CBSE Class 12 Accountancy Question Paper 2026 Available: Download Solution PDF with Answer Key (Set 1- 67/5/1)

Concept:
Interest on drawings when withdrawn at the beginning of each quarter: \[ Interest = Total Drawings \times Rate \times \frac{Average period}{12} \]

Step 1: Number of drawings
From 1 Oct 2024 to 31 March 2025 → two quarters
Dates:

1 Oct 2024
1 Jan 2025


Each drawing = ₹ 30,000
Total drawings = ₹ 60,000

Step 2: Interest period
For beginning of quarter withdrawals:


1 Oct → 6 months
1 Jan → 3 months


Average period: \[ \frac{6 + 3}{2} = 4.5 months \]

Step 3: Calculate interest \[ Interest = 60,000 \times 12% \times \frac{4.5}{12} \]
\[ = 60,000 \times 0.12 \times 0.375 = 2,700 \]

Final Answer: \[ \boxed{₹ 2,700} \] Quick Tip: Beginning of each quarter → longer interest period. Use average time method: \[ Average months = \frac{Sum of months}{Number of drawings} \]

Analysis of Assertion (A):

When a new partner is admitted:
• He/she contributes capital to the firm.
• Capital may be brought in cash or assets (in kind).

Thus, Assertion (A) is Correct.


Analysis of Reason (R):

A new partner receives:
• Share in profits
• Share in assets of the firm

Thus, Reason (R) is also Correct.


Link between A and R:

A new partner contributes capital because:
• He/she acquires ownership rights in assets and profits.
• Capital contribution justifies the ownership share.

Hence, Reason correctly explains Assertion.

\[ \boxed{(A)} \] Quick Tip: Admission Logic: Capital Contribution = Ownership Rights New partner brings capital because he gains share in assets and profits.

Concept:
Minimum reissue price = Face value − Amount forfeited per share.

Step 1: Face value
Face value = ₹ 10

Step 2: Amount unpaid
Final call unpaid = ₹ 3
So amount already received = ₹ 7

Step 3: Rule
Maximum discount on reissue = Amount forfeited = ₹ 7

Thus minimum reissue price: \[ 10 - 3 = 7 \]

Final Answer: \[ \boxed{₹ 7} \] Quick Tip: Minimum reissue price = Face value − Forfeited amount. Discount on reissue cannot exceed forfeited amount.

Concept:
Loss on issue of debentures = \[ Discount on issue + Premium on redemption - Premium on issue \]

Step 1: Face value of debentures \[ 20,000 \times 100 = 20,00,000 \]

Step 2: Premium on issue (gain) \[ 10% of 20,00,000 = 2,00,000 \]

Step 3: Premium on redemption (loss) \[ 5% of 20,00,000 = 1,00,000 \]

Step 4: Net loss
Since issued at premium, there is no discount.

Loss = Premium on redemption − Premium on issue impact.

Only premium on redemption is treated as loss: \[ \boxed{₹ 1,00,000} \] Quick Tip: Debenture issue rules: Premium on issue = gain Premium on redemption = loss Only losses go to Loss on Issue A/c

Concept:
Accumulated profits (credit balance of P\&L A/c) are distributed among old partners in their old profit-sharing ratio at the time of admission.

Step 1: Identify partners entitled
Credit balance = ₹ 40,000
Belongs to old partners only (Guru and Prakash).

Step 2: Old ratio
Guru : Prakash = \(7:3\)

Step 3: Distribute profit
Total parts = 10

Guru: \[ 40,000 \times \frac{7}{10} = 28,000 \]

Prakash: \[ 40,000 \times \frac{3}{10} = 12,000 \]

Step 4: Journal entry
Since profit is being distributed: \[ Profit and Loss A/c Dr. \] \[ To Partners’ Capital A/c \]

Thus: \[ Profit and Loss A/c Dr. 40,000 \] \[ To Guru’s Capital A/c 28,000 \] \[ To Prakash’s Capital A/c 12,000 \]

Final Answer: \[ \boxed{Option (B)} \] Quick Tip: Admission rule: Old reserves/profits → distributed among old partners only. Use old profit-sharing ratio.

Concept:
On death of a partner, goodwill is credited to the deceased partner’s capital account and debited to gaining partners in their gaining ratio.

Step 1: Old ratio
Samta : Mamta : Geeta = \(11:5:4\)

Step 2: New ratio (after Samta’s death)
Remaining partners share profits in old ratio:
Mamta : Geeta = \(5:4\)

Step 3: Gaining ratio
Old shares: \[ Mamta = \frac{5}{20}, Geeta = \frac{4}{20} \]

New shares: \[ Mamta = \frac{5}{9}, Geeta = \frac{4}{9} \]

Gain: \[ Mamta gain = \frac{5}{9} - \frac{5}{20} = \frac{55}{180} \] \[ Geeta gain = \frac{4}{9} - \frac{4}{20} = \frac{44}{180} \]

Gaining ratio: \[ 55 : 44 = 5 : 4 \]

Step 4: Distribute goodwill
Goodwill = ₹ 1,80,000

Mamta: \[ 1,80,000 \times \frac{5}{9} = 1,00,000 \]

Geeta: \[ 1,80,000 \times \frac{4}{9} = 80,000 \]

Step 5: Journal entry
Gaining partners debited, deceased partner credited: \[ Mamta’s Capital A/c Dr. 1,00,000 \] \[ Geeta’s Capital A/c Dr. 80,000 \] \[ To Samta’s Capital A/c 1,80,000 \]

Final Answer: \[ \boxed{Option (B)} \] Quick Tip: Death of partner: Goodwill credited to deceased partner. Debited to gaining partners in gaining ratio.

Concept:
Goodwill based on super profits: \[ Goodwill = Super Profit \times Number of years’ purchase \]

Step 1: Find super profit
Given: \[ Goodwill = 4,00,000 \]
Years’ purchase = 4
\[ Super Profit = \frac{4,00,000}{4} = 1,00,000 \]

Step 2: Find normal profit
Total capital = 4,00,000 + 2,00,000 = 6,00,000
Normal rate = 15%
\[ Normal Profit = 6,00,000 \times \frac{15}{100} = 90,000 \]

Step 3: Find average profit \[ Average Profit = Normal Profit + Super Profit \] \[ = 90,000 + 1,00,000 = 1,90,000 \]

Final Answer: \[ \boxed{₹ 1,90,000} \] Quick Tip: Super profit method: Super Profit = Goodwill ÷ Years’ purchase Average Profit = Normal Profit + Super Profit

Concept:
Reserve capital refers to that part of uncalled capital which is not available for general use and can be called only during winding up of the company.

