CHAPTER:1

ACCOUNTING FOR PARTNERSHIP FIRMS: BASIC CONCEPTS

Q.1 State the conditions under which capital balances may change under the system of a Fixed Capital Account.
Q.2 A is partner in a firm. His capital as on an !1" 2!!# was $s. %!"!!!. He introduced additional capital of $s.
2!!!! on &ct !1 2!!#. Calculate interest on A's capital ( )* p.a.
Q.+ Al,a" -ar,ha and Charu are partners in a firm ha.ing no partnership agreement. Al,a" -ar,ha and Charu
contributed $s. 2!"!!!" $s. +!"!!! and $s. 1"!!"!!! respecti.ely. Al,a and -ar,ha desire that the profit
should be di.ided in the ratio of capital contribution. Charu does not agree to this. How will you settle the
dispute.
Q./ A and - are partners in a firm without a partnership deed. A is an acti.e partner and claims a salary of $s.
10"!!! per month. State with reason whether the claim is .alid or not.
Q.1 Chandar and Suman are partners in a firm without a partnership deed. Chandar's capital is $s. 1!"!!! and
Suman's capital is $s. 1/"!!!. Chander has ad.anced a loan of $s. 1!!! and claim interest ( 12* p.a. State
whether his claim is .alid or not.
Q.% $" S" and 2 entered into a partnership of manufacturing and distributing educational C3's on April !1" 2!!%. $
loo,ed after the business de.elopment" S content de.elopment and 2 financed the pro4ect. At the end of the
year 5+16!+62!!#7 2 wanted an interest of 12* on the capital employed by him. 2he other partners were not
inclined to this. How would you resol.e this within the ambit of the 8ndian 9artnership Act" 1)+2:
Q.# A" - and C are partners in a firm. A withdrew $s. 1!!! in the beginning of each month of the year. Calculate
interest on A's drawing ( %* p.a.
Q.0 A" - and C are partners in a firm" - withdrew $s. 0!! at the end of each month of the year. Calculate interest
on -'s drawings ( %* p.a.
Q.) A" - and C are partners in a firm. 2hey ha.e omitted interest on capital ( 1! * p.a. for three years ended +1
st
march 2!!#. 2heir fixed capitals on which interest was to be calculated through ;out were
A $s. 1"!!"!!!
- $s. 0!"!!!
C $s. #!"!!!
<i.e the necessary ournal entry with wor,ing notes.
Q.1! =" >" and ? are partners sharing profits and losses in the ratio of +@2@1. After the final accounts ha.e been
prepared it was disco.ered that interest on drawings ( 1 * had not been ta,en into consideration. 2he
drawings of the partner were = $s. 11!!!" > $s. 12"%!!" ? $s. 12"!!!. <i.e the necessary ad4usting ournal
entry.
Q.11 A" - and C are partners sharing profits and losses in the ratio of +@2@1. 2heir fixed capitals are $s. 1"1!"!!!"
$s. 1"!!"!!! and $s. 0!"!!! respecti.ely. 9rofit for the year after pro.iding interest on capital was $s. %!"!!!"
which was wrongly transferred to partners eAually. After distribution of profit it was found that interest on
capital pro.ided to them ( 1!* instead of 12* . 9ass necessary ad4ustment entry.
Show your wor,ing clearly.
Q.12 $a.i and Bohan were partner in a firm sharing profits in the ratio of #@1. 2heir respecti.e fixed capitals were
$a.i $s. 1!"!!"!!! and Bohan $s. #"!!"!!!. 2he partnership deed pro.ided for the following@6
5i7 8nterest on capital ( 12* p.a.
5ii7 $a.i's salary $s. %!!! per month and Bohan's salary $s. %!!!! per year.
2he profit for the year ended +16!+62!!# was $s. 1"!/"!!! which was distributed eAually without
pro.iding for the abo.e. 9ass an ad4ustment Cntry.
Q.1+ 3istinguish between fixed capital method and fluctuating capital method.
Q.1/ A" - and C were partners in a firm ha.ing capitals of $s. %!"!!!" $s. %!"!!! and $s. 0!"!!! respecti.ely.
2heir current account balances were A6 $s. 1!"!!!" -6 $s. 1!!! and C6 $s. 2!!! 53r.7. According to the
partnership deed the partners were entitled to an interest on capital ( 1* p.a. C being the wor,ing partner
was also entitled to a salary of $s. %"!!! p. a. 2he profits were to be di.ided as follows@
5i7 2he first $s. 2!"!!! in proportion to their capitals.
5ii7 Dext $s. +!"!!! in the ratio of 1@+@2.
5iii7 $emaining profits to be shared eAually.
3uring the year the firm made a profit of $s. 1"1%"!!! before charging any of the abo.e items.
9repare the profit and loss appropriate on AEC.
Q.11 A and - are partners sharing profits in proportion of +@2 with capitals of $s. /!"!!! and $s. +!"!!!
respecti.ely. 8nterest on capital is agreed at 1 * p.a. - is to be allowed an annual salary of $s. +!!! which has
not been withdrawn. 3uring 2!!1 the profits for the year prior to calculation of interest on capital but after
charging -'s salary amounted to $s. 12"!!!. A pro.ision of 1* of this amount is to be made in respect of
commission to the manager.
9repare profit and loss appropriation account showing the allocation of profits.
CHAPTER:2
RECONSTITUTION OF PARTNERSHIP
ADMISSION OF A PARTNER
Q.1 &n what occasions does the need for .aluation of goodwill arise:
Q.2 Fhy is it necessary to re.alue assets and reassess liabilities at the time of admission of new partner:
Q.+ Fhat is meant by sacrificing ratio:
Q./ State two occasions when sacrificing ratio may be applied.
Q.1 A business has earned a.erage profit of $s. %!"!!! during the last few years. 2he assets of the business are $s.
1"/!"!!! and its external liabilities are $s. 0!"!!!. 2he normal rate of return is 1!*. Calculate the .alue of
goodwill on the basis of capitalisation of super profits.
Q.% 2he capital of a firm of Arpit and 9ra4wal is $s. 1!"!!"!!!. 2he mar,et rate of return is 11* and the goodwill
of the firm has been .alued $s. 1"0!"!!! at two years purchase of super profits. Find the a.erage profits of the firm.
Q.# 2he a.erage profits for last 1 years of a firm are $s. 2!"!!! and goodwill has been wor,ed out $s. 2/"!!!
calculated at + years purchase of super profits. Calculate the amount of capital employed assuming the normal rate
of interest is 0 *.
Q.0 $ahul and Sahil are partners sharing profits together in the ratio of /@+. 2hey admit Gamal as a new partner.
$ahul surrenders 1E/
th
of his share and Sahil surrenders 1E+
rd
of his share in fa.our of Gamal. Calculate the new
profit sharing ratio.
Q.) A4ay and Da.een are partners sharing profits in the ratio of 1@+. Surinder is admitted in to the firm for 1E/
th
share in the profit which he acAuires from A4ay and Da.een in the ratio of 2@1. Calculate the new profit sharing
ratio.
Q.1! A and - were partners sharing profits in the ratio of +@2. A surrenders 1E%
th
of his share and - surrenders 1E/
th
of his share in fa.our of C" a new partner. Fhat is the new ratio and the sacrificing ratio.
Q.11 Aarti and -harti are partners sharing profits in the ratio of 1@+. 2hey admit Shital for 1E/
th
share and agree to
share between them in the ratio of 2@1 in future. Calculate new and sacrificing ratio.
Q.12 = and > di.ide profits and losses in the ratio of +@2. ? is admitted in the firm as a new partner with 1E%
th
share"
which he acAuires from = and > in the ratio of 1@1. Calculate the new profit sharing ratio of all partners.
Q.1+ $a,hi and 9arul are partners sharing profits in the ratio of +@1. Deha is admitted as a partner. 2he new profit
sharing ratio among $a,hi" 9arul and Deha is 2@+@2. Find out the sacrificing ratio.
Q.1/ = and > are partners sharing profits in the ratio of 1@/. 2hey admit ? in the firm for 1E+
rd
profit" which he
ta,es 2E)
th
from = and 1E)
th
from > and brings $s. 11!! as premium. 9ass the necessary ournal entries on ?'s
admission.
Q.11 $anHeet and 9riya are two partners sharing profits in the ratio of +@2. 2hey admit Dilu as a partner" who pays
$s. %!"!!! as capital. 2he new ratio is fixed as +@1@1. 2he .alue of goodwill of the firm was determined at $s.
1!"!!!. Show 4ournal entries if Dilu brings goodwill for her share in cash.
Q.1% A and - are partners sharing profits eAually. 2hey admit C into partnership" C paying only $s. 1!!! for
premium out of his share of premium of $s. 10!! for 1E/
th
share of profit. <oodwill account appears in the boo,s at
$s. %!!!. All the partners ha.e decided that goodwill should not appear in the new firms boo,s.
Q.1# A and - are partners sharing profits in the ratio of +@2. 2heir boo,s showed goodwill at $s. 2!!!. C is
admitted with 1E/
th
share of profits and brings $s. 1!"!!! as his capital but is not able to bring in cash goodwill $s.
+!!!. <i.e necessary ournal entries.
Q.10 9iyush and 3eepi,a are partners sharing in the ratio of #@+. they admit Seema as a new partner. 2he new ratio
being 1@+@2. 9ass 4ournal entries.
Q.1) A and - are partners with capital of $s. 2%"!!! and $s. 22"!!! respecti.ely. 2hey admit C as partner with
1E/
th
share in the profits of the firm. C brings $s. 2%"!!! as his share of capital. <i.e 4ournal entry to record
goodwill on C's admission.
Q.2! A and - are partners sharing profits in the ratio of +@2. 2hey admit C into partnership for 1E/
th
share. C is
unable to bring his share of goodwill in cash. 2he goodwill of the firm is .alued at $s. 21"!!!. gi.e 4ournal entry
for the treatment of goodwill on C's admission.
Q.21 A and - are partners with capitals of $s. 1+"!!! and $s. )!!! respecti.ely. 2hey admit C as a partner with
1E1
th
share in the profits of the firm. C brings $s. 0!!! as his capital. <i.e 4ournal entries to record goodwill.
Q.22 A" - and C were partners in the ratio of 1@/@1. &n +1
st
3ec. 2!!% their balance sheet showed a reser.e fund of
$s. %1"!!!" 9IJ AEC 5Joss7 of $s. /1"!!!. &n 1
st
anuary" 2!!#" the partners decided to change their profit sharing
ratio to )@%@1. For this purpose goodwill was .alued at $s. 1"1!"!!!.
2he partners do not want to distribute reser.es and losses and also do not want to record goodwill.
>ou are reAuired to pass single 4ournal entry for the abo.e.
