ISC Class 12 Accountancy Sample Paper 2025 with Solutions

SECTION A (60 Marks)
Answer all questions.

Question 1
In subparts (i) to (iv) choose the correct options and in subparts (v) to (x) answer the questions as instructed.

(i) The commission due to a partner is closed by: [1 Mark]
(a) Debiting it to Partner's Capital A/c
(b) Crediting it to Partner's Capital A/c
(c) Debiting it to P/L Appropriation A/c
(d) Crediting it to P/L Appropriation A/c

Answer: (c) Debiting it to P/L Appropriation A/c

Teacher's Note:
a) Commission to a partner is an appropriation of profit, not a charge.
b) At the year end the Commission A/c is closed by transferring it to the P/L Appropriation A/c.
c) The partner's Capital or Current A/c is credited when the commission is allowed.
d) Do not show partner's commission in the Profit and Loss A/c.

(ii) On the admission of Adil as a partner, the capitals of Rohan and Pavan, after all adjustments, were Rs. 50,000 and Rs. 40,000. Their capitals before Adil's admission were Rs. 45,000 and Rs. 48,000.
The capital account of the partner having surplus capital was adjusted through his current account by passing the journal entry: [1 Mark]
(a) Debit Rohan's Capital A/c Rs. 5,000; Credit Rohan's Current A/c Rs. 5,000
(b) Debit Pavan's Capital A/c Rs. 8,000; Credit Pavan's Current A/c Rs. 8,000
(c) Debit Rohan's Current A/c Rs. 5,000; Credit Rohan's Capital A/c Rs. 5,000
(d) Debit Pavan's Current A/c Rs. 8,000; Credit Pavan's Capital A/c Rs. 8,000

Answer: (b) Debit Pavan's Capital A/c Rs. 8,000; Credit Pavan's Current A/c Rs. 8,000

Pavan's capital was Rs. 48,000 but should be Rs. 40,000, so he has a surplus of Rs. 8,000. The surplus is taken out of his Capital A/c and credited to his Current A/c.

Teacher's Note:
a) Surplus capital = Existing capital - Required capital.
b) Surplus capital is transferred out by debiting the Capital A/c.
c) Rohan has a shortage of Rs. 5,000, which would be the reverse entry.
d) Read which partner has the surplus before choosing the option.

(iii) Choose the components required to calculate goodwill of a firm by Capitalisation of Average Profits Method. [1 Mark]
P The normal profits of a similar firm in the industry
Q The average profits of the firm
R The number of years' purchase
S The actual capital employed in the business
(a) P, Q, R
(b) Q, R, S
(c) P, Q, S
(d) P, R, S

Answer: (c) P, Q, S

Goodwill = Capitalised value of average profits - Actual capital employed, where Capitalised value = Average profits × 100 / Normal rate of return.

Teacher's Note:
a) The normal rate of return comes from the normal profits of similar firms.
b) Average profits are capitalised at this normal rate.
c) Actual capital employed is deducted to get goodwill.
d) Number of years' purchase is used in the average profit and super profit methods, not here.

(iv) Given below is a fictitious scenario. Read the information and answer the question that follows:
Bhim International Ltd., in order to raise additional funds for expansion purpose, took a loan of Rs. 10,00,000 at a rate of 12% per annum from NZ Bank on 1^st July, 2023, against which it offered Rs. 15,00,000, 8% Debentures of Rs. 100 each as a collateral security.
Calculate the finance cost to the company for the year 2023-24. [1 Mark]
(a) Rs. 1,20,000
(b) Rs. 2,40,000
(c) Rs. 90,000
(d) Rs. 1,80,000

Answer: (c) Rs. 90,000

Interest on loan = 10,00,000 × 12/100 × 9/12 = Rs. 90,000 (1^st July 2023 to 31^st March 2024)
No interest is paid on debentures issued as collateral security.

Teacher's Note:
a) Finance cost is the interest on the bank loan only.
b) Count only 9 months because the loan was taken on 1^st July.
c) Collateral debentures carry no interest as long as the loan is repaid.
d) Option (a) is the mistake of taking a full year's interest.

(v) Ira (a partner in a firm) was allowed to retain the whole of the stock as her remuneration for services rendered by her in the course of dissolution of the firm. The value of stock was Rs. 10,000 which had been transferred to the Realisation Account.
Complying with the accounting principle of full disclosure, record the above transaction in the books of the partnership firm at the time of its dissolution. [1 Mark]

Answer:

Journal

Teacher's Note:
a) Full disclosure needs two entries: one for the asset taken and one for the remuneration.
b) Taking over the stock is like buying it, so her Capital A/c is debited.
c) Remuneration is a realisation expense, so Realisation A/c is debited.
d) The two entries cancel in her Capital A/c but both must be recorded.

(vi) Aman and Vinod are partners in a firm. Their Balance Sheet showed:
Gross Debtors: Rs. 1,52,000
Provision for doubtful debts: Rs. 1,000
On Milin's admission as a new partner, the assets and liabilities are to be revalued as:
Unaccounted accrued income of Rs. 10,000 to be provided for
Bills Payable of Rs. 10,000 which were recorded, to be discharged at a rebate of 10%
Debtors of Rs. 2,000 to be irrecoverable
Provision for doubtful debts to be provided @ 2% of the debtors
What is the net effect of revaluation of assets and liabilities? [1 Mark]

Answer:
Gain: Accrued income 10,000 + Rebate on bills payable (10% of 10,000) 1,000 = Rs. 11,000
Loss: Bad debts 2,000 + Additional provision (2% of 1,50,000 = 3,000 - 1,000 existing) 2,000 = Rs. 4,000
Net effect = 11,000 - 4,000 = Net gain of Rs. 7,000

Teacher's Note:
a) Write off bad debts first, then calculate the provision on the remaining debtors.
b) Only the extra provision needed is a loss (3,000 - 1,000).
c) A rebate on a liability is a gain because less has to be paid.
d) Show gains and losses separately before finding the net effect.

(vii) Assertion: A company can reissue a forfeited share at an amount which is less than the amount not received on it.
Reason: A company can write off the net loss made on the reissue of a forfeited share from its capital reserve.
Which one of the following is correct? [1 Mark]
(a) Both Assertion and Reason are true and Reason is the correct explanation for Assertion.
(b) Both Assertion and Reason are true but Reason is not the correct explanation for Assertion.
(c) Assertion is false and Reason is true.
(d) Both Assertion and Reason are false.

Answer: (d) Both Assertion and Reason are false.

Teacher's Note:
a) The discount on reissue cannot be more than the amount forfeited on that share.
b) A loss on reissue is met from the Share Forfeiture A/c, not from Capital Reserve.
c) Capital Reserve only receives the gain left after reissue.
d) Test each statement separately before choosing.

(viii) Mention the liability of a partnership firm which is not shown in its Balance Sheet, but is paid off at the time of the dissolution of the firm. [1 Mark]

Answer:
Unrecorded liability (or a contingent liability which becomes a definite liability on dissolution).

Teacher's Note:
a) An unrecorded liability is not in the books, so it is not in the Balance Sheet.
b) When paid on dissolution it is debited to the Realisation A/c.
c) A contingent liability that becomes payable is treated the same way.
d) One correct term is enough for the mark.

