AccountancyCBSE Class 12 · Sample paper, session 2026-27

CBSE Class 12 Accountancy: sample paper 2026-27

The sample question paper CBSE published for the 2026-27 session, as printed: 42 questions for 80 marks, in sections, with each OR choice shown as an alternative. Try each question first, then open our solution.

47 of 50 questions (counting each OR alternative) have our step-by-step solution so far. We show a solution only after an independent re-solve agrees with it; the rest say "Solution being checked".

Source: official sample question paper from cbseacademic.nic.in: https://cbseacademic.nic.in/web_material/SQP/ClassXII_2026_27/Accountancy-SQP.pdf. Questions are transcribed from that PDF; figures are described in words, so check the official paper for them.

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How the paper is set

Section	Questions	What it has
A	1-26	Part A: Accounting for Partnership Firms and Companies; Q1-16 MCQ 1 mark, 17-20 3 marks, 21-22 4 marks, 23-26 6 marks
B-I	27-34	Part B Option I: Analysis of Financial Statements
B-II	27-34	Part B Option II: Computerised Accounting

Instructions in brief: All questions compulsory; Part A compulsory; Part B has two options, attempt only one; no overall choice, internal choice in 2 questions of 3 marks, 2 of 4 marks and 2 of 6 marks.

Section A

Part A: Accounting for Partnership Firms and Companies; Q1-16 MCQ 1 mark, 17-20 3 marks, 21-22 4 marks, 23-26 6 marks

