CBSE12thAccountancySet2Key

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ACCOUNT TAXATION

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Accounting

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Dec 22, 2024

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CBSE 12th 2024 Compartment Accountancy Set-2(67/S/2) SolutionsPART A(Accounting for Partnership Firms and Companies)Q.1. Arjun, Babita and Charlie were partners in a firm sharing profitsin the ratio of 2:2:1. They admitted Dheeraj for the share in the profitsof the firm. He has to contribute proportionate capital to acquire theshare in future profits. On the date 5 of admission, the capitals afterall adjustments relating to goodwill and revaluation of assets andliabilities, were Arjun ₹ 62,000, Babita 52,000 and Charlie ₹ 36,000. Thecapital brought by Dheeraj will be:(A) ₹37,500(B) ₹30,000(C) ₹32,500(D) ₹35,000Solution. (B) ₹30,000,To determine the capital to be brought in byDheeraj, we need to follow these steps:1. Determine the Total Capital of the Firm:○Total capital after adjustments = ₹62,000 (Arjun) + ₹52,000(Babita) + ₹36,000 (Charlie)○Total capital = ₹150,0002. Calculate the Share of Dheeraj in the Total Capital:○The existing profit-sharing ratio is 2:2:1. The total ratio parts are2 + 2 + 1 = 5.○Therefore, the share of Dheeraj in the firm will be in proportionto his share of the total profit.3. Determine the Share to be Acquired by Dheeraj:○Dheeraj’s share = 1 part (from the total 5 parts) = 1/5 of the totalcapital

4. Calculate Dheeraj’s Capital Contribution:○Dheeraj's share of the capital = 15×₹150,000\frac{1}{5} \times₹150,00051×₹150,000○Dheeraj's capital contribution = ₹30,000Thus, the capital to be brought in by Dheeraj is:(B) ₹30,000Q.2. There are two statements: Assertion (A) and Reason (R):Assertion (A): The maximum number of partners in a partnership firmare 50. Reason (R): The maximum number of partners are prescribedby the Partnership Act, 1932. Choose the correct option from thefollowing: (A) Both Assertion (A) and Reason (R) are correct, butReason (R) is not the correct explanation of Assertion (A). (B) BothAssertion (A) and Reason (R) are correct and Reason (R) is thecorrect explanation of Assertion (A). (C) Assertion (A) is correct, butReason (R) is incorrect. (D) Assertion (A) is incorrect, but Reason (R)is correct.Solution. (D) Assertion (A) is incorrect, but Reason (R) is correct.Let'sbreak down the statements to determine their correctness:Assertion (A):The maximum number of partners in a partnership firm are 50."Partnership Act, 1932: The Act does not explicitly state that the maximumnumber of partners is 50. Instead, the Act states that a partnership firm canhave up to 20 partners in a partnership (general partnership) and up to 10partners in the case of a banking business.Reason (R):"The maximum number of partners are prescribed by the Partnership Act,1932."Partnership Act, 1932: This is correct in the sense that the Act does setlimits on the number of partners. However, the specific limits are:

General partnerships: Maximum of 20 partners.Banking partnerships: Maximum of 10 partners.Analysis:Assertion (A): The number stated (50) is not correct according to thePartnership Act, 1932.Reason ® : It is correct that the Act prescribes limits on the number ofpartners.Correct Option:(D) Assertion (A) is incorrect, but Reason (R) is correct.Q.3 Kamini, Lata and Meera were partners in a firm sharing profits andlosses equally. Neel was admitted as a new partner for an equal sharein the profits of the firm. Neel brought his share of capital andpremium for goodwill in cash. On the date of admission of Neel,goodwill appeared in the books at ₹ 1,20,000. The existing goodwill isto be written off among:(A) Old partners in old ratio.(B) New partners in new ratio.(C) Sacrificing partners in sacrificing ratio.(D) Old partners in sacrificing ratio.Solution.When a new partner is admitted and the existing goodwill isrequired to be written off, it is done according to the sacrificing ratio of theexisting partners. The sacrificing ratio reflects the portion of goodwill eachold partner gives up to accommodate the new partner.Here's how it works:1. Goodwill Write-off: The existing goodwill in the books needs to beadjusted or written off among the old partners.2.Sacrificing Ratio: This ratio represents the proportion in which the existingpartners have sacrificed their share of profit to accommodate the newpartner. In this case, since Kamini, Lata, and Meera were sharing profitsequally, their sacrificing ratio is also equal.

Therefore, the existing goodwill of ₹1,20,000 should be written off amongthe old partners in their sacrificing ratio.The correct option is:(D) Old partners in sacrificing ratio.Q.4.(a) Renu, Trilok and Mansi were partners in a firm sharing profitsand losses 1 in the ratio of 9: 6:5. Hina was admitted as a partner forth share in the 10 profits which she acquired equally from Renu andTrilok. The new profit sharing ratio after Hina's admission will be:(A) 5:5:2:8(B) 5:5:8:2(C) 8:2:5:5(D) 8:5:5:2Solution. (D) 8:5:5:2,

(b) Ashu and Ria were partners in a firm sharing profits and losses inthe ratio of 4: 3. They admitted Nitu for which she took 2 th from Ashuand 7 3 th share in the profits of the firm, 7 th from Ria. The new profitsharing 7 ratio between Ashu, Ria and Nitu will be :(A) 4:3:3(B) 2:1:3(C) 2:2:3(D) 4:3:2Solution. (B) 2:1:3,

Q.5.Nikhil and Sharat were partners in a firm sharing profits andlosses in the ratio of 4: 3. Nikhil withdrew ₹ 6,000 on the first day ofevery quarter for the year ended 31st March, 2023. Interest ondrawings is to be charged @ 5% p.a. Interest on Nikhil's drawings willbe calculated for :(A) 6 months(B) 4.5 months(C) 7.5 months(D) 3 months

Solution. (C) 7.5 months,To calculate the interest on Nikhil’s drawings forthe year ended 31st March 2023, you need to determine the time period forwhich each withdrawal will be considered for interest calculation.Steps to Calculate Interest on Drawings:1. Determine the Withdrawal Dates and Amounts:Nikhil withdrew ₹6,000 on the first day of each quarter.The quarters are:1st Quarter: 1st April to 30th June2nd Quarter: 1st July to 30th September3rd Quarter: 1st October to 31st December4th Quarter: 1st January to 31st March2.Calculate the Time Period for Each Withdrawal:For the 1st withdrawal (1st April): Interest is calculated for the full year (12months).For the 2nd withdrawal (1st July): Interest is calculated for 9 months.For the 3rd withdrawal (1st October): Interest is calculated for 6 months.For the 4th withdrawal (1st January): Interest is calculated for 3 months.3.Calculate Total Time Period:Sum the periods for each withdrawal:1st April withdrawal: 12 months1st July withdrawal: 9 months1st October withdrawal: 6 months1st January withdrawal: 3 monthsTotal time periods for calculating interest = 12 + 9 + 6 + 3 = 30 months4. Average Time for Calculating Interest on Drawings:Since interest is calculated on the average time period, divide the total bythe number of withdrawals to get the average time.Average time = {30}/{4} = 7.5 monthsQ.6 Pawan, Kavita and Gaurav were partners in a firm. The firm wasdissolved. Creditors took over furniture of book value of ₹ 60,000 at

10% less than the book value in part settlement of their amount of₹60,000. The balance amount was paid to them through cheque. Theamount paid through cheque will be :(A) ₹ 5,000(C) ₹ 54,000(B) ₹6,000(D) NilSolution.(B) ₹6,000,To determine the amount paid to the creditors throughcheque after they took over the furniture, follow these steps:Steps to Calculate the Amount Paid Through Cheque:1.Determine the Discount on Furniture:The furniture has a book value of ₹60,000.Creditors took over the furniture at 10% less than its book value.Discount = 10% of ₹60,000Discount = {10}/{100}x 60,000 = ₹6,000Therefore, the creditors took the furniture for:Value of Furniture Taken Over = ₹60,000 - ₹6,000 = ₹54,0002. Calculate the Amount Paid Through Cheque:The total amount owed to creditors = ₹60,000.The value of the furniture taken over by creditors = ₹54,000.The balance amount to be paid through cheque is:Amount Paid Through Cheque = ₹60,000 - ₹54,000 = ₹6,000Read the following hypothetical situation and answer questions No. 7and 8 on the basis of the given information:Daksh and Ekansh are partners in a firm sharing profits and losses inthe ratio of 3: 1. Their capitals were ₹1,60,000 and ₹ 1,00,000respectively. As per partnership deed, they were entitled to interest on

capital @ 10% p.a.. The firm earned a profit of ₹ 13,000 for the yearended 31st March, 2023.Q.7. Daksh's interest on capital will be :(A) ₹ 5,000(B) ₹8,000(C) ₹ 16,000(D) ₹10,000Solution. (C) ₹ 16,000Q.8.Ekansh's share of profit/loss will be :(A) Nil(B) ₹9,750 (Loss)(C) ₹3,250 (Loss)(D) ₹9,750 (Profit)

Solution.(C) ₹3,250 (Loss),Q.9. There are two statements Assertion (A) and Reason (R):Assertion (A): Court does not intervene in case of dissolution ofpartnership.Reason (R): Dissolution of partnership takes place by mutualagreement among partners.Choose the correct option from the following:(A) Both Assertion (A) and Reason (R) are correct, but Reason (R) isnot the correct explanation of Assertion (A).(B) Both Assertion (A) and Reason (R) are correct and Reason (R) isthe correct explanation of Assertion (A).(C) Assertion (A) is correct, but Reason (R) is incorrect.Assertion (A) is incorrect, but Reason (R) is correct.

