CBSE Class 12 Accountancy Question Paper 2026 Solved Code 67-1-1

PART - A

(Accounting for Partnership Firms and Companies)

1. The books of Mehul and Barkha showed that their capital employed on 31st March, 2025 was Rs. 6,00,000. If the normal profits are Rs. 60,000 and super profits are Rs. 20,000, then the normal rate of return is : [1 Mark]
(A) 6%
(B) 15%
(C) 30%
(D) 10%

Answer: (D) 10%

Teacher's Note:
a) Normal rate of return = Normal profit / Capital employed x 100 = 60,000 / 6,00,000 x 100 = 10%.
b) Super profits are not needed here; do not add them to normal profit.

2. There are two statements Assertion (A) and Reason (R) :
Assertion (A) : Partnership Agreement becomes the basis of relationship among the partners.
Reason (R) : Partnership is the result of an agreement between two or more persons to do business and share its profits and losses.
Choose the correct option from the following : [1 Mark]
(A) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is correct, but Reason (R) is incorrect.
(D) Assertion (A) is incorrect, but Reason (R) is correct.

Answer: (A) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) A partnership comes into existence only through an agreement, so the agreement is the basis of the relationship.
b) The agreement may be oral or written; a written one is called the Partnership Deed.

3. (a) If 600 shares of Rs. 10 each, issued at a premium of Rs. 1 per share are forfeited on which Rs. 8 per share (including premium) have been called and Rs. 6 per share (including premium) have been paid, then 'Share Forfeiture Account' will be ________ by ________. [1 Mark]
(A) credited, Rs. 3,000
(B) debited, Rs. 3,000
(C) debited, Rs. 3,600
(D) credited, Rs. 3,600

Answer: (A) credited, Rs. 3,000

Teacher's Note:
a) Share Forfeiture is credited with the amount received towards share capital only: Rs. 6 - Rs. 1 premium = Rs. 5 per share, so 600 x 5 = Rs. 3,000.
b) Premium already received is not cancelled, so it is never credited to Share Forfeiture.

OR

(b) T.D. Ltd. issued Rs. 10,00,000, 9% debentures at a discount of 10% redeemable at a certain rate of premium. On issue of these 9% debentures, the premium on redemption of debentures account was credited by Rs. 1,00,000. The amount of 'loss on issue of debentures' was : [1 Mark]
(A) Rs. 1,00,000
(B) Rs. 2,00,000
(C) Rs. 3,00,000
(D) Nil

Answer: (B) Rs. 2,00,000

Teacher's Note:
a) Loss on issue = Discount (10% of 10,00,000 = Rs. 1,00,000) + Premium on redemption (Rs. 1,00,000) = Rs. 2,00,000.
b) Premium payable on redemption is a loss at the time of issue itself.

4. (a) Tarun and Tej were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April 2024, Tej had given a loan of Rs. 50,000 to the firm. The net profit of the firm before charging interest on loan was Rs. 3,75,000. The firm closes its books on 31st March every year. The amount of profit transferred from Profit and Loss Account to Profit and Loss Appropriation Account will be : [1 Mark]
(A) Rs. 3,75,000
(B) Rs. 3,72,000
(C) Rs. 4,25,000
(D) Rs. 3,78,000

Answer: (B) Rs. 3,72,000

Teacher's Note:
a) With no deed rate given, interest on a partner's loan is 6% p.a. as per the Partnership Act: 6% of 50,000 = Rs. 3,000.
b) Interest on loan is a charge, so it is deducted in the Profit and Loss Account: 3,75,000 - 3,000 = Rs. 3,72,000.

OR

(b) Ashok and Vasu were partners in a firm sharing profits and losses in the ratio of 4 : 3. Their capitals on 31st March, 2025 were Rs. 3,00,000 and Rs. 3,75,000 respectively. During the year ended 31st March, 2025 Vasu withdrew Rs. 40,000 for his personal use and introduced Rs. 1,50,000 as additional capital in the business. Profit of the firm for the year ended 31st March, 2025 was Rs. 1,40,000. Vasu's capital in the beginning of the year was : [1 Mark]
(A) Rs. 2,75,000
(B) Rs. 4,25,000
(C) Rs. 2,05,000
(D) Rs. 3,45,000

Answer: (C) Rs. 2,05,000

Teacher's Note:
a) Work backwards from the closing capital: 3,75,000 + 40,000 (drawings) - 1,50,000 (additional capital) - 60,000 (3/7 share of profit) = Rs. 2,05,000.
b) Add back what reduced capital and deduct what increased it.

5. Soni and Kush were partners in a firm sharing profits and losses in the ratio of 4 : 5. Hitesh was admitted as a new partner for 1/5th share in the profits of the firm. After all adjustments regarding general reserve, goodwill, and gain on revaluation of assets and reassessment of liabilities, the balances in capital accounts of Soni and Kush were Rs. 7,00,000 and Rs. 13,00,000 respectively. Hitesh brought in proportionate capital for his 1/5th share in the profits of the firm. The amount of proportionate capital brought in by Hitesh was : [1 Mark]
(A) Rs. 25,00,000
(B) Rs. 20,00,000
(C) Rs. 5,00,000
(D) Rs. 10,00,000

Answer: (C) Rs. 5,00,000

Teacher's Note:
a) Old partners' capital Rs. 20,00,000 is for 4/5 share, so total capital = 20,00,000 x 5/4 = Rs. 25,00,000.
b) Hitesh's capital = 1/5 of 25,00,000 = Rs. 5,00,000.

6. (a) Which of the following is not correct about collateral security ? [1 Mark]
(A) It is a primary security.
(B) It is an additional security.
(C) It is a subsidiary security.
(D) It is a secondary security.

Answer: (A) It is a primary security.

Teacher's Note:
a) Collateral security is given in addition to the primary security, so it is never the primary security.
b) Watch for the word "not" in the question.

OR

(b) 'A company is formed according to the provisions of Company Law' indicates which of the following characteristics of a company ? [1 Mark]
(A) Common Seal
(B) Perpetual Succession
(C) Body Corporate
(D) Limited Liability

Answer: (C) Body Corporate

Teacher's Note:
a) A company becomes a body corporate only when it is incorporated under the Companies Act.
b) Perpetual succession and limited liability are other features, but they do not describe formation under law.