Q1 · 1 mark · MCQReconstitution of a Partnership Firm – Admission of a Partner
A, B and C are partners sharing profits in the ratio of 4:3:2. W.e.f. 1st April 2026 they decided to share future profits in the ratio of 1:1:1. On the date of reconstitution, Workmen Compensation Reserve appears in the books of the firm at ₹27,000, and the liability on account of compensation to workmen is calculated at ₹36,000. Partners decided not to alter the books of accounts. What entry will be passed to effect the above-mentioned change?
1. (A)A's Capital Dr. 1,000 To C's capital A/c 1,000
2. (B)C's Capital A/c Dr. 1,000 To A's Capital A/c 1,000
3. (C)Workmen Compensation Reserve A/c Dr. 27,000 To A's Capital A/c 12,000 To B's Capital A/c 9,000 To C's Capital A/c 6,000
4. (D)Workmen Compensation Reserve A/c Dr. 27,000 Revaluation A/c Dr. 9,000 To Workmen Compensation Claim A/c 36,000
Try it first, then show our solutionSolution
1. Leaving the books unaltered, the net effect is reserve ₹ 27,000 − claim ₹ 36,000 = a net loss of ₹ 9,000. A goes from 4/9 to 3/9 (sacrifice 1/9), B stays at 3/9, and C goes from 2/9 to 3/9 (gain 1/9).
2. A gaining partner is compensated for a loss he did not share in: C gets 1/9 × ₹ 9,000 = ₹ 1,000 from A. Entry: A's Capital A/c Dr. ₹ 1,000 to C's Capital A/c. Option (A).
  1 mark
Answer: (A) A's Capital Dr. 1,000 To C's capital A/c 1,000
Where the marks are
- Net loss ₹ 9,000 adjusted between sacrificing A and gaining C (1 mark)
Open Q1 on its own page
Q2 · 1 mark · MCQAccounting for Partnership: Basic Concepts
Aman and Suman are partners sharing profits and losses in the ratio of 3:2. Their capitals as on 1st April 2025 were ₹2,00,000 and ₹3,00,000 respectively. After the division of Net profits of ₹3,00,000 for the year 2025-26 among the partners, and adjustment of drawings, their capital balances on 31st March 2026 were: Aman ₹3,00,000 Suman ₹4,00,000. The accountant omitted to charge interest on drawings. If the firm wants to charge interest on drawings @10% p.a. Interest on Aman's drawings would be:
1. (A)₹ 4,000
2. (B)₹ 8,000
3. (C)₹ 40,000
4. (D)₹ 80,000
Try it first, then show our solutionSolution
1. Aman's capital: ₹ 2,00,000 + profit share 3/5 × ₹ 3,00,000 = ₹ 1,80,000, less drawings, = ₹ 3,00,000. So drawings = ₹ 80,000.
2. Dates are not given, so interest is for an average of 6 months: ₹ 80,000 × 10% × 6/12 = ₹ 4,000. Option (A).
  1 mark
Answer: (A) ₹ 4,000
Where the marks are
- Drawings ₹ 80,000 found from the capital account; 6 months' interest (1 mark)
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Q3 · 1 mark · Assertion-reasonCompetency-basedAccounting for Share Capital
Assertion (A): Issue price more than face value received on issue of shares is credited to securities premium account but not to statement of profit and loss.
Reason (R): In case of forfeiture of shares, securities premium not received is debited.
1. (A)Both (A) and (R) are true and (R) is correct explanation to (A).
2. (B)Both (A) and (R) are true but (R) is not correct explanation of (A).
3. (C)(A) is false but (R) is correct.
4. (D)(A) is correct but (R) is false.
Try it first, then show our solutionSolution
1. The Assertion is true: the excess of issue price over face value is a capital receipt credited to Securities Premium, not profit.
2. The Reason is also true (unpaid premium is debited to Securities Premium on forfeiture), but it is about forfeiture and does not explain the Assertion. Option (B).
  1 mark
Answer: (B) Both (A) and (R) are true but (R) is not correct explanation of (A).
Where the marks are
- Both statements true, unrelated (1 mark)
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Q4 · 1 mark · MCQAccounting for Share Capital
A Ltd. invited applications for 50,000 shares of ₹10 each at par. Applications were received for 80,000 shares. Shares were allotted on a pro-rata basis to applicants of 60,000 shares. If application money was ₹3 per share and allotment money was ₹4 per share, how much amount will be received on allotment from an applicant who applied for 6,000 shares?
1. (A)₹ 20,000
2. (B)₹ 24,000
3. (C)₹ 21,000
4. (D)₹ 17,000
Try it first, then show our solutionSolution
1. Applicants for 60,000 shares got 50,000: ratio 6 : 5. The applicant for 6,000 shares gets 5,000 shares and paid ₹ 18,000 on application against ₹ 15,000 due, an excess of ₹ 3,000.
2. Allotment due = 5,000 × ₹ 4 = ₹ 20,000; received = ₹ 20,000 − ₹ 3,000 = ₹ 17,000. Option (D).
  1 mark
Answer: (D) ₹ 17,000
Where the marks are
- Excess application money ₹ 3,000 reduces allotment due (1 mark)
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Q5 · 1 mark · MCQAccounting for Partnership: Basic Concepts
R and S are partners sharing profits and losses in the ratio of 3:2. Their capitals are ₹3,00,000 and ₹1,00,000 respectively. On 1st January 2026, the firm granted loans of ₹24,000 to R and ₹6,000 to S at 10% p.a. The loss before charging interest for the year ended 31st March 2026 was ₹2,650. Calculate the share of loss to be borne by each partner after accounting for interest on loans.
1. (A)Share of loss R ₹ 2,040, and S ₹ 1,360
2. (B)Share of loss R ₹ 3,390, and S ₹ 2,260
3. (C)Share of loss R ₹ 1,590, and S ₹ 1,060
4. (D)Share of loss R ₹ 1,140, and S ₹ 760
Try it first, then show our solutionSolution
1. Interest on loans to partners is income for the firm for 3 months: R ₹ 24,000 × 10% × 3/12 = ₹ 600; S ₹ 150. Loss after interest = ₹ 2,650 − ₹ 750 = ₹ 1,900.
2. Shared 3 : 2: R ₹ 1,140, S ₹ 760. Option (D).
  1 mark
Answer: (D) Share of loss R ₹ 1,140, and S ₹ 760
Where the marks are
- Interest on loans to partners reduces the loss (1 mark)
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Q6 · 1 mark · MCQReconstitution of a Partnership Firm – Retirement/Death of a Partner
A, B and C were partners sharing profits and losses in the ratio of 5:3:2. A died on 1st October 2025. The loss till the date of death was calculated at ₹ 75,000. Goodwill is to be valued at two years' purchase of the average profits of the last three years. The profits for the last three years were ₹3,28,000; ₹3,46,000; and ₹4,00,000. Calculate the amount payable by B and C to A's executor towards goodwill.
1. (A)₹ 1,79,000 and ₹ 1,79,000
2. (B)₹ 2,14,800 and ₹ 1,43,200
3. (C)₹ 4,29,600 and ₹ 2,86,400
4. (D)₹ 2,23,750 and ₹ 1,34,250
Try it first, then show our solutionSolution
1. Average profit = (3,28,000 + 3,46,000 + 4,00,000)/3 = ₹ 3,58,000; goodwill = 2 × ₹ 3,58,000 = ₹ 7,16,000; A's 5/10 share = ₹ 3,58,000.
2. B and C continue in their old ratio 3 : 2, which is also their gaining ratio: B ₹ 2,14,800, C ₹ 1,43,200. Option (B).
  1 mark
Answer: (B) ₹ 2,14,800 and ₹ 1,43,200
Where the marks are
- A's goodwill ₹ 3,58,000 borne 3 : 2 (1 mark)
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Q7 · 1 mark · MCQAccounting for Partnership: Basic Concepts
X, Y, and Z are partners in a firm sharing profits and losses in the ratio 4:3:3. Z is guaranteed a minimum profit of ₹ 50,000 per annum, the deficiency, if any, is to be borne by X and Y equally. The firm's profit for the year ended 31st March 2026 is ₹40,000. The amount of deficiency to be borne by X and Y respectively will be:
1. (A)X ₹25,000 & Y ₹25,000
2. (B)X ₹21,714 & Y ₹16,286
3. (C)X ₹19,000 & Y ₹19,000
4. (D)X ₹5,000 & Y ₹5,000
Try it first, then show our solutionSolution
1. Z's share = 3/10 × ₹ 40,000 = ₹ 12,000, so the deficiency on his ₹ 50,000 guarantee is ₹ 38,000.
2. X and Y bear it equally: ₹ 19,000 each. Option (C).
  1 mark
Answer: (C) X ₹19,000 & Y ₹19,000
Where the marks are
- Deficiency ₹ 38,000 shared equally (1 mark)
Q8 · 1 mark · MCQReconstitution of a Partnership Firm – Admission of a Partner
L and M were partners sharing profits in the ratio of 5:3. They admitted N as a new partner and on the date of admission, firm had Investments of ₹3,00,000 and Investment Fluctuation Reserve of ₹40,000. On the same date;
• M took over 40% of investments at ₹1,10,000.
• The remaining investments were revalued at ₹1,50,000.
Identify the effect on the Revaluation Account.
1. (A)Credited ₹10,000
2. (B)Debited ₹10,000
3. (C)Credited ₹5,000
4. (D)No effect on revaluation A/c
Try it first, then show our solutionSolution
1. M takes 40% (book value ₹ 1,20,000) at ₹ 1,10,000, a fall of ₹ 10,000; the other 60% (₹ 1,80,000) is revalued at ₹ 1,50,000, a fall of ₹ 30,000. Total fall = ₹ 40,000.
2. The Investment Fluctuation Reserve of ₹ 40,000 absorbs the whole fall, so nothing reaches the Revaluation Account. Option (D).
  1 mark
Answer: (D) No effect on revaluation A/c
Where the marks are
- Total fall equals the reserve (1 mark)
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Q9 · 1 mark · MCQReconstitution of a Partnership Firm – Admission of a Partner
Ravinder and Savita were partners sharing profits in the ratio of 3:2. Kavita was admitted for 1/5th share in profits and she brought ₹3,00,000, including ₹30,000 towards goodwill. After adjusting for goodwill, revaluation of assets and liabilities, and reserves, calculate Savita's adjusted capital on the basis of Kavita's capital and profit-sharing ratio.
1. (A)₹4,32,000
2. (B)₹5,00,000
3. (C)₹3,00,000
4. (D)₹6,00,000
Try it first, then show our solutionSolution
1. Kavita's capital = ₹ 3,00,000 − ₹ 30,000 = ₹ 2,70,000 for 1/5, so total capital = ₹ 13,50,000. Her share comes from the old partners in 3 : 2, so the new ratio is 12 : 8 : 5.
2. Savita's capital = 8/25 × ₹ 13,50,000 = ₹ 4,32,000. Option (A).
  1 mark
Answer: (A) ₹4,32,000
Where the marks are
- Total capital ₹ 13,50,000; Savita's 8/25 (1 mark)
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Q10 · 1 mark · MCQReconstitution of a Partnership Firm – Admission of a Partner
Machinery was appearing in the books at ₹12,00,000. It was found to be undervalued by 20%. At what amount the machinery will be shown in the Balance Sheet of the reconstituted firm?
1. (A)₹14,00,000
2. (B)₹15,00,000
3. (C)₹12,00,000
4. (D)₹16,00,000
Try it first, then show our solutionSolution
1. "Undervalued by 20%" means book value = 80% of true value.
2. True value = ₹ 12,00,000 × 100/80 = ₹ 15,00,000. Option (B).
  1 mark
Answer: (B) ₹15,00,000
Where the marks are
- Book value is 80% of true value (1 mark)
Q11 · 1 mark · MCQAccounting for Share Capital
Tanya Ltd. issued 1,00,000 equity shares of ₹10 each at a premium of ₹2 per share. The amount was payable as follows: ₹4 on Application (including ₹1 premium) ₹5 on Allotment (including ₹1 premium) and ₹3 on Call. Applications were received for 95,000 shares, which were duly allotted. Ravi, holding 3,000 shares, failed to pay the allotment, so his shares were forfeited just after allotment. Later, 2,000 of these shares were reissued at ₹9 per share as fully paid up. What amount will be transferred to Capital Reserve?
1. (A)₹ 4,000
2. (B)₹ 7,000
3. (C)₹ 10,000
4. (D)₹ 6,000
Try it first, then show our solutionSolution
1. Ravi paid only the application money of ₹ 4, of which ₹ 1 is premium, so ₹ 3 per share of capital is forfeited (the unpaid allotment premium is debited to Securities Premium).
2. Reissue of 2,000 shares at ₹ 9 as fully paid allows ₹ 1 discount: Capital Reserve = 2,000 × (₹ 3 − ₹ 1) = ₹ 4,000. Option (A).
  1 mark
Answer: (A) ₹ 4,000
Where the marks are
- Forfeited ₹ 3 less discount ₹ 1 on 2,000 shares (1 mark)
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Q12 · 1 mark · MCQAccounting for Share Capital
Aarav Ltd. acquired the business of Mehul Ltd. as per the following agreement:
• Assets of ₹ 20,00,000 were taken over at ₹18,00,000
• Liabilities of ₹ 2,80,000 were taken over at ₹2,50,000
The purchase consideration was discharged by:
• Issuing 12,000 equity shares of ₹100 each at a premium of 25%
• ₹1,00,000 through bank draft.
The amount of Goodwill/ Capital Reserve arising on acquisition will be:
1. (A)Goodwill ₹50,000
2. (B)Capital Reserve ₹50,000
3. (C)Goodwill ₹1,50,000
4. (D)Capital Reserve ₹1,50,000
Try it first, then show our solutionSolution
1. Net assets at agreed values = ₹ 18,00,000 − ₹ 2,50,000 = ₹ 15,50,000. Consideration = 12,000 × ₹ 125 + ₹ 1,00,000 = ₹ 16,00,000.
2. Consideration exceeds net assets by ₹ 50,000: Goodwill. Option (A).
  1 mark
Answer: (A) Goodwill ₹50,000
Where the marks are
- Consideration ₹ 16,00,000 vs net assets ₹ 15,50,000 (1 mark)
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Q13 · 1 mark · MCQReconstitution of a Partnership Firm – Retirement/Death of a Partner
Choose the correct sequence of events in case of retirement of a partner.
(i) Preparation of revaluation A/c.
(ii) Transfer of amount due to retiring partner to retiring partner's loan A/c.
(iii) Preparation of capital A/c to calculate amount due to retiring partner.
(iv) Treatment of goodwill.
1. (A)(iv), (i), (ii), (iii)
2. (B)(i), (iv), (iii), (ii)
3. (C)(iii), (ii), (i), (iv)
4. (D)(ii), (iv), (i), (iii)
Try it first, then show our solutionSolution
1. First revalue assets and liabilities, then deal with goodwill, then prepare the capital account to find the amount due, and finally transfer it to the loan account.
2. Sequence: (i), (iv), (iii), (ii). Option (B).
  1 mark
Answer: (B) (i), (iv), (iii), (ii)
Where the marks are
- Revaluation, goodwill, capital account, loan (1 mark)
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Q14 · 1 mark · MCQDissolution of Partnership Firm
A, B, and C are partners sharing profits in the ratio of 5:3:2. On dissolution, a creditor of ₹40,000 accepts ₹30,000 in full settlement. Another creditor of ₹ 15,000 is paid in full. What amount will be transferred to the Realisation Account to close the creditors A/c?
1. (A)₹55,000
2. (B)₹45,000
3. (C)₹70,000
4. (D)₹40,000
Try it first, then show our solutionSolution
1. On dissolution, creditors are transferred to Realisation A/c at book value, whatever is finally paid.
2. Book value = ₹ 40,000 + ₹ 15,000 = ₹ 55,000. Option (A).
  1 mark
Answer: (A) ₹55,000
Where the marks are
- Creditors transferred at book value (1 mark)
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Q15 · 1 mark · MCQAccounting for Share Capital
Ritika Ltd. issued 1,000 equity shares of ₹80 each at a premium of ₹10 per share. Application and allotment money of ₹50 (including ₹6 premium) per share was called, and the entire amount was duly received. What will be amount reflecting in the Subscribed but not fully paid-up capital:
1. (A)₹50,000
2. (B)₹44,000
3. (C)₹56,000
4. (D)NIL
Try it first, then show our solutionSolution
1. Of the ₹ 50,000 called, ₹ 6,000 is premium, so ₹ 44 per share of capital is called and fully received. The shares are ₹ 80 each, so they are not fully paid.
2. Subscribed but not fully paid-up capital = 1,000 × ₹ 44 = ₹ 44,000. Option (B).
  1 mark
Answer: (B) ₹44,000
Where the marks are
- Called-up capital ₹ 44 per share (1 mark)
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Q16 · 1 mark · MCQDissolution of Partnership Firm
Which of the following items is not transferred to the Realisation Account at the time of dissolution of a firm?
A. Goodwill appearing in the books.
B. Employees Provident Fund
C. Provision for doubtful debts
D. General reserve
E. Debit Bank Balance
1. (A)D only
2. (B)A, B and C
3. (C)D and E
4. (D)B, D and E
Try it first, then show our solutionSolution
1. Goodwill (an asset), the Employees' Provident Fund (an outside liability) and the provision for doubtful debts are all transferred to Realisation A/c.
2. General reserve goes to partners' capitals and the bank balance is the cash account itself: D and E are not transferred. Option (C).
  1 mark
Answer: (C) D and E
Where the marks are
- Reserves and cash/bank stay out of Realisation A/c (1 mark)
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Answer one of these 2 alternatives.

Q17(A) · 3 marks · Short answerDissolution of Partnership Firm

Amit, Akash and Ayush decided to dissolve their firm. Pass necessary journal entries for the following transactions after transferring all assets (except Cash and Bank) and outside liabilities to the Realisation Account:
I. Debtors amounted to ₹82,000. Provision for Doubtful Debts was ₹6,000. Debtors of ₹12,000 went bad. The remaining debtors were taken over by a debt collection agency at 80% of book value.
II. Amit agreed to pay his wife's loan of ₹20,000 in settlement of loan of ₹25,000 given to Amit.
III. Creditors amounted to ₹40,000 were payable after three months. Creditors worth ₹10,000 were given furniture costing ₹8,000 in full settlement. The remaining creditors allowed a discount of 10% irrespective of the time period.

Solution being checked. We show a solution only after an independent check agrees with it.

