AHSEC Class 12: Accountancy Solved Question Papers' 2018 | AHSEC | SOLVED QUESTION PAPERS

AHSEC ACCOUNTANCY SOLVED QUESTION PAPERS
2018 (ACCOUNTANCY)
Full Marks: 100
Pass Marks: 30, Time: Three Hours

The figures in the margin indicate full marks for the questions.

1. (a) Fill in the blanks with appropriate word/words:                  1x4=4

1)      The interest due to the retiring partner is transferred to his Loan account in case it is not paid immediately.

2)      A partner acts as Agent of the firm.

3)      In case of fixed capital, a partner’s capital account always shows a credit balance.

4)      Unrecorded assets when realised are credited to realisation Account.

(b) Choose the correct alternative:                                         1x2=2

                     i.      Balance Sheet shows:

1)      Financial position of a company.

2)      Profit and Loss of a company.

3)      Cash flow of a company.

4)      All of the above.

                   ii.      Financial statements are:

1)      Detailed reports of the recorded facts.

2)      Detailed reports of the cash transactions only.

3)      Summarised reports of recorded facts.

4)      Summarised reports of the financial institutions only.

(c) State whether the following statements are true or false:          1x2=2

1)      Interest on Partner’s Capital is credited to Partner’s Drawings Account. False, Capital account

2)      Life membership fee is a Revenue receipt.                                                  False, Capital receipts

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

Ans: Characteristics of Not-for-profit organisations: Following are the main characteristics or the salient features of Not for Profit organisations:                      

a)      The main objective of not-for-profit organisations is not to make profit but to provide service to its members and to the society in general.

b)      The main source of income of these organisations is admissions fees, subscriptions, donations, grant-in-aid, etc.

3. What is a Common Size Statement?                  2

Ans: Common size statement is a statement in which amounts of individual item of balance sheet and profit and loss account for one or more years are expressed in terms of percentage of a common base. The common base can be net sales in the case of profit and loss account and total of balance sheet for the balance sheet.

4. Mention any two distinctions between shares and debentures.          2

Ans: Difference between Shares and Debentures

Basis of Difference

Shares

Debentures

Ownership

Shareholders are the owners of the Company.

Debenture holders are the Creditors of the Company.

Repayment

 

Normally, the amount of share is not returned during the life of the company.

Debentures are issued for a definite period.

 

5. What do you mean by Forfeiture of shares?                                                  2

Ans: Cancellation of shares due to non-payment of allotment and call money is called forfeiture of shares. Where a shareholder fails to pay the amount due on allotment or any call, the directors may, if so authorized by the articles, forfeit his shares.

6. What do you mean by Comparative statement?                                          2

Ans: Financial statements are prepared for a particular period to show the operating efficiency and financial position of a concern. But comparative financial statements compare figures of financial statements of two or more periods to show the changes in absolute terms and in terms of percentage. Both profit and loss account and balance sheet are prepared in comparative forms. Comparative statements are of two types – “Comparative balance sheets and Comparative income statements”.

7. Explain the meaning of Cash Flow from Financial Activities.                                  3

Ans: Financing activities are the activities which results in changes in the size and composition of the owner’s capital and borrowings of the enterprises from other sources. The financing activities of a firm include issuing or redemption of share capital, issue and redemption of debentures, raising and repayment of long term loans etc. Dividends and Interest paid are also come under financing activities.

Or

From the following information, calculate Stock Turnover Ratio:                                              3

Sales

Average Stock

Gross Loss Ratio

4,00,000

55,000

10%

Ans: Stock Turnover ratio = (Cost of Goods Sold / Average Stock)

Cost of goods Sold = Sales + Gross Loss

= 4,00,000 + 10% of Rs. 4,00,000

= 4,40,000

Now, STR = 4,40,000/55,000 = 8 Times

8. Mention any three objectives of financial statement analysis.              3

Ans: Financial analysis serves the following purposes and that brings out the significance of such analysis:

a)      To judge the financial health of the company: The main objective of the financial analysis is to determine the financial strength and weakness of the company. It is done by properly establishing the relationship between the various items of balance sheet and profit and loss account.

b)      To judge the earnings performance of the company: Potential investors are primarily interested in earning efficiency of the company and its dividend paying capacity. The analysis and interpretation is done with a view to ascertain the company’s position in this regard.

c)       To judge the Managerial efficiency: The financial analysis helps to pinpoint the areas wherein the managers have shown better efficiency and the areas of inefficiency. Any favourable and unfavourable variations can be identified and reasons thereof can be ascertained to pinpoint weak areas.

Or

Briefly explain the nature of financial statements.             3

Ans: Nature of Financial Statements:    

a)      Recorded Facts: The Financial statements are statements prepared on the basis of recorded facts; they do not depict the unrecorded facts.

b)      Accounting Conventions: Certain accounting conventions are followed while preparing financial statements such as convention of ‘Conservatism’, convention of ‘Materiality’, convention of ‘Full disclosure’, convention of ‘Consistency’.

c)       Accounting Concepts: While preparing financial statements the accountants make a number of assumptions known as accounting concepts such as going concern concept, money measurement concept, realisation concept, etc.