7. (a) Chandan, Ravi and Mahesh were partners in a firm sharing profits and losses in the ratio of 5 : 4 : 1. From 1st April, 2025 they decided to share the future profits in the ratio of 3 : 2 : 1. On that date there existed a general reserve of Rs. 7,00,000 in the books of the firm which they decided to distribute among themselves.
In which ratio will the general reserve be distributed among the partners ? [1 Mark]
(A) New profit sharing ratio
(B) Old profit sharing ratio
(C) Sacrificing / Gaining ratio
(D) Equally

Answer: (B) Old profit sharing ratio

Teacher's Note:
a) Reserves were built from past profits, so they belong to partners in the old ratio.
b) This rule applies to change in ratio, admission, retirement and death alike.

OR

(b) Suman and Tanya were partners in a firm sharing profits and losses in the ratio of 2 : 1. With effect from 1st April, 2025, they decided to share the profits equally. On that date furniture was appearing in the books of the firm at Rs. 4,50,000. At the time of change in the profit sharing ratio, it was found to be undervalued by 10%. In the new balance sheet, furniture will be shown at : [1 Mark]
(A) Rs. 4,05,000
(B) Rs. 4,50,000
(C) Rs. 4,95,000
(D) Rs. 5,00,000

Answer: (D) Rs. 5,00,000

Teacher's Note:
a) "Undervalued by 10%" means the book value is 90% of the true value: 4,50,000 / 90 x 100 = Rs. 5,00,000.
b) A common mistake is to add 10% of the book value (giving 4,95,000).

8. Tula, Ram and Madhvi were partners in a firm. The partnership deed provided for interest on partners drawings @ 12% p.a. The firm closes its books on 31st March every year. Starting from 31st December, 2025 Madhvi withdrew Rs. 40,000 at the end of every month for her personal use. Interest on Madhvi's drawings will be : [1 Mark]
(A) Rs. 19,200
(B) Rs. 4,800
(C) Rs. 2,400
(D) Rs. 1,600

Answer: (C) Rs. 2,400

Teacher's Note:
a) Four withdrawals (31 Dec, 31 Jan, 28 Feb, 31 Mar) total Rs. 1,60,000; the average period is (3 + 0) / 2 = 1.5 months.
b) Interest = 1,60,000 x 12/100 x 1.5/12 = Rs. 2,400.

9. (a) Dharam, Karam and Raman were partners in a firm sharing profits and losses in the ratio of 7 : 8 : 5. On 31st March, 2025, Raman retired from the firm. Dharam and Karam decided to share profits in future in the ratio of 11 : 9. Their gaining ratio will be : [1 Mark]
(A) 1 : 1
(B) 1 : 2
(C) 4 : 1
(D) 2 : 1

Answer: (C) 4 : 1

Teacher's Note:
a) Gain = New share - Old share: Dharam 11/20 - 7/20 = 4/20; Karam 9/20 - 8/20 = 1/20.
b) So the gaining ratio is 4 : 1.

OR

(b) Deen, Raju and Hari were partners in a firm sharing profit and losses in the ratio of 7 : 6 : 7. On 31st March 2025 Raju died. Deen and Hari decided to take over Raju's share equally. The new profit sharing ratio between Deen and Hari will be : [1 Mark]
(A) 1 : 1
(B) 7 : 6
(C) 6 : 7
(D) 3 : 2

Answer: (A) 1 : 1

Teacher's Note:
a) Each gets half of Raju's 6/20, i.e. 3/20: Deen 7/20 + 3/20 = 10/20; Hari 7/20 + 3/20 = 10/20.
b) Equal old shares plus equal gains give an equal new ratio.

10. Nidhi and Kunal were partners in a firm sharing profits and losses in the ratio of 4 : 1. Their capitals were Rs. 3,00,000 and Rs. 2,00,000 respectively. They were entitled to interest on capital @ 6% p.a. The firm earned a profit of Rs. 15,000 during the year.
Interest on partners' capitals will be : [1 Mark]
(A) Nidhi Rs. 18,000 ; Kunal Rs. 12,000
(B) Nidhi Rs. 7,500 ; Kunal Rs. 7,500
(C) Nidhi Rs. 9,000 ; Kunal Rs. 6,000
(D) Nidhi Rs. 12,000 ; Kunal Rs. 3,000

Answer: (C) Nidhi Rs. 9,000 ; Kunal Rs. 6,000

Teacher's Note:
a) Full interest would be Rs. 18,000 + Rs. 12,000 = Rs. 30,000, but profit is only Rs. 15,000.
b) When profit is less than interest, the profit is shared in the ratio of interest (3 : 2), not the profit sharing ratio.

11. On 1st April, 2024, Dina Ltd. issued 8,000, 9% debentures of Rs. 100 each at a discount of 6%. The total amount of interest due on debentures for the year ended 31st March, 2025 will be : [1 Mark]
(A) Rs. 48,000
(B) Rs. 72,000
(C) Rs. 1,20,000
(D) Rs. 80,000

Answer: (B) Rs. 72,000

Teacher's Note:
a) Interest is always on the face value: 8,000 x 100 x 9% = Rs. 72,000.
b) The discount on issue does not change the interest amount.

12. Sakshi Ltd. forfeited 500 equity shares of Rs. 10 each, issued at a premium of Rs. 2 per share for non-payment of second and final call of Rs. 4 per share (including premium).
The maximum amount of discount at which these shares can be reissued is : [1 Mark]
(A) Rs. 1 per share
(B) Rs. 6 per share
(C) Rs. 8 per share
(D) Rs. 5 per share

Answer: (C) Rs. 8 per share

Teacher's Note:
a) The premium was due in the unpaid final call, so all Rs. 8 received (Rs. 12 - Rs. 4) is towards share capital.
b) Maximum discount on reissue = amount forfeited per share = Rs. 8.

