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Does partnership firm has a separate legal entity?
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Not-for-profit organisations serve the purpose of providing services to its members and to the society rather than earning profits. In the light of above statement, give two examples of such organisations,
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Divij and Ayaan entered into a partnership to float M/s Sunrise Enterprises, by writing a partnership deed. Divij has invested more capital than Ayaan and also spends more time in managing the business. Divij demands that he should be given 75% of profit instead of 50% as agreed. Is the claim of Divij correct? *You are advised to attempt this sample paper without referring the answers given here. However cross check your answers With the answers given at the end after you complete the paper.
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Zombtech Ltd was formed with a capital of Rs. 5,00,000 divided into shares of Rs. 10 each. Out of these, 5,000 shares were issued to the vendors as fully paid as purchase consideration, 10,000 shares were offered to the public and of these 11,000 shares were applied for. The directors rejected the excess applications and allotted 10,000 shares. The directors called Rs. 6 per share and received the entire amount except a call of Rs. 2 per share on 1,500 shares. What is the amount of issued capital?
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A and B who shared profits in the ratio of 2 : 1 admit C as a partner for l/5th share in profits, which he acquires from A and B in the ratio of 1 : 2. What will be the new profit sharing ratio?
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A partnership firm has 50 members. All the partners have agreed to admit A and B as new partners. Can A and B be admitted? Give reason.
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ABC Ltd invited applications for 10,000 shares of Rs. 10 each. Applications were received for 15,000 shares. Name the kind of subscription. Give three alternatives for allotting shares in this form of subscription.
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A, B and C are partners sharing profits in the ratio of 1 : 2 : 3. C retires and her capital, after making adjustments for reserves and profits on revaluation stands at Rs. 2,20,000. A and B agreed to pay her Rs. 2,50,000 in full settlement of her claim. Record necessary journal entry for the treatment of goodwill, if the new profit sharing ratio is decided at 1 : 3.
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(i) Laxmi Ltd purchased the assets of Shri Ram Ltd for Rs. 5,00,000, payable Rs. 1,00,000 in cash and the balance by issue of 7% debentures of Rs. 100. Pass necessary journal entries. (ii) Identify the value shown by the company by issuing debentures for consideration other than cash.
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From the following extract of receipts and payments account and additional information given below, compute the amount of income from subscription and show how they would appear in income and expenditure account for the year ended 31st March, 2017 and in the balance sheet on that date: Receipts and Payments Account Dr for the year ending 31st March, 2017 Cr
Receipts | Amt (Rs.) | Payments | Amt (Rs.) |
Subscriptions | | | |
2015-16 | 7,000 | | |
2016-17 | 30,000 | | |
2017-18 | 5,000 | | |
Additional Information
(i) Subscription outstanding on 31st March, 2016 Rs. 8,500 |
(ii) Total subscriptions outstanding on 31st March, 2017 Rs. 18,500 |
(iii) Subscriptions received in advance as on 31st March, 2016 Rs. 4,000 |
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Following is the balance sheet of Hari, Ram and Shyam as at 31st December, 2016. Balance Sheet as at 31st December, 2016
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Sundry Creditors | | 3,000 | Tools | 1,000 |
Reserve Fund | | 3,200 | Furniture | 8,000 |
Capital A/cs | | | Stock | 6,000 |
Hari | 10,000 | | Debtors | 6,000 |
Ram | 5,000 | | Cash at Bank | 5,000 |
Shyam | 5,000 | 20,000 | Cash in Hand | 200 |
| | 26,200 | | 26,200 |
Ram died on 31st March, 2017. Under the partnership agreement, the executor of Ram was entitled to the following amounts:
(i) Amount standing to the credit of his capital account. |
(ii) Interest on capital, which amounted to Rs. 62.50. |
(iii) His share of goodwill Rs. 3,500. |
(iv) His share of profit from the closing of the last financial year to the date of death, which amounted to Rs. 437.50. |
Draw up Ram's account to be rendered to his executor. |
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Nitin, Megha, Priyanka and Ankit are partners. Their capital accounts on 1st April, 2016 were Rs. 60,000, Rs. 1,00,000, Rs. 1,60,000 and Rs. 2,00,000 respectively. After the accounts for the year ended 31st March, 2017 have been prepared, it is discovered that interest @ 5% as provided in the partnership agreement has not been credited to partners' capital accounts before distributing profits. So, it is decided to make adjusting entry at the beginning of the next year. Give the necessary journal entry along with working notes.
