CBSE Class 12 Accountancy Sample Paper 2026 27 with Solutions PDF Download

Part - A

Part A :- Accounting for Partnership Firms and Companies

1. A, B and C are partners sharing profits in the ratio of 4:3:2. W.e.f. 1^st April 2026 they decided to share future profits in the ratio of 1:1:1. On the date of reconstitution, Workmen Compensation Reserve appears in the books of the firm at Rs. 27,000, and the liability on account of compensation to workmen is calculated at Rs. 36,000. Partners decided not to alter the books of accounts. What entry will be passed to effect the above-mentioned change? [1 Mark]
(A) A's Capital Dr. 1,000
    To C's capital A/c 1,000
(B) C's Capital A/c Dr. 1,000
    To A's Capital A/c 1,000
(C) Workmen Compensation Reserve A/c Dr. 27,000
    To A's Capital A/c 12,000
    To B's Capital A/c 9,000
    To C's Capital A/c 6,000
(D) Workmen Compensation Reserve A/c Dr. 27,000
Revaluation A/c Dr. 9,000
    To Workmen Compensation Claim A/c 36,000

Answer: (A) A's Capital Dr. 1,000, To C's capital A/c 1,000

Teacher's Note:
a) Net effect = Reserve Rs. 27,000 - Claim Rs. 36,000 = loss of Rs. 9,000. In the old ratio 4:3:2 it is A 4,000, B 3,000, C 2,000; in the new ratio 1:1:1 it is 3,000 each.
b) A must bear Rs. 1,000 more and C Rs. 1,000 less, so A is debited and C is credited with Rs. 1,000.
c) When books are not to be altered, pass only one adjusting entry between partners' capital accounts.

2. Aman and Suman are partners sharing profits and losses in the ratio of 3:2. Their capitals as on 1^st April 2025 were Rs. 2,00,000 and Rs. 3,00,000 respectively. After the division of Net profits of Rs. 3,00,000 for the year 2025-26 among the partners, and adjustment of drawings, their capital balances on 31^st March 2026 were: Aman Rs. 3,00,000 Suman Rs. 4,00,000. The accountant omitted to charge interest on drawings. If the firm wants to charge interest on drawings @10% p.a. Interest on Aman's drawings would be: [1 Mark]
(A) Rs. 4,000
(B) Rs. 8,000
(C) Rs. 40,000
(D) Rs. 80,000

Answer: (A) Rs. 4,000

Teacher's Note:
a) Aman's drawings = Opening capital 2,00,000 + Profit share 1,80,000 - Closing capital 3,00,000 = Rs. 80,000.
b) Drawing dates are not given, so interest is charged for an average period of 6 months: 80,000 x 10% x 6/12 = Rs. 4,000.

3. Assertion (A): Issue price more than face value received on issue of shares is credited to securities premium account but not to statement of profit and loss.
Reason (R): In case of forfeiture of shares, securities premium not received is debited. [1 Mark]
(A) Both (A) and (R) are true and (R) is correct explanation to (A).
(B) Both (A) and (R) are true but (R) is not correct explanation of (A).
(C) (A) is false but (R) is correct.
(D) (A) is correct but (R) is false.

Answer: (B) Both (A) and (R) are true but (R) is not correct explanation of (A).

Teacher's Note:
a) Securities premium is a capital receipt, so it goes to Securities Premium A/c and not to the Statement of Profit and Loss.
b) The Reason is a separate true rule about forfeiture; it does not explain why premium is a capital receipt.

4. A Ltd. invited applications for 50,000 shares of Rs. 10 each at par. Applications were received for 80,000 shares. Shares were allotted on a pro-rata basis to applicants of 60,000 shares.
If application money was Rs. 3 per share and allotment money was Rs. 4 per share, how much amount will be received on allotment from an applicant who applied for 6,000 shares? [1 Mark]
(A) Rs. 20,000
(B) Rs. 24,000
(C) Rs. 21,000
(D) Rs. 17,000

Answer: (D) Rs. 17,000

Teacher's Note:
a) Pro-rata ratio = 60,000 : 50,000 = 6 : 5, so the applicant for 6,000 shares gets 5,000 shares.
b) Excess application money = (6,000 - 5,000) x Rs. 3 = Rs. 3,000, adjusted towards allotment.
c) Amount received on allotment = 5,000 x Rs. 4 - 3,000 = Rs. 17,000.

5. R and S are partners sharing profits and losses in the ratio of 3:2. Their capitals are Rs. 3,00,000 and Rs. 1,00,000 respectively.
On 1^st January 2026, the firm granted loans of Rs. 24,000 to R and Rs. 6,000 to S at 10% p.a.
The loss before charging interest for the year ended 31^st March 2026 was Rs. 2,650.
Calculate the share of loss to be borne by each partner after accounting for interest on loans. [1 Mark]
(A) Share of loss R Rs. 2,040, and S Rs. 1,360
(B) Share of loss R Rs. 3,390, and S Rs. 2,260
(C) Share of loss R Rs. 1,590, and S Rs. 1,060
(D) Share of loss R Rs. 1,140, and S Rs. 760

Answer: (D) Share of loss R Rs. 1,140, and S Rs. 760

Teacher's Note:
a) The loans are given by the firm to the partners, so interest is an income of the firm: R 24,000 x 10% x 3/12 = 600 and S 6,000 x 10% x 3/12 = 150.
b) Loss = 2,650 - 750 = Rs. 1,900, shared 3:2 as R Rs. 1,140 and S Rs. 760.

6. A, B and C were partners sharing profits and losses in the ratio of 5:3:2. A died on 1^st October 2025. The loss till the date of death was calculated at Rs. 75,000. Goodwill is to be valued at two years' purchase of the average profits of the last three years. The profits for the last three years were Rs. 3,28,000; Rs. 3,46,000; and Rs. 4,00,000.
Calculate the amount payable by B and C to A's executor towards goodwill. [1 Mark]
(A) Rs. 1,79,000 and Rs. 1,79,000
(B) Rs. 2,14,800 and Rs. 1,43,200
(C) Rs. 4,29,600 and Rs. 2,86,400
(D) Rs. 2,23,750 and Rs. 1,34,250

Answer: (B) Rs. 2,14,800 and Rs. 1,43,200

Teacher's Note:
a) Average profit = 10,74,000 / 3 = Rs. 3,58,000; Goodwill = 3,58,000 x 2 = Rs. 7,16,000.
b) A's share = 7,16,000 x 5/10 = Rs. 3,58,000, borne by B and C in the gaining ratio 3:2.
c) The loss till the date of death does not affect the goodwill calculation here.