13. Surya Ltd. issued 50,000 equity shares of Rs. 10 each. The amount was payable as follows :
on Application - Rs. 3 per share
on Allotment - Rs. 2 per share
on First and Final Call - the balance
Usha, to whom 700 shares were allotted, paid her entire share money on allotment. Raj, to whom 300 shares were allotted did not pay the first and final call. The amount to be debited to Bank Account for first and final call after it becomes due will be : [1 Mark]
(A) Rs. 2,50,000
(B) Rs. 2,48,500
(C) Rs. 2,45,000
(D) Rs. 2,52,000

Answer: (C) Rs. 2,45,000

Teacher's Note:
a) Call due = 50,000 x 5 = Rs. 2,50,000; less calls-in-advance of Usha (700 x 5 = Rs. 3,500); less calls-in-arrears of Raj (300 x 5 = Rs. 1,500).
b) Bank receives 2,50,000 - 3,500 - 1,500 = Rs. 2,45,000.

14. Sidhi, Gyan and Gayatri were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 2. On 31st March, 2025 their firm was dissolved. At the time of dissolution a debtor amounting to Rs. 25,000 whose debt had been previously written off as bad debt paid 40% of the amount. The accounting treatment for the above transaction will be : [1 Mark]
(A) Rs. 10,000 will be credited to bad debts recovered account.
(B) Rs. 10,000 will be credited to the debtor's personal account.
(C) Rs. 10,000 will be credited to realisation account.
(D) Rs. 10,000 will be credited to bad debts account.

Answer: (C) Rs. 10,000 will be credited to realisation account.

Teacher's Note:
a) On dissolution, any unrecorded asset realised is credited to Realisation Account: Bank A/c Dr. To Realisation A/c.
b) Amount = 40% of 25,000 = Rs. 10,000.

15. Chaman and Vatika were partners in a firm sharing profits and losses in the ratio of 4 : 5. They admitted Mohan as a new partner for 1/5th share in the profits of the firm. Mohan acquired his share equally from Chaman and Vatika. The new profit sharing ratio of Chaman, Vatika and Mohan will be : [1 Mark]
(A) 2 : 2 : 1
(B) 31 : 41 : 18
(C) 41 : 31 : 18
(D) 7 : 8 : 5

Answer: (B) 31 : 41 : 18

Teacher's Note:
a) Each old partner gives 1/10: Chaman 4/9 - 1/10 = 31/90; Vatika 5/9 - 1/10 = 41/90; Mohan 1/5 = 18/90.
b) Use the LCM 90 to compare the three shares.

16. Lalita, Shivani and Madhuri were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Madhuri retired from the firm on 31st March, 2025. The balance in her capital account on the date of her retirement was Rs. 1,80,000. Lalita and Shivani agreed to pay her Rs. 2,25,000 in full settlement of her claim.
The goodwill of the firm on Madhuri's retirement was : [1 Mark]
(A) Rs. 1,80,000
(B) Rs. 2,25,000
(C) Rs. 45,000
(D) Rs. 2,70,000

Answer: (D) Rs. 2,70,000

Teacher's Note:
a) Extra payment 2,25,000 - 1,80,000 = Rs. 45,000 is Madhuri's share of goodwill (1/6).
b) Firm's goodwill = 45,000 x 6 = Rs. 2,70,000.

17. Average profit of a firm during the last few years is Rs. 8,00,000. In similar business, the normal rate of return is 10% of the capital employed. Assets of the business were Rs. 60,00,000 and its external liabilities were Rs. 20,00,000.
Calculate the value of goodwill by :
(i) Capitalisation of super profits method
(ii) Super profit method if the goodwill is valued at four years' purchase of super profits. [3 Marks]

Answer:
Capital Employed = Assets - External Liabilities = 60,00,000 - 20,00,000 = Rs. 40,00,000
Normal Profit = 10% of 40,00,000 = Rs. 4,00,000
Super Profit = Average Profit - Normal Profit = 8,00,000 - 4,00,000 = Rs. 4,00,000
(i) Capitalisation of super profits method:
Goodwill = Super Profit x 100 / Normal Rate of Return = 4,00,000 x 100 / 10 = Rs. 40,00,000
(ii) Super profit method:
Goodwill = Super Profit x Number of years' purchase = 4,00,000 x 4 = Rs. 16,00,000

Teacher's Note:
a) Always find capital employed first (assets minus outside liabilities); partners' capital is not deducted.
b) Write the formula before each calculation, as the formula itself carries marks.
c) Super profit needs to be calculated only once and can be used in both parts.

18. (a) Sultan, Singh and Tulsi were partners in a firm sharing profits and losses in the ratio of 9 : 7 : 4. Their fixed capitals were Rs. 6,00,000, Rs. 5,00,000 and Rs. 4,00,000. The partnership deed provided that interest on partners capital accounts will be allowed at 10% per annum. After the final accounts for the year were prepared, it was found that interest on capital was allowed @ 12% per annum.
Pass the necessary adjusting journal entry. [3 Marks]

Answer:

Journal

Adjustment Table

Teacher's Note:
a) Since capitals are fixed, the adjustment is passed through partners' current accounts, not capital accounts.
b) Only the extra 2% is reversed, and the same amount (Rs. 30,000) is redistributed as profit in the profit sharing ratio.
c) Show the adjustment table; it carries 2 of the 3 marks.

OR

(b) Sameer and Manveer were partners in a firm sharing profits and losses in the ratio of 5 : 3. On 1st April, 2024, they admitted Sandeep as a new partner for 1/5th share in the profits with a guaranteed minimum amount of Rs. 80,000. Sameer and Manveer continue to share profits as before but agreed to bear any deficiency on account of guarantee to Sandeep in the ratio of 3 : 5. The net profit of the firm for the year ended 31st March, 2025 was Rs. 3,20,000.
Prepare Profit and Loss Appropriation Account of Sameer, Manveer and Sandeep for the year ended 31st March, 2025. [3 Marks]

Answer:

Profit and Loss Appropriation Account for the year ended 31st March, 2025

Working Note: Sandeep's share = 1/5 x 3,20,000 = Rs. 64,000; deficiency = 80,000 - 64,000 = Rs. 16,000, borne by Sameer and Manveer in 3 : 5 (Rs. 6,000 and Rs. 10,000). Remaining profit Rs. 2,56,000 is shared 5 : 3 (Rs. 1,60,000 and Rs. 96,000).