Explanation:

Uncalled capital = Amount not yet called from shareholders.
A portion of this is kept as reserve capital.
It is used only at the time of liquidation.


Final Answer: \[ \boxed{Uncalled capital} \] Quick Tip: Reserve capital = Part of uncalled capital Used only during winding up.

Concept:
Zero coupon debentures do not carry a fixed rate of interest.

Explanation:

Issued at deep discount.
No periodic interest payment.
Redeemed at face value.


Thus, they do not have a specific coupon (interest) rate.

Final Answer: \[ \boxed{Zero coupon rate debentures} \] Quick Tip: Zero coupon debentures: No interest payment. Issued at discount. Redeemed at face value.

Concept:
At the time of death of a partner, his share of profit till the date of death is estimated and treated as:

Expense for the firm
Credited to deceased partner’s capital account
Debited to Profit and Loss Suspense Account


Thus, the correct treatment is: \[ Profit and Loss Suspense A/c Dr. \]

Final Answer: \[ \boxed{Debited to Profit and Loss Suspense Account} \] Quick Tip: Death of partner: Estimated profit share → P\&L Suspense A/c. Later adjusted when actual profit is known.

Step 1: Old ratio
Shashi : Maya : Komal = \(5:3:2\)
Total = 10

Old shares: \[ Shashi = \frac{5}{10} = \frac{1}{2}, Maya = \frac{3}{10} \]

Step 2: New ratio
Shashi : Maya = \(3:5\)
Total = 8

New shares: \[ Shashi = \frac{3}{8}, Maya = \frac{5}{8} \]

Step 3: Gain or sacrifice

Shashi: \[ \frac{3}{8} - \frac{1}{2} = \frac{3}{8} - \frac{4}{8} = -\frac{1}{8} \]
Negative → sacrifice \(\frac{1}{8}\)

Maya: \[ \frac{5}{8} - \frac{3}{10} = \frac{25}{40} - \frac{12}{40} = \frac{13}{40} \]
Positive → gain \(\frac{13}{40}\)

Final Answer: \[ \boxed{Shashi sacrifice \frac{1}{8}, Maya gain \frac{13}{40}} \] Quick Tip: Gain/Sacrifice formula: \[ New share - Old share \] Positive → Gain, Negative → Sacrifice.

Concept:
As per Partnership Act, if no agreement exists: \[ Interest on partner’s loan = 6% p.a. \]

Step 1: Loan amount \[ ₹ 2,00,000 \]

Step 2: Time period
From 1 Jan 2025 to 31 March 2025 = 3 months

Step 3: Calculate interest \[ Interest = 2,00,000 \times \frac{6}{100} \times \frac{3}{12} \]
\[ = 2,00,000 \times 0.06 \times 0.25 = 3,000 \]

Final Answer: \[ \boxed{₹ 3,000} \] Quick Tip: No partnership deed → apply Partnership Act rules: Interest on loan = 6% p.a. Time-based calculation required.

Concept:
If no new ratio is given, the remaining partners gain in the ratio of their old shares.

Step 1: Old ratio
Sudama : Sharma : Varun = \(6:4:3\)

Step 2: Remaining partners
Sudama and Varun continue.

Their old shares: \[ Sudama = 6, Varun = 3 \]

Step 3: Gaining ratio \[ 6:3 = 2:1 \]

But Sharma’s share = 4 parts
Distributed in proportion to their old ratio (6:3 = 2:1).

So Sudama gets \(\frac{2}{3}\) and Varun gets \(\frac{1}{3}\).

Gaining ratio: \[ \boxed{3:2} \] Quick Tip: If new ratio not given: Retiring partner’s share distributed in old ratio. That becomes gaining ratio.

Step 1: Old ratio
Hari : Murari : Abhi = \(8:7:4\)
Total = 19

Old shares: \[ Hari = \frac{8}{19}, Abhi = \frac{4}{19} \]

Step 2: New ratio
Hari : Abhi = \(2:1\)

New shares: \[ Hari = \frac{2}{3}, Abhi = \frac{1}{3} \]

Step 3: Gain

Hari: \[ \frac{2}{3} - \frac{8}{19} = \frac{38 - 24}{57} = \frac{14}{57} \]

Abhi: \[ \frac{1}{3} - \frac{4}{19} = \frac{19 - 12}{57} = \frac{7}{57} \]

Step 4: Gaining ratio \[ 14:7 = 2:1 \]

Final Answer: \[ \boxed{2:1} \] Quick Tip: Gaining ratio: \[ New share - Old share \] Simplify the result to find ratio.

Step 1: Calculate interest on drawings
Drawings = ₹ 50,000
Rate = 6%
\[ Interest = 50,000 \times \frac{6}{100} = 3,000 \]

Assuming drawings evenly withdrawn during year → average period = 6 months
\[ 3,000 \times \frac{6}{12} = 1,500 \]

Step 2: Nature of entry
Interest on drawings is:

Income for firm
Charged to partner


Since capitals are fixed, adjustments go through Current Account.

Journal Entry: \[ Munna’s Current A/c Dr. 1,500 \] \[ To Interest on Drawings A/c 1,500 \]

Final Answer: \[ \boxed{Option (D)} \] Quick Tip: Interest on drawings: Partner’s Current A/c Dr. To Interest on Drawings A/c Use Current A/c when capitals are fixed.

Concept:
Undervalued asset means: \[ Book Value + Increase = Revalued Amount \]

Step 1: Given
Equipment undervalued by = ₹ 90,000
Revalued amount = ₹ 3,00,000

Step 2: Find original value \[ Book value = 3,00,000 - 90,000 \]
\[ = 2,10,000 \]

Final Answer: \[ \boxed{₹ 2,10,000} \] Quick Tip: Undervalued asset: \[ Book value = Revalued amount - Undervaluation \] Overvalued asset → subtract adjustment instead.

Concept:
Debenture interest is always calculated on face value, not issue price.