7. X, Y, and Z are partners in a firm sharing profits and losses in the ratio 4:3:3. Z is guaranteed a minimum profit of Rs. 50,000 per annum, the deficiency, if any, is to be borne by X and Y equally. The firm's profit for the year ended 31^st March 2026 is Rs. 40,000. The amount of deficiency to be borne by X and Y respectively will be: [1 Mark]
(A) X Rs. 25,000 & Y Rs. 25,000
(B) X Rs. 21,714 & Y Rs. 16,286
(C) X Rs. 19,000 & Y Rs. 19,000
(D) X Rs. 5,000 & Y Rs. 5,000

Answer: (C) X Rs. 19,000 & Y Rs. 19,000

Teacher's Note:
a) Z's actual share = 40,000 x 3/10 = Rs. 12,000, so deficiency = 50,000 - 12,000 = Rs. 38,000.
b) The deficiency is borne equally as agreed, so X and Y bear Rs. 19,000 each.

8. L and M were partners sharing profits in the ratio of 5:3. They admitted N as a new partner and on the date of admission, firm had Investments of Rs. 3,00,000 and Investment Fluctuation Reserve of Rs. 40,000. On the same date;
• M took over 40% of investments at Rs. 1,10,000.
• The remaining investments were revalued at Rs. 1,50,000.
Identify the effect on the Revaluation Account. [1 Mark]
(A) Credited Rs. 10,000
(B) Debited Rs. 10,000
(C) Credited Rs. 5,000
(D) No effect on revaluation A/c

Answer: (D) No effect on revaluation A/c

Teacher's Note:
a) Fall in value: 40% part (1,20,000 taken at 1,10,000) = Rs. 10,000; remaining part (1,80,000 revalued at 1,50,000) = Rs. 30,000.
b) Total fall of Rs. 40,000 is fully met from the Investment Fluctuation Reserve of Rs. 40,000, so nothing goes to the Revaluation A/c.

9. Ravinder and Savita were partners sharing profits in the ratio of 3:2. Kavita was admitted for 1/5th share in profits and she brought Rs. 3,00,000, including Rs. 30,000 towards goodwill.
After adjusting for goodwill, revaluation of assets and liabilities, and reserves, calculate Savita's adjusted capital on the basis of Kavita's capital and profit-sharing ratio. [1 Mark]
(A) Rs. 4,32,000
(B) Rs. 5,00,000
(C) Rs. 3,00,000
(D) Rs. 6,00,000

Answer: (A) Rs. 4,32,000

Teacher's Note:
a) Kavita's capital = 3,00,000 - 30,000 = Rs. 2,70,000 for 1/5 share, so total capital = Rs. 13,50,000.
b) New ratio = 12:8:5; Savita's share = 8/25, so her capital = 13,50,000 x 8/25 = Rs. 4,32,000.

10. Machinery was appearing in the books at Rs. 12,00,000. It was found to be undervalued by 20%. At what amount the machinery will be shown in the Balance Sheet of the reconstituted firm? [1 Mark]
(A) Rs. 14,00,000
(B) Rs. 15,00,000
(C) Rs. 12,00,000
(D) Rs. 16,00,000

Answer: (B) Rs. 15,00,000

Teacher's Note:
a) Undervalued by 20% means the book value is 80% of the true value.
b) True value = 12,00,000 x 100/80 = Rs. 15,00,000. A common mistake is to add 20% of book value (Rs. 14,40,000).

11. Tanya Ltd. issued 1,00,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share. The amount was payable as follows: Rs. 4 on Application (including Rs. 1 premium) Rs. 5 on Allotment (including Rs. 1 premium) and Rs. 3 on Call. Applications were received for 95,000 shares, which were duly allotted. Ravi, holding 3,000 shares, failed to pay the allotment, so his shares were forfeited just after allotment. Later, 2,000 of these shares were reissued at Rs. 9 per share as fully paid up. What amount will be transferred to Capital Reserve? [1 Mark]
(A) Rs. 4,000
(B) Rs. 7,000
(C) Rs. 10,000
(D) Rs. 6,000

Answer: (A) Rs. 4,000

Teacher's Note:
a) Amount forfeited = capital part of application money = Rs. 3 per share (premium received is not forfeited).
b) On 2,000 reissued shares: forfeiture 2,000 x 3 = 6,000; discount on reissue 2,000 x 1 = 2,000; Capital Reserve = Rs. 4,000.

12. Aarav Ltd. acquired the business of Mehul Ltd. as per the following agreement:
• Assets of Rs. 20,00,000 were taken over at Rs. 18,00,000
• Liabilities of Rs. 2,80,000 were taken over at Rs. 2,50,000
The purchase consideration was discharged by:
• Issuing 12,000 equity shares of Rs. 100 each at a premium of 25%
• Rs. 1,00,000 through bank draft.
The amount of Goodwill/ Capital Reserve arising on acquisition will be: [1 Mark]
(A) Goodwill Rs. 50,000
(B) Capital Reserve Rs. 50,000
(C) Goodwill Rs. 1,50,000
(D) Capital Reserve Rs. 1,50,000

Answer: (A) Goodwill Rs. 50,000

Teacher's Note:
a) Net assets taken over = 18,00,000 - 2,50,000 = Rs. 15,50,000 (use agreed values, not book values).
b) Purchase consideration = 12,000 x Rs. 125 + 1,00,000 = Rs. 16,00,000, which is Rs. 50,000 more than net assets, so it is Goodwill.

13. Choose the correct sequence of events in case of retirement of a partner.
(i) Preparation of revaluation A/c.
(ii) Transfer of amount due to retiring partner to retiring partner's loan A/c.
(iii) Preparation of capital A/c to calculate amount due to retiring partner.
(iv) Treatment of goodwill. [1 Mark]
(A) (iv), (i), (ii), (iii)
(B) (i), (iv), (iii), (ii)
(C) (iii), (ii), (i), (iv)
(D) (ii), (iv), (i), (iii)

Answer: (B) (i), (iv), (iii), (ii)

Teacher's Note:
a) Revaluation and goodwill adjustments come first, as they change the capital balances.
b) Only after the capital account is prepared can the final amount due be transferred to the loan account.

14. A, B, and C are partners sharing profits in the ratio of 5:3:2. On dissolution, a creditor of Rs. 40,000 accepts Rs. 30,000 in full settlement. Another creditor of Rs. 15,000 is paid in full. What amount will be transferred to the Realisation Account to close the creditors A/c? [1 Mark]
(A) Rs. 55,000
(B) Rs. 45,000
(C) Rs. 70,000
(D) Rs. 40,000

Answer: (A) Rs. 55,000

Teacher's Note:
a) Creditors are transferred to the Realisation A/c at their book value: 40,000 + 15,000 = Rs. 55,000.
b) The amount actually paid (Rs. 45,000) is recorded separately on the debit side of the Realisation A/c.