Teacher's Note:
a) The deficiency is borne in the agreed ratio 3 : 5, not in the profit sharing ratio 5 : 3.
b) Sandeep's final credit must equal exactly the guaranteed Rs. 80,000.
c) Show the deduction and addition of deficiency inside the account, not just the net figures.

19. (a) Raunak Cotton Ltd. purchased machinery of Rs. 6,80,000 from Heavy Machines Ltd. The Payment to Heavy Machines Ltd. was made by issuing 10,500 equity shares of Rs. 50 each at a premium of 20% and the balance through a cheque.
Pass necessary journal entries for the above transactions in the books of Raunak Cotton Ltd. [3 Marks]

Answer:

Journal of Raunak Cotton Ltd.

Working Note: Shares = 10,500 x Rs. 50 = Rs. 5,25,000; premium = 10,500 x Rs. 10 = Rs. 1,05,000; cheque = 6,80,000 - 6,30,000 = Rs. 50,000. (The second entry may also be passed as two separate entries.)

Teacher's Note:
a) Premium of 20% on Rs. 50 is Rs. 10 per share; it goes to Securities Premium A/c.
b) The vendor (Heavy Machines Ltd.) is credited first and then debited when paid.

OR

(b) Neo Ltd. took over assets of Rs. 25,00,000 and liabilities of Rs. 12,00,000 of Madura Ltd. for a purchase consideration of Rs. 18,00,000. Neo Ltd. issued 11% debentures of Rs. 100 each at a discount of 10% in full satisfaction of the purchase consideration.
Pass necessary journal entries for the above transactions in the books of Neo Ltd. [3 Marks]

Answer:

Journal of Neo Ltd.

Working Note: Net assets = 25,00,000 - 12,00,000 = Rs. 13,00,000; goodwill = 18,00,000 - 13,00,000 = Rs. 5,00,000. Number of debentures = 18,00,000 / 90 = 20,000.

Teacher's Note:
a) When purchase consideration is more than net assets, the difference is Goodwill.
b) Divide the purchase consideration by the issue price (Rs. 90), not by the face value, to find the number of debentures.

20. Shree and Hari were partners in a firm sharing profits and losses in the ratio of 2 : 3. Their fixed capitals were Rs. 4,00,000 and Rs. 3,00,000 respectively. The partnership deed provided that Hari is to be allowed a commission of 5% of net profit.
The net profit of the firm for the year ended 31st March, 2025 was Rs. 1,00,000.
Pass the following journal entries in the books of the firm :
(i) For crediting Hari's commission to his current account.
(ii) For transferring the commission to Profit and Loss Appropriation Account. [3 Marks]

Answer:

Journal

Teacher's Note:
a) Commission = 5% of Rs. 1,00,000 = Rs. 5,000.
b) With fixed capitals, the commission is credited to the partner's current account.
c) Partner's commission is an appropriation of profit, so it is closed to the P and L Appropriation Account.

21. On 1st April 2024 Bhumika Ltd. issued 500, 9% debentures of Rs. 500 each at a discount of 10% redeemable at a premium of 6% after five years. On 31st March, 2025 the company had a balance of Rs. 30,000 in its Securities Premium Account.
Pass necessary journal entries for issue of 9% Debentures and writing off Loss on issue of Debentures. Also prepare 'Loss on Issue of Debentures Account'. [4 Marks]

Answer:

Journal of Bhumika Ltd.

Loss on Issue of Debentures Account

Teacher's Note:
a) Loss = Discount (10% of 2,50,000 = Rs. 25,000) + Premium on redemption (6% of 2,50,000 = Rs. 15,000) = Rs. 40,000.
b) Write off the loss first from Securities Premium; only the balance goes to the Statement of Profit and Loss.

22. Kiran, Raveena and Hina were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. The firm closes its books on 31st March every year. As per the terms of the partnership deed, on the death of any partner, the goodwill of the firm will be calculated on the basis of four times the average profits of the last three years. Hina died on 1st July 2025. The Profits for the last three years were :
2022-23 Rs. 4,75,000
2023-24 Rs. 4,05,000
2024-25 Rs. 3,20,000
Hina's share of profit upto the date of death was to be calculated on the basis of previous year's profit.
(i) Calculate goodwill of the firm and Hina's share of goodwill.
(ii) Calculate Hina's share in the profits of the firm till the date of her death.
(iii) Pass necessary journal entries for the treatment of goodwill without opening goodwill account and for Hina's share of profit at the time of her death. [4 Marks]

Answer:
(i) Average Profit = (4,75,000 + 4,05,000 + 3,20,000) / 3 = 12,00,000 / 3 = Rs. 4,00,000
Goodwill of the firm = 4,00,000 x 4 = Rs. 16,00,000
Hina's share of goodwill = 2/10 x 16,00,000 = Rs. 3,20,000
(ii) Hina's share of profit = 3,20,000 x 3/12 x 2/10 = Rs. 16,000 (1st April to 1st July = 3 months)
(iii)

Teacher's Note:
a) On death, the remaining partners gain in their old ratio (5 : 3) unless told otherwise.
b) Profit till death is based on the previous year's profit for the months elapsed (April to June).
c) The share of profit is debited to Profit and Loss Suspense A/c because the year's accounts are not yet closed.

23. Ravneet and Manmeet were partners in a firm sharing profits and losses in the ratio of 7 : 3. On 31st March, 2025, their Balance Sheet was as follows :
Balance Sheet of Ravneet and Manmeet as on 31st March, 2025

On the above date, the firm was dissolved. The plant and machinery was sold at Rs. 4,87,000 and stock at 20% less than the book value. Debtors realised Rs. 1,40,000.
Ravneet agreed to bear all realisation expenses for which he was allowed a commission of Rs. 9,000. Actual realisation expenses amounted to Rs. 7,500.
Prepare Realisation Account and Partners' Capital Accounts. [6 Marks]

Answer:

Realisation Account

Partners' Capital Accounts

Teacher's Note:
a) Cash at Bank is not transferred to Realisation Account; only other assets are.
b) Since Ravneet bears the expenses for a fixed commission, only his commission (Rs. 9,000) is recorded; the actual expenses of Rs. 7,500 paid by him are not recorded in the firm's books.
c) Check: Bank 2,50,000 + 8,27,000 - 4,50,000 = Rs. 6,27,000, which equals the amounts paid to partners (3,81,600 + 2,45,400).

