STUDY MATERIAL ON HOTS Subject: Accountancy CLASS XII( As e! NCERT "oo#$ %a!t A Accountancy Not &o! %!o&'t o!

o!(an')at'on an* a!tne!s+' Accounts

CHA%TER:, ACCOUNTIN- .OR NOT .OR %RO.IT OR-ANISATION

Q.1 Give to main sources of income of a Not for profit organisation. Q.2 State any two characteristics of Receipt and Payment ccount. Q.! "ow wou#d you account for su$scription due to $e received in the current year in the $oo%s of a non trading organisation& Q.' "ow wou#d you account for su$scription received in advance in the current year in the $oo%s of a non trading organisation& Q.( )hat is meant $y fund $ased accounting& Q.* +ournament fund appears in the $oo%s Rs. 1(,--- and e.penses on tournament during the year were Rs. 1/---. "ow wi## you show this in format whi#e preparing financia# statement of a not0for0profit organisation& Q.1 s per Receipt and Payments account for the year ended on 2arch !1, 2--/, the su$scription received were Rs. 2,(-,---. ddition information given is as fo##ows30 4i5 Su$scriptions outstanding on -10-'02--1 Rs. (-,---. 4ii5 Su$scription outstanding on !10-!02--/ Rs. !(,---. 4iii5Su$scription Received in advance as on !10-!02--/ Rs. !----. scertain the amount of income from su$scription for the year 2--10-/. Q./ 6rom the fo##owing e.tracts of Receipts and Payments ccount and the additiona# information given $e#ow, compute the amount of income from su$scriptions and show us how they wou#d appear in the 7ncome and 8.penditure ccount for the year ending 2arch !1, 2--1and the 9a#ance sheet on that date30 Rece' ts an* %ay/ents A0C .o! t+e yea! en*'n( Ma!c+ 1,2 3445 Rece' ts Su$scription 30 2--(0-* 2--*0-1 2--10-/ Rs6 0 1--0 !---0 (--%ay/ents Rs6

'2---

A**'t'ona7 'n&o!/at'on:8 4i5 Su$scription outstanding on 2arch !1, 2--* Rs. /(--. 4ii5 +ota# su$scriptions outstanding on 2arch !1, 2--1 Rs. 1/,(--. 4iii5 Su$scriptions received in advance as on 2arch !1, 2--* Rs. '---. Q. : 6rom the fo##owing particu#ars of a c#u$, ca#cu#ate the amount of sa#aries to $e shown in 7ncome and e.penditure account for the year ended !1 2arch, 2--/30 +ota# sa#aries paid during the year 2--10-/ Rs. /1,---

;utstanding sa#aries on -10-'02--1 Prepaid sa#aries on -10-'02--1 ;utstanding sa#aries on !10-!02--/ Prepaid sa#aries on !10-!02--/

Rs. 11,--Rs. 1:,--Rs. !2,--Rs 2-,---

Q.1- <a#cu#ate the amount to $e de$ited to 7ncome and 8.penditure account under the heading sports items for the year 2--*0-1 in respect of the ;smosis c#u$30 Stoc% of sports items on -10-'02--* Stoc% of sports items on !10-!02--1 Paid for sports items during the year Rs. '',1-Rs. 2',(-Rs. :1,:--

<reditors for supp#ies of sports items !10-!02--1 Rs. 2*,(--. Q.11 Show the fo##owing information in the 9a#ance Sheet of the <osmos c#u$ as on !1st 2arch 2--130 %a!t'cu7a!s +ournament 6und +ournament 6und 7nvestment 7ncome 6rom +ournament 6und 7nvestment +ournament 8.penses dditiona# 7nformation30 7nterest accrued on +ournament 6und 7nvestment Rs. *---. Q.12 <a#cu#ate the amount medicines to $e de$ited in the 7ncome and 8.penditure $asis of the fo##owing information30 4,8498344: Rs6 :-,--2,'-,--ccount of a "ospita# on the 1,84183445 Rs6 1,2',--2,-',--D! (Rs$ 0 1,(-,--0 12,--C! (Rs$ 1,(-,--0 1/,--0

Stoc% of 2edicines <reditors for 2edicines mount paid for medicines during the year was Rs. *,1:---.

Q.1! =istinguish $etween Receipts and Payments >< and 7ncome and e.penditure ><.

CHA%TER:3 ACCOUNTIN- .OR %ARTNERSHI% .IRMS: "ASIC CONCE%TS

Q.1 State the conditions under which capita# $a#ances may change under the system of a 6i.ed <apita# ccount. Q.2 Q.! is partner in a firm. "is capita# as on ?an -1, 2--1 was Rs. *-,---. "e introduced additiona# capita# of Rs. 2---- on ;ct -1 2--1. <a#cu#ate interest on s capita# @ :A p.a. #%a, 9ar%ha and <haru are partners in a firm having no partnership agreement. #%a, 9ar%ha and <haru contri$uted Rs. 2-,---, Rs. !-,--- and Rs. 1,--,--- respective#y. #%a and 9ar%ha desire that the profit shou#d $e divided in the ratio of capita# contri$ution. <haru does not agree to this. "ow wi## you sett#e the dispute. and 9 are partners in a firm without a partnership deed. is an active partner and c#aims a sa#ary of Rs. 1/,--- per month. State with reason whether the c#aim is va#id or not.

Q.'

Q.( <handar and Suman are partners in a firm without a partnership deed. <handars capita# is Rs. 1-,--- and Sumans capita# is Rs. 1',---. <hander has advanced a #oan of Rs. (--- and c#aim interest @ 12A p.a. State whether his c#aim is va#id or not. Q.* R, S, and + entered into a partnership of manufacturing and distri$uting educationa# <=s on pri# -1, 2--*. R #oo%ed after the $usiness deve#opment, S content deve#opment and + financed the proBect. t the end of the year 4!10-!02--15 + wanted an interest of 12A on the capita# emp#oyed $y him. +he other partners were not inc#ined to this. "ow wou#d you reso#ve this within the am$it of the 7ndian Partnership ct, 1:!2& Q.1 , 9 and < are partners in a firm. withdrew Rs. 1--- in the $eginning of each month of the year. <a#cu#ate interest on s drawing @ *A p.a. Q./ , 9 and < are partners in a firm, 9 withdrew Rs. /-- at the end of each month of the year. <a#cu#ate interest on 9s drawings @ *A p.a. Q.: , 9 and < are partners in a firm. +hey have omitted interest on capita# @ 1- A p.a. for three years ended !1 st march 2--1. +heir fi.ed capita#s on which interest was to $e ca#cu#ated through Cout were Rs. 1,--,--9 Rs. /-,--< Rs. 1-,--Give the necessary ?ourna# entry with wor%ing notes. Q.1- D, E, and F are partners sharing profits and #osses in the ratio of !3231. fter the fina# accounts have $een prepared it was discovered that interest on drawings @ ( A had not $een ta%en into consideration. +he drawings of the partner were D Rs. 1(---, E Rs. 12,*--, F Rs. 12,---. Give the necessary adBusting ?ourna# entry. Q.11 , 9 and < are partners sharing profits and #osses in the ratio of !3231. +heir fi.ed capita#s are Rs. 1,(-,---, Rs. 1,--,--- and Rs. /-,--- respective#y. Profit for the year after providing interest on capita# was Rs. *-,---, which was wrong#y transferred to partners eGua##y. fter distri$ution of profit it was found that interest on capita# provided to them @ 1-A instead of 12A . Pass necessary adBustment entry. Show your wor%ing c#ear#y.

Q.12 Ravi and 2ohan were partner in a firm sharing profits in the ratio of 13(. +heir respective fi.ed capita#s were Ravi Rs. 1-,--,--- and 2ohan Rs. 1,--,---. +he partnership deed provided for the fo##owing30 4i5 7nterest on capita# @ 12A p.a. 4ii5 Ravis sa#ary Rs. *--- per month and 2ohans sa#ary Rs. *---- per year. +he profit for the year ended !10-!02--1 was Rs. (,-',--- which was distri$uted eGua##y without providing for the a$ove. Pass an adBustment 8ntry.

Q.1! =istinguish $etween fi.ed capita# method and f#uctuating capita# method. Q.1' , 9 and < were partners in a firm having capita#s of Rs. *-,---, Rs. *-,--- and Rs. /-,--- respective#y. +heir current account $a#ances were 0 Rs. 1-,---, 90 Rs. (--- and <0 Rs. 2--- 4=r.5. ccording to the partnership deed the partners were entit#ed to an interest on capita# @ (A p.a. < $eing the wor%ing partner was a#so entit#ed to a sa#ary of Rs. *,--- p. a. +he profits were to $e divided as fo##ows3 4i5 +he first Rs. 2-,--- in proportion to their capita#s. 4ii5 Ne.t Rs. !-,--- in the ratio of (3!32. 4iii5 Remaining profits to $e shared eGua##y. =uring the year the firm made a profit of Rs. 1,(*,--- $efore charging any of the a$ove items. Prepare the profit and #oss appropriate on ><. and 9 are partners sharing profits in proportion of !32 with capita#s of Rs. '-,--- and Rs. !-,--respective#y. 7nterest on capita# is agreed at ( A p.a. 9 is to $e a##owed an annua# sa#ary of Rs. !--- which has not $een withdrawn. =uring 2--1 the profits for the year prior to ca#cu#ation of interest on capita# $ut after charging 9s sa#ary amounted to Rs. 12,---. provision of (A of this amount is to $e made in respect of commission to the manager. Prepare profit and #oss appropriation account showing the a##ocation of profits.