 9. Mention any three limitations of financial statements.                                            3

Ans: Limitations of financial statements: Financial Statements suffers from various limitations which are given below:

(i)     Historical Records: The information given in these statements is historic in nature and does not reflect the future.

(ii)   It Ignores Price Level Changes: Business transactions and events are recorded at historical cost and changes in prices over the years are ignored.

(iii) Qualitative aspect Ignored: Financial statements considered only those items which can be expressed in terms of money. Financial Statements ignores the qualitative aspect.

Or

Explain the meaning of Ratio Analysis.                                                  3

Ans: A Ratio is an arithmetical expression of relationship between two related or interdependent items. If such ratios are calculated on the basis of accounting information, then they are called accounting ratios. Simply, accounting ratio is an expression of relationship between two accounting terms or variables or two set of accounting heads or group of items stated in financial statement. It is one of the techniques of financial analysis which is used to evaluate the operating efficiency and financial position of a business concern.

 10. Mention any three distinctions between Fund-based Accounting and Non-Fund-based Accounting. 3

Ans: Difference between fund based and non fund based accounting

Basis

Fund Based Accounting

Non fund based Accounting

Accounting base

It is based on cash basis of accounting.

It is based on accrual basis of accounting.

Followed by

This system is followed by not-for-profit organisations.

This system is followed by profit-motive organisation.

Funds

Specific funds are used for specific purposes except for general fund.

Funds can be used for any profit earning purpose.

Or

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ALSO READ (AHSEC ASSAM BOARD CLASS 12):

1. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE NOTES

2. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION (THEORY)

3. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION BANK (PRACTICAL)

4. AHSEC CLASS 12 ACCOUNTANCY PAST EXAM PAPERS (FROM 2012 TILL DATE)

5. AHSEC CLASS 12 ACCOUNTANCY SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)

6. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE MCQS

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What do you mean by Income and Expenditure Account?                            3

Ans: Income and Expenditure Account: Income and Expenditure Account is a Nominal Account which is prepared at the end of the accounting period by a Not-For-Profit Organisation to ascertain the surplus, i.e., excess of income over expenditure, or the deficit, i.e., excess of expenditure over income for a particular period. It records all expenses and losses on its debit side and all incomes and gains on its credit side. It includes only revenue items whether cash or non-cash but capital items are not shown in income and expenditure account.


11. Amar and Bahadur are partners of a firm sharing profits in the ratio of 3:2. They admit Mery as a new partner for ¼ th share in the future profits. The new profit sharing ratio between Amar and Bahadur is agreed to be 2 : 1. Calculate their sacrificing ratio.                               3

Ans: Aman : Bahadur = 3:2 (Old Ratio)

Mery’s share = ¼ (out of total share)

Let the total share be 1

Mery’s share = 1x ¼ =  ¼

Remaining share = 1 -  ¼ = ¾

Now, Amar’s new share = ¾ x 2/3 = 2/4

Bahadur’s new share = ¾ x 1/3 = 1/4

Therefore, Amar: Bahadur:Mery = 2:1:1 (New ratio)

Again, Sacrifice ratio = Old Share – New Share

Amar’s sacrifice = 3/5 – 2/4 = (12-10)/20 = 2/20

Bahadur’s sacrifice = 2/5 – ¼ = (8-5)/20 = 3/20

Therefore, Sacrifice ratio = 2/20:3/20 = 2:3

Or

Ranjana, Sadhana and Kamona are partners sharing profits in the ratio of 4: 3: 2. Ranjana retires and Sadhana and Kamona agree to share future profits in the ratio of 5: 3. Calculate the gaining ratio.        3

Ans: Ranjana:Sadhana:Kamona = 4:3:2 (Old Ratio)

Sadhana:Kamona = 5:3 (New Ratio)

Gaining Ratio = New Share – Old Share

Now, Sadhana’s Gain = 5/8 – 3/9 = (45-24)/72 = 21/72

Kamona’s Gain = 3/8 – 2/9 = (27-16)/72 = 11/72

Therefore, Gaining Ratio = 21:11

12. From the following Receipts and Payments Account for the year ended 31st March, 2017 and other details of KAZIRANGA SPORTS CLUB, prepare an Income Expenditure Account for the year ended 31st March, 2017.

Receipts and Payments Account

Receipts

Rs.

Payments

Rs.

Cash in hand on 01.04.16

Subscriptions:

2015-16:                 1,000

2016-17:               30,000

2017-18:                 2,000

 

Donation

Interest

Donation for Buildings

Life Membership Fees

10,000

 

 

 

33,000

 

7,000

3,000

10,000

7,000

Salaries

Honorarium

Sports Expenses

Rent

Travelling Expenses

Purchase of Furniture

Cash in hand on 31.3.17

 

8,000

5,000

2,000

3,000

2,000

35,000

15,000

 

70,000

 

70,000

Additional Information:

a)      Outstanding Salaries = 2,000/-

b)      Prepaid Rent = 1,000/-

Ans:

Income and Expenditure A/c of Kaziranga sports

For the year ended on 31-3-2017

Expenditure

Amount

Income

Amount

To Salaries                                          8000

Add:-outstanding Salaries               2000

To Honorarium

To Sports expenses

To Rent                                              3000

Less:-Prepaid rent                            1000

To Travelling expenses

To Surplus (Excess on income over expenditure)

 

10,000

5000

2000

 

2000

2000

19,000

By Subscription

 

By Donation

By Interest

30,000

 

7000

3000

 

40,000

 

40,000

Note:-

a)      Donation for Buildings and life membership fees are capital receipts hence not shown in income and expenditure A/c.

b)      Purchase of Furniture is a capital expenditure.