Solution.To evaluate the two statements:Assertion (A): Court does not intervene in case of dissolution ofpartnership.Reason (R): Dissolution of partnership takes place by mutual agreementamong partners.Here's a detailed breakdown:1.Assertion (A):This statement is not entirely correct. While dissolution by mutualagreement doesn't require court intervention, dissolution due to disputes,insolvency, or other reasons might require court involvement.2. Reason (R):This statement is generally correct. Dissolution by mutual agreement is acommon way to end a partnership, and in such cases, court intervention isnot needed.Given the statements:(A) Both Assertion (A) and Reason (R) are correct, but Reason (R) is notthe correct explanation of Assertion (A).This option is accurate. The Reason (R) explains that dissolution by mutualagreement does not involve the court, but it does not fully explain theAssertion (A) as court intervention may still be necessary in otherdissolution scenarios.(B) Both Assertion (A) and Reason (R) are correct and Reason (R) is thecorrect explanation of Assertion (A).This is incorrect because Assertion (A) does not fully account for allscenarios of dissolution.(C) Assertion (A) is correct, but Reason (R) is incorrect.This is incorrect because Reason (R) is correct; however, Assertion (A) isnot fully accurate.(D) Assertion (A) is incorrect, but Reason (R) is correct.This option is partially correct. While Assertion (A) is not entirely correct,Reason (R) is accurate.Correct Option: (A) Both Assertion (A) and Reason (R) are correct, butReason (R) is not the correct explanation of Assertion (A).

Q.10 (a) Money not received from shareholders on allotment or callsis:(A) debited calls in advance.(B) credited to calls in advance.(C) debited calls in an arrears account.(D) credited to calls in arrears account.Solution. (D) credited to calls in arrears account.When money is notreceived from shareholders on allotment or calls, the correct accountingtreatment is:Calls in Arrears: This account is used to record the amount not receivedfrom shareholders on calls or allotment. It represents the unpaid amount onshares that shareholders were required to pay but have not yet paid.So the correct answer is (C) debited to calls in the arrears account.OR(b) Those debentures where a charge is created on the assets of thecompany for the purpose of payment in case of default are known as:(A) Secured Debentures(B) Registered Debentures(C) Specific Coupon Rate Debentures(D) Redeemable DebenturesSolution. (A) Secured Debentures,Debentures with a charge created onthe assets of the company to secure repayment in case of default areknown as (A) Secured Debentures.Secured debentures are backed by a charge on the company's assets,providing additional security to debenture holders in case the companyfaces financial difficulties.Q.11.(a) Nagar Ltd. issued 6,000, 11% Debentures of ₹ 100 each at adiscount of 10% redeemable at a premium. 'Discount on issue ofdebentures' and 'Premium on redemption of debentures' were

accounted for through 'Loss on issue of debentures account'. If theamount of 'Loss on issue of debentures' was ₹90,000, then theamount of premium on redemption of debentures was:(A) ₹60,000(B) ₹90,000(C) ₹1,20,000(D) ₹30,000Solution.(D) ₹30,000,To determine the amount of premium on redemptionof debentures given the `Loss on issue of debentures account` is ₹90,000,follow these steps:1.Calculate the Discount on Issue of Debentures:- Number of debentures issued = 6,000- Face value of each debenture = ₹100- Total face value = 6,000 × ₹100 = ₹6,00,000- Discount = 10% of face value- Total discount = ₹6,00,000 × 10% = ₹60,0002. Determine the Premium on Redemption:The loss on issue of debentures = Discount on issue + Premium onredemption- Given: Loss on issue of debentures = ₹90,000- Discount on issue = ₹60,000- Therefore, Premium on redemption = Loss on issue - Discount on issue- Premium on redemption = ₹90,000 - ₹60,000 = ₹30,000So, the amount of premium on redemption of debentures was:(D) ₹30,000.OR(b) On 1st April, 2022 Surya Ltd. issued 10,000, 12% Debentures of ₹100 each at a premium of 5%. The total amount of interest ondebentures for the year ended 31st March, 2023 will be :

(A) ₹1,20,000(B) ₹50,000(C) ₹ 1,00,000(D) ₹1,26,000Solution.To determine the total amount of interest on debentures for theyear ended 31st March, 2023, follow these steps:1. Calculate the Total Face Value of Debentures:Number of debentures issued = 10,000Face value of each debenture = ₹100Total face value = 10,000 × ₹100 = ₹10,00,0002. Determine the Interest on Debentures:Interest rate = 12%Total interest = Total face value × Interest rateTotal interest = ₹10,00,000 × 12% = ₹1,20,000The premium on debentures affects the issuance price but does not affectthe calculation of interest on debentures. Therefore, the total amount ofinterest for the year is simply the interest rate applied to the face value ofthe debentures.So, the total amount of interest on debentures for the year ended 31stMarch, 2023 will be:(A) ₹1,20,000.Q.12.(a) Deepa, Elton and Frank were partners in a firm sharing profitsin the ratio of 2:2: 1. With effect from 1st April, 2023 they decided tochange their profit sharing ratio as 1:2:2. There existed a DebitBalance of Profit and Loss Account of ₹ 50,000 in the books of thefirm on the date of change in profit sharing ratio. The partnersdecided to retain the Debit Balance of Profit and Loss Account in thebooks. The adjustment entry will be :

JournalParticularsDr. Amount(₹)Cr.Amount(₹)(A)Deepa's Capital A/cDr.10,000To Frank's Capital A/c10,000(B)Deepa's Capital A/cDr.5,000To Frank's Capital A/c5,000(C)Frank's Capital A/cDr.10,000To Deepa's Capital A/c10,000(D)Frank's Capital A/c5,000To Deepa's Capital A/c5,000

Solution.(b) Som, Pam and Ron were partners in a firm sharing profits in theratio of 7:2: 1. With effect from 1st April, 2023 they decided to changetheir profit sharing ratio to 1:27. There existed a Credit Balance in theProfit and Loss Account of ₹ 1,00,000 on the date of change in profitsharing ratio in the books of the firm. The partners decided to retainthe Credit Balance in Profit and Loss Account in the books. Theadjustment entry will be :Journal

ParticularsDr. Amount(₹)Cr. Amount(₹)(A)Ron's Capital A/cDr.20,000To Som's Capital A/c20,000Ron's Capital A/cDr.60,000To Som's Capital A/c60,000Som's Capital A/cDr.20,000To Ron's Capital A/c20,000Som's Capital A/cDr.60,000To Ron's Capital A/c60,000

Solution.Q.13. (a) Anu, Bina and Roy were partners in a firm sharing profitsand losses in the ratio of 3:2: 1. Roy retired and his share wasacquired by Anu. The new profit sharing ratio between Anu and Binaafter Roy's retirement will be :(A) 3:2(B) 3:1(C) 1:1(D) 2:1Solution. (D) 2:1,

(b) Asha, Yug and Zubin were partners in a firm sharing profits andlosses in the ratio of 4:32. Zubin retired. Zubin's share was acquiredequally by Asha and Yug. The new profit sharing ratio between Ashaand Yug after Zubin's retirement was:(A) 3:2(B) 5:4(C) 4:3(D) 2:1

Solution.Q.16 Beeta Ltd. offered for subscription 1,00,000 equity shares of ₹10each at a premium of 100% payable entirely on application.Applications were received for 5,00,000 equity shares. The companydecided to allot the shares on a pro-rata basis to all the applicants.The amount received by the company on application was:(A) ₹1,00,00,000(B) ₹20,00,000(C) ₹1,20,00,000(D) ₹80,00,000Solution.(A) ₹1,00,00,000,Amount Received by the Company onApplication