Q.1(

CHA%TER:1 RECONSTITUTION O. %ARTNERSHI%

ADMISSION O. A %ARTNER Q.1 ;n what occasions does the need for va#uation of goodwi## arise& Q.2 )hy is it necessary to reva#ue assets and reassess #ia$i#ities at the time of admission of new partner& Q.! )hat is meant $y sacrificing ratio& Q.' State two occasions when sacrificing ratio may $e app#ied. Q.( $usiness has earned average profit of Rs. *-,--- during the #ast few years. +he assets of the $usiness are Rs. (,'-,--- and its e.terna# #ia$i#ities are Rs. /-,---. +he norma# rate of return is 1-A. <a#cu#ate the va#ue of goodwi## on the $asis of capita#isation of super profits. Q.* +he capita# of a firm of rpit and PraBwa# is Rs. 1-,--,---. +he mar%et rate of return is 1(A and the goodwi## of the firm has $een va#ued Rs. 1,/-,--- at two years purchase of super profits. 6ind the average profits of the firm. Q.1 +he average profits for #ast ( years of a firm are Rs. 2-,--- and goodwi## has $een wor%ed out Rs. 2',--ca#cu#ated at ! years purchase of super profits. <a#cu#ate the amount of capita# emp#oyed assuming the norma# rate of interest is / A. Q./ Rahu# and Sahi# are partners sharing profits together in the ratio of '3!. +hey admit Hama# as a new partner. Rahu# surrenders 1>'th of his share and Sahi# surrenders 1>! rd of his share in favour of Hama#. <a#cu#ate the new profit sharing ratio. Q.: Bay and Naveen are partners sharing profits in the ratio of (3!. Surinder is admitted in to the firm for 1>' th share in the profit which he acGuires from Bay and Naveen in the ratio of 231. <a#cu#ate the new profit sharing ratio. Q.1- and 9 were partners sharing profits in the ratio of !32. surrenders 1>* th of his share and 9 surrenders 1>'th of his share in favour of <, a new partner. )hat is the new ratio and the sacrificing ratio. Q.11 arti and 9harti are partners sharing profits in the ratio of (3!. +hey admit Shita# for 1>' th share and agree to share $etween them in the ratio of 231 in future. <a#cu#ate new and sacrificing ratio. Q.12 D and E divide profits and #osses in the ratio of !32. F is admitted in the firm as a new partner with 1>* th share, which he acGuires from D and E in the ratio of 131. <a#cu#ate the new profit sharing ratio of a## partners. Q.1! Ra%hi and Paru# are partners sharing profits in the ratio of !31. Neha is admitted as a partner. +he new profit sharing ratio among Ra%hi, Paru# and Neha is 23!32. 6ind out the sacrificing ratio. Q.1' D and E are partners sharing profits in the ratio of (3'. +hey admit F in the firm for 1>! rd profit, which he ta%es 2>:th from D and 1>:th from E and $rings Rs. 1(-- as premium. Pass the necessary ?ourna# entries on Fs admission. Q.1( RanIeet and Priya are two partners sharing profits in the ratio of !32. +hey admit Ni#u as a partner, who pays Rs. *-,--- as capita#. +he new ratio is fi.ed as !3131. +he va#ue of goodwi## of the firm was determined at Rs. (-,---. Show Bourna# entries if Ni#u $rings goodwi## for her share in cash.

Q.1* and 9 are partners sharing profits eGua##y. +hey admit < into partnership, < paying on#y Rs. 1--- for premium out of his share of premium of Rs. 1/-- for 1>' th share of profit. Goodwi## account appears in the $oo%s at Rs. *---. ## the partners have decided that goodwi## shou#d not appear in the new firms $oo%s. Q.11 and 9 are partners sharing profits in the ratio of !32. +heir $oo%s showed goodwi## at Rs. 2---. < is admitted with 1>'th share of profits and $rings Rs. 1-,--- as his capita# $ut is not a$#e to $ring in cash goodwi## Rs. !---. Give necessary ?ourna# entries. Q.1/ Piyush and =eepi%a are partners sharing in the ratio of 13!. they admit Seema as a new partner. +he new ratio $eing (3!32. Pass Bourna# entries. Q.1: and 9 are partners with capita# of Rs. 2*,--- and Rs. 22,--- respective#y. +hey admit < as partner with 1>'th share in the profits of the firm. < $rings Rs. 2*,--- as his share of capita#. Give Bourna# entry to record goodwi## on <s admission. Q.2- and 9 are partners sharing profits in the ratio of !32. +hey admit < into partnership for 1>' th share. < is una$#e to $ring his share of goodwi## in cash. +he goodwi## of the firm is va#ued at Rs. 21,---. give Bourna# entry for the treatment of goodwi## on <s admission. Q.21 and 9 are partners with capita#s of Rs. 1!,--- and Rs. :--- respective#y. +hey admit < as a partner with 1>(th share in the profits of the firm. < $rings Rs. /--- as his capita#. Give Bourna# entries to record goodwi##. Q.22 , 9 and < were partners in the ratio of (3'31. ;n !1 st =ec. 2--* their $a#ance sheet showed a reserve fund of Rs. *(,---, PJK >< 4Koss5 of Rs. '(,---. ;n 1 st ?anuary, 2--1, the partners decided to change their profit sharing ratio to :3*3(. 6or this purpose goodwi## was va#ued at Rs. 1,(-,---. +he partners do not want to distri$ute reserves and #osses and a#so do not want to record goodwi##. Eou are reGuired to pass sing#e Bourna# entry for the a$ove. Q.2! and 9 were partners in the ratio of !32. +hey admit < for !>1! th share. New profit ratio after <s admission wi## $e (3(3!. < $rought some assets in the form of his capita# and for the share of his goodwi##. 6o##owing were the assets3 ssets Stoc% 9ui#ding P#ant and 2achinery Rs. 2,'',--2,'-,--1,'-,---

t the time of admission of < goodwi## of the firm was va#ued at Rs. 12,'/,---. Pass necessary Bourna# entries. Q.2' D, E and F are sharing profits and #osses in the ratio of (3!32. +hey decide to share future profits and #osses in the ratio of 23!3( with effect from 1 st pri#, 2--2. +hey a#so decide to record the effect of the reserves without affecting their $oo% figures, $y passing a sing#e adBusting entry. Genera# Reserve Profit 2 #oss >< 4<r5 dvertisement Suspense ><4=r5 Pass the necessary sing#e adBusting entry. 9oo% 6igure Rs. '-,--Rs. 1-,--Rs. 2-,---

CHA%TER:9
RECONSTITUTION O. A%ARTNERSHI% .IRM RETIREMENT 0DEATH O. A %ARTNER
Q.1 Q.2 =istinguish $etween Sacrificing Ratio and Gaining Ratio. Hama#, Hishore and Huna# are partners in a firm sharing profits eGua##y. Hishore retires from the firm. Hama# and Huna# decide to share the profits in future in the ratio '3!. <a#cu#ate the Gaining Ratio.

Q.! P, Q and R are partners sharing profits in the ratio of 13231. P retires and the new profit sharing ratio $etween Q and R is 231. State the Gaining Ratio. Q.' , 9 and < are partners in a firm sharing profits in the ration of 23231. 9 retires and his share is acGuired $y and < eGua##y. <a#cu#ate new profit sharing ratio of and <.

Q.( D, E and F are partners sharing profits in the ratio of '>:, 1>! and 2>:. D retires and surrenders 2>! rd of his share in favour of E and remaining in favour of F. <a#cu#ate new profit sharing ratio and gaining ratio. Q.* D, E and F have $een sharing profits and #osses in the ratio of !3231. F retires. "is share is ta%en over $y D and E in the ratio of 231. <a#cu#ate the new profit sharing ratio. Q.1 Q./ P, Q and R were partners in a firm sharing profits in '3(3* ratio. ;n 2/0-202--/ Q retired and his share of profits was ta%en over $y P and R in 132 ratio. <a#cu#ate the new profit sharing ratio of P and R. 2ayan%, "arshit and Rohit were partners in a firm sharing profits in the ratio of (3!32. "arshit retired and goodwi## is va#ued at Rs *----. 2ayan% and Rohit decided to share future profits in the ratio 23!. Pass necessary Bourna# entry for treatment of goodwi##.

Q.: Ramesh, Naresh and Suresh were partners in a firm sharing profits in the ratio of (3!32. Naresh retired and the new profit sharing ratio $etween Ramesh and Suresh was 23!. ;n Naresh retirement the goodwi## of the firm was va#ued at Rs. 12----. Pass necessary Bourna# entry for the treat. Q.1- K, 2 and ; were partners in a firm sharing profits in the ratio of 13!32. K retired and the new profit sharing ratio $etween 2 and ; was 132. ;n Ks retirement the goodwi## of the firm was va#ued Rs. 12----. Pass necessary Bourna# entry for the treatment of goodwi##. Q.11 State the Bourna# entry for treatment of deceased partners share of profit for his #ife period in the year of death. Q.12 D, E and F were partners in a firm sharing profits and #osses in the ratio of !3231. +he profit of the firm for the year ended !1st 2arch, 2--1 was Rs. !,-----. E dies on 1st ?u#y 2--1. <a#cu#ate Es share of profit up to date of death assuming that profits in the year 2--10 2--/ have $een accured on the same sca#e as in the year 2--*0-1 and pass necessary Bourna# entry. Q.1! , 9 and < were partners in a firm sharing profits in !3231 ratio. +he firm c#oses its $oo%s on !1 st 2arch every year. 9 died on 120-*02--1. ;n 9s death the goodwi## of the firm was va#ued at Rs. *----. ;n 9s death his share in the profit of the firm ti## the time of his death was to $e ca#cu#ated on the $asis of previous years which was Rs.1(----. <a#cu#ate 9s share in the profit of the firm. Pass necessary Bourna# entries for the treatment of goodwi## and 9s share of profit at the time of his death. Q.1' , 9 and < were partners in a firm sharing profits in the ratio of 23231. < dies on !1 st ?u#y, 2--1. Sa#es during the previous year upto !1st march, 2--1 were Rs. *,--,--- and profits were Rs. 1(----. Sa#es for the current year upto !1st ?u#y were Rs. 2(----. <a#cu#ate <s share of profits upto the date of his death and pass necessary Bourna# entry.