24. (a) Generic Pharma Ltd. invited applications for using 3,00,000 equity shares of Rs. 10 each at a premium of Rs. 6 per share. The amount was payable as follows :
on Application and Allotment - Rs. 4 per share (including premium of Rs. 2 per share)
on First and Final Call - Balance
Applications for 4,00,000 shares were received. Applications for 40,000 shares were rejected and the application money was refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received on applications was adjusted towards sums due on first and final call. Jain, an applicant for 3,600 shares failed to pay the first and final call. His shares were forfeited.
Pass necessary journal entries in the books of Generic Pharma Ltd. for the above transactions. Open 'calls in arrears account' and 'calls in advance account', wherever necessary. [6 Marks]

Answer:

Journal of Generic Pharma Ltd.

Working Notes:
1. Pro-rata applicants = 4,00,000 - 40,000 = 3,60,000 for 3,00,000 shares (ratio 6 : 5). Refund = 40,000 x 4 = Rs. 1,60,000.
2. Excess application money = 3,60,000 x 4 - 3,00,000 x 4 = Rs. 2,40,000 (calls in advance).
3. Jain applied for 3,600 shares and was allotted 3,000. He paid 3,600 x 4 = Rs. 14,400; Rs. 12,000 was due on application and allotment, so Rs. 2,400 was his excess. Call due from him = 3,000 x 12 = Rs. 36,000; calls in arrears = 36,000 - 2,400 = Rs. 33,600.
4. Bank on call = 36,00,000 - 2,40,000 - 33,600 = Rs. 33,26,400.

Teacher's Note:
a) On forfeiture, cancel the unpaid premium (Rs. 4 x 3,000 = Rs. 12,000) because it was not received.
b) Share Forfeiture = amount actually received towards capital from Jain (Rs. 8,400).
c) Always calculate the defaulter's excess money before finding calls in arrears.

OR

(b) Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases :
(i) Diksha Ltd. forfeited 3,000 shares of Rs. 10 each for non-payment of final call of Rs. 2 per share. Out of these, 600 shares were reissued as fully paid up in such a way that Rs. 4,200 was transferred to capital reserve.
(ii) Ashoka Ltd. forfeited 2,000 equity shares of Rs. 100 each issued at a premium of 10% for non-payment of allotment money of Rs. 60 per share (including premium). The first and final call of Rs. 20 per share was not yet made. The forfeited shares were re-issued at Rs. 70 per share fully paid up. [3 + 3 = 6 Marks]

Answer:

(i) Journal of Diksha Ltd.

Working Note: Forfeited amount on 600 shares = 600 x 8 = Rs. 4,800. Since Rs. 4,200 went to capital reserve, the discount on reissue was 4,800 - 4,200 = Rs. 600 (Re. 1 per share), so the shares were reissued at Rs. 9.

(ii) Journal of Ashoka Ltd.

Working Note: Called up capital = Rs. 80 per share (first and final call of Rs. 20 not made), so 2,000 x 80 = Rs. 1,60,000. Amount received on application = Rs. 30 per share = Rs. 60,000 (forfeited amount). On reissue at Rs. 70 as fully paid, the discount of Rs. 30 per share uses the whole forfeiture, so nothing is left for capital reserve.

Teacher's Note:
a) Debit Share Capital only with the amount called up at the time of forfeiture.
b) Unpaid premium (Rs. 10 x 2,000) is debited to Securities Premium on forfeiture.
c) Discount on reissue can never exceed the amount forfeited on those shares.

25. (a) Sanjay and Vijay were partners in a firm sharing profits and losses in the ratio of 4 : 3. On 1st April, 2025 they admitted Babul as a new partner for 2/5th share in the profits of the firm. On Babul's admission, the following was agreed upon :
(i) The new profit sharing ratio of Sanjay, Vijay and Babul will be 3 : 3 : 4.
(ii) The goodwill of the firm will be valued at four years purchase of the average profits of the last three years. The profits of the previous three years were :
2022-23 Rs. 16,500
2023-24 Rs. 17,500
2024-25 Rs. 18,500
(iii) Babul will bring his share of goodwill premium in cash, half of which will be withdrawn by Sanjay and Vijay.
(iv) On Babul's admission, revaluation of assets and reassessment of liabilities resulted in a loss of Rs. 70,000.
(v) At the time of Babul's admission, the firm had a General Reserve of Rs. 28,000.
(vi) After making necessary adjustments relating to goodwill, loss on revaluation and general reserve, the capital accounts of Sanjay and Vijay showed balances of Rs. 3,50,000 and Rs. 2,50,000 respectively. Babul brought proportionate capital for his 2/5th share in the profits of the firm.
Showing your workings clearly pass necessary journal entries for the above transactions in the books of the firm on Babul's admission. [6 Marks]

Answer:

Journal

Working Notes:
1. Sacrificing ratio: Sanjay 4/7 - 3/10 = 19/70; Vijay 3/7 - 3/10 = 9/70; ratio 19 : 9.
2. Average profit = (16,500 + 17,500 + 18,500) / 3 = Rs. 17,500; goodwill = 17,500 x 4 = Rs. 70,000; Babul's share = 2/5 x 70,000 = Rs. 28,000.
3. Babul's capital: Sanjay and Vijay's adjusted capital Rs. 6,00,000 is for 3/5 share; total capital = 6,00,000 x 5/3 = Rs. 10,00,000; Babul's capital = 2/5 x 10,00,000 = Rs. 4,00,000.

Teacher's Note:
a) Goodwill premium is shared in the sacrificing ratio, while revaluation loss and general reserve go in the old ratio.
b) Use the adjusted capitals (after all adjustments) to find the new partner's proportionate capital.
c) Show all three working notes; they carry marks.