Given:Equity shares offered = 1,00,000 sharesPremium per share = 100% of ₹10 = ₹10Total price per share = ₹10 (face value) + ₹10 (premium) = ₹20Applications received for = 5,00,000 sharesAllotment is on a pro-rata basis.Total amount receivable = 5,00,000 shares × ₹20 = ₹1,00,00,000Answer:(A) ₹1,00,00,000Q.19. (a) Jatin, Keshav and Lalit were partners in a firm with fixedcapitals of ₹1,20,000, ₹ 1,00,000 and ₹80,000 respectively. As per thepartnership deed, there was a provision for allowing interest oncapitals @ 10% p.a., but entries for the same had not been made forthe last two years.The profit sharing ratio during the last two years was as follows:YearJatinKeshavLalit2021-225322022-23111Pass an adjustment entry at the beginning of the third year, i.e, on 1stApril, 2023.Solution.To record the adjustment for interest on capitals for the last twoyears in the books of the firm, we need to follow these steps:1. Calculate Interest on Capitals:Interest Rate: 10% per annumFor 2021-22:Jatin: ₹1,20,000 × 10% = ₹12,000Keshav: ₹1,00,000 × 10% = ₹10,000Lalit: ₹80,000 × 10% = ₹8,000Total Interest for 2021-22 = ₹12,000 + ₹10,000 + ₹8,000 = ₹30,000For 2022-23:Jatin: ₹1,20,000 × 10% = ₹12,000Keshav: ₹1,00,000 × 10% = ₹10,000

Lalit: ₹80,000 × 10% = ₹8,000Total Interest for 2022-23 = ₹12,000 + ₹10,000 + ₹8,000 = ₹30,0002. Calculate Total Interest Payable:Total interest for both years = ₹30,000 (2021-22) + ₹30,000 (2022-23) =₹60,0003.Calculate Share of Interest Based on Profit Sharing Ratio:For 2021-22:Jatin: (5/10) × ₹30,000 = ₹15,000Keshav: (3/10) × ₹30,000 = ₹9,000Lalit: (2/10) × ₹30,000 = ₹6,000For 2022-23:Jatin: (1/3) × ₹30,000 = ₹10,000Keshav: (1/3) × ₹30,000 = ₹10,000Lalit: (1/3) × ₹30,000 = ₹10,000Total Interest Due:Jatin: ₹15,000 + ₹10,000 = ₹25,000Keshav: ₹9,000 + ₹10,000 = ₹19,000Lalit: ₹6,000 + ₹10,000 = ₹16,000OR(b) Meera, Neena and Ojas were partners in a firm sharing profits andlosses in the ratio of 5:32. The partnership deed provided for charginginterest on drawings @ 10% p.a. The drawings of Meera, Neena andOjas during the year ended 31st March, 2023 amounted to ₹60,000,₹50,000 and ₹40,000 respectively. After the final accounts had beenprepared, it was discovered that interest in drawings had not beentaken into consideration. Pass the necessary adjustment entry.Solution.To record the adjustment for interest on drawings, follow thesesteps:Calculate Interest on Drawings:

The interest rate on drawings is 10% per annum.Meera’s Drawings: ₹60,000Interest = ₹60,000 × 10% = ₹6,000Neena’s Drawings: ₹50,000Interest = ₹50,000 × 10% = ₹5,000Ojas’s Drawings: ₹40,000Interest = ₹40,000 × 10% = ₹4,000Q.19.(a) Sheetal Ltd. purchased a building worth ₹2,50,000, plant andmachinery worth ₹2,00,000, furniture worth ₹ 40,000 and took overliabilities of 30,000 from Poonam Ltd. for a purchase consideration of₹ 4,40,000. The purchase consideration was paid by issuing 12%Debentures of ₹ 100 each at a premium of 10%.Pass the necessary journal entries in books of Sheetal Ltd. to recordthe above transactions.ORSolution.Journal Entries in the Books of Sheetal Ltd.Record the Purchase of Assets and Liabilities Taken Over:Record the Issue of Debentures for Purchase Consideration:Calculate the Total Number of Debentures to be Issued:Face value of each debenture = ₹100Premium on each debenture = 10% of ₹100 = ₹10Total issue price per debenture = ₹100 + ₹10 = ₹110Total purchase consideration = ₹4,40,000Number of debentures to be issued = Purchase Consideration / Issue Priceper Debenture

Number of debentures = ₹4,40,000 / ₹110 = 4,000 debenturesExplanation:1. Asset and Liability Purchase:○The first entry records the purchase of assets and liabilities.The total value of assets and liabilities taken over is credited toPoonam Ltd.'s account, which is the amount to be settled.2. Issue of Debentures:○The second entry reflects the settlement of the purchaseconsideration by issuing debentures. The debentures arerecorded at their face value, and the premium on debentures iscredited to the Securities Premium Account.○The total value of debentures issued (₹4,00,000) and thepremium (₹40,000) add up to the total purchase considerationof ₹4,40,000.(b) On 1st April, 2023, Simple Ltd. took over assets of ₹ 5,00,000 andliabilities of ₹ 1,00,000 from Temur Ltd. at an agreed value of ₹16,00,000. Simple Ltd. paid the amount to Temur Ltd. as follows:(i) Issued a bank draft of ₹ 1,00,000.(ii) Issued 8% Debentures of ₹ 100 each at a premium of 50% insatisfaction of the balance amount of purchase consideration. Passthe necessary journal entries in the books of Simple Ltd. to record theabove transactions.Solution.To record the transactions of Simple Ltd. taking over assets andliabilities from Temur Ltd., and paying the purchase consideration with acombination of a bank draft and 8% debentures issued at a premium, followthese journal entries:Journal Entries in the Books of Simple Ltd.1. Record the Purchase of Assets and Liabilities:DateParticularsDr. (₹)Cr. (₹)

Assets Account (e.g., Buildings, Machinery, etc.)Dr. 5,00,000Liabilities AccountDr. 1,00,000To Temur Ltd. Account6,00,000(Being assets and liabilities taken over from Temur Ltd. recorded)2. Record the Payment by Bank Draft:DateParticularsDr. (₹)Cr. (₹)Temur Ltd. AccountDr. 1,00,000To Bank Account1,00,00(Being payment of ₹1,00,000 to Temur Ltd. by bank draft)3. Calculate the Amount to be Paid through Debentures:Total purchase consideration: ₹16,00,000Amount already paid by bank draft: ₹1,00,000Balance to be paid through debentures: ₹16,00,000 - ₹1,00,000 =₹15,00,000Calculate Number of Debentures to be Issued:Face value of each debenture = ₹100Premium on each debenture = 50% of ₹100 = ₹50Total issue price per debenture = ₹100 + ₹50 = ₹150Number of debentures to be issued = Balance Amount / Issue Price perDebentureNumber of debentures = ₹15,00,000 / ₹150 = 10,000 debentures4. Record the Issuance of Debentures:DateParticularsDr. (₹)Cr. (₹)Temur Ltd. AccountDr. 15,00,000To 8% Debentures Account10,00,000To Securities Premium Account5,00,000(Being balance of purchase consideration settled by issuing 8% debenturesat a premium)Explanation:1. Asset and Liability Purchase:

This entry reflects the acquisition of assets and liabilities from Temur Ltd.,with the total purchase consideration debited to Temur Ltd.'s account.2.Bank Draft Payment:- This entry records the payment made via bank draft. The bank accountis credited to reflect the cash outflow.3. Debenture Issuance:The entry records the issuance of debentures for the balance of thepurchase consideration. Debentures are recorded at their face value, andthe premium is recorded in the Securities Premium Account.These entries properly account for the combination of cash and debenturepayments for the purchase of assets and liabilities.Q. 21 Shringar Ltd. was registered with an authorized capital of5,00,000 divided into equity shares of ₹ 10 each. The company issueda prospectus inviting applications for 20,000 equity shares. Theamount was payable as follows:On Application3 per shareOn Allotment5 per shareOn First and Final call BalanceApplications were received for 19,000 equity shares and allotmentwas made to all the applicants. All the amounts were duly receivedexcept the first and final call on 5,000 shares.Present the share capital in the Company's Balance Sheet as perSchedule III, Part I of Companies Act, 2013. Also prepare 'Notes toAccounts' for the same.Solution.To present the share capital in the company's balance sheet andprepare the notes to accounts for Shringar Ltd., follow these steps:1. Share Capital in the Balance Sheet

Balance Sheet of Shringar Ltd. as per Schedule III, Part I of CompaniesAct, 2013Equity and LiabilitiesShare Capital:Authorized Capital:Equity Shares of ₹10 each: ₹5,00,000Issued, Subscribed, and Paid-Up Capital:Issued: 20,000 sharesSubscribed: 19,000 sharesPaid-Up: 14,000 shares fully paid-up, 5,000 shares with partial payment2. Notes to AccountsNotes to Accounts for Share Capital1.Authorized Share Capital:₹5,00,000 divided into 50,000 equity shares of ₹10 each.2.Issued Share Capital:The company issued 20,000 equity shares of ₹10 each.3. Subscribed Share Capital:Applications were received for 19,000 equity shares, and all applicantswere allotted shares.The amount payable on application was ₹3 per share, on allotment was ₹5per share, and on the first and final call was the balance of ₹2 per share.4. Paid-Up Capital:- Fully Paid-Up: 14,000 equity shares- Application (14,000 shares × ₹3) = ₹42,000- Allotment (14,000 shares × ₹5) = ₹70,000- First and Final Call (14,000 shares × ₹2) = ₹28,000- Total Paid-Up Capital = ₹42,000 + ₹70,000 + ₹28,000 = ₹1,40,000