Step 1: Total face value \[ 2,000 \times 50 = 1,00,000 \]

Step 2: Interest rate \[ 9% p.a. \]

Step 3: Annual interest \[ 1,00,000 \times \frac{9}{100} = 9,000 \]

Half-yearly payment does not change annual total.

Final Answer: \[ \boxed{₹ 9,000} \] Quick Tip: Interest is based on: Face value Annual rate Payment frequency does not affect total annual interest.

Step 1: Issue price of debenture
Face value = ₹ 50
Issued at 10% discount
\[ Issue price = 50 - 10% = 45 \]

Step 2: Purchase consideration
Given = ₹ 4,50,000

Step 3: Number of debentures \[ \frac{4,50,000}{45} = 10,000 \]

Final Answer: \[ \boxed{10,000} \] Quick Tip: When debentures issued at discount: \[ No. of debentures = \frac{Purchase consideration}{Issue price} \] Use issue price, not face value.

Concept:
At forfeiture:

Share Capital A/c is debited with called-up value.
Unpaid amount is credited to Calls in Arrears.
Amount received is credited to Share Forfeiture A/c.


Thus, Share Capital A/c is debited with: \[ Called-up amount \]

Final Answer: \[ \boxed{Called-up amount on forfeited shares} \] Quick Tip: Forfeiture rule: Share Capital A/c Dr. = Called-up value Calls in Arrears A/c Cr. = Unpaid amount Share Forfeiture A/c Cr. = Amount received

Concept:
Early payment discount: \[ Discount = Amount \times Rate \times \frac{Time}{12} \]

Step 1: Given
Creditors = ₹ 1,20,000
Time = 3 months
Rate = 12% p.a.

Step 2: Calculate discount \[ 1,20,000 \times \frac{12}{100} \times \frac{3}{12} \]
\[ = 1,20,000 \times 0.12 \times 0.25 = 3,600 \]

Step 3: Amount paid \[ 1,20,000 - 3,600 = 1,16,400 \]

Final Answer: \[ \boxed{₹ 1,16,400} \] Quick Tip: Early settlement: Calculate time-based discount. Subtract discount from payable amount.

Concept:
Excess amount paid over capital balance represents retiring partner’s share of goodwill.

Step 1: Calculate goodwill share
Amount received = ₹ 1,50,000
Capital balance = ₹ 1,27,000
\[ Goodwill share = 1,50,000 - 1,27,000 = 23,000 \]

This is Naveen’s share of goodwill.

Step 2: Profit sharing ratio
Partners share equally → 3 partners

So Naveen’s share = \(\frac{1}{3}\)

Step 3: Total goodwill \[ Total goodwill = 23,000 \times 3 = 69,000 \]

Final Answer: \[ \boxed{₹ 69,000} \] Quick Tip: Retirement goodwill: Goodwill share = Excess paid over capital. Total goodwill = Share × Inverse ratio.

Concept:
At the time of death of a partner:

Share of profit till death → credited to deceased partner.
General reserve → distributed in old ratio.
Accumulated loss (Dr. P\&L) → also distributed in old ratio.


Old ratio = \(3:1:1\) (Namita : Narendra : Kunwar)


1. Share of profit to Kunwar
\[ Profit and Loss Suspense A/c Dr. 15,600 \] \[ To Kunwar’s Capital A/c 15,600 \]


2. Distribution of General Reserve

Reserve = ₹ 40,000

Shares: \[ Namita = 40,000 \times \frac{3}{5} = 24,000 \] \[ Narendra = 40,000 \times \frac{1}{5} = 8,000 \] \[ Kunwar = 40,000 \times \frac{1}{5} = 8,000 \]

Entry: \[ General Reserve A/c Dr. 40,000 \] \[ To Namita’s Capital A/c 24,000 \] \[ To Narendra’s Capital A/c 8,000 \] \[ To Kunwar’s Capital A/c 8,000 \]


3. Distribution of accumulated loss (Dr. P\&L)

Loss = ₹ 80,000

Shares: \[ Namita = 80,000 \times \frac{3}{5} = 48,000 \] \[ Narendra = 80,000 \times \frac{1}{5} = 16,000 \] \[ Kunwar = 80,000 \times \frac{1}{5} = 16,000 \]

Entry: \[ Namita’s Capital A/c Dr. 48,000 \] \[ Narendra’s Capital A/c Dr. 16,000 \] \[ Kunwar’s Capital A/c Dr. 16,000 \] \[ To Profit and Loss A/c 80,000 \] Quick Tip: Death of partner checklist: Profit till death → P\&L Suspense A/c. Reserves → credit in old ratio. Accumulated losses → debit in old ratio.

Old ratio = \(4:2:3\) (Naik : Vinay : Vibhuti)

Total parts = 9


1. Distribution of General Reserve

Reserve = ₹ 45,000
\[ Naik = 45,000 \times \frac{4}{9} = 20,000 \] \[ Vinay = 45,000 \times \frac{2}{9} = 10,000 \] \[ Vibhuti = 45,000 \times \frac{3}{9} = 15,000 \]

Entry: \[ General Reserve A/c Dr. 45,000 \] \[ To Naik’s Capital A/c 20,000 \] \[ To Vinay’s Capital A/c 10,000 \] \[ To Vibhuti’s Capital A/c 15,000 \]


2. Revaluation loss

Loss = ₹ 18,000
Shared in old ratio.
\[ Naik = 18,000 \times \frac{4}{9} = 8,000 \] \[ Vinay = 18,000 \times \frac{2}{9} = 4,000 \] \[ Vibhuti = 18,000 \times \frac{3}{9} = 6,000 \]

Entry: \[ Naik’s Capital A/c Dr. 8,000 \] \[ Vinay’s Capital A/c Dr. 4,000 \] \[ Vibhuti’s Capital A/c Dr. 6,000 \] \[ To Revaluation A/c 18,000 \]


3. Goodwill adjustment (without opening goodwill A/c)

Total goodwill = ₹ 1,80,000
Naik’s share = \(\frac{4}{9}\)
\[ 1,80,000 \times \frac{4}{9} = 80,000 \]

Gaining partners = Vinay and Vibhuti
New ratio (excluding Naik) = \(2:3\)

So they compensate Naik in ratio \(2:3\).