(ix) The Adani family has raised their stake in Ambuja Cements by the conversion of 21·20 crore warrants into shares in a transaction that will see them infusing nearly Rs. 6,661 crore. (Source: The Telegraph, Kolkata, 29 March, 2024) [1 Mark]
(a) What is a share warrant?
(b) Mention the head under which Money received against Share Warrants is shown in the Balance Sheet of a company prepared as per Schedule III of the Companies Act, 2013.

Answer:
(a) A share warrant is a financial instrument which gives the holder the right to get the equity shares mentioned in it on a fixed date at a pre-decided price.
(b) Shareholders' Funds.

Teacher's Note:
a) A warrant gives a right to buy shares later at a fixed price.
b) Money received against share warrants is part of Shareholders' Funds.
c) It is shown separately after Share Capital and Reserves and Surplus.
d) Answer both parts to get the mark.

(x) On 1^st April, 2023, Zara Ltd. issued 10,000, 6% Debentures of Rs. 100 each at a discount of 5%. On 31^st March, 2024, the company had Rs. 40,000 in its Capital Reserve A/c and Rs. 30,000 as balance of Securities Premium.
Give the journal entry to write off the discount on issue of issue of debentures on 31^st March, 2024. [1 Mark]

Answer:
Discount = 10,000 × 100 × 5% = Rs. 50,000

Journal

Teacher's Note:
a) Securities Premium is used first to write off the discount.
b) The balance is written off from the Statement of Profit and Loss.
c) Capital Reserve cannot be used to write off a discount on issue.
d) Check that the debits total Rs. 50,000.

Question 2 [3 Marks]
Mita, Sita and Rita are partners in a firm. Rita retires from the firm on 31^st March, 2024.
Her claim, including her capital and her share of goodwill, is determined at Rs. 2,50,000.
On this date the firm's books showed:
(a) An unrecorded investment valued at Rs. 60,000 which was given to an unrecorded creditor of Rs. 1,16,000 in settlement of his claim of Rs. 70,000.
(b) An unrecorded vehicle which was given to Rita at the market value of Rs. 46,000 in part settlement of her claim.
The balance of Rita's claim was discharged by cheque.
You are required to pass journal entries to record the above transactions in the books of the firm on 31^st March, 2024.

Answer:

Journal

Working Notes:
1. The unrecorded creditor's total claim is Rs. 1,16,000. Rs. 70,000 of it is settled by handing over the unrecorded investment, so no entry is passed for that part. The remaining Rs. 46,000 (1,16,000 - 70,000) is recorded as a liability.
2. Balance paid to Rita = 2,50,000 - 46,000 = Rs. 2,04,000.

Teacher's Note:
a) An unrecorded asset given to an unrecorded creditor needs no entry, because neither item is in the books.
b) An unrecorded asset or liability that stays is brought in through the Revaluation A/c.
c) Here the revaluation gain and loss are equal, so there is nothing to share among partners.
d) The question's wording is unclear; this answer follows the reading used by the official key.

OR

Akshat, Javed and Gaurav are partners in a firm sharing profits in the ratio of 5:3:7.
Akshat died on 31^st March, 2024.
Javed and Gaurav decided to share the profits in reconstituted firm in the ratio 2:3.
The capital accounts of the partners on 31^st March, 2024, before considering the firm's goodwill were:
Akshat Rs. 1,66,000
Javed Rs. 66,000
Gaurav Rs. 1,41,000
After considering the adjustment for goodwill, Akshat's share was determined to be Rs. 1,81,000. It was decided that this amount would be paid to Akshat's executor immediately by the firm through a cheque, the amount being contributed by Javed and Gaurav in such a manner that their capitals would become proportionate to their new profit-sharing ratio.
You are required to pass journal entries to record:
(i) The adjustment for self-generated goodwill of the firm.
(ii) Cash brought in by Javed and Gaurav to pay off Akshat's executor.
(iii) Payment made to Akshat's executor.

Answer:

Working Notes:
1. Akshat's share of goodwill = 1,81,000 - 1,66,000 = Rs. 15,000
2. Gaining ratio: Javed = 2/5 - 3/15 = 6/15 - 3/15 = 3/15; Gaurav = 3/5 - 7/15 = 9/15 - 7/15 = 2/15. Gaining ratio = 3:2. Javed pays 9,000 and Gaurav pays 6,000.
3. Capitals after goodwill: Javed = 66,000 - 9,000 = 57,000; Gaurav = 1,41,000 - 6,000 = 1,35,000.
4. Total capital of the new firm = 57,000 + 1,35,000 + 1,81,000 (cash brought in) = Rs. 3,73,000
5. Required capitals in 2:3: Javed = 3,73,000 × 2/5 = 1,49,200; Gaurav = 3,73,000 × 3/5 = 2,23,800
6. Cash to be brought in: Javed = 1,49,200 - 57,000 = Rs. 92,200; Gaurav = 2,23,800 - 1,35,000 = Rs. 88,800. Total = Rs. 1,81,000

Journal

Teacher's Note:
a) Goodwill is adjusted through the gaining partners' capital accounts in the gaining ratio.
b) Use the capitals after the goodwill adjustment when making them proportionate.
c) The official key shows Javed Rs. 89,200 and Gaurav Rs. 91,800 because it uses capitals before the goodwill entry; after goodwill the correct amounts are Rs. 92,200 and Rs. 88,800.
d) Check: 1,49,200 : 2,23,800 = 2:3.

Question 3 [3 Marks]
On 1^st April, 2023, Ruth Ltd. purchased Plant and Machinery for Rs. 11,00,000 from Pablo Ltd. payable as to Rs. 1,00,000 by accepting a promissory note and the balance by an issue of 11% Debentures of Rs. 100 each at a premium of 10% to be redeemed at a premium of 2 % after six years.
You are required to pass journal entries in the books of Ruth Ltd. only to record the payment made to Pablo Ltd.

Answer:

Journal of Ruth Ltd.

Working Notes:
1. Balance payable = 11,00,000 - 1,00,000 = Rs. 10,00,000
2. Number of debentures = 10,00,000 / 110 = 9,090.90, so 9,090 debentures are issued.
3. 9,090 × 110 = Rs. 9,99,900; the balance Rs. 100 is paid in cash.
4. Premium on redemption = 9,09,000 × 2% = Rs. 18,180

Teacher's Note:
a) Debentures can only be issued in whole numbers, so a small balance is paid in cash.
b) The premium on redemption is a loss recorded at the time of issue.
c) Securities Premium is 10% of the face value of the debentures issued.
d) The question asks only for the payment entries, not the purchase entry.

