2015 H.S. 2nd Year ACCOUNTANCY Solved Question Paper




2015
ACCOUNTANCY
Solved Question Paper 


1.(a) Fill in the blanks with appropriate word:   1x4= 4
(i) If a partner takes over a liability of the firm, the partners’ capital account is _______ . 
Ans: Credited

(ii) A partner acts as an _____ for the firm.
Ans: Agent.

(iii) When partners’ capital accounts are fixed, then their ______Accounts are prepared.
Ans: Current

(iv) ______is the extra earning capacity of a firm.
Ans: Goodwill

(b) Choose the correct alternative:         1x2=2
(i) In the event of death of a partner, the amount of general reserve is transferred to the partners’ capital accounts in:
a. New profit sharing ratio
b. Old profit sharing ratio
c. Capital ratio  
d. None of the above

Ans: Old profit sharing ratio

(ii) Balance sheet shows
a. Financial position of a company
b. Profit or loss of a company
c. Cash flow statement
d. None of the above

Ans: Financial position of a company

(c) State whether the following statements are True or False.        1x2=2
(i) The deceased partners’ executor is entitled to a share of profit for the period up to his/her death.

Ans: True

(ii) A preference share holder gets interest at a fixed rate.

Ans: False

2. State any two features of a not-for-profit organization.      2

Ans: Followings are the features of non-trading organization:-
a.These organizations carry their activities without any profit motive.
b.These organizations are generally managed by an elected body of members or nominated committee.
c.The main source of fund of such organizations is subscriptions from members, donation, government grant etc.

3. A, B and C are partners sharing profits in the ratio of 2:2:1. C retires. A and B have decided to share future profits and losses in the ratio of 2:1. Calculate the gaining ratio.      2

Solution:


4. Mention any two features of Debentures.      2

Ans: Following are the characteristics of Debentures:
a. It is an acknowledgment of debt or loan taken by a company.
b. A debenture is generally redeemable.
c. Its face value is pre- determined

5. Mention any two methods of valuation of goodwill.    2

Ans: Following are the methods for valuation of goodwill:
(i) Average profit method:-
   (a) Simple average profit method.
   (b) Weighted average profit method.

(ii) Super profit method.
(iii) Capitalization method:-
    (a) Capitalization of average profit.
    (b) Capitalization of super profit.

6. X Ltd. decided to forfeit 1,000 shares of ₹ 10/- each for non-payment of allotment money for ₹ 4/- each and 1st and final call money of ₹ 3/- each. Give journal entry for the forfeiture of shares.  2

Solution:  



7. X, Y and Z are partners sharing profits in the ratio of 3:2:1. It is now agreed that they will share the future profits equally. Goodwill of the firm is valued at ₹ 60,000/- and the same does not appear in the books. Pass necessary journal entries.      3


8. Briefly explain any three objectives of analysis of financial statements.      3
Ans: The primary objectives of financial statement analysis is to understand and diagnose the information contained in financial statement with a view to judge the profitability and financial soundness of the firm, and to make forecast about future prospects of the firm.
Followings are the purposes or objectives of financial statement analysis to bring out the importance of such analysis:

(I) Assessing the creditability: The business may have to offer credit to prospective dealers and buyers therefore it is essential to analysis their credit worthiness.

(ii) Assessing the profitability: Analysing of financial statement helps in getting the view of profitability of business. The profits can be matched with sales, capital employed, total assets etc.

(iii) Progress of the business: It is very essential to measure the progress and growth of business.

Or


From the following, calculate current Ratio :  3


9. What do you mean by Forfeiture of shares? Discuss the procedure of Forfeiture.   3
Ans: Forfeiture of shares means when a shareholder fail to pay calls on the day fixed for payment thereof and fails to pay even after his attention is drawn to it by registered notice, the Board of directors pass a resolution to the effect that such shares be forfeited. Forfeiture of shares brings about compulsory termination of membership and the company takes the shares from the defaulting member by way of penalty of allotment and /or call money.

A company must follow the following procedure for forfeiture of share:

Notice before Forfeiture: When a shareholder fails to pay any calls, the company may forfeit the shares. Before the shares can be forfeited the company may serve a notice on the defaulting member requiring payment of the call. The notice must give not less than fourteen days time from the date of service of notice for the payment of the amount due. The notice must also state that in the event of non-payment of the amount due within the period mentioned in the notice the shares in respect of which call was made will be liable to forfeit.

Non-compliance of Notice: If the shareholder fails to comply with the requirement of this notice, the directors may pass a resolution effecting the forfeiture of shares.
Effect of Forfeiture: The effect of forfeiture of shares is that the defaulting shareholder losses all his rights in shares and ceases to be a member. The name of shareholder is removed from the register of members and the amount already paid by him is forfeited.