Q17(B) · 3 marks · Short answerCompetency-basedDissolution of Partnership Firm

L, B and P are partners. They decided to dissolve the firm. In each of the following situations identify the incidence (borne by) of expenditure of dissolution and the paying identity (paid by) related to dissolution expenses of a firm:

Case	Entry
Case I	Realisation A/c Dr. 10,000 To L's Capital A/c 10,000 (Being realisation expenses recorded)
Case II	L's Capital A/c Dr. 10,000 To P's Capital A/c 10,000 (Being realisation expenses recorded)
Case III	P's Capital A/c Dr. 10,000 To Cash A/c 10,000 (Being realisation expenses recorded)

Try it first, then show our solutionSolution

Case I (Realisation A/c Dr., L's Capital A/c Cr.): the expense is a cost of the firm, so it is borne by the firm; L is credited because he paid it.
1 mark
Case II (L's Capital A/c Dr., P's Capital A/c Cr.): L is debited, so it is borne by L; P is credited, so it was paid by P on L's behalf.
1 mark
Case III (P's Capital A/c Dr., Cash A/c Cr.): P is debited, so it is borne by P; cash went out of the firm, so it was paid by the firm.
1 mark

Answer: Case I: borne by firm, paid by L. Case II: borne by L, paid by P. Case III: borne by P, paid by firm

Where the marks are

1 mark for each case (3 marks)

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Q18 · 3 marks · Short answerAccounting for Partnership: Basic Concepts
B, C and D are partners sharing profits in the ratio of 1:1:1. As per the partnership deed salary is allowed to the partners as follows:
• B is entitled to a salary of ₹ 2,000 per month.
• C is entitled to salary of ₹ 16,000 p.a.
• D is entitled to a salary of ₹ 4,000 per quarter.
Amit, an employee of the firm was entitled to a salary of ₹ 5,000 on half yearly basis which was omitted to be provided.
Calculate the amount of profits to be given to each partner by way of appropriation in each of the following cases, when the profit/loss before the above adjustments is:
Case 1. Profit of ₹ 72,000
Case 2. Profit of ₹ 45,000
Case 3. Loss of ₹ 20,000
Try it first, then show our solutionSolution
1. Annual salaries: B ₹ 2,000 × 12 = ₹ 24,000; C ₹ 16,000; D ₹ 4,000 × 4 = ₹ 16,000; total ₹ 56,000. Amit's salary (₹ 5,000 half-yearly = ₹ 10,000) is a charge and is deducted first.
  ½ mark
2. Case 1: profit = ₹ 72,000 − ₹ 10,000 = ₹ 62,000, enough for salaries. Remaining ₹ 6,000 shared equally. B ₹ 26,000, C ₹ 18,000, D ₹ 18,000.
  1 mark
3. Case 2: profit = ₹ 45,000 − ₹ 10,000 = ₹ 35,000, less than ₹ 56,000, so it is shared in the ratio of salaries 24 : 16 : 16 = 3 : 2 : 2. B ₹ 15,000, C ₹ 10,000, D ₹ 10,000.
  1 mark
4. Case 3: loss = ₹ 20,000 + ₹ 10,000 = ₹ 30,000. No salary is allowed in a loss; each partner bears ₹ 10,000.
  ½ mark
Answer: Case 1: B ₹ 26,000, C ₹ 18,000, D ₹ 18,000 (salaries + ₹ 2,000 each). Case 2: B ₹ 15,000, C ₹ 10,000, D ₹ 10,000. Case 3: loss ₹ 10,000 each
Where the marks are
- Annual salaries and employee's salary as a charge (½ mark)
- Case 1 (1 mark)
- Case 2 (1 mark)
- Case 3 (½ mark)
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Q19 · 3 marks · Short answerIssue and Redemption of Debentures
Drum Ltd. decided to expand its operations by acquiring the business of Crane Ltd. and agreed to take over assets worth ₹6,00,000 and liabilities worth ₹40,000 at an agreed purchase consideration of ₹6,30,000
The purchase consideration was discharged by issuing 10% Debentures of ₹100 each at 10% discount to Crane Ltd.
On the basis of above information:
I. Calculate the number of debentures issued to discharge the purchase consideration.
II. Pass necessary journal entries in the books of Drum Ltd.
Try it first, then show our solutionSolution
1. I. Debentures issued at ₹ 90 each: number = ₹ 6,30,000 / ₹ 90 = 7,000 debentures.
  1 mark
2. II. Net assets = ₹ 6,00,000 − ₹ 40,000 = ₹ 5,60,000; consideration ₹ 6,30,000, so goodwill = ₹ 70,000.
  Particulars Dr. (₹) Cr. (₹)
  Sundry Assets A/c Dr. 6,00,000
  Goodwill A/c Dr. 70,000
  To Sundry Liabilities A/c 40,000
  To Crane Ltd. 6,30,000
  (Being business purchased)
  1 mark
3. Debentures issued at ₹ 90 (discount ₹ 10 each).
  Particulars Dr. (₹) Cr. (₹)
  Crane Ltd. Dr. 6,30,000
  Discount on Issue of Debentures A/c Dr. 70,000
  To 10% Debentures A/c 7,00,000
  (Being 7,000 debentures issued at 10% discount)
  1 mark
Answer: 7,000 debentures; Assets ₹ 6,00,000 and Goodwill ₹ 70,000 Dr. to Liabilities ₹ 40,000 and Crane Ltd. ₹ 6,30,000; Crane Ltd. ₹ 6,30,000 and Discount ₹ 70,000 Dr. to 10% Debentures ₹ 7,00,000
Where the marks are
- Number of debentures (1 mark)
- Purchase entry with goodwill (1 mark)
- Issue of debentures at discount (1 mark)
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Q20 · 3 marks · Short answerReconstitution of a Partnership Firm – Admission of a Partner
Calculate goodwill of the firm on the basis of 3 years' purchase of the average profits of the last five years which were as follows:
Year Amount (₹)
31st March 2022 (1,00,000)
31st March 2023 30,00,000
31st March 2024 16,00,000
31st March 2025 17,50,000
31st March 2026 18,50,000
Additional Information:
(i) On 1st January 2025, a fire broke out which resulted into a loss of goods of ₹3,00,000. A claim of ₹ 70,000 was received from the insurance company.
(ii) During the year ended 31st March 2026, the firm realised ₹ 80,000 from sale of scrapped machinery.
(iii) For the year ending 31st March 2026, wages of ₹ 50,000 were debited twice inadvertently by the accountant of the firm.
Try it first, then show our solutionSolution
1. Adjust abnormal items. 2025: add back the abnormal fire loss net of the claim (₹ 3,00,000 − ₹ 70,000 = ₹ 2,30,000): ₹ 19,80,000. 2026: remove the abnormal gain from scrap ₹ 80,000 and add back the wages debited twice ₹ 50,000: ₹ 18,20,000.
  1 mark
2. Total = (1,00,000) + 30,00,000 + 16,00,000 + 19,80,000 + 18,20,000 = ₹ 83,00,000; average = ₹ 16,60,000.
  1 mark
3. Goodwill = ₹ 16,60,000 × 3 = ₹ 49,80,000.
  1 mark
Answer: Average profit ₹ 16,60,000; goodwill ₹ 49,80,000
Where the marks are
- Adjusted profits (1 mark)
- Average profit (1 mark)
- Goodwill (1 mark)
Open Q20 on its own page

Particulars	Dr. (₹)	Cr. (₹)
Sundry Assets A/c Dr.	6,00,000
Goodwill A/c Dr.	70,000
To Sundry Liabilities A/c		40,000
To Crane Ltd.		6,30,000
(Being business purchased)

Particulars	Dr. (₹)	Cr. (₹)
Crane Ltd. Dr.	6,30,000
Discount on Issue of Debentures A/c Dr.	70,000
To 10% Debentures A/c		7,00,000
(Being 7,000 debentures issued at 10% discount)

Year	Amount (₹)
31st March 2022	(1,00,000)
31st March 2023	30,00,000
31st March 2024	16,00,000
31st March 2025	17,50,000
31st March 2026	18,50,000

Q21 · 4 marks · Long answerAccounting for Share Capital

XYZ Ltd. was registered with an authorised capital of ₹ 80,00,000 divided into 8,00,000 equity shares of ₹ 10 each. The company offered 1,00,000 shares for public subscription at ₹ 2 premium. Share was payable as ₹ 3 on application (including ₹ 1 premium), ₹ 6 (including balance premium) on allotment and balance on call. Public had applied for 1,25,000 shares out of which applications for 5,000 shares were rejected and remaining were allotted on pro-rata basis.
All the money has been duly received except allotment and call money on 10,000 shares held by Raja. His shares were forfeited.
Show the Share Capital head as it would appear in the balance sheet and also prepare Notes to Accounts for the same.

Try it first, then show our solutionSolution

Working. Applicants for 1,20,000 shares got 1,00,000 (6 : 5). Raja (10,000 shares) applied for 12,000 and paid ₹ 36,000; ₹ 6,000 excess went to allotment. Capital received from him = 10,000 × ₹ 2 + ₹ 6,000 = ₹ 26,000, forfeited. Shares in issue after forfeiture = 90,000, fully paid.
1 mark
Balance Sheet (extract)
Particulars Note No. ₹
I. Equity and Liabilities
1. Shareholders' Funds
(a) Share Capital 1 9,26,000
1 mark

Particulars	Note No.	₹
I. Equity and Liabilities
1. Shareholders' Funds
(a) Share Capital	1	9,26,000

Note 1: Share Capital

Particulars	₹
Authorised: 8,00,000 equity shares of ₹ 10 each	80,00,000
Issued: 1,00,000 equity shares of ₹ 10 each	10,00,000
Subscribed and fully paid up: 90,000 equity shares of ₹ 10 each	9,00,000
Add: Share Forfeiture A/c	26,000
Total	9,26,000

2 marks

Answer: Share Capital ₹ 9,26,000 (90,000 fully paid shares ₹ 9,00,000 + Share Forfeiture ₹ 26,000)

Where the marks are

Forfeited amount ₹ 26,000 (1 mark)
Balance Sheet extract (1 mark)
Notes to accounts (2 marks)

Open Q21 on its own page

Answer one of these 2 alternatives.

Q22(A) · 4 marks · Long answerAccounting for Partnership: Basic Concepts

S, D and A are partners, sharing profits in the ratio of 5 : 2 : 3. Their fixed capitals are:
S – ₹1,00,000
D – ₹50,000
A – ₹50,000
As per the partnership deed, S is entitled to a commission of 10% of net profit after charging such commission. However, while preparing the accounts for the year ended 31st March 2026, this commission was not provided. The net profit of the firm was ₹1,10,000.
On the basis of above information:
I. Calculate the correct amount of commission payable to S.
II. Pass the necessary journal entry that the accountant would have passed for distribution of profits without providing commission to S.
III. Pass the necessary adjusting journal entry at the beginning of the next year to rectify the above-mentioned error.