5. Calls in Arrears:First and Final Call on 5,000 sharesCalls in Arrears = 5,000 shares × ₹2 per share = ₹10,0006. Total Share Capital:- Fully Paid-Up Capital = ₹1,40,000- Calls in Arrears = ₹10,000- Total Subscribed Share Capital = ₹1,50,000Summary of Share Capital in the Balance Sheet:1. Authorized Capital: ₹5,00,0002. Issued Capital: ₹2,00,0003. Subscribed Capital: ₹1,90,0004. Paid-Up Capital: ₹1,40,0005. Calls in Arrears: ₹10,0006. Total Share Capital: ₹1,90,000Q.25. (a) Anshu and Vihu were partners in a firm sharing profits andlosses in the ratio of 3: 2. Their Balance Sheet as at 31st March, 2023was as follows: Balance Sheet of Anshu and Vihu as at 31st March,2023 Liabilities Amount (₹) Assets Amount (₹) Creditors 80,000 Cash40,000 General Reserve 50,000 Investment Fluctuation Fund 10,000Debtors Less Provision for Doubtful debts Stock 36,000 2,000 34,00030,000 Capitals: Anshu 1,44,000 Vihu 80,000 2,24,000 3,64,000 Plantand Machinery 2,20,000 40,000 Investments 3,64,000Solution.1. Verify the Balance SheetLet’s ensure that the Balance Sheet is balanced by totaling the assets andliabilities.Total Liabilities:1. Creditors: ₹80,0002. General Reserve: ₹50,0003. Investment Fluctuation Fund: ₹10,000

4. Capitals:Anshu: ₹1,44,000Vihu: ₹80,000Total Liabilities Calculation:Total Liabilities = Creditors + General Reserve + Investment FluctuationFund + Capital of Anshu + Capital of Vihu= ₹80,000 + ₹50,000 + ₹10,000 + ₹1,44,000 + ₹80,000= ₹3,64,000Total Assets:1. Cash: ₹40,0002. Debtors: ₹36,0003. Less: Provision for Doubtful Debts**: ₹2,000Net Debtors: ₹36,000 - ₹2,000 = ₹34,0004. Stock: ₹30,0005. Plant and Machinery: ₹2,20,0006. Investments: ₹40,000Total Assets Calculation:```Total Assets = Cash + Net Debtors + Stock + Plant and Machinery +Investments= ₹40,000 + ₹34,000 + ₹30,000 + ₹2,20,000 + ₹40,000= ₹3,64,000The Balance Sheet is balanced with both totals being ₹3,64,000.2. Typical Adjustments or TransactionsScenario 1: Admission of a New PartnerRevaluation of Assets: If the problem involves a new partner, the assetsmight need revaluation.Adjustment of Reserves: General Reserve and Investment FluctuationFund might need to be shared among the partners based on theirprofit-sharing ratio.

Scenario 2: Dissolution or Sale of AssetsDisposal of Assets: Selling or settling of assets would be recorded.Settlement of Liabilities: Any remaining liabilities would need to be cleared.3. Journal Entries for Adjustment ScenariosIf Revaluation is Required:1.Revaluation of Assets:Increase in assets: Dr. Asset Account / Cr. Revaluation AccountDecrease in assets: Dr. Revaluation Account / Cr. Asset Account2. Transfer of Reserves:General Reserve and Investment Fluctuation Fund need to be adjusted topartners’ capital accounts.General Reserve Transfer Entry:General Reserve A/cDr. ₹50,000To Anshu's Capital A/c₹30,000To Vihu's Capital A/c₹20,000(Being General Reserve transferred to partners' capital accounts in theratio of 3:2)Investment Fluctuation Fund Transfer Entry:Investment Fluctuation Fund A/cDr. ₹10,000To Anshu's Capital A/c₹6,000To Vihu's Capital A/c₹4,000(Being Investment Fluctuation Fund transferred to partners' capitalaccounts in the ratio of 3:2)(b) Trisha, Urvi and Varsha were partners in a firm sharing profits andlosses in the ratio of 5: 4: 1. Their Balance Sheet as at 31st March,2023 was as follows: Balance Sheet of Trisha, Urvi and Varsha as at31st March, 2023 Liabilities Amount (₹) Assets Amount (₹) Capitals:Fixed Assets Trisha Urvi Stock Debtors Cash 1,50,000 1,30,000 100% +6 Varsha 4,30,000 General Reserve 1,50,000 Creditors 2,70,000

8,50,000 8,50,000 Trisha retired on 1st April, 2023 and the partnersagreed to the following terms: (i) Fixed Assets were found overvaluedby ₹80,000. (ii) Stock was taken over by Trisha at ₹ 80,000. (iii) (iv)Goodwill of the firm was valued at ₹ 1,00,000 on Trisha's retirementand Trisha's share by goodwill was adjusted through the CapitalAccounts of remaining partners. New profit sharing ratio between theremaining partners was agreed at 2:3. Trisha was paid ₹50,000 onretirement and the balance was transferred to her loan account. (v)Pass necessary journal entries in the books of the firm on Trisha'sretirement.Solution.To record the transactions related to Trisha's retirement from thepartnership of Trisha, Urvi, and Varsha, we'll follow these steps:1. Adjust Fixed Assets for Overvaluation2. Record Stock Taken Over by Trisha3. Record Goodwill Adjustment4. Settlement of Trisha’s Share5. Transfer of Balance to Loan AccountLet’s break this down step by step with the necessary journal entries.1.Adjust Fixed Assets for OvervaluationThe fixed assets were found to be overvalued by ₹80,000. This needs to beadjusted in the books.Journal Entry:Fixed Assets A/cDr. ₹80,000To Revaluation Account₹80,000(Being the overvaluation of fixed assets adjusted)2.Record Stock Taken Over by Trisha

Stock was taken over by Trisha at ₹80,000. This amount will be adjustedagainst her capital account.Journal Entry:Stock A/cDr. ₹80,000To Trisha’s Capital A/c₹80,000(Being stock taken over by Trisha at ₹80,000)3.Record Goodwill AdjustmentGoodwill of the firm was valued at ₹1,00,000, and Trisha’s share of goodwillneeds to be adjusted in the capital accounts of the remaining partners.Trisha’s share of goodwill (based on her profit-sharing ratio of 5/10 or 1/2):Trisha’s share of goodwill = ₹1,00,000 × (5/10) = ₹50,000The remaining partners (Urvi and Varsha) will share this adjustment in theirnew profit-sharing ratio of 2:3.Goodwill adjustment for Urvi and Varsha:**Urvi’s share of goodwill = ₹50,000 × (2/5) = ₹20,000Varsha’s share of goodwill = ₹50,000 × (3/5) = ₹30,000Journal Entries:Goodwill A/cDr. ₹1,00,000To Urvi’s Capital A/c₹20,000To Varsha’s Capital A/c₹30,000To Trisha’s Capital A/c₹50,000(Being adjustment of goodwill among the partners, Trisha’s share adjustedthrough her capital account)

4.Settlement of Trisha’s ShareTrisha was paid ₹50,000 in cash, and the remaining amount is transferredto her loan account.Total Amount Payable to Trisha:1.Calculate Trisha’s Share of Capital and Adjustments:Initial Capital (Before adjustments):Trisha: ₹1,50,000Adjustments:- Less: Stock taken over by Trisha: ₹80,000- Less: Goodwill adjustment: ₹50,000- Less: Fixed Assets Overvaluation: ₹80,000Net Amount:Amount payable to Trisha: ₹1,50,000 - ₹80,000 - ₹50,000 - ₹80,000 =₹40,000Payment:Paid: ₹50,000Balance: ₹40,000 (which will be transferred to Trisha’s loan account)Journal Entries:Trisha’s Capital A/cDr. ₹40,000To Trisha’s Loan A/c₹40,000(Being the balance amount transferred to Trisha’s loan account afterpayment of ₹50,000)Trisha’s Loan A/cDr. ₹40,000To Bank A/c₹50,000To Trisha’s Capital A/c₹10,000(Being settlement of Trisha’s capital account, payment of ₹50,000 andbalance adjusted)Summary of Journal Entries1.Adjust Fixed Assets for Overvaluation:Fixed Assets A/cDr. ₹80,000