CHA%TER:;

DISSOLUTION O. %ARTNERSHI% .IRM

Q.1 =istinguish $etween disso#ution of partnership and disso#ution of partnership firm on the $asis of continuation of $usiness. Q.2 )hy is Rea#isation ccount prepared on disso#ution of partnership firm& Q.! State any one point of difference $etween Rea#isation ccount and Reva#uation ccount. Q.' ## partners wish to disso#ve the firm. Eastin, a partner wants that her #oan of Rs. 2,----- must $e paid off $efore the payment of capita#s to the partners. 9ut, mart, another partner wants that the capita# must $e paid $efore the payment of Eastins #oan. Eou are reGuired to sett#e the conf#ict giving reasons.

Q.( ;n a firms disso#ution de$tors as shown in the 9a#ance sheet were Rs. 11--- out of these Rs. 2--- $ecame $ad. ;ne de$tor of Rs. *--- $ecame inso#vent and '-A cou#d $e recovered from him. 6u## recovery was made from the $a#ance de$tors. <a#cu#ate the amount received from de$tors and pass necessary Bourna# entry. Q.* ;n disso#ution of a firm, Hama#s capita# account shows a de$it $a#ance of Rs. 1*---. "is share of profit on rea#iIation is Rs. 11---. "e has ta%en over firms creditors at Rs. :---. <a#cu#ate the fina# payment due to >from him and pass Bourna# entry. Q.1 and 9 were partners in a firm sharing profits and #osses eGua##y. +heir firm was disso#ved on 1( th 2arch, 2--', which resu#ted in a #oss of Rs. !-,---. ;n that date the capita# >< of showed a credit $a#ance of Rs. 2-,--- and that of 9 a credit $a#ance of Rs. !----. +he cash account has a $a#ance of Rs. 2----. Eou are reGuired to pass the necessary Bourna# entries for the 4i5 +ransfer of #oss to the capita# accounts and 4ii5 ma%ing fina# payment to the partners.

Q./ )hat Bourna# entries wou#d $e passed in the $oo%s of and 9 who are partners in a firm, sharing profits in the ratio of (32, for the fo##owing transactions on the disso#ution of the firm after various assets 4other than cash5 and third party #ia$i#ities have $een transferred to Rea#isation ccount& 4a5 4$5 4c5 4d5 4e5 4f5 9an% #oan Rs. 12,--- is paid. Stoc% worth Rs. *--- is ta%en over $y 9. Koss on Rea#isation Rs. 1',---. Rea#isation e.penses amounted to Rs. 2,---, 9 has to $ear these e.penses. =eferred Revenue dvertising 8.penditure appeared at Rs. 2/,---. typewriter comp#ete#y written off in the $oo%s of the firm was so#d for Rs. 2--.

STUDY MATERIAL ON HOTS Subject: Accountancy CLASS XII( As e! NCERT "oo#$ %a!t " Accountancy Co/ any Accounts an* Ana7ys's o& .'nanc'a7 State/ents

CHA%TER:, < 3 ACCOUNTIN- .OR SHARE CA%ITAL < DE"ENTURE

THEORETICAL =UESTIONS Q.1 Gupta Ktd has incurred a #oss of Rs. /,--,--- $efore payment of interest on de$entures. +he directors of the company are of the opinion that interest on de$entures is paya$#e on#y when company earn profit. =o you agree& Q.2 s per #atest guide#ines governing the servicing of de$entures a company is reGuired to create on specia# account. Name that account. Q.! Name the method of redemption of de$entures in which there is no reGuirement of creating =e$enture Redemption Reserve. Q.' )hat is the nature of receipt of premium on issue of shares& Q.( <an a company issue shares at a premium in the a$sence of any e.press authority in its artic#es& Q.* )hat is the ma.imum rate of interest which the $oard of directors of a company can norma##y pay on ca##s0in0 advance if the artic#es are si#ent on the matter of such interest& Q.1 State with reason whether a company can issue its shares at a discount in its 7nitia# Pu$#ic ;ffer 47P;5. Q./ )hy securities premium money can not $e used for payment of cash dividend among shareho#ders& Q.: Hrishna Ktd. )ith paid0up share capita# of Rs. *-,--,--- has a $a#ance of Rs. 1(,--,--- in securities premium account. +he company management does not want to carry over this $a#ance. Eou are reGuired to suggest the method for uti#iIing this premium money that wou#d achieve the o$Bectives of the management and ma.imiIe the return to shareho#ders. Q.1- =istinguish $etween a share and a =e$enture. Q.11 <an share premium $e uti#ised for the purchase of fi.ed assets& Q.12 State in $rief, the S897 guide#ines regarding =e$enture Redemption Reserve4=RR5. Q.1! )hich companies are e.empted from the o$#igation of creating =RR $y S897& Q.1' )hat is the restriction on reissue of forfeited shares at discount& %RACTICAL =UESTIONS Q.1 D Ktd. issued 2-,--- shares of Rs. 1- each at a premium of 1-A paya$#e as fo##ows30 ;n app#ication Rs. 2 4 1st ?an 2--15, on a##otment Rs. ' 4inc#uding premium5 41 st pri# 2--15, ;n first ca## Rs. ! 41st ?une 2--15, on second ca## J fina# ca## Rs. 2 41st ug. 2--15. pp#ication were received for 1/,--- shares and the directors made a##otment in fu##. ;ne shareho#der to whom '- shares were a##otted paid the entire $a#ance on his share ho#dings with a##otment

money and another shareho#der did not pay a##otment and 1 st ca## money on his *- shares $ut which he paid with fina# ca##. <a#cu#ate the amount of interest paid and received on ca##s0in0advance and ca##s0in0arrears respective#y on 1st ug. 2--1.

Q.2 D Ktd too% over the assets of Rs. *,*-,--- and #ia$i#ities of Rs. /-,---, E Ktd for Rs. *--,---. Show the necessary Bourna# entries in the $oo% of D Ktd. assuming that <ase07 3 +he consideration was paya$#e 1-A in cash and the $a#ance in ('--- eGuity shares of Rs. 1- each. <ase077 3 +he consideration was paya$#e 1-A in cash and the $a#ance in '(--- eGuity shares of Rs. 1- each. <ase0777 3 +he consideration was paya$#e 1-A in cash and the $a#ance in *-,--- eGuity shares of Rs. 1- each. Q.! D #td. was formed with a capita# of Rs. (--,--- divided into shares of Rs. 1- each out of these 2--- shares were issued to the vendors as fu##y paid as purchase consideration for a $ui#ding acGuired, 1--- shares were issued to signatories to the memorandum of association as fu##y paid. +he directors offered *(-- shares to the pu$#ic and ca##ed up Rs. * per and received the entry ca##ed up amount on share a##otted. Show these transaction in the 9a#ance sheet of a company. Q.' D Ktd. invited app#ications for 11,--- shares of Rs. 1- each issued at 1-A premium paya$#e as3 ;n app#ication Rs. ! 4inc#uding Rs. 1 premium5 ;n a##otment Rs. ' 4inc#uding Rs. 1 premium5 ;n 1st <a## Rs. ! nd ;n 2 J fina# ca## Rs. 2 pp#ication were received for 2'--- shares. <ategory 7 3 ;ne fourth of the shares app#ied for a##otted 2--- shares. <ategory 773 +hree fourth the shares app#ied for a##otted :--- shares. Remaining app#icants were reBected. 2r. 2ohan ho#ding !-- shares out of category 77 fai#ed to pay a##otment and two ca##s and his shares were re issued @ Rs. 11 fu##y paid0up. Pass necessary Bourna# entries. Q.( company forfeited 2'- shares of Rs. 1- each issued to raB at a a premium of 2-A. Raman had app#ied for !-shares and had not paid anything after paying Rs * per share inc#uding premium on app#ication. 1/- shares were reissued at Rs. 11 per share fu##y paid up. Pass Bourna# entries re#ating to forfeiture and reissue of shares.

Q.* ;n 1st ?u#y 2--1. Ktd gave notice of their intention to redeem their outstanding Rs. '--,--- /A =e$entures on 1st ?anuary, 2--/ @ rs. 1-2 each and offered the ho#ders the fo##owing options0 4a5 +o su$sci$e for 4i5 *A cumu#ative preference shares of Rs. 2- each at Rs. 22.(- per share, accepted $y de$enture ho#ders of Rs. 1,11,--- or 4ii5 12A de$entures were issued @:*A accepted $y the ho#ders of Rs. 1,'',--- =e$entures. 4$5 Remaining de$entures to $e redeemed for cash if neither of the option under 4a5 was accepted. Pass necessary Bourna# entries. Q. 1 Sonu Ktd. company issued 1(,--- shares of Rs. 1- each. Payment on there shares is to $e made as fo##ows3 ;n app#ication Rs. ' 4 1st 6e$, 2--!5 ;n a##otment Rs. ! 41st pri#, 2--!5 ;n fina# ca## Rs. ! 41st 2ay, 2--!5 Ra%esh to whom 1--- shares were a##otted paid the fu## amount on app#ication and mohan to whom 2-- shares were a##otted paid the fina# ca## money on a##otment. 7nterest @ *A was paid on 1 st 2ay, 2--!. Pass necessary Bourna# entries.