Or

Explain the steps in preparation of Income and Expenditure Account.   5

Ans: Steps in the Preparation of Income and Expenditure Account: Following steps may be helpful in preparing an Income and Expenditure Account from a given Receipt and Payment Account:

1. First, The opening and closing balances of cash and bank are ignored as they are not an income.

2. Second, Exclude the capital receipts and capital payments as these are to be shown in the Balance Sheet. Income and expenditure accounts include only revenue items.

3. Third, Consider only the revenue receipts to be shown on the income side of Income and Expenditure Account with due adjustments of income accrued and income received in advance.

4. Fourth, Take the revenue expenses to the expenditure side of the Income and Expenditure Account with due adjustments of prepaid expenses and outstanding expenses.

5. Last, Consider the following items not appearing in the Receipt and Payment Account that need to be taken into account for determining the surplus/ deficit for the current year :

(a) Depreciation of fixed assets.

(b) Profit or loss on sale of fixed assets.

(c) Opening and Closing Stock.

13. Charles Ltd. made a profit of Rs. 1, 00,000/- after charging depreciation of Rs. 20,000 on assets and a transfer to general reserve of Rs. 30,000/-. The goodwill written off was Rs. 7,000/- and gain on sale of machinery was Rs. 3,000/-. Other information available to you (change in the value of current assets and current liabilities) are: debtors showed an increase of Rs. 6,000/-; creditors an increase of Rs. 10,000/-; prepaid expenses an increase of Rs. 200/-; bills receivable a decrease of Rs. 3,000/-; bills payable a decrease of Rs. 4,000/- and outstanding expenses a decrease of Rs. 2,000/-. Ascertain cash flow from operating activities.

Ans: Calculation of Cash Flow from operating activities

Particulars

Amount

Net profit

Add:- Non - cash and Non –operating expenses and losses including Appropriation

            Depreciation

            Transfer to General Reserve

            Goodwill written off

 

Less:-Non – cash and non – operating incomes and gains:

                    Gain on Sale of Machinery

 

Effect of working capital changes

                    Increase in Debtors

                    Increase in Creditors

                    Increase in prepaid expenses

                    Decrease in B/R

                    Decrease in B/P

                    Decrease in outstanding expenses

Cash Flow From operating activities

1,00,000

 

20,000

30,000

7,000

1,57,000

 

3,000

1,54,000

 

(6,000)

10,000

(200)

3,000

(4,000)

(2,000)

1,54,800

Or

Explain the terms:                                           2 ½ + 2 ½

1)      Cash equivalents.

2)      Cash flows.

Ans: 1) Cash Equivalents: Cash Equivalents are short-term, highly liquid investments that are readily convertible cash. Examples of cash equivalents are: (a) treasury bills, (b) commercial paper, (c) money market funds and (d) Investments in preference shares and redeemable within three months.           

2) Cash flows: Cash flows are the movement of cash and cash equivalents. Cash flows comprised of cash inflows and cash outflows. Cash inflows means cash generated from operating, investing and financing activities and cash outflows means cash and cash equivalent expended in operating, investing and financing activities.

 

14. Mention any five objectives of Ratio Analysis.                           5

Ans: Answer: A Ratio is an arithmetical expression of relationship between two related or interdependent items. If such ratios are calculated on the basis of accounting information, then they are called accounting ratios. Simply, accounting ratio is an expression of relationship between two accounting terms or variables or two set of accounting heads or group of items stated in financial statement. It is one of the techniques of financial analysis which is used to evaluate the operating efficiency and financial position of a business concern.

Objectives of Ratio analysis

1.       To know the weak areas of the business which need more attention.

2.       To know about the potential areas which can be improved with the effort in the desired direction?

3.       To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in the business.

4.       To provide information for decision making.

5.       To provide information for inter-firm and intra-firm comparison.

Or

Calculate current assets of a company from the following information:                                5

Stock turnover ratio = 4 times

Stock at the end is Rs. 20,000/- more than the stock at the beginning.

Sales Rs. 3,00,000/- and gross profit ratio is 20% of Sales.