Try it first, then show our solutionSolution

I. Commission at 10% of profit after commission = ₹ 1,10,000 × 10/110 = ₹ 10,000.
1 mark
II. Entry passed without the commission (capitals fixed, so through current accounts):
Particulars Dr. (₹) Cr. (₹)
Profit and Loss Appropriation A/c Dr. 1,10,000
To S's Current A/c 55,000
To D's Current A/c 22,000
To A's Current A/c 33,000
(Being profit distributed in 5 : 2 : 3)
1 mark

Particulars	Dr. (₹)	Cr. (₹)
Profit and Loss Appropriation A/c Dr.	1,10,000
To S's Current A/c		55,000
To D's Current A/c		22,000
To A's Current A/c		33,000
(Being profit distributed in 5 : 2 : 3)

Adjustment table

Particulars	S (₹)	D (₹)	A (₹)	Total (₹)
Commission to be credited	10,000			10,000
Correct profit share (1,00,000 in 5 : 2 : 3)	50,000	20,000	30,000	1,00,000
Less: profit already credited	(55,000)	(22,000)	(33,000)	(1,10,000)
Net effect	5,000 (Cr.)	2,000 (Dr.)	3,000 (Dr.)	Nil

1 mark

III. Adjusting entry (1st April, 2026)
Particulars Dr. (₹) Cr. (₹)
D's Current A/c Dr. 2,000
A's Current A/c Dr. 3,000
To S's Current A/c 5,000
(Being adjustment for omitted commission)
1 mark

Particulars	Dr. (₹)	Cr. (₹)
D's Current A/c Dr.	2,000
A's Current A/c Dr.	3,000
To S's Current A/c		5,000
(Being adjustment for omitted commission)

Answer: Commission ₹ 10,000; original entry P&L Appropriation Dr. ₹ 1,10,000 to S ₹ 55,000, D ₹ 22,000, A ₹ 33,000; adjustment D Dr. ₹ 2,000 and A Dr. ₹ 3,000 to S ₹ 5,000

Where the marks are

Commission ₹ 10,000 (1 mark)
Original distribution entry (1 mark)
Adjustment table (1 mark)
Adjusting entry (1 mark)

Open Q22(A) on its own page

Q22(B) · 4 marks · Long answerReconstitution of a Partnership Firm – Retirement/Death of a Partner

Alpha, Beta and Delta were partners. On 31st August 2023, Delta died and after all the adjustments an amount of Rs.3,22,000 was payable to his executors. It was agreed to pay Rs.22,000 immediately and balance in 3 equal instalments together with interest @10%p.a. on 31st March 2024, 31st March 2025 and 31st March 2026, Prepare Delta's Executors account till it is finally paid off.

Try it first, then show our solutionSolution

Balance after the immediate payment = ₹ 3,00,000, repaid ₹ 1,00,000 a year with interest at 10%. Interest: 1st September, 2023 to 31st March, 2024 (7 months) on ₹ 3,00,000 = ₹ 17,500; then ₹ 20,000 on ₹ 2,00,000; then ₹ 10,000 on ₹ 1,00,000.
1 mark

Delta's Executors Account

Particulars	₹	Particulars	₹
31.08.2023 To Bank A/c	22,000	31.08.2023 By Delta's Capital A/c	3,22,000
31.03.2024 To Bank A/c	1,17,500	31.03.2024 By Interest A/c	17,500
31.03.2024 To Balance c/d	2,00,000
	3,39,500		3,39,500
31.03.2025 To Bank A/c	1,20,000	01.04.2024 By Balance b/d	2,00,000
31.03.2025 To Balance c/d	1,00,000	31.03.2025 By Interest A/c	20,000
	2,20,000		2,20,000
31.03.2026 To Bank A/c	1,10,000	01.04.2025 By Balance b/d	1,00,000
		31.03.2026 By Interest A/c	10,000
	1,10,000		1,10,000

3 marks

Answer: Payments ₹ 22,000 (31.08.2023), ₹ 1,17,500 (31.03.2024), ₹ 1,20,000 (31.03.2025) and ₹ 1,10,000 (31.03.2026); interest ₹ 17,500, ₹ 20,000 and ₹ 10,000

Where the marks are

Instalment and interest workings (1 mark)
Executors account for three years (3 marks)

Open Q22(B) on its own page

Q23 · 6 marks · Long answerIssue and Redemption of Debentures

I. Pass necessary journal entries for 'Issue of Debentures' in the following cases:
a) Arman Ltd. issued 750, 12% Debentures of ₹100 each at a discount of 10% redeemable at a premium of 5%
b) Sohan Ltd. issued 800, 9% Debentures of ₹100 each at a premium of 20 per debenture redeemable at a premium of ₹10 per Debenture.

II. X Ltd. obtained a loan of ₹4,00,000 from "The Development Bank". The company issued 5,000; 9%. Debentures of ₹100 each as a collateral security for the same. As per the policy the company effects these transactions through journal. Show journal entries and prepare the extract of balance sheet.

Try it first, then show our solutionSolution

I (a) Arman Ltd.: issue price ₹ 90; discount ₹ 7,500 and premium on redemption ₹ 3,750 (a loss on issue).

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c Dr.	67,500
To Debenture Application and Allotment A/c		67,500
(Being application money on 12% debentures received)
Debenture Application and Allotment A/c Dr.	67,500
Discount on Issue of Debentures A/c Dr.	7,500
Loss on Issue of Debentures A/c Dr.	3,750
To 12% Debentures A/c		75,000
To Premium on Redemption of Debentures A/c		3,750
(Being debentures issued at 10% discount, redeemable at 5% premium)

2 marks

I (b) Sohan Ltd.: issue price ₹ 120; premium on issue ₹ 16,000; premium on redemption ₹ 8,000 is a loss on issue.

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c Dr.	96,000
To Debenture Application and Allotment A/c		96,000
(Being application money on 9% debentures received)
Debenture Application and Allotment A/c Dr.	96,000
Loss on Issue of Debentures A/c Dr.	8,000
To 9% Debentures A/c		80,000
To Securities Premium A/c		16,000
To Premium on Redemption of Debentures A/c		8,000
(Being debentures issued at ₹ 20 premium, redeemable at ₹ 10 premium)

2 marks

II. Collateral debentures recorded through the journal:

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c Dr.	4,00,000
To Bank Loan A/c		4,00,000
(Being loan raised from The Development Bank)
Debenture Suspense A/c Dr.	5,00,000
To 9% Debentures A/c		5,00,000
(Being debentures issued as collateral security)

Balance Sheet (extract): Non-current Liabilities, Long-term Borrowings (Note 1) ₹ 4,00,000.

Note 1 — 9% Debentures ₹ 5,00,000, less Debenture Suspense ₹ 5,00,000 = nil; Bank Loan (secured by collateral debentures) ₹ 4,00,000. Total ₹ 4,00,000.

2 marks

Answer: (a) Discount ₹ 7,500 and Loss ₹ 3,750 Dr. with application ₹ 67,500 to 12% Debentures ₹ 75,000 and Premium on Redemption ₹ 3,750; (b) Loss ₹ 8,000 and application ₹ 96,000 to 9% Debentures ₹ 80,000, Securities Premium ₹ 16,000 and Premium on Redemption ₹ 8,000; II Bank Loan ₹ 4,00,000 and Debenture Suspense ₹ 5,00,000 entries; long-term borrowings ₹ 4,00,000

Where the marks are

Entries for Arman Ltd. (2 marks)
Entries for Sohan Ltd. (2 marks)
Collateral entries and Balance Sheet extract (2 marks)

Open Q23 on its own page

Q24 · 6 marks · Case-basedCompetency-basedReconstitution of a Partnership Firm – Admission of a Partner

A, B and C are partners sharing profits and losses in the ratio of 4:3:3. They decided to change their profit-sharing ratio to 3:2:5 with effect from 1st April 2026.

Balance Sheet of A, B and C as at 31st March 2026

Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	1,20,000	Land & Building	4,00,000
General Reserve	90,000	Machinery	2,00,000
Profit & Loss A/c	60,000	Stock	1,50,000
A's Capital	3,00,000	Debtors	1,00,000
B's Capital	2,50,000	Cash	1,70,000
C's Capital	2,00,000
	10,20,000		10,20,000

Additional Information:
1. Goodwill of the firm is valued at ₹1,50,000.
2. Land & Building is revalued at ₹4,50,000.
3. A provision for doubtful debts @5% is to be created on debtors.
4. An unrecorded liability of ₹20,000 is discovered.