15. Ritika Ltd. issued 1,000 equity shares of Rs. 80 each at a premium of Rs. 10 per share. Application and allotment money of Rs. 50 (including Rs. 6 premium) per share was called, and the entire amount was duly received.
What will be amount reflecting in the Subscribed but not fully paid-up capital: [1 Mark]
(A) Rs. 50,000
(B) Rs. 44,000
(C) Rs. 56,000
(D) NIL

Answer: (B) Rs. 44,000

Teacher's Note:
a) Capital called per share = 50 - 6 (premium) = Rs. 44, so 1,000 x 44 = Rs. 44,000.
b) Premium is never shown under Share Capital; it goes to Reserves and Surplus.

16. Which of the following items is not transferred to the Realisation Account at the time of dissolution of a firm?
A. Goodwill appearing in the books.
B. Employees Provident Fund
C. Provision for doubtful debts
D. General reserve
E. Debit Bank Balance [1 Mark]
(A) D only
(B) A, B and C
(C) D and E
(D) B, D and E

Answer: (C) D and E

Teacher's Note:
a) General reserve is transferred to partners' capital accounts in the profit sharing ratio.
b) Cash and bank balances are not transferred; all other assets and outside liabilities go to the Realisation A/c.

17 A. Amit, Akash and Ayush decided to dissolve their firm. Pass necessary journal entries for the following transactions after transferring all assets (except Cash and Bank) and outside liabilities to the Realisation Account:
I. Debtors amounted to Rs. 82,000. Provision for Doubtful Debts was Rs. 6,000. Debtors of Rs. 12,000 went bad. The remaining debtors were taken over by a debt collection agency at 80% of book value.
II. Amit agreed to pay his wife's loan of Rs. 20,000 in settlement of loan of Rs. 25,000 given to Amit.
III. Creditors amounted to Rs. 40,000 were payable after three months. Creditors worth Rs. 10,000 were given furniture costing Rs. 8,000 in full settlement. The remaining creditors allowed a discount of 10% irrespective of the time period. [3 Marks]

Answer:

Teacher's Note:
a) Debtors and the provision are already in the Realisation A/c, so only the cash actually realised (Rs. 56,000) is recorded.
b) No entry is passed for creditors settled by giving furniture, because both are already in the Realisation A/c.
c) Remaining creditors Rs. 30,000 less 10% discount = Rs. 27,000 paid in cash.

OR

17 B. L, B and P are partners. They decided to dissolve the firm.
In each of the following situations identify the incidence (borne by) of expenditure of dissolution and the paying identity (paid by) related to dissolution expenses of a firm: [3 Marks]

Answer:
Case I: Expenses are borne by the firm and paid by partner L.
Case II: Expenses are borne by partner L and paid by partner P.
Case III: Expenses are borne by partner P and paid by the firm.

Teacher's Note:
a) The account debited shows who bears the expense (incidence); the account credited shows who pays it.
b) Realisation A/c debited means the firm bears it; Cash A/c credited means the firm pays it.

18. B, C and D are partners sharing profits in the ratio of 1:1:1. As per the partnership deed salary is allowed to the partners as follows:
• B is entitled to a salary of Rs. 2,000 per month.
• C is entitled to salary of Rs. 16,000 p.a.
• D is entitled to a salary of Rs. 4,000 per quarter.
Amit, an employee of the firm was entitled to a salary of Rs. 5,000 on half yearly basis which was omitted to be provided.
Calculate the amount of profits to be given to each partner by way of appropriation in each of the following cases, when the profit/loss before the above adjustments is:
Case 1. Profit of Rs. 72,000
Case 2. Profit of Rs. 45,000
Case 3. Loss of Rs. 20,000 [3 Marks]

Answer:
Annual salaries: B = 2,000 x 12 = Rs. 24,000; C = Rs. 16,000; D = 4,000 x 4 = Rs. 16,000. Total = Rs. 56,000.
Employee's salary (charge against profit) = 5,000 x 2 = Rs. 10,000.
Case 1: Net profit = 72,000 - 10,000 = Rs. 62,000. This is more than total salary of Rs. 56,000. Remaining profit = 62,000 - 56,000 = Rs. 6,000, shared equally = Rs. 2,000 each. So B gets 24,000 + 2,000 = Rs. 26,000; C gets 16,000 + 2,000 = Rs. 18,000; D gets 16,000 + 2,000 = Rs. 18,000.
Case 2: Net profit = 45,000 - 10,000 = Rs. 35,000, which is less than total salary of Rs. 56,000. The profit is divided in the ratio of salaries 24,000 : 16,000 : 16,000 = 3:2:2. B = 35,000 x 3/7 = Rs. 15,000; C = 35,000 x 2/7 = Rs. 10,000; D = 35,000 x 2/7 = Rs. 10,000.
Case 3: Net loss = 20,000 + 10,000 = Rs. 30,000. No salary is allowed in case of loss. The loss is shared equally: Rs. 10,000 each for B, C and D.

Teacher's Note:
a) Employee's salary is a charge against profit, so deduct it first before any appropriation.
b) When profit is less than total appropriations, divide the available profit in the ratio of the appropriations.
c) Partners' salary is an appropriation, so it is never allowed when there is a loss.

19. Drum Ltd. decided to expand its operations by acquiring the business of Crane Ltd. and agreed to take over assets worth Rs. 6,00,000 and liabilities worth Rs. 40,000 at an agreed purchase consideration of Rs. 6,30,000
The purchase consideration was discharged by issuing 10% Debentures of Rs. 100 each at 10% discount to Crane Ltd.
On the basis of above information:
I. Calculate the number of debentures issued to discharge the purchase consideration.
II. Pass necessary journal entries in the books of Drum Ltd. [3 Marks]

Answer:
I. Number of debentures = Purchase Consideration / Issue Price = 6,30,000 / 90 = 7,000 debentures.
II. Journal entries in the books of Drum Ltd.:

Teacher's Note:
a) Divide the purchase consideration by the issue price (Rs. 90), not by the face value (Rs. 100).
b) Net assets = 6,00,000 - 40,000 = Rs. 5,60,000; purchase consideration Rs. 6,30,000 is higher, so Goodwill = Rs. 70,000.
c) Debentures are credited at face value (7,000 x 100 = Rs. 7,00,000) and the discount of Rs. 70,000 is debited.

