COMMON PRE-BOARD EXAMINATION

SUBJECT: ACCOUNTANCY (055)

CLASS XII – SESSION 2022-23
Time allowed: 3 hours Maximum. Marks: 80
General Instructions:
1. This question paper contains 34 questions. All questions are compulsory.
2. This questions paper is divided into two parts, Part A and B.
3. Part - A is compulsory for all candidates.
4. Part -B has two potions i.e., (i) Analysis of Financial Statements and (ii) Computerized Accounting.
Students must attempt only one of the given options.
5. Questions 1 to 16 and 27 to 30 carries 1 mark each.
6. Questions 17 to 20, 31 and 32 carries 3 marks each.
7. Questions 21, 22, and 33 carries 4 marks each.
8. Questions 23 to 26 and 34 carries 6 marks each.
9. There is no overall choice. However, an internal choice has been provided in 7 questions of one mark,
2 questions of three marks, 1 question of four marks and 2 questions of six marks.
PART-A
(Accounting for Partnership Firms and companies)
1. Kiran and Kumar were partners sharing profits and losses in the ratio of 5:3. On 1 st April, 2021 they
admitted Kailash as a new partner and new ratio was decided as 3:2:1. Goodwill of the firm was
valued as ₹ 1,80,000. Kailash could not bring any amount for goodwill. Amount of goodwill share to be
credited to Kiran and Kumar Accounts will be:
(a) ₹ 18,000 and ₹ 12,000 respectively. (b) ₹ 15,000 and ₹ 15,000 respectively.
(c) ₹ 18,500 and ₹ 11,500 respectively. (d) ₹ 22,500 and ₹ 7,500 respectively. (1)
2. Read the following statements – Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A): Pro rata allotment is proportionate allotment where applicants are allotted less number
of shares than applied for.
Reason (R): The balance of the ‘Forfeited Shares Account’ is added to the Share Capital under
‘Subscribed Capital’.
Alternatives: (a) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true, and (R) is not the correct explanation of (A).
(c) Assertion (A) is true but reasons (R) is false.
(d) Assertion (A) is false but Reason (R) is true. (1)
3. Gaurav Ltd. purchased machinery costing ₹ 1,71,000. It was agreed that the purchase
consideration be paid by issuing 12% debentures of ₹ 100 each. Assume debentures have been
issued at a discount of 10%. Number of debentures issued to vendor are:
(a) 1,500 (b) 1,900
(c ) 2,000 (d) 2,100
OR
Yuvraj Ltd., forfeited 200 shares of ₹ 100 each, ₹ 60 per share called up, held by Charles. He had
paid ₹ 20 per share. Out of these, 150 shares were reissued to Andrew as ₹ 60 paid up for ₹ 50
per share. Amount transferred to Capital Reserve Account will be:
(a) ₹ 2,500 (b) ₹ 4,000
(c) ₹ 1,500 (d) ₹ 3,000 (1)

