AHSEC Class 12: Accountancy Solved Question Papers' 2012 | AHSEC | SOLVED QUESTION PAPERS

Q.1: (A) Fill in the blanks with appropriate word:             1x4=4

(i) Income and Expenditure Account records transactions of Revenue nature.

(ii) On admission, unrecorded assets brought into account are credited to revaluation account.

(iii) A company can issue shares at a discount only if at least one year has elapsed since the company became entitled to commence the business.

(iv) If a partner takes over an asset, such partner’s capital accounts is debited.

(B) Choose the correct alternative:                         1x2=2

(i) Subscription received in advance is treated as: 

(a) An income

(b) An asset

(c) A liability

(d) Capital

(ii) Profit on revaluation of assets and liabilities is shared by the old partners in:

(a) Sacrificing ratio

(b) New ratio

(c) Old ratio

(d) Gaining ratio

(C) State whether the following statements are true or false.              1x2=2

(i) Dissolution of firm and dissolution of partnership are two distinct legal concepts.        True

(ii) Discount on reissue of forfeited shares cannot exceed the amount received on forfeited shares.       True

Q.2: Give the adjustment entry required for recording interest on capital when Capital Account is maintained under Fixed Capital method.      (2)

Ans: Interest on Capital Account              Dr.

To Partners’ Current a/c

Q.3: What is meant by ‘Gaining Ratio ‘on retirement of a partner?          (2)

Ans. Gaining Ratio: Gaining Ratio is calculated at the time of retirement or death of partner. It is the excess of new ratio over old ratio of old partners except retire or dead partner. Gaining Ratio = New Ratio - Old Ratio.

Q4: What is meant by ‘Loss on issue of debenture’?      (2)

Ans. When debentures are redeemable at a premium, the extra amount payable over and above the nominal value on redemption is called “Loss on Issue of Debenture”. Discount on issue of shares is also added at the with loss on issue of debenture.

Q.5: What are the types of Financial Statements Analysis?     (2)

Ans: Types of financial Statement analysis:

Q.6: What do you mean by Ratio Analysis?    (2)

Ans. Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and performance of a business concern. Simply, ratio means the comparison of one figure to other relevant figure or figures.

According to Myers, “Ratio analysis of financial statements is a study of relationship among various financial factors in a business as disclosed by a single set of statements and a study of trend of these factors as shown in a series of statements."

Q.7: Mention three Features of Receipts and Payments Accounts.     (3)

Ans. Following are the main features of Receipts and Payments Account:

Q.8: Mention three situations when valuation of goodwill becomes necessary.     (3)

Ans. Reasons for Valuation of Goodwill: In case of a partnership firm, the need for valuation of goodwill may arise under the following circumstances:

Q.9: Write three points of distinction between Shares and debenture.     (3)

Ans: Refer Q.N. 22 (Or), asked in 2017 exam

Q.10: Give three characteristics of an ideal financial statement.     (3)

Ans. Characteristics of Ideal financial Statements are:

Q.11: Give three objectives of Ratio Analysis.     (3)

Ans. Objectives of Ratio analysis

Q.12: From the following information, ascertain the amount of subscription to be credited to the Income and Expenditure Account for the year 2012.      (5)

(i) Subscription received during the year Rs 11,750 (including Rs 1000 for 2011 and Rs 500 for 2013)

(ii) Subscription received in 2011 for 2012 Rs 700

(iii) Subscription outstanding on 31^st December 2012 Rs 900

Solution: Calculation of Subscription for the year 2012

OR

Give five points of Distinction Existing between Receipt and Payments Accounts and Income and Expenditure Account.     (5)

Ans. Difference between Receipts and Payments Account and Income and Expenditure Account

Q.13: A and B are partners sharing profits in the ratio of 5:4. They admit C in the firm for 1/4^th Share of profit. C takes 3/16^th from A and 1/16^th from B. C brings in Rs 25,000 as capital and Rs 8,000 as premium for goodwill. The partners withdraw 40% of their respective share of premium. Pass the necessary Journal entries on C’s admission.     (5)

Solution:

Journal Entries

In the books of firm

Working Note:

Calculation of Sacrifice ratio: Sacrificing Ratio = 3/16 : 1/16 = 3 : 1

OR

What is super profit? What are the steps to be followed for valuation of goodwill under super profit method? 1+4=5

Ans. Super Profit Method: Super Profits means profits earned in excess of the normal Profit, i.e., Actual Profit –Normal. Normal profits mean the profit which the firms could normally earns in a particular business.

Under this method, the following steps are to be followed for calculation of goodwill:

Q.14: Can a company issue shares at a premium? If so, state the purpose for which the share premium account can be utilized?     (5)

Ans: If Shares are issued at a price, which is more than the face value of shares, it is said that the shares have been issued at a premium. The Company Act, 2013 does not place any restriction on issue of shares at a premium but the amount received, as premium has to be placed in a separate account called Securities Premium Account.

