ACCOUNTS BOARD QUESTION PAPER : WITH COMPLET SOLUTION GIVEN BELOW FOR PRACTICE
Max. Marks: 80
Time: 3 Hrs.
Q.1. Attempt all of the following sub-questions: [20]
(A) Select the correct options and rewrite the statements:
(1) To find out the net profit or net loss of the business _______ Account is prepared.
(2) From financial statement analysis the creditors are specially interested to know _______.
(3) Death is a compulsory _______.
(4) The due date of the bill drawn for 2 months on 23rd November, 2019 will be _______.
(5) Decrease in the value of assets should be _______ to Profit and Loss Adjustment Account.
(B) Write a word / term / phrase as a substitute for each of the following statements: (5)
(1) Debit balance of Trading Account.
Answer: Gross Loss.
(2) Expenses incurred on dissolution of the firm.
Answer: Dissolution/realization Expenses
(3) Old Ratio less New Ratio.
Answer: Sacrifice Ratio
(4) Officer appointed by Govt. for noting the dishonor of the bill.
Answer: Notary Public.
(5) Donation received for a specific purpose.
Answer: Specific donation / Capital receipt.
(C) Answer the following questions in only ‘one’ sentence each: (5)
(1) What is Legacy?
Solution: Any asset, property or amount of cash which ‘Not for Profit’ concern receives as per the provisions made in the will of the donor after his death is called Legacy.
(2) What is CAS?
Solution: CAS means Computerized Accountig System which helps business firms to implement accounting process and makes it user friendly with automation.
(3) Who is called Insolvent Person?
Solution: Whose capital A/c shows debit balance and who is not in a position to meet his capital deficiency even from his private property is called an insolvent person.
(4) What is Reserve Capital?
Solution: Reserve Capital is that part of the subscribed capital which is reserved to be called-up only at the time of winding up or liquidation of the company.
(5) What is Revaluation Account?
Solution: The account which shows change in the values of assets and liabilities during the admission, retirement or death of a partner is known as Revaluation Account.
(D) Complete the sentences: (5)
(1) Partnership deed is an _______ of partnership.
Solution: Partnership Deed is an Article of Partnership.
(2) Aurangabad University prepares _______ Account instead of Profit and Loss Account.
Solution: Aurangabad University prepares Income and Expenditure Account instead of Profit and Loss Account.
(3) Returns outward are deducted from _______.
Solution: Returns outward are deducted from Purchases.
(4) New Ratio (–) _______ = Gain Ratio.
Solution: New Ratio (less) Old ratio = Gain ratio
(5) Cash receipts which are recurring in nature are called as _______ receipts.
Solution: Cash receipts which are recurring in nature are called as revenue Receipts.
Q.2. Ram and Shyam were in partnership sharing profits and losses in the proportion of 3:1 respectively. Their Balance sheet as on 31st March, 2020 stood as follows: [10]
Balance Sheet as on 31st March, 2020
They admit Bharat into partnership on 1st April, 2020. The term being that:
- He shall have to bring in ₹ 40,000 as his Capital for 1/5th share in future profit and ₹ 20,000 as his share of Goodwill.
- A provision for 5% doubtful debts to be created on sundry debtors.
- Stock should be appreciated by 5% and Land and Building be appreciated by 20%.
- Furniture to be depreciated by 20%.
- Capital Accounts of all partners be adjusted in their new profit sharing ratio through Cash Account.
Prepare:
- (i) Profit and Loss Adjustment Account
- (ii) Partners’ Capital Account.
- (iii) Balance Sheet of the new firm.
SOLUTION:
Ajay, Vijay and Sanjay were partners sharing profits and losses in the ratio of 3 : 3 : 2. Their Balance Sheet as on 31st March, 2020 is as follows:
Balance Sheet as on 31st March, 2020
On 1st April, 2020 Sanjay retired from the firm on the following terms:
- R.D.D. is to be maintained at 10% on debtors.
- ₹ 300 to be written off from creditors.
- Goodwill of the firm is to be valued at ₹ 12,000, however, only Sanjay’s share in it is to be raised in the book and written off immediately.
- Assets to be revalued as: Stock ₹ 18,900, Plant and Machinery ₹ 60,000, Live Stock ₹ 30,600.
- The amount payable to Sanjay to be transferred to his loan account after retirement:
Prepare:
- (i) Revaluation Account.
- (ii) Partners’ Capital Account
- (iii) Balance Sheet of the New firm.
SOLUTION:
Q.3. Asha, Usha and Nisha are partners in the firm sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 31st March, 2019 they decided to dissolve the firm when their Balance Sheet was as under: [10]
Balance Sheet as on 31st March, 2019
The firm was dissolved on the above date and the assets realised as under:
- Asha agreed to take over the Building at ₹ 1,23,600.
- Usha took over Goodwill, Stock and Debtors at book value and agreed to pay Creditors and Bills payable.