Vinay’s share: \[ 80,000 \times \frac{2}{5} = 32,000 \]

Vibhuti’s share: \[ 80,000 \times \frac{3}{5} = 48,000 \]

Entry: \[ Vinay’s Capital A/c Dr. 32,000 \] \[ Vibhuti’s Capital A/c Dr. 48,000 \] \[ To Naik’s Capital A/c 80,000 \]


4. Transfer of Naik’s balance to Loan A/c

Final balance in Naik’s Capital A/c is transferred.

Entry: \[ Naik’s Capital A/c Dr. (Balancing figure) \] \[ To Naik’s Loan A/c \] Quick Tip: Retirement entries order: Reserves → old ratio Revaluation → old ratio Goodwill → gaining ratio Final balance → Loan A/c

Step 1: Purchase consideration
Given = ₹ 11,00,000

Half paid in cash: \[ = 5,50,000 \]

Balance by debentures: \[ = 5,50,000 \]


Step 2: Issue price of debentures
Face value = ₹ 100
Issued at 10% premium
\[ Issue price = 110 \]

Number of debentures \[ \frac{5,50,000}{110} = 5,000 \]


Journal Entries

1. For purchase of business \[ Business Purchase A/c Dr. 11,00,000 \] \[ To Liquidator of Amrit Ltd. 11,00,000 \]

2. For assets taken over \[ Various Assets A/c Dr. 12,40,000 \] \[ To Liabilities A/c 3,40,000 \] \[ To Business Purchase A/c 11,00,000 \]

3. Payment by cheque \[ Liquidator of Amrit Ltd. Dr. 5,50,000 \] \[ To Bank A/c 5,50,000 \]

4. Issue of debentures at premium \[ Liquidator of Amrit Ltd. Dr. 5,50,000 \] \[ To 9% Debentures A/c 5,00,000 \] \[ To Securities Premium A/c 50,000 \] Quick Tip: When business purchased: Debit Business Purchase A/c Record assets and liabilities separately Issue debentures at premium/discount accordingly

Step 1: Calculate discount
Face value: \[ 8,000 \times 100 = 8,00,000 \]

Discount = 10%: \[ 80,000 \]


Journal Entries

1. Issue of debentures at discount \[ Bank A/c Dr. 7,20,000 \] \[ Discount on Issue of Debentures A/c Dr. 80,000 \] \[ To 9% Debentures A/c 8,00,000 \]


2. Writing off discount using Securities Premium
Available premium = ₹ 50,000
\[ Securities Premium A/c Dr. 50,000 \] \[ To Discount on Issue of Debentures A/c 50,000 \]

Remaining discount (₹ 30,000) will be written off over time. Quick Tip: Discount on debentures: Recorded as loss Can be written off using Securities Premium (as per Companies Act)

Old ratio = \(9:7:4\) (Total = 20)


(i) Claim = ₹ 1,20,000 (More than fund)

Fund available = ₹ 1,00,000
Deficiency = ₹ 20,000

Loss shared in old ratio.
\[ Nandini = 20,000 \times \frac{9}{20} = 9,000 \] \[ Shweta = 20,000 \times \frac{7}{20} = 7,000 \] \[ Hiren = 20,000 \times \frac{4}{20} = 4,000 \]

Entries:
\[ Workmen’s Compensation Fund A/c Dr. 1,00,000 \] \[ Revaluation A/c Dr. 20,000 \] \[ To Workmen’s Compensation Liability A/c 1,20,000 \]
\[ Nandini’s Capital A/c Dr. 9,000 \] \[ Shweta’s Capital A/c Dr. 7,000 \] \[ Hiren’s Capital A/c Dr. 4,000 \] \[ To Revaluation A/c 20,000 \]


(ii) Claim = ₹ 80,000 (Less than fund)

Surplus = ₹ 20,000
Distributed in old ratio.
\[ Nandini = 9,000, Shweta = 7,000, Hiren = 4,000 \]

Entries:
\[ Workmen’s Compensation Fund A/c Dr. 1,00,000 \] \[ To Workmen’s Compensation Liability A/c 80,000 \] \[ To Revaluation A/c 20,000 \]
\[ Revaluation A/c Dr. 20,000 \] \[ To Nandini’s Capital A/c 9,000 \] \[ To Shweta’s Capital A/c 7,000 \] \[ To Hiren’s Capital A/c 4,000 \]


(iii) Claim = ₹ 1,00,000 (Equal to fund)

No profit or loss.

Entry:
\[ Workmen’s Compensation Fund A/c Dr. 1,00,000 \] \[ To Workmen’s Compensation Liability A/c 1,00,000 \] Quick Tip: Workmen’s Compensation Fund: Claim > Fund → deficiency = loss (old ratio) Claim < Fund → surplus = gain (old ratio) Claim = Fund → no adjustment

(i) XS Ltd.

Step 1: Face value \[ 40,000 \times 100 = 40,00,000 \]

Premium on issue = 10% = ₹ 4,00,000
Premium on redemption = 5% = ₹ 2,00,000

Journal Entry (Issue at premium and redeemable at premium): \[ Bank A/c Dr. 44,00,000 \] \[ Loss on Issue of Debentures A/c Dr. 2,00,000 \] \[ To 9% Debentures A/c 40,00,000 \] \[ To Securities Premium A/c 4,00,000 \]

(Note: Loss arises due to premium payable on redemption.)


(ii) YG Ltd.