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Following is the receipts and payments account of Sai Club for the year ended 31st December, 2017: Receipts and Payments Account Dr for the year ending 31st December, 2017 Cr
Receipts | | Amt (Rs.) | Payment | | Amt (Rs.) |
Balance b/d | | | Salaries | | |
Cash | 2,000 | | Secretary | 6,000 | |
Bank | 12,000 | 14,000 | Staff | 5,000 | 11,000 |
Subscription | | | Canteen Expenses | | 12,000 |
for 2016 | 500 | | Miscellaneous Expenses | | 2,500 |
for 2017 | 5,500 | | Construction of Building | | 15,000 |
for 2018 | 400 | 6,400 | Balance c/d | | |
Interest from Bank | | 1,000 | Cash | 1,300 | |
Sale Proceeds of Old Newspapers | | 400 | Bank | 4,000 | 5,300 |
Sale of Old Furniture | | 2,000 | | | |
Canteen Collection | | 12,000 | | | |
Donations for Building Fund | | 10,000 | | | |
| | 45,800 | | | 45,800 |
With the additional information given below, prepare the income and expenditure account for the year ended 31st December, 2017 and the balance sheet as on that date:
| Particulars | 31st December, 2016 (Rs.) | 31st December, 2017 (Rs.) |
(i) | Subscription Receivable | 1,000 | 600 |
(ii) | Subscription Received in Advance | 200 | 400 |
(iii) | Salary of Staff Outstanding | 1,000 | 2,000 |
(iv) | Canteen Expenses Prepaid | 1,000 | 1,500 |
(v) | Furniture at Book Value | 14,000 | - |
(vi) | Buildings | 15,000 | - |
(vii) | Fixed Deposit with Bank | 10,000 | 10,000 |
(viii) | Book Value of Furniture sold during 2017 was Rs. 3,500 | | |
(ix) | Charge Depreciation on Furniture at 10 p.a. on The Closing Balance | | |
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On 1st April, 2014, X and Y entered into partnership for sharing profits in the ratio of 4 : 3. They admitted Z as a new partner on 1st April, 2016 for l/5th share which she acquired equally from X and Y. X, Y and Z earned profits at a higher rate than the normal rate of return for the year ended 31st March, 2017. Therefore, they decided to expand their business. To meet the requirements of additional capital, they admitted W as a new partner on 1st April, 2017 for l/7th share in profits which he acquired from X and Y in 7 : 3 ratio. Calculate
(i) New profit sharing ratio of X, Y and Z for the year 2016-17. |
(ii) New profit sharing ratio of X, Y, Z and W on W's admission. |
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The balance sheet of AK, BK and CK sharing profits in the ratio of 3 : 4 : 2 stood as follows on the date of dissolution. Balance Sheet as at...
Liabilities | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | 48,000 | Machinery | 90,000 |
Workmen's Compensation Reserve | 54,000 | Computer | 9,600 |
Investment Fluctuation Reserve | 6,000 | Furniture | 60,000 |
Mrs AK's Loan | 30,000 | Investments | 72,000 |
Mrs BK's Loan | 24,000 | Stock-in-trade | 1,44,000 |
AK's Capital A/c | 2,40,000 | CK?s Capital A/c | 24,000 |
BK's Capital A/c | 1,44,000 | Profit and Loss A/c | 1,08,000 |
| | Cash | 12,000 |
| | Bank | 26,400 |
| 5,46,000 | | 5,46,000 |
The following information is given to you:
(i) AK promised to pay Mrs. AK's loan and took stock-in-trade at Rs. 1,20,000. |
(ii) BK took half of the investments at Rs. 42,000 and remaining investments were realised at 120%. |
(iii) CK took over machinery at Rs. 60,000 for cash. |
(iv) Rs. 72,000 had to be paid for workmen's compensation. |
(v) Creditors amounting to Rs. 9,600 were given furniture of the book value of Rs. 24,000 in full settlement. Remaining creditors were paid at a discount of 10%. |
(vi) Remaining furniture was sold at 30% of the book value. |
(vii) AK was allowed a remuneration of Rs. 12,000 to carry out dissolution work and he agreed to bear all expenses of realisation which amounted to Rs. 18,000 and were paid by him. Prepare necessary accounts. |
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A limited company issued a prospectus inviting applications for 2,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:
On application | Rs. 2 per share |
On allotment | Rs. 5 per share (including premium) |
On first call | Rs. 3 per share |
On second call | Rs. 2 per share |
Applications were received for 3,000 shares and allotment made pro-rata to the applicants of 2,400 shares, the remaining applications being refused. Money overpaid on applications was employed on account of sums due to allotment. Taksh, to whom 40 shares were allotted, failed to pay allotment money and on his subsequent failure to pay first call, his shares were forfeited. Daksh, the holder of 60 shares, failed to pay the two calls and so his shares were also forfeited. All these shares were sold to Naksh credited as fully paid for Rs. 9 per share. Show the journal and cash book entries in the books of company. Or Mohan Ltd invited application for issuing 60,000 shares of Rs. 10 each at par. The amount was payable as follows: On application Rs. 2 per share; on allotment Rs. 3 per share; on first and final call Rs. 5 per share. Applications were received for 92,000 shares. Allotment was made on the following basis:
(i) | To applicants for 40,000 shares | Full |
(ii) | To applicants for 50,000 shares | 40% |
(iii) | To applicants for 2000 shares | Nil |
Rs. 1,08,000 was realised on account of allotment (excluding the amount carried from application money) and ? 2,50,000 on account of call. The directors decided to forfeit shares of those applicants to whom full allotment was made and on which allotment money was overdue. Pass journal entries in the books of Mohan Ltd to record the above transactions.