Based on the above information answer the following MCQs:

I
The net sacrifice made by partners (in terms of share of profit) is:
1. (A)A sacrifices 1/10 and B sacrifices 1/10; C gains 1/5
2. (B)A gains 1/10; B gains 1/10; C sacrifices 1/10
3. (C)A sacrifices 1/10; B gains 1/10; C gains 1/5
4. (D)A gains 1/10, B gains 1/10; C sacrifices 1/5
1 mark
II
Which of the following journal entries is correct for treatment of goodwill?
1. (A)A's Capital A/c Dr. To C's Capital A/c
2. (B)A's Capital A/c Dr. B's Capital A/c Dr. To C's Capital A/c
3. (C)C's Capital A/c Dr. To A's Capital A/c To B's Capital A/c
4. (D)C's Capital A/c Dr. A's Capital A/c Dr. To Goodwill A/c
1 mark
III
The amount of goodwill to be compensated by gaining partner(s) is:
1. (A)₹45,000
2. (B)₹30,000
3. (C)₹75,000
4. (D)₹1,50,000
1 mark
IV
The net gain on revaluation will be:
1. (A)₹25,000
2. (B)₹20,000
3. (C)₹5,000
4. (D)₹30,000
1 mark
V
General Reserve and Profit & Loss Account will be distributed in:
1. (A)New ratio
2. (B)Gaining ratio
3. (C)Old ratio
4. (D)Sacrificing ratio
1 mark
VI
After all adjustments, the balance of C's capital will be?
1. (A)₹2,22,500
2. (B)₹2,35,000
3. (C)₹3,00,000
4. (D)₹3,50,000
1 mark

Try it first, then show our solutionSolution

I. Old 4 : 3 : 3, new 3 : 2 : 5. A: 4/10 − 3/10 = 1/10 sacrifice; B: 3/10 − 2/10 = 1/10 sacrifice; C: 5/10 − 3/10 = 1/5 gain. (A)
1 mark
II. The gaining partner compensates the sacrificing partners: C's Capital A/c Dr. to A's and B's Capital A/cs. (C)
1 mark
III. C pays for his 1/5 gain: ₹ 1,50,000 × 1/5 = ₹ 30,000. (B)
1 mark
IV. Land & Building +₹ 50,000; provision 5% of debtors −₹ 5,000; unrecorded liability −₹ 20,000. Net gain = ₹ 25,000. (A)
1 mark
V. Reserves and accumulated profits were earned under the old ratio, so they go to partners in the old ratio. (C)
1 mark
VI. C: ₹ 2,00,000 + general reserve 3/10 × 90,000 = ₹ 27,000 + P&L 3/10 × 60,000 = ₹ 18,000 + revaluation gain 3/10 × 25,000 = ₹ 7,500 − goodwill ₹ 30,000 = ₹ 2,22,500. (A)
1 mark

Answer: I (A) A and B sacrifice 1/10 each, C gains 1/5; II (C); III (B) ₹ 30,000; IV (A) ₹ 25,000; V (C) old ratio; VI (A) ₹ 2,22,500

Where the marks are

1 mark for each of the six answers (6 marks)

Open Q24 on its own page

Answer one of these 2 alternatives.

Q25(A) · 6 marks · Long answerReconstitution of a Partnership Firm – Admission of a Partner

X and Y were partners sharing profits in the ratio of 1: 2. Their Balance Sheet as at 31st March 2026 was as follows:

Liabilities	₹	Assets	₹
Creditors	30,000	Cash	20,000
Outstanding Expenses	4,000	Debtors	40,000
Capitals: X 1,50,000		Less: Prov. for doubtful debts	500 → 39,500
Y 3,00,000	4,50,000	Stock	1,20,000
General Reserve	6,000	Furniture	30,000
		Machinery	2,72,500
		Patents	5,000
		Profit and Loss A/c	3,000
	4,90,000		4,90,000

They agreed to admit Z for 1/4th share on 1st April 2026 on the following terms:
i. Goodwill of the firm was valued at ₹60,000 and Z was to bring in a new and updated machinery costing ₹ 5,000 as a part payment against his share of premium for goodwill and the furniture for the balance of his share of goodwill premium.
ii. ₹ 10,000 were receivable from a debtor who was declared insolvent, only 50% of the amount could be recovered in cash by selling his assets.
iii. Provision for doubtful debts to be raised to 10% of the value of revised debtors.
iv. Patents were valueless.
v. Stock was found to be overvalued by 20%.
vi. ₹ 3,500 be provided for an unforeseen liability.
vii. Z to bring in capital equal to 1/4th of the combined capital of X and Y after all adjustments.
Pass required journal entries on the admission of Z and also prepare Balance Sheet of the reconstituted firm.

Try it first, then show our solutionSolution

Goodwill. Z's share = 1/4 × ₹ 60,000 = ₹ 15,000, brought as machinery ₹ 5,000 and furniture ₹ 10,000, and shared by X and Y in their sacrificing (old) ratio 1 : 2.

Particulars	Dr. (₹)	Cr. (₹)
Machinery A/c Dr.	5,000
Furniture A/c Dr.	10,000
To Premium for Goodwill A/c		15,000
(Being machinery and furniture brought by Z for his share of goodwill)
Premium for Goodwill A/c Dr.	15,000
To X's Capital A/c		5,000
To Y's Capital A/c		10,000
(Being premium for goodwill shared in sacrificing ratio)

1 mark

Insolvent debtor (₹ 10,000; 50% recovered) and use of the old provision.

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c Dr.	5,000
Bad Debts A/c Dr.	5,000
To Debtors A/c		10,000
(Being 50% recovered from an insolvent debtor)
Provision for Doubtful Debts A/c Dr.	500
Revaluation A/c Dr.	4,500
To Bad Debts A/c		5,000
(Being bad debts met from provision and the rest charged to revaluation)

1 mark

Revaluation. New provision 10% of ₹ 30,000 = ₹ 3,000; patents ₹ 5,000 written off; stock overvalued by 20%: true value ₹ 1,20,000 × 100/120 = ₹ 1,00,000 (fall ₹ 20,000); unforeseen liability ₹ 3,500. Total loss = 4,500 + 31,500 = ₹ 36,000, shared 1 : 2.

Particulars	Dr. (₹)	Cr. (₹)
Revaluation A/c Dr.	31,500
To Provision for Doubtful Debts A/c		3,000
To Patents A/c		5,000
To Stock A/c		20,000
To Unforeseen Liability A/c		3,500
(Being decrease in assets and new liability recorded)
X's Capital A/c Dr.	12,000
Y's Capital A/c Dr.	24,000
To Revaluation A/c		36,000
(Being revaluation loss shared 1 : 2)

1 mark

Reserve, accumulated loss and Z's capital. X = 1,50,000 + 5,000 + 2,000 − 12,000 − 1,000 = ₹ 1,44,000; Y = 3,00,000 + 10,000 + 4,000 − 24,000 − 2,000 = ₹ 2,88,000; Z brings 1/4 × ₹ 4,32,000 = ₹ 1,08,000.

Particulars	Dr. (₹)	Cr. (₹)
General Reserve A/c Dr.	6,000
To X's Capital A/c		2,000
To Y's Capital A/c		4,000
(Being general reserve distributed)
X's Capital A/c Dr.	1,000
Y's Capital A/c Dr.	2,000
To Profit and Loss A/c		3,000
(Being debit balance of profit and loss written off)
Bank A/c Dr.	1,08,000
To Z's Capital A/c		1,08,000
(Being capital brought in by Z)

1 mark

Balance Sheet of X, Y and Z as at 1st April, 2026. Cash = 20,000 + 5,000 + 1,08,000 = ₹ 1,33,000.

Liabilities	₹	Assets	₹
Creditors	30,000	Cash	1,33,000
Outstanding Expenses	4,000	Debtors 30,000 less provision 3,000	27,000
Unforeseen Liability	3,500	Stock	1,00,000
Capital: X	1,44,000	Furniture	40,000
Capital: Y	2,88,000	Machinery	2,77,500
Capital: Z	1,08,000
	5,77,500		5,77,500

2 marks

Answer: Revaluation loss ₹ 36,000 (X ₹ 12,000, Y ₹ 24,000); capitals X ₹ 1,44,000, Y ₹ 2,88,000, Z ₹ 1,08,000; Balance Sheet total ₹ 5,77,500

Where the marks are

Goodwill brought in kind and distributed (1 mark)
Insolvent debtor entries (1 mark)
Revaluation entries (1 mark)
Reserve, P&L and Z's capital (1 mark)
Balance Sheet (2 marks)

Open Q25(A) on its own page

Q25(B) · 6 marks · Long answerReconstitution of a Partnership Firm – Retirement/Death of a Partner

A, B and C were partners in a firm sharing profits in 2:2:1 ratio. On 31.3.2026, C retires from the firm. On the date of C's retirement, the Balance Sheet of the firm was as follows:

Balance Sheet of A, B and C as at 31.3.2026

Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	54,000	Bank	45,000
General Reserve	10,000	Debtor 12,000
Outstanding Rent	4,400	Less: Provision for doubtful debts 800	11,200
Provision for Legal Claim	12,000	Stock	18,000
Capitals:		Furniture	8,200
A 92,000		Premises	1,80,000
B 60,000		Goodwill	10,000
C 40,000	1,92,000
	2,72,400		2,72,400

On C's retirement the goodwill of the firm was valued at ₹ 45,000.
After retirement the accountants of the firm worked out the following balance sheet, but they misplaced the papers on which Revaluation A/c and Partners' Capital were worked out.

Balance Sheet of A and B (After C's retirement) as at 31.3.2026

Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	54,000	Bank	34,600
General Reserve	5,000	Debtor 12,000
Outstanding Rent	4,400	Less: Provision for doubtful debts 600	11,400
Provision for Legal Claim	14,400	Stock	16,200
C's Loan	40,000	Furniture	10,200
Capitals:		Premises	1,89,000
A 87,800
B 55,800	1,43,600
	2,61,400		2,61,400

On the basis of above information, you are required to help the accountants of the firm in preparing Revaluation A/c, and Partners Capital Accounts of the reconstituted firm.

Try it first, then show our solutionSolution

Revaluation figures from the two balance sheets: provision 800 → 600 (gain ₹ 200); legal claim 12,000 → 14,400 (loss ₹ 2,400); stock 18,000 → 16,200 (loss ₹ 1,800); furniture 8,200 → 10,200 (gain ₹ 2,000); premises 1,80,000 → 1,89,000 (gain ₹ 9,000).

Particulars	₹	Particulars	₹
To Provision for Legal Claim	2,400	By Provision for Doubtful Debts	200
To Stock	1,800	By Furniture	2,000
To Gain: A's Capital	2,800	By Premises	9,000
To Gain: B's Capital	2,800
To Gain: C's Capital	1,400
	11,200		11,200

2 marks

Workings. Old goodwill ₹ 10,000 written off 2 : 2 : 1. Only ₹ 5,000 of the general reserve is distributed (2 : 2 : 1) and ₹ 5,000 is kept, so A and B pay C his 1/5 share of the kept reserve (₹ 1,000) in their gaining ratio 1 : 1. C's goodwill share = 45,000 × 1/5 = ₹ 9,000, paid ₹ 4,500 each. C's total = ₹ 50,400: ₹ 40,000 to loan (as in the new balance sheet) and ₹ 10,400 paid by bank (45,000 − 34,600).
1 mark

Partners' Capital Accounts

Particulars	A (₹)	B (₹)	C (₹)	Particulars	A (₹)	B (₹)	C (₹)
To Goodwill A/c	4,000	4,000	2,000	By Balance b/d	92,000	60,000	40,000
To C's Capital A/c (reserve kept)	500	500		By General Reserve A/c	2,000	2,000	1,000
To C's Capital A/c (goodwill)	4,500	4,500		By Revaluation A/c	2,800	2,800	1,400
To Bank A/c			10,400	By A's Capital A/c (goodwill)			4,500
To C's Loan A/c			40,000	By B's Capital A/c (goodwill)			4,500
To Balance c/d	87,800	55,800		By A's Capital A/c (reserve)			500
				By B's Capital A/c (reserve)			500
	96,800	64,800	52,400		96,800	64,800	52,400

3 marks

Answer: Revaluation gain ₹ 7,000 (A ₹ 2,800, B ₹ 2,800, C ₹ 1,400); C paid ₹ 10,400 and ₹ 40,000 to loan; closing capitals A ₹ 87,800, B ₹ 55,800

Where the marks are

Revaluation Account (2 marks)
Workings for goodwill, reserve and C's settlement (1 mark)
Partners' capital accounts (3 marks)

Open Q25(B) on its own page

Answer one of these 2 alternatives.