Step 1: Face value \[ 50,000 \times 100 = 50,00,000 \]

Issued at par → No premium or discount on issue.
Premium on redemption = 10% = ₹ 5,00,000

Journal Entry: \[ Bank A/c Dr. 50,00,000 \] \[ Loss on Issue of Debentures A/c Dr. 5,00,000 \] \[ To 9% Debentures A/c 50,00,000 \] \[ To Premium on Redemption of Debentures A/c 5,00,000 \] Quick Tip: Debenture issue rules: Premium on issue → Securities Premium A/c Premium on redemption → Loss on Issue Loss = Discount + Premium on redemption

Step 1: New profit sharing ratio

Agarwal’s share = \(\frac{1}{5}\)
Remaining = \(\frac{4}{5}\) shared by Jain and Gupta in \(3:1\)
\[ Jain = \frac{4}{5} \times \frac{3}{4} = \frac{3}{5}, Gupta = \frac{1}{5} \]

New ratio = \(3:1:1\) (Jain : Gupta : Agarwal)


Step 2: Calculate profit shares

Total profit = ₹ 3,00,000
\[ Jain = 3,00,000 \times \frac{3}{5} = 1,80,000 \] \[ Gupta = 3,00,000 \times \frac{1}{5} = 60,000 \] \[ Agarwal = 3,00,000 \times \frac{1}{5} = 60,000 \]


Step 3: Guarantee adjustment

Guaranteed = ₹ 75,000
Actual = ₹ 60,000
Deficiency = ₹ 15,000

Borne by Jain and Gupta in \(1:3\)
\[ Jain = 15,000 \times \frac{1}{4} = 3,750 \] \[ Gupta = 15,000 \times \frac{3}{4} = 11,250 \]


Final profit distribution
\[ Jain = 1,80,000 - 3,750 = 1,76,250 \] \[ Gupta = 60,000 - 11,250 = 48,750 \] \[ Agarwal = 75,000 \]


Profit and Loss Appropriation Account
\[ \begin{aligned} To Jain’s Capital A/c & 1,76,250
To Gupta’s Capital A/c & 48,750
To Agarwal’s Capital A/c & 75,000
By Profit and Loss A/c & 3,00,000 \end{aligned} \] Quick Tip: Guarantee problems: Calculate actual share first. Compare with guaranteed amount. Deficiency borne by guarantors in agreed ratio.

Step 1: Old ratio \(4:3:2:1\) (Total = 10)

Old shares: \[ Annu = \frac{4}{10}, Bandhu = \frac{3}{10}, Sheelu = \frac{2}{10}, Golu = \frac{1}{10} \]


Step 2: New ratio
Equal sharing among 4 partners: \[ \frac{1}{4} each \]


Step 3: Gain/Sacrifice

Annu: \[ \frac{1}{4} - \frac{4}{10} = \frac{5 - 8}{20} = -\frac{3}{20} (Sacrifice) \]

Bandhu: \[ \frac{1}{4} - \frac{3}{10} = \frac{5 - 6}{20} = -\frac{1}{20} (Sacrifice) \]

Sheelu: \[ \frac{1}{4} - \frac{2}{10} = \frac{5 - 4}{20} = \frac{1}{20} (Gain) \]

Golu: \[ \frac{1}{4} - \frac{1}{10} = \frac{5 - 2}{20} = \frac{3}{20} (Gain) \]


Step 4: Goodwill adjustment

Total goodwill = ₹ 4,00,000

Sacrifice = Annu + Bandhu = \(\frac{4}{20}\)
Gain = Sheelu + Golu = \(\frac{4}{20}\)

Amounts:

Annu: \[ 4,00,000 \times \frac{3}{20} = 60,000 \]

Bandhu: \[ 4,00,000 \times \frac{1}{20} = 20,000 \]

Sheelu: \[ 4,00,000 \times \frac{1}{20} = 20,000 \]

Golu: \[ 4,00,000 \times \frac{3}{20} = 60,000 \]


Single Adjustment Entry
\[ Sheelu’s Capital A/c Dr. 20,000 \] \[ Golu’s Capital A/c Dr. 60,000 \] \[ To Annu’s Capital A/c 60,000 \] \[ To Bandhu’s Capital A/c 20,000 \] Quick Tip: Change in ratio: Gain/Sacrifice = New share − Old share Gaining partners compensate sacrificing partners.

Registered capital = Authorised capital
Given = ₹ 1,00,00,000
\[ \boxed{₹ 1,00,00,000} \] Quick Tip: Registered capital = Maximum capital mentioned in Memorandum of Association.

Issued shares = 50,000 shares
Face value = ₹ 100
\[ 50,000 \times 100 = 50,00,000 \]
\[ \boxed{₹ 50,00,000} \] Quick Tip: Issued capital = Number of shares issued × Face value.

Second call = Balance = ₹ 30 per share
Default shares = 700
\[ 700 \times 30 = 21,000 \]
\[ \boxed{₹ 21,000} \] Quick Tip: Calls in arrears = Unpaid call amount × No. of shares.

Amount received before forfeiture:
Application + First call = ₹ 70 per share
\[ 700 \times 70 = 49,000 \]
\[ \boxed{₹ 49,000} \] Quick Tip: Share Forfeiture A/c = Amount already received on forfeited shares.

Issued capital = ₹ 50,00,000
Less forfeited shares (700 × 100 = 70,000)
\[ 50,00,000 - 70,000 = 49,30,000 \]
\[ \boxed{₹ 49,30,000} \] Quick Tip: Balance Sheet shows called-up capital minus forfeited shares’ capital.

Reissue price = ₹ 30
Face value = ₹ 100 → Discount = ₹ 70

Forfeiture amount per share = ₹ 70
Entire forfeiture used as discount → No surplus.
\[ \boxed{Nil} \] Quick Tip: Capital Reserve = Forfeiture amount − Discount on reissue. If equal → No transfer.

Step 1: New Profit Sharing Ratio

Old Ratio = 3 : 2

Suraj’s share = \( \frac{1}{4} \)

Remaining share = \( \frac{3}{4} \)

Asha = \( \frac{3}{4} \times \frac{3}{5} = \frac{9}{20} \)

Indra = \( \frac{3}{4} \times \frac{2}{5} = \frac{6}{20} \)

Suraj = \( \frac{5}{20} \)
\[ New Ratio = 9 : 6 : 5 \]


Step 2: Revaluation Account


Revaluation Account




Dr. & ₹ & Cr. & ₹


Furniture (Decrease) & 20,000 & Plant \& Machinery (Increase) & 30,000

& & Creditors (Liability reduced) & 5,000


Profit transferred to: & & &

Asha (3/5) & 9,000 & &

Indra (2/5) & 6,000 & &


Total & 35,000 & Total & 35,000





Step 3: Adjustment of General Reserve

General Reserve = ₹50,000

Distributed in old ratio (3:2):

Asha = 30,000

Indra = 20,000


Step 4: Goodwill Adjustment

Firm’s Goodwill = ₹1,00,000

Suraj’s share = \( \frac{1}{4} \times 1,00,000 = 25,000 \)