20. Calculate goodwill of the firm on the basis of 3 years' purchase of the average profits of the last five years which were as follows:
Year | Amount (Rs.)
31^st March 2022 | (1,00,000)
31^st March 2023 | 30,00,000
31^st March 2024 | 16,00,000
31^st March 2025 | 17,50,000
31^st March 2026 | 18,50,000
Additional Information:
(i) On 1^st January 2025, a fire broke out which resulted into a loss of goods of Rs. 3,00,000. A claim of Rs. 70,000 was received from the insurance company.
(ii) During the year ended 31^st March 2026, the firm realised Rs. 80,000 from sale of scrapped machinery.
(iii) For the year ending 31^st March 2026, wages of Rs. 50,000 were debited twice inadvertently by the accountant of the firm. [3 Marks]

Answer:

Average Profit = 83,00,000 / 5 = Rs. 16,60,000
Goodwill = Average Profit x 3 years = 16,60,000 x 3 = Rs. 49,80,000

Teacher's Note:
a) Abnormal loss (fire loss Rs. 3,00,000) is added back and the insurance claim (Rs. 70,000) is deducted to get normal profit.
b) Abnormal gain from sale of scrapped machinery (Rs. 80,000) is deducted, and wages debited twice (Rs. 50,000) are added back.
c) Keep the loss of 2022 in brackets and subtract it while totalling.

21. XYZ Ltd. was registered with an authorised capital of Rs. 80,00,000 divided into 8,00,000 equity shares of Rs. 10 each. The company offered 1,00,000 shares for public subscription at Rs. 2 premium. Share was payable as Rs. 3 on application (including Rs. 1 premium), Rs. 6 (including balance premium) on allotment and balance on call. Public had applied for 1,25,000 shares out of which applications for 5,000 shares were rejected and remaining were allotted on pro-rata basis.
All the money has been duly received except allotment and call money on 10,000 shares held by Raja. His shares were forfeited.
Show the Share Capital head as it would appear in the balance sheet and also prepare Notes to Accounts for the same. [4 Marks]

Answer:

Working Note (Share Forfeited):
Pro-rata ratio = 1,20,000 : 1,00,000 = 6 : 5, so Raja applied for 12,000 shares.
Excess application money of Raja = 2,000 x Rs. 3 = Rs. 6,000, adjusted towards allotment.
Amount forfeited = application money on capital (10,000 x Rs. 2 = 20,000) + excess adjusted (6,000) = Rs. 26,000.

Teacher's Note:
a) Only 90,000 shares remain subscribed and fully paid; forfeited shares are shown separately as "Add: Forfeited Shares".
b) Premium received is not forfeited; only the amount received towards capital (including excess adjusted) goes to Share Forfeiture.
c) Rejected applications (5,000 shares) do not affect share capital, as the money is refunded.

22 A. S, D and A are partners, sharing profits in the ratio of 5 : 2 : 3. Their fixed capitals are:
S - Rs. 1,00,000
D - Rs. 50,000
A - Rs. 50,000
As per the partnership deed, S is entitled to a commission of 10% of net profit after charging such commission.
However, while preparing the accounts for the year ended 31^st March 2026, this commission was not provided. The net profit of the firm was Rs. 1,10,000.
On the basis of above information:
I. Calculate the correct amount of commission payable to S.
II. Pass the necessary journal entry that the accountant would have passed for distribution of profits without providing commission to S.
III. Pass the necessary adjusting journal entry at the beginning of the next year to rectify the above-mentioned error. [4 Marks]

Answer:
I. S's Commission = 1,10,000 x 10/110 = Rs. 10,000
II. Entry passed by the accountant:

III. Table showing adjustment:

Teacher's Note:
a) Commission "after charging such commission" = Profit x Rate / (100 + Rate).
b) Capitals are fixed, so all adjustments go through partners' Current Accounts, not Capital Accounts.
c) Always prepare the adjustment table; the net effect column gives the single adjusting entry.

OR

22 B. Alpha, Beta and Delta were partners. On 31^st August 2023, Delta died and after all the adjustments an amount of Rs. 3,22,000 was payable to his executors. It was agreed to pay Rs. 22,000 immediately and balance in 3 equal instalments together with interest @10%p.a. on 31^st March 2024, 31^st March 2025 and 31^st March 2026,
Prepare Delta's Executors account till it is finally paid off. [4 Marks]

Answer:

Teacher's Note:
a) Balance after the immediate payment = 3,22,000 - 22,000 = Rs. 3,00,000, so each instalment is Rs. 1,00,000.
b) Interest for the first year is only for 7 months (1 September 2023 to 31 March 2024) = Rs. 17,500.
c) Later interest is on the reducing balance: Rs. 20,000 on 2,00,000 and Rs. 10,000 on 1,00,000.

23. I. Pass necessary journal entries for 'Issue of Debentures' in the following cases:
a) Arman Ltd. issued 750, 12% Debentures of Rs. 100 each at a discount of 10% redeemable at a premium of 5%
b) Sohan Ltd. issued 800, 9% Debentures of Rs. 100 each at a premium of 20 per debenture redeemable at a premium of Rs. 10 per Debenture.
II. X Ltd. obtained a loan of Rs. 4,00,000 from "The Development Bank". The company issued 5,000; 9%. Debentures of Rs. 100 each as a collateral security for the same. As per the policy the company effects these transactions through journal. Show journal entries and prepare the extract of balance sheet. [6 Marks]

Answer:
I. Journal entries:

II. Journal entries in the books of X Ltd.:

Teacher's Note:
a) In (a), the discount (Rs. 7,500) and premium on redemption (Rs. 3,750) together are the total loss of Rs. 11,250 on issue.
b) In (b), the securities premium on issue (Rs. 16,000) is a gain, while the premium payable on redemption (Rs. 8,000) is debited to Loss on Issue of Debentures A/c.
c) Collateral debentures recorded through a journal entry are cancelled by Debenture Suspense A/c in the notes, so only the bank loan of Rs. 4,00,000 is shown.