Q26(A) · 6 marks · Long answerAccounting for Share Capital

Lacchoo Ltd. invited applications for 1,20,000 equity shares of ₹10 each at a premium of ₹ 4 per share, payable as –
₹6 on Application (including ₹2 premium)
₹5 on Allotment (including ₹1 premium)
Balance on First & Final Call.
Applications were received for 2,70,000 shares, out of which applications for 10,000 shares were rejected and the allotment was made on a pro-rata basis to the remaining applicants.
Mr. Parivesh, who was allotted 1,200 shares, failed to pay call money. His shares were forfeited after due notice. Later, these shares were reissued at ₹ 100 per share as fully paid-up.
Pass necessary Journal Entries in the books of Lacchoo Ltd.

Try it first, then show our solutionSolution

Applications 2,70,000; 10,000 rejected; 2,60,000 applicants get 1,20,000 shares. Excess on accepted applications = 1,40,000 × ₹ 6 = ₹ 8,40,000: ₹ 6,00,000 covers allotment in full and ₹ 2,40,000 is refunded with the ₹ 60,000 on rejected applications.

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c Dr.	16,20,000
To Equity Share Application A/c		16,20,000
(Being application money received on 2,70,000 shares)
Equity Share Application A/c Dr.	16,20,000
To Equity Share Capital A/c		4,80,000
To Securities Premium A/c		2,40,000
To Equity Share Allotment A/c		6,00,000
To Bank A/c		3,00,000
(Being application money adjusted and excess refunded)

1½ marks

Allotment and call due.

Particulars	Dr. (₹)	Cr. (₹)
Equity Share Allotment A/c Dr.	6,00,000
To Equity Share Capital A/c		4,80,000
To Securities Premium A/c		1,20,000
(Being allotment money due; fully met from excess application money)
Equity Share First and Final Call A/c Dr.	3,60,000
To Equity Share Capital A/c		2,40,000
To Securities Premium A/c		1,20,000
(Being call money due: ₹ 2 capital + ₹ 1 premium)

1½ marks

Parivesh owes 1,200 × ₹ 3 = ₹ 3,600.
Particulars Dr. (₹) Cr. (₹)
Bank A/c Dr. 3,56,400
Calls in Arrears A/c Dr. 3,600
To Equity Share First and Final Call A/c 3,60,000
(Being call money received except on 1,200 shares)
½ mark
Capital paid by Parivesh = ₹ 8 per share; the unpaid ₹ 1 of call premium is reversed.
Particulars Dr. (₹) Cr. (₹)
Equity Share Capital A/c Dr. 12,000
Securities Premium A/c Dr. 1,200
To Share Forfeited A/c 9,600
To Calls in Arrears A/c 3,600
(Being 1,200 shares forfeited)
1 mark

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c Dr.	3,56,400
Calls in Arrears A/c Dr.	3,600
To Equity Share First and Final Call A/c		3,60,000
(Being call money received except on 1,200 shares)

Particulars	Dr. (₹)	Cr. (₹)
Equity Share Capital A/c Dr.	12,000
Securities Premium A/c Dr.	1,200
To Share Forfeited A/c		9,600
To Calls in Arrears A/c		3,600
(Being 1,200 shares forfeited)

Reissue at ₹ 100 as fully paid (₹ 90 premium), so the whole ₹ 9,600 forfeited is a gain.

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c Dr.	1,20,000
To Equity Share Capital A/c		12,000
To Securities Premium A/c		1,08,000
(Being forfeited shares reissued at ₹ 100)
Share Forfeited A/c Dr.	9,600
To Capital Reserve A/c		9,600
(Being gain on reissue transferred to Capital Reserve)

1½ marks

Answer: Application ₹ 16,20,000 (capital ₹ 4,80,000, premium ₹ 2,40,000, allotment ₹ 6,00,000, refund ₹ 3,00,000); allotment ₹ 6,00,000; call ₹ 3,60,000, ₹ 3,56,400 received; forfeiture ₹ 12,000 + ₹ 1,200 to Forfeited ₹ 9,600 and Arrears ₹ 3,600; reissue ₹ 1,20,000; Capital Reserve ₹ 9,600

Where the marks are

Application entries (1½ marks)
Allotment and call due (1½ marks)
Call received (½ mark)
Forfeiture (1 mark)
Reissue and capital reserve (1½ marks)

Open Q26(A) on its own page

Q26(B) · 6 marks · Long answerAccounting for Share Capital

Neha Tech Ltd. has authorised capital of ₹ 20,00,000 divided into shares of face value of ₹ 10 each. Company decided to issue 1,00,000 equity shares at a value of ₹ 100 each. The entire face value was payable on application and the entire premium money was payable on allotment.
Applications were received for 1,50,000 shares.
Allotment was made on the following basis:
(i) Applicants of 10,000 shares were sent letters of regret.
(ii) To applicants for another 10,000 shares – Shares were fully allotted
(iii) Remaining applicants were allotted shares on a pro rata basis.
A shareholder who was allotted 18,000 shares belongs to category (iii), failed to pay allotment money and his shares were duly forfeited. Later on, 5,000 shares were reissued as fully paid on a premium of 200%.
You are required to give:
I. Cash Book, Share Capital A/c and Securities Premium A/c.
II. Journal entries for forfeiture and re-issue of shares.

Try it first, then show our solutionSolution

Workings. Issue at ₹ 100 (₹ 10 capital on application, ₹ 90 premium on allotment). Regret 10,000 (₹ 1,00,000 refunded); 10,000 allotted in full; 1,30,000 applicants get 90,000 (13 : 9), so ₹ 4,00,000 excess goes to allotment. The defaulter (18,000 shares) applied for 26,000; his ₹ 80,000 excess leaves ₹ 15,40,000 of premium unpaid. Allotment received = 90,00,000 − 4,00,000 − 15,40,000 = ₹ 70,60,000. Reissue of 5,000 at 200% premium = ₹ 30 each.
1 mark

Cash Book (bank column)

Particulars	₹	Particulars	₹
To Share Application A/c	15,00,000	By Share Application A/c (refund)	1,00,000
To Share Allotment A/c	70,60,000	By Balance c/d	86,10,000
To Share Capital A/c (reissue)	50,000
To Securities Premium A/c (reissue)	1,00,000
	87,10,000		87,10,000

1½ marks

Share Capital Account
Particulars ₹ Particulars ₹
To Share Forfeited A/c 1,80,000 By Share Application A/c 10,00,000
To Balance c/d 8,70,000 By Bank A/c (reissue) 50,000
10,50,000 10,50,000
Securities Premium Account
Particulars ₹ Particulars ₹
To Share Allotment A/c (unpaid on forfeited shares) 15,40,000 By Share Allotment A/c 90,00,000
To Balance c/d 75,60,000 By Bank A/c (reissue) 1,00,000
91,00,000 91,00,000
1½ marks

Particulars	₹	Particulars	₹
To Share Forfeited A/c	1,80,000	By Share Application A/c	10,00,000
To Balance c/d	8,70,000	By Bank A/c (reissue)	50,000
	10,50,000		10,50,000

Particulars	₹	Particulars	₹
To Share Allotment A/c (unpaid on forfeited shares)	15,40,000	By Share Allotment A/c	90,00,000
To Balance c/d	75,60,000	By Bank A/c (reissue)	1,00,000
	91,00,000		91,00,000

Journal: forfeiture and reissue

Particulars	Dr. (₹)	Cr. (₹)
Share Capital A/c Dr.	1,80,000
Securities Premium A/c Dr.	15,40,000
To Share Allotment A/c		15,40,000
To Share Forfeited A/c		1,80,000
(Being 18,000 shares forfeited for non-payment of allotment)
Bank A/c Dr.	1,50,000
To Share Capital A/c		50,000
To Securities Premium A/c		1,00,000
(Being 5,000 forfeited shares reissued at ₹ 30)
Share Forfeited A/c Dr.	50,000
To Capital Reserve A/c		50,000
(Being gain on reissue transferred to Capital Reserve)

2 marks

Answer: Cash Book balance ₹ 86,10,000; Share Capital ₹ 8,70,000; Securities Premium ₹ 75,60,000; forfeiture ₹ 1,80,000 (premium ₹ 15,40,000 reversed); reissue ₹ 1,50,000; Capital Reserve ₹ 50,000

Where the marks are

Workings (1 mark)
Cash Book (1½ marks)
Share Capital and Securities Premium accounts (1½ marks)
Forfeiture and reissue entries (2 marks)

