SAMPLE PAPER SET-I ACCOUNTANCY Time Allowed : 3 Hrs. Maximum Marks : 100 General Instructions : (i) This paper is divided into two parts A and B. (ii) Each part carries 50 marks. (iii) Each question carries marks indicated against it. [ Section - A] 1. Define Partnership. State any four provisions of the Partnership Act relating to Partnership accounts if there is no partnership deed. 3 2. Rohit, Harish and Vinod are partners sharing profits and losses in the ratio of 8:7:5. Vinod retires, Rohit & Harish decided to share future profits in the ratio of 3:1 respectively. The goodwill of the firm is valued at Rs. 60,000 and it is the practice of the firm not to raise Goodwill A/c in its books of accounts, Journalise. 3 3. X,Y and Z are partners in a firm. Their capital accounts stood at Rs. 30,000, Rs. 15,000 and Rs. 15,000 respectively on 1st Jan. 96. As per the provisions of the deed : (a) Z was to be allowed a remuneration of Rs. 3,000 p.a. (b) Interest at 5 % p.a. was to be provided on capital. (c) Profits were to be distributed in the ratio of 2:2:1. Ignoring the above terms the net profits of Rs. 18,000 for the year ended 1996 was divided among the partners equally. Pass an adjustment entry to rectify the error. Show the working clearly. 4 4. X Ltd. issued 2,200 debentures of Rs. 100 each on 1st January 1990 at a discount of 5%. The debentures are to be redeemed as follows : 3 31 Dec> 1990 : Rs. 40,000 31 Dec. 1991 : Rs. 80,000 31 Dec. 1992 : Rs. 1,00,000 Prepare Discount on issue of Debenture A/c. 5. State the purposes for which share premium can be used. 2 6. A and B are partners in a firm sharing profits and losses in the ratio of 3:2. The Balance Sheet was as follows on 1st January, 1978 : Balance - Sheet Liabilities Rs. Assets Rs. Sundry Creditors 15,000 Plant 30,000 General Reserve 15,000 Patent's 10,000 Capital Accounts - Goodwill 5,000 A 30,000 B 25,000 55,000 Stock Debtors 20,000 18,000 - - Cash 2,000 - 85,000 - 85,000 C is admitted as a partner on the above date on the following terms : (1) He will pay Rs. 10,000 as goodwill for one-fourth share which he acquires in the ratio of 4:1 from A and B. (2) The assets are to be valued as under : Plant at Rs. 32,000; Stock at Rs. 18,000; Debtors at book figure less a provision of 5 percent for Bad Debts. (3) It was found that the creditors included a sum of Rs. 1,400 which was not to be paid. But it was also found that there was a liability for compensation to workers amounting to Rs. 2,000. (4) C was to introduce Rs. 25,000 as capital and the capitals of the old partners were to be adjusted in the new profit-sharing ratio. For this purpose, current accounts were to be opened. Give journal entries to record the above and Balance - Sheet after C's admission. 12 OR The following is the balance - sheet of A and B on 31st December, 1997 : Liabilities Rs. Assets Rs. Creditors 30,000 Cash in hand 500 Bills Payable 8,000 Cash at Bank 8,000 Mrs. A's Loan 5,000 Stock 10,000 Mrs. B's Loan 10,000 Investment - Reserve Fund 10,000 Debtors 20,000 - Investment - (-) Prov. 2,000 18,000 fluctuation Fund 1,000 Plants 20,000 A's Capital 10,000 Building 15,000 B's Capital 10,000 Goodwill 4,000 - - P & L A/c 3,500 - 84,000 - 84,000 The firm was dissolved on 31st December 1997 and the following arrangements were made : (1) A promised to pay off Mrs. A's Loan and took away stock-in-trade at Rs. 4,000. (2) B took away half the investments at 10 % discount. (3) Debtors realised Rs. 19,000. (4) Creditors and bills payable were due on an average basis on one month after 31st December, but they were paid immediately on 31st Dec. at 6 % discount per annum. (5) Other