24. A, B and C are partners sharing profits and losses in the ratio of 4:3:3.
They decided to change their profit-sharing ratio to 3:2:5 with effect from 1^st April 2026. [6 Marks]

Additional Information:
1. Goodwill of the firm is valued at Rs. 1,50,000.
2. Land & Building is revalued at Rs. 4,50,000.
3. A provision for doubtful debts @5% is to be created on debtors.
4. An unrecorded liability of Rs. 20,000 is discovered.
Based on the above information answer the following MCQs:

I. The net sacrifice made by partners (in terms of share of profit) is: [1 Mark]
A) A sacrifices 1/10 and B sacrifices 1/10; C gains 1/5
B) A gains 1/10; B gains 1/10; C sacrifices 1/10
C) A sacrifices 1/10; B gains 1/10; C gains 1/5
D) A gains 1/10, B gains 1/10; C sacrifices 1/5

Answer: A) A sacrifices 1/10 and B sacrifices 1/10; C gains 1/5

Teacher's Note:
a) Sacrifice/gain = Old share - New share: A 4/10 - 3/10 = 1/10 sacrifice; B 3/10 - 2/10 = 1/10 sacrifice.
b) C: 3/10 - 5/10 = -2/10, i.e. a gain of 1/5.

II. Which of the following journal entries is correct for treatment of goodwill? [1 Mark]
(A) A's Capital A/c Dr.
    To C's Capital A/c
(B) A's Capital A/c Dr.
B's Capital A/c Dr.
    To C's Capital A/c
(C) C's Capital A/c Dr.
    To A's Capital A/c
    To B's Capital A/c
(D) C's Capital A/c Dr.
A's Capital A/c Dr.
    To Goodwill A/c

Answer: (C) C's Capital A/c Dr., To A's Capital A/c, To B's Capital A/c

Teacher's Note:
a) The gaining partner (C) compensates the sacrificing partners (A and B) in their sacrificing ratio 1:1.
b) Goodwill A/c is not raised; the adjustment is made only through capital accounts.

III. The amount of goodwill to be compensated by gaining partner(s) is: [1 Mark]
(A) Rs. 45,000
(B) Rs. 30,000
(C) Rs. 75,000
(D) Rs. 1,50,000

Answer: (B) Rs. 30,000

Teacher's Note:
a) C's gain = 1/5, so compensation = 1,50,000 x 1/5 = Rs. 30,000.
b) A and B each get Rs. 15,000 (1,50,000 x 1/10).

IV. The net gain on revaluation will be: [1 Mark]
(A) Rs. 25,000
(B) Rs. 20,000
(C) Rs. 5,000
(D) Rs. 30,000

Answer: (A) Rs. 25,000

Teacher's Note:
a) Gain on Land & Building = 4,50,000 - 4,00,000 = Rs. 50,000.
b) Losses: provision for doubtful debts 5% of 1,00,000 = Rs. 5,000 and unrecorded liability Rs. 20,000; net gain = 50,000 - 25,000 = Rs. 25,000.

V. General Reserve and Profit & Loss Account will be distributed in: [1 Mark]
(A) New ratio
(B) Gaining ratio
(C) Old ratio
(D) Sacrificing ratio

Answer: (C) Old ratio

Teacher's Note:
a) Accumulated profits and reserves were earned under the old ratio, so they belong to partners in the old ratio 4:3:3.
b) The same rule applies to the profit or loss on revaluation.

VI. After all adjustments, the balance of C's capital will be? [1 Mark]
(A) Rs. 2,22,500
(B) Rs. 2,35,000
(C) Rs. 3,00,000
(D) Rs. 3,50,000

Answer: (A) Rs. 2,22,500

Teacher's Note:
a) C's capital = 2,00,000 + General Reserve 27,000 + P&L 18,000 + Revaluation gain 7,500 - Goodwill 30,000.
b) This gives Rs. 2,22,500; remember that C pays for goodwill, so it is deducted.

25 A. X and Y were partners sharing profits in the ratio of 1: 2. Their Balance Sheet as at 31^st March 2026 was as follows: [6 Marks]

They agreed to admit Z for 1/4 share on 1^st April 2026 on the following terms:
i. Goodwill of the firm was valued at Rs. 60,000 and Z was to bring in a new and updated machinery costing Rs. 5,000 as a part payment against his share of premium for goodwill and the furniture for the balance of his share of goodwill premium.
ii. Rs. 10,000 were receivable from a debtor who was declared insolvent, only 50% of the amount could be recovered in cash by selling his assets.
iii. Provision for doubtful debts to be raised to 10% of the value of revised debtors.
iv. Patents were valueless.
v. Stock was found to be overvalued by 20%.
vi. Rs. 3,500 be provided for an unforeseen liability.
vii. Z to bring in capital equal to 1/4^th of the combined capital of X and Y after all adjustments.
Pass required journal entries on the admission of Z and also prepare Balance Sheet of the reconstituted firm.

Answer:

Working Notes:
Adjusted capital of X = 1,50,000 + 5,000 + 2,000 - 12,000 - 1,000 = Rs. 1,44,000
Adjusted capital of Y = 3,00,000 + 10,000 + 4,000 - 24,000 - 2,000 = Rs. 2,88,000
Z's capital = 1/4 x (1,44,000 + 2,88,000) = Rs. 1,08,000
Stock overvalued by 20%: true value = 1,20,000 x 100/120 = Rs. 1,00,000, so decrease = Rs. 20,000
New provision = 10% of revised debtors (40,000 - 10,000 = 30,000) = Rs. 3,000

Teacher's Note:
a) Z's share of goodwill = 60,000 x 1/4 = Rs. 15,000, brought in kind (machinery 5,000 + furniture 10,000) and shared by X and Y in the sacrificing ratio 1:2.
b) Bad debt of Rs. 5,000 is first set off against the old provision of Rs. 500; only Rs. 4,500 goes to the Revaluation A/c.
c) Total revaluation loss = 4,500 + 3,000 + 5,000 + 20,000 + 3,500 = Rs. 36,000; check that both sides of the new Balance Sheet total Rs. 5,77,500.

OR

25 B. A, B and C were partners in a firm sharing profits in 2:2:1 ratio. On 31.3.2026, C retires from the firm. On the date of C's retirement, the Balance Sheet of the firm was as follows: [6 Marks]

On C's retirement the goodwill of the firm was valued at Rs. 45,000.
After retirement the accountants of the firm worked out the following balance sheet, but they misplaced the papers on which Revaluation A/c and Partners' Capital were worked out.

On the basis of above information, you are required to help the accountants of the firm in preparing Revaluation A/c, and Partners Capital Accounts of the reconstituted firm.

Answer:

Teacher's Note:
a) Compare the two Balance Sheets item by item: Legal Claim +2,400 and Stock -1,800 are losses; provision -200, Furniture +2,000 and Premises +9,000 are gains; net gain Rs. 7,000.
b) Only Rs. 5,000 of General Reserve is distributed; C's 1/5 share of the Rs. 5,000 retained (Rs. 1,000) is paid by A and B, Rs. 500 each. C's share of goodwill (45,000 x 1/5 = 9,000) is paid by A and B in the gaining ratio 1:1.
c) Bank paid to C = 45,000 - 34,600 = Rs. 10,400, and the balance of Rs. 40,000 goes to C's Loan A/c.

