Accountancy-2
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Question paper 1
1. (a) What is Donation ?
(b) Workmen compensation fund is an outside liability(True/False).
Answer:
(a) Donation = Donation recieved my be meant for a general purpose or a specific purpose of the organisation.
(b) An unrecarded asset is recarded on the Libility side of revaulation account
2. What are the limitations of Receipts and Payments Account ?
Answer:
Limitation of Receipt and Payments
(i) It is prepared on the cash basis of accounting
(ii) It is record both the revenue and capital Reciept and payment in a particular year.
(iii) It is not a part of double entery system is book keeping
(iv) Balance sheet can't prepare from this account only
3. Write any two difference between Fixed Capital Account and Fluctuating Capital Account.
Answer:
Difference Between fixed and flucating Account
BASIS Fixed cap Account Flucting cap Account (i)opening and Closing Blance
(ii) Current Account
(iii) Adjustment relaning on cap
(iv) Position of cap
opning and closing Blance normally remain same
Current Account of partner are opened in theis case
All adjustment related to partner such as drawing, on cap, salary of partner
capital account mostly has a credit balance
opening and closing blance change due to adjustment in capital account
Current account of partner are not opened case
All such adjustment are made in capital account itself
Capital Account in this case may have debit or credit balance
4. SurJit, Baljit and Harish me partner sin 2;2:1 ratio. Manish is admitted for 1/10 share. Total goodwill is valued $ 6,00,000. Manish brings his share of goodwill in Cash and for Capital $1,80,000. Pass journal entries.
Answer:
Surjit Account $312000
Baljit Account $ 312000
Harish Account $ 156000
To Manish Account 780000
5. Jatin Nitin and Kartik are partners in a firm sharing profits in the ratio of 3:2:1 respectively' Onl-4-20i6'tney decided to dissolve the firm. On that date profit and loss account showed a debit balance of 2,40,000 and General reserve showed a balance of 3,00,000. Pass the necessary journal entries
Answer:
Jatin Account $ 270000
Nitin Account $ 180000
Kartik Account $ 90000
To General Reserve 540000
6.(i) A and B are partners sharing profit in the ratio of 3:2 with capitals of 3,00,000,and 1,80,000 respectively. Interest on capital is agreed @ 67% p.a. B is to be allowed an annual salary of T 15,000. During 2015, the profits of the firm prior to calculation of interest on capital but after charging B's Salary amounted to 75,000. A provision of 5% of the profits is to be maintained in respect of future contingencies before any appropriation. Prepare an account showing allocation of profits and partner's capital accounts
(ii) What is Goodwill ?Write any four features of Goodwill
(iii) Write any four difference between Realisation Account and Revaluation Account.
Answer:
(i)
Expinditure $ Income $ To salaries 2400 + o/s at the end 250 -o/s at beg 200
To Rent 720 + o/s at end 80 -beg 60
To Postage
To Printing & station
To electricity ch
To Meeting Exp
To surplus
2450
740
30
255
300
150
2450
By Sub 4550 - o/s at beg 100 -Adv sub 150
By Profit on sale of furniture
Bank Interest
By Int on Int
4300
50
25
2000
6375 6375
Balance Sheet (Closing)
Libilities $ Library 5000 6000 cap Fund 48455
+ Surplus 2450
Adv sub
o/s salary
o/s Rent
50905
150
250
80
+Add 1000
Investment 4000
+Add 1000
Cash in Hand
Cash at Bank
Furniture
6000
41000
155
1480
2750
51385 51385 Rent 60 Sub due 100 Salary 200 Investment 40000 Capital fund 48455 Furniture 3000 Library Books 5000 565 48715 48715 Furniture A/c
To Bal B/d 3000 By Cash Sale 300 To Profit 30 By C/d 2750 3050 3050 (ii) Goodwill : Goodwill is a long term asset categorized as an intangible asset . The amount of goodwill is the cost to purchase the bussiness miues the fair market value of tangible asset , the intangible asset that can be identified, and the liability obtained in the purchase.
Features of Goodwill:
- Be an Intangible asset which cannot be seen.
- It cannot be seprated from the bussiness like a physical asset.