assets realised as : Plant : Rs. 25,000 Building : Rs. 40,000 Goodwill : Rs. 6,000 Investment (Balance) : Rs. 4,500 (6) There was an old typewriter in the firm which had been written off completely from the books. It is now estimated to realise Rs. 300 and was taken away by B at the estimated price. (7) Realisation expenses were Rs. 1,000. You are required to prepare ledger accounts in the books of the firm. 12 7. A,B and C are equal partners of a firm. The capital of the firm is Rs. 30,000 held equally by the partners. The firm has taken out a Policy of Life Assurance for Rs. 9,000 on joint lives of the partners. The Joint Life Policy A/c exists in the books of accounts at the surrender value of Rs. 18,000. Under the partnership deed : (a) Partners were to be allowed 6 % p.a. interest on their capital. (b) In the event of death of a Partner, Goodwill was to be valued at two year's purchase of the average profits of the three years preceeding the death and the share of profit of the dead partner till the date of death was to be calculated on the basis of last year's profits. B died on 1st May 1994. His drawings during the year 94 amounted to Rs. 1,000. The profits of the three years preceeding the death were : year ending 31st Dec. 1991 - Rs. 10,600; 1992 - loss Rs. 1,600 and 1993 - profit Rs. 4,500. The amount of Joint Life Policy is duly received. Prepare dead Partner's Capital A/c. 5 8. K Ltd., has been registered with an authorised capital of Rs. 2,00,000 divided into 2,000 shares of Rs. 100 each of which, 1,000 shares were offered for public subscription at a premium of Rs. 5 per share, payable as under : On application : Rs. 10 On allotment : Rs. 25 ( including premium) On first call : Rs. 40 On final call : Rs. 30 Applications were recieved for 1,800 shares of which applications for 300 shares were rejected outright; the rest of the applications were allotted 1,000 shares on prorata basis. Excess application money was transferred to allotment. All the money were duly received except from Sunder, who applied for 150 shares, failed to pay allotment and first call money. His shares were later forfeited, and reissued to Shyam at Rs. 60 per share, Rs. 70 paid- up. Final call has not been made. Pass necessary cash book and nournal entries in the book of K Ltd., 10 OR M. Ltd. issued on 1st Jan.'91 1,000, 12 % Debenture of Rs. 100 each repayable at the end of 3 year at par. It was decided to create a Sinking Fund for the Redemption of Debentures. The investments are expected to earn interest at 5 % p.a. Reference to the Sinking Fund table shows that Re. 0.317209 invested at 5 % p.a. should be Re. 1 at the end of three years. AT the end of 3 years, the investments were sold at Rs. 70,000 and Debentures were redeemed. Prepare Debentures A/c, Sinking Fund A/c, Sinking Fund Investment A/c for the 3 years. 9. Journalise the following transactions : X Ltd. purchased its own Debentures for immediate cancillation from the open market of the face value of Rs. 10,000 at 92%. OR Y Ltd. redeems by converting its debentures of the face value of Rs. 10,000 redeemable at premium of 20 % by issuing 12 % Pref. Shares of Rs. 100 each at a discount of 4 %. 10. The following balance have been extracted from the books of Mittal Ltd. on 31.12.96 : Share capital Rs. 5,00,000; Sinking Fund Rs. 1,00,000; 15% Debentures Rs. 3,00,000; Creditors Rs. 1,00,000; Outstanding Salary Rs. 10,000; Profit & Loss A/c (Dr.) Rs. 10,000; Plant & Machinery Rs. 6,00,000; IFC bonds Rs. 2,00,000. Raw Material Rs. 1,75,000 and Discount on issue of 5 % Debentures Rs. 25,000. Prepare the Balance - sheet of the company as per Schedule VI Part I of the Companies Act, 1956. 