Current liabilities = 40,000/-

Quick ratio = 0.75

Ans: Given,

STR = 4 Times

Sales = Rs. 3,00,000

G.P = 20% of Sales

Now, Gross Profit = 3,00,000*20% = 60,000

Again, cost of goods sold = Sales – GP = 3,00,000 – 60,000 = 2,40,000

Now, STR = Cost of goods sold / Average stock

=> 4 = 2,40,000/Average Stock

=> Average Stock = 2,40,000/4 = 60,000

 

                 Current liabilities

                 Quick ratio

Again, Let the opening stock be x

(opening stock + Closing stock)/2 = Average Stock

=> [x + (x + 20,000)]/2 = 60,000

=> 2x + 20,000 = 1,20,000

=> 2x = 1,00,000

=> x = 50,000

Therefore, opening stock = 50,000

And Closing stock = 50,000 + 20,000 = 70,000

Again,

Current liabilities = 40,000

Quick ratio = 0.75

Now, Quick ratio = (Liquid assets / Current liabilities)

=> 0.75 = (Liquid assets / 40,000)

=> Liquid assets = 0.75*40,000 = 30,000

Therefore, Current assets = Liquid assets + Closing Stock = 30,000 + 70,000 = 1,00,000

15. Shyam, Gagan and Ram are partners sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2017, their Balance Sheet was as follows:

Balance Sheet

Liabilities

(Rs.)

Assets

(Rs.)

Sundry Creditors

Reserve

Capital:

Shyam:                               20,000/-

Gagan:                                10,000/-

Ram:                                    10,000/-

 

50,000

10,000

 

 

 

40,000

Cash

Debtors

Stock

Machinery

Buildings

5,000

20,000

25,000

20,000

30,000

 

1,00,000

 

1,00,000

Gagan retired on that date and Shyam and Ram agreed to share future profits in the ratio 5 : 3. Stock, Machinery and Buildings were revalued at Rs. 20,000/-, Rs. 15,000/- and Rs. 45,000/- respectively. Prepare Revaluation Account and Partner’s Capital Account.            2 ½ + 2 ½=5

Ans:

Revaluation A/c

Dr.                                                                                                                                                                                            Cr.

Particulars

Amount

Particulars

Amount

To Stock

To Machinery

To Profit on revaluation.

- Shyam = 5,000*2/5

- Gagan = 5,000*2/5

- Ram = 5,000*1/5

5,000

5,000

 

2,000

2,000

1,000

By Building

 

15,000

 

15,000

 

15,000

Partner’s Capital A/c

Particulars

Shyam

Gagan

Ram

Particulars

Shyam

Gagan

Ram

 

To Gagan’s loan A/c

To Balance c/d

 

 

26,000

 

16,000

 

 

13,000

By Balance b/d

By Reserve

By Revaluation

20,000

4,000

2,000

10,000

4,000

2,000

10,000

2,000

1,000

 

26,000

 

13,000

 

26,000

16,000

13,000

Or

Prepare the new format of the Balance Sheet of a company with the major headings only.   5

Ans: Proforma of Balance Sheet

Name of the Company …………………………………….

Balance Sheet as at……………………………………..

Particulars

Note

No.

Amount

(Current Year)

Amount

(Previous Year)

I. EQUITY AND LIABILITIES

(1) Shareholders’ Funds

(a) Share capital

(b) Reserves and surplus

(c) Money received against share Warrants

(2) Share application money pending allotment

(3) Non – current liabilities

(a) Long term borrowings

(b) Deferred tax liabilities (net)

(c) Other long term liabilities

(d) Long term provisions

(4) Current liabilities

(a) Short term borrowings

(b) Trade payables

(c) Other current liabilities

(d) Short term provisions

 

 

 

Total

 

 

 

II ASSETS

(1) Non-Current Assets

(a) Fixed assets

(i) Tangible assets

(ii) Intangible assets

(iii) Capital work in progress

(iv) Intangible assets under development

(b) Non-current investments

(c) Deferred tax assets (net)

(d) Long term loans and advances

(e) Other non-current assets

(2) Current Assets

(a) Current investments

(b) Inventories

(c) Trade receivables

(d) Cash and cash equivalents

(e) Short term loans and advances

(f) Other current assets

 

 

 

Total

 

 

 

 16. Mohit, Sohan and Rahul were partners sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as on 31st March, 2017 was as follows:

Balance Sheet

Liabilities

(Rs.)

Assets

(Rs.)

Capital:

Mohit:                                 30,000/-

Sohan:                                 20,000/-

Rahul:                                  20,000/-

General Reserve

Creditors

 

 

 

70,000

5,000

25,000

Fixed Assets

Stock

Sundry Debtors

Cash at Bank

60,000

10,000

20,000

10,000

 

1,00,000

 

1,00,000

Sohan died on June 30, 2017. It was agreed between the remaining partners and his executors that:

1)      Goodwill will be valued at Rs. 50,000.

2)      Interest on capital is provided at 10% p.a.

3)      Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year which was Rs. 40,000/-

4)      The amount due to Sohan shall be transferred to his Executor’s Loan Account.

Prepare Sohan Capital Account as on the date of his death.                                         5

Ans:

Sohan’s Capital A/c

Particulars

Amount

Particulars

Amount

To Sohan’s Executors A/c

 

 

 

46,500

By Balance b/d

By Interest on Capital A/c (20,000*10%*3/12)

By General reserve (5,000*2/5)

By P/L Suspense (40,000*3/12*2/5)

 By Mohit’s Capital A/c

By Rahul’s Capital A/c

20,000

500

2,000

4,000

13,333

6,667

 

46,500

 

46,500

Or

What is Partnership Deed? Mention any three distinctions between Fixed and Fluctuating Capital Accounts of a partner. 2+3=5

Ans: Ans: Partnership deed: A partnership is formed by an agreement. This agreement may be oral or in writing. Though the law does not expressly require that the partnership agreement should be in writing, it is desirable to have it in writing. A written agreement, which contains the terms of partnership, as agreed to by the partners is called ‘Partnership Deed.’