OR

A limited company made an issue, which was fully subscribed, of 2,000, 5% Debentures of Rs. 100 each at Rs. 96, to be redeemed at par after five years. The debentures were allotted on 31^st May 2023, subscriptions being payable:
15% on application
30% on allotment
30% on 30^th June, 2023
Balance on 30^th September 2023
One debenture holder holding 100 debentures paid the allotment with the first call along with interest on calls-in-arrears @ 10% per annum.
You are required to:

(i) Give the amounts in rupees payable with: [2 Marks]
1. Allotment
2. Second and Final Call

Answer:
1. Allotment = 30% of Rs. 100 = Rs. 30 per debenture (total 2,000 × 30 = Rs. 60,000)
2. Second and Final Call = Issue price 96 - (15 + 30 + 30) = Rs. 21 per debenture (total 2,000 × 21 = Rs. 42,000)

Teacher's Note:
a) The percentages are on the face value of Rs. 100.
b) The discount of Rs. 4 reduces the last call, so it is Rs. 21, not Rs. 25.
c) Check: 15 + 30 + 30 + 21 = Rs. 96, the issue price.
d) The official key gives the per-debenture amounts.

(ii) Prepare the Interest-on-Calls in Arrears A/c. [1 Mark]

Answer:
Interest = 100 × 30 × 10/100 × 1/12 = Rs. 25 (allotment due on 31^st May, paid on 30^th June)

Interest on Calls-in-Arrears Account

Teacher's Note:
a) Interest is charged only for the period of delay, here one month.
b) It is an income, so it is closed to the Statement of Profit and Loss.
c) Calculate it only on the unpaid allotment money of that holder.
d) Rs. 3,000 × 10% × 1/12 = Rs. 25.

Question 4 [3 Marks]
Ronny Ltd. (an unlisted construction company) redeems its 7,000, 10% Debentures of Rs. 100 each at a premium of 5 % in instalments, as follows:

You are required to prepare for the year 2023-24:
(i) General Reserve Account.
(ii) Debenture holders' Account. (Ignore interest on Debentures)

Answer:

Working Notes:
1. DRR (10% of debentures outstanding) is transferred to General Reserve as each lot is redeemed: 2022: 20,000; 2023: 30,000; 2024: 20,000.
2. Opening General Reserve on 1.4.2023 = 20,000 + 30,000 = Rs. 50,000
3. Amount due on redemption in 2024 = 2,000 × 100 = 2,00,000 + Premium 5% = 10,000. Total = Rs. 2,10,000

(i) General Reserve Account

(ii) Debenture holders' Account

Teacher's Note:
a) An unlisted company keeps DRR at 10% of outstanding debentures.
b) DRR on the debentures redeemed each year is moved to General Reserve.
c) The official key shows the premium as Rs. 20,000; 5% of Rs. 2,00,000 is Rs. 10,000, so the total paid is Rs. 2,10,000.
d) The redemption entries are dated 31^st March, 2024.

Question 5 [3 Marks]
Kriti and Atif are partners sharing profits and losses equally. On 31^st March, 2024, they admitted David as a third partner for 1/5 share in the profits.
It is decided that on David's admission:
Atif would retain his original share
Goodwill would be valued by the super profit method on the basis of the following information:
(a) Balance Sheet of Kriti and Atif (an extract) As at 31^st March, 2024

(b) The normal rate of return is 12% per annum.
(c) Average profits of the firm for last four years are Rs. 74,000.
You are required to calculate:
(i) The sacrificing ratio of the partners.
(ii) The value of goodwill of the firm at four years' purchase of the super profit.

Answer:
(i) Atif keeps his 1/2 share, so Kriti alone gives David his 1/5 share.
Sacrificing ratio (Kriti : Atif) = 1/5 : 0, that is, only Kriti sacrifices.
(ii) Capital Employed = 2,50,000 + 1,75,000 + 40,000 - 10,000 + 25,000 = Rs. 4,80,000
Normal Profit = Capital Employed × Normal Rate of Return / 100 = 4,80,000 × 12/100 = Rs. 57,600
Super Profit = Average Profit - Normal Profit = 74,000 - 57,600 = Rs. 16,400
Goodwill = Super Profit × Number of years' purchase = 16,400 × 4 = Rs. 65,600

Teacher's Note:
a) If one partner keeps his old share, the other partner makes the whole sacrifice.
b) Capital employed includes capitals, credit current accounts and reserves, less debit current accounts.
c) Write formulas in full words, not as SP or NP.
d) New ratio: Kriti 3/10, Atif 1/2, David 1/5.

Question 6 [6 Marks]
The following balances have been extracted from the books of Nirvana Ltd, as at 31^st March, 2024:

You are required to show the above items in Notes to Accounts accompanying the Balance Sheet of Nirvana Ltd. prepared as per Schedule III of the Companies Act 2013 as at 31^st March, 2024.

Answer:

Notes to Accounts of Nirvana Ltd. as at 31^st March, 2024

Working Notes:
1. Calls-in-arrears at Rs. 1 per share = 40,000, so 40,000 shares are not fully paid and 60,000 shares are fully paid.
2. Underwriting commission is written off against Securities Premium (Section 52).

Teacher's Note:
a) Calls-in-arrears are deducted from the shares that are subscribed but not fully paid.
b) A debit balance of the Statement of Profit and Loss is shown as a negative item in Reserves and Surplus.
c) A security deposit for ten years is a long-term loan and advance (an asset).
d) The uncalled amount on partly paid shares is shown only as a commitment, not in the totals.

Question 7 [6 Marks]
Anita and Anil are partners in a firm. On 1^st April, 2024, they admitted Jia as a third partner. The capital accounts of the partners after considering the following adjustments on Jia's admission are given below:
(a) Loss on revaluation due to depreciation on machinery @ 20% per annum.
(b) The General Reserve maintained in the old firm was not to be disturbed in the reconstituted firm.

Partners' Capital Accounts

Additional information:
On 31^st March, 2024, the firm of Anita and Anil, apart from plant and machinery and a bank balance of Rs. 2,15,000, had no other asset.
You are required to prepare the Balance Sheet of the reconstituted firm on the date of Jia's admission after considering the information given above.
(Show your workings clearly)

Answer:

Balance Sheet of Anita, Anil and Jia as at 1^st April, 2024

Working Notes:
1. Loss on revaluation = 7,500 + 7,500 = Rs. 15,000 = 20% of machinery. Value of machinery = 15,000 × 100/20 = Rs. 75,000; after depreciation = 75,000 - 15,000 = Rs. 60,000
2. Jia's Current A/c is debited 25,000 + 25,000 = Rs. 50,000 for her share of the undisturbed General Reserve. Taking Jia's share as 1/3 (the old partners are credited equally), General Reserve = 50,000 × 3 = Rs. 1,50,000
3. Cash at Bank = 2,15,000 + 75,000 (Jia's capital) + 50,000 (premium for goodwill) = Rs. 3,40,000
4. Check of old Balance Sheet: Capitals 1,70,000 + General Reserve 1,50,000 = 3,20,000 = Bank 2,15,000 + Machinery 75,000 + Goodwill 20,000 + P&L (Dr) 10,000

Teacher's Note:
a) Work backwards from the revaluation loss to find the machinery value.
b) When the reserve is not distributed, the new partner compensates old partners for her share of it through her Current A/c.
c) Jia's Current A/c with a debit balance is shown on the assets side.
d) Goodwill and the P&L debit balance were written off, so they do not appear in the new Balance Sheet.