Q.2+ A and - were partners in the ratio of +@2. 2hey admit C for +E1+
th
share. Dew profit ratio after C's admission
will be 1@1@+. C brought some assets in the form of his capital and for the share of his goodwill.
Following were the assets@
Assets $s.
Stoc, 2"//"!!!
-uilding 2"/!"!!!
9lant and Bachinery 1"/!"!!!
At the time of admission of C goodwill of the firm was .alued at $s. 12"/0"!!!.
9ass necessary 4ournal entries.
Q.2/ =" > and ? are sharing profits and losses in the ratio of 1@+@2. 2hey decide to share future profits and losses in
the ratio of 2@+@1 with effect from 1
st
April" 2!!2. 2hey also decide to record the effect of the reser.es without
affecting their boo, figures" by passing a single ad4usting entry.
-oo, Figure
<eneral $eser.e $s. /!"!!!
9rofit 2 loss AEC 5Cr7 $s. 1!"!!!
Ad.ertisement Suspense AEC53r7 $s. 2!"!!!
9ass the necessary single ad4usting entry.
CHAPTER:3
RECONSTITUTION OF APARTNERSHIP FIRM
RETIREMENT /DEATH OF A PARTNER
Q.1 3istinguish between Sacrificing $atio and <aining $atio.
Q.2 Gamal" Gishore and Gunal are partners in a firm sharing profits eAually. Gishore retires from the firm. Gamal
and Gunal decide to share the profits in future in the ratio /@+. Calculate the <aining $atio.
Q.+ 9" Q and $ are partners sharing profits in the ratio of #@2@1. 9 retires and the new profit sharing ratio between
Q and $ is 2@1. State the <aining $atio.
Q./ A" - and C are partners in a firm sharing profits in the ration of 2@2@1. - retires and his share is acAuired by
A and C eAually. Calculate new profit sharing ratio of A and C.
Q.1 =" > and ? are partners sharing profits in the ratio of /E)" 1E+ and 2E). = retires and surrenders 2E+
rd
of his
share in fa.our of > and remaining in fa.our of ?. Calculate new profit sharing ratio and gaining ratio.
Q.% =" > and ? ha.e been sharing profits and losses in the ratio of +@2@1. ? retires. His share is ta,en o.er by =
and > in the ratio of 2@1. Calculate the new profit sharing ratio.
Q.# 9" Q and $ were partners in a firm sharing profits in /@1@% ratio. &n 206!262!!0 Q retired and his share of
profits was ta,en o.er by 9 and $ in 1@2 ratio. Calculate the new profit sharing ratio of 9 and $.
Q.0 Bayan," Harshit and $ohit were partners in a firm sharing profits in the ratio of 1@+@2. Harshit retired and
goodwill is .alued at $s %!!!!. Bayan, and $ohit decided to share future profits in the ratio 2@+. 9ass
necessary 4ournal entry for treatment of goodwill.
Q.) $amesh" Daresh and Suresh were partners in a firm sharing profits in the ratio of 1@+@2. Daresh retired and the
new profit sharing ratio between $amesh and Suresh was 2@+. &n Daresh retirement the goodwill of the firm
was .alued at $s. 12!!!!. 9ass necessary 4ournal entry for the treat.
Q.1! J" B and & were partners in a firm sharing profits in the ratio of 1@+@2. J retired and the new profit sharing
ratio between B and & was 1@2. &n J's retirement the goodwill of the firm was .alued $s. 12!!!!. 9ass
necessary 4ournal entry for the treatment of goodwill.
Q.11 State the 4ournal entry for treatment of deceased partners share of profit for his life period in the year of
death.
Q.12 =" > and ? were partners in a firm sharing profits and losses in the ratio of +@2@1. 2he profit of the firm for
the year ended +1
st
Barch" 2!!# was $s. +"!!!!!. > dies on 1
st
uly 2!!#. Calculate >'s share of profit up to
date of death assuming that profits in the year 2!!#6 2!!0 ha.e been accured on the same scale as in the
year 2!!%6!# and pass necessary 4ournal entry.
Q.1+ A" - and C were partners in a firm sharing profits in +@2@1 ratio. 2he firm closes its boo,s on +1
st
Barch e.ery
year. - died on 126!%62!!#. &n -'s death the goodwill of the firm was .alued at $s. %!!!!. &n -'s death
his share in the profit of the firm till the time of his death was to be calculated on the basis of pre.ious years
which was $s.11!!!!. Calculate -'s share in the profit of the firm. 9ass necessary 4ournal entries for the
treatment of goodwill and -'s share of profit at the time of his death.
Q.1/ A" - and C were partners in a firm sharing profits in the ratio of 2@2@1. C dies on +1
st
uly" 2!!#. Sales during
the pre.ious year upto +1
st
march" 2!!# were $s. %"!!"!!! and profits were $s. 11!!!!. Sales for the current
year upto +1
st
uly were $s. 21!!!!. Calculate C's share of profits upto the date of his death and pass
necessary 4ournal entry.
CHAPTER:4
DISSOLUTION OF PARTNERSHIP FIRM
Q.1 3istinguish between dissolution of partnership and dissolution of partnership firm on the basis of continuation
of business.
Q.2 Fhy is $ealisation Account prepared on dissolution of partnership firm:
Q.+ State any one point of difference between $ealisation Account and $e.aluation Account.
Q./ All partners wish to dissol.e the firm. >astin" a partner wants that her loan of $s. 2"!!!!! must be paid off
before the payment of capitals to the partners. -ut" Amart" another partner wants that the capital must be
paid before the payment of >astin's loan. >ou are reAuired to settle the conflict gi.ing reasons.
Q.1 &n a firms dissolution debtors as shown in the -alance sheet were $s. 1#!!! out of these $s. 2!!! became
bad. &ne debtor of $s. %!!! became insol.ent and /!* could be reco.ered from him. Full reco.ery was
made from the balance debtors. Calculate the amount recei.ed from debtors and pass necessary 4ournal
entry.
Q.% &n dissolution of a firm" Gamal's capital account shows a debit balance of $s. 1%!!!. His share of profit on
realiHation is $s. 11!!!. He has ta,en o.er firms creditors at $s. )!!!. Calculate the final payment due to
Efrom him and pass 4ournal entry.
Q.# A and - were partners in a firm sharing profits and losses eAually. 2heir firm was dissol.ed on 11
th
Barch"
2!!/" which resulted in a loss of $s. +!"!!!. &n that date the capital AEC of A showed a credit balance of
$s. 2!"!!! and that of - a credit balance of $s. +!!!!. 2he cash account has a balance of $s. 2!!!!. >ou
are reAuired to pass the necessary 4ournal entries for the 5i7 2ransfer of loss to the capital accounts and 5ii7
ma,ing final payment to the partners.
Q.0 Fhat 4ournal entries would be passed in the boo,s of A and - who are partners in a firm" sharing profits in the
ratio of 1@2" for the following transactions on the dissolution of the firm after .arious assets 5other than cash7
and third party liabilities ha.e been transferred to $ealisation Account:
5a7 -an, loan $s. 12"!!! is paid.
5b7 Stoc, worth $s. %!!! is ta,en o.er by -.
5c7 Joss on $ealisation $s. 1/"!!!.
5d7 $ealisation expenses amounted to $s. 2"!!!" - has to bear these expenses.
5e7 3eferred $e.enue Ad.ertising Cxpenditure appeared at $s. 20"!!!.
5f7 A typewriter completely written off in the boo,s of the firm was sold for $s. 2!!.
STUDY MATERIAL
ON
HOTS
Subjec: Acc!u"#"c$
CLASS % &II' A( )e* NCERT B!!+,
P#* %B
Acc!u"#"c$ C!-)#"$ Acc!u"( #".
A"#/$(0( !1 F0"#"c0#/ S#e-e"(
CHAPTER:1 2 2
ACCOUNTING FOR SHARE CAPITAL 2 DEBENTURE
THEORETICAL 3UESTIONS
Q.1 <upta Jtd has incurred a loss of $s. 0"!!"!!! before payment of interest on debentures. 2he directors of the
company are of the opinion that interest on debentures is payable only when company earn profit. 3o you agree:
Q.2 As per latest guidelines go.erning the ser.icing of debentures a company is reAuired to create on special
account. Dame that account.
Q.+ Dame the method of redemption of debentures in which there is no reAuirement of creating 3ebenture
$edemption $eser.e.
Q./ Fhat is the nature of receipt of premium on issue of shares:
Q.1 Can a company issue shares at a premium in the absence of any express authority in its articles:
Q.% Fhat is the maximum rate of interest which the board of directors of a company can normally pay on calls6in6
ad.ance if the articles are silent on the matter of such interest:
Q.# State with reason whether a company can issue its shares at a discount in its 8nitial 9ublic &ffer 589&7.
Q.0 Fhy securities premium money can not be used for payment of cash di.idend among shareholders:
Q.) Grishna Jtd. Fith paid6up share capital of $s. %!"!!"!!! has a balance of $s. 11"!!"!!! in securities premium
account. 2he company management does not want to carry o.er this balance. >ou are reAuired to suggest the
method for utiliHing this premium money that would achie.e the ob4ecti.es of the management and maximiHe the
return to shareholders.
Q.1! 3istinguish between a share and a 3ebenture.
Q.11 Can share premium be utilised for the purchase of fixed assets:
Q.12 State in brief" the SC-8 guidelines regarding 3ebenture $edemption $eser.e53$$7.
Q.1+ Fhich companies are exempted from the obligation of creating 3$$ by SC-8:
Q.1/ Fhat is the restriction on reissue of forfeited shares at discount:
PRACTICAL 3UESTIONS
Q.1 = Jtd. issued 2!"!!! shares of $s. 1! each at a premium of 1!* payable as follows@6
&n application $s. 2 5 1
st
an 2!!17" on allotment $s. / 5including premium7 51
st
April 2!!17" &n first call
$s. + 51
st
une 2!!17" on second call I final call $s. 2 51
st
Aug. 2!!17.
Application were recei.ed for 10"!!! shares and the directors made allotment in full. &ne
shareholder to whom /! shares were allotted paid the entire balance on his share holdings with allotment
money and another shareholder did not pay allotment and 1
st
call money on his %! shares but which he paid
with final call.
Calculate the amount of interest paid and recei.ed on calls6in6ad.ance and calls6in6arrears
respecti.ely on 1
st
Aug. 2!!1.
Q.2 = Jtd too, o.er the assets of $s. %"%!"!!! and liabilities of $s. 0!"!!!" > Jtd for $s. %!!"!!!. Show the
necessary 4ournal entries in the boo, of = Jtd. assuming that