- it's value is not relatives to any investment amount or costs.
(iii)
Basis of Comparison Revaluation Account Realisation Account Meaning
Comprise of
Preparation
Remaning Balance
Revaluation Account is an A/c prepared to ascertain the variation in the value of the asset
only those asset and libility which are revalued
At the time of reconstitution
Transfer to the cap account of old partner
Realisation A/c is an A/c prepared to ascertain the net profit or loss on the sale of asset
All the asset and liability
At the time of Dissolution
Transfet to the capital account of all partner
7. Usha and Anju were partners in a firrn sharing profits in the ratio of 3:2. On 31st March 2015 theirBalance Sheetwas as follows:
Liabilities $ Assets $ Sundry Creditors
Bills Payable
Provision for doubtful debts
General Reserve
Sanju'sLoan
CapitalAccounts :
Usha 1,00,000 Anju 1.30.000
30,000
20,000
500
15,000
50,000
230,000
Cash
Debtors
Bills Receivable
Stock
Investment
Land and Building
Profit and LossAccount
9,000
40,000
30,000
37,500
95,000
90;000
45,000
3,45,500 3,45,500 On the above date Sanju was admitted as a new partner in the firm for 1/4th share in the profits on the following terms
(i) Sanju's loan will be converted into his Capital.
(ii) A provision for 5% was to be created for doubtfur debts.
(iii) Land and Building was depreciated by $ 9,000.
(iv) Stock is overvalued by $2,500.
(v) There were unrecorded creditors of $ 2,500.
(vi) Goodwill of the nrm is valued at 2 times of average profit. Average profit of the firm for 4 years is $ 20,000.
Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of the newfirm
Answer:
Particular $ Particular $ To Goodwill 60000 By Creditor 100000 To L & B 160000 By Caash (Goodwill) 40000 To P& M 112000 By Cast (L & B) 200000 To Motor car 1080000 By cash (P & M) 100000 To Debtar 96000 By cash (car) 56000 To cash 4000 By cash (Debtor) 48000 To cash
Sita 2000
Gita 1000
Rita 1000
Partners Cap Account :
To Bal B/d
162000
161000
121000
By Bal Acc
By Cap Acc
2000
160000
1000
160000
1000
120000
Cash Account :
To cash
To Real (Goodwill)
To REal (L & B)
To Real (P & M)
To Real (Car)
To Real (Deb)
4000
40,000
2,00,000
1,00,000
56,000
48,000
By Sita Acc
By Gita Acc
By Rita Acc
By Real Acc
162000
161000
121000
4000
448000 448000
8. (a) What is Capital Reserve ?
(b) Which summary is provided by Financial accounts ?
(c) What are Cash equivalent?
Answer:
(a) Capital Reserve : Capital Reserve is the reserve created by a company to support its future capital expenditre The profit earned from the sale of fixed asset or Bussiness operation which generates revenue goes under capiatal Reserve is not avaliable for distribution as dividends to the shareholder.
(b) Financial Account: Financial account is the field of accounting concerned with the summary, analysis and reporting of financial transaction pertaing to the bussiness involves the prepration of financial statement avaliable for public cusumption
(c) Cash Equivalent : Cash and cash equivalents are the must liquid current asset found on a bussiness balance sheert cash equivalant are short term commitment with temporarily idle cash and easily convertiable into a known cash amount.
9. Write any two difference between private company and pubric company.
Answer:
Difference between private company and pubric company.
Bases Private Company Public Company No of Members
Invation For Capital
issue of prospectus
Commencement
Statutory meeting
It Needs at least 1 Members for its formation The Maximum no can be 50
It cannot invite the public to buy its share
It does not need to issue prospectus
It can commerce the bussiness immediatly after the incorportation
It does not need to hold statutory meeting and file statutory report
It needs at least & members of it's formation. The maximum number is not limited.