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 4. Akil, Dia and Kiya were equal partners. They decided to change the profit-sharing ratio of
4:3:2. For this purpose, the goodwill of the firm was valued at ₹ 1,80,000.
The journal entry for the treatment of Goodwill on change in profit-sharing ratio will be:
Date Particulars L.F Dr. (₹) Cr. (₹)
(a) Kiya’s Capital A/c Dr. 20,000
To Akil’s Capital A/c 20,000
(b) Dia Capital A/c Dr. 20,000
To Akil’s Capital A/c 20,000
(c) Akil’s Capital A/c Dr. 1,80,000
To Kiya’s Capital A/c 1,80,000
(d) Akil’s Capital A/c Dr. 20,000
To Kiya’s Capital A/c 20,000
OR
A, B and C are partners in a firm sharing profits in the ratio 2:2:1. C is guaranteed a minimum
profit of ₹ 40,000 by A. Profit for the year amounted to ₹ 1,60,000. The profit credited to each
partner will be:
(a) ₹ 40,000, ₹ 80,000, ₹ 40,000 (b) ₹ 56,000, ₹ 64,000, ₹ 40,000
(c) ₹ 64,000, 64,000, ₹ 32,000 (d) ₹ 60,000, ₹ 60,000, ₹ 40,000 (1)
5. Shanti and Satya are partners with capitals of ₹ 20,00,000 and ₹ 16,00,000 respectively. The
Partnership Deed provides for interest on capital @ 10% p.a. If the firms earned a profit of
₹ 2,70,000 for the year ended 31st March, 2020, then Interest on capital respectively credited
to the Partners’ Capital Accounts was:
(a) ₹ 2,00,000 and ₹ 1,60,000 (b) ₹ 1,35,000 and ₹ 1,35,000
(c) No Interest on capital will be allowed (d) ₹ 1,50,000 and ₹ 1,20,000 (1)
6. Lotus Ltd. issued 1, 00,000, 10 % Debentures of ₹ 100 at certain rate of premium and to be
redeemed at 10% premium. At the time of writing off Loss on Issue of Debentures, Statement
of Profit and Loss was debited with ₹ 4,00,000. At what rate of premium, these debentures
were issued?
(a) 5% (b) 6%
(c) 10% (d) 20 %
OR
Himalaya Ltd. issues ₹ 70,00,000, 8 % Debentures of ₹ 100 each at a premium of 5 %
redeemable at 110% at the end of the 10 years.
Debentures Application and Allotment A/c Dr. ₹ 73,50,000
Loss on Issue of Debentures A/c Dr. ₹ 7,00,000
To 8% Debentures A/c X
To Securities Premium A/c Y
To Premium on Redemption of Debentures A/c Z
Here, X, Y and Z are:
(a) ₹ 70,00,000, ₹ 3,50,000, ₹ 7,00,000 (b) ₹ 3,50,000, ₹ 7,00,000, ₹ 70,00,000
(c ) ₹ 3,50,000, ₹ 5,00,000, ₹ 2,00,000 (d) ₹ 7,00,000, ₹ 3,50,000, ₹ 70,00,000 (1)
7. Mehar Ltd. invited applications for 28,000 shares. Applications for 35,000 shares are received.
The company rejected 5,000 shares and gave full allotment to applicants of 8,000 shares, and
pro rata allotment was given to the applicants in the ratio:
(a) 6:5 (b) 11:10
(c) 8:3 (d) 9:8 (1)

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8. A, B and C are partners in a business. B retired from the business, when his capital a/c, after all
necessary adjustments, showed a balance of ₹ 1, 09,500. It was agreed that he should be paid
₹ 49,500 cash on retirement and the balance in three equal yearly installments with interest at
12% per annum. Amount of last installment with interest will be:
(a) ₹ 22,400 (b) ₹ 22,300
(c) ₹ 22,200 (d) ₹ 22,100
OR
Asha, Nisha and Usha were partners in a firm sharing profits and losses in the ratio of 2:2:1.
They admitted Ashish for 1/4th share with effect from 1st April 2022. An extract of their Balance
Sheet as at 31st March, 2022 is as follows:
Liabilities (₹ ) Assets (₹ )
Workmen Compensation Reserve 2,50,000
If the claim for workmen compensation is estimated at ₹ 3,00,000, which of the following
accounts will be debited and by what amount?
(a) Workmen compensation Reserve by ₹ 50,000.
(b) Provision for Workmen Compensation Reserve by ₹ 50,000.
(c) Revaluation A/c by ₹ 2,50,000.
(d) Revaluation A/c by ₹ 50,000. (1)

Read the following hypothetical situation, Answer Question No. 9 and 10.
Pavan and Naveen are partners sharing profits in the ratio of 3:2 with capitals of ₹ 2,50,000 and
₹ 1,50,000 respectively. Interest on capital is agreed @ 6 % p. a. Naveen is to be allowed an
annual salary of ₹ 12,500. During the year ended 31st March, 2022 the profits of the year prior
to calculation of interest on capital but after charging Naveen’s salary amounted to ₹ 62,500. A
provision of 10% of the profits is to be made in respect of manager’s commission.
Following is their Profit and Loss Appropriation Account.
Dr. Profit and Loss Appropriation Account Cr.
Particulars ₹ Particulars ₹
To Interest on Capital: By Profit and Loss A/c ………
Pavan ……….
Naveen ………..
To Naveen’s Salary A/c 12,500
To Profits transferred to:
Pavan’s Capital A/c ………..
Naveen’s Capital A/c ………..
………. ………..
9. Pavan’s profit will be:
(a) ₹ 14,250 (b) ₹ 20,850
(c) ₹ 18,600 (d) ₹ 15,400 (1)
10. Naveen’s profit will be:
(a) ₹ 12,400 (b) ₹ 13,900
(c) ₹ 14,250 (d) ₹ 15,900 (1)
11. Which of the following statement is incorrect in context of partnership?
(a) Interest on partners’ drawings is to be given @ 10% p.a. if the partnership deed is silent
about the rate of interest.
(b) Fixed capital account always show a credit balance while fluctuating capital accounts may
show a credit or debit balances.
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 (c) Every partner including sleeping partner will get equal share of profit in the absence of
deed.
(d)Debit balance of a partner’s current account would indicate that the partner has withdrawn
in excess of what was due to him. So, it will be shown on the asset side of balance sheet. (1)