5 [ Section - B ] 11. What is meant by Financial Analysis ? What are it limitations ? 6 12. Give the method of computing and purpose of any two of the following : 3 (a) Fixed assets turnover ratio. (b) Proprietory Ratio (c) Acid Test Ratio 13. The current ratio of a firm is 2:1. State giving reasons which of the following transactions would improve, reduce and not change the current ratio : 3 (a) Repayment of current liability (b) Purchase of goods on credit (c) Sale of office typewriter ( book value Rs. 4,000) for Rs. 3,000 only. 14. From the following calculate Debt Equity Ratio, Interest Coverage Ratio and Return on Investment : 6 - Rs. Share Capital 1,60,000 General Reserve 1,70,000 15 % Loan 2,00,000 Sale for the year 6,00,000 Tax paid during the year 40,000 Preliminary Expenses 10,000 Profit for the year - after interest and tax 80,000 15. Calculate cash from operation from the following informations: 4 - 1996 (Rs.) 1995 (Rs.) Debtors 46,000 42,000 Prepaid expenses 2,700 2,000 Accrued income 1,200 1,500 Bills Receivable 12,000 14,000 Income received in advance 1,000 800 Outstanding expenses 6,000 8,000 Creditors 28,000 26,000 Profits made during the year amounted to Rs. 1,00,000 after taking into account the following adjustments : - (Rs.) (a) Profit on sale of investment 2,000 (b) Loss on sale of machine 900 (c) Goodwill amortised 3,000 (d) Depreciation charged on fixed assets 2,900 16. Calculate current assets of a company from the following information : (1) Stock turnover ratio - 5 times (2) Stock at the end is Rs. 15,000 more than stock in the beginning. (3) Sale Rs. 2,00,000 (4) Gross Profit Ratio - 25 % (5) Current Liabilities Rs. 50,000 (6) Quick Ratio - 75:1. 17 Prepare Comparative Income Statement : - 1996 (Rs.) 1997 (Rs.) Sales 3,00,000 4,00,000 Cost of goods sold 2,00,000 2,50,000 Office & Adm. expenses 20,000 30,000 Selling & Distribution exp. 10,000 15,000 Other Income 10,000 20,000 Income Tax Provision 40,000 6,25,000 18. From the following information prepare cash budget for the months of April, May & June'97 : Month Sales(Rs.) Purchase (Rs.) Wages(Rs.) Office Exp. (Rs.) February 60,000 36,000 9,000 6,000 March 62,000 38,000 8,000 6,500 April 64,000 33,000 10,000 7,000 May 58,000 35,000 8,500 5,500 June 56,000 39,000 9,500 5,500 (1) Cash balance on 1st April '97 - Rs. 10,000. (2) Plant costing Rs. 20,000 is due for delivery in April, payable 10 % on delivery and balance in three equal montly instalments. (3) 50 % of sales are cash sales. Period of credit allowed to customers is one month. (4) Purchases are made on two months's credit. (5) Lag in payment of office expenses is one month. 19. From the following information, prepare a Fund Flow Statement and a Statement of Changes in Working Capital : Balance Sheet Liabilities 1995(Rs.) 1996 (Rs.) Assets 1995(Rs.) 1996 (Rs.) Sh. Capital 100000 120000 Goodwill 30000 20000 Debentures 50000 70000 Plant & Machinery 40000 70000 Gen. Reserve 30000 40000 Land 70000 13000000 P & L A/c 20000 30000 Debtors 50000 40000 Prov. for tax 20000 25000 Bill Receivable 20000 35000 Proposed Dividend 10000 15000 Stock 30000 40000 Sundry Crs. 30000 20000 Cash 20000 15000 Bills Payable 10000 30000 Preliminary Exp. 10000 - - 270000 350000 - 27000 350000 Additional Informations : (1) Depreciation charged on Plant was Rs. 10,000. A part of plant, book value Rs. 15,000 was sold for Rs. 10,000. (2) Tax paid during 1996 was Rs. 30,000. (3) Treat provision for taxation as current liability and proposed dividend as non-current liability. 20. Give any two differences between Cash Flow Statement and Fund Flow Statement.