To Revaluation Account₹80,0002.Record Stock Taken Over by Trisha:Stock A/cDr. ₹80,000To Trisha’s Capital A/c₹80,0003.Record Goodwill Adjustment:Goodwill A/cDr. ₹1,00,000To Urvi’s Capital A/c₹20,000To Varsha’s Capital A/c₹30,000To Trisha’s Capital A/c₹50,0004. Settlement of Trisha’s Share:Trisha’s Capital A/cDr. ₹40,000To Trisha’s Loan A/c₹40,000Trisha’s Loan A/cDr. ₹40,000To Bank A/c₹50,000To Trisha’s Capital A/c₹10,000These entries cover the adjustments and settlements necessary due toTrisha’s retirement from the partnership.Q.26 (A) Diamond Ltd. issued a prospectus inviting applications for20,000 shares of ₹ 10 each. The amount was payable as follows: OnApplication ₹4 per share On Allotment 4 per share On First and Finalcall Balance Applications for 45,000 shares were received andallotment was made as follows: Category (i) Applicants for 35,000shares were allotted 15,000 shares. Category (ii) Applicants for 10,000shares were allotted 5,000 shares. It was decided that excess moneyreceived on application be adjusted towards sum due on allotmentand calls. Amar, an applicant of Category (ii), who was allotted 500shares, failed to pay the first and final call. His shares were forfeitedand subsequently reissued at 2 per share as fully paid up. Passnecessary journal entries to record the above transactions in thebooks of Diamond Ltd. ORSolution.1.Receipt of Application Money:

Applicants for 45,000 shares applied, but only 20,000 shares were to beissued. The application money was ₹4 per share.Bank A/cDr. ₹1,80,000To Share Application A/c₹1,80,000(Being application money received for 45,000 shares @ ₹4 per share)2. Allotment of Shares:Category (i): Applicants for 35,000 shares were allotted 15,000 shares.Category (ii): Applicants for 10,000 shares were allotted 5,000 shares.Adjustment of Excess Application Money:Total application money received: ₹1,80,000Allotment money due: 20,000 shares @ ₹4 = ₹80,000Excess application money: ₹1,80,000 - ₹80,000 = ₹1,00,000This excess amount will be adjusted against the allotment money due.Allotment Entries:Share Application A/cDr. ₹1,80,000To Share Capital A/c₹2,00,000To Share Allotment A/c₹80,000(Being the transfer of application money to share capital and allotmentaccounts)Share Allotment A/cDr. ₹80,000To Bank A/c₹80,000

(Being allotment money received)3. Calls on Shares:The balance amount on call is: ₹10 (total) - ₹4 (application) - ₹4 (allotment)= ₹2 per shareTotal call money: 20,000 shares × ₹2 = ₹40,000Share First and Final Call A/c Dr. ₹40,000To Share Capital A/c₹40,000(Being the first and final call due on 20,000 shares @ ₹2 per share)Share First and Final Call A/c Dr. ₹40,000To Bank A/c₹40,000(Being call money received)4. Forfeiture of Shares:Amar, who was allotted 500 shares, failed to pay the first and final call of₹1,000 (500 shares × ₹2 per share).Forfeiture Entry:Share Capital A/cDr. ₹5000Share First and Final Call A/c Dr. ₹1000To Share Forfeiture A/c₹6000(Being 500 shares forfeited for non-payment of final call)5.Reissue of Forfeited Shares:The forfeited shares were reissued at ₹2 per share as fully paid-up.The amount received from the reissue is: 500 shares × ₹2 = ₹1,000Reissue Entry:Bank A/cDr. ₹1,000To Share Capital A/c₹500To Share Forfeiture A/c₹50(Being 500 forfeited shares reissued at ₹2 per share)Here’s a summary of the journal entries:1.Application Money:Bank A/cDr. ₹1,80,000To Share Application A/c₹1,80,000

2. Allotment and Adjustments:Share Application A/cDr. ₹1,80,000To Share Capital A/c₹2,00,000To Share Allotment A/c₹80,000Share Allotment A/cDr. ₹80,000To Bank A/c₹80,0003. Calls on Shares:Share First and Final Call A/c Dr. ₹40,000To Share Capital A/c₹40,000Share First and Final Call A/c Dr. ₹40,000To Bank A/c₹40,0004.Forfeiture of Shares:Share Capital A/cDr. ₹5000Share First and Final Call A/c Dr. ₹1000To Share Forfeiture A/c₹60005.Reissue of Forfeited Shares:Bank A/cDr. ₹1,000To Share Capital A/c₹500To Share Forfeiture A/c₹500These entries cover the entire process from application through reissue ofshares, including all necessary adjustments and forfeitures.(b) Pearl Ltd. issued a prospectus inviting applications for 40,000shares of 10 each at a premium of 20%. The amount was payable asfollows: On Application 5 per share On Allotment 5 per share(Including Premium) On First and Final call Balance Applications for60,000 shares were received and allotment was made on a pro-ratabasis to all the applicants. Excess money received on application was

adjusted towards the amount due on allotment. Sameer who hadapplied for 1,200 shares failed to pay the allotment money. His shareswere forfeited immediately after allotment. All the forfeited shareswere reissued at 7 per share as ₹8 paid up. First and final call was notyet made. Pass necessary journal entries to record the abovetransactions in the book of Pearl Ltd. Open 'Calls in Arrears Account'wherever necessary.Solution.To record the transactions for Pearl Ltd., we need to handleseveral aspects including the application, allotment, forfeiture, and reissueof shares. Let’s break down the transactions and the corresponding journalentries.1.Application MoneyPearl Ltd. issued a prospectus for 40,000 shares at ₹10 each with apremium of 20%, making the total price ₹12 per share (₹10 + ₹2 premium).The application money was ₹5 per share.Total application money received:Applications for 60,000 shares at ₹5 each = ₹3,00,000Journal Entry:Bank A/cDr. ₹3,00,000To Share Application A/c₹3,00,000(Being application money received for 60,000 shares @ ₹5 per share)2.Allotment MoneyThe allotment was on a pro-rata basis due to oversubscription. The totalamount due on allotment was ₹5 per share (including premium).Allotment due: 40,000 shares × ₹5 = ₹2,00,000Excess Application Money Adjusted:Total application money: ₹3,00,000Total allotment money due: ₹2,00,000Excess application money: ₹3,00,000 - ₹2,00,000 = ₹1,00,000

Journal Entry:Share Application A/cDr. ₹3,00,000To Share Capital A/c₹4,00,000To Share Allotment A/c₹2,00,000(Being transfer of application money to share capital and allotmentaccounts)Share Allotment A/cDr. ₹1,00,000To Bank A/c₹1,00,000(Being the remaining allotment money received, after adjusting excessapplication money)3. Forfeiture of SharesSameer, who applied for 1,200 shares, did not pay the allotment money.His shares were forfeited.Forfeiture Entry:Allotment money due on Sameer’s shares: 1,200 shares × ₹5 = ₹6,000Share Capital A/cDr. ₹12,000To Share Allotment A/c₹6,000To Calls in Arrears A/c₹6,000(Being 1,200 shares forfeited for non-payment of allotment money)4. Reissue of Forfeited SharesThe forfeited shares (1,200 shares) were reissued at ₹7 per share as ₹8paid-up.Reissue price: ₹7 per sharePaid-up amount on reissue: ₹8 per shareTotal amount received on reissue:Amount received: 1,200 shares × ₹7 = ₹8,400Journal Entry for Reissue:Bank A/cDr. ₹8,400To Share Capital A/c₹12,000To Share Forfeiture A/c₹3,600(Being 1,200 forfeited shares reissued at ₹7 per share as ₹8 paid-up)5.Calls in Arrears Account

Since the first and final call was not yet made, there is no entry related tocalls in arrears for this transaction.Summary of Journal Entries:1. Application Money:Bank A/cDr. ₹3,00,000To Share Application A/c₹3,00,0002. Allotment and Adjustments:Share Application A/cDr. ₹3,00,000To Share Capital A/c₹4,00,000To Share Allotment A/c₹2,00,000Share Allotment A/cDr. ₹1,00,000To Bank A/c₹1,00,0003.Forfeiture of Shares:Share Capital A/cDr. ₹12,000To Share Allotment A/c₹6,000To Calls in Arrears A/c₹6,0004. Reissue of Forfeited Shares:Bank A/cDr. ₹8,400To Share Capital A/c₹12,000To Share Forfeiture A/c₹3,600This covers the complete journal entries for the application, allotment,forfeiture, and reissue of shares for Pearl Ltd.PART BOption - I(Analysis of Financial Statements)Q.27. (a) Which of the following is not a limitation of Analysis ofFinancial Statements'?