12. Honda Ltd. forfeited 100 equity shares of ₹ 10 each issued at a premium of 20% for non-
payment of ₹ 5 on final call including premium. The maximum amount of discount at which
these shares can be reissued is:
(a) ₹ 600 (b) ₹ 700
(c ) ₹ 800 (d) ₹ 900 (1)
13. Which of the following statements is/are true?
(i) Authorised Capital < Issued Capital
(ii) Authorised Capital ≥ Issued Capital
(iii) Subscribed Capital ≤ Issued Capital
(iv) Subscribed Capital > Issued Capital
(a) (i) only (b) (i) and (iv) Both
(c) (ii) and (iii) Both (d) (ii) only (1)
14. X and Y are partners sharing profits in the ratio of 2:1. They admit Z into the partnership for
1/4th share in profits for which he brings ₹ 20,000 as his share of capital. Hence, the adjusted
capital of X and Y will be:
(a) ₹ 40,000 and ₹ 20,000 respectively (b) ₹ 32,000 and ₹ 16,000 respectively
(c) ₹ 60,000 and ₹ 30,000 respectively (d) ₹ 20,000 and ₹ 40,000 respectively (1)

15. A, B and C are partners, their partnership deed provides for interest on drawings at 8% per
annum. B withdrew a fixed amount in the middle of every month and his interest on drawings
amounted to ₹ 4,800 at end of the year. What was the amount of his monthly drawings?
(a) ₹ 10,000 (b) ₹ 5,000
(c) ₹ 1,20,000 (d) ₹ 48,000
OR
Sumanth, a partner withdrew ₹ 6,000 at the end of each quarter and interest on drawings was
calculated as ₹ 900 at the end of accounting year 31st March 2022. What is the rate of interest on
drawings charged?
(a) 12% p.a. (b) 9% p.a
(c) 6% p.a. (d) 10% p.a. (1)
16. During the dissolution of partnership firm, assets were ₹ 2,00,000 and outside liabilities were
₹ 50,000. If assets realized 85% and expenses of dissolution paid were ₹ 500, profit/loss on realization
will be:
(a) ₹ 30,500 (Gain) (b) ₹ 25,500 (Gain)
(c) ₹ 30,500 (Loss) (d) ₹ 40,500 (Loss) (1)

17. A, B and C were partners in a firm whose books were closed on March 31st each year. A died on
30th June, 2020 and according to the agreement, the share of profits of a deceased partner upto the
date of the death is to be calculated on the basis of the average profits for the last five years. The net
profits for the last 5 years have been: 2016 - ₹ 14,000; 2017- ₹ 18,000; 2018 - ₹ 16,000; 2019 - ₹ 10,000
(loss) and 2020 - ₹ 16,000.
Calculate A’s share of the profit upto the date of death and pass necessary journal entry. (3)

