HSC 12th Standard Accounts: March 2019 Board Paper Solution

Q. 1. Attempt any Three of the following sub–questions.

(A) Answer in ‘one’ sentence each. (5)

(1) What is a Balance Sheet?

Ans: A balance sheet is a statement showing the financial position of a firm on a specific date, listing its assets, liabilities, and owner's equity.

(2) What is gain ratio or benefit ratio?

Ans: The ratio by which the remaining partners benefit from a retiring partner's share of profit is known as the Gain Ratio or Benefit Ratio.

(3) What is authorised capital?

Ans: Authorised capital is the maximum amount of share capital that a company is legally permitted to issue to its shareholders, as stated in its Memorandum of Association.

(4) Who is a drawer?

Ans: A person who creates or "draws" a bill of exchange, ordering the drawee to pay a certain sum of money, is known as the drawer.

(5) What is a Statement of Affairs?

Ans: A Statement of Affairs is a summary of assets and liabilities prepared under the single-entry system to determine the capital of a business on a particular date.

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(B) Write a word/term/phrase for the following statements: (5)

(1) An association of two or more persons to carry on business.

Ans: Partnership

(2) Payment of the bill before its due date.

Ans: Retirement of the bill

(3) The acknowledgement of debt under the common seal of a company.

Ans: Debenture

(4) A bill which is drawn in India and payable in another country.

Ans: Foreign bill

(5) Critical evaluation of a financial statement to measure profitability.

Ans: Analysis of financial statement

(C) Select the most appropriate alternative: (5)

(1) The interest on drawings is transferred to the _________ side of the Profit and Loss Account.

• (a) debit
• (b) credit
• (c) assets
• (d) liability

(2) If an asset is taken over by a partner from the firm, __________ account will be debited.

• (a) capital
• (b) revaluation
• (c) assets
• (d) profit and loss adjustment

(3) If goodwill is raised to the extent of a retiring partner’s share, ________ account is to be debited.

• (a) cash
• (b) Goodwill
• (c) all partners’ capital
• (d) retiring partner’s capital

(4) _________ extra days are allowed over and above the period of the bill.

• (a) Two
• (b) Three
• (c) Five
• (d) Ten

(5) In the statement of Profit or Loss, interest on capital is ___________

• (a) shown as addition
• (b) shown as subtraction
• (c) ignored
• (d) multiplied

(D) State whether the following statements are True or False: (5)

1. ‘Not for Profit’ concerns concentrate their efforts on maximizing their profit. False
2. On dissolution of a firm, the Cash or Bank account is closed automatically. True
3. A bill can’t be deposited into a bank for collection. False
4. A person to whom, or as per his order, the amount of a bill is payable is a payee. True
5. Analysis of a financial statement is a tool but not a remedy. True

(E) Format of Bill of Exchange (5)

For the complete step-by-step format and solution, please check the dedicated link below.

• View Bill of Exchange Format

Detailed Solutions for Other Questions

Click on the buttons below to view the full solution for each question.

• Q. 2: Single Entry Solution
• Q. 3: Admission of Partner Solution
• Q. 4: Bills of Exchange Solution
• Q. 5: Dissolution of Partnership
• Q. 6: NPO Solution
• Q. 7: Final Account Solution

Difficult Words: An Easy Guide

Understanding these accounting terms will help you master the subject:

Balance Sheet

A financial report card that shows what a business owns (Assets) and what it owes (Liabilities) on a specific day.

Gain Ratio (Benefit Ratio)

When a partner leaves (retires), their share of the profit is divided among the partners who stay. The ratio used to share this benefit is the Gain Ratio.

Authorised Capital

The legal maximum amount of money a company is allowed to raise by selling shares to the public.

Drawer

The person or business who writes (draws) a bill demanding payment from someone else.

Statement of Affairs

A simplified Balance Sheet used when a business does not keep complete accounting records (Single Entry System) to estimate capital.

Retirement of a Bill

Paying the money for a bill before its official due date, usually to get a small discount (rebate).

Debenture

A document issued by a company acknowledging a loan. It is a way for companies to borrow money from the public for a fixed period with interest.

Revaluation

Recalculating the value of assets and liabilities to find out their current worth, usually done when a partner joins or leaves.

Goodwill

The reputation and brand value of a business that helps it earn more profit than others.

Dissolution

The official closing down of a partnership business, where all assets are sold and debts are paid.