OR

Alfa and Beta are partners in a firm. Their Balance Sheet as at 31^st March, 2024, is given below:

Balance Sheet of Alfa and Beta As at 31^st March, 2024

On 1^st April, 2024, they admit Beta's son Gama, as a partner on the following terms:
(a) Gama to have 1/4 share of profits, half of which is to be gifted to him by his father and the remaining half to be purchased from Alfa.
(b) Gama to bring in Rs. 60,000 as his capital but would be unable to bring in cash his share of goodwill.
(c) Goodwill of the firm to be valued at Rs. 40,000.
(d) 50% of the investment to be taken over by Alfa and Beta in their profit-sharing ratio.
(e) The liability on account of Workmen's Compensation Claim to be Rs. 30,000.
You are required to:

(i) Calculate the new profit-sharing ratio of all the partners. [1 Mark]

Answer:
Old ratio of Alfa and Beta = 1:1 (no ratio is given, so profits are shared equally).
Gama's share = 1/4; gifted by Beta = 1/2 × 1/4 = 1/8; purchased from Alfa = 1/8.
Alfa = 1/2 - 1/8 = 3/8; Beta = 1/2 - 1/8 = 3/8; Gama = 1/4 = 2/8
New ratio = 3 : 3 : 2

Teacher's Note:
a) When no ratio is given, old partners share profits equally.
b) Each old partner gives up 1/8, one as a gift and one by sale.
c) The official key shows 7:7:2 by subtracting 1/8 from 1 instead of from 1/2; the correct ratio is 3:3:2.
d) Check: 3/8 + 3/8 + 2/8 = 1.

(ii) Prepare the Partners' Capital Accounts. [5 Marks]

Answer:

Partners' Capital Accounts

Working Notes:
1. Existing goodwill of Rs. 20,000 written off equally: 10,000 each.
2. 50% of investment = Rs. 10,000 taken over equally: 5,000 each.
3. Workmen's compensation claim 30,000 - reserve 24,000 = Rs. 6,000 loss on revaluation, shared equally: 3,000 each.
4. Gama's share of goodwill for the share purchased from Alfa = 40,000 × 1/8 = Rs. 5,000, debited to Gama's Current A/c and credited to Alfa. The share gifted by Beta needs no payment.

Teacher's Note:
a) A share gifted by a father to his son needs no goodwill payment to the father.
b) Goodwill already in the books is written off in the old ratio.
c) Extra workmen's compensation liability over the reserve is a revaluation loss.
d) If the new partner cannot bring goodwill in cash, debit his Current A/c.

Question 8 [6 Marks]
Atul and Peter were partners in a firm sharing profits and losses in the ratio of 3:5. They dissolved their firm on 31^st March, 2024, when their Balance Sheet showed the following balances:

On the date of dissolution of the firm:
(a) Peter paid the realisation expenses of Rs. 2,000 on behalf of the firm.
(b) Atul discharged his wife's loan of Rs. 5,000 which she had given to the firm.
(c) The dissolution resulted in a profit of Rs. 24,000 from the realisation of assets and settlement of liabilities.
You are required to pass journal entries to close the books of the firm (including the entries to show the final settlement of the amount due from the partners / due to the partners by the firm).

Answer:

Journal

Working Notes:
Atul: 40,000 - 3,000 + 8,250 + 5,000 + 9,000 = Rs. 59,250
Peter: 35,000 + 13,750 + 2,000 + 15,000 = Rs. 65,750

Teacher's Note:
a) A partner's loan is paid before the partners' capitals.
b) Expenses or liabilities paid by a partner are credited to that partner's Capital A/c.
c) The official key's narration for the loan entry wrongly mentions workmen compensation; it is simply Atul's loan being repaid.
d) Both partners have credit balances, so both are paid in cash.

Question 9

(A) Deb, Riza and Ved entered into a partnership on 1^st July, 2023, without any agreement as to profit sharing, except that Deb guaranteed that Ved's share of profit, after considering interest into account, would not be less than Rs. 8,500 per annum.
The initial capital provided by the partners was as follows:
Deb Rs. 60,000;
Riza Rs. 20,000;
Ved Rs. 12,000 (increased on the following 1^st January, 2024, to Rs. 16,000)
In addition to the above capital, Deb and Riza gave temporary loans to the partnership firm as follows:
Deb advanced Rs. 18,000 on 1^st October, 2023, and was repaid on 1^st April following.
Riza advanced Rs. 40,000 on 1^st September, 2023, and was repaid along with interest, on 1^st December, 2023.
The profit of the firm for the year ended 31^st March, 2024, before providing for any interest was Rs. 21,000.
You are required to prepare for the year 2023-24:

(i) Profit and Loss Appropriation Account. [4½ Marks]

Answer:

Profit and Loss Appropriation Account for the year ending 31^st March, 2024

Working Notes:
1. With no agreement, profits are shared equally and no interest on capital is allowed.
2. Interest on partners' loans at 6% p.a.: Deb = 18,000 × 6/100 × 6/12 = Rs. 540; Riza = 40,000 × 6/100 × 3/12 = Rs. 600
3. Divisible profit = 21,000 - 1,140 = 19,860; each partner's share = Rs. 6,620
4. Ved's deficiency = 8,500 - 6,620 = Rs. 1,880, borne by Deb (as in the official key).

Teacher's Note:
a) Without an agreement, the Indian Partnership Act gives 6% p.a. interest on partners' loans and equal profit sharing.
b) Interest on loans is a charge and is deducted before sharing profit.
c) Only Deb gave the guarantee, so only Deb bears Ved's deficiency.
d) The firm ran for only 9 months; if the Rs. 8,500 per annum guarantee is taken for 9 months (Rs. 6,375), Ved's share of Rs. 6,620 needs no top-up. The official key uses the full Rs. 8,500.

(ii) Riza's Loan Account. [1½ Marks]

Answer:

Riza's Loan Account

Teacher's Note:
a) The loan was repaid with interest, so the account closes with no balance.
b) Interest is for 3 months, from 1^st September to 1^st December.
c) Interest on a partner's loan is credited to the Loan A/c.
d) Check: 40,000 + 600 = Rs. 40,600 paid.

(iii) Ved's Capital Account. [2 Marks]

Answer:

Ved's Capital Account

Teacher's Note:
a) Additional capital of Rs. 4,000 is recorded on the date it is brought in.
b) Ved's share and the deficiency from Deb are both credited.
c) Capitals are fluctuating here, as no current accounts are mentioned.
d) Check the closing balance: 12,000 + 4,000 + 6,620 + 1,880 = Rs. 24,500.

(B) Krish and Tarun are partners in a firm with capitals of Rs. 40,000 and Rs. 60,000. As per their partnership deed:
(a) Interest on capital is to be allowed to them @ 5% per annum.
(b) Profits are to be shared in the ratio of 3:2.
The trading profits for the year 2023-24 was Rs. 3,600.
You are required to calculate the interest on capital allowed to the partners in the year 2023-24. [2 Marks]

Answer:
Interest on capital due: Krish = 40,000 × 5% = 2,000; Tarun = 60,000 × 5% = 3,000; Total = Rs. 5,000
Profit is only Rs. 3,600, so it is shared in the ratio of interest due, 2,000 : 3,000 = 2:3.
Krish = 3,600 × 2/5 = Rs. 1,440
Tarun = 3,600 × 3/5 = Rs. 2,160

Teacher's Note:
a) Interest on capital is an appropriation, so it cannot exceed the profit.
b) When profit is short, it is divided in the ratio of the interest due.
c) The profit-sharing ratio 3:2 is not used here.
d) Nothing is left to share as profit after this.