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18. Sonali and Monali started a business on 1st April, 2017. Their capital contribution were ₹ 2,00,000 and
₹ 1,50,000 respectively. The partnership deed provided: (i) Interest on capital at 10% p.a. (ii) Sonali to
get a salary of ₹ 2,000 p.m. and Monali ₹ 3,000 p.m. (iii) Profits are to be shared in the ratio of 3:2.
The profits for the year ended 31st March, 2018 before making above appropriations were ₹ 2,16,000.
Interest on drawings amounted to ₹ 2,200 for Sonali and ₹ 2,500 for Monali.
Prepare Profit and Loss Appropriation Account.
OR
Rohit and Raina are partners in a firm sharing profits in the ratio of 7:3. Their capital accounts on
1st April 2019, stood at ₹ 9,00,000, and ₹ 4,00,000 . The partnership deed provided for the following
but the profit for the year was distributed without providing for:
(a) Interest on capital was to be allowed @ 9% per annum.
(b) Rohit’s salary ₹ 50,000 per year and Raina’s salary ₹ 3,000 per month.
The profit for the year ended 31st March, 2018 was ₹ 2,78,000 .
You are required to pass an Adjustment entry to rectify the error. (3)
19. Wipro Ltd. invited applications for issuing 500, 12% debentures of ₹ 100 each at a discount of 5%.
These debentures were redeemable after three years at par. Applications for 600 debentures were
received. Pro-rata allotment was made to all the applicants. Pass necessary journal entries for the
issue of debentures assuming that the whole amount was payable with application.
OR
Sony Ltd. purchased assets of Super Star Ltd. for ₹ 3,00,000. It also agreed to take over the liabilities of
Super Star Ltd. amounting to ₹ 50,000 for a purchase consideration of ₹ 2,75,000. The payment to
Super Star Ltd. was made by issue of 8% debentures of ₹ 50 each at a premium of 10 %.
Pass necessary journal entries for the above transactions in the books of Sony Ltd. (3)
20. Ram, Shyam and Mohan were partners in a firm sharing profits and losses equally. The firm was
engaged in the storage and distribution of canned juice and its godowns were located at three
different places in the city. Each godown was being managed individually by Ram, Shyam and Mohan.
Because of increase in business activities at the go-down managed by Shyam, he had to devote more
time. Shyam demanded that his share in the profits of the firm be increased, to which Ram and
Mohan agreed. The new profit sharing ratio was agreed to be 1:2:1. For this purpose, the goodwill of
the firm was valued at two years ’purchase of the average profits of last five years. The profits of the
last five years were as follows:
Year Profit(₹)
I 4,00,000
II 4,80,000
III 7,33,000
IV (Loss) 33,000
V 2,20,000
You are required to
(a) Calculate the goodwill of the firm.
(b) Pass necessary Journal Entry for the treatment of goodwill on change in profit- sharing ratio of
Ram, Shyam and Mohan. (3)
21. On 1st April, 2019, Videocon Ltd. was formed with an authorized capital of ₹ 5,00,000 divided into
50,000 equity shares of ₹ 10 each. Since the economy was in robust shape the company decided to
offer to the public subscription of 30,000 equity shares of ₹ 10 each at a premium of ₹ 20 per share.
The company received applications for 28,000 equity shares and allotment was made to all the
applicants. All calls were made and duly received except the final call of ₹ 2 per share on 500 shares.
Show the following:
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 (a) Share Capital in the Balance Sheet of the company as per Schedule III Part I of the Companies Act,
2013.
(b) Also prepare ‘Notes to Accounts’ for the same. (4)
22. Raghav, Laxman and Bharath have been partners in a firm manufacturing alarm clock. During recent
years, they saw a decline in the demands and sale of their product as mobile phones have started to
serve the purpose of alarm clock too. All the partners decided to voluntarily dissolve the firm through
mutual consent.
The firm of Raghav, Laxman and Bharath was dissolved on 31/03/2021 various assets (other than cash
and bank) and the third party liabilities had been transferred to realization account.
(i) Raghav’s loan of ₹ 40,000 to the firm was settled by paying ₹ 35,000.
(ii) Bharath’s loan of ₹ 75,000 to the firm and he took over Investments of ₹ 60,000 as part
payment.
(iii) Laxman’s loan ₹ 60,000 was settled by giving an unrecorded asset of ₹ 75,000.
(iv) Raghav agreed to bear the dissolution expenses of ₹ 6,500 and the same paid from the firm’s
cash. (4)
23. Jindal Ltd has offered 50,000 equity shares of ₹ 100 each at a premium of ₹ 20, payable as follows:
Application ₹ 50
Allotment ₹ 40 (including premium) and balance on first and final call.
The bank account of the company has received ₹ 35,00,000 on account of share application money.
Jindal Ltd. decided to allot shares to all the applicants on Pro-rata basis. The balance in calls in arrears
account at the time of allotment and first and final call amounted to ₹ 1,00,000 and ₹ 1,50,000
respectively. These shares were forfeited and reissued at ₹ 90 per share as fully paid up.
Make Journals in Jindal Ltd.
OR
Give journal entries for forfeiture and reissue of shares:
(i) Max Ltd. forfeited 30 shares of ₹ 10 each, ₹ 7 called-up, on which Madhu has paid application
and allotment money ₹ 5 per share. Of these, 25 shares were reissued to Neha as fully paid up
for ₹ 6 per share.
(ii) Reliance Ltd. forfeited 180 shares of ₹ 10 each, ₹ 8 called up, issued at premium of ₹ 2 per
share to Arsh for non-payment of allotment money of ₹ 5 per share (including premium) . Out
of these, 160 shares were reissued to Jyothi as ₹ 8 called up for ₹ 10 per share fully paid up. (6)
24. Kavita and Pavita were partners in a firm sharing profits and losses equally.
On 31st March 2022 their Balance Sheet was as follows:
Balance Sheet of Kavita and Pavita as on 31/03/2022
Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors 1,04,000 Cash at Bank 30,000
Capitals: Bills Receivables 45,000
Kavita 2,50,000 Debtors 75,000
Pavita 2,16,000 4,66,000 Furniture 1,10,000
Land and Building 3,10,000
5,70,000 5,70,000
On 1/4/2022, they admitted Navita as a new partner for 1/3rd share in the profits on the following
conditions:
(i) Navita will bring ₹ 3,00,000 as her capital and ₹ 50,000 as her share of goodwill premium, half of
which will be withdrawn by Kavita and Pavita.
(ii) Debtors to the extent of ₹ 5,000 were unrecorded.