It is free to invite the public to buy its shares
It must issue prospectus
It can commerce the bussiness after receiving the certificate of comm of bussiness
It must hold statutory meetiing and file statutory report
10. Calculate Acid Test Ratio from the foilowing information :
current ratio 3:1
Net Working Capital $ 8,00,000 Stock $ 5,00,000 Answer:
11. Attempt arry two questions out of three questions :
Answer:
(iii) Financing Activities : Cash Flow From Financing Activities is a category in a company's cash flow statement that account for external activities that allow a form to raise cap financial activity also include repaying investors, adding or changing loan, or issuing more stock cash flow from financing activities shows investors the cam[pany are financing strength.
12. What do you mean by Company? What are its characteristics?
Answer:
Company : A flow chart is a type of diagram that represents an algorthim , work flow , or process. The chart shows different boxes that represents a steps and arranged by order linked with arrow to show the connectivity between steps.A flow chart may represent a structure or a solution to any type of
Characterstics of company flow
Fow properties Cohesives Strength Powder flowability through hoppers wall friction hoppers angles to achieves mass flow
Question paper 2
(a) What is Grant ?
(b) Sharp of good will brought in cash by new partner is called..................
(c) Realisation Account is a nominal Account.(T/F)
Answer:
(a) Grant : Grant are non-repayable funds or products distribution or given by one party, often a governement department, corportion foundation or trust, to a receipient, often a non-profit entity, education institution, busniss or an individual
(b) Revaluation Account
(c) Yes
Write features of Receipts and Payments Account?
Answer:
Features of Receipts and Payments Account
- It is abridged additionof cash book it is in effect, a summary of cash book.
- All cash receipt during the whole year are recording on its left hand.
- Cash Receipt and cash payment of both capital and Revenue nature are record here
Write any two difference between Fixed Capital Account and Flucating Current Account
Answer:
Fixed Capital Flucating Current - The cap normally remain unchange exept under special
- each partner has two account normaly, capital account and current account
- Capital account shares always a entiled balance current acount may share debit or credit balance
- All adjustment debiting to partner are received in carier account
- The capital is changing from provide is period
- Each partner are easily one account i.e Capital account
- Capital Account shares always a credit Balance
- All adjustment debeting its partner are seprated directly its the capital account.
Surjit Baljit and Haribh are partner sin 2:2:1 ratio. Manish is admitted for 1/10 share. Total goodwill is valued 4,00,000. Manish brings his share of goodwill in Cash and for Capital 1,20,000. Passjounral entries
Answer:
Manish Account Dr 1,20,000
To Surjit Account 48,000
To Baljit Account 48,000
To Harish Account 24,000
Goodwill A/c Dr 4,00,000
To Manish Account 4,00,000
Jatin, Nitin and Kartik are pafiners in a firm sharing profits in the ratio of 3:2:1 respectively. Or. 1-4-2016 they deeided to dissolve the fiirm. On that date profit and loss account showed a debit batance of 4,80,000 and General reserve showed a balance of 6,00,000. pass the l neces sary journal ontries.
Answer:
GR A/c Dr 6,00,000
To cash A/c 6,00,000
Jatin A/c Dr 2,40,000
Nitin A/c Dr 1,60,000
Kartik A/c Dr 80,000
To P & L A/c 4,80,000
Attempt any three questions outof fourquestions:
(i) From the following Receipts and Payments Account of Youth Club prepare an Income and Expenditure Account for the year ending 31st Dec 2015
Recepits $ Payments $ To Cash in hand (opening)
To Cash at bank (opening)
To Subscriptions
To Donations
To Interest on investment
To Entrange fees
To Interesi received frorn bank
To Sale of old newsPapers
13,500
3,78,000
4,57,200
2,16,000
5,400
54,000
18,900
2,740
By Salary
By Paper, ink, etc.
By Repairing expenses
By Billiard table
By Purchase of investment
By Misc. expenses
By Purchase of fumiture
By Insurance premium
By Cash in hand (closing)
By Cash atbank (closing)
1,48,500
5,850
21,060
1,74,150
1,95,940 1
9,800
3,69,000
8,100
12,600
2,00,700
11,45,700 11,45,700 (i) Subscriptions in arrear for 2015 $ 40,500 and subscriptions in advairbe for 2016 $ 11,700.
(ii) Insurance premium prepaid $ 900
(iii) Miscellaneous expenses outstanding $ 2,700
(iv) 50% of donation is to be capitalized.