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Sohan and Mohan are two partners sharing profits and losses in the ratio of 3 : 2. Their balance sheet as at 31st March, 2017 is as follows: Balance Sheet as at 31st March, 201
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Capital A/cs | | | Land and Building | 3,00,000 |
Sohan | 30,00,000 | | Furniture | 1,60,000 |
Mohan | 20,00,000 | 50,00,000 | Bills Receivable | 40,000 |
General Reserve | | 2,00,000 | Sundry Debtors | 55,000 |
Sundry Creditors | | 60,000 | Cash at Bank | 85,000 |
Bills Payable | | 40,000 | Stock | 2,00,000 |
Workmen Compensation Fund | | 40,000 | | |
| | 8,40,000 | | 8,40,000 |
Rohan is to be admitted as a partner with effect from 1st April, 2017 on the following terms: (i) Rohan will bring in Rs. 2,00,000 as capital and Rs. 1,20,000 as premium for goodwill for 1/5th share of profit. (ii) Half premium withdrawn by old partners. (iii) The assets will be revalued as, land and building Rs. 4,50,000; furniture Rs. 1,20,000; stock Rs. 1,50,000. (iv) The claim of a creditor for Rs. 40,000 is settled at Rs. 35,000. (v) Capital of Sohan and Mohan adjusted in new profit sharing ratio on the basis of Rohan's capital. Difference adjusted in cash account. (vi) Bills payable paid off by raising bank loan. You are required to show the revaluation account, partners' capital accounts and the balance sheet of the new firm. Or V, W and X were carrying out a business as partners and sharing profits in the ratio of 2 : 1 : 1. Their balance sheet as at 31st December, 2017 is as follows: Balance Sheet as at 31st December, 2017
Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
Bills Payable | | 10,600 | Buildings | | 70,000 |
Sundry Creditors | | 11,000 | Plant and Machinery | | 78,000 |
Capital A/cs | | | Stock | | 16,000 |
V | 75,000 | | Debtors | 22,000 | |
W | 50,000 | | (-) Provision for Doubtful Debts | (400) | 21,600 |
X | 55,000 | 1,80,000 | Bank | | 7,500 |
Profit and Loss A/c | | 1,400 | Cash | | 9,900 |
| | 2,03,000 | | | 2,03,000 |
V decided to retire on that date because of health problems. In this regard, following adjustments were agreed upon: (i) The value of buildings to be increased to Rs. 96,000. (ii) The provision for bad and doubtful debts on debtors to be maintained at 3%. (iii) Plant and machinery should be valued at 20% less. (iv) Goodwill of the firm is valued at Rs. 36,000 and V's share is to be adjusted in the remaining partners' accounts. (v) W and X agree that the capital of the new firm would be in their new profit sharing ratio and adjustments to be made through cash. You are required to prepare revaluation account, partners' capital accounts and balance sheet.
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Amortisation of goodwill is which type of activity while preparing cash flow statement?
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Holyname Ltd made an operating profit of Rs. 2,00,000 after charging depreciation of Rs. 22,000. During that year, trade payables increased by Rs. 27,200 and inventory increased by Rs. 75,000. There was no change in trade receivables. Assuming that no other factors affected it, what would be the cash generated from operations?
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Under which main heading and sub-heading will you classify the following items while preparing the balance sheet as per Schedule III of the Companies Act, 2013.