Q./ +P+ Ktd. invited app#ications for issuing 1,--,--- eGuity shares of Rs. 1- each at a premium of Rs. ! per share. +he who#e amount was paya$#e on app#ication. +he issue was over su$scri$ed $y !-,--- shares and a##otment was made on pro0rata $asis. Pass necessary Bourna# entries in the $oo%s of the company. Q.: Lirani 7ndustries Ktd. issued 1,--,---, 1-A =e$entures of Rs. 1- each at a discount of :A on redeema$#e as fo##ows3 !1st 2arch 2--! 0 !1st 2arch 2--' 0 !1st 2arch 2--( 0 !1st 2arch 2--* 0 <a#cu#ate the amount account. pri# 1 st, 2--1

2-,--- =e$entures !-,--- =e$entures 2-,--- =e$entures Remaining =e$entures of discount to $e written off each year and prepare discount on issue of de$entures

Q.1- +he fo##owing $a#ance appeared in the $oo%s of F Ktd. on ?anuary 1, 2--'. 12A =e$entures >< Rs. 1,(-,--=e$enture Redemption 6und Rs. 1,2(,--=e$enture Redemption 6und 7nvestment Rs. 1,2(,--4Represented $y Rs. 1,'1,(--, !A Govt. Securities5 +he annua# insta##ment added to the fund is Rs. 2-,(1(. ;n =ecem$er !1, 2--', the $an% $a#ance after the receipt of interest on investment was Rs. !:,1--. ;n that date a## the investment were so#d at /!A and the de$entures were du#y redeemed. Show the necessary #edger accounts for the year 2--'. Q.11 ;n -10-'01:::, Ktd., issued 2---, 1A de$entures of Rs. 1-- each at a discount of 1-A redeema$#e at par after ' years $y converting them into eGuity shares of Rs. 1-- each issued at a premium of 2(A. Pass Bourna# entries in the fo##owing cases3 4i5 7f de$entures are redeemed on maturity. 4ii5 7f de$entures are redeemed $efore maturity. Q.12 Pass Bourna# entries for the fo##owing at the time of issue of de$entures3 4a5 9 Ktd. issues !-,---, 12A =e$entures of Rs. 1-- each at a discount of ( A to $e repaid at par at the end of ( years. 4$5 8 Ktd. issues Rs. *-,---, 12A =e$entures of Rs. 1-- each at a discount of ( A repaya$#e at a premium of 1-A at the end of ( years. 4c5 6 Ktd. issues Rs. 1-,---, 12A =e$entures of Rs. 1-- each at a premium of ( A redeema$#e at 11-A. Q.1! (-- shares of Rs. 1-- each issued at a discount of 1-A were forfeited for the non0payment of a##otment money of Rs. (- per share. +he first and fina# ca## of Rs.1- per share on these shares were not made. +he forfeited shares were reissued at Rs. /- per share fu##y paid0up. Q.1' 2-- shares of Rs. 1-- each issued at a discount of 1-A were forfeited for the non payment of a##otment money of Rs. (- per share. +he first and fina# ca## of Rs. 1- per share on these shares were not made. +he forfeited share were reissued at Rs. 1' per share fu##y paid up. Q.1( /-- Shares of Rs. 1- each issued at per were forfeited for the non0payment of fina# ca## of Rs. 2 per share. +hese shares were reissued at Rs. / per share fu##y paid0up.

C+a te! 1 < 9 Ana7ys's o& .'nanc'a7 State/ents

Qus31 "ow wi## you show the fo##owing items in the 9a#ance sheet of a company. 4i5 <a##s in rrears 4ii5 <a##s in dvance. Qus32 Mnder what heads the fo##owing items on the Kia$i#ities side of the 9a#ance sheet ;f a company wi## $e presented 4i5 Proposed =ividend. 4ii5 Mnc#aimed =ividend. Qus3! State any two items which are shown under the head 7nvestment in a company $a#ance sheet. Qus3' Give the format of the 9a#ance sheet of a company4main headings on#y5 as per the reGuirement of Schedu#e L7 of the companies ct.1:(*. Qus3( Give the heading under which the fo##owing items wi## $e shown in a companys 9a#ance sheet3 4i5 Goodwi##. 4ii5 Pre#iminary 8.penses 4iii5 Koose +oo#s 4iv5 <apita# Redemption Resave. 4v5 Kive Stoc%. Qus3* +he fo##owing $a#ance have $een from the $oo% of Sahara Ktd. Share capita# Rs.1-,--,---, securities Premium Rs. 1,--,---, :A =e$entures Rs. (--,---, <reditors Rs. 2--,---., Proposed =ividend Rs. (-,---. , 6reeho#d property RS. :,--,---, share of Re#iance 7ndustries Rs. ',--,---, )or%0in0 Progress Rs. ',--,---, =iscount on 7ssue of =e$entures Rs. 1,--,---. Prepare the $a#ance sheet of the company as per schedu#e L7 part 1 of the companies ct.1:(*. Qus31 Kist any three items that can $e shown as contingent Kia$i#ities in a companys 9a#ance sheet. Qus3/ Give two e.amp#e each of Non0<urrent ssets and Non0 <urrent Kia$i#ities. Qus3: )hat is "oriIonta# na#ysis& Qus31- Give the e.amp#e of "oriIonta# na#ysis. Qus311. )hat is Lertica# na#ysis& Qus312. Give the e.amp#e of Lertica# na#ysis& Qus31!. "ow is a <ompanys $a#ance sheet different from that of a Partnership firm& Give +wo point on#y. Qus31'. Kist any two information reGuired to $e given in the $a#ance sheet of a company or $y way of foot Notes. Qus31(. State whether the 9a#ance sheet of a <ompany is prepared as on a particu#ar date or as at a Particu#ar date & Qus31*. )hich part of Schedu#e L7 to the <ompanies ct.1:(* prescri$es the forms of the $a#ance sheet & Qus311. "ow is ana#ysis of 6inancia# statements suffered from the #imitation of window dressing & Qus31/. )hat is the interest of Shareho#ders in the ana#ysis of 6inancia# statements& Qus31:. Name two too#s of 6inancia# na#ysis & Qus32-3 )hich item is assumed to $e 1-- in the case of common siIe 7ncome statement . Qus321 Prepare <omparative income statement from the fo##owing information for the years ended march !1,2--! and 2--'. %a!t'cu7a!s 1.Net Sa#es 2.<ost of Goods So#d !.7ndirect 8.penses '.7ncome +a. rate 3441(Rs6$ /,--,--*-A of sa#es 1-A of Gross profit (-A 3449(Rs6$ 1-,--,--*-A of sa#es 1-A of Gross Profit *-A

C+a te! 8 ; Rat'o Ana7ys's

Qus31 "ow wi## you asses the #iGuidity or short term financia# position of a $usiness & Qus32 <urrent ratio of Re#iance +e.ti#es Ktd. 7s 1.( at present. 7n future it want to improve this ratio to 2. Suggest any two accounting transaction for improving the current ratio. Qus3! State one transaction which resu#ts in an increase in #iGuid ratio and nochange in current ratio. Qus3' )hy stoc% is e.c#uded from #iGuid assets & Qus3( Quic% ratio of a company is 1.( 31 . state giving reason whether the ratio wi## improve , dec#ine or Not change on payment of dividend $y the company. Qus3* State one transaction which resu#t in a decrease in de$t0eGuity ratio and no change in current Ratio . Qus31 "ow does ratio ana#ysis $ecomes #ess effective when the price #eve# changes& Qus3/. 7ndicate which ratio a shareho#ders wou#d use who is e.amining his portfo#io and wants to decide )hether he shou#d ho#d or se## his shareho#dings& Qus3: 7ndicate which ratio wou#d $e used $y a Kong0+erm creditor who is interested in determining whether his c#aim is adeGuate#y secured & Qus31- )hat wi## $e the ;perating profit, 7f operating Ratio is 1/A & Qus311 +he =e$aters turnover Ratio of a company is * times. State with reasons whether the ratio wi## 7mprove , decrease, or not change due to increases in the va#ue of c#osing stoc% $y Rs. (-,---& Qus312 )hat wi## $e the impact of 7ssue of shares against the purchase of fi.ed assets on a de$t 8Guity ratio of 131 & Qus31! State one transaction invo#ving a decrease in KiGuid ratio and no change in current ratio. Qus31' ssuming that the =e$t 8Guity Ratio is 231. State giving reason , whether the ratio wi## improve , dec#ine or wi## have no change in case $onus shares a##otted to eGuity shareho#ders $y <apita#iIing profits. Qus31( +he ratio of current ssets 4Rs. :,--,---5 to current #ia$i#ities is 1.(31. +he accountant of this 6irm is interested in maintaining a current ratio of 231 $y paying some part of current #ia$i#ities Eou are reGuired to suggest him the amount of current #ia$i#ities which must $e paid for the Purpose. Qus31* company has a #oan of Rs.1(,--,--- as part of its capita# emp#oyed. +he interest paya$#e on

Koan is 1(A and the R;7 of the company is 2(A. +he rate of income ta. is *-A.what is the Gain to shareho#ders due to the #oan raised $y the company & Qus311 Rs.2,--,--- is the cost of goods so#d, inventory turnover / times, stoc% at the $eginning is 1.( +imes more than the stoc% at the end. <a#cu#ate the va#ue of opening J c#osing stoc% . Qus31/ 6rom the given information, ca#cu#ate the stoc% turnover ratio3 sa#es Rs.(,--,---, Gross Profit 2(A on cost , opening stoc% was 1>!rd of the va#ue of c#osing stoc%. <#osing stoc% was !-A ;f sa#es. Qus31: <a#cu#ate cost of goods so#d from the fo##owing information3 Sa#es Rs.12,--,---, Sa#es Returns Rs./-,---, operating e.penses Rs.1,/2,---, operating ratio :2A. Qus32- <a#cu#ate the amount of opening stoc% and c#osing stoc% from the fo##owing figures3 verage =e$t co##ection period ' month stoc% turnover ratio ! times. verage =e$tors Rs.1,--,--- <ash sa#es $eing 2(A of tota# sa#es Gross profit ratio 2(A stoc% at the end was ! +imes that in the $eginning. Qus321 4a5 <a#cu#ate return on 7nvestment from the fo##owing information 3 Net profit after +a. Rs.*,(-,---. 12.(A converti$#e de$entures Rs /,-----. 7ncome +a. (-A. 6i.ed ssets at cost Rs.2',*-,---. =epreciation reserve Rs.',*-,---. <urrent ssets Rs. 1(,--,---. <urrent Kia$i#ities Rs. 1,--,---. 4$5 Profit $efore interest and ta.4P97+5 Rs.2,--,---, 1-A preference shares of Rs.1-- each. Rs.2,--,---, 2,---- eGuity shares of Rs. 1- each, Rate of ta. @ (-A ca#cu#ate earning pen Share48PS5.