(v) Entrances fees are to be treated as revenue income
(ii) A and B are partners sharing profit sin the ratio of 3:2 with capitals of $2,00,000,and $1,20,000 respectively. Interest on capital is agreed @ 6% p,a, B is to be allowed an annual salary of $ 10,000. During 2015,the profits of the firm prior to calcullation of interest on capital but after charging B's Salary amounted to $ 50,000. A provision of 5% of the profits is to be maintained in respect of future contingencies before any appropritation. prepare an account showing allocation of profits and partner's capital accounts
(iiiWhat is Goodwiil ? Write types of Goodwill
(iv) Write any four difference between Firm's Debts and Partner's Personal Debts.
Answer:
(iii) Goodwill : Goodwill is the replutation enjoyed by the bussiness which is reflected by, larger number of customers, high sales & high profit.
Types of Goodwill : Goodwill is nothing more than the profitable that the old customers will report to the old place
(1) Dog Goodwill : Dog follow its master wherever he goes Because dog always stays failful to its master rather than to a place.
(2) Cat Goodwill: Cat is not attached with the person living in the house.
(3) Rat Goodwill : Customer of such nature can go anywhere for their benifits, because such rat has no attachment either with the person or to a place.
(4) Rabbit Goodwll : Rabbit always afriad to goin too far. The Rabbit's sale consideration if Proximity, he has a habbit to living close
(iv) Difference Between Firm Debtor & Partner's Personal Debtor.
A Debtor is an entity that owes a debt to another entity. The entity may be an individual a firm, a government, a company or other leagal person . if x borrowed money from his/her bank, x is the debtor and the bank is the creditor
(a) Whatis Sweatequity shares ?
(b) What are Financial statements ?
(c) How Bank overdraft will be treated in cash flow statements ?
Answer:
(a) Sweat equity Shares : These are equity Shares issued by the campany to its employed or director at a discont or for consideration other than cash.
(i) For Providing know how
(ii) For making available the right in the nature of intellectual property rights.
(iii) For value adding e.g some software development which adds to economic value.
(b) Financial Statement : Financial statement is a formal record of the financial activity and position of a a business, person or other entity Relevant financial information is presented in a structured manner and in a from easy to understand.
(c) Cash flow statement: In financal account, a cash flow statement also known as statement that shows how change in balance sheet account and income affect cash and cash equivalents and breaks the analysis and breaks the analysis down to operating, investing and financing activities.
write any two difference between calrs in Arrear and cails in advance.
Answer:
Call in Arrer Call in Advance - It is the amount which defaulter shareholder have not paid on the amount called up by campany
- Call in arrer may be recovered in future or in the event not recieved shares may be forfeiled
- It is the amount which is recieved in advance before the amount is due from shareholder
- Calls in advance is adjusted in future at the time of relevant calls
- It is the amount which defaulter shareholder have not paid on the amount called up by campany
Calcucate Acid rest Ratio from the following information :
Current Ratio 3:1 Net Working Capital 16,00,000 Stock 10,00,000 Answer:
Acid Test Ratio : \(Current Asset \over Current Liabilities\)
Answer:
Shares : The share of company are moveable property and ae transformable in the manner provided the articles association, A shares is undoubedly a moveable property in the same way in which a bale of cloth or a bag of wheat
Difference between Equity share & Prefrence share
Equity share Prefrence share - Meaning : equity share are the ordinary share of the campany repersenting the part
- Payment of divident : The dividend is paid after the payment of all liabilities
- Repayable of dividend : The dividend is paid after the payment of all liability
- Repayable of capital : In the event of winding up the campany, equity
- Rate of Dividend : Fluctuating
- Redemption : No
Meaning : Preference share are the share thet carry preferential right on the matters of payment of dividend and repayment
Payment of divident : Priority in payment of dividend over equity shareholder
In the event of winding up of the campany prefrence shares are repaid
Fixed
Yes
What do you mean by Cash Flow from operating activities?
Answer:
Cash Flow from operating Activity : Is an accounting item that indirected the amount of money a company bring in from the ongoing regular business activities, such as manufacturing and selling goods or providing a services.
Cash flow from operating activities does not include large term activities