Case68 @ 2he consideration was payable 1!* in cash and the balance in 1/!!! eAuity shares of $s. 1! each.
Case688 @ 2he consideration was payable 1!* in cash and the balance in /1!!! eAuity shares of $s. 1! each.
Case6888 @ 2he consideration was payable 1!* in cash and the balance in %!"!!! eAuity shares of $s. 1! each.
Q.+ = ltd. was formed with a capital of $s. 1!!"!!! di.ided into shares of $s. 1! each out of these 2!!! shares
were issued to the .endors as fully paid as purchase consideration for a building acAuired" 1!!! shares were
issued to signatories to the memorandum of association as fully paid. 2he directors offered %1!! shares to the
public and called up $s. % per and recei.ed the entry called up amount on share allotted. Show these
transaction in the -alance sheet of a company.
Q./ = Jtd. in.ited applications for 11"!!! shares of $s. 1! each issued at 1!* premium payable as@
&n application $s. + 5including $s. 1 premium7
&n allotment $s. / 5including $s. 1 premium7
&n 1
st
Call $s. +
&n 2
nd
I final call $s. 2
Application were recei.ed for 2/!!! shares.
Category 8 @ &ne fourth of the shares applied for allotted 2!!! shares.
Category 88@ 2hree fourth the shares applied for allotted )!!! shares.
$emaining applicants were re4ected. Br. Bohan holding +!! shares out of category 88 failed to pay
allotment and two calls and his shares were re issued ( $s. 11 fully paid6up. 9ass necessary 4ournal entries.
Q.1 A company forfeited 2/! shares of $s. 1! each issued to ra4 at a a premium of 2!*. $aman had applied for +!!
shares and had not paid anything after paying $s % per share including premium on application. 10! shares
were reissued at $s. 11 per share fully paid up. 9ass 4ournal entries relating to forfeiture and reissue of shares.
Q.% &n 1
st
uly 2!!#. A Jtd ga.e notice of their intention to redeem their outstanding $s. /!!"!!! 0* 3ebentures
on 1
st
anuary" 2!!0 ( rs. 1!2 each and offered the holders the following options6
5a7 2o subscibe for 5i7 %* cumulati.e preference shares of $s. 2! each at $s. 22.1! per share" accepted by
debenture holders of $s. 1"#1"!!! or 5ii7 12* debentures were issued ()%* accepted by the holders of $s.
1"//"!!! 3ebentures.
5b7 $emaining debentures to be redeemed for cash if neither of the option under 5a7 was accepted. 9ass necessary
4ournal entries.
Q. # Sonu Jtd. company issued 11"!!! shares of $s. 1! each. 9ayment on there shares is to be made as follows@
&n application $s. / 5 1
st
Feb" 2!!+7
&n allotment $s. + 51
st
April" 2!!+7
&n final call $s. + 51
st
Bay" 2!!+7
$a,esh to whom 1!!! shares were allotted paid the full amount on application and mohan to whom 2!! shares
were allotted paid the final call money on allotment. 8nterest ( %* was paid on 1
st
Bay" 2!!+. 9ass necessary
4ournal entries.
Q.0 292 Jtd. in.ited applications for issuing 1"!!"!!! eAuity shares of $s. 1! each at a premium of $s. + per share.
2he whole amount was payable on application. 2he issue was o.er subscribed by +!"!!! shares and allotment
was made on pro6rata basis. 9ass necessary 4ournal entries in the boo,s of the company.
Q.) Kirani 8ndustries Jtd. issued 1"!!"!!!" 1!* 3ebentures of $s. 1! each at a discount of )* on April 1
st
" 2!!1
redeemable as follows@
+1
st
Barch 2!!+ 6 2!"!!! 3ebentures
+1
st
Barch 2!!/ 6 +!"!!! 3ebentures
+1
st
Barch 2!!1 6 2!"!!! 3ebentures
+1
st
Barch 2!!% 6 $emaining 3ebentures
Calculate the amount of discount to be written off each year and prepare discount on issue of debentures
account.
Q.1! 2he following balance appeared in the boo,s of ? Jtd. on anuary 1" 2!!/.
12* 3ebentures AEC $s. 1"1!"!!!
3ebenture $edemption Fund $s. 1"21"!!!
3ebenture $edemption Fund 8n.estment $s. 1"21"!!!
5$epresented by $s. 1"/#"1!!" +* <o.t. Securities7
2he annual installment added to the fund is $s. 2!"1#1. &n 3ecember +1" 2!!/" the ban, balance after the
receipt of interest on in.estment was $s. +)"1!!. &n that date all the in.estment were sold at 0+* and the
debentures were duly redeemed. Show the necessary ledger accounts for the year 2!!/.
Q.11 &n !16!/61)))" A Jtd." issued 2!!!" #* debentures of $s. 1!! each at a discount of 1!* redeemable at par
after / years by con.erting them into eAuity shares of $s. 1!! each issued at a premium of 21*.
9ass 4ournal entries in the following cases@
5i7 8f debentures are redeemed on maturity.
5ii7 8f debentures are redeemed before maturity.
Q.12 9ass 4ournal entries for the following at the time of issue of debentures@
5a7 - Jtd. issues +!"!!!" 12* 3ebentures of $s. 1!! each at a discount of 1 * to be repaid at par at the end of 1
years.
5b7 C Jtd. issues $s. %!"!!!" 12* 3ebentures of $s. 1!! each at a discount of 1 * repayable at a premium of 1!*
at the end of 1 years.
5c7 F Jtd. issues $s. #!"!!!" 12* 3ebentures of $s. 1!! each at a premium of 1 * redeemable at 11!*.
Q.1+ 1!! shares of $s. 1!! each issued at a discount of 1!* were forfeited for the non6payment of allotment
money of $s. 1! per share. 2he first and final call of $s.1! per share on these shares were not made. 2he
forfeited shares were reissued at $s. 0! per share fully paid6up.
Q.1/ 2!! shares of $s. 1!! each issued at a discount of 1!* were forfeited for the non payment of allotment money
of $s. 1! per share. 2he first and final call of $s. 1! per share on these shares were not made. 2he forfeited
share were reissued at $s. 1/ per share fully paid up.
Q.11 0!! Shares of $s. 1! each issued at per were forfeited for the non6payment of final call of $s. 2 per share.
2hese shares were reissued at $s. 0 per share fully paid6up.
C4#)e* 3 2 4
A"#/$(0( !1 F0"#"c0#/ S#e-e"(
Qus@1 How will you show the following items in the -alance sheet of a company.
5i7 Calls in Arrears 5ii7 Calls in Ad.ance.
Qus@2 Lnder what heads the following items on the Jiabilities side of the -alance sheet &f a company will
be presented
5i7 9roposed 3i.idend.
5ii7 Lnclaimed 3i.idend.
Qus@+ State any two items which are shown under the head M8n.estment' in a company balance sheet.
Qus@/ <i.e the format of the -alance sheet of a company5main headings only7 as per the reAuirement of
Schedule K8 of the companies Act.1)1%.
Qus@1 <i.e the heading under which the following items will be shown in a company's -alance sheet@
5i7 <oodwill.
5ii7 9reliminary Cxpenses
5iii7 Joose 2ools
5i.7 Capital $edemption $esa.e.
5.7 Ji.e Stoc,.
Qus@% 2he following balance ha.e been from the boo, of Sahara Jtd. Share capital $s.1!"!!"!!!" securities
9remium $s. 1"!!"!!!" )* 3ebentures $s. 1!!"!!!" Creditors $s. 2!!"!!!." 9roposed 3i.idend
$s. 1!"!!!. " Freehold property $S. )"!!"!!!" share of $eliance 8ndustries $s. /"!!"!!!" For,6in6
9rogress $s. /"!!"!!!" 3iscount on 8ssue of 3ebentures $s. 1"!!"!!!.
9repare the balance sheet of the company as per schedule K8 part 1 of the companies Act.1)1%.
Qus@# Jist any three items that can be shown as contingent Jiabilities in a company's -alance sheet.
Qus@0 <i.e two example each of Don6Current Assets and Don6 Current Jiabilities.
Qus@) Fhat is HoriHontal Analysis:
Qus@1! <i.e the example of HoriHontal Analysis.
Qus@11. Fhat is Kertical Analysis:
Qus@12. <i.e the example of Kertical Analysis:
Qus@1+. How is a Company's balance sheet different from that of a 9artnership firm: <i.e 2wo point only.
Qus@1/. Jist any two information reAuired to be gi.en in the balance sheet of a company or by way of foot
Dotes.
Qus@11. State whether the -alance sheet of a Company is prepared ' as on a particular date M or M as at a
9articular date M :
Qus@1%. Fhich part of Schedule K8 to the Companies Act.1)1% prescribes the forms of the balance sheet :
Qus@1#. How is analysis of Financial statements suffered from the limitation of window dressing :
Qus@10. Fhat is the interest of Shareholders in the analysis of Financial statements:
Qus@1). Dame two tools of Financial Analysis :
Qus@2!@ Fhich item is assumed to be 1!! in the case of common siHe 8ncome statement .
Qus@21 9repare Comparati.e income statement from the following information for the years ended march
+1"2!!+ and 2!!/.
P#*0cu/#*( 2553'R(6, 2554'R(6,
1.Det Sales
2.Cost of <oods Sold
+.8ndirect Cxpenses
/.8ncome 2ax rate
0"!!"!!!
%!* of sales
1!* of <ross profit
1!*
1!"!!"!!!
%!* of sales
1!* of <ross 9rofit
%!*
C4#)e* 7 8
R#0! A"#/$(0(
Qus@1 How will you asses the liAuidity or short term financial position of a business :
Qus@2 Current ratio of $eliance 2extiles Jtd. 8s 1.1 at present. 8n future it want to impro.e this ratio to 2.
Suggest any two accounting transaction for impro.ing the current ratio.
Qus@+ State one transaction which results in an increase in M liAuid ratio Mand nochange in Mcurrent ratio'.
Qus@/ Fhy stoc, is excluded from liAuid assets :
Qus@1 Quic, ratio of a company is 1.1 @1 . state gi.ing reason whether the ratio will impro.e " decline or
Dot change on payment of di.idend by the company.
Qus@% State one transaction which result in a decrease in M debt6eAuity ratio M and no change in M current
$atio M.
Qus@# How does ratio analysis becomes less effecti.e when the price le.el changes:
Qus@0. 8ndicate which ratio a shareholders would use who is examining his portfolio and wants to decide
Fhether he should hold or sell his shareholdings:
Qus@) 8ndicate which ratio would be used by a Jong62erm creditor who is interested in determining
whether his claim is adeAuately secured :
Qus@1! Fhat will be the &perating profit" 8f operating $atio is #0* :
Qus@11 2he 3ebaters turno.er $atio of a company is % times. State with reasons whether the ratio will
8mpro.e " decrease" or not change due to increases in the .alue of closing stoc, by $s. 1!"!!!:
Qus@12 Fhat will be the impact of M 8ssue of shares against the purchase of fixed assets M on a debt
CAuity ratio of 1@1 :