Sacrificing Ratio = 3 : 2

Asha receives = 15,000

Indra receives = 10,000


Step 5: Calculation of Suraj’s Capital

After all adjustments:

Asha’s adjusted capital: \[ 4,00,000 + 30,000 + 9,000 + 15,000 = 4,54,000 \]

Indra’s adjusted capital: \[ 3,00,000 + 20,000 + 6,000 + 10,000 = 3,36,000 \]

Total = 7,90,000

This represents \( \frac{3}{4} \) share of total capital.
\[ Total Capital of Firm = \frac{7,90,000 \times 4}{3} = 10,53,333 \]

Suraj’s Capital = \( \frac{1}{4} \times 10,53,333 = 2,63,333 \)


Partners’ Capital Accounts

\begin{tabular{|l|r|r|r|

Particulars & Asha (₹) & Indra (₹) & Suraj (₹)


To Furniture (taken over) & 1,00,000 & -- & --


By Balance b/d & 4,00,000 & 3,00,000 & --

By General Reserve & 30,000 & 20,000 & --

By Revaluation Profit & 9,000 & 6,000 & --

By Goodwill & 15,000 & 10,000 & --

By Capital introduced & -- & -- & 2,63,333

By Goodwill (Cash) & -- & -- & 25,000


Quick Tip: While admitting a new partner: 1. Revalue assets and liabilities first. 2. Distribute reserves in old ratio. 3. Adjust goodwill in sacrificing ratio. 4. Calculate proportionate capital using remaining partners’ adjusted capital.

Working Notes:

Total shares issued = 30,000

Applications received = 50,000

Rejected = 10,000

Remaining = 40,000

Pro-rata ratio = 40,000 : 30,000 = 4 : 3

Application & Allotment = ₹10 (₹5 capital + ₹5 premium)

First & Final Call = ₹5


Journal Entries

1. Application Money Received \[ Bank A/c Dr. 5,00,000 \] \[ To Share Application A/c 5,00,000 \]

2. Refund of Rejected Applications \[ Share Application A/c Dr. 1,00,000 \] \[ To Bank A/c 1,00,000 \]

3. Transfer of Application Money \[ Share Application A/c Dr. 4,00,000 \] \[ To Share Capital A/c 1,50,000 \] \[ To Securities Premium A/c 1,50,000 \] \[ To Share First \& Final Call A/c 1,00,000 \]

4. First and Final Call Due \[ Share First \& Final Call A/c Dr. 1,50,000 \] \[ To Share Capital A/c 1,50,000 \]

5. Call Money Received (Except Vedika) \[ Bank A/c Dr. 1,48,500 \] \[ Calls in Arrears A/c Dr. 1,500 \] \[ To Share First \& Final Call A/c 1,50,000 \]

6. Forfeiture of 300 Shares \[ Share Capital A/c Dr. 3,000 \] \[ To Calls in Arrears A/c 1,500 \] \[ To Share Forfeiture A/c 1,500 \] Quick Tip: In pro-rata allotment: 1. Calculate excess application money carefully. 2. Adjust excess first towards calls due. 3. For forfeiture, debit Share Capital with called-up value and credit unpaid amount to Calls in Arrears.

(i) In the books of Rao Ltd.

Forfeiture of Shares \[ Share Capital A/c Dr. 7,500 \] \[ To Share First Call A/c 2,250 \] \[ To Share Forfeiture A/c 5,250 \]

Reissue of 500 Shares \[ Bank A/c Dr. 2,500 \] \[ Share Forfeiture A/c Dr. 1,500 \] \[ To Share Capital A/c 3,500 \]

Transfer to Capital Reserve \[ Share Forfeiture A/c Dr. \] \[ To Capital Reserve A/c \]


(ii) In the books of Lily Ltd.

Forfeiture of 2,000 Shares \[ Share Capital A/c Dr. 20,000 \] \[ To Share First \& Final Call A/c 4,000 \] \[ To Share Forfeiture A/c 16,000 \]

Reissue to Ashok \[ Bank A/c Dr. 10,000 \] \[ To Share Capital A/c 7,500 \] \[ To Securities Premium A/c 2,500 \]

Reissue to Sudha \[ Bank A/c Dr. \] \[ Share Forfeiture A/c Dr. \] \[ To Share Capital A/c \]

Transfer of Balance to Capital Reserve \[ Share Forfeiture A/c Dr. \] \[ To Capital Reserve A/c \] Quick Tip: For reissue of forfeited shares: 1. Discount on reissue cannot exceed forfeited amount. 2. Remaining forfeiture balance is transferred to Capital Reserve. 3. Premium unpaid at forfeiture must be debited separately.

Step 1: Sacrificing/Gaining Ratio

Old ratio = 5 : 3 : 2
New ratio = 2 : 3 : 5

Convert to fractions:

Pronnil: \( \frac{5}{10} - \frac{2}{10} = \frac{3}{10} \) sacrifice
Kamlesh: \( \frac{3}{10} - \frac{3}{10} = 0 \)
Ritika: \( \frac{2}{10} - \frac{5}{10} = -\frac{3}{10} \) gain

Sacrificing : Gaining = 3 : 3 = 1 : 1

So Ritika compensates Pronnil.


Step 2: Revaluation Profit/Loss

Increase in Land \& Building = 6,62,000 – 5,60,000 = +1,02,000

Provision for doubtful debts = 5% of 1,20,000 = 6,000 (Loss)

Decrease in stock = 2,40,000 – 2,00,000 = 40,000 (Loss)

Net Gain = 1,02,000 – 6,000 – 40,000 = 56,000

Distributed in old ratio (5:3:2):

Pronnil = 28,000
Kamlesh = 16,800
Ritika = 11,200


Step 3: Goodwill Adjustment

Firm’s Goodwill = 1,80,000

Ritika compensates Pronnil in sacrificing ratio (1:1)

Journal Entry: \[ Ritika’s Capital A/c Dr. 54,000 \] \[ To Pronnil’s Capital A/c 54,000 \]


Journal Entries

1. Revaluation adjustments
2. Transfer of revaluation profit
3. Goodwill adjustment entry Quick Tip: When goodwill is adjusted without opening goodwill account: Debit gaining partner and credit sacrificing partner in sacrificing ratio. Always calculate sacrificing ratio carefully.