Chapter 6 Cash Flow Statement

Qus31 )hy is the cash f#ow statement not a suita$#e Budge of profita$i#ity & Qus32 Mnder which accounting standard , cash f#ow statement is prepared & Qus3! )hy do we add $ac% depreciation to net profit whi#e ca#cu#ating cash f#ow from operating activities. Qus3' "ow wi## you c#assify #oans given $y 9ir#a 6inance Ktd.& )hi#e preparing cash f#ow statement. Qus3( "ow wi## you c#assify deposits $y customers in "=6< 9an% whi#e preparing cash f#ow statement. Qus3* )here wi## you show purchase of computer in cash f#ow statement & Qus31 Give two e.amp#es of Significant non cash transactions . Qus3/ "ow wi## you c#assify #oans given $y +ata 2anufacturing <ompany. Qus3: company receives a dividend of Rs. 2 Ka%hs on its investment in other companys share wi## it $e <ash inf#ow from operating or investing activities in case of a. 4i5 4ii5 6inance <ompany. Non06inance <ompany.

Qus31- "ow are various activities c#assified as per S0! 4Revised5 & Qus311 <ash f#ow from operating ctivities N <ash f#ow from 7nvesting ctivities N <ash f#ow from 6inancing ctivities OPPPPPPPPPPPPPP Qus312 )hat are the two methods which can $e emp#oyed to ca#cu#ate net cash f#ow from operating activities & Qus31! 8scorts Ktd. 8ngaged in the $usiness of manufacturing tractors invested Rs.'-,--,--- in the shares of a <ar manufacturing <ompany. state with reason whether the dividend received on this investment wi## 9e cash f#ow from operating activities or 7nvesting activities. Qus31' 2odern +oys Ktd. Purchased a machinery of Rs.2-,--,--- for manufacturing toys. State giving reason )hether the cash f#ow due to the purchase of machinery wi## $e cash f#ow from operating activities, 7nvesting activities or 6inancing activities &

Qus31( 6rom the fo##owing profit or #oss account find out the f#ow of cash from operating activities of 2ohan Ktd. D!6 %a!t'cu7a!s +o Rent Paid 1',--Kess3 Prepaid 2,--+o Sa#aries +o =epreciation +o Koss on sa#e of 6urniture +o Goodwi## written ;ff +o 9ad =e$ts +o ;ffice 8.penses +o =iscount a##owed +o Proposed =ividend +o Provision for +a. +o Net Profit %RO.IT AND LOSS ACCOUNT A/ount 4Rs5 12,--2(,--1(,--1-,--/,--!,--1/,--1,--!-,--22,--(2,/-2,-2,/-%a!t'cu7a!s 9y Gross Profit 9y Profit on Sa#e of 2achine 9y +a. Refund 9y Rent received dd3 Rent accrued C!. A/ount 4Rs5 1,/2,--12,--!,/-',--1,--(,---

2,-2,/--

Note3 +here was increase in <#osing stoc% $y Rs. 2(,---. Qus31* Prepare <ash f#ow Statement from the fo##owing information of 9o. Ktd. 6or the year ended 2arch !1,2--'. "ALANCE SHEETS O. LION LTD6 AS ON MARCH 1,23449 L'ab'7't'es Share capita# Profit J Koss ccount Genera# Reserve +a. Provision <reditors 9i## Paya$#es =epreciation Provision 3441 4Rs5 !,--,--1,2-,--*-,--1-,--(-,--!-,--2(,--*,((,--A**'t'ona7 In&o!/at'on : 1.7nvestment costing Rs.(-,--- were so#d for Rs. '/,--- during the year. 2.+a. paid during the year Rs.1-,---. !.7nterest received on 7nvestment Rs. 12,---. 3449 4Rs5 ',--,--2,*-,--:(,--/-,--:-,--1-,--'-,--:,1(,--Assets Goodwi## 2achinery 12A 7nvestments Stoc% =e$tors <ash at 9an% Short term 7nvestment 3441 4Rs5 1-,--!,--,--1,(-,--!(,--(-,--!-,--2-,--*,((,--3449 4Rs5 !-,--!,2-,--!,--,--1,/(,--1-,--'-,--!-,--:,1(,---

SU--ESTED ANS>ERS

ON HOTS Subject: Accountancy CLASS XII( As e! NCERT "oo#$ %a!t A Accountancy Not &o! %!o&'t o!(an')at'on an* a!tne!s+' Accounts

CHA%TER:, NOT .OR %RO.IT OR-ANISATION Q. 1 4i5 Su$scription 4ii5 =onation. Q.2 4i5 Receipts and Payments ccount is a summary of <ash 9oo%. 4ii5 Non0 cash e.penses such as depreciation and outstanding e.penses are not shown in Receipts and Payments ccount. Q.! Su$scription due to $e received is added with su$scription received during the year in 7ncome and 8.penditure >< and shown as an asset in the c#osing $a#ance sheet. Q.' Su$scription received in advance is su$tracted from su$scription received during the year in 7ncome and 8.penditure >< and shown as a #ia$i#ity in the c#osing 9a#ance sheet. Q.( 6und $ased accounting is a $oo% peeping techniGue where $y separate se#f0$a#ancing sets of assets, #ia$i#ity, income, e.penses and fund $a#ance accounts are maintained for each contri$ution for a specific purpose. Q.* Inco/e an* E? en*'tu!e A0C .o! t+e yea! en*e* @@@ Rs6 1/--1(--!--Inco/e Rs6

E? en*'tu!e +o +ournament 8.penses Kess +ournament 6und

Q. 1 <a#cu#ation of current year su$scription to $e shown in 7ncome and 8.penditure >< for the year ended 2arch !1, 2--/ 30 +ota# su$scription received during the year 2(---dd30 ;utstanding su$scription on !10-!02--/ dvance su$scription on -10-'02--1 !(--N7K !(--2/(---

Kess 30 ;utstanding su$scription on -10-'0-1 dvance su$scription on !10-!02--/ Cu!!ent yea! subsc!' t'on (---!---4/----5 34;444

Q. / E? en*'tu!e

Inco/e an* E? en*'tu!e A0C .o! t+e yea! en*'n( Ma!c+ 1,2 3445 Rs6 Inco/e Rs6 9y Su$scription !---dd30 outstanding su$scription for 2--* 0-1 41/(--01(--5 11--dd30 dvance in 2--(0-* '--(1---

L'ab'7't'es Su$scription in advance

"a7ance s+eet As on 1,st Ma!c+ 34445 A/ount Assets (--Su$scription outstanding 2--(0-* 2--*0-1

A/ount 1(-11--- 1/(--

Q. : <a#cu#ation of sa#aries to $e shown in 7ncome and 8.penditure >< for the year ended 2arch !1, 2--/30 Rs. +ota# Sa#aries paid during the year /1,--dd30 ;utstanding sa#aries on !10-!02--/ !2,--Prepaid sa#aries on -10-'02--1 1:,--(1,--1!/,--Kess30 ;utstanding Sa#aries on -10-'02--1 11,--Prepaid sa#aries on !10-!02--/ 2,--Sa#aries to $e shown in 7ncome and 8.penditure >< Q. 1mount paid for sports items during the year dd30 Stoc% of sports items as on -10-'02--* <reditors for sports as on !10-!02--1 Kess 30 Stoc% of sports items as on !10-!02--1 Sports items to $e de$ited in the 7ncome and e.penditure >< 2'(-1''*-:1:-''1-2*(-112-1*:1-4!1,---5 1-1---

Q.11 L'ab'7't'es +ournament 6und dd 7ncome 1/,--from +ournament

"a7ance s+eet o& Cos/os Lt*6 As on 1,st Ma!c+2 3445 A/ount 1,(---6und 7nvestment Assets +ournament 6und investment. ccured interest on +ournament fund 7nvestment *--A/ount 1,(----

ccured interest on tournament fund 7nvestment *--1,1',--Kess +ournament 8.penses 12,--1*2---

Q. 12 mount paid for medicine during the year dd30 Stoc% of medicine on -10-'02--* <reditors for medicine on !10-!02--1 Kess30 Stoc% of medicine on !10-!02--1 12',--<reditors for medicine as on -10-'02--* 2'-,--2edicine to $e de$ited in in 7ncome and 8.penditure ><. :-,--2-',---

*,1:---

2:',--:,1!,---

!*',--*-:---

Q. 1! =ifference $etween Receipts and Payments and 7ncome and 8.penditure. "as's 4i5 Nature 4ii5 Nature of 7tems 4iii5 Resu#t Inco/e an* E? en*'tu!e 7t is a %in to profit and #oss >< 7t records income and e.penditure of revenue nature on#y +he resu#t of 7ncome and e.penditure >< is surp#us or deficit. Rece' ts an* %ay/ents 7t is the summary of <ash $oo%. 7t records receipts and payments of $oth capita# and revenue nature. +he resu#t of Receipt and Payments is c#osing $a#ance of cash and 9an%.