OR

(b) Anuj, Divij and Shilpa were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their Balance Sheet as at 31st March, 2023 was as follows :
Balance Sheet of Anuj, Divij and Shilpa as at 31st March, 2023

Anuj retired on the above date on the following terms :
(i) Anuj's share of goodwill was valued at Rs. 90,000 and the same was to be treated without opening goodwill account.
(ii) Revaluation of assets and reassessment of liabilities resulted in a gain of Rs. 25,000.
(iii) Amount due to Anuj was transferred to his loan account, to be paid in two equal yearly instalments plus interest @ 12% p.a. on the unpaid balance starting from 31st March, 2024.
Prepare Partners' Capital Accounts and Anuj's Loan Account till it is fully discharged. [6 Marks]

Answer:

Partners' Capital Accounts

Anuj's Loan Account

Working Notes: Anuj's goodwill Rs. 90,000 is borne by the gaining partners Divij and Shilpa in their gaining ratio 1 : 2 (Rs. 30,000 and Rs. 60,000). Revaluation gain Rs. 25,000 is shared in 2 : 1 : 2.

Teacher's Note:
a) Interest each year is charged only on the unpaid balance at the start of that year.
b) Each instalment is Rs. 2,00,000 of principal, plus that year's interest.
c) Balance the loan account at the end of every year to show the carried-forward amount.

26. Dharma Ltd. was registered with an authorised capital of Rs. 30,00,000 divided into 3,00,000 equity shares of Rs. 10 each. The amount was payable as follows :
On Application - Rs. 2 per share
On Allotment - Rs. 5 per share
On First and Final Call - Balance
The company offered 90,000 shares for public subscription. All the shares were subscribed and the company received all the money due, except allotment and call money on 4,000 shares held by Aditi and call money on 3,000 shares held by Rohit. The directors forfeited shares of Aditi and Rohit.
Answer the following questions on the basis of above information : [6 Marks]

(i) The nominal capital of Dharma Ltd. is : [1 Mark]
(A) Rs. 30,00,000
(B) Rs. 3,00,000
(C) Rs. 9,00,000
(D) Rs. 33,00,000

Answer: (A) Rs. 30,00,000

Teacher's Note:
a) Nominal capital is another name for authorised capital: 3,00,000 x Rs. 10.
b) It is the maximum capital the company can raise.

(ii) The issued capital of the company is : [1 Mark]
(A) Rs. 3,00,000
(B) Rs. 30,00,000
(C) Rs. 9,00,000
(D) Rs. 33,00,000

Answer: (C) Rs. 9,00,000

Teacher's Note:
a) Issued capital = shares offered to the public: 90,000 x Rs. 10 = Rs. 9,00,000.
b) Do not confuse issued capital with authorised capital.

(iii) Subscribed and fully paid capital of Dharma Ltd. will be : [1 Mark]
(A) Rs. 9,00,000
(B) Rs. 8,30,000
(C) Rs. 8,56,000
(D) Nil

Answer: (B) Rs. 8,30,000

Teacher's Note:
a) After forfeiting 7,000 shares (4,000 + 3,000), 83,000 shares remain: 83,000 x Rs. 10 = Rs. 8,30,000.
b) Forfeited shares are no longer part of subscribed capital.

(iv) The amount of 'Share Capital' presented in the Balance sheet of Dharma Ltd. under 'Shareholders Funds' will be : [1 Mark]
(A) Rs. 8,30,000
(B) Rs. 8,59,000
(C) Rs. 9,00,000
(D) Rs. 30,00,000

Answer: (B) Rs. 8,59,000

Teacher's Note:
a) Share Capital in the Balance Sheet = Subscribed and fully paid Rs. 8,30,000 + Share Forfeiture Rs. 29,000.
b) Share Forfeiture is added to share capital in the Notes to Accounts.

(v) In the Notes to Accounts, the amount to be shown under 'Share Forfeiture Account' will be : [1 Mark]
(A) Rs. 32,000
(B) Rs. 12,000
(C) Rs. 44,000
(D) Rs. 29,000

Answer: (D) Rs. 29,000

Teacher's Note:
a) Aditi paid only application money: 4,000 x Rs. 2 = Rs. 8,000.
b) Rohit paid application and allotment: 3,000 x Rs. 7 = Rs. 21,000; total forfeiture = Rs. 29,000.

(vi) Subscribed and not fully paid capital of Dharma Ltd. will be : [1 Mark]
(A) Rs. 9,00,000
(B) Rs. 8,30,000
(C) Rs. 8,56,000
(D) Nil

Answer: (D) Nil

Teacher's Note:
a) All shares with unpaid calls were forfeited, so every remaining share is fully paid.
b) Hence there is no subscribed but not fully paid capital.

PART - B

Option - I (Analysis of Financial Statements)

27. (a) The process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the various items of Balance Sheet and the Statement of Profit and Loss is called : [1 Mark]
(A) Comparative Statement Analysis
(B) Cash Flow Analysis
(C) Financial Analysis
(D) Common Size Analysis

Answer: (C) Financial Analysis

Teacher's Note:
a) Financial analysis studies relationships between items of both statements to judge strengths and weaknesses.
b) Comparative and common size analysis are only tools of financial analysis.

OR

(b) Ratios calculated to measure the ability of the business to pay the amount due to stakeholders as and when it is due are known as : [1 Mark]
(A) Solvency ratios
(B) Liquidity ratios
(C) Activity ratios
(D) Profitability ratios

Answer: (B) Liquidity ratios

Teacher's Note:
a) Liquidity ratios (current ratio, quick ratio) measure the ability to meet short-term obligations when due.
b) Solvency ratios deal with long-term obligations.

28. Which of the following transaction will affect the 'Gross Profit Ratio' of a company : [1 Mark]
(i) Revenue from operations Rs. 1,00,000
(ii) Purchased goods worth Rs. 70,000.
(iii) Goods costing Rs. 15,000 withdrawn for personal use.
(iv) Goods costing Rs. 50,000 sold for Rs. 60,000.
(A) (iv)
(B) (i) and (ii)
(C) (ii) and (iii)
(D) (i) and (iii)

Answer: (A) (iv)

Teacher's Note:
a) A sale at a profit changes both revenue from operations and gross profit, so the gross profit ratio changes.
b) This answer is as given in the official CBSE marking scheme.