Qus@1+ State one transaction in.ol.ing a decrease in JiAuid ratio and no change in current ratio.

Qus@1/ Assuming that the 3ebt CAuity $atio is 2@1. State gi.ing reason " whether the ratio will impro.e
" decline or will ha.e no change in case bonus shares allotted to eAuity shareholders by
CapitaliHing profits.

Qus@11 2he ratio of current Assets 5$s. )"!!"!!!7 to current liabilities is 1.1@1. 2he accountant of this
Firm is interested in maintaining a current ratio of 2@1 by paying some part of current liabilities
>ou are reAuired to suggest him the amount of current liabilities which must be paid for the
9urpose.

Qus@1% A company has a loan of $s.11"!!"!!! as part of its capital employed. 2he interest payable on
Joan is 11* and the $&8 of the company is 21*. 2he rate of income tax is %!*.what is the
<ain to shareholders due to the loan raised by the company :


Qus@1# $s.2"!!"!!! is the cost of goods sold" in.entory turno.er 0 times" stoc, at the beginning is 1.1
2imes more than the stoc, at the end. Calculate the .alue of opening I closing stoc, .


Qus@10 From the gi.en information" calculate the stoc, turno.er ratio@ sales $s.1"!!"!!!" <ross 9rofit
21* on cost " opening stoc, was 1E+
rd
of the .alue of closing stoc,. Closing stoc, was +!*
&f sales.


Qus@1) Calculate cost of goods sold from the following information@ Sales $s.12"!!"!!!" Sales
$eturns $s.0!"!!!" operating expenses $s.1"02"!!!" operating ratio )2*.


Qus@2! Calculate the amount of opening stoc, and closing stoc, from the following figures@
A.erage 3ebt collection period / month stoc, turno.er ratio + times. A.erage 3ebtors
$s.1"!!"!!! Cash sales being 21* of total sales <ross profit ratio 21* stoc, at the end was +
2imes that in the beginning.

Qus@21 5a7 Calculate return on 8n.estment from the following information @

Det profit after 2ax $s.%"1!"!!!.
12.1* con.ertible debentures $s 0"!!!!!.
8ncome 2ax 1!*.
Fixed Assets at cost $s.2/"%!"!!!.
3epreciation reser.e $s./"%!"!!!.
Current Assets $s. 11"!!"!!!.
Current Jiabilities $s. #"!!"!!!.

5b7 9rofit before interest and tax59-827 $s.2"!!"!!!" 1!* preference shares of $s.1!! each.
$s.2"!!"!!!" 2"!!!! eAuity shares of $s. 1! each" $ate of tax ( 1!* calculate earning pen
Share5C9S7.