CHA%TER:3 ACCOUNTIN- .OR %ARTNERSHI% .IRMS: "ASIC CONCE%TS ns. 1 4i5 )hen additiona# capita# is introduced. 4ii5 )hen capita# is withdrawn. ns. 2 *---- D :>1-2---- D :>1-- D !>12 +ota# 7nterest O O ('-'((/(-

ns. ! <haru is correct as in the a$sence of partnership agreement, profits and #osses are divided eGua##y among partners. ns. ' s c#aim is not va#id as in the a$sence of partnership deed, no sa#ary is a##owed to partners. ns. ( <handers c#aim is not va#id as in the a$sence of partnership deed interest on partners #oan is provided @ *A p.a. ns. * s per provision of 7ndian Partnership act 1:!2, when there is no partnership, no partner is entit#ed for interest on his capita# contri$ution. ns. 1 7nterest on drawing ns. / 7nterest on drawing O O 12--- D *>1-- D *.(>12 O !::*-- D *>1-- D (.(>12 O 2*'

ns. : 7nterest on <apita# 4! years5 dBustment of profit ?ourna# 8ntry 30

ANALYSIS TA"LE <r. =r. A !---2(--4<r5 (--" 2'--2(--4=r5 1--C 21--2(--4=r5 '---5

9s current >< =r. 1--<s <urrent >< =r. '--+o s current >< (--4 dBustment entry for omission of interest on capita# @ 1-A p.a.5 ns. 17nterest on drawings dBustment of profit 4=r5 4<r5 Fs <apita# >< +o Ds <urrent >< +o Es current >< ANALYSIS TA"LE X 1(::4<r5 2'=r. 212'!Y *!**4<r5 !A *-!!4=r521Tota7 1:/1:/0

4 dBustment entry for omission of interest on drawings @ ( A p.a.5 ns. 11 )rong profit 7nterest on <apita# @ 2A <orrect profit =r. <r. <r. ANALYSIS TA"LE A " 2---2---!--2--2*1-11/-4<r5 :1-4=r5 2-C 2---1*-/:-4=r5 :(-Tota7 *---**-(!'-0

9s <urrent >< =r. 2-<s <urrent >< =r. :(-+o s current >< :1-4 dBustment entry for interest on capita# and distri$ution in wrong ratio.5 ns. 12 )rong Profit =istri$uted 7nterest on capita# omitted Sa#ary to $e provided <urrent Profit Net a*just/ent C!6 1C444 =r. <r. <r. <r. ANALYSIS TA"LE RaB' 2(2--12---12--:/--D!6 1C444 Mo+an 2(2--/'--*---1---Tota7 (-'--2-'--1!2--1*/---

2ohans current >< =r. !/--+o Ravis <urrent >< !/--4 dBustment entry for omission of certain provisions of partnership deed.5

ns. 1! =istinction $etween 6i.ed and 6#uctuating <apita# method30 "as's o& *'&&e!ences 4i5 Num$er of ccounts 4ii5 <hange in capita# >< $a#ances 4iii5 Recording of transactions .'?e* ca 'ta7 /et+o* +wo accounts are maintained in fi.ed capita# method. Remain unchanged dBustment regarding interest on capita#, interest on drawings partners sa#ary and profits etc are recorded in partners current account. Rs. (1,--Rs. '(,--Rs. '',--Rs. ',*(Rs. !,1-.7uctuat'n( Ca 'ta7 Met+o* ;n#y one account is maintained. 9a#ance f#uctuate freGuent#y. ## these adBustments are recorded in partners capita# accounts.

ns. 1'

Profit transferred to s current >< 9s current >< <s current ><

ns. 1( Net profit transferred to s <apita# >< 9s <apita# ><

CHA%TER:1 RECONSTITUTION O. %ARTNERSHI% ADMISSION O. A %ARTNER ns. 1 Need of va#uation of goodwi## arises on the fo##owing occasions30 4i5 <hange in profit sharing ratio of e.isting partners. 4ii5 dmission of a partner. 4iii5 Retirement of a partner. 4iv5 =eath of a partner. ns. 2 7t is necessary to reva#ue assets and reassess #ia$i#ities at the time of admission of new partners as if assets and #ia$i#ities are overstated or understated in the $oo%s then its $enefits or #oss shou#d not affect the near partner. ns. ! Sacrificing ratio is the ratio in which o#d partners have agreed to sacrifice their share of profit in favour of the new partner. +his ratio is ca#cu#ated $y deducting the new ratio from the o#d ratio. Sac!'&'c'n( Rat'o D O7* Rat'o 8 NeE Rat'o ns. ' 4i5 ;n admission of a new partner. 4ii5 ;n change on profit sharing ratio of e.isting partner. ns. ( 4i5<apita# emp#oyed O ssets C Kia$i#ities O ('---- C /---O Rs. '*---4ii5 Norma# Profit O <apita# emp#oyed D Norma# rate of return>1-O Rs. '*---- D 1->1-- O '*--4iii5 Super Profit O 6irms verage profit C Norma# Profit O *---- C '*--O 1'--4iv5 Goodwi## O Super profit D 1--> Norma# rate of return O 1'--- D 1--> 1O 1'---ns. * 4i5 Super profit O La#ue of goodwi## >Num$er of years purchase O 1/---->2 O :---4ii5 Norma# Profit O <apita# emp#oyed D Norma# rate of return >1-O 1------ D 1(> 1-O 1(---4iii5 verage Profit O Norma# Profit N Super profit O 1(---- N :---O 2'---ns. 1 4i5 Super profit O va#ue of goodwi##> num$er of years purchase O 2'---->! O /---4ii5 Norma# Profit O verage profit C Super profit O 2---- C /--O Rs. 12--4iii5 <apita# 8mp#oyee O Norma# Profit D 1--> Norma# rate of return

O 12--- D 1-->/ O 1(---ns. / Rahu#s sacrificing share Sahi#s sacrificing share Rahu#s new share Sahi#s New share Hama#s share NeE !o&'t s+a!'n( !at'o ns. : Bays sacrifies Naveens sacrifies Bays new share Naveens New share Surenders share NeE !at'o ns. 1;#d ratio surrender 9 surrender s new share 9s new share <s new share NeE !at'o Sacrificing Ration 9 Sac!'&'c'n( !at'o ns. 11 ;#d ratio Shita# O '>1 D 1>' O !>1 D 1>! O '>1 C 1>1 O !>1 C 1>1 O 1>1N1>1 D 1:3:3 O 1>' D 2>! O1>' D 1>! O (>/ C 2>12 O !>/ C 1>12 O 1>' or *>2' D ,,:5:: O 1>1 O 1>1 O !>1 O 2>1 O 2>1 O 2>12 O 1>12 O 11>2' O 1>2'

O 39 O !32 O !>( D 1>* O !>!O1>1O 2>( D 1>' O 1>1O !>( C 1>1- O (>1O 2>( C 1>1- O !>1O 1>1- N1>1- O 2>1D ;0,42 10,42 30,4 OR ;:1:3 O ;#d ratio C New ratio O !>( C (>1- O 1>1O 2>( C !>1- O 1>1D ,:,

O O

(3! 1>'th Share O!>' O 1>2 O 1>' O! 3:,:,

Ket the profit $e Rs. 1 Remaining profit O 101>' rti 3 9a$ita O 231 rtis share O !>' D 2>! 9a$itas Share O !>' D 1>! NeE Rat'o D ,032 ,092 ,09 Sacrificing ratio rtis sacrifies 9a$itas Sacrifies Sac!'&'c'n( Rat'o

O ;#d ratio C New ratio O (>/ C 2>' O 1>/ O !>/ C 1>' O 1>/ D ,:,

ns. 12 ;#d ratio O D3E O 131 F is admitted for 1>*th share which he acGuire from D,E in the ratio of 131 Since 1>* D 1>2 O 1>12 from D and E Ds new ratio O !>( C 1>12 O !1>*Es New ratio O 2>( C 1>12 O 1:>*-

Fs share NeE !at'o

O 1>* D 1,0:42 ,F0:42,0: o! 1,:,F:,4

ns. 1! ;#d ratio O Ra%hi 3 Paru# New ratio O Ra%hi3 Paru#3 Neha Ra%his sacrifice Paru#s sacrifice

O !31 O 23!32 O !>' C 2>1 O 1!>2/ O 1>' 0!>1 O (>2/ 4Gain5

So, Ra%his sacrifice 1!>2/th share and Paru# is gaining to the e.tent of (>2/th share. ns. 1' <ash >< =r. 1(-+o premium >< 4cash $rought in $y F for his share of goodwi##5

1(--

Premium >< =r. 1(-+o Ds capita# >< 1--+o Es <apita# >< (-4Goodwi## distri$uted among sacrificing partners in the ratio of 231.5 ns. 1( <ash >< +o Ni#us capita# >< +o premium >< 4<ash $rought in $y new partner5 =r. 1---*---1----

Premium >< =r. 1---+o Priyas capita# >< 1---4 mount of goodwi## distri$uted among sacrificing partner in their sacrificing ratio.5 ns. 1* <ash >< +o premium >< 4 mount of goodwi## $rought in $y <5 =r. 1--1---

Premium >< =r. 1--<s capita# >< =r. /-+o s capita# >< :-+o 9s capita# >< :-4Rs. 1/-- distri$uted among sacrificing partners in sacrificing ratio.5 s capita# >< =r. !--9s capita# >< =r. !--+o goodwi## >< *--4;#d goodwi## written off among o#d partners in o#d ratio.5 Q. 11 <ash >< =r. 1---+o <s capita# >< 4<ash $rought in $y < for his share of capita#5 s capita# >< =r. 12-1----

9s <apita# >< =r. /-+o goodwi## >< 2--4;#d goodwi## written off among o#d partners in o#d ratio.5 <s capita# >< =r. !--+o s capita# >< +o 9s capita# >< 4 dBustment of goodwi## on admission of <5 ns. 1/ <ash >< =r. '--+o premium >< 4 mount of goodwi## $rought in $y new partner5 1/-12--

'---

Premium >< =r. '--+o Piyushs capita# >< '--4Goodwi## distri$uted among sacrificing partners in their sacrificing ratio.5 ns. 1: <ash >< =r. 2*--+o <s capita# >< 4 mount of capita# $rought in $y new partner.5 <s capita# >< +o s capita# >< +o 9s capita# >< 4<s share of goodwi## distri$uted among <a#cu#ation of "idden goodwi##30 <apita# of and 9 < $rings +ota# capita# of the firm 8.isting capita# of the firm Goodwi## <s share of goodwi## =r. 1(-!1(!1(and 95

