CUET 2026 Accountancy May 20 Shift 1 Question Paper- Download Answer Key and Solution PDF

The doctrine of: \[ Separate\ Legal\ Entity \]
means that a company has a legal existence separate from its owners or shareholders.
After incorporation:
The company becomes an independent legal person
It can own property in its own name
It can enter into contracts
It can sue or be sued
Members are distinct from the company
This principle was established in the famous case: \[ Salomon\ v.\ Salomon \& Co. Ltd. \]
Thus, the company is legally separate from its shareholders.
Option analysis:
Option (A): Incorrect because company and shareholders are legally distinct
Option (B): Incomplete explanation of separate legal entity
Option (C): Correct
Option (D): Incorrect because company is not merely an agent of shareholders
Therefore: \[ \boxed{(C)} \] Quick Tip: A company has: its own legal identity separate from its members

According to the: Indian Partnership Act, 1932  partnership arises from: an agreement between persons who agree to share profits of a business carried on by all or any one of them acting for all.
The agreement may be:
Express
Implied
Written
Oral
Even in the absence of a written contract, the mutual rights and duties of partners are governed by: a legally enforceable agreement
Thus, partnership is based on: contractual relationship 
and not merely on trust or informal understanding.
Option analysis:
Option (A): Incorrect because partnership requires mutual agreement among all partners
Option (B): Correct
Option (C): Incorrect because legal enforceability is essential
Option (D): Incorrect because intention to create legal relations is necessary
Therefore: \[ \boxed{(B)} \] Quick Tip: Partnership is created through:  a lawful agreement between partners which may be written, oral, express or implied.

A partnership firm is governed by the: Indian Partnership Act, 1932
The essential features of partnership are:
There must be at least two persons.
There must be an agreement among partners.
The agreement must be for carrying on a lawful business.
Profit-sharing must exist.
Business should be carried on by all or any one acting for all.
However: equal sharing of profits and losses is not compulsory
Partners may share profits and losses:
Equally
In agreed ratio
According to partnership deed
Thus: \[ equal sharing is not an essential feature \]
Option analysis:
Option (A): Essential feature
Option (B): Essential feature
Option (C): Correct
Option (D): Essential feature
Therefore: \[ \boxed{(C)} \] Quick Tip: Partnership requires: \[ profit sharing \] but not necessarily: \[ equal profit sharing \]

Interest on drawings is calculated from the date of withdrawal till the end of the accounting year.

Step 1: Interest on first withdrawal

Amount withdrawn: \[ Rs.~20,000 \]
Date: \[ 1^st\ April, 2024 \]
Period: \[ 12\ months \]
Interest: \[ = \frac{20,000\times6\times12}{100\times12} \] \[ = Rs.~1,200 \]
Step 2: Interest on second withdrawal

Amount withdrawn: \[ Rs.~40,000 \]
Date: \[ 1^st\ October, 2024 \]
Period: \[ 6\ months \]
Interest: \[ = \frac{40,000\times6\times6}{100\times12} \] \[ = Rs.~1,200 \]
Step 3: Calculate total interest \[ Total Interest = 1,200+1,200 \] \[ = Rs.~2,400 \]
Thus: \[ \boxed{Rs.~2,400} \]
Option analysis:

Option (A): Correct
Option (B): Incorrect
Option (C): Incorrect
Option (D): Incorrect

Hence: \[ \boxed{(A)} \] Quick Tip: Interest on drawings: \[ = \frac{Amount\timesRate\timesTime}{100} \] where time is calculated from date of withdrawal till year-end.