Chapter 6
Cash Flow Statement
Qus@1 Fhy is the cash flow statement not a suitable 4udge of profitability :
Qus@2 Lnder which accounting standard " cash flow statement is prepared :
Qus@+ Fhy do we add bac, depreciation to net profit while calculating cash flow from operating acti.ities.
Qus@/ How will you classify loans gi.en by -irla Finance Jtd.: Fhile preparing cash flow statement.
Qus@1 How will you classify deposits by customers in H3FC -an, while preparing cash flow statement.
Qus@% Fhere will you show purchase of computer in cash flow statement :
Qus@# <i.e two examples of M Significant non cash transactions M.
Qus@0 How will you classify loans gi.en by 2ata Banufacturing Company.
Qus@) A company recei.es a di.idend of $s. 2 Ja,hs on its in.estment in other company's share will it be
Cash inflow from operating or in.esting acti.ities in case of a.
5i7 Finance Company.
5ii7 Don6Finance Company.
Qus@1! How are .arious acti.ities classified as per AS6+ 5$e.ised7 :
Qus@11 Cash flow from operating Acti.ities N Cash flow from 8n.esting Acti.ities N Cash flow from Financing
Acti.ities OPPPPPPPPPPPPPP
Qus@12 Fhat are the two methods which can be employed to calculate net cash flow from operating acti.ities :
Qus@1+ Cscorts Jtd. Cngaged in the business of manufacturing tractors in.ested $s./!"!!"!!! in the shares of a
Car manufacturing Company. state with reason whether the di.idend recei.ed on this in.estment will
-e cash flow from operating acti.ities or 8n.esting acti.ities.
Qus@1/ Bodern 2oys Jtd. 9urchased a machinery of $s.2!"!!"!!! for manufacturing toys. State gi.ing reason
Fhether the cash flow due to the purchase of machinery will be cash flow from operating acti.ities"
8n.esting acti.ities or Financing acti.ities :
Qus@11 From the following profit or loss account find out the flow of cash from operating acti.ities of
Bohan Jtd.
D*6 PROFIT AND LOSS ACCOUNT C*.
P#*0cu/#*( A-!u" P#*0cu/#*( A-!u"
2o $ent 9aid 1/"!!!
Jess@ 9repaid 2"!!!
2o Salaries
2o 3epreciation
2o Joss on sale of Furniture
2o <oodwill written &ff
2o -ad 3ebts
2o &ffice Cxpenses
2o 3iscount allowed
2o 9roposed 3i.idend
2o 9ro.ision for 2ax
2o Det 9rofit
5$s7
12"!!!
21"!!!
11"!!!
1!"!!!
0"!!!
+"!!!
10"!!!
#"!!!
+!"!!!
22"!!!
12"0!!
2"!2"0!!
-y <ross 9rofit
-y 9rofit on Sale of Bachine
-y 2ax $efund
-y $ent recei.ed /"!!!
Add@ $ent accrued 1"!!!
5$s7
1"02"!!!
12"!!!
+"0!!
1"!!!
2"!2"0!!
N!e@ 2here was increase in Closing stoc, by $s. 21"!!!.
Qus@1% 9repare Cash flow Statement from the following information of -ox Jtd. For the year ended Barch
+1"2!!/.
BALANCE SHEETS OF LION LTD6 AS ON MARCH 3192554
L0#b0/00e( 2553 2554 A((e( 2553 2554
Share capital
9rofit I Joss Account
<eneral $eser.e
2ax 9ro.ision
Creditors
-ill 9ayables
3epreciation 9ro.ision
5$s7
+"!!"!!!
1"2!"!!!
%!"!!!
#!"!!!
1!"!!!
+!"!!!
21"!!!
%"11"!!!
5$s7
/"!!"!!!
2"%!"!!!
)1"!!!
0!"!!!
)!"!!!
1!"!!!
/!"!!!
)"#1"!!!
<oodwill
Bachinery
12* 8n.estments
Stoc,
3ebtors
Cash at -an,
Short term 8n.estment
5$s7
#!"!!!
+"!!"!!!
1"1!"!!!
+1"!!!
1!"!!!
+!"!!!
2!"!!!
%"11"!!!
5$s7
+!"!!!
+"2!"!!!
+"!!"!!!
1"01"!!!
#!"!!!
/!"!!!
+!"!!!
)"#1"!!!
A..00!"#/ I"1!*-#0!" :
1.8n.estment costing $s.1!"!!! were sold for $s. /0"!!! during the year.
2.2ax paid during the year $s.#!"!!!.
+.8nterest recei.ed on 8n.estment $s. 12"!!!.
SUGGESTED ANS:ERS
ON
HOTS
Subjec: Acc!u"#"c$
CLASS % &II' A( )e* NCERT B!!+,
P#* %A
Acc!u"#"c$ N! % 1!* P*!10
!*;#"0<#0!" #". )#*"e*(40) Acc!u"(
CHAPTER:1
NOT FOR PROFIT ORGANISATION
Q. 1 5i7 Subscription 5ii7 3onation.
Q.2 5i7 $eceipts and 9ayments Account is a summary of Cash -oo,.
5ii7 Don6 cash expenses such as depreciation and outstanding expenses are not shown in $eceipts and
9ayments Account.
Q.+ Subscription due to be recei.ed is added with subscription recei.ed during the year in 8ncome and Cxpenditure
AEC and shown as an asset in the closing balance sheet.
Q./ Subscription recei.ed in ad.ance is subtracted from subscription recei.ed during the year in 8ncome and
Cxpenditure AEC and shown as a liability in the closing -alance sheet.
Q.1 Fund based accounting is a boo, peeping techniAue where by separate self6balancing sets of assets" liability"
income" expenses and fund balance accounts are maintained for each contribution for a specific purpose.
Q.% I"c!-e #". E=)e".0u*e A/C
F!* 4e $e#* e".e. >>>
E=)e".0u*e R(6 I"c!-e R(6
2o 2ournament Cxpenses 10!!!
Jess 2ournament Fund 11!!! +!!!
Q. # Calculation of current year subscription to be shown in 8ncome and Cxpenditure AEC for the year ended Barch
+1" 2!!0 @6
2otal subscription recei.ed during the year 21!!!!
Add@6
&utstanding subscription on +16!+62!!0 +1!!!
Ad.ance subscription on !16!/62!!# D8J +1!!!
201!!!
Jess @6
&utstanding subscription on !16!/6!# 1!!!!
Ad.ance subscription on +16!+62!!0 +!!!! 50!!!!7
Cu**e" $e#* (ub(c*0)0!" 258555
Q. 0 I"c!-e #". E=)e".0u*e A/C
F!* 4e $e#* e".0"; M#*c4 319 255?
E=)e".0u*e R(6 I"c!-e R(6
-y Subscription +!!!!
Add@6 outstanding subscription for 2!!% 6!#
5101!!611!!7 1#!!!
Add@6 Ad.ance in 2!!16!% /!!! 11!!!
B#/#"ce (4ee
A( !" 31
(
M#*c4 2555?
L0#b0/00e( A-!u" A((e( A-!u"
Subscription in ad.ance 1!!! Subscription outstanding 2!!16!% 11!!
2!!%6!# 1#!!! 101!!
Q. ) Calculation of salaries to be shown in 8ncome and Cxpenditure AEC for the year ended Barch +1" 2!!0@6
$s.
2otal Salaries paid during the year 0#"!!!
Add@6
&utstanding salaries on +16!+62!!0 +2"!!!
9repaid salaries on !16!/62!!# 1)"!!! 11"!!!
1+0"!!!
Jess@6
&utstanding Salaries on !16!/62!!# 1#"!!!
9repaid salaries on +16!+62!!0 2"!!! 5+#"!!!7
Salaries to be shown in 8ncome and Cxpenditure AEC 1!1!!!
Q. 1!
Amount paid for sports items during the year )#)!!
Add@6
Stoc, of sports items as on !16!/62!!% //#!!
Creditors for sports as on +16!+62!!# 2%1!! #12!!
1%)1!!
Jess @6
Stoc, of sports items as on +16!+62!!# 2/1!!
Sports items to be debited in the 8ncome and expenditure AEC 1//%!!
Q.11 B#/#"ce (4ee !1 C!(-!( L.6
A( !" 31
(
M#*c49 255?
L0#b0/00e( A-!u" A((e( A-!u"
2ournament Fund 1"1!!!!
Add
8ncome from 2ournament Fund 8n.estment
10"!!!
Accured interest on tournament fund 8n.estment
%!!!
1"#/"!!!
Jess 2ournament Cxpenses 12"!!! 1%2!!!
2ournament Fund in.estment.
Accured interest on 2ournament
fund 8n.estment
1"1!!!!
%!!!
Q. 12 Amount paid for medicine during the year %"#)!!!
Add@6
Stoc, of medicine on !16!/62!!% )!"!!!
Creditors for medicine on +16!+62!!# 2!/"!!! 2)/"!!!
)"#+"!!!
Jess@6
Stoc, of medicine on +16!+62!!# 12/"!!!
Creditors for medicine as on !16!/62!!% 2/!"!!! +%/"!!!
Bedicine to be debited in in 8ncome and Cxpenditure AEC. %!)!!!
Q. 1+ 3ifference between $eceipts and 9ayments and 8ncome and Cxpenditure.
B#(0( I"c!-e #". E=)e".0u*e Rece0)( #". P#$-e"(
5i7 Dature 8t is a ,in to profit and loss AEC 8t is the summary of Cash boo,.
5ii7 Dature of
8tems
8t records income and expenditure of re.enue
nature only
8t records receipts and payments of both capital
and re.enue nature.
5iii7 $esult 2he result of 8ncome and expenditure AEC is
surplus or deficit.
2he result of $eceipt and 9ayments is closing
balance of cash and -an,.
CHAPTER:2
ACCOUNTING FOR PARTNERSHIP FIRMS: BASIC CONCEPTS
Ans. 1 5i7 Fhen additional capital is introduced.
5ii7 Fhen capital is withdrawn.
Ans. 2 %!!!! = )E1!! O 1/!!
2!!!! = )E1!! = +E12 O /1!
2otal 8nterest 101!
Ans. + Charu is correct as in the absence of partnership agreement" profits and losses are di.ided eAually among
partners.
Ans. / A's claim is not .alid as in the absence of partnership deed" no salary is allowed to partners.
Ans. 1 Chander's claim is not .alid as in the absence of partnership deed interest on partners loan is pro.ided ( %*
p.a.
Ans. % As per pro.ision of 8ndian 9artnership act 1)+2" when there is no partnership" no partner is entitled for
interest on his capital contribution.
Ans. # 8nterest on drawing O 12!!! = %E1!! = %.1E12 O +)!
Ans. 0 8nterest on drawing O )%!! = %E1!! = 1.1E12 O 2%/
Ans. ) ANALYSIS TABLE
A B C
8nterest on Capital 5+ years7 Cr. +!!!! 2/!!! 21!!!
Ad4ustment of profit 3r. 21!!! 21!!! 21!!!
5Cr7 1!!! 53r7 1!!! 53r7 /!!!7
ournal Cntry @6
-'s current AEC 3r. 1!!!
C's Current AEC 3r. /!!!
2o A's current AEC 1!!!