29. (a) Purchase of marketable securities or short term investments are not considered for the preparation of cash flow statement because : [1 Mark]
(A) These are current assets
(B) These constitute cash equivalents
(C) These are intangible assets
(D) These are tangible assets

Answer: (B) These constitute cash equivalents

Teacher's Note:
a) Movement between cash and cash equivalents is not a cash flow.
b) Marketable securities are highly liquid, so they are treated as cash equivalents.

OR

(b) Which of the following will not amount to cash outflow from operating activities ? [1 Mark]
(A) Purchase of marketable securities
(B) Cash payment to suppliers of goods
(C) Payment of employee benefit expenses
(D) Payment of insurance premium

Answer: (A) Purchase of marketable securities

Teacher's Note:
a) Marketable securities are cash equivalents, so buying them is not a cash outflow at all.
b) Payments to suppliers, employees and for insurance are operating outflows.

30. Statement - I : In case of non-financial enterprises, receipts of interest and dividend are classified as financing activities.
Statement - II : In case of financial enterprises receipts of interest and dividend are classified as investing activities.
Choose the correct option from the following : [1 Mark]
(A) Both the Statements are true.
(B) Statement I is true and Statement II is false.
(C) Statement I is false and Statement II is true.
(D) Both the Statements are false.

Answer: (D) Both the Statements are false.

Teacher's Note:
a) For non-financial enterprises, interest and dividend received are investing activities.
b) For financial enterprises (like banks), they are operating activities, because earning interest is their main business.

31. Classify the following items under major heads and sub-heads (if any) in the Balance Sheet of the company as per Schedule-III, Part-I of the Companies Act, 2013 :
(i) Stores and Spare parts
(ii) Livestock
(iii) Public Deposits [3 Marks]

Answer:

Teacher's Note:
a) Each item carries 1 mark: half for the major head and half for the sub-head.
b) Livestock is a tangible fixed asset, so it comes under Property, Plant and Equipment.
c) Public deposits are usually taken for more than 12 months, so they are long-term borrowings.

32. From the following Balance sheets of Royal Sugar Mills Ltd. as at 31st March, 2024 and 2025, prepare a Comparative Balance Sheet : [3 Marks]

Answer:

Comparative Balance Sheet of Royal Sugar Mills Ltd. as at 31st March, 2024 and 2025

Teacher's Note:
a) Percentage change = Absolute change / Previous year figure x 100; always divide by the 2024 figure.
b) Show decreases in brackets, as for inventories (-50%).
c) Put the earlier year first in a comparative statement.

33. (a) From the following information, calculate :
(i) Current ratio and
(ii) Debt to capital employed ratio
Information (Rs.) : Total Assets 6,00,000; Non-Current Liabilities 1,40,000; Shareholders' Funds 4,20,000; Non-current Assets 5,20,000 [4 Marks]

Answer:
(i) Current Ratio = Current Assets / Current Liabilities
Current Assets = Total Assets - Non-current Assets = 6,00,000 - 5,20,000 = Rs. 80,000
Current Liabilities = Total Liabilities - Non-current Liabilities - Shareholders' Funds = 6,00,000 - 1,40,000 - 4,20,000 = Rs. 40,000
Current Ratio = 80,000 / 40,000 = 2 : 1
(ii) Debt to Capital Employed Ratio = Debt / Capital Employed
Debt = Non-current Liabilities = Rs. 1,40,000
Capital Employed = Shareholders' Funds + Non-current Liabilities = 4,20,000 + 1,40,000 = Rs. 5,60,000
Debt to Capital Employed Ratio = 1,40,000 / 5,60,000 = 1 : 4 (0.25 : 1)

Teacher's Note:
a) Total liabilities side always equals total assets (Rs. 6,00,000), which helps find current liabilities.
b) Capital employed can also be found as Non-current assets + Current assets - Current liabilities = Rs. 5,60,000.
c) Write each formula first; the formula carries half a mark.

OR

(b) From the following information, calculate :
(i) Debt-Equity Ratio and
(ii) Total Assets to Debt ratio
Information (Rs.) : Long-term borrowings 8,00,000; Other long-term liabilities 80,000; Long term provisions 1,20,000; Share capital 24,00,000; Reserves and Surplus 6,00,000; Non-current Assets 36,00,000; Current Assets 14,00,000; Current Liabilities 10,00,000 [4 Marks]

Answer:
(i) Debt-Equity Ratio = Debt / Equity
Debt = Long-term Borrowings + Long-term Provisions + Other Long-term Liabilities = 8,00,000 + 1,20,000 + 80,000 = Rs. 10,00,000
Equity = Share Capital + Reserves and Surplus = 24,00,000 + 6,00,000 = Rs. 30,00,000
Debt-Equity Ratio = 10,00,000 / 30,00,000 = 1 : 3 (0.33 : 1)
(ii) Total Assets to Debt Ratio = Total Assets / Debt
Total Assets = Non-current Assets + Current Assets = 36,00,000 + 14,00,000 = Rs. 50,00,000
Total Assets to Debt Ratio = 50,00,000 / 10,00,000 = 5 : 1

Teacher's Note:
a) Debt means long-term debt only; current liabilities are never included.
b) The marking scheme also accepts Debt as Rs. 9,20,000 (without other long-term liabilities), giving 23 : 75 and 125 : 23.
c) Do not include current liabilities in either ratio.

34. For the year ended 31st March 2025, Sona Ltd. made a profit of Rs. 4,00,000 after charging depreciation of Rs. 75,000 on fixed assets and a transfer of Rs. 1,50,000 to general reserve. Goodwill written off during the year was Rs. 80,000. The company sold machinery of the book value of Rs. 90,000 at Rs. 95,000. During the year, trade receivables increased by Rs. 40,000 and trade payables increased by Rs. 30,000. Prepaid expenses increased by Rs. 2,000 and outstanding wages decreased by Rs. 20,000.
Calculate cash flows from operating activities. [6 Marks]

Answer:

Cash Flows from Operating Activities

Working Note: Net Profit before Tax = Net Profit Rs. 4,00,000 + Transfer to General Reserve Rs. 1,50,000 = Rs. 5,50,000.