26 A. Lacchoo Ltd. invited applications for 1,20,000 equity shares of Rs. 10 each at a premium of Rs. 4 per share, payable as -
Rs. 6 on Application (including Rs. 2 premium)
Rs. 5 on Allotment (including Rs. 1 premium)
Balance on First & Final Call.
Applications were received for 2,70,000 shares, out of which applications for 10,000 shares were rejected and the allotment was made on a pro-rata basis to the remaining applicants.
Mr. Parivesh, who was allotted 1,200 shares, failed to pay call money. His shares were forfeited after due notice. Later, these shares were reissued at Rs. 100 per share as fully paid-up.
Pass necessary Journal Entries in the books of Lacchoo Ltd. [6 Marks]

Answer:

Working Note:
Refund = rejected 10,000 x 6 = 60,000 + excess from pro-rata applicants (2,60,000 x 6 - 1,20,000 x 6 - 6,00,000 adjusted to allotment) 2,40,000 = Rs. 3,00,000.
First call = 14 - 6 - 5 = Rs. 3 per share (Rs. 2 capital + Rs. 1 premium).

Teacher's Note:
a) Excess application money covers the full allotment money (Rs. 6,00,000), so no cash is received on allotment.
b) On forfeiture, the unpaid premium on call (1,200 x Re. 1 = Rs. 1,200) is debited to Securities Premium A/c; amount forfeited = 1,200 x Rs. 8 = Rs. 9,600.
c) Reissue above face value creates premium (Rs. 90 per share), and the whole forfeited amount goes to Capital Reserve.

OR

26 B. Neha Tech Ltd. has authorised capital of Rs. 20,00,000 divided into shares of face value of Rs. 10 each. Company decided to issue 1,00,000 equity shares at a value of Rs. 100 each. The entire face value was payable on application and the entire premium money was payable on allotment.
Applications were received for 1,50,000 shares.
Allotment was made on the following basis:
(i) Applicants of 10,000 shares were sent letters of regret.
(ii) To applicants for another 10,000 shares - Shares were fully allotted
(iii) Remaining applicants were allotted shares on a pro rata basis.
A shareholder who was allotted 18,000 shares belongs to category (iii), failed to pay allotment money and his shares were duly forfeited. Later on, 5,000 shares were reissued as fully paid on a premium of 200%.
You are required to give:
I. Cash Book, Share Capital A/c and Securities Premium A/c.
II. Journal entries for forfeiture and re-issue of shares. [6 Marks]

Answer:
I. Cash Book, Share Capital A/c and Securities Premium A/c:

II. Journal entries:

Working Notes:
Category (iii): 1,30,000 applicants get 90,000 shares, ratio 13 : 9. Excess application money = 40,000 x 10 = Rs. 4,00,000, adjusted towards allotment.
Defaulting shareholder: applied for 26,000 shares; excess 8,000 x 10 = Rs. 80,000 adjusted; unpaid allotment = 18,000 x 90 - 80,000 = Rs. 15,40,000.
Allotment received = 90,00,000 - 4,00,000 - 15,40,000 = Rs. 70,60,000.
Reissue: premium 200% of Rs. 10 = Rs. 20, so 5,000 x Rs. 30 = Rs. 1,50,000.

Teacher's Note:
a) Here the whole face value is received on application, so the unpaid allotment is entirely premium; only the unpaid premium (Rs. 15,40,000) is debited to Securities Premium A/c.
b) Amount forfeited = 18,000 x Rs. 10 = Rs. 1,80,000; for the 5,000 reissued shares it is Rs. 50,000, transferred in full to Capital Reserve as there is no discount.
c) Premium of 200% is calculated on the face value (Rs. 10), not on the issue price.

Part B :- Analysis of Financial Statements

(Option - I)

27. A company had the following balances in their books of accounts:
Particulars | 31^st March, 2026 (Rs.) | 31^st March, 2025 (Rs.)
Work in Progress | 1,00,000 | 90,000
Finished Goods | 80,000 | 1,10,000
Stock in Trade | 90,000 | 80,000
Raw Material | 20,000 | 10,000
What will be the amount of Cost of Materials Consumed if purchases of raw materials amounted to Rs. 1,60,000 and purchase of stock-in-trade amounted to Rs. 2,00,000? [1 Mark]
(A) Rs. 1,90,000
(B) Rs. 3,40,000
(C) Rs. 1,50,000
(D) Rs. 3,50,000

Answer: (C) Rs. 1,50,000

Teacher's Note:
a) Cost of Materials Consumed = Opening raw material + Purchases of raw material - Closing raw material = 10,000 + 1,60,000 - 20,000 = Rs. 1,50,000.
b) Stock-in-trade, WIP and finished goods are not part of materials consumed; they are used for other expense heads.

28. Assertion (A): Current Ratio can never be less than Liquid ratio.
Reason (R): Current Ratio includes all current assets, including inventory and prepaid expenses. [1 Mark]
(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 incorrect
(D) A is incorrect but R is correct

Answer: (A) Both A and R are correct, and R is the correct explanation of A

Teacher's Note:
a) Both ratios have the same denominator (current liabilities).
b) Current assets include inventory and prepaid expenses in addition to liquid assets, so the current ratio can never be lower than the liquid ratio.

29. Vivek Consultancy Private Limited purchased furniture for Rs. 20,00,000 paying 60% by issue of equity shares of Rs. 10 each and the balance by a cheque. This transaction will result in: [1 Mark]
(A) Cash used in Investing activities Rs. 20,00,000 and Cash generated from financing activities Rs. 12,00,000.
(B) Cash used in investing activities Rs. 8,00,000.
(C) Cash used in investing activities Rs. 20,00,000.
(D) Cash generated from financing activities Rs. 12,00,000.

Answer: (B) Cash used in investing activities Rs. 8,00,000.

Teacher's Note:
a) Issue of shares for furniture (Rs. 12,00,000) is a non-cash transaction and is not shown in the Cash Flow Statement.
b) Only the cheque payment of 40% (Rs. 8,00,000) is a cash outflow under investing activities.

30. Which of the following is not a cash flow from investing activities? [1 Mark]
(A) Sale of 2,500 shares (held as investment) for Rs. 15 each
(B) Purchase of equipment for Rs. 500 cash
(C) Purchase of marketable securities for Rs. 25,000 cash
(D) Sale of land for Rs. 28,000 cash

Answer: (C) Purchase of marketable securities for Rs. 25,000 cash

Teacher's Note:
a) Marketable securities are cash equivalents, so buying them is only a change within cash and cash equivalents.
b) Sale of investments, purchase of equipment and sale of land are all investing activities.