10. What is meant by common size statements? Mention two uses of common size statements.  3
Ans: Common size statement is a statement where the items of income statement and balance sheet of one or more years are expressed in terms of percentage of a common base. Each item shows the relationship with the base item. There are two types of common size statement:-

i. Common size income statement
ii. Common size balance sheet.

Uses of Common size statements:

a.It is used for vertical analysis, in which each line item in a financial statement is represented as a percentage of a base figure within the statement.
b.Common size financial statements help to analyze and compare a company’s performance over several periods with varying sales figures.

Or

Give any three distinctions between sacrificing ratio and gaining ratio.     3
Ans: Following are difference between Sacrificing ratio and Gaining ratio:

11. Mention any three objectives of Receipts and Payments Account.   3
Ans: Following are the objectives of Receipts and Payments Account:
a. It is prepared by a non-trading organization to find out the closing cash and bank balances at the end of an accounting period.

b. It is prepared to show the cash receipts and the cash payments under different heads during an accounting period.

c. It serves as a basis of preparing financial statements i.e., income and expenditure account and balance sheet for the organization.


12. Give the new format of the Balance sheet of a Company (main headings only) as per the requirement of schedule VI of the Companies Act, 2013.    5

Or
Distinguish between a company’s Balance sheet and a Balance sheet of a Partnership firm.
Ans: Following are the difference between company’s balance sheet and partnership firm’s balance sheet:



13. Assam Cricket Club has a Cash and Bank Balances of ₹1,600/- and ₹20,000/- respectively on 01-04-2013. From the following details, prepare a Receipts and Payments Account for the year ended 31-03-2014 :    5


Or
14. X Ltd. made a profit of ₹5,00,000/- after considering the following items :

Solution:


Or
What is cash flow statement? Briefly explain any four objectives of preparing a cash flow statement.
Ans: Cash flow statement is a statement which describes the inflows and outflows of cash and cash equivalents in an enterprise during a specified period of time. A cash flow statement summarises the causes of changes in cash position of a business enterprise between dates of two balance sheets.

Following are the objectives of cash flow statement:
a. To recognise the sources from operation, investing and financing activities from where cash and cash equivalent are generated.

b.To recognises the uses by operating, investing and financing activities for which cash and cash equivalents were used by the enterprise.

c. To compute the net changes in cash and cash equivalents indicating the difference between sources and uses from operating, investing and financing activities between the dates of two balance sheets.

15. From the given information, calculate the stock Turnover Ratio :      5


Or
How are the accounts settled between partners on the dissolution of partnership firm.             
Ans: Following are the procedure is followed in settlement of accounts, when a firm is dissolved:-

(i) Realisation of assets: - All tangible and intangible assets are realised, some assets are sold for cash and some assets may be taken over by partners at agreed values.

(ii) Payments of realisation expenses: - Expenses incurred on disposal of assets are to be met out of firm’s cash. Sometimes such expenses are born by a partner when he undertakes to do the work of dissolution for some commission.

(iii) Payment of liabilities to third parties:- After the realisation of assets and payments of realisation expenses, liabilities to third parties are to be paid out of remaining cash.

(iv) payment of partners loans: - After the payment of liabilities to third parties, payment of partners loans will be paid off.

(v) Distribution of balance cash or other assets among partners:- Balance cash or assets will be distributed among the partners in their final capital ratio. If any partner’s capital account shows a debit balance, the partner has to refund the balance to the firm, so that the partners having credit balance may be paid in full.

16. The Balance Sheet of A, B and C who were sharing profits in proportion to their capitals stood as follows on 31st March, 2014 :


Or
Explain the issue of shares at par, at a discount and at a premium.
Ans: A company may issue shares at par, at premium and at a discount.

At par: Issue of shares at par means issue of share at face value. For e.g.,  if the face value of a share is Rs. 100 and same is issued at Rs. 100, it means that the shares have been issued at par.

At Premium: Issue of shares at a premium means issue of shares at a price higher than its face value. For e.g., if the face value of a share is Rs. 100 and the same is issued at Rs. 110, it means that the shares have been issued at a premium.

At a discount:  Issue of shares at a discount means issue of shares at a price lower than its face value. For e.g.,  if the face value of a share is Rs. 100 and the same is issued at Rs. 90, it means that the shares have been issued at a discount.

17. A, B, and C were partners in a firm sharing profits in the ratio of 5:3:2. On 31st March 2013, their Balance  Sheet was as follows :





18. A and B are partners sharing Profits in the ratio of 3:2. Their Balance Sheet as on 31.03.2014 was as follows :

The firm is dissolved on the above date. Assets are realised at ₹13,500/-. Dissolution expenses came to ₹250. Give journal entries to close the books of the firm.   5

19. Preety and Jyoti are partners in a firm sharing profits in the ratio of 3:2. The Trial Balance of the firm as on 31-03-2014 was as follows :-


Prepare the Profit and Loss A/c and the Profit and Loss Appropriation A/c of the firm for the year ended on 31-03-14 and a Balance Sheet as on that date after considering the following adjustments: 8

(i) Machinery is to be depreciated by 10%.
(ii) Provision for bad debt is to be increased by ₹200/-.
(iii) Preety was to receive, salary @ ₹300/- per month.
(iv) Interest on Capital is allowed@ 5% p.a.