- Motor car and Machinery realised at ₹ 1,51,080 and ₹ 31,680 respectively.
- Investment were taken by Nisha at an agreed value of ₹ 55,440.
- Realisation Expenses amounted to ₹ 6,800.
Prepare:
- (a) Realisation Account
- (b) Partners’ Capital Account
- (c) Bank Account
SOLUTION:
Sonali draws a bill on Rupali for ₹ 50,000 for 3 months. Rupali accepts the bill on the same date. Sonali sends the bill to the bank for collection. Before due date, Rupali finds herself unable to make payment of bill and requests Sonali to renew it. Sonali agrees to the proposal on a condition that Rupali should pay ₹ 20,000 in cash along with interest ₹ 1,000 and accept a new bill for 2 months for the balance. Rupali retired the bill by paying ₹ 27,000.
Give Journal entries in the books of Sonali and prepare Rupali’s Account in the books of Sonali.
SOLUTION:
Q.4. Ajita Ltd. issued 2,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share payable as: [8]
- ₹ 3 on application
- ₹ 5 on allotment (including ₹ 2 premium)
- ₹ 4 on first and final call
Applications were received for 2,40,000 equity shares and pro-rata allotment was made to all the applicants.
The excess application money was adjusted with allotment. Prerna who was allotted 400 shares failed to pay first and final call and her shares were forfeited.
Pass Journal Entries in the books of Ajita Ltd.
SOLUTION:
State the difference between Manual Accounting Process and Computerised Accounting Process.
Solution
| Basis of Difference | Manual Accounting | Computerized Accounting |
|---|---|---|
| 1. Meaning | Manual accounting is the system in which we maintain physical register of journal and ledger for keeping the records of each business transaction. | In this system of computerized accounting, we use computer and different accounting software for digital record of each business transactions. |
| 2. Calculation make total of | In this system, all calculations are done manually. For example, to find the balance of any ledger account. We will make total of the debit and credit side and then we will find its difference for showing balance. | In computerized accounting system, our duty is to record the business transactions manually in the database. All the calculations are done by computer system. We need not calculate each account’s balance, it is calculated automatically by computerized accounting system. |
| 3. Ledger Accounts | Ledger accounts are prepared by posting transactions in appropriate ledger manually with the help of journal. There may be mistakes while transferring the amount manually. | In computerized accounting system, once a voucher is entered it will automatically be printed. Thus there is no chance of taking or transferring wrong amount. |
| 4. Trial Balance | In this system of accounting, we have to take the balances of all ledger A/c, in Trial Balance Statement. | Computerized accounting system will produce Trial Balance automatically. |
| 5. Adjustment Entries Record | Both adjustment journal entries and its posting in the ledger accounts will be done manually one by one. | Only adjustment entries will be passed in the computerized accounting system, posting in the Ledger accounts will be done automatically. |
| 6. Financial Statements | We have to make the financial statements manually by carefully transferring Trial Balance’s figures into Trading, Profit and Loss Account and Balance Sheet. | We need not prepare financial statement manually; financial statements will be generated automatically. It will also automatically change after each voucher entry in the system. This facility is not available in the manual accounting system. |
| 7. Closing the Books | After the year end accountants prepare financial statements for the accounting period. The balances are to be carried forward manually, to next year. | In computerized accounting software financial reports are auto-generated for the accounting period. The balances are automatically carried forward to next year. |
Q.5. Anil, Sunil and Mohit were partners sharing profits and losses in the proportion of their capital. Their Balance Sheet as on 31st March, 2019 was as follows: [8]
Balance Sheet as on 31st March, 2019
Mohit died on 1st August, 2019 and the following adjustments were made:
- Assets to be revalued as under:
- Land and Building ₹88,000
- Motor Lorry ₹ 36,000
- Furniture ₹ 34,000
- All debtors were good.
- Goodwill of the firm valued at two times the average profit of last 4 years’ profit.
- Mohit’s share of profit to be calculated on the basis of average profit of the last three years.
- Profit for four years 1st year ₹ 12,000, 2nd year ₹ 24,000, 3rd year ₹ 14,000, 4th year ₹ 22,000.
Prepare:
- (a) Mohit’s capital account showing the amount payable to his executor.
- (b) Give working note of Mohit’s share of goodwill and profit up to the date of his death
SOLUTION:
Following is the Balance Sheet of Param Company Ltd. as on 31st March, 2019 and 31st March, 2020:
You are required to prepare Comparative Balance Sheet of Param Company Ltd. as on 31st March, 2019 and 31st March 2020.
SOLUTION:
Q.6. From the following Receipts and Payments Account of Shahu College, Kolhapur for the year ending 31st March, 2020 and additional information, prepare Income and Expenditure Account for the year ended 31st March, 2020 and Balance Sheet as on that date: [12]
Receipts and Payments Account for the year ended 31st March, 2020
Additional information:
- Outstanding Salaries ₹ 35,000.