31 A. Prepare a Comparative Statement of Profit and Loss of Uttu Machineries Ltd. for the year ended 31^st March 2026 from the following information:
PARTICULARS | 31^st March 2026 (Rs.) | 31^st March 2025 (Rs.)
Revenue From Operations | 40,00,000 | 20,00,000
Cost of Revenue from Operations | 4,00,000 | 2,00,000
Wages | 6,00,000 | 4,00,000
Interest paid | 1,00,000 | 1,00,000
Tax Rate | 50% | 50% [3 Marks]

Answer:

Teacher's Note:
a) % Change = Absolute change / Previous year amount x 100; always use 2025 as the base.
b) Every expense given in the question, including wages, must be shown under Expenses before finding profit before tax.
c) The marking scheme leaves out wages and shows Total Expenses 3,00,000 / 5,00,000, Profit before Tax 17,00,000 / 35,00,000 and Profit after Tax 8,50,000 / 17,50,000 (change 105.88%).

OR

31 B. Prepare Common Size Statement of Profit and Loss for the year ended March 31, 2026
PARTICULARS | 31^st March 2026 (Rs.)
Revenue from Operations | 6,00,000
Indirect Expense | 25% of gross profit
Cost of Revenue from Operations | 4,00,000
Other incomes | 30,000
Income tax | 30% [3 Marks]

Answer:

Teacher's Note:
a) Gross profit = 6,00,000 - 4,00,000 = Rs. 2,00,000, so indirect expenses = 25% of 2,00,000 = Rs. 50,000.
b) In a common size statement every item is shown as a percentage of Revenue from Operations (Rs. 6,00,000 = 100).

32. Under which main head and sub - head of the financial statements are the following items classified or shown:
I. Warranty claims payable.
II. Preliminary expenses written off.
III. Interest Accrued and Due on Debentures. [3 Marks]

Answer:

Teacher's Note:
a) Preliminary expenses are written off in the year they are incurred, so they appear only in the Statement of Profit and Loss, not in the Balance Sheet.
b) Interest accrued on debentures (whether due or not due) is shown under Other Current Liabilities.

33 A. Quick Ratio of Alpha Traders is 1.2 : 1. Given that their operating cycle is of 8 months, state with reasons whether the following transactions will increase, decrease, or not affect the Quick Ratio:
I. Bills Receivable Rs. 40,000 were dishonoured and treated as bad debts.
II. Stock worth Rs. 25,000 was destroyed by fire; insurance company admitted claim of Rs. 18,000 receivable within 6 months.
III. Furniture having book value Rs. 60,000 was sold for Rs. 52,000; sale proceeds to be received in 11th month from the date of sale.
IV. 12% Debentures of Rs. 2,00,000 were issued at a premium of 10% to a supplier of machinery costing Rs. 3,00,000 and balance was settled through cheque. [4 Marks]

Answer:
I. Decrease in Quick Ratio. Reason: Quick assets (bills receivable) decrease, while quick (current) liabilities remain unchanged.
II. Increase in Quick Ratio. Reason: A new quick asset (insurance claim receivable of Rs. 18,000) is created, which will be received within the operating cycle; stock is not a quick asset.
III. Increase in Quick Ratio. Reason: Quick assets increase, as the sale proceeds of Rs. 52,000 will be received within 12 months and are a current receivable.
IV. Decrease in Quick Ratio. Reason: Quick assets decrease as bank is reduced by Rs. 80,000 (3,00,000 - 2,20,000), while current liabilities remain unchanged.

Teacher's Note:
a) Quick ratio = Quick assets / Current liabilities; since the ratio is more than 1, check only which side changes.
b) A receivable counts as a current asset if it will be realised within the operating cycle or within 12 months.
c) Debentures are a non-current liability, so issuing them does not change current liabilities.

OR

33 B. From the given information, calculate the following ratios:
I. Current ratio
II. Inventory Turnover ratio
Information Revenue from operations (Net sales) Rs. 5,00,000, opening inventory Rs. 7,000, closing inventory Rs. 4,000 more than the opening inventory, net purchase is 70% of revenue from operations, operating expenses Rs. 30,000, liquid assets Rs. 75,000, wages Rs. 10,000, salaries Rs. 20,000, carriage inwards Rs. 40,000, prepaid expenses Rs. 2,000, current liabilities Rs. 60,000, 9% debentures Rs. 3,00,000, long - term loan from bank Rs. 1.00,000, equity share capital Rs. 10,00,000 and 8% preference share capital Rs. 2,00,000. [4 Marks]

Answer:
I. Current Ratio = Current Assets / Current Liabilities
Closing inventory = 7,000 + 4,000 = Rs. 11,000
Current Assets = Liquid assets + Closing inventory + Prepaid expenses = 75,000 + 11,000 + 2,000 = Rs. 88,000
Current Ratio = 88,000 / 60,000 = 1.47 : 1
II. Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
Purchases = 70% of 5,00,000 = Rs. 3,50,000
Cost of Revenue from Operations = Opening Inventory + Purchases + Direct expenses (wages + carriage inwards) - Closing Inventory = 7,000 + 3,50,000 + 10,000 + 40,000 - 11,000 = Rs. 3,96,000
Average Inventory = (7,000 + 11,000) / 2 = Rs. 9,000
Inventory Turnover Ratio = 3,96,000 / 9,000 = 44 times

Teacher's Note:
a) Only direct expenses (wages and carriage inwards) are added in cost of revenue from operations; salaries and operating expenses are ignored.
b) Debentures, bank loan and share capital are extra information not needed for these two ratios.

34. From the following Balance Sheet of Krishang Ltd. as at 31 March 2026, calculate Cash Flow from Operating Activities and Investing Activities. [6 Marks]

Notes to Accounts:

Additional Information:
i. A piece of machinery costing Rs. 12,000 on which accumulated depreciation was Rs. 8,000 was sold for Rs. 3,000.
ii. 10% Debentures were issued on 1^st October 2025.
iii. On 1^st May, 2025, Land was purchased of Rs. 2,00,000 for investment purpose but due to financial requirements the company had to sell it on 31^st January 2026 for Rs. 2,20,000.

Answer:

Working Notes:

Net Profit before Tax: Surplus (1,50,000 - 1,00,000) = 50,000 + Provision for tax 25,000 = Rs. 75,000.
Interest on Debentures = 85,000 x 10% (full year) + 35,000 x 10% x 6/12 = 8,500 + 1,750 = Rs. 10,250.