Under the: \[ Indian Partnership Act, 1932 \]
every partner acts as: \[ an agent of the firm \]
and also: \[ an agent of other partners \]
Therefore, any act performed by a partner:

In the ordinary course of business
Within the scope of implied authority

is binding on: \[ the firm and all partners \]
Implied authority includes acts that are:

Necessary for carrying on business
Usually done in similar businesses
Within normal business operations

Option analysis:

Option (A): Incorrect because express permission is not always required
Option (B): Correct
Option (C): Incorrect because ratification is not necessary for acts within implied authority
Option (D): Incorrect because such acts bind the entire firm

Therefore: \[ \boxed{(B)} \] Quick Tip: Every partner is: \[ an agent of the firm \] Hence acts done within implied authority bind all partners.

Authorised Share Capital, also known as: \[ Nominal Capital \]
is the: \[ maximum amount of share capital \]
that a company is legally authorised to issue according to its: \[ Memorandum of Association \]
It represents the upper limit beyond which shares cannot be issued unless the authorised capital is increased legally.

Option analysis:

Option (A): Refers to Issued Capital
Option (B): Refers to Subscribed Capital
Option (C): Correct
Option (D): Refers to Paid-up Capital

Therefore: \[ \boxed{(C)} \] Quick Tip: Authorised Capital: \[ Maximum capital a company can issue \]

When shares are issued at a premium: \[ Issue Price>Face Value \]
The excess amount received over the face value is called: \[ Securities Premium \]
A company may collect securities premium along with:

Application money
Allotment money
Call money

depending upon the terms of issue decided by the company.

Thus securities premium is not restricted to any one stage of share collection.

Option analysis:

Option (A): Possible
Option (B): Possible
Option (C): Possible
Option (D): Correct

Therefore: \[ \boxed{(D)} \] Quick Tip: Securities Premium: \[ = Issue Price - Face Value \] It may be collected with application, allotment or calls.

A Partnership Deed is a written agreement containing:

Rights of partners
Duties of partners
Profit-sharing ratio
Interest on capital
Salary and other terms

When a Partnership Deed: \[ does not exist \]
or when certain matters are not mentioned in the deed, then the provisions of the: \[ Indian Partnership Act, 1932 \]
become applicable.

These provisions are known as: \[ rules applicable in the absence of partnership deed \]
Option analysis:

Option (A): Correct
Option (B): Differences among partners do not automatically apply the Act
Option (C): Unequal capital contribution is allowed in partnership
Option (D): Only specific omitted clauses are governed by the Act, but the general condition is absence of deed

Therefore: \[ \boxed{(A)} \] Quick Tip: If no Partnership Deed exists: \[ Indian Partnership Act, 1932 applies \]

Items related to partners are generally classified into:

Appropriations of profit
Charges against profit

Appropriations of profit are recorded in: \[ Profit \& Loss Appropriation Account \]
Examples:

Interest on Capital
Partner's Salary
Commission to Partners

However, rent paid to a partner for use of their property is treated as: \[ a business expense \]
because it arises from a separate contractual arrangement.

Therefore it is:

A charge against profits
Debited to Profit \& Loss Account
Not transferred to Profit \& Loss Appropriation Account

Option analysis:

Option (A): Appropriation of profit
Option (B): Credited in Appropriation Account
Option (C): Correct
Option (D): Appropriation of profit

Therefore: \[ \boxed{(C)} \] Quick Tip: Rent paid to a partner for use of property is: \[ a charge against profits \] not an appropriation of profit.

Sometimes shareholders pay: \[ future call money in advance \]
before it is formally demanded by the company.

Such amount is known as: \[ Calls in Advance \]
Since this amount is:

Received before becoming due
A liability for the company

it is credited to: \[ Calls-in-Advance Account \]
Journal entry: \[ Bank A/c Dr. \] \[ To Calls-in-Advance A/c \]
Thus: \[ Calls-in-Advance Account is credited \]
Option analysis:

Option (A): Incorrect
Option (B): Correct
Option (C): Incorrect
Option (D): Incorrect because amount is not yet part of called-up capital

Therefore: \[ \boxed{(B)} \] Quick Tip: Calls in Advance is: \[ a liability of the company \] hence it is credited.