- 60% of donations are for Building Fund and Balance is to be treated as revenue income.
SOLUTION:
Q.7. Asha and Nisha are partners sharing profits and losses in equal ratio. From the following Trial Balance and adjustments you are required to prepare Final Accounts: [12]
Trial Balance as on 31st March, 2019
Adjustments:
- Closing stock is valued at cost price ₹ 88,000 and market price ₹ 90,000.
- Asha and Nisha withdrew goods from business ₹ 3,000 and ₹ 2,000 respectively for their personal use.
- Depreciate Motor Van by 5% and Plant and Machinery by 7%.
- Reserve for Doubtful debts on Debtors at 5% is to be created.
- Outstanding Wages ₹ 800.
SOLUTION:
Difficult Words and Their Meanings:
- Net Profit/Loss: The final financial gain or loss of a business after all operating expenses, interest, and taxes are subtracted from total revenues.
- Trading Account: A financial statement prepared to determine the gross profit or gross loss of a business from its primary trading activities (buying and selling goods).
- Profit and Loss Account: (Also Income Statement) A financial statement that summarizes revenues, costs, and expenses incurred during a specific period, to show the net profit or net loss.
- Financial Statement Analysis: The process of reviewing a company's financial statements (like Balance Sheet, Profit & Loss Account) to understand its financial health and make informed decisions.
- Creditors: Individuals or businesses to whom a company owes money for goods or services received on credit.
- Liquidity: A company's ability to meet its short-term financial obligations (debts) as they come due.
- Dissolution (of a firm): The formal process of ending a partnership or company, involving selling assets and settling liabilities.
- Admission (of a partner): The act of a new partner joining an existing partnership firm.
- Retirement (of a partner): The act of an existing partner leaving the partnership firm.
- Winding up: The process of closing down a company, selling its assets, paying off its debts, and distributing any remaining assets to the owners.
- Due Date (of a bill): The specific date on which payment for a bill of exchange or promissory note must be made.
- Debited: An entry on the left side of an account, typically increasing assets or expenses, or decreasing liabilities or equity.
- Credited: An entry on the right side of an account, typically increasing liabilities, equity or income, or decreasing assets or expenses.
- Profit and Loss Adjustment Account / Revaluation Account: An account prepared to record changes in the values of assets and liabilities when a partnership is reconstituted (e.g., admission, retirement, death of a partner).
- Gross Loss: Occurs when the cost of goods sold is higher than the net sales revenue in the Trading Account.
- Realization Expenses: Costs incurred during the process of dissolving a firm, such as expenses for selling assets and settling liabilities.
- Sacrifice Ratio: The ratio in which existing partners agree to give up (sacrifice) their share of profits in favor of a new incoming partner.
- Notary Public: A public official authorized to witness signatures, certify documents, and perform other legal formalities, such as noting the dishonor of a bill.
- Specific Donation: A donation received by an organization that must be used for a particular purpose specified by the donor.
- Capital Receipt: Money received by a business that is not from its regular operations (e.g., sale of a fixed asset, long-term loan). It's not treated as income for the current period.
- Legacy: A gift of money or property left to an individual or organization through a will after the donor's death.
- Computerized Accounting System (CAS): Using computer hardware and software to record, process, and report financial transactions.
- Insolvent Person: An individual or entity whose liabilities (debts) exceed their assets, making them unable to pay their debts.
- Reserve Capital: A portion of a company's uncalled share capital that is set aside to be called up only in the event of the company's winding up.
- Partnership Deed: A written agreement among partners outlining the terms, conditions, rights, and responsibilities of the partnership.
- Income and Expenditure Account: A summary of all income and expenses for a specific period, prepared by non-profit organizations to determine surplus or deficit.
- Returns Outward: (Purchase Returns) Goods returned by a business to its suppliers.
- Gain Ratio: The ratio in which the continuing partners benefit from the share of profit of an outgoing (retiring or deceased) partner.
- Revenue Receipts: Money received by a business from its normal day-to-day operations (e.g., sales, service fees).
- Goodwill: An intangible asset representing the non-physical value of a business, such as its reputation, customer loyalty, and brand recognition.
- Provision for Doubtful Debts (R.D.D.): An estimated amount set aside from profits to cover potential losses from customers who may not pay their debts.
- Sundry Debtors: Customers who owe money to the business for goods or services supplied on credit.
- Appreciated (assets): An increase in the value of an asset over time.
- Depreciated (assets): A decrease in the value of an asset over time due to use, wear and tear, or obsolescence.
- Pro-rata Allotment: Allocation of shares to applicants in proportion to their application when a share issue is oversubscribed.
- Forfeited Shares: Shares that are taken back by the company from a shareholder who fails to pay allotment or call money due on them.