(A) It is just a study of the reports of the company.(B) It does not consider price level changes.(C) It ascertains the relative importance of different components ofthe financial position of the firm.(D) It may be misleading without the knowledge of the changes inaccounting procedures followed by a firm.Solution.(C) It ascertains the relative importance of differentcomponents of the financial position of the firm.Option (A): It is just a study of the reports of the company.Explanation: Analyzing financial statements involves studying thecompany's financial reports to assess performance and financial health.While this might seem like a limitation, it is actually the core purpose offinancial statement analysis—to examine the reports and make informedjudgments.Result: Not a LimitationOption (B): It does not consider price level changes.Explanation: Traditional financial statement analysis often does not accountfor changes in price levels due to inflation or deflation. This can lead tomisleading conclusions, as the real value of money and purchasing powerchanges over time.Result:A LimitationOption (C): It ascertains the relative importance of different components ofthe financial position of the firm.Explanation: This is actually a benefit of financial statement analysis, not alimitation. By determining the relative importance of various components,analysts can better understand the company's financial health andperformance.Result: Not a LimitationOption (D): It may be misleading without the knowledge of the changes inaccounting procedures followed by a firm.

Explanation: Changes in accounting procedures can impact thecomparability of financial statements over time. If analysts are unaware ofthese changes, their interpretations might be misleading.Result: A LimitationOR(b) Ratios that are calculated for measuring the efficiency ofoperations of business based on effective utilization of resources areknown as:(A) Liquidity ratios(B) Turnover ratios(C) Solvency ratios(D) Profitability ratiosSolution. (B) Turnover ratios ,To determine which ratios measure theefficiency of operations and effective utilization of resources, let’s examineeach type of ratio:Option (A): Liquidity RatiosPurpose: Liquidity ratios measure a company’s ability to meet its short-termobligations using its liquid assets. Examples include the Current Ratio andQuick Ratio.Focus: They focus on the company's short-term financial health and do notdirectly measure operational efficiency.Result:Not the correct answerOption (B): Turnover RatiosPurpose: Turnover ratios assess how efficiently a company utilizes itsresources, such as inventory, receivables, and assets. They indicate howwell the company is managing its operations and converting resources intosales.Examples: Inventory Turnover Ratio, Receivables Turnover Ratio, andAsset Turnover Ratio.Result: Correct answer

Option (C): Solvency RatiosPurpose: Solvency ratios evaluate a company’s long-term financial stabilityand its ability to meet long-term obligations. They measure the company’scapital structure and long-term debt relative to its equity.Examples: Debt to Equity Ratio, Debt Ratio.Result: Not the correct answerOption (D): Profitability RatiosPurpose: Profitability ratios assess a company's ability to generate profitrelative to its revenue, assets, or equity. They measure overall financialperformance but do not specifically focus on the efficiency of operations.Examples: Net Profit Margin, Return on Assets (ROA), Return on Equity(ROE).Result: Not the correct answerQ.28 (a) Sale of patents of ₹ 50,00,000 will result in:(A) Cash inflow of ₹ 50,00,000 from financing activities(B) Cash outflow of ₹ 50,00,000 from financing activities(C) Cash outflow of ₹ 50,00,000 from investing activities(D) Cash inflow of ₹ 50,00,000 from investing activitiesSolution.(D) Cash inflow of ₹ 50,00,000 from investing activitiesTo determine the effect of the sale of patents on cash flows, we need tounderstand the nature of this transaction. The sale of patents involvesconverting a long-term intangible asset into cash.Types of Cash FlowsInvesting Activities: These include transactions related to the acquisitionand disposal of long-term assets and investments. This category coversactivities such as buying or selling property, equipment, patents, orinvestments in other companies.

Financing Activities: These involve transactions that affect the company'scapital structure, such as issuing or repurchasing stock, borrowing, orrepaying debt.Analyzing the Sale of PatentsSale of Patents: Patents are considered long-term intangible assets. Whena company sells a patent, it is disposing of one of its long-term assets inexchange for cash.Impact on Cash Flow: This transaction results in cash inflow because thecompany is receiving cash from selling an asset. Since patents areclassified as investing activities, this cash inflow is categorized underinvesting activities.OR(b) Income tax paid is classified under:(A) Operating activities(B) Investing activities(C) Financing activities(D) Cash and cash equivalentsSolution.(A) Operating activities ,Income tax paid is classified based onhow it relates to the company's primary business activities and cash flowstatements. Let's break down the classifications:Classifications of Cash FlowsOperating Activities: These include the core business operations of acompany, such as cash received from customers and cash paid tosuppliers and employees. It also includes cash payments for interest andincome taxes.Investing Activities: These involve transactions related to the acquisitionand disposal of long-term assets, such as property, equipment, orinvestments.Financing Activities: These relate to changes in the company's capitalstructure, such as issuing or repurchasing stock, borrowing, and repayingdebt.

Cash and Cash Equivalents: This refers to the actual cash available andhighly liquid investments that are readily convertible to cash.Income Tax PaidNature: Income tax is a part of the costs associated with operating abusiness and is directly related to the company’s income and profitgeneration activities.Classification: In the cash flow statement, income tax paid is categorizedunder operating activities because it pertains to the cash flows resultingfrom the company’s core business operations.ConclusionIncome tax paid is classified under:(A) Operating activitiesQ.29. The Quick Ratio of a company is 1: 1. Which of the followingtransactions will result in an increase of this ratio?(A) Purchase of inventory ₹1,50,000 through cheque(B) Sold inventory on credit₹ 50,000(C) Outstanding expenses of ₹ 40,000 paid(D) Machinery purchased for cash₹50,000Solution. (B) Sold inventory on credit₹ 50,000 ,The Quick Ratio, alsoknown as the Acid-Test Ratio, measures a company's ability to meet itsshort-term liabilities with its most liquid assets. It is calculated using theformula:Quick Ratio=Quick Assets/Current Liabilities Where:Quick Assets include cash, cash equivalents, marketable securities, andreceivables.Current Liabilities are short-term liabilities due within one year.Quick Assets exclude inventory and prepaid expenses.

To determine which transaction will result in an increase in the Quick Ratio,let’s analyze each option:Option (A) Purchase of Inventory ₹1,50,000 through ChequeEffect on Quick Assets: Decreases (cash decreases).Effect on Inventory: Increases (inventory increases).Overall Effect on Quick Ratio: Since inventory is excluded from quickassets, this transaction decreases quick assets and increases currentliabilities by the same amount (if the purchase is on credit). This generallywould decrease the Quick Ratio or have no effect if the purchase is madewith cash. However, it can be seen as neutral or potentially decreasing theQuick Ratio.Option (B) Sold Inventory on Credit ₹50,000Effect on Quick Assets: Increases (accounts receivable increases).Effect on Inventory: Decreases (inventory decreases).Overall Effect on Quick Ratio: Since inventory is excluded from quickassets and accounts receivable is included, this transaction increases quickassets while decreasing inventory. The Quick Ratio will increase becausequick assets (receivables) increase while current liabilities remainunchanged.Option (C) Outstanding Expenses of ₹40,000 PaidEffect on Quick Assets: No direct effect (cash decreases).Effect on Current Liabilities: Decreases (current liabilities decrease).Overall Effect on Quick Ratio: Since current liabilities decrease while quickassets decrease by the same amount (if cash is used), the overall effect onthe Quick Ratio depends on the proportion of decrease. However, typically,this transaction results in a higher Quick Ratio because the denominator(current liabilities) is reduced more relative to the decrease in quick assets.Option (D) Machinery Purchased for Cash ₹50,000

Effect on Quick Assets: Decreases (cash decreases).Effect on Non-Current Assets: Increases (machinery increases).Overall Effect on Quick Ratio: Since machinery is a non-current asset andnot part of quick assets, the reduction in cash (quick asset) lowers theQuick Ratio while current liabilities remain the same. Hence, this willdecrease the Quick Ratio.Q.30. Which of the following transactions will result in cash outflowfrom operating activities?(A) Payment to creditors(B) Proceeds from sale of investments(C) Dividend received by a non-finance company(D) Depreciation charged on furnitureSolution.(A) Payment to creditors,To determine which transactionresults in a cash outflow from operating activities, let's first clarify whatconstitutes cash outflows from operating activities. Operating activities referto the core business operations of a company, including cash flows fromselling goods and services, and paying expenses.Option (A): Payment to CreditorsNature of Transaction: This involves paying off outstanding amounts tosuppliers or creditors.Impact: This is a direct cash outflow related to the day-to-day operations ofthe business, as it pertains to paying for goods or services that have beenpurchased on credit.Result: Cash Outflow from Operating ActivitiesOption (B): Proceeds from Sale of InvestmentsNature of Transaction: This involves receiving cash from sellinginvestments (such as stocks or bonds).Impact: This is a cash inflow related to investing activities rather thanoperating activities. Investing activities pertain to transactions involvingassets and investments.