OR

Deepa, Ridhi and Adit are partners in a firm. Following are the particulars of their Capital and Drawings Accounts for the year 2023-24:

According to their partnership deed:
Profits were to be shared in the ratio of 2:2:1
Interest on capital to be allowed @ 5% per annum
Interest on drawings to be charged @ 8% per annum
The trading profits of the firm for the financial year 2023-24 were Rs. 50,000, before considering the discrepancy of having recorded the inventory at Rs. 10,000 when its realisable value was Rs. 4,000.

(i) You are required to give:
1. The adjusting entry and closing entry for Drawings made by Ridhi [2 Marks]

Answer:

Journal

Teacher's Note:
a) Drawings are first recorded in the Drawings A/c.
b) At the year end the Drawings A/c is closed to the Capital A/c.
c) The official key debits Ridhi's Capital A/c in the first two entries; they should debit Ridhi's Drawings A/c, or the closing entry would count the drawings twice.
d) Date each drawing at the end of its half year.

2. The adjusting entry and closing entry for Interest on Drawings [2 Marks]

Answer:
Interest on drawings = 7,500 × 8/100 × 6/12 = Rs. 300 (the second instalment, drawn at the year end, earns no interest)

Journal

Teacher's Note:
a) Interest is charged only for the time the money was out of the business.
b) The first instalment was out for 6 months; the second for none.
c) Interest on drawings is a gain for the firm, so it is credited to the P&L Appropriation A/c.
d) The partner's Capital A/c is debited with the interest.

3 The adjusting entry and closing entry for Interest on Capital [2 Marks]

Answer:
Deepa = 1,00,000 × 5% = Rs. 5,000; Ridhi = 80,000 × 5% = Rs. 4,000; Adit has a debit balance, so he gets no interest. Total = Rs. 9,000

Journal

Teacher's Note:
a) No interest on capital is given on a debit capital balance.
b) Interest on capital is an appropriation of profit.
c) The profit here is enough, so full interest is allowed.
d) Close the Interest on Capital A/c to the P&L Appropriation A/c.

4. The entry to close the Adit's Loan A/c [2 Marks]

Answer:

Journal

Teacher's Note:
a) The loan was given by the firm to Adit, so it is an asset of the firm.
b) It is closed by debiting Adit's Capital A/c.
c) The loan is interest free, so no interest entry is needed.
d) Name the account 'Loan to Adit' to show it is an asset.

(ii) The accountant of the firm distributed the divisible profit among the partners in the ratio 2:1:2 instead of in the ratio mentioned in the deed.
You are required to rectify the lapse in accounting by passing a single adjusting entry. [2 Marks]

Answer:
Divisible profit = 50,000 - 6,000 (inventory written down) + 300 - 9,000 = Rs. 35,300

Adjusting Journal Entry

Teacher's Note:
a) Inventory must be shown at the lower of cost and realisable value, so profit falls by Rs. 6,000.
b) Compare what each partner got with what each should get.
c) Debit the partner who got too much and credit the partner who got too little.
d) Deepa's share is the same in both ratios, so she is not affected.

Question 10 [10 Marks]
Hero Ltd. was registered with a capital of Rs. 5,00,000 divided into 20,000 shares of Rs. 25 each, payable as:
On Application Rs. 5 per share
On Allotment Rs. 10 per share
On Call The Balance
The company offered to the public for subscription 10,000 shares. It received applications for 11,100 shares.
From amongst the applicants:
(i) Vimal, who had applied for 1,200 shares, paid Rs. 6,000 on application. but was allotted only 600 shares.
(ii) Mohan applied for 1,000 shares, paid the full amount of Rs. 25,000 with his application but was allotted only 500 shares.
(iii) Vineet, who had applied for 1,500 shares, paid his application and allotment money in order but did not pay the call money.
(iv) The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Mohan was used towards allotment and call and any surplus beyond the call was refunded.
The company forfeited Vineet's shares and later re-issued 500 of the forfeited shares @ Rs. 20 per share fully paid up.
You are required to pass journal entries in the books of Hero Ltd.

Answer:

Journal of Hero Ltd.

Working Notes:
1. Application money: 11,100 × 5 = 55,500 + Mohan's extra (25,000 - 5,000) 20,000 = Rs. 75,500
2. Vimal: paid 6,000; needed on 600 shares = 3,000; excess 3,000 used for allotment.
3. Mohan: paid 25,000; needed on 500 shares = 500 × 25 = 12,500 (application 2,500, allotment 5,000, call 5,000); refund 12,500.
4. Allotment adjusted = 3,000 (Vimal) + 5,000 (Mohan) = 8,000; received = 1,00,000 - 8,000 = Rs. 92,000
5. Call: Mohan's advance 5,000; Vineet's arrears 1,500 × 10 = 15,000; received = 1,00,000 - 5,000 - 15,000 = Rs. 80,000
6. Forfeited amount per share = 5 + 10 = Rs. 15; on 500 reissued shares = 7,500; discount = 500 × 5 = 2,500; Capital Reserve = 7,500 - 2,500 = Rs. 5,000

Teacher's Note:
a) Surplus application money is used first for allotment, then for calls, and the rest is refunded.
b) On forfeiture, debit Share Capital with the amount called up and credit Share Forfeiture with the amount received.
c) The discount on reissue cannot be more than the amount forfeited on those shares.
d) Only the gain on the shares reissued is moved to Capital Reserve.

OR

Stem Ltd. came up with an IPO inviting the public to subscribe to its Equity shares of Rs. 10 each. The issue was over-subscribed. The company allotted 80,000 shares to all the applicants making a pro-rata allotment in the ratio of 3:2.
The face value of the share was payable in three instalments.
Based on the information given above and the following extract of ledger accounts and Cash Book (Bank Column), answer the questions that follow:

Cash Book (Bank Column) (extract)

Share Capital A/c (extract)

Calls-in-Arrears A/c (extract)

(i) What are the number of shares applied for by the public? [1 Mark]

Answer:
Shares applied = 80,000 × 3/2 = 1,20,000 shares

Teacher's Note:
a) A pro rata ratio of 3:2 means 3 shares applied for every 2 allotted.
b) All applicants got shares, so there were no rejections.
c) Multiply the shares allotted by 3/2.
d) Write the answer as a number of shares.

(ii) What is the amount payable per share with application? [1 Mark]

Answer:
Application money per share = 4,80,000 / 1,20,000 = Rs. 4

Teacher's Note:
a) Application money is received on all shares applied for.
b) Divide the bank receipt on application by shares applied.
c) Use 1,20,000 shares, not 80,000.
d) The answer is per share.

(iii) What is the amount payable per share with first and final call? [1 Mark]

Answer:
Allotment per share = 4,00,000 / 80,000 = Rs. 5
First and final call = 10 - 4 - 5 = Rs. 1

Teacher's Note:
a) Share Capital credited on allotment gives the allotment amount per share.
b) The three instalments add up to the face value of Rs. 10.
c) Call = Face value - Application - Allotment.
d) Show both steps for the mark.