5Ad4ustment entry for omission of interest on capital ( 1!* p.a.7
Ans. 1! ANALYSIS TABLE
& Y @ T!#/
8nterest on drawings 53r7 #1! %+! %!! 1)0!
Ad4ustment of profit 5Cr7 ))! %%! ++! 1)0!
5Cr7 2/! 5Cr7 +! 53r72#! 6
?'s Capital AEC 3r. 2#!
2o ='s Current AEC 2/!
2o >'s current AEC +!
5Ad4ustment entry for omission of interest on drawings ( 1 * p.a.7
Ans. 11 ANALYSIS TABLE
A B C T!#/
Frong profit 3r. 2!!!! 2!!!! 2!!!! %!!!!
8nterest on Capital ( 2* Cr. +!!! 2!!! 1%!! %%!!
Correct profit Cr. 2%#!! 1#0!! 0)!! 1+/!!
5Cr7 )#!! 53r7 2!! 53r7 )1!! 6
-'s Current AEC 3r. 2!!
C's Current AEC 3r. )1!!
2o A's current AEC )#!!
5Ad4ustment entry for interest on capital and distribution in wrong ratio.7
Ans. 12
ANALYSIS TABLE
R#A0 M!4#" T!#/
Frong 9rofit 3istributed 3r. 212!!! 212!!! 1!/!!!
8nterest on capital omitted Cr. 12!!!! 0/!!! 2!/!!!
Salary to be pro.ided Cr. #2!!! %!!!! 1+2!!!
Current 9rofit Cr. )0!!! #!!!! 1%0!!!
Ne #.ju(-e" C*6 3B555 D*6 3B555
Bohan's current AEC 3r. +0!!!
2o $a.i's Current AEC +0!!!
5Ad4ustment entry for omission of certain pro.isions of partnership deed.7
Ans. 1+ 3istinction between Fixed and Fluctuating Capital method@6
B#(0( !1 .011e*e"ce( F0=e. c#)0#/ -e4!. F/ucu#0"; C#)0#/ Me4!.
5i7 Dumber of Accounts 2wo accounts are maintained in fixed
capital method.
&nly one account is maintained.
5ii7 Change in capital AEC
balances
$emain unchanged -alance fluctuate freAuently.
5iii7 $ecording of
transactions
Ad4ustment regarding interest on capital"
interest on drawings partners salary and
profits etc are recorded in partners current
account.
All these ad4ustments are recorded in
partners capital accounts.
Ans. 1/ 9rofit transferred to A's current AEC $s. 11"!!!
-'s current AEC $s. /1"!!!
C's current AEC $s. //"!!!
Ans. 11 Det profit transferred to A's Capital AEC $s. /"%1!
-'s Capital AEC $s. +"1!!
CHAPTER:3
RECONSTITUTION OF PARTNERSHIP
ADMISSION OF A PARTNER
Ans. 1 Deed of .aluation of goodwill arises on the following occasions@6
5i7 Change in profit sharing ratio of existing partners.
5ii7 Admission of a partner.
5iii7 $etirement of a partner.
5i.7 3eath of a partner.
Ans. 2 8t is necessary to re.alue assets and reassess liabilities at the time of admission of new partners as if assets
and liabilities are o.erstated or understated in the boo,s then its benefits or loss should not affect the near partner.
Ans. + Sacrificing ratio is the ratio in which old partners ha.e agreed to sacrifice their share of profit in fa.our of
the new partner. 2his ratio is calculated by deducting the new ratio from the old ratio.
S#c*010c0"; R#0! C O/. R#0! 7 NeD R#0!
Ans. / 5i7 &n admission of a new partner.
5ii7 &n change on profit sharing ratio of existing partner.
Ans. 1 5i7Capital employed O Assets ; Jiabilities
O 1/!!!! ; 0!!!!
O $s. /%!!!!
5ii7 Dormal 9rofit O Capital employed = Dormal rate of returnE1!!
O $s. /%!!!! = 1!E1!! O /%!!!
5iii7 Super 9rofit O Firm's A.erage profit ; Dormal 9rofit
O %!!!! ; /%!!!
O 1/!!!
5i.7 <oodwill O Super profit = 1!!E Dormal rate of return
O 1/!!! = 1!!E 1!
O 1/!!!!
Ans. % 5i7 Super profit O Kalue of goodwill EDumber of years purchase
O 10!!!!E2
O )!!!!
5ii7 Dormal 9rofit O Capital employed = Dormal rate of return E1!!
O 1!!!!!! = 11E 1!!
O 11!!!!
5iii7 A.erage 9rofit O Dormal 9rofit N Super profit
O 11!!!! N )!!!!
O 2/!!!!
Ans. # 5i7 Super profit O .alue of goodwillE number of years purchase
O 2/!!!!E+
O 0!!!!
5ii7 Dormal 9rofit O A.erage profit ; Super profit
O 2!!!! ; 0!!!
O $s. 12!!!
5iii7 Capital Cmployee O Dormal 9rofit = 1!!E Dormal rate of return
O 12!!! = 1!!E0
O 11!!!!
Ans. 0 $ahul's sacrificing share O /E# = 1E/ O 1E#
Sahil's sacrificing share O +E# = 1E+ O 1E#
$ahul's new share O /E# ; 1E# O +E#
Sahil's Dew share O +E# ; 1E# O 2E#
Gamal's share O 1E#N1E# O 2E#
NeD )*!10 (4#*0"; *#0! C 3:2:2
Ans. ) A4ay's sacrifies O 1E/ = 2E+ O 2E12
Da.een's sacrifies O1E/ = 1E+ O 1E12
A4ay's new share O 1E0 ; 2E12 O 11E2/
Da.een's Dew share O +E0 ; 1E12 O #E2/
Surender's share O 1E/ or %E2/
NeD *#0! C 11:?:E
Ans. 1!
&ld ratio O A@ - O +@2
A surrender O +E1 = 1E% O +E+! O1E1!
- surrender O 2E1 = 1E/ O 1E1!
A's new share O +E1 ; 1E1! O 1E1!
-'s new share O 2E1 ; 1E1! O +E1!
C's new share O 1E1! N1E1! O 2E1!
NeD *#0! C 8/159 3/159 2/15 OR 8:3:2
Sacrificing $ation O &ld ratio ; Dew ratio
A O +E1 ; 1E1! O 1E1!
- O 2E1 ; +E1! O 1E1!
S#c*010c0"; *#0! C 1:1
Ans. 11
&ld ratio O 1@+
Shital O 1E/
th
Share
Jet the profit be $s. 1
$emaining profit O 161E/ O+E/
Arti @ -abita O 2@1
Arti's share O +E/ = 2E+ O 1E2
-abita's Share O +E/ = 1E+ O 1E/
NeD R#0! C 1/29 1/49 1/4 O* 2:1:1
Sacrificing ratio O &ld ratio ; Dew ratio
Arti's sacrifies O 1E0 ; 2E/ O 1E0
-abita's Sacrifies O +E0 ; 1E/ O 1E0
S#c*010c0"; R#0! C 1:1
Ans. 12 &ld ratio O =@> O 1@1
? is admitted for 1E%
th
share which he acAuire from ="> in the ratio of 1@1
Since 1E% = 1E2 O 1E12 from = and >
='s new ratio O +E1 ; 1E12 O +1E%!
>'s Dew ratio O 2E1 ; 1E12 O 1)E%!
?'s share O 1E%
NeD *#0! C 31/E59 1F/E591/E !* 31:1F:15
Ans. 1+
&ld ratio O $a,hi @ 9arul O +@1
Dew ratio O $a,hi@ 9arul@ Deha O 2@+@2
$a,hi's sacrifice O +E/ ; 2E# O 1+E20
9arul's sacrifice O 1E/ 6+E# O 1E20 5<ain7
So" $a,hi's sacrifice 1+E20
th
share and 9arul is gaining to the extent of 1E20
th
share.
Ans. 1/
Cash AEC 3r. 11!!
2o premium AEC 11!!
5cash brought in by ? for his share of goodwill7
9remium AEC 3r. 11!!
2o ='s capital AEC 1!!!
2o >'s Capital AEC 1!!
5<oodwill distributed among sacrificing partners in the ratio of 2@1.7
Ans. 11
Cash AEC 3r. #!!!!
2o Dilu's capital AEC %!!!!
2o premium AEC 1!!!!
5Cash brought in by new partner7
9remium AEC 3r. 1!!!!
2o 9riya's capital AEC 1!!!!
5Amount of goodwill distributed among sacrificing partner in their sacrificing ratio.7
Ans. 1%
Cash AEC 3r. 1!!!
2o premium AEC 1!!!
5Amount of goodwill brought in by C7
9remium AEC 3r. 1!!!
C's capital AEC 3r. 0!!
2o A's capital AEC )!!
2o -'s capital AEC )!!
5$s. 10!! distributed among sacrificing partners in sacrificing ratio.7
A's capital AEC 3r. +!!!
-'s capital AEC 3r. +!!!
2o goodwill AEC %!!!
5&ld goodwill written off among old partners in old ratio.7
Q. 1#
Cash AEC 3r. 1!!!!
2o C's capital AEC 1!!!!
5Cash brought in by C for his share of capital7
A's capital AEC 3r. 12!!
-'s Capital AEC 3r. 0!!
2o goodwill AEC 2!!!
5&ld goodwill written off among old partners in old ratio.7
C's capital AEC 3r. +!!!
2o A's capital AEC 10!!
2o -'s capital AEC 12!!
5Ad4ustment of goodwill on admission of C7
Ans. 10
Cash AEC 3r. /!!!
2o premium AEC /!!!
5Amount of goodwill brought in by new partner7
9remium AEC 3r. /!!!
2o 9iyush's capital AEC /!!!
5<oodwill distributed among sacrificing partners in their sacrificing ratio.7
Ans. 1)
Cash AEC 3r. 2%!!!
2o C's capital AEC 2%!!!
5Amount of capital brought in by new partner.7
C's capital AEC 3r. #1!!
2o A's capital AEC +#1!
2o -'s capital AEC +#1!
5C's share of goodwill distributed among A and -7
Calculation of Hidden goodwill@6
Capital of A and - O 2%!!! N 22!!!
O /0!!!
C brings O 2%!!! for 1E/
th
share
2otal capital of the firm O 2%!!! = /E1
O 1!/!!!
Cxisting capital of the firm O /0!!! N 2%!!!
O #/!!!
<oodwill O 1!/!!! ; #/!!!
O +!!!!
C's share of goodwill O +!!!! = 1E/ O #1!!
Ans. 2!
C's capital AEC 3r. 121!
2o A's capital AEC +11!
2o -'s capital AEC 21!!
5C's share of goodwill distributed among old partners in sacrificing ratio i.e. +@27
Ans. 21
Cash AEC 3r. 0!!!
2o C's capital AEC 0!!!
5Amount of capital brought in by new partner7
C's capital AEC 3r. 2!!!
2o A's capital AEC 1!!!
2o -'s capital AEC 1!!!
5Share of goodwill distributed among A and - in sacrificing ratio i.e. 1@17
Calculation of Hidden <oodwill.
C brings 0!!! for 1E1 share
Since total capital of the firm O 0!!! = 1E1
O /!!!!
Cxisting capital of the firm O 1+!!! N )!!! N 0!!!
O +!!!!
<oodwill O /!!!! ; +!!!!
O 1!!!!
C's share of goodwill O 1!!!! = 1E1
O 2!!!
Ans. 22
C's CapitaQ AEC 3r. $s. 21" 1!!
2o A's Capital AEC $s. 0"1!!
2o -'s Capital AEC $s. 1#"!!!
Ans. 2+
R( R(
5i7 Stoc, AEC 3r.
-uilding AEC 3r
9lant I Bachinery AEC 3r.
2o C's capital AEC
2o premium AEC
2"//"!!!
2"/!"!!!
1"/!"!!!
+"+%"!!!
2"00"!!!
5ii7 9remium AEC 3r.
2o A's Capital AEC
2o -'s Capital AEC
2"00"!!!
2"%0"0!!
1)"2!!