Result: Not a Cash Outflow from Operating ActivitiesOption (C): Dividend Received by a Non-Finance CompanyNature of Transaction: This involves receiving dividends from investmentsin other companies.Impact: For a non-financial company, dividends received are generallyconsidered an investing activity. However, they may be classified asoperating cash flows in some cases if they relate to the company’s corebusiness operations.Result: Not a Typical Cash Outflow from Operating Activities (It can be aninflow, depending on the classification)Option (D): Depreciation Charged on FurnitureNature of Transaction: Depreciation is a non-cash expense that reflects theallocation of the cost of fixed assets over their useful life.Impact: Depreciation does not involve an actual cash transaction. It is anaccounting entry that reduces taxable income but does not affect cash flow.Result: Not a Cash Outflow from Operating Activities (It is a non-cashcharge)Q.31. Classify the following items under major heads and sub-heads(if any) in the Balance Sheet of the company as per Schedule III, Part Iof the Companies Act, 2013 :(a) Calls in Advance(b) Creditors(c) Securities PremiumSolution.Under the Schedule III, Part I of the Companies Act, 2013, itemsin the Balance Sheet of a company are classified under major heads andsub-heads. Here's how you classify the given items:1. Equity and LiabilitiesShareholders' Funds

Share Capital: (This is where the Calls in Advance would be recorded,though Calls in Advance is a liability and is typically shown separately.)Other Current LiabilitiesCalls in Advance: This is classified under 'Other Current Liabilities' as itrepresents amounts received from shareholders for calls that are not yetdue.Shareholders' FundsReserves and SurplusSecurities Premium: This is classified under 'Reserves and Surplus'. Itrepresents the amount received over and above the face value of sharesissued.2.Current LiabilitiesTrade PayablesCreditors: This falls under 'Trade Payables' within the 'Current Liabilities'section. It represents the amounts payable to suppliers for goods orservices received.Summary of Classification:1. Equity and LiabilitiesShareholders' FundsReserves and SurplusSecurities PremiumCurrent LiabilitiesTrade PayablesCreditorsOther Current LiabilitiesCalls in AdvanceQ.32. From the following information, calculate :(a) Trade Receivables Turnover Ratio(b) Operating Profit RatioParticularsAmount (₹)

Credit Revenue from operations55,00,000Cash Revenue from operations15,00,000Debtors12,50,000Bills Receivable7,50,000Operating Expenses7,00,000Gross Profit Ratio 20%Solution.

Q.33. (a) From the given Balance Sheet of Moonlight Ltd., prepare aCommon Size Balance Sheet :Balance Sheet of Moonlight Ltd.as at 31st March, 2023

Solution.

Current Assets:●Trade Receivables: 20%●Inventories: 10%(b) From the following particulars of Accent Ltd., prepare aComparative Statement of Profit and Loss for the year ended 31stMarch, 2023 :ParticularsNote No.2022 –23 (₹)2021 –22 (₹)Revenue from operations25,00,00020,00,000Employee benefit expenses5,00,0004,00,000

Other expenses2,50,0002,00,000Tax rate 50%Solution.To prepare a Comparative Statement of Profit and Loss forAccent Ltd. for the years ended 31st March, 2023 and 2022, we need tocompare the financial performance of the two years side by side. Thisinvolves calculating the Gross Profit, Net Profit, and other relevant figuresfor each year and presenting them in a comparative format.Comparative Statement of Profit and LossFor the years ended 31st March, 2023 and 20221.Revenue from Operations:- 2022-23: ₹25,00,000- 2021-22: ₹20,00,000- Increase: ₹5,00,000 (25%)2. Employee Benefit Expenses:- 2022-23: ₹5,00,000- 2021-22: ₹4,00,000- Increase: ₹1,00,000 (25%)3. Other Expenses:- 2022-23: ₹2,50,000- 2021-22: ₹2,00,000- Increase: ₹50,000 (25%)4. Total Expenses:- 2022-23: ₹7,50,000 (Employee Benefit Expenses + Other Expenses)- 2021-22: ₹6,00,000- Increase: ₹1,50,000 (25%)5. Gross Profit:

- 2022-23: ₹17,50,000 (Revenue - Total Expenses)- 2021-22: ₹14,00,000- Increase: ₹3,50,000 (25%)6. Tax (50%):- 2022-23: ₹8,75,000 (50% of Gross Profit)- 2021-22: ₹7,00,000 (50% of Gross Profit)- Increase: ₹1,75,000 (25%)7. Net Profit:- 2022-23: ₹8,75,000 (Gross Profit - Tax)- 2021-22: ₹7,00,000- Increase: ₹1,75,000 (25%)This comparative statement helps in analyzing the financial performanceover the two years, highlighting the changes in revenue, expenses, andprofits.Q.34. From the following particulars of Ruparel Ltd., calculate ‘CashFlow from Investing Activities’. Show your working clearly.Particulars31.03.2023 (₹)31.03.2022 (₹)Goodwill3,00,0001,00,000Patents1,60,0002,80,000Machinery12,40,00010,20,00010% Investments1,60,00060,000Additional Information :(i) Patents of ₹1,20,000 were sold at book value.(ii) Depreciation charged during the year on machinery was ₹1,40,000. A machine having a book value of ₹ 80,000 was sold for₹50,000.(iii) On 31.03.2023, 10% investments were purchased for ₹ 1,80,000and some investments were sold at a profit of ₹ 20,000. Interestreceived on investments was ₹ 6,000.

Solution.Calculation of Cash Flow from Investing Activities1. Sale of Patents- Patents at the beginning (31.03.2022): ₹2,80,000- Patents at the end (31.03.2023): ₹1,60,000- Patents sold during the year: ₹1,20,000 (at book value)2. Sale of Machinery- Book value of the machine sold: ₹80,000- Sale proceeds of the machine: ₹50,000- Loss on sale of machinery: ₹80,000 - ₹50,000 = ₹30,000 (not directlyaffecting cash flow, but indicates sale value)3. Purchase of Machinery- Machinery at the beginning (31.03.2022): ₹10,20,000- Machinery at the end (31.03.2023): ₹12,40,000- Net addition to machinery: ₹12,40,000 - ₹10,20,000 = ₹2,20,000- Less: Book value of machinery sold: ₹80,000- Net purchase of machinery: ₹2,20,000 + ₹80,000 = ₹3,00,0004. Investment Transactions- Investments at the beginning (31.03.2022): ₹60,000- Investments at the end (31.03.2023): ₹1,60,000- Net increase in investments: ₹1,60,000 - ₹60,000 = ₹1,00,000- Less: Purchase of investments during the year: ₹1,80,000- Profit on sale of investments: ₹20,000- Investments sold (adjusted for profit): ₹1,00,000 - ₹1,80,000 + ₹20,000= ₹-60,000 (showing net outflow as actual cash spent on investments)5. Interest Received on Investments- Interest received: ₹6,000Summary of Cash Flow from Investing Activities1. Proceeds from Sale of Patents: ₹1,20,000

2. Proceeds from Sale of Machinery: ₹50,0003. Purchase of Machinery: ₹3,00,000 (outflow)4. Net Purchase of Investments: ₹1,00,000 (outflow) - ₹1,80,000 purchase+ ₹20,000 profit (adjusted)5. Interest Received: ₹6,000Cash Flow from Investing Activities CalculationCash Flow from Investing Activities=(Proceeds from Sale ofPatents+Proceeds from Sale of Machinery−Purchase of Machinery−NetPurchase of Investments+Interest Received)Cash Flow from InvestingActivities=(1,20,000+50,000−3,00,000−1,00,000+6,000)Cash Flow from Investing Activities=1,70,000−4,00,000+6,000Flow from Investing Activities = 1,70,000 - 4,00,000 + 6,000Cash Flowfrom Investing Activities=1,70,000−4,00,000+6,000Cash Flow from Investing Activities=−2,24,000Cash Flow from Investing Activities = -2,24,000Cash Flow from InvestingActivities=−2,24,000PART BOPTION – II(Computerised Accounting)Q.27. (a) A sequential code refers to code applied to some documentswhere :(A) Account heads are assigned to documents

(B) Numbers and letters are assigned in consecutive order(C) Special names are given to accounts(D) Documents are arranged in special sequenceORSolution. (B) Numbers and letters are assigned in consecutive orderIn accounting and documentation, a sequential code is a method where (B)Numbers and letters are assigned in consecutive order.This means thatdocuments or transactions are coded with numbers or letters that follow asequential pattern, such as 001, 002, 003, etc., or A1, A2, A3, etc. Thismethod helps in organizing and tracking documents in a systematic order,making it easier to retrieve and reference them.(b) Name the Accounting information sub-system which is linked withother sub-systems for obtaining information about cost and expenses(A) Cash and Bank sub-system(B) Costing sub-system(C) Expense accounting sub-system(D) Final accounts sub-systemSolution.The Accounting information sub-system that is linked with othersubsystems to obtain information about cost and expenses is (B) Costingsub-system, The Costing sub-system integrates with various othersub-systems, such as inventory, production, and expense accounting, togather detailed information on costs and expenses. This integration helpsin accurate cost analysis and management.Q.28. To see all available shape styles of a chart, which of thefollowing buttons is clicked?(A) More