(iv) Stem Ltd. did not receive the allotment money and call money due from the shareholder Rehan, who had applied for 3,000 shares.
What is the amount received by Stem Ltd. with allotment? [2 Marks]

Answer:
Allotment due = 80,000 × 5 = Rs. 4,00,000
Less: Excess application money adjusted = (1,20,000 - 80,000) × 4 = Rs. 1,60,000
Net allotment due = Rs. 2,40,000
Less: Rehan's unpaid allotment = Rs. 6,000 (2,000 × 5 = 10,000 - excess 1,000 × 4 = 4,000)
Amount received with allotment = 2,40,000 - 6,000 = Rs. 2,34,000

Teacher's Note:
a) Rehan applied for 3,000 shares and was allotted 2,000 (3:2).
b) His excess application money of Rs. 4,000 was already adjusted.
c) The Calls-in-Arrears A/c confirms his unpaid allotment of Rs. 6,000.
d) Deduct both the excess adjusted and the arrears.

(v) Stem Ltd. forfeited Rehan's shares after the final call. It reissued 1,500 forfeited shares fully called up @ Rs. 13 per share
Give the journal entries passed by the company for:

(a) Forfeiture of these shares [2 Marks]

Answer:

Journal

Share Capital = 2,000 × 10 = 20,000; Amount received = 3,000 × 4 = 12,000; Arrears = Allotment 6,000 + Call 2,000 × 1 = 8,000

Teacher's Note:
a) Share Capital is debited with the full called-up amount of Rs. 10 per share.
b) Share Forfeiture is credited with all money received from Rehan, including the excess on application.
c) Unpaid allotment and call are cleared from Calls-in-Arrears.
d) Check: 12,000 + 8,000 = 20,000.

(b) Reissue of the forfeited shares. [3 Marks]

Answer:

Journal

Forfeited amount on 1,500 shares = 12,000 × 1,500 / 2,000 = Rs. 9,000

Teacher's Note:
a) Shares reissued above face value create Securities Premium.
b) There is no discount, so the whole forfeited amount on these shares goes to Capital Reserve.
c) Forfeited amount on the 500 shares not reissued stays in Share Forfeiture A/c.
d) Work out the forfeited amount per share: 12,000 / 2,000 = Rs. 6.

SECTION B (20 Marks)

Question 11
In subparts (i) and (ii) choose the correct options and in subparts (iii) to (v) answer the questions as instructed.

(i) According to the ratings agency Chrisil, healthy demand for grocery items and expansion into tier II and III cities will help organized brick-and-mortar food and grocery (F&G) retailers log a revenue of 14-15% in FY25. The agency further said the debt raising will be capped to ensure healthy key debt protection metrics. Source (edited): Financial Express, 23 December, 2023 [1 Mark]
From the following ratios:
Choose the formula of the ratio to be used by the F&G retailers as a debt protection metrics
Mention the name of the ratio so chosen
(a) Revenue from Operations / Working Capital
(b) (Cost of Revenue from Operation + Operating Expenses) / Revenue from Operations × 100
(c) Net Profit before interest and taxes / Fixed Interest Charges
(d) Net Profit after Tax and Preference Dividend / No. of Equity Shares

Answer: (c) Net Profit before interest and taxes / Fixed Interest Charges

Name of the ratio: Interest Coverage Ratio

Teacher's Note:
a) Debt protection ratios show how safely a firm can pay interest on its debt.
b) Interest Coverage Ratio shows how many times profit covers interest.
c) Option (a) is Working Capital Turnover and (b) is Operating Ratio.
d) Give both the formula and the name for the mark.

(ii) Read the following news item of ITC Ltd. and answer the question that follows:
The company's board declared an interim dividend of Rs. 6·25 per share for the financial year ending March, 2024. The dividend will be paid between February 26-28, 2024, to the eligible shareholders. (Source: The Hindu, Financial Express, 30 January, 2024)
Which of the following are the attributes of interim dividend? [1 Mark]
P It is a charge against profits.
Q It is an appropriation of profits.
R Its declaration and payment will decrease the company's Current Ratio.
S Its declaration and payment will increase the company's Debt Equity Ratio.
(a) Only P
(b) Only Q
(c) P, R and S
(d) Q, R and S

Answer: (d) Q, R and S

Teacher's Note:
a) Dividend is paid out of profit, so it is an appropriation, not a charge.
b) Paying cash reduces current assets, so the current ratio falls (when it is above 1).
c) Equity falls while debt stays the same, so the Debt Equity Ratio rises.
d) Link each statement to the items it changes.

(iii) Bajaj Hindusthan Sugar, one of the largest sugar and ethanol producers, in order to revive the company, has offered to invest Rs. 2,500 crore as fresh equity of which Rs. 1,000 crore has already been infused. (Source (edited): Economic Times, Mumbai Edition 08, August, 2023)
What will be the effect of this decision of Bajaj Hindusthan Sugar on its Debt-Equity Ratio? [1 Mark]

Answer:
The Debt-Equity Ratio will reduce, because fresh equity increases shareholders' funds while debt stays the same.

Teacher's Note:
a) Debt-Equity Ratio = Debt / Equity.
b) A bigger denominator gives a smaller ratio.
c) A lower ratio means the company is less risky for lenders.
d) Always give the reason with the effect.

(iv) Jubilant Food Works Ltd., the company that operates Domino's restaurants in India, reported a net profit of Rs. 65·7 crore for the three months ending, 31^st December, 2023, against Rs. 80 crore for the three months ending, 31^st December, 2022. (Source (edited): Mint, 01 February, 2024)
You are required to give, for the three months ending, 31^st December, 2023, as compared to the same period ending, 31^st December, 2022: [1 Mark]
(a) The formula to calculate the percentage change in net profit of the company.
(b) The percentage change in the net profit of Jubilant Food Works Ltd. of the three months ending 31^st December, 2023 vis-a-vis the three months ending, 31^st December, 2022, mentioning the increase / decrease.

Answer:
(a) Percentage change = Absolute change in net profit / Base year (previous year) profit × 100
(b) = (65.7 - 80) / 80 × 100 = -14.3 / 80 × 100 = -17.88%, that is, a decrease of 17.88%

Teacher's Note:
a) The base is always the earlier period, here Rs. 80 crore.
b) The official key shows a decrease of 21.77% because it divides by 65.7; using its own formula, the correct figure is 17.88%.
c) A negative change means a decrease.
d) Round to two decimal places.

(v) Read the news item given below and answer the questions which follow:
Tata Consultancy Services Rs. 17,000 crore share buyback programme will open on December 1 and close on December 7, India's largest software exporter said on Tuesday.
"The company believes that the buyback is not likely to cause any material impact on the profitability or earnings of the company except to the extent of reduction in the amount available for investment, which the company could have otherwise deployed towards generating investment income", TCS said in a regulatory filing. (Source: Economic Times, December 29, 2023)
How would the Cash Flow from Investing Activities of TCS be affected, if instead of buying back its shares, the company had proceeded with its investing programme? [1 Mark]

Answer:
There would be a cash outflow under investing activities to the extent of the investment made.
Later there would be a cash inflow under investing activities from the interest or dividend earned on those investments.