2*---

O 2*--- N 22--O '/--O 2*--- for 1>'th share O 2*--- D '>1 O 1-'--O '/--- N 2*--O 1'--O 1-'--- C 1'--O !---O !---- D 1>' O 1(--

ns. 2<s capita# >< =r. (2(+o s capita# >< !1(+o 9s capita# >< 21-4<s share of goodwi## distri$uted among o#d partners in sacrificing ratio i.e. !325 ns. 21 <ash >< =r. /--+o <s capita# >< 4 mount of capita# $rought in $y new partner5 <s capita# >< =r. 2---

/---

+o s capita# >< +o 9s capita# >< 4Share of goodwi## distri$uted among <a#cu#ation of "idden Goodwi##. < $rings /--- for 1>( share Since tota# capita# of the firm 8.isting capita# of the firm Goodwi## <s share of goodwi## ns. 22 <s <apitaQ >< +o s <apita# >< +o 9s <apita# ><

1--1--and 9 in sacrificing ratio i.e. 1315

O /--- D (>1 O '---O 1!--- N :--- N /--O !---O '---- C !---O 1---O 1---- D 1>( O 2--=r. Rs. 2(, (-Rs. /,(-Rs. 11,---

ns. 2! Rs =r. 2,'',--=r 2,'-,--=r. 1,'-,--=r. 2,//,--2,*/,/-1:,2-Rs

4i5 Stoc% >< 9ui#ding >< P#ant J 2achinery >< +o <s capita# >< +o premium >< 4ii5 Premium >< +o s <apita# >< +o 9s <apita# ><

!,!*,--2,//,---

ns. 2' Fs <apita# >< +o Ds <apita# >< =r. Rs. :--Rs. :---

C+a te! 89 RETIREMENT AND DEATH O. A %ARTNER ns. 1 "as's 4i5 2eaning 4ii5 ;ccasion 4iii5 6ormu#a Sac!'&'c'n( Rat'o Proportion in which o#d partners sacrifice their share in favour of new partner. Sacrificing ratio is ca#cu#ated at the time of admission of new partner. Sacrificing ratio O ;#d ratio C New ratio -a'n'n( Rat'o Proportion in which continuing partner gain the share of outgoing partner on his retirement. Gaining ratio is ca#cu#ated at the time of retirement or death of a partner. Gaining ratio C ;#d ratio

ns. 2 Gaining Ratio O New ratio C ;#d ratio Hama#s Gain O '>1 C 1>! O (>21 Huna#s Gain O !>1 C 1>! O 2>21 Gaining Ratio O (32 ns. ! ;#d ratio O P Q R 13 23 1 New ratio OQ R 231 Gaining Ratio O New ratio C ;#d ratio Qs gain O 2>! C 2>1- O 1'>!Rs gain O 1>! C 1>1- O 1>!Gaining Ratio O 1'31 or 231

ns. ' s gaining share O 2>( D R O 1>( s new share O 2>( N 1>( O !>( <s gaining share O 2>( D R O 1>( <s New share O 1>( N 1>( O 2>( NeE !at'o o& A an* C D 1:3 ns. ( Es gaining share Fs gaining share Es new share Fs new share New Ratio -a'n'n( !at'o ns. * ;#d Ratio F Retire Ds Gaining Ds New share Es Gaining Es new share NeE Rat'o O !3231 O 1>* D 2>! O 2>1/ O !>* N 2>1/ O 11>1/ O 1>* D 1>! O 1>1/ O 2>* N 1>1/ O 1>1/ D ,,0,C2 50,C O! ,,:5 O '>: D 2>! O />21 O '>: C />21 O '>21 O ;#d share N gain O 1>! N />21 O 11>21 O 2>: N '>21 O 1->21 O 1131D C035 : 9035 o! 3:,

ns. 1 ;#d ratio Q retired Ps gaining Ps new share Rs Gaining share Rs new share NeE Rat'o

OPQR O '3(3* O 1>! D (>1( O '>1( N 1>: O 2>! D (>1( O *>1( N 2>: D ,5:3C O 1>: O 11>'( O 2>: O 2/>'(

ns. / Rohits capita# >< =r. 2'--+o 2ayan%s capita# >< *--+o harshits <apita# >< 1/--4 dBustment 8ntry for treatment of goodwi## in gaining ratio.5 ns. : Suresh capita# >< =r. '/--+o Rameshs capita# >< 12--+o Naresh capita# >< !*--4Goodwi## adBusted among the gaining partner in gaining ratio.5 ns. 1- ;s capita# >< =r. '---+o <s capita# >< 2---+o 2s capita# >< 2---4 dBustment of goodwi## in gaining partners in their gaining ratio.5 ns. 11 Profit and #oss suspense >< +o deceased partners capita# >< =r

ns. 12 +ota# profit for the year ended !1st 2arch 2--1 Es share of profit up to date of death

O O O

Rs !----!----- D 2>* D !>12 2(---

Profit and Koss suspense >< =r. 2(--+o Es capita# >< 2(--4 Es share of profit transferred to Es capita# ><5 ns. 1! Profit and Koss suspense >< =r. 1---+o 9s capita# >< 1---49s share of profit transferred to 9s capita# ><5 s capita# >< =r. 1(--<s capita# >< =r. (--+o 9s capita# >< 2---49s share of goodwi## transferred to 9s capita# >< and de$ited to remaining partners capita# >< in their gaining ratio.5 O O 9s share of profit O O ns. 1( Profit J Koss suspense >< +o <s capita# >< 9s share of profit Num$er of days from 1 pri# to 12th ?une 2--1 1! =ays 1(---- D 1>! D 1!>!*( Rs. 1---=r. Rs. 12,(-Rs. 12,(--

CHA%TER 8 ; DISSOLUTION O. %ARTNERSHI% .IRM ns. 1 7n case of disso#ution of partnership, the firm may continue its $usiness operation $ut in case of disso#ution of partnership firm, the $usiness operations are discontinued. ns. 2 Rea#isation account is prepared to ascertain profit or #oss on sa#e of assets and payment of #ia$i#ities. ns. ! Rea#isation ccount is prepared on disso#ution of partnership firm and Reva#uation account is prepared on reconstitution of partnership firm. ns. ' Eustins c#aim is va#id as according to section '/ 4$5 of partnership ct, partners #oan are to $e paid $efore any amount is paid to partners on account of their capita#s. ns. ( <ash >< =r. 11'-+o Rea#isation >< 11'-46or de$tors rea#iIed on disso#ution of firm5 ns. * Hama#s capita# >< =r. '--+o cash >< 4for fina# payment to Hama#5 ns. 1 4i5 '---

s capita# >< =r. 1(--9s capita# >< =r. 1(--+o rea#iIation >< !---46or transfer of #oss on disso#ution5 4ii5 s capita# >< =r. (--9s capita# >< =r. 1(--+o cash >< 2---46or fina# payment to partners5

ns. / ?;MRN K 4a5 4$5 4c5 4d5 4e5 4f5 Rea#isation >< =r. +o 9an% >< 9s capita# >< =r. +o rea#isation >< s capita# >< =r. 9s capita# >< =r. +o Rea#isation >< 9s capita# >< =r. +o $an% >< s capita# >< =r. 9s capita# >< =r. +o deferred revenue advertising e.penditure >< 9an% >< =r. +o rea#isation >< D!6 (Rs$ 12--*,--*,--1-,--',--1'--2,--2,--2-,--/,--2/,--2-2-C!6 (Rs6$ 12---

SU--ESTED ANS>ERS

ON HOTS Subject: Accountancy CLASS XII( As e! NCERT "oo#$ %a!t " Accountancy Co/ any Accounts an* Ana7ys's o& .'nanc'a7 State/ents

CHA%TER8, <3 ACCOUNTIN- .OR SHARE CA%ITAL < DE"ENTURE THEORETICAL =UESTIONS
ns.1 No $ecause 7nterest on de$entures is a charge against profit and not an appropriation of profit. ns. 2 =e$enture Redemption Reserve ccount. ns. ! Redemption of de$entures $y conversion. ns. ' <apita# Nature. ns. ( Ees. S "int See section 1/T ns. * ccording to ta$#e not e.ceeding * A p.a. ns. 1 Section 1: <ompanies ct0 the shares must $e of a c#ass a#ready issued. So a company cannot issue shares at a discount in its 7nitia# Pu$#ic ;ffer. ns. / 7t is restricted under section 1/ of 7ndian <ompanies ct. ns. : 2ention the provisions of section 1/. ns. 1- 9asis of difference 3 4i5 ;wnership 4ii5 Return 4iii5 Loting Right 4iv5 <onverti$i#ity ns. 11 No. ns. 12 s per S897 guide#ines, an amount eGua# to (-A of the de$enture issue, must $e transferred to =RR $efore the redemption $egins. ns. 1! +he fo##owing companies are e.empted from the o$#igation of creating =RR C 4i5 company which has issued de$entures with a maturity of 1/ months or #ess. 4ii5 7nfrastructure companies, which are who##y engaged in the $usiness of deve#oping, maintaining and operating infrastructure faci#ities. ns. 1' <ompany can reissue forfeited shares at a discount not more than amount forfeited on these shares. %RACTICAL =UESTIONS ns. 1 7nterest on <a##s in advance Rs. 2./7nterest on <a##s in arrears Rs. (.(ns. 2 So#ution30

4i5

4ii5 <ase 7 <ase 77 <ase 777

Sundry ssets >< Goodwi## >< +o Sundry Kia$i#ities +o E Ktd. E Ktd. +o 9an% >< E Ktd +o 8Guity share capita# E Ktd +o 8Guity share capita# +o securities premium E Ktd =iscount on issue share +o 8Guity share capita#

=r. =r. =r. =r. >< =r. >< >< >< >< =r. =r.

