These HOTS Questions for CBSE Class 12 Accountancy are ready for 2026-27, built to turn textbook theory into real, applied understanding of Accountancy.
Benefits of Accountancy HOTS Practice for Class 12
- Fully matched to the latest NCERT Class 12 Accountancy syllabus and competency-based guidelines.
- Tests how well you actually understand Accountancy, beyond simple recall.
- Designed around the trickiest Accountancy sections seen in CBSE and KVS exams.
- Detailed reasoning is given for every Accountancy HOTS answer, not just the result.
Browse Class 12 Accountancy HOTS by Chapter
The chapter links below have the Accountancy HOTS PDF. Prepared by veteran Accountancy teachers, these are meant to help you succeed in tests and exams.
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HOTS Practice - High Order Thinking & Analytical Questions Master complex adjustment scenarios, case applications, and challenging board examination problems across all 10 chapters. HOTS Q1. A and B are partners sharing profits in the ratio of 2:1. A is entitled to a commission of 10% on the net profit before charging such commission, while B is entitled to a commission of 10% on the net profit after charging all commissions. If net profit before any commission is ₹1,10,000, calculate the commissions of A and B.
Step-by-step Solution:
1. A's Commission (Before charging): ₹1,10,000 × (10 / 100) = ₹11,000. 2. Remaining Profit after A's Commission: ₹1,10,000 − ₹11,000 = ₹99,000. 3. B's Commission (After charging all commissions): ₹99,000 × [10 / (100 + 10)] = ₹99,000 × (10 / 110) = ₹9,000. HOTS Q1. At the time of admission of a partner, why is the existing Goodwill already appearing in the old Balance Sheet written off among the old partners in their old profit-sharing ratio, rather than being adjusted in sacrificing ratio?
Conceptual Justification:
1. As per AS-26 (Intangible Assets), internally generated goodwill cannot be recognized in financial statements, and purchased goodwill appearing in books must be written off. 2. Existing goodwill in the balance sheet represents past efforts/purchases belonging exclusively to the old partners. It is written off in the Old Ratio to clear the asset before the new partner enters, ensuring the incoming partner does not bear any historical goodwill write-down. HOTS Q1. A, B, and C are partners sharing profits in the ratio of 3:2:1. C dies on 30th June. Sales for the previous accounting year were ₹12,00,000 and profit was ₹2,40,000. Sales from 1st April to 30th June of the current year amounted to ₹3,00,000. Calculate C's share of profit up to the date of death and pass the necessary journal entry.
Working Notes:
1. Profit Percentage on Sales: (₹2,40,000 ÷ ₹12,00,000) × 100 = 20%. 2. Estimated Profit up to 30th June: 20% of ₹3,00,000 = ₹60,000. 3. C's Share of Profit (1/6): ₹60,000 × 1/6 = ₹10,000. Journal Entry: Profit and Loss Suspense A/c ... Dr. ₹10,000 To C's Capital A/c ₹10,000 HOTS Q1. At the time of dissolution of a partnership firm, Partner X agreed to look after the dissolution work for an agreed remuneration of ₹15,000 and undertook to bear all dissolution expenses. The actual dissolution expenses amounted to ₹18,000 and were paid directly by the firm out of its bank account. Pass the necessary journal entry.
Accounting Treatment & Entries:
1. For Remuneration Credited to X: Realisation A/c ... Dr. ₹15,000 To X's Capital A/c ₹15,000 2. For Actual Expenses Paid by Firm on X's Behalf: X's Capital A/c ... Dr. ₹18,000 To Bank A/c ₹18,000 (Note: Realisation A/c is debited only with the agreed remuneration of ₹15,000, not the actual expenses, because X agreed to bear all costs.) HOTS Q1. A company forfeited 100 shares of ₹10 each issued at a premium of ₹2 per share for non-payment of allotment money of ₹5 per share (including premium) and call money of ₹3 per share. What is the maximum discount the company can offer when reissuing 60 of these shares?
Working & Calculation:
1. Application money received per share = Total Face Value (₹10) − Unpaid Allotment Capital (₹3) − Unpaid Call (₹3) = ₹4 per share. 2. Note: Since the allotment was unpaid, the premium of ₹2 was not received and was debited during forfeiture, so it cannot be part of the forfeited shares account. 3. Maximum Discount on Reissue: Limited to the amount forfeited on those reissued shares = 60 shares × ₹4 = ₹240. HOTS Q1. Why is 'Loss on Issue of Debentures' written off completely in the year of issue itself as per the updated guidelines of the Institute of Chartered Accountants of India (ICAI) and Section 52(2) of the Companies Act, 2013, instead of being amortized over the life of the debentures?
Statutory & Accounting Reason:
1. Under Section 52(2) of the Companies Act, 2013 and ICAI guidelines, any discount or loss on issue of debentures must be written off in the year of issue first from Securities Premium Account (if balance exists). 2. If Securities Premium is insufficient, the remaining balance must be written off from the Statement of Profit and Loss in that same year, following the Prudence Convention to prevent carrying unrepresented fictitious assets on the Balance Sheet. HOTS Q1. Under which major heads and sub-heads of Schedule III to the Companies Act, 2013 will the following items be classified in a company's Balance Sheet?
Classification under Schedule III:
• (a) Uncalled Liability on partly paid shares: Shown as a Contingent Liability under Notes to Accounts (not added to Balance Sheet totals). • (b) Provision for Tax: Major Head: Current Liabilities | Sub-head: Short-term Provisions. • (c) Mining Rights: Major Head: Non-Current Assets | Sub-head: Property, Plant & Equipment and Intangible Assets → Intangible Assets. HOTS Q1. Explain how 'Window Dressing' in financial statements acts as a severe limitation to financial statement analysis. Provide one concrete accounting example.
Explanation & Example:
• Meaning: Window dressing refers to the manipulation of financial figures to present a healthier financial position than what actually exists, misleading analysts and investors. • Concrete Example: Recording a large credit sale on the last day of the accounting year to inflate current assets (Trade Receivables) and net profits, which is subsequently canceled/returned on the first day of the next accounting period. HOTS Q1. The Current Ratio of a company is 2:1. State with reasons which of the following transactions will: (i) Increase, (ii) Decrease, or (iii) Not change the Current Ratio:
Analysis & Reasoning:
• (a) Payment of Current Liability: INCREASES the ratio. Equal reduction in Current Assets and Current Liabilities increases a ratio that is already greater than 1:1. • (b) Purchase of goods on credit: DECREASES the ratio. Equal addition to both numerator and denominator reduces a ratio greater than 1:1. • (c) Sale of goods at profit on credit: INCREASES the ratio. Current Assets increase net by the profit amount (₹18,000 Debtors added − ₹15,000 Stock reduced = +₹3,000) while Current Liabilities remain unchanged. HOTS Q1. State with reason whether 'Payment of dividend on equity shares' is an Operating, Investing, or Financing cash outflow for: (a) A manufacturing company, (b) A financial enterprise.
Analysis:
• (a) For a manufacturing company: It is a Financing Activity outflow because dividends relate directly to servicing owners' equity capital. • (b) For a financial enterprise: It is ALSO a Financing Activity outflow. While dividend *received* is an operating activity for financial companies, dividend *paid* on their own shares remains a cost of capital structure (Financing). |
| Part 1 Chapter 01 Accounting for Partnership Basic Concepts HOTS Question |
| Part 1 Chapter 02 Reconstitution of a Partnership Firm Admission of a Partner HOTS Question |
| Part 1 Chapter 03 Reconstitution of a Partnership Firm Retirement/Death of a Partner HOTS Question |
| Part 1 Chapter 04 Dissolution of Partnership Firm HOTS Question |
| Part 1 Chapter Accounting for Not-for-Profit Organisation HOTS Question |
| Part 2 Chapter 01 Accounting for Share Capital HOTS Question |
| Part 2 Chapter 02 Issue and Redemption of Debentures HOTS Question |
| Part 2 Chapter 03 Financial Statements of a Company HOTS Question |
| Part 2 Chapter 04 Analysis of Financial Statements HOTS Question |
| Part 2 Chapter 05 Accounting Ratios HOTS Question |
| Part 2 Chapter 06 Cash Flow Statement HOTS Question |
| All Chapters HOTS Question |
| All Chapters HOTS Question |
| All Chapters HOTS Question Set 01 |
| Part 1 Chapter 01 Accounting For Debentures HOTS Question |
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FAQs
HOTS stands for Higher Order Thinking Skills. In Class 12 Accountancy, these questions students go beyond simple memorization and they require analysis, evaluation, and application of knowledge to solve complex problems.
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HOTS questions are important as they carry extra weightage in CBSE exams. They test students ability to apply Accountancy concepts in various new situations essential for scoring full marks and percentage.
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