Teacher's Note:
a) Buying investments is an investing outflow.
b) Interest and dividend received by a non-financial company are investing inflows.
c) A share buyback is a financing activity, not investing.
d) Mention both the outflow and the later inflow.

Question 12 [3 Marks]
From the following information, you are required to prepare a Common Size Balance Sheet of Super Ltd. as at 31^st March, 2024.

Answer:

Common Size Balance Sheet of Super Ltd. as at 31.3.2024

Working Notes:
1. Shareholders' Funds = 2,00,000 + 2.5 × 2,00,000 = Rs. 7,00,000 ('2.5 times more than' means 3.5 times)
2. Total Equity and Liabilities = 7,00,000 + 2,00,000 + 1,00,000 = Rs. 10,00,000
3. Non-Current Assets = 70% of 10,00,000 = Rs. 7,00,000; with Current Assets 3,00,000 the total is Rs. 10,00,000, which confirms step 1.

Teacher's Note:
a) Each item is shown as a percentage of the Balance Sheet total.
b) '2.5 times more than' adds 2.5 times to the original amount.
c) Only this reading makes both sides of the Balance Sheet equal.
d) Both sides must show a total of 100%.

Question 13
Anand Ltd. reported a loss of Rs. 80,000 for the year ended 31^st March, 2024, after considering the depreciation charged on Plant & Machinery represented by '??' and the following items:

Additional information:
1. During the year 2023-24:
A machine having a book value Rs. 40,000, was disposed of for Rs. 25,000 and a machine costing Rs. 2,20,000 was purchased.
Credit sales were Rs. 1,00,000
2. An extract of the balance sheet of the company as at 31^st March, 2023, and as at 31^st March, 2024:

(i) You are required to calculate for the year 2023-24: (Show the workings clearly)

1. The net operating profit of the company before working capital changes. [2 Marks]

Answer:

Working Note 1: Plant and Machinery Account (at cost)

Working Note 2: Provision for Depreciation Account

Teacher's Note:
a) Convert net values to cost by adding back the provision for depreciation.
b) Cost of machine sold = 6,00,000 + 2,20,000 - 7,50,000 = 70,000; its depreciation = 70,000 - 40,000 = 30,000.
c) Interest earned on loans and advances is an investing item, so it is deducted.
d) Start from the loss and add back tax to get profit before tax.

2. Cash from Investing Activity. [2 Marks]

Answer:

Teacher's Note:
a) Loans and advances given by the company are treated as investing activities here.
b) Sale proceeds, not the book value, are the cash inflow.
c) A figure in brackets is an outflow.
d) Net result is an outflow of Rs. 2,31,000.

(ii) Taking the information of credit sales into consideration, state with reason, whether the increase in Trade Receivables in the year 2023-24 over the year 2022-23 will cause the cash from operating activities before tax paid to be more or less then the net operating profit of the company before its working capital changes. [2 Marks]

Answer:
Less.
Reason: Credit sales of Rs. 1,00,000 are included in profit, but cash collected from customers = 15,000 + 1,00,000 - 20,000 = Rs. 95,000. The increase of Rs. 5,000 in trade receivables is profit not yet received in cash, so cash from operations is Rs. 5,000 less.

Teacher's Note:
a) An increase in a current asset is deducted in the cash flow statement.
b) Higher receivables mean some sales are still unpaid.
c) Show the cash collected to support the reason.
d) The word 'reason' in the question carries the marks.

OR

From the following Balance Sheets of Ronald Ltd., you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2023-24. [6 Marks]

Balance Sheets of Ronald Ltd. As at 31^st March, 2024 and 31^st March, 2023

Additional information:
(i) The Debentures of Violet Ltd. were purchased on 31^st March, 2024.
(ii) During the year 2023-24:
(a) Tax of Rs. 20,000 was paid.
(b) Interest on all borrowings due and paid was Rs. 25,000.

Answer:

Working Note 1: Provision for Tax Account

Working Note 2: Net Profit before Tax = Change in Statement of P&L (80,000 - (-60,000)) 1,40,000 + Provision for Tax 7,000 = Rs. 1,47,000
Working Note 3: Interest on investments = 50,000 × 7% = Rs. 3,500 (the new debentures were bought on the last day of the year)

Cash Flow Statement of Ronald Ltd. for the year ended 31^st March, 2024

Teacher's Note:
a) A move from a debit to a credit balance in the Statement of P&L is a profit of 1,40,000.
b) The fall in plant and machinery with no sale or purchase is depreciation.
c) The official key treats bank overdraft as a financing inflow, as shown here.
d) Check: closing bank of Rs. 2,80,000 matches the Balance Sheet.

Question 14 [6 Marks]
Answer any three of the following questions:

(i) Calculate Interest Coverage Ratio of Criss Cross Ltd. (up-to two decimal places) from the following information:

Answer:
Net Profit before Tax = 80,000 × 100/50 = Rs. 1,60,000
Interest = 3,00,000 × 12% + 1,00,000 × 9% = 36,000 + 9,000 = Rs. 45,000
Net Profit before Interest and Tax = 1,60,000 + 45,000 = Rs. 2,05,000
Interest Coverage Ratio = Net Profit before Interest and Taxes / Fixed Interest Charges = 2,05,000 / 45,000 = 4.56 times

Teacher's Note:
a) With 50% tax, profit before tax is double the profit after tax.
b) Add back interest to get profit before interest and tax.
c) Include interest on both the debentures and the bank loan.
d) Give the answer in 'times' to two decimal places.

(ii) Calculate the Operating Ratio of Zen Ltd. (up-to two decimal places) from the following information:

Answer:
Cost of Revenue from Operations = 9,00,000 × 100/120 = Rs. 7,50,000
Operating Ratio = (Cost of Revenue from Operations + Operating Expenses) / Revenue from Operations × 100
= (7,50,000 + 60,000) / 9,00,000 × 100 = 90.00%

Teacher's Note:
a) Gross profit is 20% of cost, so sales = 120% of cost.
b) A common mistake is to take 20% of sales as gross profit.
c) Operating ratio is shown as a percentage.
d) Write the formula in full words.

(iii) A company had Current Assets of Rs. 3,00,000 and Current Liabilities of Rs. 1,50,000, having a current Ratio of 2:1.
What will be its revised Current Ratio after it endorses a bills receivable of Rs. 40,000 to one of its creditors?

Answer:
Current Assets = 3,00,000 - 40,000 = Rs. 2,60,000
Current Liabilities = 1,50,000 - 40,000 = Rs. 1,10,000
Current Ratio = Current Assets / Current Liabilities = 2,60,000 / 1,10,000 = 2.36:1

Teacher's Note:
a) Endorsing a bill reduces both bills receivable and creditors.
b) When the ratio is above 1, an equal fall in both makes it rise.
c) Show the new current assets and current liabilities.
d) Give the answer as a ratio.

(iv) From the following particulars of NB Ltd., calculate its Cost of Revenue from Operations for the year 2023-24.

