ISC Class 12 Accounts Question Paper 2026 with Solution PDF

Concept:
Interest on drawings is charged on amounts withdrawn for personal use.

Formula: \[ Interest = Amount \times Rate \times Time \]

Use average period method where timing is not exact.


Step 1: Shiv’s drawings.
Shiv withdrew ₹15,000 in the middle of each half-year.

That means:

Two drawings of ₹15,000 each
Mid-first half → 9 months
Mid-second half → 3 months


Total interest: \[ (15{,}000 \times 6% \times \frac{9}{12}) + (15{,}000 \times 6% \times \frac{3}{12}) \]
\[ = 675 + 225 = 900 \]
\[ \textbf{Shiv’s interest = ₹900} \]


Step 2: Ravi’s drawings.
₹20,000 withdrawn for personal insurance.

This is a personal expense paid by firm → treated as drawings.

Assume mid-year withdrawal (no timing given): \[ Interest = 20{,}000 \times 6% \times \frac{6}{12} = 600 \]
\[ \textbf{Ravi’s interest = ₹600} \]


Step 3: Roshan’s drawings.
₹12,000 withdrawn from capital (personal use).

Timing not specified → assume mid-year.
\[ Interest = 12{,}000 \times 6% \times \frac{6}{12} = 360 \]
\[ \textbf{Roshan’s interest = ₹360} \]


Final Answer: \[ \boxed{ \begin{aligned} Shiv &= ₹900
Ravi &= ₹600
Roshan &= ₹360 \end{aligned} } \] Quick Tip: If timing not given: Assume mid-year (6 months) Mid-half-year drawings → use actual months (9 and 3)

Concept:
Workmen Compensation Reserve is a provision created to meet future claims.
On admission of a new partner:

Actual liability must be adjusted against reserve.
Any excess claim is treated as a loss.



Step 1: Given data. \[ Reserve = ₹80{,}000 \] \[ Actual claim = ₹90{,}000 \]

Excess claim: \[ 90{,}000 - 80{,}000 = ₹10{,}000 \]


Step 2: Accounting treatment.

Reserve is first used to meet the claim.
Extra ₹10,000 is a loss of the firm.
It is borne by old partners in their old profit-sharing ratio (since it relates to past period).



Journal Entry: \[ Workmen Compensation Reserve A/c Dr. \quad 80{,}000 \] \[ Old Partners’ Capital A/cs Dr. \quad 10{,}000 \] \[ To Workmen Compensation Liability A/c \quad 90{,}000 \]


Conclusion:
The extra ₹10,000 is treated as a loss and debited to the old partners’ capital accounts in their old profit-sharing ratio. Quick Tip: On admission: Excess liability over reserve → loss to old partners Short liability → gain to old partners Always adjust in old profit-sharing ratio.

Concept:
On reissue of forfeited shares:

Discount on reissue is debited to Share Forfeiture A/c
Balance in Share Forfeiture related to reissued shares → transferred to Capital Reserve

\[ Capital Reserve = Forfeiture per share - Discount per share \]


Step 1: Amount received before forfeiture.

Face value = ₹10
Called-up = ₹8
Unpaid allotment = ₹5 (includes ₹2 premium)

So amount received per share before forfeiture: \[ 8 - 5 = ₹3 \]

Thus forfeiture amount per share = ₹3.


Step 2: Reissue price and discount.

Shares reissued at ₹7.
Called-up value = ₹8

Discount per share: \[ 8 - 7 = ₹1 \]


Step 3: Gain transferred to Capital Reserve per share. \[ Gain per share = 3 - 1 = ₹2 \]


Step 4: Total Capital Reserve given. \[ Capital Reserve = ₹3{,}200 \]

Let number of shares reissued = \( x \)
\[ 2x = 3{,}200 \]
\[ x = 1{,}600 \]


But total forfeited shares = 1,000.
So maximum reissue cannot exceed 1,000.
Hence, adjust logic:

Capital Reserve comes only from forfeiture related to reissued shares.
Correct forfeiture per share must include premium portion:

Premium ₹2 was unpaid → not credited to forfeiture.

So forfeiture amount per share actually: \[ Amount received = Application + part of allotment excluding premium \]

Since ₹5 unpaid includes ₹2 premium → ₹3 capital unpaid.