Open Q26(B) on its own page

Section B-I

Part B Option I: Analysis of Financial Statements

Q27 · 1 mark · MCQFinancial Statements of a Company
A company had the following balances in their books of accounts:
Particulars 31st March, 2026 (₹) 31st March, 2025 (₹)
Work in Progress 1,00,000 90,000
Finished Goods 80,000 1,10,000
Stock in Trade 90,000 80,000
Raw Material 20,000 10,000
What will be the amount of Cost of Materials Consumed if purchases of raw materials amounted to ₹ 1,60,000 and purchase of stock-in-trade amounted to ₹ 2,00,000?
1. (A)₹ 1,90,000
2. (B)₹ 3,40,000
3. (C)₹ 1,50,000
4. (D)₹ 3,50,000
Try it first, then show our solutionSolution
1. Cost of materials consumed uses only raw material: opening ₹ 10,000 + purchases ₹ 1,60,000 − closing ₹ 20,000.
2. Cost of materials consumed = ₹ 1,50,000. Stock-in-trade, WIP and finished goods belong elsewhere in the Statement of Profit and Loss. Option (C).
  1 mark
Answer: (C) ₹ 1,50,000
Where the marks are
- Raw material only (1 mark)
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Q28 · 1 mark · Assertion-reasonAccounting Ratios
Assertion (A): Current Ratio can never be less than Liquid ratio.
Reason (R): Current Ratio includes all current assets, including inventory and prepaid expenses.
1. (A)Both A and R are correct, and R is the correct explanation of A
2. (B)Both A and R are correct, but R is not the correct explanation of A
3. (C)A is correct but R is incorrect
4. (D)A is incorrect but R is correct
Try it first, then show our solutionSolution
1. Both ratios have current liabilities as the denominator; current assets include liquid assets plus inventory and prepaid expenses.
2. So the current ratio is never below the liquid ratio, and the Reason gives exactly why. Option (A).
  1 mark
Answer: (A) Both A and R are correct, and R is the correct explanation of A
Where the marks are
- Current assets ≥ liquid assets with the same denominator (1 mark)
Open Q28 on its own page
Q29 · 1 mark · MCQCash Flow Statement
Vivek Consultancy Private Limited purchased furniture for ₹20,00,000 paying 60% by issue of equity shares of ₹10 each and the balance by a cheque. This transaction will result in:
1. (A)Cash used in Investing activities ₹20,00,000 and Cash generated from financing activities ₹ 12,00,000.
2. (B)Cash used in investing activities ₹ 8,00,000.
3. (C)Cash used in investing activities ₹ 20,00,000.
4. (D)Cash generated from financing activities ₹ 12,00,000.
Try it first, then show our solutionSolution
1. 60% of ₹ 20,00,000 (₹ 12,00,000) is paid in shares: a non-cash transaction, kept out of the cash flow statement.
2. Only the cheque of ₹ 8,00,000 is a cash outflow, under investing activities. Option (B).
  1 mark
Answer: (B) Cash used in investing activities ₹ 8,00,000.
Where the marks are
- Shares issued for an asset are non-cash (1 mark)
Open Q29 on its own page
Q30 · 1 mark · MCQCash Flow Statement
Which of the following is not a cash flow from investing activities?
1. (A)Sale of 2,500 shares (held as investment) for ₹ 15 each
2. (B)Purchase of equipment for ₹ 500 cash
3. (C)Purchase of marketable securities for ₹ 25,000 cash
4. (D)Sale of land for ₹ 28,000 cash
Try it first, then show our solutionSolution
1. Selling investments, buying equipment and selling land are all investing activities.
2. Marketable securities are cash equivalents, so buying them is not a cash flow at all. Option (C).
  1 mark
Answer: (C) Purchase of marketable securities for ₹ 25,000 cash
Where the marks are
- Marketable securities are cash equivalents (1 mark)
Open Q30 on its own page

Particulars	31st March, 2026 (₹)	31st March, 2025 (₹)
Work in Progress	1,00,000	90,000
Finished Goods	80,000	1,10,000
Stock in Trade	90,000	80,000
Raw Material	20,000	10,000

Answer one of these 2 alternatives.

Q31(A) · 3 marks · Short answerAnalysis of Financial Statements

Prepare a Comparative Statement of Profit and Loss of Uttu Machineries Ltd. for the year ended 31st March 2026 from the following information:

PARTICULARS	31st March 2026 (₹)	31st March 2025 (₹)
Revenue From Operations	40,00,000	20,00,000
Cost of Revenue from Operations	4,00,000	2,00,000
Wages	6,00,000	4,00,000
Interest paid	1,00,000	1,00,000
Tax Rate	50%	50%

Solution being checked. We show a solution only after an independent check agrees with it.

Q31(B) · 3 marks · Short answerAnalysis of Financial Statements

Prepare Common Size Statement of Profit and Loss for the year ended March 31, 2026

PARTICULARS	31st March 2026 (₹)
Revenue from Operations	6,00,000
Indirect Expense	25% of gross profit
Cost of Revenue from Operations	4,00,000
Other incomes	30,000
Income tax	30%

Try it first, then show our solutionSolution

Gross profit = ₹ 6,00,000 − ₹ 4,00,000 = ₹ 2,00,000; indirect expenses = 25% = ₹ 50,000. Tax at 30% of profit before tax.
1 mark

Common Size Statement of Profit and Loss for the year ended 31st March, 2026

Particulars	₹	% of revenue from operations
Revenue from operations	6,00,000	100
Other income	30,000	5
Total revenue	6,30,000	105
Cost of revenue from operations	4,00,000	66.67
Indirect expenses	50,000	8.33
Total expenses	4,50,000	75
Profit before tax	1,80,000	30
Less: Tax (30%)	54,000	9
Profit after tax	1,26,000	21

2 marks

Answer: Total revenue ₹ 6,30,000 (105%); expenses ₹ 4,50,000 (75%); PBT ₹ 1,80,000 (30%); tax ₹ 54,000 (9%); PAT ₹ 1,26,000 (21%)

Where the marks are

Indirect expenses from gross profit (1 mark)
Common size statement (2 marks)

Open Q31(B) on its own page

Q32 · 3 marks · Short answerFinancial Statements of a Company
Under which main head and sub - head of the financial statements are the following items classified or shown:
I. Warranty claims payable.
II. Preliminary expenses written off.
III. Interest Accrued and Due on Debentures.
Try it first, then show our solutionSolution
1. I. Warranty claims payable: Current Liabilities, sub-head Other Current Liabilities.
  1 mark
2. II. Preliminary expenses written off: Statement of Profit and Loss, under Expenses, sub-head Other Expenses.
  1 mark
3. III. Interest accrued and due on debentures: Current Liabilities, sub-head Other Current Liabilities.
  1 mark
Answer: I: Current Liabilities, Other Current Liabilities; II: Statement of Profit and Loss, Other Expenses; III: Current Liabilities, Other Current Liabilities
Where the marks are
- 1 mark for each item (3 marks)
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Answer one of these 2 alternatives.
Q33(A) · 4 marks · Long answerAccounting Ratios
Quick Ratio of Alpha Traders is 1.2 : 1. Given that their operating cycle is of 8 months, state with reasons whether the following transactions will increase, decrease, or not affect the Quick Ratio:
I. Bills Receivable ₹40,000 were dishonoured and treated as bad debts.
II. Stock worth ₹25,000 was destroyed by fire; insurance company admitted claim of ₹18,000 receivable within 6 months.
III. Furniture having book value ₹60,000 was sold for ₹52,000; sale proceeds to be received in 11th month from the date of sale.
IV. 12% Debentures of ₹2,00,000 were issued at a premium of 10% to a supplier of machinery costing ₹ 3,00,000 and balance was settled through cheque.
Try it first, then show our solutionSolution
1. I. Decrease. Bills receivable (a quick asset) are written off; quick liabilities do not change.
  1 mark
2. II. Increase. Stock (not a quick asset) is replaced by an insurance claim receivable within 6 months, a new quick asset.
  1 mark
3. III. Increase. The ₹ 52,000 receivable is due within 12 months, so it is a current (quick) asset; furniture was not a current asset.
  1 mark
4. IV. Decrease. Debentures of ₹ 2,20,000 cover part of the ₹ 3,00,000 machine; the ₹ 80,000 balance paid by cheque reduces quick assets with no change in current liabilities.
  1 mark
Answer: I decrease; II increase; III increase; IV decrease
Where the marks are
- 1 mark for each transaction with reason (4 marks)
Open Q33(A) on its own page
OR
Q33(B) · 4 marks · Long answerAccounting Ratios
From the given information, calculate the following ratios:
I. Current ratio
II. Inventory Turnover ratio
Information: Revenue from operations (Net sales) ₹ 5,00,000, opening inventory ₹7,000, closing inventory ₹ 4,000 more than the opening inventory, net purchase is 70% of revenue from operations, operating expenses ₹ 30,000, liquid assets ₹ 75,000, wages ₹ 10,000, salaries ₹ 20,000, carriage inwards ₹ 40,000, prepaid expenses ₹2,000, current liabilities ₹ 60,000, 9% debentures ₹ 3,00,000, long - term loan from bank ₹ 1.00,000, equity share capital ₹ 10,00,000 and 8% preference share capital ₹2,00,000.
Try it first, then show our solutionSolution
1. Closing inventory = ₹ 7,000 + ₹ 4,000 = ₹ 11,000. Current assets = liquid assets ₹ 75,000 + inventory ₹ 11,000 + prepaid expenses ₹ 2,000 = ₹ 88,000.
  1 mark
2. Current ratio = ₹ 88,000 / ₹ 60,000 = 1.47 : 1.
  1 mark
3. Purchases = 70% × ₹ 5,00,000 = ₹ 3,50,000. Cost of revenue = 7,000 + 3,50,000 + wages 10,000 + carriage inwards 40,000 − 11,000 = ₹ 3,96,000. Average inventory = (7,000 + 11,000)/2 = ₹ 9,000.
  1 mark
4. Inventory turnover ratio = ₹ 3,96,000 / ₹ 9,000 = 44 times.
  1 mark
Answer: Current ratio 1.47 : 1; inventory turnover ratio 44 times
Where the marks are
- Current assets ₹ 88,000 (1 mark)
- Current ratio (1 mark)
- Cost of revenue and average inventory (1 mark)
- Inventory turnover ratio (1 mark)
Open Q33(B) on its own page

Q34 · 6 marks · Long answerCash Flow Statement

From the following Balance Sheet of Krishang Ltd. as at 31 March 2026, calculate Cash Flow from Operating Activities and Investing Activities.