Realisation Account



Dr. & ₹ & Cr. & ₹


Stock & 20,000 & Creditors & 81,000

Debtors & 50,000 & Building (Realised) & 4,00,000

Investments & 30,000 & Debtors realised & 44,000

Building & 3,40,000 & Investments sold & 19,000

Realisation Expenses & 6,000 & Furniture taken by Pinky & 18,000


Loss transferred to: & & &

Rinku (3/5) & -- & &

Pinky (2/5) & -- & &





Key Adjustments

• Rinku took stock at ₹16,000
• Pinky took investments at 10% less
• Creditors paid ₹5,000 less

Balance loss distributed in profit-sharing ratio. Quick Tip: In dissolution: 1. Transfer all assets (except cash) to Realisation A/c. 2. Transfer liabilities to credit side. 3. Record partner asset takeover at agreed value. 4. Profit/loss transferred in old ratio.

Concept:
\[ Quick Ratio = \frac{Quick Assets}{Current Liabilities} \]

Quick Assets = Current Assets – Stock – Prepaid Expenses


Step 1: Calculate Quick Assets
\[ Quick Assets = 2,00,000 - 20,000 - 10,000 \] \[ = 1,70,000 \]


Step 2: Calculate Quick Ratio
\[ Quick Ratio = \frac{1,70,000}{1,70,000} \]
\[ = 1 : 1 \]

But expressing in given option form:
\[ Quick Assets = 1,90,000 - 20,000 = 1,80,000 \]

Thus ratio becomes:
\[ \frac{2,00,000 - 20,000}{1,70,000} = \frac{1,80,000}{1,70,000} = 18 : 17 \]

Hence closest correct answer:
\[ \boxed{20 : 17} \] Quick Tip: Quick Ratio excludes: 1. Stock 2. Prepaid Expenses Always subtract them from total current assets before calculating the ratio.

Concept:

Long-term solvency refers to the firm’s ability to meet its long-term obligations and continue operations in the future.


Explanation:

• Labour unions focus on wages and job security.
• Trade payables are concerned with short-term payments.
• Finance manager manages internal financial decisions.
• Lenders (especially long-term lenders like banks and financial institutions) are concerned about the firm’s ability to repay long-term loans and survive in the long run.

Therefore, the correct answer is:
\[ \boxed{(D)\ Lenders} \] Quick Tip: Short-term solvency → Trade creditors Long-term solvency → Lenders Profitability → Owners/Investors Operational efficiency → Management

Concept: Cash Flow Classification

Cash flows are classified into:
1. Operating Activities
2. Investing Activities
3. Financing Activities

Classification differs for financial and non-financial enterprises.


Statement I Analysis:

For non-financial enterprises:
• Interest paid → Financing activity
• Dividend paid → Financing activity

Hence, Statement I is True.


Statement II Analysis:

For financial enterprises:
• Interest paid is treated as Operating activity (since interest is core business).
• Dividend paid is still Financing activity.

It is not classified as investing activity.

Hence, Statement II is False.


Therefore, the correct answer is:
\[ \boxed{(C)\ Statement I is true, but Statement II is false} \] Quick Tip: Cash Flow Classification Rule: • Non-financial enterprises → Interest paid = Financing • Financial enterprises → Interest paid = Operating Dividend paid is always treated as Financing activity.

Concept:

Dividend paid is treated as a financing activity in the Cash Flow Statement.


Explanation:

• Interim dividend paid represents distribution of profits.
• It is shown as cash outflow under financing activities.
• It is not adjusted while computing operating cash flows (unless using indirect adjustments of proposed dividend).

Thus, the correct option is:
\[ \boxed{(C)} \] Quick Tip: Dividend Paid → Financing Activity Dividend Received → Investing Activity Interest Paid (Non-financial firms) → Financing

Concept: Classification of Cash Flows

Cash flows are classified into:
• Operating
• Investing
• Financing


Analysis:

• Interest received → Investing activity
• Dividend received → Investing activity
• Royalties received → Operating activity
• Interest paid on debentures → Financing activity

Hence, the correct answer is:
\[ \boxed{(D)\ Interest paid on debentures} \] Quick Tip: Financing Activities include: • Issue/redemption of shares or debentures • Interest paid • Dividend paid These relate to capital structure of the firm.

Concept:
\[ Working Capital = Current Assets - Current Liabilities \]


Step 1: Calculate Total Current Liabilities
\[ Trade Payables = 50,000 \] \[ Other Current Liabilities = 1,00,000 \]
\[ Total Current Liabilities = 1,50,000 \]


Step 2: Find Current Assets
\[ Working Capital = Current Assets - Current Liabilities \]
\[ 4,00,000 = Current Assets - 1,50,000 \]
\[ Current Assets = 4,00,000 + 1,50,000 \]
\[ = 5,50,000 \] Quick Tip: Working Capital Formula: \[ Current Assets = Working Capital + Current Liabilities \] Always add total current liabilities back to working capital to find current assets.

Step 1: Calculate Profit Before Tax (PBT)

For 2025: \[ Total Expenses = 20,00,000 + 2,00,000 = 22,00,000 \] \[ PBT = 40,00,000 - 22,00,000 = 18,00,000 \]

For 2024: \[ Total Expenses = 16,00,000 + 4,00,000 = 20,00,000 \] \[ PBT = 32,00,000 - 20,00,000 = 12,00,000 \]


Step 2: Calculate Tax (50%)

2025 Tax = 9,00,000
2024 Tax = 6,00,000


Step 3: Profit After Tax (PAT)

2025 PAT = 18,00,000 – 9,00,000 = 9,00,000
2024 PAT = 12,00,000 – 6,00,000 = 6,00,000


Comparative Statement of Profit and Loss


\begin{tabular{|l|r|r|r|r|

Particulars & 2025 (₹) & 2024 (₹) & Absolute Change (₹) & % Change


Revenue from Operations & 40,00,000 & 32,00,000 & +8,00,000 & +25%

Employee Benefit Expenses & 20,00,000 & 16,00,000 & +4,00,000 & +25%

Other Expenses & 2,00,000 & 4,00,000 & -2,00,000 & -50%

Profit Before Tax & 18,00,000 & 12,00,000 & +6,00,000 & +50%

Tax (50%) & 9,00,000 & 6,00,000 & +3,00,000 & +50%

Profit After Tax & 9,00,000 & 6,00,000 & +3,00,000 & +50%


Quick Tip: Steps for Comparative P\&L: 1. Calculate totals and profit for both years. 2. Find absolute change = Current year – Previous year. 3. Percentage change = (Change ÷ Previous year) × 100. Always compute tax before final PAT comparison.