Under Section 52 of the Company Act 2013, the amount of security premium may be used only for the following purposes:

OR

Distinguish between Equity share and Preference shares giving five points of differences.

Ans. Difference between Equity Shares and Preference Shares               

Q.15: Show by means of Journal entries how you will record the following issue:       (5)

(a) A. Ltd. Issues 6,000, 10% debenture of Rs 100 each at a discount of 5%, redeemable at the end of 5 year at par.  

(b) B. Ltd. issue 7,000, 11% debenture of Rs 100 each at par, redeemable at the end of 5 year at a premium of 5%.

(c) X. Ltd. issue 8,000, 12% debenture of Rs 100 each at a discount of 5%, redeemable at the end of 5 year at premium of 5%.

Solution:

Journal Entries

In the books of A Ltd.

Journal Entries

In the books of B Ltd.

Journal Entries

In the books of C Ltd.

OR

What is meant by redemption of debenture? State any three methods of redemption of debenture.  (2+3=5)

Ans: Meaning of Redemption of Debentures: Redemption of debenture is the discharge of debenture liability. It can be done either by repaying the money to debenture holders or converting the debenture into shares. The conditions of redemption are clearly stated at the time of issue of debenture in the prospectus. Debentures can be redeemed at par, premium or discount as per the terms of issue. The period of maturity, redemption amount, yield on redemption etc. will be mentioned in the prospectus. In case the non convertible debentures proposed to be rolled over (repayment extended for an additional period), a compulsory option should be given to the debenture holders who wish to withdraw from the debenture programme, as per the guidelines issued by SEBI.

Methods of Redemption of Debentures

i) Redemption In lump-sum, at the end of stipulated period: Under this method the entire debentures are redeemed at the stipulated date stated in the prospectus for the issue of debentures. The drawback of this method is that the company has to arrange a large amount at the time of redemption.

ii) By Draw of Lots: Under this method the company does not redeem all the debentures at the same time. Instead it will call back only a portion of its debentures in the market for redemption each year. The company selects the debentures of a predetermined value, by drawing lot and they are redeemed that year.

iii) By Purchasing in the Open Market: Debentures can be redeemed by purchasing them from the open market. If a company finds its debentures are available in the open market at cheap rate it will purchase those debentures and cancel them.

Q.16: Name the major headings under which the liabilities side of a company’s Balance Sheet is organised and presented.     (5)

Ans:

Proforma of Balance Sheet

Name of the Company …………………………………….

Balance Sheet as at……………………………………..

OR

Discuss any five limitations of Financial Statements

Ans. Limitations of financial statements:

Financial Statements suffers from various limitations which are given below:

Q.17: Prepare a comparative income Statements of Sunny Ltd. with the help of the following information.   (5)

Solution:

Comparative Income Statement

OR

What do you understand by Financial Statement Analysis? Discuss its importance to management. (Any four points).      (1+4=5)

Ans: Financial Statement Analysis: It is the process of identifying the financial strength and weakness of a firm from the available accounting and financial statements. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account.

In the words of Myer “Financial Statement analysis is largely a study of relationship among the various financial factors in a business, as disclosed by a single set of statements, and a study of trends of these factors, as shown in a series of statements.”

In simple words, analysis of financial statement is a process of division, establishing relationship between various items of financial statements and interpreting the result thereof to understand the working and financial position of a business.

Q.18: Ascertain Cash Flows from operating activities under the Direct Method from the Following data Related to the accounting year 2010 – 11     (5)

Total sales: 44,000 (Cash Rs 4,000, Credit Rs 40,000)

Cash received from customers: 35,000

Closing Account Receivables: 8,000

Cash paid to Suppliers: 42,000

Cash paid to employees: 7,000

Furniture purchased from (M/s. Decorators on credit): 9,000

Income tax paid: 3,000

Donation paid: 1,000

Office expenses, total Rs 6,000, paid: 3,000

Solution:

Cash Flow from Operating Activities (Direct Method)

OR

What is Cash Flow Statement? Briefly explain any four objectives of preparing a Cash Flow Statement.  (1+4=5)

Ans: Cash Flow Statement:  Cash­ flow is made up of two words i.e. Cash and Flow, whereas Cash means cash balance in hand including cash at bank balance, and Flow means changes (which may be increase or decrease) in the cash movements of the business. Cash Flow Statement is simply a summary of cash receipts and payments whereby reconciling the opening cash balance with the closing cash including bank balances in done.

Objectives of Cash Flow Statement

The Cash Flow Statement is prepared because of number of merits, which are offered by it. Such merits are also termed as its objectives. The important objectives are as follows:

Q.19: Choudhury and Barua are partners in a firm sharing profit and losses in the ratio 50:50 respectively. The Trial Balance of the firm as on 31^st March, 2011 was as follows:

Trial Balance

Prepare Profit and loss Account, Profit and Loss Appropriation Account for the year ended 31^st March, 2011 and a Balance Sheet as at that date after taking into consideration the following.