Answer:
Quick Ratio = Quick Assets / Current Liabilities
1.5 = (6,80,000 - Inventory) / 3,40,000, so Quick Assets = 5,10,000 and Inventory = Rs. 1,70,000
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
4 = Cost of Revenue from Operations / 1,70,000
Cost of Revenue from Operations = Rs. 6,80,000

Teacher's Note:
a) Quick assets = Current assets - Inventory (and prepaid expenses).
b) Find inventory from the quick ratio first.
c) The closing inventory is taken as the average inventory, since no opening figure is given.
d) Write the ratio formulas in full.

SECTION C (20 Marks)

Question 15
In subparts (i) and (ii) choose the correct options and in subparts (iii) to (v) answer the questions as instructed.

(i) The fill function can be __________ to complete formulas in a range. [1 Mark]
(a) Single clicked
(b) Double clicked
(c) Triple clicked
(d) Right clicked

Answer: (b) Double clicked

Teacher's Note:
a) Double-clicking the fill handle copies a formula down the range.
b) The fill handle is the small square at the bottom-right of a cell.
c) Dragging the fill handle also works.
d) Cell references change as the formula is filled.

(ii) An index is clustered if: [1 Mark]
(a) it is on a set of fields that form a candidate key.
(b) it is on a set of fields that form a primary key.
(c) the data records of the file are organized in the same order as the data entries of the index.
(d) the data records of the file are organized not in the same order as the data entries of the index.

Answer: (c) the data records of the file are organized in the same order as the data entries of the index.

Teacher's Note:
a) In a clustered index, the data is stored in the order of the index.
b) A table can have only one clustered index.
c) Option (d) describes a non-clustered index.
d) Clustered indexes make range searches faster.

(iii) Mention the symbol which specifies the fixed columns or rows in a formula. [1 Mark]

Answer:
The dollar sign ($), for example $A$1.

Teacher's Note:
a) $ makes a cell reference absolute.
b) $A1 fixes the column; A$1 fixes the row.
c) An absolute reference does not change when the formula is copied.
d) Press F4 to add $ signs quickly.

(iv) Give the shortcut that is used to select a row in Excel. [1 Mark]

Answer:
Shift + Spacebar

Teacher's Note:
a) Shift + Spacebar selects the whole row.
b) Ctrl + Spacebar selects the whole column.
c) Ctrl + A selects the whole sheet.
d) Learn row and column shortcuts together.

(v) What is meant by the term Back-end as used in data applications? [1 Mark]

Answer:
Back-end is the part of a data application where the data is stored and managed, for example MS Access or Oracle. Users do not work on it directly; they use the front-end.

Teacher's Note:
a) The front-end is what the user sees; the back-end stores the data.
b) The back-end is usually a database.
c) Give one example for clarity.
d) The official key also lists Excel as an example.

Question 16 [3 Marks]

(i) How is a Formula different from a Function in Excel?

Answer:

Teacher's Note:
a) Every function is used inside a formula, but not every formula uses a function.
b) Give an example for each.
c) Both begin with the = sign.
d) Functions reduce errors in long calculations.

(ii) Why is database testing important?

Answer:
Database testing makes sure that correct and unique data, free of bugs, reaches the correct place. It prevents serious problems such as deadlock, data corruption, poor performance and inconsistent data.

Teacher's Note:
a) Testing checks that the data is accurate and consistent.
b) It finds bugs before users are affected.
c) Name at least two problems it prevents.
d) Keep the answer short and clear.

Question 17 [6 Marks]
You are required to answer any three of the following questions.

(i) Give any two reasons to show that a blank space or zero is not the same as NULL value in SQL. [2 Marks]

Answer:

Teacher's Note:
a) NULL means 'no value', not an empty value.
b) Zero is a number and blank is a character, so both are real values.
c) NULL cannot be compared using = in SQL; IS NULL is used.
d) Two clear reasons earn full marks.

(ii) List any two types of storage devices in DBMS. [2 Marks]

Answer:
1. Primary storage
2. Secondary storage
(Tertiary storage is a third type.)

Teacher's Note:
a) Primary storage is fast but small, like main memory.
b) Secondary storage is large and permanent, like hard disks.
c) Tertiary storage is used for backups, like tapes.
d) Two types are enough.

(iii) What are the SQL statements used in Database testing to manipulate the test table? [2 Marks]

Answer:
SELECT, INSERT, UPDATE and DELETE statements are used to manipulate the test table.

Teacher's Note:
a) These are Data Manipulation Language (DML) statements.
b) INSERT adds, UPDATE changes and DELETE removes rows.
c) SELECT reads the data to check results.
d) Write the statements in capital letters.

(iv) What is meant by date-transfer rate? [2 Marks]

Answer:
The data-transfer rate is the rate at which data can be read from or written to a disk (storage device).

Teacher's Note:
a) The question says 'date-transfer'; it means data-transfer rate.
b) It is measured in units like MB per second.
c) A higher rate means faster access to data.
d) Mention both reading and storing data.

Question 18
The spread sheet below shows the sales of Jupiter Ltd. made by four salesmen in the four quarters of the financial year 2022-23:

Based on the above transactions and the information given in the spreadsheet, answer any three of the following questions:

(i) Write the formula to calculate the cost of the goods sold by Salesman No. S2 in Qtr 2, if he had sold the goods at a profit of 10% of the sales. [2 Marks]

Answer:
=C4*90%
Or =C4*0.9
Or =C4-C4*10%
Result: 9,000 × 90% = Rs. 8,100

Teacher's Note:
a) Profit is 10% of sales, so cost is 90% of sales.
b) S2's Qtr 2 sales are in cell C4.
c) Any one correct formula earns full marks.
d) Start the formula with the = sign.

(ii) Write the formula to calculate the sales made by Salesman No. S2 in Qtr 3 in cell D3, if he had sold the goods at a profit of 10% of the cost. [2 Marks]

Answer:
=9000+9000*10%
Or =9000*1.1
Or =9000*110/100
Result: Rs. 9,900

Teacher's Note:
a) Profit is 10% of cost, so sales = cost × 110%.
b) The official key takes the cost of goods as Rs. 9,000; the question does not state this cost clearly.
c) Note that cell D3 is in the row of S1, not S2.
d) Profit on cost and profit on sales give different formulas; read carefully.

(iii) In Qtr 1, Salesman No. S4 sold goods costing Rs. 8,800 at a loss of 10% of the sales. What is the selling price of the goods in cell B6. [2 Marks]

Answer:
Loss is 10% of sales, so cost = 110% of sales.
Sales = 8,800 × 100/110 = Rs. 8,000
Formula: =8800*100/110

Teacher's Note:
a) When the loss is on sales, cost is 110% of sales.
b) Divide the cost by 1.1 to get sales.
c) Check: 8,000 + 10% of 8,000 = 8,800.
d) The official key writes 8,000 × 110/100, which is a misprint; the answer Rs. 8,000 is correct.

(iv) The company gives a commission of 10% on its total sales. Write the formula to calculate the commission earned by Salesman No. S3 in cell G5. [2 Marks]

Answer:
=F5*10%
Or =(B5+C5+D5+E5)*10%
Result: 36,700 × 10% = Rs. 3,670

Teacher's Note:
a) Commission is 10% of total sales in cell F5.
b) You can also add the four quarters directly.
c) Use brackets when adding before multiplying.
d) Any one correct formula earns full marks.