Difference between fixed capital accounts and fluctuating capital Accounts:    

Basic of difference

Fixed Capital Account

Fluctuating Capital Accounts

1. Opening and Closing balance

Opening and Closing balances normally remains same.

Opening and Closing balance change due to adjustment in capital account.

2. Current account

Current accounts of partners are opened in this case.

Current accounts of partners are not opened in this case.

3. Adjustment relating to capital

All adjustment relating to partners capital accounts are made in current account.

All such adjustments are made in capital account itself.

4. Closing capital

The closing balance of capital account always shows a credit balance.

The closing balances of partner’s capital account may be debit or credit.

17. SONU and ASHU were partners sharing profits in the ratio of 3 : 1. Their Balance Sheet as on 31st March, 2017 was as follows:

Balance Sheet

Liabilities

(Rs.)

Assets

(Rs.)

Creditors

Loan

Capital:

SONU:                            50,000/-

ASHU:                            50,000/-

10,000

20,000

 

 

1,00,000

Cash at Bank

Sundry Assets

Profit and Loss Account

20,000

70,000

40,000

 

1,30,000

 

1,30,000

The firm was dissolved on the above date. The assets were realised at Rs. 50,000/-. Creditors were paid at a discount of 20%. SONU agreed to pay off the Loan. Realisation expenses were Rs. 2,000/-. Prepare Realisation Account, Bank Account and Partners Capital Account.    5

Ans:

Realisation A/c

Particulars

Amount

Particulars

Amount

To Sundry assets

To Bank (Payment to Creditors)

To Sonu’s Capital (Loan taken over)

To Bank (Expenses)

 

70,000

8,000

20,000

2,000

By Creditors

By Loan

By Bank (Assets realised)

By Loss on realisation

- Sonu = 20,000*3/4

- Ashu = 20,000*1/4

10,000

20,000

50,000

 

15,000

5,000

 

1,00,000

 

1,00,000

Bank A/c

Particulars

Amount

Particulars

Amount

To Balance b/d

To Realisation A/c (Assets realised)

20,000

50,000

By Realisation A/c (Payment to creditors)

By Realisation A/c (Expenses paid)

By Sonu’s Capital A/c

By Ashu’s Capital A/c

8,000

2,000

25,000

35,000

 

70,000

 

70,000

Partner’s Capital A/c

Particulars

Sonu

Ashu

Particulars

Sonu

Ashu

To P/L

To Realisation A/c

To Bank (Final Payment)

30,000

15,000

25,000

10,000

5,000

35,000

By Balance b/d

By Realisation A/c (Loan taken over)

50,000

20,000

50,000

 

70,000

50,000

 

70,000

50,000

Or

What do you mean by Dissolution of a Partnership? State three grounds for Dissolution of Partnership. 2+3=5

Ans: Reconstitution of Partnership: A Partnership agreement is an agreement between two or more persons for carrying out various business activities. Reconstitution of a partnership refers to a situation when there is a change in the existing partnership agreement. In such a case, a new partnership agreement is formed to replace the old partnership agreement. It means the firm continues to exist and the only change will take place in existing partnership agreement.  Thus, reconstitution of a partnership takes place in each of the following cases:

a)      Change on profit sharing ratio

b)      Admission of a partner (Refer below for explanation)

c)       Retirement of a partner

d)      Death of a partner

e)      Amalgamation of two firms

18. Explain the terms ‘Over-subscription’ and ‘Under-subscription’ of shares.                   2 ½ + 2 ½=5

Ans: Over-subscription: When the number of shares applied is more than the number of shares issued by a company, the issue of shares is said to be oversubscribed. The company cannot allot shares more than those offered for subscription. In case of over-subscription, there are three possibilities arise:

(a) Some applicants may not be allotted any shares. This is known as ‘rejection of applications’.

(b) Some applicants may be allotted less number of shares than they have applied for. This is known as partial or pro-rata allotment.

(c) Some applicants may be allotted the full number of shares they have applied for. This is known as full allotment.

Under subscription: When the number of shares applied is less than the number of shares issued by a company, the issue of shares is said to be under subscribed. In this case accounting entries are passed with the number of shares applied by the public.    

Or

********************************************

ALSO READ (AHSEC ASSAM BOARD CLASS 12):

1. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE NOTES

2. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION (THEORY)

3. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION BANK (PRACTICAL)

4. AHSEC CLASS 12 ACCOUNTANCY PAST EXAM PAPERS (FROM 2012 TILL DATE)

5. AHSEC CLASS 12 ACCOUNTANCY SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)

6. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE MCQS

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What is a ‘Preference Share’? State the different types of Preference Shares.                  2+3=5

Ans: Preference Share: According to Sec. 43 (a) of the Companies Act 2013, a share that carries the following two preferential rights is called ‘Preference Share’:

(i) Preference shares have a right to receive dividend at a fixed rate before any dividend given to equity Shares.      