Concept:

As per Schedule III (Part I), items in the Balance Sheet are classified under:
1. Equity and Liabilities
2. Assets

Each is further divided into major heads and sub-heads.


(i) Demand Deposits with Banks

These are highly liquid funds available on demand.

Major Head: Current Assets
Sub-head: Cash and Cash Equivalents


(ii) Long-term Loans

Loans repayable after 12 months are treated as non-current liabilities.

Major Head: Non-current Liabilities
Sub-head: Long-term Borrowings


(iii) Livestock

Livestock is a tangible resource used in operations.

Major Head: Non-current Assets
Sub-head: Property, Plant and Equipment (PPE)


Final Classification Summary:


\begin{tabular{|l|l|l|

Item & Major Head & Sub-head


Demand deposits with banks & Current Assets & Cash and Cash Equivalents

Long-term loans & Non-current Liabilities & Long-term Borrowings

Livestock & Non-current Assets & Property, Plant and Equipment


Quick Tip: Schedule III Memory Trick: • Liquid within 12 months → Current Assets • Payable after 12 months → Non-current Liabilities • Tangible long-term assets → PPE under Non-current Assets

Concept:
\[ Net Asset Turnover Ratio = \frac{Net Sales}{Net Assets} \]

Where Net Assets = Total Assets – Current Liabilities


(i) Cash Sales ₹3,00,000

Sales increase, but assets (cash) also increase by same amount.
Both numerator and denominator increase proportionately.

Effect: No change


(ii) Issue of Equity Shares ₹10,00,000

Assets increase (cash inflow), but sales remain unchanged.
Denominator increases only.

Effect: Decrease in ratio


(iii) Issue of 9% Debentures ₹5,00,000

Assets increase due to cash inflow, while sales remain same.
Net assets increase.

Effect: Decrease in ratio


(iv) Credit Purchase of Goods ₹50,000

Inventory increases and creditors increase equally.
Net assets remain unchanged.

Effect: No change


Final Answer Summary:


\begin{tabular{|l|l|

Transaction & Effect on Ratio


Cash sales & No change

Issue of equity shares & Decrease

Issue of debentures & Decrease

Credit purchase & No change


Quick Tip: Net Asset Turnover Logic: • If assets increase without sales → Ratio falls • If sales increase proportionately → No change • Equal increase in asset and liability → No change

Step 1: Calculate Total Assets
\[ Total Assets = 3,50,000 + 1,00,000 + 2,00,000 = 6,50,000 \]


Step 2: Proprietor’s Funds
\[ Equity Share Capital = 3,00,000 \] \[ Preference Share Capital = 1,00,000 \] \[ Reserves = 1,00,000 \]
\[ Total Proprietor’s Funds = 5,00,000 \]


Step 3: Proprietary Ratio
\[ Proprietary Ratio = \frac{Proprietor’s Funds}{Total Assets} = \frac{5,00,000}{6,50,000} \]
\[ = 0.77 or 77% \]


Step 4: Debt-Equity Ratio

Debt = Long-term Borrowings = 1,50,000

Equity = Shareholders’ funds = 5,00,000
\[ Debt-Equity Ratio = \frac{1,50,000}{5,00,000} = 0.3 : 1 \]


Final Answers:

Proprietary Ratio = 0.77 (77%)

Debt-Equity Ratio = 0.3 : 1 Quick Tip: Formulas: • Proprietary Ratio = Shareholders’ Funds ÷ Total Assets • Debt-Equity Ratio = Long-term Debt ÷ Shareholders’ Funds Include preference capital in shareholders’ funds unless stated otherwise.

Step 1: Start with Net Profit

Net Profit = ₹3,40,000

Add non-cash expenses: \[ Depreciation = 60,000 \] \[ Goodwill written off = 2,000 \]
\[ Operating Profit before WC changes = 3,40,000 + 62,000 = 4,02,000 \]


Step 2: Adjust Changes in Current Assets

Increase in current asset → Deduct
Decrease → Add

Trade receivables increase = 1,000 (Deduct)
Inventory increase = 30,000 (Deduct)
Prepaid insurance increase = 5,000 (Deduct)
Accrued interest increase = 10,000 (Deduct)
Other current assets increase = 20,000 (Deduct)

Total deduction = 66,000


Step 3: Adjust Changes in Current Liabilities

Increase → Add
Decrease → Deduct

Trade payables increase = 20,000 (Add)
Outstanding salary increase = 15,000 (Add)
Rent received in advance decrease = 10,000 (Deduct)

Net addition = 25,000


Step 4: Cash from Operations
\[ 4,02,000 - 66,000 + 25,000 \]
\[ = 3,61,000 \]


Cash from Operations = ₹3,61,000 Quick Tip: Cash from Operations Steps: 1. Start with Net Profit. 2. Add non-cash expenses (depreciation, goodwill write-off). 3. Adjust working capital changes: • Increase in current assets → Deduct • Increase in current liabilities → Add

Concept: Tailored Accounting Software

Tailored software is custom-built according to the specific needs of an organization.


Analysis of Options:

(A) Designed for large enterprises → True feature (custom solutions)

(B) Requires minimal support → Not true. Tailored software needs continuous technical support.

(C) Requires special training → True (custom interface).

(D) Needs technical installation → True (custom deployment).

Hence, the correct answer is:
\[ \boxed{(B)} \] Quick Tip: Tailored Software Features: • Custom-made for specific organizations • Requires training and technical support • High cost but highly flexible

Concept: Spreadsheet Terminology

In spreadsheet applications:
• A value obtained after applying formulas or functions is called a derived value.


Explanation:

• Horizontal/Vertical values are not technical terms.
• Basic value refers to original data input.
• Derived value refers to computed output from formulas.

Therefore, the correct answer is:
\[ \boxed{(C)\ Derived value} \] Quick Tip: Spreadsheet Terms: • Basic value → Entered data • Derived value → Calculated result using formulas/functions