(i) Securities premium reserve | (ii) Stock of work-in-progress |
(iii) Provision for tax | (iv) Mortgage loan |
(v) Patents | (vi) Investments |
(vii) General reserve | (viii) Bills receivable |
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Following is the comparative balance sheet of Shri Ram Fabrics Ltd who are engaged in the production and supply of green energy in the rural areas of India. Comparative Balance Sheet as at 31st March, 2017 and 2018
| Particulars | Note No. | 31st March, 2017 (Rs.) | 31st March, 2018 (Rs.) | Absolute Change (Increase or Decrease) (Rs.) | Percentage Change (Increase or Decrease) |
| | | A | B | C = B ? A | \[D=\frac{C}{A}\times 100%\] |
I. | EQUITY AND LIABILITIES | | | | | |
| 1. Shareholder's Funds | | | | | |
| (a) Share Capital | | 12,00,000 | 12,00,000 | ? | ? |
| (b) Reserve and Surplus | | 3,00,000 | ? | (30,000) | (?) |
| 2 Non-current Liabilities | | | | | |
| Long term Borrowings | | 5,00,000 | ? | (?) | (40) |
| 3. Current Liabilities | | | | | |
| (a) Short-term Borrowings | | ? | 20,00,000 | 12,00,000 | ? |
| (b) Trade Payables | | ? | ? | ... | ? |
| Total | | 30,00,000 | 40,00,000 | ? | ? |
II. | ASSETS | | | | | |
| 1. Non-current Assets | | 15,00,000 | ? | 5,00,000 | ? |
| 2. Current Assets | | | | | |
| (a) Inventory | | 5,00,000 | ? | ? | 100 |
| (b) Trade Receivables | | ? | 8,40,000 | 40,000 | ? |
| (c) Cash and Cash Equivalents | | ? | ? | (?) | (?) |
| Total | | ? | ? | ? | ? |
You are required to fill up the missing figures in the comparative balance sheet. Also identify any two values that the company wishes to convey to the society.
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Calculate the following ratios:
(i) Liquid ratio |
(ii) Proprietary ratio |
Information Revenue from operations i.e., sales Rs. 5,00,000; cost of revenue from operations i.e., cost of goods sold Rs. 2,40,000; selling expenses Rs. 80,000; office expenses Rs. 40,000; total current assets Rs. 2,00,000; current liabilities Rs. 1,00,000; closing inventory Rs. 20,000; fixed assets Rs. 8,00,000; equity share capital Rs. 3,00,000 and general reserve Rs. 2,00,000.
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From the following information, prepare a cash flow statement for Ravi Ltd. Balance sheets of Ravi Ltd as at 31st March, 2016 and 2017 are given below: Balance Sheet as at 31st March, 2016 and 2017
| Particulars | Note No. | 31st March, 2016 Amt (Rs.) | 31st March, 2017 Amt (Rs.) |
I. | EQUITY AND LIABILITIES | | | |
| 1. Shareholders' Funds | | | |
| (a) Equity Share Capital | | 25,00,000 | 35,00,000 |
| (b) Reserves and Surplus | 1 | 4,00,000 | 50,000 |
| 2. Non-current Liabilities | | | |
| Long-term Borrowings (12% Debentures) | | 6,00,000 | 10,00,000 |
| 3. Current Liabilities | | | |
| Trade Payables | | 15,00,000 | 12,50,000 |
| Total | | 50,00,000 | 58,00,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| (a) Fixed Assets | | 20,00,000 | 28,00,000 |
| (b) Non-current Investments | | 10,00,000 | 10,00,000 |
| 2. Current Assets | | | |
| (a) Trade Receivables | | 15,00,000 | 16,00,000 |
| (b) Cash and Cash Equivalents | | 3,00,000 | 4,00,000 |
| (c) Other Current Assets (Prepaid Expenses) | | 2,00,000 | - |
| Total | | 50,00,000 | 58,00,000 |
Notes to Accounts
Particulars | 31st March, 2016 Amt (Rs.) | 31st March, 2017 Amt (Rs.) |
1. Reserves and Surplus | | |
Statement of Profit and Loss | 4,00,000 | (2,00,000) |
Securities Premium Reserve | - | 2,50,000 |
| 4,00,000 | 50,000 |
Additional Information
(i) Debentures were issued on 1st April, 2016. |
(ii) During the year, a machine included in fixed assets costing Rs. 12,00,000 was purchased and another machine of the book value of Rs. 3,00,000 was sold at a loss of Rs. 20,000. |
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