(ii) Preference shares have a right to get their capital returned, before the capital of equity shareholders is returned in case the company is going to wind up.

Preference shares are further subdivided into:

(a) On the basis of dividend: Cumulative and Non-cumulative preference shares

Cumulative preference shares are those which have the right to receive arrear of dividend before the dividend is paid to the equity shareholders.

Non-cumulative preference shares are those which do not have the right to receive arrear of dividends.

(b) On the basis of participation: Participating and non-Participating preference shares

Participating preference shares are those which have the rights to participate in remaining profits after payment of dividends to the equity shareholders.

Non-Participating preference shares are those which do not have the rights to participate in remaining profits after payment of dividends to the equity shareholders.

(c) On the basis of conversion: Convertible and Non-Convertible preference shares

Convertible preference shares are those which have the right to be converted into equity shares.

Non-convertible preference shares are those which do not have the right to be converted into equity shares.

(d) On the basis of redemption: Redeemable and Irredeemable preference shares

Redeemable preference shares are those which are redeemable after the expiry of specific period of time.

Irredeemable preference shares are those which are not redeemed by the company except in case of winding up.



19. Following is the Trial Balance of RAM and SHYAM as on 31st March, 2017:

Trial balance

Particulars (DR)

Rs.

Particulars (CR)

Rs.

Plant & Machinery

Freight on Sales

Publicity

Land & Buildings

Sundry Debtors

Bad debts

Cash at Bank

Investments

Cash in hand

Salaries

Rent

Stock

Drawings:

RAM                          6,000

SHYAM                    10,000

10,000

3,000

2,000

50,000

10,000

2,000

15,000

8,000

1,000

12,000

8,000

25,000

 

 

16,000

Capital Accounts:

RAM                               36,000

SHYAM                           40,000

Trading Account:

Gross Profit

Creditors

Bank Loan

Bills Payable

 

 

 

76,000

 

60,000

12,000

8,000

6,000

 

1,62,000

 

1,62,000

Prepare a Profit & Loss Account and the Profit and Loss Appropriation Account of the firm for the year ended 31st March, 2017 and a Balance Sheet as on that date, after taking into consideration the following additional information:               8

                     i.            Outstanding Salaries Rs. 3,000/-

                   ii.            Ram will get a Commission of Rs. 10,000/- for the year.

 

Profit & Loss A/c

For the year ended on 31-03-2017

Particulars

Amount

Particulars

Amount

To Freight on Sales

To Publicity

To Bad debts

To Salaries              12,000

Add:- Outstanding  3,000

To Rent

To Net Profit

3,000

2,000

2,000

 

15,000

8,000

30,000

By Gross profit b/d

60,000

 

60,000

 

60,000

Profit & Loss Appropriation A/c

For the year ended on 31-03-2017

Particulars

Amount

Particulars

Amount

To Partner’s Commission

      -Ram

To Share of Profit

- Ram = 20,000*1/2

- Shyam = 20,000*1/2

 

10,000

 

10,000

10,000

By Net Profit

30,000

 

30,000

 

30,000

Balance Sheet

As on 31-03-2017

Liabilities

Amount

Assets

Amount

Outstanding Salaries

Creditors

Bank loan

Bills payable

Capital:

Ram                               36,000

Add: Commission       10,000

Add: Share of profit   10,000

Less: Drawings              6,000

Shyam’s Capital           40,000

Add:- Share of profit  10,000

Less:- Drawings           10,000

3,000

12,000

8,000

6,000

 

 

 

 

50,000

 

 

40,000

P/M

Land & Building

Sundry Debtors

Cash at Bank

Investments

Cash in hand

Stock

10,000

50,000

10,000

15,000

8,000

1,000

25,000

 

1,19,000

 

1,19,000

20. Honda Limited issued 10,000 equity shares of 100 each payable as follows:

                Rs. 20/- on application

                Rs. 30/- on allotment

                Rs. 20/- on first call

                Rs. 30/- on second and final call

10,000 shares were applied for the allotted. All money due was received with the exception of both the calls on 300 shares held by SUPRIYA. These shares were forfeited. Give necessary journal entries.                 8

Ans:

Journal Entries

In the books of Honda Ltd.

Particulars

L/f

Amount Dr.

Amount Cr.

Bank A/c                                                                                            Dr.

To Share Application A/c

(Being the application money received on 10,000 shares @ Rs. 20 each)

 

2,00,000

 

2,00,000

Share Application A/c                                                                      Dr.

To Share Capital A/c

(Being the application money on 10,000 shares @ Rs. 20 each transferred to Share Capital & excess refunded)

 

2,00,000

 

2,00,000

Share Allotment A/c                                                                          Dr.

To Share Capital A/c

(Being the allotment money due on 10,000 shares @ Rs. 30 each)

 

3,00,000

 

3,00,000

Bank A/c                                                                                               Dr.

To Share Allotment A/c

(Being the allotment money received on 10,000 shares @ Rs. 30 each)

 

3,00,000

 

3,00,000

Share 1st Call A/c                                                                                 Dr.