Ans. 2/
?'s Capital AEC 3r. $s. )!!!
2o ='s Capital AEC $s. )!!!
C4#)e* 74
RETIREMENT AND DEATH OF A PARTNER
Ans. 1
B#(0( S#c*010c0"; R#0! G#0"0"; R#0!
5i7 Beaning 9roportion in which old partners sacrifice their
share in fa.our of new partner.
9roportion in which continuing partner
gain the share of outgoing partner on his
retirement.
5ii7 &ccasion Sacrificing ratio is calculated at the time of
admission of new partner.
<aining ratio is calculated at the time of
retirement or death of a partner.
5iii7 Formula Sacrificing ratio O &ld ratio ; Dew ratio <aining ratio ; &ld ratio
Ans. 2 <aining $atio O Dew ratio ; &ld ratio
Gamal's <ain O /E# ; 1E+ O 1E21
Gunal's <ain O +E# ; 1E+ O 2E21
<aining $atio O 1@2
Ans. + &ld ratio O 9 Q $
# @ 2 @ 1
Dew ratio O Q $
2 @ 1
<aining $atio O Dew ratio ; &ld ratio
Q's gain O 2E+ ; 2E1! O 1/E+!
$'s gain O 1E+ ; 1E1! O #E+!
<aining $atio O 1/@# or 2@1
Ans. / A's gaining share O 2E1 = R O 1E1
A's new share O 2E1 N 1E1 O +E1
C's gaining share O 2E1 = R O 1E1
C's Dew share O 1E1 N 1E1 O 2E1
NeD *#0! !1 A #". C C 3:2
Ans. 1
>'s gaining share O /E) = 2E+ O 0E2#
?'s gaining share O /E) ; 0E2# O /E2#
>'s new share O &ld share N gain
O 1E+ N 0E2# O 1#E2#
?'s new share O 2E) N /E2# O 1!E2#
Dew $atio O 1#@1!
G#0"0"; *#0! C B/2? : 4/2? !* 2:1
Ans. %
&ld $atio O +@2@1
? $etire
='s <aining O 1E% = 2E+ O 2E10
='s Dew share O +E% N 2E10 O 11E10
>'s <aining O 1E% = 1E+ O 1E10
>'s new share O 2E% N 1E10 O #E10
NeD R#0! C 11/1B9 ?/1B O* 11:?
Ans. # &ld ratio O 9 Q $
O /@1@%
Q retired
9's gaining O 1E+ = 1E11 O 1E)
9's new share O /E11 N 1E) O 1#E/1
$'s <aining share O 2E+ = 1E11 O 2E)
$'s new share O %E11 N 2E) O 20E/1
NeD R#0! C 1?:2B
Ans. 0 $ohit's capital AEC 3r. 2/!!!
2o Bayan,'s capital AEC %!!!
2o harshit's Capital AEC 10!!!
5Ad4ustment Cntry for treatment of goodwill in gaining ratio.7
Ans. ) Suresh capital AEC 3r. /0!!!
2o $amesh's capital AEC 12!!!
2o Daresh capital AEC +%!!!
5<oodwill ad4usted among the gaining partner in gaining ratio.7
Ans. 1! &'s capital AEC 3r. /!!!!
2o C's capital AEC 2!!!!
2o B's capital AEC 2!!!!
5Ad4ustment of goodwill in gaining partners in their gaining ratio.7
Ans. 11 9rofit and loss suspense AEC 3r
2o deceased partner's capital AEC
Ans. 12 2otal profit for the year ended +1
st
Barch 2!!# O $s +!!!!!
>'s share of profit up to date of death O +!!!!! = 2E% = +E12
O 21!!!
9rofit and Joss suspense AEC 3r. 21!!!
2o >'s capital AEC 21!!!
5 >'s share of profit transferred to >'s capital AEC7
Ans. 1+ 9rofit and Joss suspense AEC 3r. 1!!!!
2o -'s capital AEC 1!!!!
5-'s share of profit transferred to -'s capital AEC7
A's capital AEC 3r. 11!!!
C's capital AEC 3r. 1!!!
2o -'s capital AEC 2!!!!
5-'s share of goodwill transferred to -'s capital AEC and debited to remaining
partners capital AEC in their gaining ratio.7
-'s share of profit O Dumber of days from 1 April to 12
th
une 2!!#
O #+ 3ays
-'s share of profit O 11!!!! = 1E+ = #+E+%1
O $s. 1!!!!
Ans. 11 9rofit I Joss suspense AEC 3r. $s. 12"1!!
2o C's capital AEC $s. 12"1!!
CHAPTER 7 8
DISSOLUTION OF PARTNERSHIP FIRM
Ans. 1 8n case of dissolution of partnership" the firm may continue its business operation but in case of dissolution
of partnership firm" the business operations are discontinued.
Ans. 2 $ealisation account is prepared to ascertain profit or loss on sale of assets and payment of liabilities.
Ans. + $ealisation Account is prepared on dissolution of partnership firm and $e.aluation account is prepared on
reconstitution of partnership firm.
Ans. / >ustin's claim is .alid as according to section /0 5b7 of partnership Act" partners loan are to be paid before
any amount is paid to partners on account of their capitals.
Ans. 1 Cash AEC 3r. 11/!!
2o $ealisation AEC 11/!!
5For debtors realiHed on dissolution of firm7
Ans. % Gamal's capital AEC 3r. /!!!
2o cash AEC /!!!
5for final payment to Gamal7
Ans. # 5i7 A's capital AEC 3r. 11!!!
-'s capital AEC 3r. 11!!!
2o realiHation AEC +!!!!
5For transfer of loss on dissolution7
5ii7 A's capital AEC 3r. 1!!!
-'s capital AEC 3r. 11!!!
2o cash AEC 2!!!!
5For final payment to partners7
Ans. 0
&L$DAJ
D*6 'R(, C*6 'R(6,
5a7 $ealisation AEC 3r.
2o -an, AEC
12!!!
12!!!
5b7 -'s capital AEC 3r.
2o realisation AEC
%"!!!
%"!!!
5c7 A's capital AEC 3r.
-'s capital AEC 3r.
2o $ealisation AEC
1!"!!!
/"!!!
1/!!!
5d7 -'s capital AEC 3r.
2o ban, AEC
2"!!!
2"!!!
5e7 A's capital AEC 3r.
-'s capital AEC 3r.
2o deferred re.enue ad.ertising expenditure AEC
2!"!!!
0"!!!
20"!!!
5f7 -an, AEC 3r.
2o realisation AEC
2!!
2!!
SUGGESTED ANS:ERS
ON
HOTS
Subjec: Acc!u"#"c$
CLASS % &II' A( )e* NCERT B!!+,
P#* %B
Acc!u"#"c$ C!-)#"$ Acc!u"( #".
A"#/$(0( !1 F0"#"c0#/ S#e-e"(
CHAPTER71 22
ACCOUNTING FOR SHARE CAPITAL 2 DEBENTURE
THEORETICAL 3UESTIONS
Ans.1 Do' because 8nterest on debentures is a charge against profit and not an appropriation of profit.
Ans. 2 3ebenture $edemption $eser.e Account.
Ans. + $edemption of debentures by con.ersion.
Ans. / Capital Dature.
Ans. 1 >es. S Hint See section #0T
Ans. % According to table MA' not exceeding % * p.a.
Ans. # Section #) Companies Act6 the shares must be of a class already issued. So a company cannot issue shares at
a discount in its 8nitial 9ublic &ffer.
Ans. 0 8t is restricted under section #0 of 8ndian Companies Act.
Ans. ) Bention the pro.isions of section #0.
Ans. 1! -asis of difference @
5i7 &wnership
5ii7 $eturn
5iii7 Koting $ight
5i.7 Con.ertibility
Ans. 11 Do.
Ans. 12 As per SC-8 guidelines" an amount eAual to 1!* of the debenture issue" must be transferred to 3$$ before
the redemption begins.
Ans. 1+ 2he following companies are exempted from the obligation of creating 3$$ ;
5i7 A company which has issued debentures with a maturity of 10 months or less.
5ii7 8nfrastructure companies" which are wholly engaged in the business of de.eloping" maintaining and
operating infrastructure facilities.
Ans. 1/ A Company can reissue forfeited shares at a discount not more than amount forfeited on these shares.
PRACTICAL 3UESTIONS
Ans. 1 8nterest on Calls in ad.ance $s. 2.0!
8nterest on Calls in arrears $s. 1.1!
Ans. 2
Solution@6
5i7 Sundry Assets AEC 3r.
<oodwill AEC 3r.
2o Sundry Jiabilities
2o > Jtd.
%%!"!!!
2!"!!!
0!!!!
%!!!!!
5ii7 > Jtd. 3r.
2o -an, AEC
%!"!!!
%!!!!
Case 8 > Jtd 3r.
2o CAuity share capital AEC
1/!"!!!
1/!" !!!
Case 88 > Jtd 3r.
2o CAuity share capital AEC
2o securities premium AEC
1/!"!!!
/1!"!!!
)!"!!!
Case 888 >' Jtd 3r.
3iscount on issue share AEC 3r.
2o CAuity share capital AEC
1/!"!!!
%!!!!
%!!"!!!
Ans. + 8ssued Capital $s. )1!!!.
Ans. / Hint6
5i7 Amount recei.ed on allotment $s. 2%"1!!.
5ii7 Amount transferred to share forfeited AEC $s. )!!
5iii7 Amount transferred to Capital $eser.e $s. %!!.
Ans. 1 Capital $eser.e $s. ))!.
Ans. %
Hints6
517 Case a 5i7 ; Do. of preference shares issued ##12.
527 Case a 5ii76 Do. of debentures issued 11+!.
5+7 $emaining 01!!! debentures paid in cash.
Ans. # 8nterest on Calls in ad.ance O 11 N + O $s. 10
Ans. 0
5i7 3r. -an, AEC $s. 1%")!"!!!" Cr.CA.share Application AEC $s. 1%")!"!!!.
5ii7 3r.CA.Share Application AEC $s. 1%")!"!!!" Cr.CA. share Capital AEC $s.1!"!!"!!!" Cr. Security
premium AEC $s. +!!"!!!" Cr. -an, AEC $s. +")!"!!!.
Ans. ) Amount of discount O $s. )!"!!!
3iscount to be written off@
2!!16!2 6 $s. 21"!!!
2!!26!+ 6 $s. 21"!!!
2!!+6!/ 6 $s. 2!"!!!
2!!/6!1 6 $s. 12"1!!
2!!16!% 6 $s. #"1!!
Ans. 1!
Hint @ 5i7 Joss on sale of in.estment $s. 21#1.
5ii7 Amount transferred to <eneral $eser.e $s. 1"/#"/21.
Ans. 11 Case 5i7 ; Do. of CAuity shares to be issued 1"%!!.
Case 5ii7 ; Do. of CAuity shares to be issued 1"//!.
Ans. 12
ournal of - Jtd.
5a7