**-,--2-,--/---*----*-,--*---('-,--('-, --('-,--'(-,--:-,--('-,--*---*--,---

ns. ! 7ssued <apita# Rs. :(---. ns. ' "int0 4i5 4ii5 4iii5 mount received on a##otment Rs. 2*,1--. mount transferred to share forfeited >< Rs. :-mount transferred to <apita# Reserve Rs. *--.

ns. ( <apita# Reserve Rs. ::-. ns. * "ints0 415 <ase a 4i5 C No. of preference shares issued 11(2. 425 <ase a 4ii50 No. of de$entures issued 1(!-. 4!5 Remaining /(--- de$entures paid in cash. ns. 1 7nterest on <a##s in advance ns. / 4i5 =r. 9an% >< Rs. 1*,:-,---, <r.8G.share pp#ication >< Rs. 1*,:-,---. 4ii5 =r.8G.Share pp#ication >< Rs. 1*,:-,---, <r.8G. share <apita# >< Rs.1-,--,---, <r. Security premium >< Rs. !--,---, <r. 9an% >< Rs. !,:-,---. ns. : mount of discount O Rs. :-,--=iscount to $e written off3 2--10-2 0 Rs. 2(,--2--20-! 0 Rs. 2(,--2--!0-' 0 Rs. 2-,--2--'0-( 0 Rs. 12,(-2--(0-* 0 Rs. 1,(-ns. 1"int 3 4i5 Koss on sa#e of investment Rs. 2(1(. 4ii5 mount transferred to Genera# Reserve Rs. 1,'1,'2(. ns. 11 <ase 4i5 C No. of 8Guity shares to $e issued 1,*--. <ase 4ii5 C No. of 8Guity shares to $e issued 1,''-. ns. 12 ?ourna# of 9 Ktd. O 1( N ! O Rs. 1/

4a5 4i5 9an% >< +o. =e$. pp#ication J ##otment >< 4ii5 =e$. pp#ication J a##otment >< =iscount on issue of =e$entures +o 12 A de$entures >< =r. 2/,(-,--2/,(-,--=r. 2/,(-,--=r. 1,(-,--!-,--,---

?ourna# of 8 Ktd. 4$5 4i5 9an% >< +o. =e$. pp#ication J ##otment >< =r. (1,--(1,---

4ii5 =e$. pp#ication J a##otment >< =r. (1,--Koss on issue of =e$entures >< =r. :,--+o 12 A de$entures >< +o =e$enture Redemption Premium >< ?ourna# of 6 Ktd. 4c5 4i5 9an% >< +o. =e$. pp#ication J ##otment >< =r. 1!,(--

*-,--*---

1!,(--

4ii5 =e$. pp#ication J a##otment >< =r. 1!,(-Koss on issue of =e$entures >< =r. 1,--+o 12 A de$entures >< +o Securities premium >< +o =e$enture Redemption Premium ><

1-,--!,(-1,---

ns. 1! <apita# Reserve Rs. 1-,--ns. 1' <apita# Reserve Rs. *-ns. 1( <apita# Reserve Rs. ',/--.

C+a te! 1 < 9 Ana7ys's o& .'nanc'a7 State/ents

ns31 4i5 <a##s in rrears3 7t is deducted from the su$scri$ed capita#. 4iii5 <a##s in dvance3 7t is shown separate#y under the su$scri$ed capita#. ns32 Ite/s Proposed dividend Mnc#aimed dividend Hea*'n( <urrent Kia$i#ities J Provision <urrent Kia$i#ities J Provision Sub8Hea*'n( Provision <urrent Kia$i#ities

ns3! 4i5 Government Securities. 4ii5 Sin%ing 6und 7nvestment. ns3' 9a#ance sheet as onUUUUUU L'ab'7't'es Rs6 Assets Rs.

Share capita# Reserve J surp#us Secured Koans Mnsecured Koans <urrent Kia$i#ities J Provision 4a5 <urrent Kia$i#ities 4$5 Provision

6i.ed ssets 7nvestment <urrent ssets, Koan and dvances 4a5 <urrent ssets 4$5 Koans J dvance 2isce##aneous 8.penditures Profit J Koss amount 4=r.9a#ance5

ns3( 4i5 6i.ed ssets. 4ii5 2isce##aneous 8.penditures 4iii5<urrent ssets Koans J dvance under <urrent ssets. 4iv5Reserve and Surp#us. 4v56i.ed ssets. ns3* +ota# of 9a#ance Sheet Rs.1/,(-,---. ns31 4i5 <#aims against the <ompany not ac%now#edged as de$ts . 4ii5 Mnca##ed Kia$i#ity on part#y paid shares. 4iii5 rrears of =ividend on <umu#ative preference shares. ns3/ ns3: Non0<urrent ssets C 9ui#ding, 2achinery. Non0<urrent Kia$i#ities C Share <apita# , =e$entures. +he ana#ysis which is made to review and compare the financia# statements of two or more then two Eears is ca##ed "oriIonta# na#ysis.

ns31- <omparative 6inancia# Statement. ns311 +he na#ysis which is made to review the financia# statements of one particu#ar year on#y is ca##ed Lertica# na#ysis.

ns312 Ratio na#ysis. ns31! 4i5 6or companys 9a#ance Sheet there are two standard forms prescri$ed under the companies ct.1:(* )hereas there is no standard form prescri$ed under the 7ndian partnership ct,1:!2 for a partnership 6irms $a#ance sheet. 4ii5 7n case of a companys 9a#ance sheet previous years figures are reGuired to $e given whereas it is not so in the case of a partnership firms $a#ance sheet. ns31' 4i5 Mnca##ed Kia$i#ity on share part#y paid up . 4ii5 rrears of fi.ed <umu#ative =ividend. ns31( 9a#ance of a <ompany is prepared as at a particu#ar date . ns31* Part 7 of Schedu#e L7 to the <ompanies ct.1:(*. ns311 na#ysis of financia# statements is affected from the #imitation of window dressing as companies hide Some vita# information or show items at incorrect va#ue to portray $etter profita$i#ity and financia# Position of the $usiness, for e.amp#e the company may overva#ue c#osing stoc% to show higher profits.

ns31/ 4i5 +hey want to Budge the present and future earning capacity of the $usiness. 4ii5 +hey want to Budge the safety of their investment. ns31: 4i5 <omparative 6inancia# Statements. 4ii5 Ratio na#ysis etc. ns32- Sa#es. ns321 Percentage <hange C Net sa#e 2(A <ost of Goods so#d 2(A Gross profit 2(A 7ndirect 8.penses /1.(-A Net profit $efore +a. 1/.-(A 7ncome +a. '1.*1A Net Profit after +a. (.(*A

<hapter 0 (
ccounting Ratios
ns31 Short term financia# position of the $usiness is assessed $y ca#cu#ating current ratio and #iGuid ratio. ns32 4i5 Payment of current #ia$i#ities. 4ii5 7ssue of share capita# etc. ns3! Sa#e of stoc% at cost price. ns3' 4i5 $ecause there is uncertainty whether it wi## $e so#d or not. 4ii5 7t wi## ta%e time $efore it is converted into de$tors and cash. ns3( Quic% ratio wi## improve as $oth the #iGuid assets and current #ia$i#ities wi## decrease $y the same mount. ns3* <onversion of de$entures into shares. ns31 ccounting ratios are ca#cu#ated from financia# statements, which are down on the $asis of historica# <ost as recorded in the $oo% of accounts . ns3/ +ota# ssets to =e$t Ratio. ns3: =e$t08Guity0Ratio. ns31- 1--01/O22A ns311 No change $ecause it wi## neither affect net credit sa#es nor average receiva$#e. ns312 =e$t0eGuity ratio wi## decrease $ecause the Kong0term #oans remain unchanged where as the Shareho#ders funds are increased $y the amount f share capita# issued . ns31! Purchase of goods for cash . ns31' =e$t eGuity ratio wi## not change as the tota# amount of shareho#ders funds wi## remain same. ns31( Payment of current Kia$i#ities Rs.!,--,---. ns31* Net gain to shareho#ders Rs.*-,---. ns311 <#osing stoc% O Rs.1',2/(. ;pening stoc% O Rs.!(,11(. ns31/ Stoc% turnover Ratio O ' times . ns31: <ost of goods so#d ORs./,'/,'--. ns32- ;pening stoc% Rs. (-,---. <#osing stoc% Rs. 1,(-,---. ns321 4a5 Net profit $efore interest Rs.1',--,--capita# emp#oyed Rs. 2/,--,--Return on investment (-A. 4$58arning per share Rs. '.

<hapter 0 * <ash 6#ow Statement

ns31 <ash 6#ow statement is prepared on cash $asis of accounting $ut profit is ca#cu#ated on accrua# $asis. So cash f#ow statement is not a Budge of profita$i#ity. ns32 Mnder accounting standard0!4Revised5. ns3! =epreciation reduces the net profit without reducing the cash $a#ance as it is a non0cash item. ns3' s ;perating ctivities. ns3( ;perating ctivities. ns3* s ;utf#ow under 7nvesting ctivities. ns31 Give any two e.amp#es0 4i5 cGuisition of fi.ed asset $y issue of de$entures or shares. 4ii5 <onversion of de$entures into shares. ns3/ <#assified as 6inancing ctivities. ns3: 7t wi## $e operating activities in case of a finance company and investing activities in case of Non06inancing <ompany. ns31- 4i5 ;perating ctivities. 4ii57nvesting ctivities. 4iii56inancing ctivities. ns311 PO Net 7ncrease >=ecrease in cash and <ash 8Guiva#ents. ns312 =irect 2ethod and 7ndirect 2ethod. ns31! 7nvesting ctivities 9ecause PPPPP. ns31' 7nvesting ctivities 9ecause PPPPP. ns31( <ash from ;perating ctivities Rs.1,-!,/--. ns31* 4i5 <ash 7nf#ow 6rom ;perating ctivities Rs./-,---. 4ii5<ash ;utf#ow on 7nvesting ctivities Rs.1,*-,---, 4iii5<ash 7nf#ow 6rom 6inancing ctivities Rs. 1,--,---.