Teacher's Note:
a) Add back the transfer to general reserve, because it is an appropriation and not an expense.
b) Gain on sale of machinery (95,000 - 90,000 = Rs. 5,000) is deducted; the sale itself is an investing activity.
c) Increase in current assets and decrease in current liabilities are deducted; the opposite changes are added.

PART - B

Option - II (Computerised Accounting)

27. (a) The encryption of data facilitates : [1 Mark]
(A) Easy processing of data and keeping records.
(B) Securing the accounting reports.
(C) Generation of mnemonic codes.
(D) Codification

Answer: (D) Codification

Teacher's Note:
a) Encryption converts data into a coded form, so it facilitates codification.
b) This answer is as given in the official CBSE marking scheme.

OR

(b) How many columns exist on Excel 2006 worksheet ? [1 Mark]
(A) 2056
(B) 256
(C) 275
(D) 26

Answer: (C) 275 (as per the official CBSE marking scheme)

Teacher's Note:
a) The official CBSE marking scheme gives (C) 275 as the answer.
b) For general knowledge: Excel 2003 had 256 columns (IV), and Excel 2007 onwards has 16,384 columns (XFD).

28. Which of the following is not contained on formula tab on Excel ribbon ? [1 Mark]
(A) Defined names
(B) Page layout
(C) Function library
(D) Calculation

Answer: (B) Page layout

Teacher's Note:
a) Page Layout is a separate tab on the ribbon, not a group in the Formulas tab.
b) The Formulas tab has Function Library, Defined Names, Formula Auditing and Calculation groups.

29. What will be displayed on the screen when Excel does not recognise the text or formula ? [1 Mark]
(A) Correct a # DIV/0! Error
(B) Correct a # N/A Error
(C) Correct a # Name Error
(D) Correct a # Null! Error

Answer: (C) Correct a # Name Error

Teacher's Note:
a) #NAME? appears when Excel does not recognise text in a formula, such as a misspelt function name.
b) #DIV/0! is for division by zero and #N/A is for a value not available.

30. (a) What is the outcome of an arithmetic expression or function called ? [1 Mark]
(A) Horizontal value
(B) Derived value
(C) Basic value
(D) Vertical value

Answer: (B) Derived value

Teacher's Note:
a) A value typed directly is a basic value; a value produced by a formula or function is a derived value.
b) Derived values change automatically when the input values change.

OR

(b) What value of range look up in VLOOKUP ( ) and HLOOKUP ( ) is used for returning only exact value ? [1 Mark]
(A) False
(B) True
(C) Blank
(D) Zero

Answer: (A) False

Teacher's Note:
a) Range_lookup = FALSE returns only an exact match.
b) TRUE (or leaving it blank) returns an approximate match.

31. State any three advantages and three limitations of Computerised Accounting System. [3 Marks]

Answer:
Advantages (any three):
1. Timely generation of reports and information in the desired format.
2. Efficient record keeping.
3. Ensures effective control over the system.
4. Economy in processing of accounting data.
5. Confidentiality of data is maintained.
Limitations (any three):
1. Faster obsolescence of technology needs fresh investment in a short time.
2. Data may be lost or corrupted due to power interruption.
3. Data are prone to hacking.
4. Un-programmed and un-specified reports cannot be generated.

Teacher's Note:
a) Each point carries half a mark, so write exactly three of each.
b) Keep advantages and limitations under separate headings.

32. What are 'Radar Charts' ? What purpose do they serve ? [3 Marks]

Answer:
Meaning: A radar chart is a graphical tool in which data series or related data points are plotted on axes that start from a common centre. The data is multivariate, as three or more quantitative variables are plotted. Each data series in the chart has a unique colour or pattern.
Purpose: It is used to compare the highest and lowest values of several variables at a glance.

Teacher's Note:
a) The meaning carries 2 marks and the purpose 1 mark.
b) Use the word "multivariate" (three or more variables) in the meaning.

33. (a) Explain any two ways in which Computerized Accounting System safeguards the secrecy of business data. [4 Marks]

Answer:
1. Password Security: Only authorised persons can access the data. It ensures the integrity of data, uses an encoded (binary) format, and is a widely accepted method of security.
2. Data Audit: It gives administrator rights and prevents unauthorised access. It audits data for correction, and displays all entries with the name of the auditor or user and the date and time of any alteration.
3. Data Vault: It gives additional security to the data entered and preserves the original information. Its password cannot be broken, and some software also encrypts the data.

Teacher's Note:
a) Explain any two methods; each carries 2 marks.
b) Give the name of the method as a heading, then 3-4 short points about it.

OR

(b) Name the table which is an interactive way to quickly summaries large amounts of data. State any three reasons why this table is designed. [4 Marks]

Answer:
The table is the Pivot Table.
Reasons (any three):
1. To query large amounts of data in user-friendly ways.
2. To create custom calculations and formulas.
3. To expand and collapse levels of data to focus on results, and drill down from summaries to details.
4. To move rows to columns and columns to rows to see different summaries of the source data.
5. To filter, sort, group and conditionally format the most useful subset of data.
6. To present concise, attractive and annotated online or printed reports.

Teacher's Note:
a) Naming the Pivot Table carries 1 mark, and each reason carries 1 mark.
b) Write only three reasons, as asked.

34. Explain various options available to change the alignment of the text in the cells. [6 Marks]

Answer:
1. Text layout:
Vertical alignment - specifies the vertical position of the text in a shape (top, middle, bottom).
Text direction - specifies the orientation of the text in a shape.
2. Autofit: Resize shape to fit text - increases the size of the shape vertically so that the text fits inside it.
3. Internal margin: the distance between the text and the border of a chart element. It can be set using:
Left - distance between the left border and the text.
Right - distance between the right border and the text.
Top - distance between the top border and the text.
Bottom - distance between the bottom border and the text.
Columns - number of columns of text and the spacing between them.
Steps to change alignment in cells:
1. Select the range.
2. Click the Home tab and open the Alignment option, which shows the Format Cells dialog box with the Alignment tab.
3. Select the horizontal and vertical alignment required.
4. Use other options to show text at an angle, wrap text within a cell or merge it across cells.
5. Click OK.

Teacher's Note:
a) Cover text layout, autofit and internal margin, then give the steps; this matches the marking scheme split.
b) Mention both horizontal and vertical alignment options.

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