(a) Outstanding Expenses – Salaries Rs 300, Interest on Bank overdraft Rs 225

(b) Machine worth Rs 15,000 purchased on 1^st Oct, 2010.

(c) Provide depreciation on machinery and furniture @ 10% p.a. and on Building @ 2^1/2 % p.a.

(d) Interest on capital to be allowed @ 10% p.a.

(e) Prepaid Insurance Rs 150.

(f) Partners are entitled to salary of Rs 1,000 per annum each.

Solution:

Profit & Loss A/c

For the year ended 31-3-2011

Profit & Loss Appropriation A/c

For the year ended 31-3-2011

Partner’s Capital A/c

Balance Sheet

As on 31-03-2011

Q.20: Ashok publications Ltd. issues 3,000 shares of Rs 10 each, payable as follow:                  (8)

On Application Rs 2

On Allotment Rs 3

On first call Rs 2 And the balance when required.

3,200 shares were applied for, application for 3000 was accepted by the Directors and the balance application was rejected and money returned. Allotment money was duly received and first call was received on 2950 shares. Pass journal entries in the books of the company for the above transactions.

Solution:

Journal Entries

In the books of Ashok Publications Ltd.

OR

What do you mean by ‘forfeiture of share’? Discuss the procedure of forfeiture of share and re-issue of such share.

The directors of the company have the power to re-issue the forfeited shares on such terms as it think fit. Thus the forfeited shares can be reissued at par, or at premium or at discount. However, if the forfeited shares are reissued at discount, the amount of discount should not exceed the amount credited to the share forfeiture A/c. If the discount allowed on reissue is less than the forfeited amount there will be the surplus left in the share forfeited A/c. This surplus will be of the nature of capital profits so it will be transferred to the Capital Reserve A/c.

Procedure for reissue of forfeited shares

Q.21: Kumar and Gaurav are partners sharing profit and losses as three-fourth and one-fourth. They agreed to dissolve their firm. On the date of dissolution, they have following Balance sheet:             (8)

The Assets Realised as follows:

(i) Land and Building Rs.48, 000

(ii) Sundry Debtors Rs.18, 000

(iii) Goodwill Rs.16, 500

Kumar took over plant and machinery at 5% more than the book value. Gaurav agreed to discharge his wife’s loan. Creditors are paid Rs.12, 000 in full settlement of their claim and expenses on realisation amounted to Rs.700. You are required to show Realisation Account, Cash Account and Capital Accounts of the Partners on dissolution.

Solution:

Realisation A/c

Partner’s Capital A/c

Cash A/c

OR

What do you mean by Dissolution of a Firm? Mention Difference Between dissolution of a Firm and Partnership.

Ans. Dissolution of a firm means discontinuation of the firm’s business and the relationship between the partners. According to Sec. 39 of Indian Partnership Act 1932, “Dissolution of firm means dissolution of partnership between all the partners in the firm."

Therefore when a firm is dissolved, assets of the firm are disposed off, liabilities are paid off and the accounts of all the partners are also settled.

Difference between dissolution of partnership and dissolution of firm.

Q.22: X, Y and Z were partners in firm Sharing profit in 5:3:2 ratios. On 31^st march, 2011 Z retired from the firm. On the date of Z’s retirement, the Balance Sheet of the Firm Was as Follows:     (8)

Balance Sheet of X, Y, Z as at 31^st March 2011

On Z’s retirement it was agreed that:

(a) Land and building will be appreciated by 5% and furniture will be depreciated by 20%

(b) Provision for Doubtful debts will be made at 5% on Debtor and provision for legal claim will be made at Rs. 60,000.

(c) Goodwill of the firm was valued at Rs.60, 000

(d) Rs. 70,000 from Z’s Capital Account will be transferred to his loan account and the balance will be paid to him by cheque.

Prepare Revaluation Account, Partners Capital Accounts and Balance sheet of X and Y after Z’s Retirement.

Solution:

Revaluation A/c

Partner’s Capital A/c

Balance Sheet

As on 31^st March, 2011

OR

Explain the term “Reconstitution of a firm”. Mention the situations when such reconstitution of a firm takes place. (3+5=8)

Ans: Reconstitution of Partnership: Reconstitution of a partnership refers to a situation when there is a change in the existing partnership agreement. A Partnership agreement is an agreement between two or more persons for carrying out various business activities. In case of reconstitution, a new partnership agreement is formed to replace the old partnership agreement. It means the firm continues to exist and the only change will take place in existing partnership agreement.  Thus, reconstitution of a partnership takes place in each of the following cases: