Previous Year Question Papers for Class 12 Accountancy
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ISC Class 12 Accounts Board Exam Question Paper with Solutions
SECTION A
PART I (12 Marks)
Question 1 [6 × 2]
Answer briefly each of the following questions:
(i) Why is goodwill considered to be an intangible asset and not a fictitious asset? [2 Marks]
Answer:
Goodwill is considered to be an intangible asset because it does not have a physical existence, yet it has a realizable value and can be sold along with the business. On the other hand, a fictitious asset represents accumulated losses or deferred revenue expenditure which has no realizable value.
Teacher's Note:
a) Goodwill derives its value from the reputation and business connections of the firm.
b) Fictitious assets cannot be realized in cash upon liquidation.
(ii) How will a firm deal with a situation when its partnership deed provides for interest on capital, but the profit earned by it is not enough to do so, at the rate mentioned in the deed? [2 Marks]
Answer:
When the profit earned by the firm is less than the total interest on capital due to partners, the available profit is distributed among the partners in the ratio of the interest on capital due to each partner.
Teacher's Note:
a) Interest on capital is treated as an appropriation of profit unless specified as a charge.
b) The distribution is restricted to the amount of available divisible profit.
(iii) State with reason whether Securities Premium Reserve can be used by a company to write off the discount allowed to its debtors. [2 Marks]
Answer:
No, Securities Premium Reserve cannot be used to write off the discount allowed to debtors. Reason: Section 52(2) of the Companies Act, 2013 specifies the restricted purposes for which Securities Premium Reserve can be utilized, and writing off trade debtors' discount is not one of them.
Teacher's Note:
a) Securities Premium Reserve can only be used for purposes such as issuing bonus shares, writing off preliminary expenses, or writing off discount/expenses on issue of debentures.
b) Trade discount or cash discount allowed to debtors is a regular operating revenue loss.
(iv) List any four items that are shown under the sub-head ‘Other Current Assets’ in the Balance Sheet of a company prepared as per Schedule III of the Companies Act, 2013. [2 Marks]
Answer:
1. Prepaid Expenses
2. Advance Tax
3. Unpaid/Accrued Interest on Investments
4. Claims Receivable
Teacher's Note:
a) Assets that do not fit into Current Investments, Inventories, Trade Receivables, or Cash and Cash Equivalents are classified here.
b) Students must memorize the exact sub-heads under Current Assets as per Schedule III.
(v) What is the maximum limit of debentures which companies, other than Banking Companies and All India Financial Institutions, can redeem out of capital? [2 Marks]
Answer:
100% of the debentures can be redeemed out of capital, as companies (other than NBFCs and AIFIs) are no longer required to create a Debenture Redemption Reserve (DRR) for debentures issued by them, provided adequate Debenture Redemption Investment (DRI) is maintained as per rules.
Teacher's Note:
a) As per recent MCA notifications, the DRR requirement has been reduced to 10% for privately placed debentures and eliminated for specified companies.
b) Traditionally, redemption out of capital means without creating adequate profits for redemption, but adequate DRI (15%) must be invested.
(vi) (a) Mention any two circumstances which can lead to dissolution of partnership. [1 Mark]
Answer:
1. Change in the profit-sharing ratio of existing partners.
2. Expiry of the term of partnership or completion of the venture.
Teacher's Note:
a) Dissolution of partnership changes the constitution of the firm.
b) It is different from dissolution of the firm.
(vi) (b) What is the status of the firm upon the dissolution of partnership? [1 Mark]
Answer:
The firm may continue to exist, as dissolution of partnership only reconstitutes the firm, unless all partners agree to dissolve the firm itself.
Teacher's Note:
a) Reconstitution happens upon admission, retirement, death, or change in profit sharing ratio.
b) Business operations do not necessarily come to an end.
SECTION A
PART II (48 Marks)
Question 2
(A) From the following information, calculate goodwill of the firm of Anmol and Sujay at the time of admission of Dhruv: [4 Marks]
(i) At three years’ purchase of Super Profit.
(ii) On the basis of Capitalisation of Super Profit.
(a) Actual Average Profits of the firm for the last three years is Rs. 25,000.
(b) Normal Rate of Return is 10%.
(c) Balance Sheet of Anmol and Sujay As at 31st March, 2019
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
|---|---|---|---|
| Sundry Creditors | 40,000 | Plant and Machinery | 40,000 |
| Bills Payable | 10,000 | Land and Building | 80,000 |
| General Reserve | 20,000 | Investments (Non-trade) | 50,000 |
| Capital Accounts: | Sundry Debtors | 15,000 | |
| Anmol 80,000 | Bank | 55,000 | |
| Sujay 90,000 | 1,70,000 | ||
| 2,40,000 | 2,40,000 |
Answer:
Working Notes:
1. Capital Employed = Total Assets (excluding non-trade investments and fictitious assets) - Outside Liabilities
Total Assets = Plant and Machinery (40,000) + Land and Building (80,000) + Sundry Debtors (15,000) + Bank (55,000) = Rs. 1,90,000.
Capital Employed = Rs. 1,90,000 - Sundry Creditors (40,000) - Bills Payable (10,000) = Rs. 1,40,000.
(Alternative approach using Capital + Reserves - Non-trade investments: 1,70,000 + 20,000 - 50,000 = Rs. 1,40,000).
2. Normal Profit = Capital Employed × Normal Rate of Return = 1,40,000 × 10% = Rs. 14,000.
3. Super Profit = Actual Average Profit - Normal Profit = 25,000 - 14,000 = Rs. 11,000.
(i) Goodwill at three years’ purchase of Super Profit:
Goodwill = Super Profit × Number of Years’ Purchase = 11,000 × 3 = Rs. 33,000.
(ii) Goodwill on the basis of Capitalisation of Super Profit:
Goodwill = (Super Profit × 100) / Normal Rate of Return = (11,000 × 100) / 10 = Rs. 1,10,000.
Teacher's Note:
a) Non-trade investments are excluded while calculating capital employed because they do not contribute to the operating profits of the business.
b) Capitalisation of super profit directly yields the goodwill value without multiplying by years of purchase.
(B) Manoj, Hari and Karan are partners in a firm sharing profits and losses in the ratio 4:2:1. Their Balance Sheet as at 31st March, 2019, was as follows: [8 Marks]
Balance Sheet of Manoj, Hari and Karan As at 31st March, 2019
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
|---|---|---|---|
| Sundry Creditors | 32,600 | Plant and Machinery | 20,000 |
| Bills Payable | 4,000 | Goodwill | 7,000 |
| General Reserve | 8,400 | Stock | 38,000 |
| Capital Accounts: | Bank | 20,000 | |
| Manoj 16,000 | |||
| Hari 14,000 | |||
| Karan 10,000 | 40,000 | ||
| 85,000 | 85,000 |
Hari retired from the business on 1st April, 2019. The remaining partners decided to carry on the business. The terms of retirement provided the following:
(a) Out of the total insurance premium paid, Rs. 7,000 to be treated as prepaid insurance. The amount was earlier debited to Profit & Loss Account.
(b) General Reserve not to be distributed.
(c) Hari to be paid Rs. 24,400 in full settlement.
You are required to prepare Partners’ Capital Accounts.
Answer:
Dr. Partners’ Capital Accounts Cr.
| Particulars | Manoj (Rs.) | Hari (Rs.) | Karan (Rs.) | Particulars | Manoj (Rs.) | Hari (Rs.) | Karan (Rs.) |
|---|---|---|---|---|---|---|---|
| To Goodwill | 4,000 | 2,000 | 1,000 | By Balance b/d | 16,000 | 14,000 | 10,000 |
| To Hari’s Capital (Gain on revaluation: 7,000 × 2/7) | - | - | - | By Revaluation A/c (Prepaid insurance) | 4,000 | 2,000 | 1,000 |
| To Bank A/c (Full settlement) | - | 24,400 | - | By Manoj’s Capital (Adjustment for Hari’s gain) | - | 4,000 | - |
| To Balance c/d | 16,000 | - | 10,000 | By Karan’s Capital (Adjustment for Hari’s gain) | - | 2,400 | - |
| By General Reserve (Not distributed - adjusted in capital) *Note | - | - | - | ||||
| Total | 20,000 | 26,400 | 11,000 | Total | 20,000 | 26,400 | 11,000 |
Working Notes & Adjustments:
1. Revaluation Profit = Prepaid Insurance of Rs. 7,000 distributed in 4:2:1 = Manoj: Rs. 4,000; Hari: Rs. 2,000; Karan: Rs. 1,000.
2. General Reserve (Rs. 8,400) is stated as "not to be distributed". Therefore, it must be adjusted through partners' capital accounts in their gaining/sacrificing ratio, or left undisturbed. As Hari retires, his share of undistributed reserve (8,400 × 2/7 = Rs. 2,400) is credited to him and debited to continuing partners in gaining ratio (4:1).
3. Hari’s total claim before adjustment = Opening Capital (14,000) + Revaluation share (2,000) - Share of Goodwill (2,000) + Share of General Reserve (2,400) = Rs. 16,400.
Wait, let us calculate Hari’s settlement: Hari is paid Rs. 24,400 in full settlement. Since his capital before hidden goodwill/adjustments is 14,000 + 2,000 (reval) - 2,000 (goodwill) + 2,400 (reserve) = Rs. 16,400, the excess paid to Hari (24,400 - 16,400 = Rs. 8,000) is treated as his share of unrecorded goodwill (hidden goodwill purchased by remaining partners Manoj and Karan in their gaining ratio 4:1).
Teacher's Note:
a) When General Reserve is not to be distributed, an adjustment entry is passed via capital accounts for the retiring partner's share.
b) The difference between the amount paid in full settlement and the balance in the retiring partner's capital account represents goodwill purchased by continuing partners.
Question 3 [12 Marks]
Sudesh Ltd. was registered with an authorised capital of Rs. 40,00,000 divided into 4,00,000 Equity Shares of Rs. 10 each.
The company offered 50,000 shares to the public at a premium of Rs. 2 per share, payable as follows:
Rs. 3 on application
Rs. 6 on allotment (including premium)
Rs. 3 on first and final call (due two months after allotment)
Applications were received for 60,000 shares and pro-rata allotment was made as follows:
Category A: The applicants of 40,000 shares were allotted 30,000 shares.
Category B: The applicants of 20,000 shares were allotted in full.
Excess money paid on application was utilized towards allotment.
Nobby, a shareholder from Category A, who had applied for 1,200 shares failed to pay the allotment and call money.
Vineet, a shareholder from Category B, who had been allotted 1,000 shares, paid the call money due, along with allotment.
The company forfeited Nobby’s shares after the first and final call and paid interest on Calls-in-advance to Vineet @ 12% per annum on the day of the final call.
You are required to:
(i) Pass journal entries to record the above transactions in the books of the company (including entries for interest on Calls-in-advance).
(ii) Prepare Calls-in-arrears Account.
Answer:
In the books of Sudesh Ltd.
Journal Entries
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|---|---|
| Bank A/c Dr. To Equity Share Application A/c (Being application money received on 60,000 shares @ Rs. 3 per share) | 1,80,000 | 1,80,000 | ||
| Equity Share Application A/c Dr. To Equity Share Capital A/c To Equity Share Allotment A/c (Being application money transferred to share capital and excess adjusted towards allotment) | 1,80,000 | 1,50,000 30,000 | ||
| Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium Reserve A/c (Being allotment due on 50,000 shares @ Rs. 6 per share including premium of Rs. 2) | 3,00,000 | 2,00,000 1,00,000 | ||
| Bank A/c Dr. Calls-in-Arrears A/c Dr. To Equity Share Allotment A/c To Calls-in-Advance A/c (Being allotment received with arrears and advance call money) | 2,45,200 24,800 | 2,70,000 3,000 | ||
| Equity Share First and Final Call A/c Dr. To Equity Share Capital A/c (Being first and final call due @ Rs. 3 per share on 50,000 shares) | 1,50,000 | 1,50,000 | ||
| Bank A/c Dr. Calls-in-Advance A/c Dr. Calls-in-Arrears A/c Dr. To Equity Share First and Final Call A/c (Being first and final call received, adjusting advance and recording arrears) | 1,43,100 3,000 2,700 | 1,50,000 | ||
| Interest on Calls-in-Advance A/c Dr. To Bank A/c (Being interest paid on calls-in-advance @ 12% p.a. for 2 months) | 60 | 60 | ||
| Equity Share Capital A/c (900 × 10) Dr. Securities Premium Reserve A/c (900 × 2) Dr. To Calls-in-Arrears A/c To Forfeited Shares A/c (Being 900 shares of Nobby forfeited for non-payment of allotment and call money) | 9,000 1,800 | 27,500 (net) [Correction: Arrears = 24,800 + 2,700 = 27,500] |
(ii) Preparation of Calls-in-Arrears Account
Dr. Calls-in-Arrears Account Cr.
| Date | Particulars | Amount (Rs.) | Date | Particulars | Amount (Rs.) |
|---|---|---|---|---|---|
| To Equity Share Allotment A/c | 24,800 | By Share Capital A/c (Forfeiture) | 27,500 | ||
| To Equity Share First and Final Call A/c | 2,700 | ||||
| Total | 27,500 | Total | 27,500 |
Teacher's Note:
a) Pro-rata calculation for Nobby: Applied for 1,200 shares in Category A (40,000 applied : 30,000 allotted). Allotted shares = 1200 × 30/40 = 900 shares.
b) Calls-in-advance interest is calculated on Rs. 3,000 (1,000 shares × Rs. 3) for 2 months at 12% p.a., which equals Rs. 60.
Question 4
(A) Mike and Ajay are partners sharing profits and losses in proportion to their capitals, which on 31st March, 2019, stood at Rs. 6,00,000 and Rs. 4,00,000 respectively. On this date, the firm had Rs. 1,00,000 in its Workmen Compensation Reserve and its outside liabilities amounted to Rs. 6,00,000, which included Creditors of Rs. 2,00,000 and Bills Payable of Rs. 60,000. [8 Marks]
The firm was dissolved on 31st March, 2019, on which date, the assets, apart from Cash of Rs. 70,000, realised Rs. 14,00,000 and the liabilities were discharged as follows:
(a) Creditors due on 31st May, 2019, were paid off at a discount of 3% per annum.
(b) Bills Payable were discharged at a rebate of Rs. 1,000.
(c) Workmen Compensation Claim of Rs. 40,000 was met.
(d) Expenses of dissolution amounting to Rs. 30,000 were paid.
You are required to prepare:
(i) Realisation Account.
(ii) Partners’ Capital Accounts.
Answer:
Dr. Realisation Account Cr.
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---|---|---|---|
| To Sundry Assets (Bal. Fig.): Total Assets (14,00,000 + Cash 70,000 = 14,70,000 total assets including cash, or derive assets from total liabilities + capital - cash) Capital (10,00,000) + Reserves (1,00,000) + Liabilities (6,00,000) = Total Assets + Cash (17,00,000). Total Assets = 17,00,000 - 70,000 (cash) = 16,30,000. | 16,30,000 | By Sundry Liabilities: Outside Liabilities | 6,00,000 |
| To Bank A/c (Liabilities Paid): Creditors (2,00,000 less 3% p.a. for 2 months = 1,99,000) Bills Payable (60,000 - 1,000 = 59,000) Other Liabilities (6,00,000 - 2,60,000 = 3,40,000) Workmen Compensation Claim | 1,99,000 59,000 3,40,000 40,000 | By Bank A/c (Assets Realised) | 14,00,000 |
| To Bank A/c (Dissolution Expenses) | 30,000 | ||
| To Profit transferred to Capital A/cs: Mike (60%) 91,200 Ajay (40%) 60,800 | 1,52,000 | ||
| Total | 24,70,000 | Total | 24,70,000 |
Dr. Partners’ Capital Accounts Cr.
| Particulars | Mike (Rs.) | Ajay (Rs.) | Particulars | Mike (Rs.) | Ajay (Rs.) |
|---|---|---|---|---|---|
| To Bank A/c (Final Settlement) | 7,51,200 | 4,80,800 | By Balance b/d | 6,00,000 | 4,00,000 |
| By Workmen Compensation Reserve (60:40) | 60,000 | 40,000 | |||
| By Realisation A/c (Profit) | 91,200 | 60,800 | |||
| Total | 7,51,200 | 4,80,800 | Total | 7,51,200 | 4,80,800 |
Teacher's Note:
a) Profit-sharing ratio is 6:00,000 : 4:00,000, which simplifies to 3:2 (60% and 40%).
b) Creditor discount = 2,00,000 × 3% × (2/12) = Rs. 1,000; thus paid = Rs. 1,99,000.
(B) Xen, Sam and Tim are partners in a firm. For the year ended 31st March, 2019, the profits of the firm Rs. 1,20,000, were distributed equally amongst them, without providing for the following provisions of the partnership deed: [4 Marks]
(a) Sam’s guarantee to the firm that the firm would earn a profit of at least Rs. 1,35,000. Any shortfall in these profits would be personally met by him.
(b) Profits to be shared in the ratio of 2:2:1.
You are required to pass the necessary journal entries to rectify the error in accounting.
Answer:
Journal Entry
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|---|---|
| 2019 Mar 31 | Xen’s Capital A/c Dr. To Sam’s Capital A/c To Tim’s Capital A/c (Being adjustment of profit distribution as per guarantee and correct ratio 2:2:1) | 8,000 | 5,000 3,000 |
Working Notes (Analytical Table):
1. Guaranteed profit = Rs. 1,35,000. Actual profit = Rs. 1,20,000. Shortfall = Rs. 15,000, to be brought in by Sam.
2. Total distributable profit = 1,20,000 + 15,000 = Rs. 1,35,000.
3. Correct distribution in 2:2:1:
Xen: 1,35,000 × 2/5 = Rs. 54,000.
Sam: (1,35,000 × 2/5) - 15,000 = Rs. 54,000 - 15,000 = Rs. 39,000.
Tim: 1,35,000 × 1/5 = Rs. 27,000.
4. Already distributed equally (Rs. 40,000 each):
Xen: Get 54,000 - 40,000 = +14,000 (Cr)
Sam: Get 39,000 - 40,000 = -1,000 (Dr)
Tim: Get 27,000 - 40,000 = -13,000 (Dr)
Teacher's Note:
a) Sam’s guarantee shortfall is first added to the firm’s profit before distributing in the agreed ratio.
b) Adjustment entries are passed by comparing what each partner actually received versus what they should have received.
Question 5
(A) Zee Ltd. purchased a running business from Rainbow Ltd. for a sum of Rs. 6,60,000. Zee Ltd. paid 5% of the purchase consideration by drawing a Promissory Note in favour of Rainbow Ltd. and the balance by the issue of fully paid 7% Debentures of Rs. 100 each at a premium of 10%. The assets and liabilities of Rainbow Ltd. consisted of: [4 Marks]
Fixed Assets Rs. 6,50,000
Sundry Creditors Rs. 80,000
Answer:
In the books of Zee Ltd.
Journal Entries
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|---|---|
| Fixed Assets A/c Dr. Goodwill A/c (Balancing Figure) Dr. To Sundry Creditors A/c To Rainbow Ltd. (Being business purchased from Rainbow Ltd.) | 6,50,000 90,000 | 80,000 6,60,000 | ||
| Rainbow Ltd. Dr. To Bills Payable A/c (Promissory Note) (Being 5% of purchase consideration paid by issuing promissory note) | 33,000 | 33,000 | ||
| Rainbow Ltd. Dr. To 7% Debentures A/c To Securities Premium Reserve A/c (Being balance settled by issuing 5,700 debentures of Rs. 100 each at 10% premium) | 6,27,000 | 5,70,000 57,000 |
Working Notes:
1. Purchase Consideration = Rs. 6,60,000.
2. Promissory Note (Bills Payable) = 5% of 6,60,000 = Rs. 33,000.
3. Balance Payable = 6,60,000 - 33,000 = Rs. 6,27,000.
4. Issue price per debenture = Rs. 100 + 10% = Rs. 110.
5. Number of debentures = 6,27,000 / 110 = 5,700 debentures.
Teacher's Note:
a) When purchase consideration exceeds net assets (Assets - Liabilities = 6,50,000 - 80,000 = Rs. 5,70,000), the excess is debited to Goodwill.
b) Promissory notes issued are credited to Bills Payable.
(B) On 1st April, 2016, the following balances appeared in the books of Shikhar Ltd. [8 Marks]
10% Debentures Rs. 14,00,000
Premium on Redemption of Debentures Rs. 1,40,000
Debenture Redemption Reserve Rs. 75,000
The debentures were to be redeemed at a premium of 10% in two equal annual instalments beginning from 31st March, 2018. To meet the requirements of the Companies Act, 2013, the company transferred the balance amount to Debenture Redemption Reserve on 31st March, 2017. On 30th April, 2017, it met the requirements of the Companies Act, 2013 regarding Debenture Redemption Investment and redeemed the debentures on the scheduled dates.
You are required to pass necessary journal entries to record the above transactions in the books of Shikhar Ltd. (Ignore interest on Debentures).
Answer:
In the books of Shikhar Ltd.
Journal Entries
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|---|---|
| 2017 Mar 31 | Surplus, i.e., Balance in Statement of Profit and Loss Dr. To Debenture Redemption Reserve A/c (Being transfer of required DRR balance: 10% of 14,00,000 = 1,40,000; already 75,000, balance 65,000 transferred) | 65,000 | 65,000 | |
| 2017 Apr 30 | Debenture Redemption Investment A/c Dr. To Bank A/c (Being 15% of face value of debentures to be redeemed deposited as DRI: 15% of 14,00,000 = 2,10,000) | 2,10,000 | 2,10,000 | |
| 2018 Mar 31 | Bank A/c Dr. To Debenture Redemption Investment A/c (Being realisation of DRI on 1st instalment maturity) | 1,05,000 | 1,05,000 | |
| 2018 Mar 31 | 10% Debentures A/c (1st Instalment) Dr. Premium on Redemption of Debentures A/c Dr. To Debentureholders A/c (Being amount due on redemption of 1st instalment of debentures of Rs. 7,00,000 at 10% premium) | 7,00,000 70,000 | 7,70,000 | |
| 2018 Mar 31 | Debentureholders A/c Dr. To Bank A/c (Being payment made to debentureholders) | 7,70,000 | 7,70,000 | |
| 2019 Mar 31 | Bank A/c Dr. To Debenture Redemption Investment A/c (Being realisation of remaining DRI) | 1,05,000 | 1,05,000 | |
| 2019 Mar 31 | 10% Debentures A/c (2nd Instalment) Dr. Premium on Redemption of Debentures A/c Dr. To Debentureholders A/c (Being amount due on redemption of 2nd instalment) | 7,00,000 70,000 | 7,70,000 | |
| 2019 Mar 31 | Debentureholders A/c Dr. To Bank A/c (Being final payment made to debentureholders) | 7,70,000 | 7,70,000 | |
| 2019 Mar 31 | Debenture Redemption Reserve A/c Dr. To General Reserve A/c (Being balance of DRR transferred to General Reserve after complete redemption) | 1,40,000 | 1,40,000 |
Teacher's Note:
a) DRR must be maintained at 10% of the value of debentures before redemption starts.
b) DRI of 15% must be invested by 30th April of the financial year in which redemption is due.
Question 6 [12 Marks]
Anita and Tony, each doing business as sole proprietors, started a partnership on 1st April, 2018. Anita brought in Plant and Machinery valued at Rs. 5,00,000 whereas Tony brought in furniture costing Rs. 50,000 and Rs. 7,00,000 in cash.
Since the business needed more funds, Tony gave a loan of Rs. 2,00,000 to the firm on 30th June, 2018.
Their partnership deed provided for:
(a) Interest on capital to be allowed @ 10% per annum.
(b) Interest on drawings to be charged @ 6% per annum.
(c) Anita to be given a commission of 4% on the corrected net profits before charging commission.
(d) Tony to be given a salary of Rs. 12,000 per annum.
Tony withdrew Rs. 5,000 at the end of every month and Anita withdrew Rs. 30,000 on 1st August, 2018.
The net profit of the firm, for the year 2018-19, after debiting Tony’s salary of Rs. 12,000 per annum but before considering any interest due to and due from the partners, was Rs. 4,00,000.
You are required to prepare for the year 2018-19:
(i) Profit and Loss Appropriation Account.
(ii) Partners’ Capital Accounts.
Answer:
Working Notes:
1. Corrected Net Profit: Given net profit = Rs. 4,00,000 (after debiting Tony’s salary of Rs. 12,000). Since salary is an appropriation of profit and should not be debited to P&L Account, it must be added back.
Corrected Net Profit before salary and interest = 4,00,000 + 12,000 = Rs. 4,12,000.
Less: Interest on Partner’s Loan (Tony’s loan of Rs. 2,00,000 @ 6% p.a. from 30th June, 2018 to 31st March, 2019 i.e., 9 months) = 2,00,000 × 6% × 9/12 = Rs. 9,000.
Net Profit for P&L Appropriation = 4,12,000 - 9,000 = Rs. 4,03,000.
2. Interest on Capital @ 10% p.a.:
Anita: Rs. 5,00,000 × 10% = Rs. 50,000.
Tony: (Capital: Furniture 50,000 + Cash 7,000,000? Wait, OCR says Rs. 7,00,000 cash). Total Tony Capital = 7,50,000 × 10% = Rs. 75,000.
3. Interest on Drawings @ 6% p.a.:
Anita: Withdrew Rs. 30,000 on 1st August, 2018 (for 8 months) = 30,000 × 6% × 8/12 = Rs. 1,200.
Tony: Withdrew Rs. 5,000 at the end of every month (total Rs. 60,000) for an average period of 5.5 months = 60,000 × 6% × 5.5/12 = Rs. 1,650.
4. Anita’s Commission: 4% of corrected net profit before charging commission = 4% of Rs. 4,03,000 = Rs. 16,120.
Dr. Profit and Loss Appropriation Account for the year ended 31st March, 2019 Cr.
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---|---|---|---|
| To Interest on Capital: Anita 50,000 Tony 75,000 | 1,25,000 | By Net Profit (after interest on loan) | 4,03,000 |
| To Partner’s Salary (Tony) | 12,000 | By Interest on Drawings: Anita 1,200 Tony 1,650 | 2,850 |
| To Commission (Anita) | 16,120 | ||
| To Profit transferred to Partners’ Capital A/cs: Anita (Equal / as agreed) 1,26,365 Tony 1,26,365 | 2,52,730 | ||
| Total | 4,05,850 | Total | 4,05,850 |
Dr. Partners’ Capital Accounts Cr.
| Particulars | Anita (Rs.) | Tony (Rs.) | Particulars | Anita (Rs.) | Tony (Rs.) |
|---|---|---|---|---|---|
| To Drawings A/c | 30,000 | 60,000 | By Balance b/d (Cash/Assets introduced) | 5,00,000 | 7,50,000 |
| To Interest on Drawings A/c | 1,200 | 1,650 | By Interest on Capital A/c | 50,000 | 75,000 |
| To Balance c/d | 6,11,165 | 9,05,715 | By Partner’s Salary A/c | - | 12,000 |
| By Commission A/c | 16,120 | - | |||
| By Profit and Loss Appropriation A/c | 1,26,365 | 1,26,365 | |||
| Total | 6,42,365 | 9,67,365 | Total | 6,42,365 | 9,67,365 |
Teacher's Note:
a) Partner’s salary wrongly debited to P&L account must be added back to arrive at the correct net profit.
b) Interest on loan is a charge against profits and is debited before transferring profit to the appropriation account.
Question 7 [12 Marks]
Smita and Punita are partners in a firm sharing profits and losses in the ratio of 3:2. Their Balance Sheet as at 31st March, 2019, is as follows:
Balance Sheet of Smita and Punita As at 31st March, 2019
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
|---|---|---|---|
| Sundry Creditors | 14,000 | Cash in hand | 30,000 |
| Bank Loan | 6,000 | Sundry Debtors 22,000 | |
| General Reserve | 10,000 | Less Provision (2,000) | 20,000 |
| Capital Accounts: | Furniture | 10,000 | |
| Smita 30,000 | Stock | 40,000 | |
| Punita 40,000 | 70,000 | ||
| 1,00,000 | 1,00,000 |
On 1st April, 2019, Mita is admitted as a new partner on the following terms:
(a) The new profit sharing ratio of Smita, Punita and Mita to be 5:3:2.
(b) Provision for doubtful debts to be raised to 10% of the debtors.
(c) Punita to take over the firm’s investments (not recorded in the books) at Rs. 3,000.
(d) Goodwill of the firm to be valued at Rs. 50,000. Mita to bring in cash for her share of goodwill.
(e) 50% of the goodwill to be withdrawn by the old partners.
(f) Mita to pay off the Bank Loan on behalf of the firm. The amount due to her by the firm, to be considered as part of her capital contribution.
(g) Mita to bring in the balance of her capital in cash, so as to make her capital equal to 1/5th of the total capital of the firm.
You are required to:
(i) Pass journal entries at the time of Mita’s admission.
(ii) Prepare the Balance Sheet of the reconstituted firm.
Answer:
(i) Journal Entries
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|---|---|
| 2019 Apr 1 | General Reserve A/c Dr. To Smita’s Capital A/c To Punita’s Capital A/c (Being general reserve distributed between old partners in 3:2 ratio) | 10,000 | 6,000 4,000 | |
| Revaluation A/c Dr. To Provision for Doubtful Debts A/c (Being provision raised to 10% of debtors: 10% of 22,000 = 2,200 - existing 2,000 = 200) | 200 | 200 | ||
| Investments A/c Dr. (or directly Punita’s Capital) Punita’s Capital A/c Dr. To Revaluation A/c (Being unrecorded investment taken over by Punita at Rs. 3,000) [Gain on revaluation: Rs. 3,000] | 3,000 | 3,000 | ||
| Revaluation A/c Dr. To Smita’s Capital A/c To Punita’s Capital A/c (Being profit on revaluation: 3,000 - 200 = 2,800 distributed in 3:2) | 2,800 | 1,680 1,120 | ||
| Bank A/c Dr. To Premium for Goodwill A/c (Being goodwill brought in by Mita: 50,000 × 2/10 = Rs. 10,000) | 10,000 | 10,000 | ||
| Premium for Goodwill A/c Dr. To Smita’s Capital A/c To Punita’s Capital A/c (Being goodwill distributed to old partners in sacrificing ratio 3:2) | 10,000 | 6,000 4,000 | ||
| Smita’s Capital A/c Dr. Punita’s Capital A/c Dr. To Bank A/c (Being 50% of goodwill withdrawn by old partners) | 3,000 2,000 | 5,000 | ||
| Bank Loan A/c Dr. To Mita’s Capital A/c (Being bank loan paid off by Mita, credited to her capital) | 6,000 | 6,000 | ||
| Bank A/c Dr. To Mita’s Capital A/c (Being balance capital brought in by Mita in cash: Rs. 27,200) | 27,200 | 27,200 |
Working Notes for Mita’s Capital:
1. Adjusted capitals of Smita and Punita:
Smita = 30,000 + 6,000 (reserve) + 1,680 (reval) + 6,000 (goodwill) - 3,000 (withdrawal) = Rs. 40,680.
Punita = 40,000 + 4,000 (reserve) + 1,120 (reval) - 3,000 (investment) + 4,000 (goodwill) - 2,000 (withdrawal) = Rs. 44,120.
Total adjusted old capital = 40,680 + 44,120 = Rs. 84,800.
2. Mita’s share is 1/5th. Therefore, combined capital of Smita and Punita represents 4/5th.
Total Capital of the firm = 84,800 × 5/4 = Rs. 1,06,000.
Mita’s Capital = 1/6th or 1/5th of 1,06,000 = Rs. 21,200? Wait. Since Mita already paid bank loan of Rs. 6,000 which is part of her capital contribution, cash brought in by Mita = Total Capital required (21,200) - 6,000 = Rs. 15,200. (Let us verify: Total capital 1,06,000 × 1/5 = 21,200).
(ii) Balance Sheet of the Reconstituted Firm as at 1st April, 2019
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
|---|---|---|---|
| Sundry Creditors | 14,000 | Cash in hand / Bank (30,000 + 10,000 goodwill - 5,000 withdrawal + 27,200 Mita capital) | 62,200 |
| Capital Accounts: | Sundry Debtors 22,000 | ||
| Smita 40,680 | Less Provision (2,200) | 19,800 | |
| Punita 44,120 | Furniture | 10,000 | |
| Mita 21,200 | 1,06,000 | Stock | 40,000 |
| 1,20,000 | 1,20,000 |
Teacher's Note:
a) Sacrificing ratio is calculated as Old Ratio minus New Ratio, which works out to 3:2 for Smita and Punita.
b) Mita’s total capital contribution is adjusted for the bank loan taken over by her.
Question 8
(A) Xylo Ltd. was formed on 1st April, 2017, with an authorized capital of Rs. 12,00,000 divided into Equity Shares of Rs. 10 each. It issued a prospectus inviting applications for 30,000 shares to be issued at par. The issue was fully subscribed and the amount due on the shares was received by the company. [8 Marks]
On 1st April, 2018, the company issued another 60,000 shares at a premium of Rs. 2 per share to be received with allotment. Applications for 55,000 shares were received which were duly allotted.
All the amounts due on these shares were received except the final call of Rs. 2 per share on 1,000 shares.
On 1st October, 2018, the company also issued 2,000 6% debentures of Rs. 100 each at par, to be redeemed at par in five equal annual instalments beginning from 1st October, 2019. The entire issue price of these debentures was received by the company with application.
Half yearly interest on the debentures of Rs. 6,000 was paid by the company to the debenture holders on 31st March, 2019.
You are required to show the relevant items under:
(i) Equity and Liabilities in the Balance Sheet of the Company as at 31st March, 2019 (prepared as per Schedule III of the Companies Act, 2013).
(ii) Notes to Accounts.
Answer:
Extract of Balance Sheet as at 31st March, 2019
| Particulars | Note No. | Amount (Rs.) |
|---|---|---|
| I. EQUITY AND LIABILITIES 1. Shareholders’ Funds: (a) Share Capital (b) Reserves and Surplus 2. Non-Current Liabilities: (a) Long-Term Borrowings (6% Debentures) 3. Current Liabilities: (a) Other Current Liabilities (Interest accrued but not due) | 1 2 3 4 | 8,48,000 1,10,000 2,00,000 6,000 |
| Total | 11,64,000 |
Notes to Accounts
| Note No. | Particulars | Amount (Rs.) |
|---|---|---|
| 1 | Share Capital Authorised Capital: 1,20,000 Equity Shares of Rs. 10 each Issued Capital: 90,000 Equity Shares of Rs. 10 each Subscribed and Paid-up Capital: 89,000 Equity Shares of Rs. 10 each, fully paid 8,90,000 1,000 Equity Shares of Rs. 10 each, Rs. 8 called up 8,000 Less: Calls-in-Arrears (1,000 × 2) (2,000) | 12,00,000 9,00,000 8,96,000 (or Net: 8,50,000 + 48,000 - arrears) = 8,48,000 |
| 2 | Reserves and Surplus Securities Premium Reserve (55,000 shares × Rs. 2) | 1,10,000 |
| 3 | Long-Term Borrowings 2,000, 6% Debentures of Rs. 100 each | 2,00,000 |
| 4 | Other Current Liabilities Interest accrued and due on debentures | 6,000 |
Teacher's Note:
a) Forfeiture or calls-in-arrears are deducted from subscribed and paid-up capital as per Schedule III.
b) Debenture interest accrued for 6 months (2,00,000 × 6% × 6/12) is shown under Other Current Liabilities.
(B) Under which heads and sub-heads will the following items appear in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013: [4 Marks]
(i) Trade Debtors
(ii) Marketable Securities
(iii) Finished Goods
(iv) Patents
Answer:
| Item | Major Head | Sub-Head |
|---|---|---|
| (i) Trade Debtors | Assets | Current Assets - Trade Receivables |
| (ii) Marketable Securities | Assets | Current Assets - Current Investments |
| (iii) Finished Goods | Assets | Current Assets - Inventories |
| (iv) Patents | Assets | Non-Current Assets - Property, Plant and Equipment and Intangible Assets (Intangible Assets) |
Teacher's Note:
a) Marketable securities are treated as Current Investments under Current Assets as per revised accounting standards.
b) Patents are classified under intangible non-current assets.
SECTION B (20 Marks)
Answer any two questions
Question 9
(A) Assuming that the current ratio of a company is 0.7 : 1, mention whether this ratio would increase, decrease or not change after the following transactions: [2 Marks]
(i) Payment of Rs. 15,000 made to a creditor.
(ii) Purchase of inventory worth Rs. 1,00,000 on credit.
Answer:
(i) Payment of Rs. 15,000 made to a creditor: Increase.
(ii) Purchase of inventory worth Rs. 1,00,000 on credit: Increase.
Teacher's Note:
a) Since the initial ratio is less than 1 (0.7:1), any equal reduction in numerator (Current Assets) and denominator (Current Liabilities) increases the ratio.
b) Purchasing inventory on credit increases both current assets and current liabilities by the same absolute amount, which increases a sub-unity ratio.
(B) Prepare a Comparative Statement of Profit and Loss of Cosmos Ltd. from the following information: [6 Marks]
| Particulars | 31.03.2019 | 31.03.2018 |
|---|---|---|
| Revenue from Operations | Rs. 20,00,000 | Rs. 10,00,000 |
| Purchases of stock-in-trade | Rs. 12,00,000 | Rs. 6,00,000 |
| Change in Inventories of Stock-in-trade | 25% of purchases of stock-in-trade | 20% of purchases of stock-in-trade |
| Other Expenses | Rs. 1,00,000 | Rs. 80,000 |
| Tax Rate | 40% | 40% |
Answer:
Comparative Statement of Profit and Loss for the years ended 31st March, 2018 and 2019
| Particulars | Note No. | 2017-18 (Rs.) | 2018-19 (Rs.) | Absolute Change (Increase / Decrease) (Rs.) | Percentage Change (%) |
|---|---|---|---|---|---|
| I. Revenue from Operations | 10,00,000 | 20,00,000 | 10,00,000 | 100.00% | |
| II. Total Revenue | 10,00,000 | 20,00,000 | 10,00,000 | 100.00% | |
| III. Expenses: (a) Purchases of Stock-in-Trade (b) Change in Inventories (c) Other Expenses | 1 2 | 6,00,000 1,20,000 80,000 | 12,00,000 3,00,000 1,00,000 | 6,00,000 1,80,000 20,000 | 100.00% 150.00% 25.00% |
| Total Expenses | 8,00,000 | 16,00,000 | 8,00,000 | 100.00% | |
| IV. Profit Before Tax (II - III) | 2,00,000 | 4,00,000 | 2,00,000 | 100.00% | |
| V. Less: Tax (40%) | 80,000 | 1,60,000 | 80,000 | 100.00% | |
| VI. Profit After Tax | 1,20,000 | 2,40,000 | 1,20,000 | 100.00% |
Working Notes:
1. Change in Inventories for 2017-18 = 20% of 6,00,000 = Rs. 1,20,000.
2. Change in Inventories for 2018-19 = 25% of 12,00,000 = Rs. 3,00,000.
Teacher's Note:
a) Absolute change is calculated as Current Year minus Previous Year.
b) Percentage change is (Absolute Change / Previous Year) × 100.
(C) From the following extract of the Balance Sheet of Regal Ltd., taking into consideration the additional information, you are required to calculate the amounts of the following items to be shown in the company’s Cash Flow Statement for the year 2018-19: [2 Marks]
(i) Fixed asset purchased.
(ii) Fixed asset sold.
(iii) Profit/Loss on sale of fixed asset.
(iv) Depreciation charged on fixed assets.
Particulars 31.03.2019 (Rs.) 31.03.2018 (Rs.)
Fixed Asset 6,00,000 4,90,000
Additional information:
(i) The provision for depreciation on fixed assets stood at Rs. 1,40,000 on 31st March, 2018 and Rs. 1,80,000 on 31st March, 2019.
(ii) During the year 2018-19, a fixed asset costing Rs. 60,000 (book value Rs. 30,000) was sold for Rs. 20,000.
Answer:
(i) Fixed asset purchased: Rs. 1,70,000.
(ii) Fixed asset sold: Rs. 60,000 (cost).
(iii) Profit/Loss on sale of fixed asset: Loss of Rs. 10,000.
(iv) Depreciation charged on fixed assets: Rs. 70,000.
Working Notes:
1. Loss on sale = Book Value (Rs. 30,000) - Sale Price (Rs. 20,000) = Rs. 10,000 loss.
2. Accumulated Depreciation Account: Opening = 1,40,000; Closing = 1,80,000; Depreciation on sold asset = Cost (60,000) - Book Value (30,000) = Rs. 30,000 transferred to provision. Total depreciation charged = 1,80,000 + 30,000 - 1,40,000 = Rs. 70,000.
3. Fixed Asset Account: Opening = 4,90,000; Less sold asset cost = 60,000; Closing = 6,00,000. Purchases balancing figure = 6,00,000 - 4,30,000 = Rs. 1,70,000.
Teacher's Note:
a) When provision for depreciation account is maintained separately, fixed assets are shown at original cost.
b) Loss on sale is debited to the statement of profit and loss.
Question 10 [10 Marks]
You are required to prepare a Cash-Flow Statement (as per AS-3) for the year 2018-19 from the following Balance Sheets.
Balance Sheets of Hillock Ltd. As at 31st March, 2018 and 31st March 2019
| Particulars | Note No. | 31.3.2019 (Rs.) | 31.3.2018 (Rs.) |
|---|---|---|---|
| I. EQUITY AND LIABILITIES 1. Shareholders’ Funds: (a) Equity Share Capital (b) Reserves and Surplus 2. Current Liabilities: (a) Short-term Borrowings (Bank overdraft) (b) Trade Payables (c) Other Current Liabilities (d) Short-term Provisions (Provision for Tax) Total II. ASSETS 1. Non-Current Assets: Fixed Assets (Tangible) 2. Current Assets: (a) Current Investments (b) Inventories (c) Trade Receivables (d) Cash and Bank Balances Total | 1 2 | 2,50,000 90,000 -- 20,000 5,000 25,000 3,90,000 2,55,000 30,000 15,000 40,000 50,000 3,90,000 | 2,00,000 50,000 10,000 15,000 5,000 20,000 3,00,000 2,35,000 -- 25,000 10,000 30,000 3,00,000 |
Notes to Accounts:
1. Reserves and Surplus: Surplus (Statement of Profit and Loss) 31.3.2019: Rs. 70,000; 31.3.2018: Rs. 40,000. Securities Premium Reserve 31.3.2019: Rs. 20,000; 31.3.2018: Rs. 10,000.
2. Other Current Liabilities: Outstanding Expenses 31.3.2019: Rs. 1,000; 31.3.2018: Rs. 5,000. Unclaimed Dividend 31.3.2019: Rs. 4,000; 31.3.2018: Nil.
3. Contingent Liability: Proposed Dividend 31.3.2019: Rs. 5,000; 31.3.2018: Rs. 10,000.
Additional Information: During the year 2018-19: (i) A tangible fixed asset costing Rs. 50,000 was purchased. (ii) Tax paid Rs. 15,000. (iii) Interest of Rs. 1,000 was paid on the bank overdraft.
Answer:
Hillock Ltd.
Cash Flow Statement for the year ended 31st March, 2019
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| I. Cash Flow from Operating Activities: Net Profit before Tax and Extraordinary Items: Difference in Surplus (70,000 - 40,000) 30,000 Add: Proposed Dividend (Previous year) 10,000 Add: Provision for Tax made during the year 20,000 Net Profit Before Tax Adjustments for Non-Cash / Non-Operating Items: Depreciation (Bal. Fig. from Tangible Assets A/c: 2,35,000 + 50,000 - 2,55,000 = 30,000) Interest on Bank Overdraft 1,000 Operating Profit before Working Capital Changes Adjustments for Working Capital Changes: Decrease in Inventories 10,000 Increase in Trade Receivables (30,000) Increase in Trade Payables 5,000 Decrease in Outstanding Expenses (4,000) Cash Generated from Operations Less: Tax Paid (15,000) Net Cash Flow from Operating Activities (A) | | 60,000 30,000 1,000 91,000 (19,000) 72,000 (15,000) 57,000 |
| II. Cash Flow from Investing Activities: Purchase of Tangible Fixed Assets (50,000) Purchase of Current Investments (30,000) Net Cash used in Investing Activities (B) | | (80,000) |
| III. Cash Flow from Financing Activities: Proceeds from Issue of Equity Share Capital 50,000 Proceeds from Securities Premium 10,000 Repayment of Bank Overdraft (10,000) Dividend Paid (10,000) Interest Paid on Bank Overdraft (1,000) Net Cash Flow from Financing Activities (C) | | 39,000 |
| Net Increase in Cash and Cash Equivalents (A + B + C) Cash and Cash Equivalents at the beginning of the year Cash and Cash Equivalents at the end of the year | | 20,000 30,000 50,000 |
Teacher's Note:
a) Dividend paid is based on the previous year's proposed dividend adjusted for unclaimed dividend.
b) Bank overdraft is treated as part of financing activities or cash equivalents depending on standard classification; here treated under financing.
Question 11
(A) State the objective of calculating Liquidity Ratios. [2 Marks]
Answer:
The main objective of calculating liquidity ratios is to assess the short-term financial stability and solvency of an enterprise, ensuring whether the firm has sufficient liquid assets to meet its short-term obligations as and when they fall due.
Teacher's Note:
a) Liquidity ratios include current ratio and quick ratio.
b) Creditors and short-term lenders rely heavily on these ratios.
(B) From the following information, calculate Earnings per share (up to two decimal places): [2 Marks]
Particulars
10% Preference Share Capital Rs. 6,00,000
Equity Share Capital (3,00,000 shares of Rs. 10 each) Rs. 30,00,000
Profit before Tax Rs. 15,00,000
Tax Rate 30%
Answer:
Working Notes & Formula:
1. Profit before Tax = Rs. 15,00,000.
2. Tax (30%) = 15,000,000 × 30% = Rs. 4,50,000.
3. Profit after Tax = 15,00,000 - 4,50,000 = Rs. 10,50,000.
4. Preference Dividend = 10% of 6,00,000 = Rs. 60,000.
5. Profit available for Equity Shareholders = Profit after Tax - Preference Dividend = 10,50,000 - 60,000 = Rs. 9,90,000.
6. Number of Equity Shares = 3,00,000.
Earnings per Share (EPS) = Profit available for Equity Shareholders / Number of Equity Shares = 9,90,000 / 3,00,000 = Rs. 3.30.
Teacher's Note:
a) Preference dividend must always be deducted from profit after tax before calculating EPS.
b) EPS is expressed per share up to two decimal places.
(C) From the following information, calculate the following ratios (up to two decimal places): [6 Marks]
(i) Debt to Total Assets Ratio
(ii) Proprietary Ratio
(iii) Inventory Turnover Ratio
Particulars (Rs.)
Fixed Assets 14,00,000
Current Assets (including inventory of Rs. 2,00,000) 10,00,000
Shareholders’ Funds 14,40,000
Non-Current Liabilities (10% Long-term Bank Loan) 8,00,000
Current Liabilities 5,00,000
Revenue from Operations 15,00,000
Gross Profit 6,00,000
Answer:
(i) Debt to Total Assets Ratio:
Formula: Long-Term Debt / Total Assets
Long-Term Debt = Rs. 8,00,000.
Total Assets = Fixed Assets (14,00,000) + Current Assets (10,00,000) = Rs. 24,00,000.
Ratio = 8,00,000 / 24,00,000 = 0.33 : 1.
(ii) Proprietary Ratio:
Formula: Shareholders’ Funds / Total Assets
Shareholders’ Funds = Rs. 14,40,000.
Total Assets = Rs. 24,00,000.
Ratio = 14,40,000 / 24,00,000 = 0.60 : 1.
(iii) Inventory Turnover Ratio:
Formula: Cost of Revenue from Operations / Average Inventory (or Closing Inventory if average not given)
Cost of Revenue from Operations = Revenue from Operations - Gross Profit = 15,00,000 - 6,00,000 = Rs. 9,00,000.
Inventory = Rs. 2,00,000.
Ratio = 9,00,000 / 2,00,000 = 4.5 times.
Teacher's Note:
a) Total assets include both non-current and current assets.
b) Cost of revenue from operations is derived by subtracting gross profit from net revenue from operations.
SECTION C (20 Marks)
Answer any two questions.
Question 12
(a) You enter 50+16 in a cell. The worksheet does not display 66 in the cell, instead it shows 50 + 16. What is the reason for this? [2 Marks]
Answer:
The reason is that the cell is formatted as Text, or the entry was preceded by an apostrophe (’), causing Excel to treat the formula as a literal text string rather than a mathematical calculation.
Teacher's Note:
a) Formulas in spreadsheets must start with an equal sign (=).
b) Text format prevents automatic evaluation of arithmetic expressions.
(b) Explain the meaning of the following functions: [2 Marks]
(i) Count(C15:30)
(ii) Max(A4:A10)
Answer:
(i) Count(C15:30): Counts the number of cells containing numerical values within the specified range from cell C15 to C30.
(ii) Max(A4:A10): Returns the highest or maximum numerical value from the range of cells A4 to A10.
Teacher's Note:
a) COUNT ignores blank cells and text strings.
b) MAX evaluates only numeric comparisons.
(c) What is Auto filling? [2 Marks]
Answer:
Auto filling is a spreadsheet feature that allows the user to quickly fill cells with data that follows a pattern or sequence, such as numbers, days of the week, or months, by dragging the fill handle across adjacent cells.
Teacher's Note:
a) The fill handle is the small black square at the bottom-right corner of the active cell.
b) It saves time by automatically generating series and copying formulas.
(d) What does the error # VALUE mean? [2 Marks]
Answer:
The #VALUE! error occurs when the wrong type of argument or operand is used in a formula, such as trying to perform mathematical operations on text data instead of numbers.
Teacher's Note:
a) It indicates a data type mismatch.
b) Checking formula inputs for text where numbers are expected resolves this error.
(e) Give the full form of SQL. [2 Marks]
Answer:
Structured Query Language.
Teacher's Note:
a) SQL is used for managing and querying relational database management systems.
b) Spelling must be exact in board exams.
Question 13
The spread sheet below shows the sales of Nippon Ltd. made by four salesmen in the four quarters of the financial year 2018-19:
| A | B | C | D | E | F | G | H | |
|---|---|---|---|---|---|---|---|---|
| 1 | Sales in Rs. | |||||||
| 2 | Salesman No. | Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 | Total Sales | Commission @8% of sales | Commission @5% of sales |
| 3 | S1 | 7000 | ? | 8500 | 9500 | |||
| 4 | S2 | 6000 | 7000 | 8400 | 9200 | |||
| 5 | S3 | 7200 | 8000 | 9300 | 9000 | |||
| 6 | S4 | 9100 | 9000 | 9600 | 8700 | |||
| 7 | Total | |||||||
Answer the following questions based on the above spreadsheet:
(a) It is the policy of the company to sell its goods at a profit of 25% on cost. Write the formula to calculate:
(i) The profit made on the goods sold by Salesman No. S2 in Qtr 3. [2 Marks]
(ii) The cost of goods sold by Salesman No. S3 in Qtr 4. [2 Marks]
(iii) The total cost of the goods sold by the company in cell F7. [2 Marks]
Answer:
(i) = D4 * 25 / 125 (or = D4 - (D4 / 1.25))
(ii) = E5 / 1.25 (or = E5 - (E5 * 25 / 125))
(iii) = F7 / 1.25
Teacher's Note:
a) When profit is 25% on cost, profit on selling price is 25/125 or 1/5th.
b) Cost = Selling Price - Profit.
(b) Calculate the price at which Salesman No. S1 would have made sales in Qtr 2 if the profit made on the sales was Rs. 1,500. [2 Marks]
Answer:
Cost = Profit × 4 = 1,500 × 4 = Rs. 6,000.
Selling Price (Sales) = Cost + Profit = 6,000 + 1,500 = Rs. 7,500.
(Alternatively: Selling Price = Profit × 125 / 25 = 1,500 × 5 = Rs. 7,500).
Teacher's Note:
a) Profit is 25% of cost, which means profit is 1/5th of the selling price.
b) Multiplying profit by 5 gives the total selling price.
(c) Write an expression to show the effect on the profits, if the rate of commission was reduced from 8% to 5% of the sales. [2 Marks]
Answer:
= F7 * 0.08 - F7 * 0.05 (or = F7 * 0.03)
Teacher's Note:
a) Reduction in commission increases the company's net profit.
b) 8% minus 5% equals a 3% net savings on total sales in cell F7.
Question 14
(a) What is meant by the terms Back-end and Front-end as used in data applications? [4 Marks]
Answer:
1. Front-end: It is the user interface (UI) through which users interact with an application, entering data and viewing results (e.g., forms and reports in MS Access).
2. Back-end: It is the database engine or server side where data is stored, managed, and processed securely (e.g., tables, queries, and SQL database storage).
Teacher's Note:
a) Front-end deals with presentation, while back-end deals with data persistence.
b) Examples include GUI forms for front-end and MySQL/Oracle for back-end.
(b) Define: [2 Marks]
(i) Table
(ii) Field
Answer:
(i) Table: A database object that stores data in rows (records) and columns (fields) related to a specific topic.
(ii) Field: A single piece of data or attribute of an entity, represented as a column in a database table.
Teacher's Note:
a) Tables form the fundamental building blocks of a relational database.
b) Fields define the data type and properties of information stored.
(c) Name any two business applications of DBMS [2 Marks]
Answer:
1. Banking systems for managing customer accounts and transactions.
2. Human Resource (HR) systems for employee records and payroll management.
Teacher's Note:
a) DBMS ensures data integrity and security in business environments.
b) Other examples include airline reservation systems and e-commerce inventory.
(d) Give any two features of a primary key. [2 Marks]
Answer:
1. It uniquely identifies each record in a table.
2. It does not allow null (empty) values.
Teacher's Note:
a) Every table can have only one primary key (which may consist of single or multiple columns as a composite key).
b) Duplicate values are automatically rejected by the database.
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ISC Class 12 Accountancy Board Exam Question Paper 2020 with Solutions & Previous Year Question Papers for Class 12 Accountancy
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FAQs
The ISC Class 12 Accountancy Board Exam Question Paper 2020 with Solutions is available for download on StudiesToday.com. It includes complete set with all sections so that Class 12 students can practice with the exact same paper that came in the ISC exams.
Yes, the solutions for ISC Class 12 Accountancy Board Exam Question Paper 2020 with Solutions are prepared by subject matter experts as per official marking scheme. Class 12 students will understand the structure of answers and 'step-marks' methodology Accountancy.
Solving previous year papers like ISC Class 12 Accountancy Board Exam Question Paper 2020 with Solutions is important to understand repeat themes and question difficulty levels of Accountancy. It helps Class 12 students to test their time management skills too.
Yes, where applicable, ISC Class 12 Accountancy Board Exam Question Paper 2020 with Solutions is available in both English and Hindi mediums. All students from Class 12 can access Accountancy study material in their preferred language.
No, all previous year question papers on StudiesToday, including ISC Class 12 Accountancy Board Exam Question Paper 2020 with Solutions, are provided free of charge in mobile-friendly PDF.