ournal of C Jtd.
5b7
ournal of F Jtd.
5c7

Ans. 1+ Capital $eser.e $s. 1!"!!!
Ans. 1/ Capital $eser.e $s. %!!
Ans. 11 Capital $eser.e $s. /"0!!.
5i7 -an, AEC 3r. 20"1!"!!!
2o. 3eb. Application I Allotment AEC 20"1!"!!!
5ii7 3eb. Application I allotment AEC 3r. 20"1!"!!!
3iscount on issue of 3ebentures 3r. 1"1!"!!!
2o 12 * debentures AEC +!"!!"!!!
5i7 -an, AEC 3r. 1#"!!!
2o. 3eb. Application I Allotment AEC 1#"!!!
5ii7 3eb. Application I allotment AEC 3r. 1#"!!!
Joss on issue of 3ebentures AEC 3r. )"!!!
2o 12 * debentures AEC %!"!!!
2o 3ebenture $edemption 9remium AEC %!!!
5i7 -an, AEC 3r. #+"1!!
2o. 3eb. Application I Allotment AEC #+"1!!
5ii7 3eb. Application I allotment AEC 3r. #+"1!!
Joss on issue of 3ebentures AEC 3r. #"!!!
2o 12 * debentures AEC #!"!!!
2o Securities premium AEC +"1!!
2o 3ebenture $edemption 9remium AEC #"!!!
C4#)e* 3 2 4
A"#/$(0( !1 F0"#"c0#/ S#e-e"(
Ans@1 5i7 Calls in Arrears@ 8t is deducted from the subscribed capital.
5iii7 Calls in Ad.ance@ 8t is shown separately under the subscribed capital.
Ans@2 Ie-( He#.0"; Sub7He#.0";

9roposed di.idend Current Jiabilities 9ro.ision
I 9ro.ision
Lnclaimed di.idend Current Jiabilities Current Jiabilities
I 9ro.ision
Ans@+ 5i7 <o.ernment Securities.
5ii7 Sin,ing Fund 8n.estment.
Ans@/ -alance sheet as onUUUUUU
L0#b0/00e( R(6 A((e( R(.

Share capital Fixed Assets
$eser.e I surplus 8n.estment
Secured Joans Current Assets"
Lnsecured Joans Joan and Ad.ances
5a7 Current Assets
5b7 Joans I Ad.ance
Current Jiabilities I 9ro.ision Biscellaneous Cxpenditures
5a7 Current Jiabilities 9rofit I Joss amount 53r.-alance7
5b7 9ro.ision
Ans@1 5i7 Fixed Assets.
5ii7 Biscellaneous Cxpenditures
5iii7Current Assets Joans I Ad.ance under Current Assets.
5i.7$eser.e and Surplus.
5.7Fixed Assets.
Ans@% 2otal of -alance Sheet $s.10"1!"!!!.
Ans@# 5i7 Claims against the Company not ac,nowledged as debts .
5ii7 Lncalled Jiability on partly paid shares.
5iii7Arrears of 3i.idend on Cumulati.e preference shares.
Ans@0 Don6Current Assets ; -uilding" Bachinery.
Don6Current Jiabilities ; Share Capital " 3ebentures.
Ans@) 2he analysis which is made to re.iew and compare the financial statements of two or more then two
>ears is called HoriHontal Analysis.
Ans@1! Comparati.e Financial Statement.
Ans@11 2he Analysis which is made to re.iew the financial statements of one particular year only is called
Kertical Analysis.
Ans@12 $atio Analysis.
Ans@1+ 5i7 For company's -alance Sheet there are two standard forms prescribed under the companies Act.1)1%
Fhereas there is no standard form prescribed under the 8ndian partnership Act"1)+2 for a partnership
Firms balance sheet.
5ii7 8n case of a company's -alance sheet pre.ious years figures are reAuired to be gi.en whereas it is
not so in the case of a partnership firms balance sheet.
Ans@1/ 5i7 Lncalled Jiability on share partly paid up .
5ii7 Arrears of fixed Cumulati.e 3i.idend.
Ans@11 -alance of a Company is prepared M as at a particular date M .
Ans@1% 9art 8 of Schedule K8 to the Companies Act.1)1%.
Ans@1# Analysis of financial statements is affected from the limitation of window dressing as companies hide
Some .ital information or show items at incorrect .alue to portray better profitability and financial
9osition of the business" for example the company may o.er.alue closing stoc, to show higher profits.
Ans@10 5i7 2hey want to 4udge the present and future earning capacity of the business.
5ii7 2hey want to 4udge the safety of their in.estment.
Ans@1) 5i7 Comparati.e Financial Statements.
5ii7 $atio Analysis etc.
Ans@2! Sales.
Ans@21 9ercentage Change ;
Det sale 21*
Cost of <oods sold 21*
<ross profit 21*
8ndirect Cxpenses 0#.1!*
Det profit before 2ax 10.!1*
8ncome 2ax /1.%#*
Det 9rofit after 2ax 1.1%*

Chapter 6 1
Accounting $atios
Ans@1 Short term financial position of the business is assessed by calculating current ratio and liAuid ratio.
Ans@2 5i7 9ayment of current liabilities.
5ii7 8ssue of share capital etc.
Ans@+ Sale of stoc, at cost price.
Ans@/ 5i7 because there is uncertainty whether it will be sold or not.
5ii7 8t will ta,e time before it is con.erted into debtors' and cash.
Ans@1 Quic, ratio will impro.e as both the liAuid assets and current liabilities will decrease by the same
Amount.
Ans@% Con.ersion of debentures into shares.
Ans@# Accounting ratios are calculated from financial statements" which are down on the basis of historical
Cost as recorded in the boo, of accounts .
Ans@0 2otal Assets to 3ebt $atio.
Ans@) 3ebt6CAuity6$atio.
Ans@1! 1!!6#0O22*
Ans@11 Do change because it will neither affect net credit sales nor a.erage recei.able.
Ans@12 3ebt6eAuity ratio will decrease because the Jong6term loans remain unchanged where as the
Shareholders funds are increased by the amount f share capital issued .
Ans@1+ 9urchase of goods for cash .
Ans@1/ 3ebt eAuity ratio will not change as the total amount of shareholders funds will remain same.
Ans@11 9ayment of current Jiabilities $s.+"!!"!!!.
Ans@1% Det gain to shareholders $s.%!"!!!.
Ans@1# Closing stoc, O $s.1/"201.
&pening stoc, O $s.+1"#11.
Ans@10 Stoc, turno.er $atio O / times .
Ans@1) Cost of goods sold O$s.0"/0"/!!.
Ans@2! &pening stoc, $s. 1!"!!!.
Closing stoc, $s. 1"1!"!!!.
Ans@21 5a7 Det profit before interest $s.1/"!!"!!!
capital employed $s. 20"!!"!!!
$eturn on in.estment 1!*.
5b7Carning per share $s. /.
Chapter 6 %
Cash Flow Statement
Ans@1 Cash Flow statement is prepared on cash basis of accounting but profit is calculated on accrual basis.
So cash flow statement is not a 4udge of profitability.
Ans@2 Lnder accounting standard6+5$e.ised7.
Ans@+ 3epreciation reduces the net profit without reducing the cash balance as it is a non6cash item.
Ans@/ As &perating Acti.ities.
Ans@1 &perating Acti.ities.
Ans@% As &utflow under 8n.esting Acti.ities.
Ans@# <i.e any two examples6
5i7 AcAuisition of fixed asset by issue of debentures or shares.
5ii7 Con.ersion of debentures into shares.
Ans@0 Classified as Financing Acti.ities.
Ans@) 8t will be operating acti.ities in case of a finance company and in.esting acti.ities in case of
Don6Financing Company.
Ans@1! 5i7 &perating Acti.ities.
5ii78n.esting Acti.ities.
5iii7Financing Acti.ities.
Ans@11 PO Det 8ncrease E3ecrease in cash and Cash CAui.alents.
Ans@12 3irect Bethod and 8ndirect Bethod.
Ans@1+ 8n.esting Acti.ities -ecause PPPPP.
Ans@1/ 8n.esting Acti.ities -ecause PPPPP.
Ans@11 Cash from &perating Acti.ities $s.1"!+"0!!.
Ans@1% 5i7 Cash 8nflow From &perating Acti.ities $s.0!"!!!.
5ii7Cash &utflow on 8n.esting Acti.ities $s.1"%!"!!!"
5iii7Cash 8nflow From Financing Acti.ities $s. 1"!!"!!!.