20. X Ltd. issued 2,000 shares of ₹100/- each at a premium of ₹20 payable as follows:
₹30/- on Application
₹50/- on Allotment (including securities premium ₹20/-)
₹40/- on First Call & Final Call.

All the shares were duly subscribed for, called up and paid up, except Miss Nitu who holding 300 shares failed to pay First & Final call money. Show entries in the Cash Book and Journal of the company for the above transactions.        8


21. Give journal entries in respect of the following :   8
(i) Debentures issued at par, redeemable at a premium.
(ii) Debentures issued at a premium, redeemable at par.
(iii) Debentures issued at a discount, redeemable at par.
(iv) Debentures issued at a discount, redeemable at par.


Or

What is meant by Redemption of Debentures? Discuss briefly any three methods of Redemption of Debentures.

Ans: Redemption of debentures  means the repayment of debentures. As debenture is shown in the liability side of balance sheet it is necessary for the company to discharge these liabilities. Thus redemption of debentures denotes discharge of liability on account of debentures by repayment to the debenture holders. The redemption is made on the expiry of specified period mentioned in the debenture certificates.

Following are the methods of redemption of debentures:-

(i) By payment in  lump sum at the end of fixed period:  Redemption of debenture by making payment in lump sum at the end of the fixed period means redemption of the whole of the debentures on a fixed date by making payment at a time to the  debenture holders.

(ii) Redemption in instalments: - Redemptions in instalment means that all the debentures are not redeemed on a particular date. Instead when the company decides to redeem only a part of the total debenture annually on a particular date and whole of the debenture are redeemed within the fixed period from the date of issue of debentures.

(iii) Redemption by purchase in open market: - Sometimes debentures of some companies are quoted on the stock exchanges. When the price of such debentures quoted in the stock exchange is lower than the amount agreed to be paid by the company at the time of redemption as per the terms of issue, the company may discharge its liabilities in respect of such debentures by purchasing them from the open market.

(iv) Redemption by Conversion into shares:- Sometimes a company may issue fully convertible debenture (FCD)/ partly convertible debenture (PCD) i.e. the debentures are either fully or partly convertible into shares. If such debentures are converted into shares, it means that the debentures have been redeemed to the extent of conversion into shares.

22. Ram and Shyam are partners sharing profits and losses in the ratio of 3:1. Their Balance Sheet as on 31-03-2014 is given below :


Hari was admitted as a new partner on the following conditions :
(i) That Hari will bring ₹40,000/- for his capital and ₹ 20,000/- for the premium for Goodwill.
(ii) That Hari will get 1/3rd  share in future profit.
(iii) That the value of stock is be reduced by ₹7,000/-.
(iv) That the value of Plant and Machinery is to be depreciated by 20%.
(v) Furniture is to be reduced by 10%.
(vi) Bad debts amounted to ₹2000/- and are to be written off.
There was an unrecorded computer valued at ₹10,000 and the same is to be brought into books now.

Prepare a Prevaluation  Account, Partners’ Capital Account and the reconstituted Balance Sheet after Hari’s admission.        3+2+3=8


Or

Who are the users of financial statement? Explain the information they require from financial statements.
Ans: Users of financial statements may be categorised into two parts:
a. Internal users              
b. External users

a. Internal users:

i. Owners: Owners are interested to know the profitability and financial position of the company.

ii. Management: Management is interested in knowing the existing profits, earning per share, chances of survival, possibility of growth and diversification, cost information etc., from the financial statements so that it can chalk out suitable strategy for its entity.

iii. Employees: Employees are interested in job satisfaction, job security, bonus declarations, employee’s welfare scheme etc. of their unit. So they want information on profitability and future prospects of the company.

b. External users

i. Creditors: Creditors are interested in knowing entity’s capability to repay the amount and interest as and when repayment becomes due. So, they are interested in finding out profitability, cash flows etc., of the entity.

ii. Potential investors: The potential investors are keen to know the earning potential of the business and ensure the safety of their investment.

iii. Research scholars: The financial statements being a mirror of the financial position of a firm are of immense value to the research scholar who wants to make a study into financial operations of a particular firm.

iv. Shareholders: Shareholders of the business are interested in the well being of the business. They are likely to know the earning capacity of the business and its prospects of future growth.

v. Taxation authorities: Income tax authorities are interested in knowing the profits of the business so that tax can be imposed thereon.


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