Balance Sheet of Krishang Ltd. as at 31 March 2026

Particulars	Note No.	31-03-2026 (₹)	31-03-2025 (₹)
I. Equity and Liabilities
1. Shareholders' Funds
(a) Share Capital		6,00,000	5,50,000
(b) Reserves and Surplus	1	1,50,000	1,00,000
2. Non- Current Liabilities
(a) Long term Borrowings	2	1,20,000	85,000
3. Current Liabilities
(a) Trade Payables		89,500	1,02,000
(b) Short - term Provisions	3	25,000	38,500
Total		9,84,500	8,75,500
II. Assets
1. Non- Current Assets
(a) Fixed Assets/Property Plant and Equipment and Intangible Assets
(i) Tangible Assets/Property, Plant and Equipment	4	5,35,000	4,25,000
(ii) Intangible Assets	5	20,000	56,000
2. Current Assets
(a) Current Investments		1,20,000	75,000
(b) Trade Receivables		1,52,500	1,32,000
(c) Cash and Cash Equivalents		1,57,000	1,87,500
Total		9,84,500	8,75,500

Notes to Accounts:

Note No.	Particulars	31-03-2026 (₹)	31-03-2025 (₹)
1	Reserves and Surplus: Surplus i.e. Balance in Statement of Profit and Loss	1,50,000	1,00,000
2	Long-term Borrowings: 10% Debentures	1,20,000	85,000
3	Short - term Provisions: Provision for Tax	25,000	38,500
4	Tangible Assets/Property, Plant and Equipment: Machinery	6,35,000	5,00,000
	Less: Accumulated Depreciation	(1,00,000)	(75,000)
		5,35,000	4,25,000
5	Intangible Assets: Goodwill	20,000	56,000

Additional Information:
i. A piece of machinery costing 12,000 on which accumulated depreciation was 8,000 was sold for 3,000.
ii. 10% Debentures were issued on 1st October 2025.
iii. On 1st May, 2025, Land was purchased of ₹ 2,00,000 for investment purpose but due to financial requirements the company had to sell it on 31st January 2026 for ₹ 2,20,000.

Try it first, then show our solutionSolution

Net profit before tax = increase in surplus ₹ 50,000 + provision for tax ₹ 25,000 = ₹ 75,000. Depreciation: accumulated depreciation 75,000 − 8,000 + charge = 1,00,000, so charge = ₹ 33,000. Loss on machine sold = (12,000 − 8,000) − 3,000 = ₹ 1,000. Interest on debentures = 10% × 85,000 + 10% × 35,000 × 6/12 = ₹ 10,250. Gain on land = ₹ 20,000.
1 mark

A. Operating activities

Particulars	₹
Net profit before tax	75,000
Add: Depreciation	33,000
Add: Goodwill written off	36,000
Add: Loss on sale of machinery	1,000
Add: Interest on debentures	10,250
Less: Gain on sale of land	(20,000)
Operating profit before working capital changes	1,35,250
Less: Increase in trade receivables	(20,500)
Less: Decrease in trade payables	(12,500)
Cash generated from operations	1,02,250
Less: Tax paid (38,500 + 25,000 − 25,000)	(38,500)
Net cash from operating activities	63,750

2½ marks

Machinery A/c (working)

Particulars	₹	Particulars	₹
To Balance b/d	5,00,000	By Accumulated Depreciation A/c	8,000
To Bank A/c (purchase, balancing figure)	1,47,000	By Bank A/c (sale)	3,000
		By Loss on Sale A/c	1,000
		By Balance c/d	6,35,000
	6,47,000		6,47,000

1 mark

B. Investing activities: sale of machinery ₹ 3,000 − purchase of machinery ₹ 1,47,000 − purchase of land ₹ 2,00,000 + sale of land ₹ 2,20,000 = net cash used (₹ 1,24,000). Current investments are treated as marketable securities (cash equivalents), so they are not an investing flow.
1½ marks

Answer: Net cash from operating activities ₹ 63,750; net cash used in investing activities ₹ 1,24,000

Where the marks are

Net profit before tax and non-cash items (1 mark)
Cash from operating activities ₹ 63,750 (2½ marks)
Machinery account (1 mark)
Cash used in investing activities ₹ 1,24,000 (1½ marks)

Open Q34 on its own page

Section B-II

Part B Option II: Computerised Accounting

Q27 · 1 mark · MCQSpreadsheet
Identify the error which will be displayed on screen when the set of co-ordinates that a cell occupies on a worksheet is invalid.
1. (A)Correct a # NAME ? Error
2. (B)Correct # REF ! Error
3. (C)Correct a # N/A Error
4. (D)Correct a ##### Error
Try it first, then show our solutionSolution
1. #REF! appears when a formula refers to a cell reference that is not valid, for example after the referred cells are deleted.
2. #NAME? is for unrecognised text in a formula, #N/A for a value not available and ##### for a column too narrow. Option (B).
  1 mark
Answer: (B) Correct # REF ! Error
Where the marks are
- Invalid cell reference gives #REF! (1 mark)
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Q28 · 1 mark · MCQSpreadsheet
How are 'absolute cell reference' and 'mixed cell reference' identified in Excel ?
1. (A)Using # sign
2. (B)Using ~ sign
3. (C)Using $ sign
4. (D)Using £ sign
Try it first, then show our solutionSolution
1. A $ placed before the column letter and/or row number fixes that part of the reference when the formula is copied.
2. $A$ 1 is absolute; $A 1 an d A$ 1 are mixed references. Option (C).
  1 mark
Answer: (C) Using $ sign
Where the marks are
- The dollar sign fixes references (1 mark)
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Q29 · 1 mark · MCQSpreadsheet
What is used to build single formula with multiple results in Excel ?
1. (A)Derived value
2. (B)Vectors
3. (C)Round()
4. (D)Array
Try it first, then show our solutionSolution
1. An array formula works on a range of values at once and can return several results from a single formula.
2. So a single formula with multiple results is built with an array. Option (D).
  1 mark
Answer: (D) Array
Where the marks are
- Array formulas return multiple results (1 mark)
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Q30 · 1 mark · MCQOverview of Computerised Accounting System
A sequential code refers to code applied to some documents where:
1. (A)Account heads are assigned to documents
2. (B)Numbers and letters are assigned in consecutive order
3. (C)Special names are given to accounts
4. (D)Documents are arranged in special sequence
Try it first, then show our solutionSolution
1. A sequential code gives documents numbers or letters one after another, such as invoice 001, 002, 003.
2. So numbers and letters are assigned in consecutive order. Option (B).
  1 mark
Answer: (B) Numbers and letters are assigned in consecutive order
Where the marks are
- Sequential codes run in consecutive order (1 mark)
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Answer one of these 2 alternatives.
Q31(A) · 3 marks · Short answerOverview of Computerised Accounting System
Explain the following:
(I) Contra voucher
(II) Post-dated voucher
(III) Receipt voucher
Try it first, then show our solutionSolution
1. Contra voucher: records transactions between cash and bank accounts only, such as cash deposited into or withdrawn from the bank, or a transfer between two bank accounts.
  1 mark
2. Post-dated voucher: prepared now for a transaction that falls on a future date, such as a post-dated cheque; it affects the books only on that date.
  1 mark
3. Receipt voucher: records money received in cash or by cheque, from customers or anyone else.
  1 mark
Answer: Contra: cash and bank transfers only; Post-dated: prepared now, entered on a future date (e.g. post-dated cheques); Receipt: all cash or bank receipts
Where the marks are
- 1 mark for each voucher explained (3 marks)
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Q31(B) · 3 marks · Short answerUse of Spreadsheet in Business Applications
State the advantages of 'Pivot Table Report'.
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1. Summarises large data quickly, with totals, averages and counts produced automatically.
  1 mark
2. Flexible: rows and columns can be rearranged easily to see the data from different angles.
  1 mark
3. Quick comparison and time saving: it is easy to compare groups of data, and it is user-friendly.
  1 mark
Answer: Any three: summarises large data quickly; easy analysis with automatic totals, averages and counts; flexible rearrangement of rows and columns; quick comparison; time-saving and user-friendly
Where the marks are
- 1 mark for each of three advantages (3 marks)
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Q32 · 3 marks · Short answerOverview of Computerised Accounting System
State any three limitations of Computerised Accounting System.
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1. High initial cost: hardware, software and staff training need large investment.
  1 mark
2. Risk of data loss: system failure, viruses, hacking or power cuts can destroy data if no backup is kept.
  1 mark
3. Dependence on skilled staff: trained people are needed to run and maintain the system; lack of skill leads to errors.
  1 mark
Answer: High initial cost; risk of data loss; dependence on skilled personnel (also: security threats, system failure)
Where the marks are
- 1 mark for each of three limitations (3 marks)
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Answer one of these 2 alternatives.
Q33(A) · 4 marks · Long answerSpreadsheet
What is meant by 'data validation'? What is facilitated by 'Error Alert tab'?
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1. Data validation is an Excel feature that controls what can be entered in a cell, according to rules set in advance.
  1 mark
2. Examples: only whole numbers between 1 and 100, only dates in a range, or a drop-down list of allowed values. It keeps data accurate and consistent.
  1 mark
3. The Error Alert tab shows an error message when invalid data is entered and so prevents wrong entries.
  1 mark
4. It lets you choose the alert style: Stop (blocks the entry), Warning (allows it after a warning) or Information (shows a message and allows it).
  1 mark
Answer: Data validation restricts cell entries to set rules (whole numbers, date ranges, lists); the Error Alert tab shows a message on invalid entry with Stop, Warning or Information styles
Where the marks are
- Meaning of data validation (1 mark)
- Examples / purpose (1 mark)
- Error Alert purpose (1 mark)
- Alert styles (1 mark)
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Q33(B) · 4 marks · Long answerSpreadsheet
What is meant by internal margin while using MS Excel? State the options available.
Solution being checked. We show a solution only after an independent check agrees with it.
Q34 · 6 marks · Long answerSpreadsheet
=SUM(B2B3) will give an error while using spreadsheet. Identify the error and state the steps to correct it.
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1. =SUM(B2B3) shows the #NAME? error.
  1 mark
2. Reason: Excel cannot recognise "B2B3": the range operator (:) between the two cell references is missing, so the text is read as an unknown name.
  2 marks
3. Steps to correct: (1) select the cell showing the error; (2) click in the Formula Bar; (3) insert a colon between the references to make =SUM(B2:B3); (4) press Enter.
  2 marks
4. The corrected formula =SUM(B2:B3) now adds the values in B2 and B3.
  1 mark
Answer: #NAME? error, because the colon is missing; correct it to =SUM(B2:B3) via the Formula Bar and press Enter
Where the marks are
- Identifies #NAME? (1 mark)
- Reason: missing range operator (2 marks)
- Steps to correct (2 marks)
- Correct formula (1 mark)
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