Teacher's Note:
a) Add back non-cash items (depreciation, goodwill written off, loss on sale) and interest on debentures (a financing item); deduct the gain on sale of land (an investing item).
b) Tax paid is taken as last year's provision (Rs. 38,500), since the current year's provision (Rs. 25,000) was added back to find profit before tax.
c) Prepare the Machinery A/c and Accumulated Depreciation A/c first to find purchase of machinery (Rs. 1,47,000) and depreciation (Rs. 33,000).

Part B: Computerised Accounting

(Option - II)

27. Identify the error which will be displayed on screen when the set of co-ordinates that a cell occupies on a worksheet is invalid. [1 Mark]
(A) Correct a # NAME ? Error
(B) Correct # REF ! Error
(C) Correct a # N/A Error
(D) Correct a ##### Error

Answer: (B) Correct # REF ! Error

Teacher's Note:
a) #REF! appears when a formula refers to a cell reference that is not valid, for example a deleted cell.
b) #NAME? is for unrecognised text in a formula and ##### is for a column too narrow to show the value.

28. How are 'absolute cell reference' and 'mixed cell reference' identified in Excel ? [1 Mark]
(A) Using # sign
(B) Using ~ sign
(C) Using $ sign
(D) Using £ sign

Answer: (C) Using $ sign

Teacher's Note:
a) $A$1 is an absolute reference; $A1 or A$1 is a mixed reference.
b) The $ sign fixes the column or row so it does not change when the formula is copied.

29. What is used to build single formula with multiple results in Excel ? [1 Mark]
(A) Derived value
(B) Vectors
(C) Round()
(D) Array

Answer: (D) Array

Teacher's Note:
a) An array formula works on a set of values and can return more than one result.
b) Round() only rounds one value, so it cannot give multiple results.

30. A sequential code refers to code applied to some documents where: [1 Mark]
(A) Account heads are assigned to documents
(B) Numbers and letters are assigned in consecutive order
(C) Special names are given to accounts
(D) Documents are arranged in special sequence

Answer: (B) Numbers and letters are assigned in consecutive order

Teacher's Note:
a) Sequential codes are commonly used for documents such as cheques, invoices and vouchers.
b) The key word is "consecutive" - one number after another.

31 A. Explain the following:
(I) Contra voucher
(II) Post-dated voucher
(III) Receipt voucher [3 Marks]

Answer:
(I) Contra Voucher: It is used to record transactions involving cash and bank accounts only, for example when cash is deposited into bank, cash is withdrawn from bank, or money is transferred from one bank account to another.
(II) Post-dated Voucher: It is a voucher prepared on the current date but entered in the books on a future date. It is used when a payment or receipt is scheduled for a future date or when post-dated cheques are issued or received. The entry is recorded only on the specified future date.
(III) Receipt Voucher: It is used to record cash or bank receipts, for example cash received from customers, a cheque received, or any other amount received.

Teacher's Note:
a) Remember: Contra = cash and bank only; Receipt = money coming in.
b) Give one example with each definition to earn the full mark.

OR

31B. State the advantages of 'Pivot Table Report'. [3 Marks]

Answer:
1. It summarises large data quickly, with automatic calculations such as totals, averages and counts.
2. It gives flexible arrangement, as rows and columns can be rearranged easily for quick comparison of data.
3. It saves time and is user-friendly, making data analysis easy.

Teacher's Note:
a) Keywords examiners look for: summarise, rearrange (pivot), compare and analyse.
b) Write each advantage as a separate point with a short explanation.

32. State any three limitations of Computerised Accounting System. [3 Marks]

Answer:
1. High Initial Cost: Installation of hardware and software and training of staff require a large investment.
2. Risk of Data Loss: Data may be lost due to system failure, virus attack, hacking or power breakdown if proper backup is not kept.
3. Dependence on Skilled Personnel: Trained staff are needed to operate and maintain the system; lack of technical knowledge may lead to errors.

Teacher's Note:
a) Give a heading for each limitation followed by one line of explanation.
b) Do not write advantages by mistake; the question asks for limitations only.

33 A. What is meant by 'data validation'? What is facilitated by 'Error Alert tab'? [4 Marks]

Answer:
1. Data Validation is a feature in MS Excel that controls the type of data entered into a cell. It makes sure that users enter correct and specific data according to predefined rules, for example only whole numbers between 1 and 100, only dates within a certain range, or a value from a drop-down list. It helps to keep data accurate and consistent.
2. The Error Alert tab in Data Validation displays an error message when invalid data is entered and prevents incorrect data entry.
3. It allows the user to choose the type of alert: Stop (prevents entry completely), Warning (allows entry after a warning) or Information (shows a message but allows entry).
4. In this way it helps in controlling wrong inputs effectively.

Teacher's Note:
a) Answer both parts of the question: the meaning of data validation and the use of the Error Alert tab.
b) Remember the three alert styles: Stop, Warning and Information.

OR

33 B. What is meant by internal margin while using MS Excel? State the options available. [4 Marks]

Answer:
1. Internal margin is the space left between the text and the border of a text box or shape in MS Excel. It keeps the text away from the edges so that it is easy to read.
2. It is set from Format Shape, under Text Options, in the Text Box settings.
3. The options available are Left margin, Right margin, Top margin and Bottom margin, each of which can be set separately.
4. Related text box options include vertical alignment, text direction, resize shape to fit text, allow text to overflow shape and wrap text in shape.

Teacher's Note:
a) Define internal margin first, then list the four margin options.
b) Do not confuse internal margin with page margins set in Page Setup for printing.

34. =SUM(B2B3) will give an error while using spreadsheet. Identify the error and state the steps to correct it. [6 Marks]

Answer:
Error: The formula =SUM(B2B3) will display a #NAME? error.
Reason: Excel shows the #NAME? error when a formula contains incorrect syntax. Here the range operator (colon) between the cell references B2 and B3 is missing, so Excel reads "B2B3" as an unknown name.
Steps to correct the error:
1. Select the cell showing the error.
2. Click on the Formula Bar.
3. Correct the formula by inserting a colon between the cell references: =SUM(B2:B3).
4. Press Enter.
The formula will now correctly calculate the sum of cells B2 and B3.
Correct Formula: =SUM(B2:B3)

Teacher's Note:
a) The colon (:) is the range operator; B2:B3 means all cells from B2 to B3.
b) Marks are given for naming the error (#NAME?), the reason (missing colon) and the correction steps.
c) The formula can also be edited by pressing F2 in the selected cell.