To Share Capital A/c

(Being the first call money due on 10,000 shares @ Rs. 20 each)

 

2,00,000

 

2,00,000

Bank A/c                                                                                                Dr.

Calls-in-arrear A/c                                                                               Dr.

To Share 1st Call A/c

(Being the first call money received on 9,700 shares)

 

1,94,000

6,000

 

 

2,00,000

Share 2nd and Final Call A/c                                                               Dr.

To Share Capital A/c

(Being the first call money due on 10,000 shares @ Rs. 30 each)

 

3,00,000

 

3,00,000

Bank A/c                                                                                                Dr.

Calls-in-arrear A/c                                                                                Dr.

To Share 2nd and Final Call A/c

(Being the first call money received on 9,700 shares)

 

2,91,000

9,000

 

 

3,00,000

Or

Write short notes on:                                    2x4=8

1)      Re-issue of forfeited shares.

2)      Calls in Arrears.

3)      Calls in Advance.

4)      Reserve Capital.

1) Reissue of forfeited shares: The directors of the company have the power to re-issue the forfeited shares on such terms as it think fit. Thus the forfeited shares can be reissued at par, or at premium or at discount. However, if the forfeited shares are reissued at discount, the amount of discount should not exceed the amount credited to the share forfeiture A/c. If the discount allowed on reissue is less than the forfeited amount there will be the surplus left in the share forfeited A/c. This surplus will be of the nature of capital profits so it will be transferred to the Capital Reserve A/c.

2) Calls in arrears: Calls-in-Arrears: The amount which is not paid by shareholders when money is demanded by the company, such amount is known as ‘Calls-in-Arrears’. The maximum rate of interest to be provided on calls in arrear must not exceed 10% per annum.

3) Calls-in-Advance: Sometimes, it so happens that a shareholder may pay the entire amount on his shares even though the whole amount has not been called up. The amount received in advance of calls from such a shareholder should be credited to "calls in advance". The maximum rate of interest allowed on calls in advance is 12% per annum.

4) Reserve Capital: A company may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called-up, except in the event of winding up of the company. Such type of share capital is known as reserve-capital.

21. X Ltd. issued 5,000, 16% debentures of Rs. 100/- each at a discount of 5% repayable after 5 years at a premium of 5%. You are required to pass journal entries and show the “Loss on Issue of Debentures Account” over the period of five years.    8

Journal Entries

In the books of X Ltd.

Particulars

L/f

Amount Dr.

Amount Cr.

At the time of Issue

Bank A/c                                                                                            Dr.

Loss on issue of debentures A/c                                                   Dr.

To 10% Debentures A/c

To Premium on redemption of debentures A/c

(Being the 5000 10% Debentures of Rs. 100 each issued at a discount of 5%, but repayable at a premium of 5%)

 

 

4,75,000

50,000

 

 

 

5,00,000

25,000

At the time of Redemption

10% Debentures A/c                                                                       Dr.

Premium on Redemption of debentures A/c                             Dr.

To Bank A/c

(Being the 5000 10% Debentures of Rs. 100 each redeemed at a premium of 5%)

 

 

5,00,000

25,000

 

 

 

5,25,000

Loss on issue of Debentures A/c

Date

Particulars

Rs.

Date

Particulars

Rs.

Year 1

To 10% Debentures

To Premium on redemption A/c

25,000

25,000

Year 1

By Profit and Loss A/c

By Balance c/d

10,000

40,000

 

 

50,000

 

 

50,000

Year 2

To Balance b/d

 

40,000

Year 2

By Profit and Loss A/c

By Balance c/d

10,000

30,000

 

 

40,000

 

 

40,000

Year 3

To Balance b/d

30,000

 

Year 3

By Profit and Loss A/c

By Balance c/d

10,000

20,000

 

 

30,000

 

 

30,000

Year 4

To Balance b/d

20,000

Year 4

By Profit and Loss A/c

By Balance c/d

10,000

10,000

 

 

20,000

 

 

20,000

Year 5

To Balance b/d

10,000

Year 5

By Profit and Loss A/c

10,000

 

 

10,0000

 

 

10,000

Working Note:

Amount to be written off each year.

= Amount of loss on issue of debentures/ No. of years = 50,000/5 = 10,000

Or

What is meant by a debenture? Explain the different types of debentures.        2+6=8

Ans: Meaning of Debentures: According to Sec. 2 (30) of the companies Act, 2013, debentures include “debenture stock, bonds and any other instruments of a company evidencing a debt, whether constituting a charge on the assets of the company or not.

Debentures are debt securities issued by a joint stock company. Amounts collected by way of debentures form part of the loan capital of a company and are repayable after a fixed period. Debenture holders get fixed rate of interest on their debentures as a charge against profit. They are creditors of the company.

Types of Debentures: Debentures are classified as follows:

1. On the Basis of Repayment

a. Redeemable Debentures: These debentures are paid off or redeemed after a fixed period of time.

b. Irredeemable or Perpetual Debentures: These debentures are permanent debentures of a company. They are redeemed only in the event of winding up of a company.

2. On the Basis of Transferability

a. Registered Debentures: These debentures are registered in the name of the owner in the company’s register of debentures.

b. Bearer Debentures: These debentures are not registered in the name of the owner in the company’s register of debentures. These debentures are transferable by mere delivery.