Thus capital received per share: \[ 8 - 3 = ₹5 \]

Correct forfeiture per share = ₹5.


Step 5: Revised gain per share. \[ Gain per share = 5 - 1 = ₹4 \]


Step 6: Calculate shares reissued. \[ 4x = 3{,}200 \]
\[ x = 800 \]


Final Answer: \[ \boxed{800 shares reissued} \] Quick Tip: In forfeiture problems: Do NOT include unpaid securities premium in forfeiture Capital Reserve = forfeiture (capital only) – discount on reissue

Concept:
Cash from Operations is calculated by adjusting net profit for:

Non-cash expenses (add back)
Changes in working capital



Step 1: Start with Net Profit. \[ Net Profit = ₹10{,}000 \]


Step 2: Add non-cash expenses.
Depreciation is a non-cash expense → add back.
\[ 10{,}000 + 2{,}000 = ₹12{,}000 \]


Step 3: Adjust working capital changes.

(i) Trade Creditors decreased by ₹15,000
Decrease in creditors = cash paid → subtract.
\[ 12{,}000 - 15{,}000 = -₹3{,}000 \]


(ii) Outstanding Expenses increased by ₹3,000
Increase in outstanding expenses = expense not paid → add.
\[ -3{,}000 + 3{,}000 = ₹0 \]


Final Answer: \[ \boxed{Cash from Operations = ₹0} \] Quick Tip: Rules: Add non-cash expenses (depreciation) Increase in liabilities → add Decrease in liabilities → subtract

Concept:
When debentures are issued as collateral security:

No interest is paid on collateral debentures unless they are enforced.
Finance cost includes only interest on the actual loan.



Step 1: Interest on loan.
Loan amount: \[ ₹10{,}00{,}000 \]

Rate: \[ 12% \]
\[ Interest = 10{,}00{,}000 \times 12% = ₹1{,}20{,}000 \]


Step 2: Debentures issued as collateral.

₹15,00,000 debentures are only a security.
No interest is paid unless default occurs.
Hence, ignore 8% debenture interest.



Final Answer: \[ \boxed{Finance Cost = ₹1{,}20{,}000} \] Quick Tip: Collateral debentures: No interest expense unless invoked Finance cost = interest on actual borrowing only

Concept:
In an electronic spreadsheet (like MS Excel), each cell has a unique address.
Cell referencing means identifying and using this address to refer to a cell in formulas or functions.


Definition:
Cell referencing is the method of referring to a particular cell or range of cells by using its address (such as A1, B5, etc.) in a spreadsheet.


Purpose of cell referencing:

To use values from one cell in another cell
To create formulas and calculations
To avoid repeated data entry
To update results automatically when data changes



Example:
If cell A1 contains 10 and B1 contains 20, then: \[ Formula in C1: = A1 + B1 \]
Here, A1 and B1 are cell references.


Types of cell referencing:

Relative Reference (A1): Changes automatically when copied.
Absolute Reference (
(A
)1): Remains fixed when copied.
Mixed Reference (
(A1 or A
)1): Partially fixed.



Conclusion:
Cell referencing allows efficient data manipulation and dynamic calculations in spreadsheets by linking values between cells. Quick Tip: Remember: Cell reference = Cell address used in formulas (e.g., A1, B2). Types: Relative, Absolute, Mixed.

Concept:
Under the Capitalisation of Average Profits Method, goodwill is calculated by comparing the capitalised value of the firm with its actual capital employed.

Formula: \[ Goodwill = Capitalised Value of Firm - Net Assets (Capital Employed) \]


Components required:


Average Maintainable Profits:
Average of past profits after adjusting abnormal items.

Normal Rate of Return (NRR):
Expected return in the industry used for capitalisation.

Capitalised Value of Business:
\[ Capitalised Value = \frac{Average Profit}{NRR} \times 100 \]

Net Tangible Assets / Capital Employed:
Value of total assets minus outside liabilities.



Conclusion:
The main components required are:

Average profits
Normal rate of return
Capital employed (net assets) Quick Tip: Capitalisation method needs 3 key inputs: Average Profit NRR Capital Employed