(B) Chart tool(C) Picture(D) CustomSolution.(A) More ,To see all available shape styles of a chart, you wouldclick(A) More In most chart tools, clicking the "More" button or similaroptions usually reveals additional styles and formatting options.Q.29 (a) A 'legend' can be repositioned on the chart:(A) On the right side only(B) On the left side only(C) On the bottom of x-axis(D) AnywhereORSolution.A 'legend' can be repositioned on the chart:(D) AnywhereLegends in charts are typically flexible and can be moved to variouspositions, including the right side, left side, top, bottom, or even within thechart area itself, depending on the charting software being used.(b) The need for codification is for:(A) the generation of mnemonic codes(B) securing the accounting reports(C) easy processing of data and keeping records(D) the encryption of data 29 To see all available shape styles of achart which of the following buttons isSolution.(C) easy processing of data and keeping recordsThe Need for Codification

Codification is used to systematically organize and simplify data throughthe assignment of codes. Here’s how it relates to each option:(A) The Generation of Mnemonic Codes: While codification may involvemnemonic codes, its broader purpose is not just limited to generating thesecodes. Mnemonic codes are more about making the codes easier toremember rather than the fundamental purpose of codification.(B) Securing the Accounting Reports: Codification does not inherentlysecure reports. Securing reports is related to security measures likeencryption and access controls.(C) Easy Processing of Data and Keeping Records: This is the mainpurpose of codification. By assigning codes to data, it becomes easier toprocess, manage, and maintain records. Codification helps in organizingdata systematically and efficiently.(D) The Encryption of Data: Encryption is a separate process that involvessecuring data by converting it into a format that is not readable withoutproper authorization. Codification is not about encryption but aboutorganizing data.ConclusionThe need for codification is primarily for:(C) Easy processing of data and keeping records.Q.30. Which of the following is not an advantage of a computerizedaccounting system ?(A) Timely generation of reports in desired format(B) Ensures effective control over the system(C) Faster obsolescence of technology(D) Confidentiality of data is maintained

Solution.(C) Faster obsolescence of technology ,To determine whichoption is not an advantage of a computerized accounting system, let’sanalyze each statement:Option (A): Timely Generation of Reports in Desired FormatAdvantage: Computerized accounting systems can quickly generatefinancial reports in various formats, making it easier to access timely andaccurate information.Result:AdvantageOption (B): Ensures Effective Control Over the SystemAdvantage: Computerized systems can include features such as userpermissions, audit trails, and access controls to help manage and monitorsystem usage effectively.Result:AdvantageOption (C): Faster Obsolescence of TechnologyDisadvantage: Technology tends to evolve rapidly, which can lead to fasterobsolescence of hardware and software used in computerized systems.This means companies might need to frequently upgrade or replacetechnology to stay current.Result: Not an AdvantageOption (D): Confidentiality of Data is MaintainedAdvantage: Computerized systems can offer strong data protectionmeasures, such as encryption, secure access controls, and backupsolutions, to maintain data confidentiality.Result: AdvantageQ.31. State any three limitations of Computerised Accounting System.Solution.Three limitations of Computerized Accounting Systems:

1.System Failures and Data Loss: Computerized systems can be prone totechnical failures, such as hardware malfunctions or software bugs. In suchcases, there is a risk of data loss or corruption if proper backups are notmaintained.2. High Initial Costs: Implementing a computerized accounting systeminvolves significant initial investment in software, hardware, and training.For small businesses, these costs can be a barrier to adoption.3. Dependence on Technology and Expertise: The effectiveness ofcomputerized accounting systems depends on having the right technologyand skilled personnel. Inadequate training or lack of technical support canlead to inefficiencies and errors in the accounting process.Q.32. State the steps to freeze a formula so that the present value ismaintained in the given cell and recalculation is prevented.Solution.To freeze a formula in Excel so that the present value ismaintained and recalculation is prevented, follow these steps:1. Calculate the Current Value: Ensure that the formula cell displays thevalue you want to freeze.2. Copy the Cell: Click on the cell with the formula, and press `Ctrl + C` (orright-click and select `Copy`).3. Paste as Values: Right-click on the same cell or another cell where youwant to keep the frozen value. From the context menu, choose `PasteSpecial`, and then select `Values` from the options. This action replaces theformula with the calculated value.4. Confirm: Click `OK` or `Paste` to complete the process. The cell nowcontains the static value and will no longer update with changes in othercells.

By following these steps, you effectively freeze the current value andprevent any further recalculation of the formula in that cell.Q.33. (a) State steps to be taken in preparation of a chart.Solution.To prepare a chart effectively in Excel or similar spreadsheetsoftware, follow these steps:1. Organize Your Data:Ensure your data is organized in rows or columns with clear labels for eachseries and category. This makes it easier to select and visualize the dataaccurately.2. Select the Data Range:Highlight the range of data you want to include in the chart. This shouldinclude both the labels (categories) and the numerical data.3. Insert the Chart:Go to the Insert tab on the toolbar.Choose the type of chart that best suits your data (e.g., bar, line, pie) fromthe Charts section.4. Choose a Specific Chart Type:Click on the desired chart type to insert it. For example, if you select a "BarChart," you’ll see different styles like clustered bar, stacked bar, etc. Pickthe style that fits your data presentation needs.5. Customize the Chart:Chart Title: Click on the default chart title to edit it or add a new title thataccurately describes the data.Axes Titles: Add or edit axis titles to clarify what each axis represents.Legend: Adjust the position or format of the legend to ensure it clearlyexplains the data series.6. Format the Chart:

Use formatting tools to change colors, fonts, and styles. Access theseoptions through the Chart Tools on the Ribbon, including Design andFormat tabs.7. Adjust Chart Elements: Add or remove elements like data labels,gridlines, or trend lines as needed. You can find these options under ChartElements or by right-clicking on the chart and selecting from the contextmenu.8. Resize and Position:Drag the edges or corners of the chart to resize it. Move the chart to thedesired location on your worksheet by clicking and dragging.9. Review and Refine:Check the chart for accuracy and clarity. Make sure it effectivelycommunicates the intended information.10.Save Your Work:Save the worksheet to ensure your chart and data are preserved.By following these steps, you can create a well-organized and visuallyappealing chart that effectively conveys your data.OR(b) What are the uses of 'Error Alert tab' ?Solution.The 'Error Alert' tab in Excel is a feature used in Data Validationto provide feedback when users enter incorrect data into a cell. Here arethe key uses of the 'Error Alert' tab:1. Display Custom Error Messages:You can set up a custom error message that appears when the dataentered does not meet the validation criteria. This message helps guide theuser on what type of data is expected.2. Control User Input:

It helps control the type of data entered into a cell by preventing invaliddata from being entered. For example, if a cell only accepts numbersbetween 1 and 100, the error alert will notify the user if they enter dataoutside this range.3.Provide Instructions:The error message can include specific instructions or examples to helpusers understand the correct format or value. This can improve dataaccuracy and consistency.4. Specify Error Alert Styles:You can choose different styles for the error alert:Stop: Prevents the user from entering invalid data and requires them tocorrect it before proceeding.Warning: Alerts the user to the potential error but allows them to continuewith the invalid data if they choose to.Information: Provides an informational message without blocking the entryof invalid data.5.Enhance Data Validation:The error alert feature is integral to data validation rules. It helps ensurethat only valid data is entered, which is crucial for maintaining data integrityin spreadsheets.By using the 'Error Alert' tab, you can ensure that users follow the correctdata entry procedures, which enhances the accuracy and reliability of yourdata.Q.34. What is meant by 'Merging a range of cells'? How is it done?State the steps to split a merged cell.Solution.Merging a range of cells in a spreadsheet (such as Excel) meanscombining two or more adjacent cells into a single larger cell. This is oftendone to create a more organized layout or to center text across multiplecells. When cells are merged, the content of the upper-left cell is preserved,and the content of the other cells in the range is discarded.

How to Merge Cells:1. Select the Cells:Click and drag to select the range of cells you want to merge.2. Access the Merge Option:Go to the Home tab on the Ribbon.Look for the Merge & Center button in the Alignment group.3. Choose a Merge Option:Click on the Merge & Center button to merge the cells and center thecontent.Alternatively, click the dropdown arrow next to the button to choose fromother options:Merge & Center: Merges cells and centers the content.Merge Across: Merges cells in each row individually.Merge Cells: Merges the selected cells without centering the content.Unmerge Cells: Splits previously merged cells back into their originalstate.Steps to Split a Merged Cell:1. Select the Merged Cell:Click on the merged cell you want to split.2. Unmerge the Cells:Go to the Home tab on the Ribbon.Click the dropdown arrow next to the Merge & Center button in theAlignment group.Select Unmerge Cells from the dropdown menu.3. Check the Result:The merged cell will be split back into its original individual cells. Anycontent that was in the merged cell will be retained in the upper-left cell ofthe original range.