3. On the Basis of Security

a. Secured debentures: These are the debentures which are secured by either a fixed charge or floating charge.

b. Unsecured Debentures: These debentures are not secured by any charge on the assets.

4. On the basis of Conversion

a. Convertible Debentures: These debentures are issued with an option to debenture holders to convert them into shares after a fixed period.

b. Non Convertible Debentures: These are debentures issued without conversion option.

5. On the Basis of Priority

a. First debentures: The debentures which have t be repaid first before other debentures are called first debentures.

b. Second debentures: The debentures which will be repaid after the first debentures are called second debentures.

6. On the Basis of Coupon Rate (interest rate)

a. Fixed Rate Debentures: Most of the time debentures are issued with a pre-fixed rate of interest. These debentures are called fixed interest debentures.

b. Floating rate Debentures: Floating rate as the names suggests keeps changing.

c. Zero Coupon Bonds: These debentures do not carry a specific rate of interest. These debentures are issued at a substantial discount but redeemed at par.

22. A and B are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2017 was as follows:

Balance Sheet

Liabilities

(Rs.)

Assets

(Rs.)

Sundry Creditors

Capital:

A:                               30,000/-

B:                               20,000/-

 

20,000

 

 

50,000

Cash in hand

Sundry Debtors

Stock

Furniture

Machinery

3,000

12,000

15,000

10,000

30,000

 

70,000

 

70,000

C was admitted as new partner on the following terms and conditions:

1)      C will bring Rs. 15,000/- for capital and Rs. 5,000/- for his share of Goodwill for 1/6th share in the future profits.

2)      The value of stock to be reduced by Rs. 2,000/- and that of Machinery be increased by Rs. 8,000/-

3)      The value of furniture to be fixed at Rs. 9,000/-

Pass journal entries in the books of the firm and prepare the Balance Sheet of the new firm.                      8

Ans:

Journal Entries

In the Books of the Firm

Particulars

L/F

Amount (Dr.)

Amount (Cr.)

Cash A/c                                                                                                       Dr.

            To C’s Capital A/c

            To Premium for goodwill A/c

(Being the Capital and premium for goodwill brought in cash)

 

20,000

 

 

 

5,000

 

 

 

3,000

 

 

 

8,000

 

 

 

5,000

 

15,000

5,000

 

 

3,000

2,000

 

 

2,000

1,000

 

 

8,000

 

 

 

3,000

2,000

Premium for goodwill A/c                                                                        Dr.

             To A’s Capital A/c

             To B’s Capital A/c

(Being the Premium for goodwill distributed between A & B)

Revaluation A/c                                                                                          Dr.

              To Stock A/c

              To Furniture A/c

(Being the loss on revaluation of assets transferred to revaluation A/c)

Machinery A/c                                                                                            Dr.

              To Revaluation A/c

(Being the profit on revaluation of machinery transferred to revaluation A/c)

Revaluation A/c                                                                                          Dr.

              To A’s Capital A/c

              To B’s Capital A/c

(Being the profit on revaluation distributed between the partners)

Balance Sheet of New Firm

As on 31-03-2017

Liabilities

Amount

Assets

Amount

Sundry creditors

Capital:

          A

          B

          C

20,000

 

36,000

24,000

15,000

Cash in hand (3,000+20,000)

Sundry Debtors

Stock

Machinery

Furniture

23,000

12,000

13,000

38,000

9,000

 

95,000

 

95,000

 Or

Give journal entries on dissolution of a Partnership firm in respect of the following:          1x8=8

a)      For transfer of assets.

b)      For sale of assets.

c)       If any partner takes over any asset.

d)      For payment of liabilities.

e)      For payment of Realisation Expenses.

f)       For realisation of unrecorded assets.

g)      For transfer of the balance of General Reserve Account.

h)      For payment of Partners’ Loan.

Journal Entries

In the books of firm

No.

Particulars

L/f

Amount Dr.

Amount Cr.

a)       

Realisation A/c                                                                                Dr.

To Sundry Assets A/c

(Being the Sundry assets transferred to realisation A/c)

 

-------

 

-----

b)       

Cash A/c                                                                                          Dr.

To Realisation A/c

(Being the sundry assets realised)

 

--------

 

--------

c)        

Partner’s Capital A/c                                                                     Dr.

To Realisation A/c

(Being the assets taken over by partners)

 

--------

 

-------

d)       

Realisation A/c                                                                               Dr.

To Cash A/c

(Being the sundry liabilities paid off)

 

----------

 

--------

e)       

Realisation A/c                                                                               Dr.

To Cash A/c

(Being the realisation expenses paid)

 

---------

 

--------

f)        

Cash A/c                                                                                          Dr.

To Realisation A/c

(Being the unrecorded assets realised)

 

--------

 

--------

g)       

General Reserve A/c                                                                     Dr.

To Partner’s Capital A/c

(Being the reserve fund distributed between the partners)

 

--------

 

-------

h)       

Partner’s Loan A/c                                                                        Dr.

To Cash A/c

(Being the partner’s loan paid off)

 

-------

 

--------


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