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(iii) Furniture will be reduced by 10% and 5% provision for bad and doubtful debts will be created on
bills receivables and debtors.
(iv) Value of land and building will be appreciated by 20%.
(v) There being a claim against the firm for damages, a liability to the extent of ₹ 8,000 will be created
for the same.
Prepare Revaluation A/c and Partners’ Capital Accounts.
OR
Jeet, Meet and Geet were partners in a firm sharing profits in the ratio of 3:2:1 respectively. On March
31st,2022, the balance sheet of the firm stood as follows:
Balance Sheet
Liabilities (₹) Assets (₹)
Creditors 26,000 Cash 4,700
Bank Overdraft 4,000 Debtors 8,000
Capital Accounts: Stock 25,300
Jeet 30,000 Buildings 50,000
Meet 20,000 Profit and Loss Account 12,000
Geet 20,000 70,000
1,00,000 1,00,000
Meet retired on the above mentioned date on the following terms:
(i) Building to be appreciated by ₹ 10,000.
(ii) A provision for doubtful debts to be made at 5 % on debtors.
(iii) Goodwill of the firm is valued at ₹ 36,000 and necessary adjustment to be made by raising
and writing off the goodwill.
(iv) ₹ 11,200 to be paid to Meet immediately and the balance in his capital account to be
transferred to his loan account carrying interest as per the agreement.
(v) Capital of the new firm was to be in the new profit sharing ratio of the continuing partners,
by opening current account.
Prepare revaluation account and Partners’ capital account. (6)

25. Narain Laxmi Ltd. issued 2,500, 8% debentures of ₹ 100 each at a discount of 10 % on 1st April,2021
redeemable at par after five years. The company has a balance of ₹ 15,000 in Securities Premium
Reserve. The company decided to use the Securities Premium Reserve for writing off the loss on issue
of debentures and also decided to write off the remaining discount in the first year itself.
Pass the Journal entries for issue of debentures and writing off the discount on Issue of debentures.
You are also required to prepare Discount on Issue of Debentures Account. (6)
26. Keith, Chander and Bina were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31 st
March, 2022 their Balance Sheet was as follows:
Balance Sheet of Keith, Honey and Bina as on 31/03/2022.
Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors 3,00,000 Fixed Assets 4,50,000
General Reserve 1,50,000 Stock 1,50,000
Capitals: Debtors 2,00,000
Keith 2,00,000 Bank 1,50,000
Chander 2,00,000
Bina 1,00,000 5,00,000
9,50,000 9,50,000

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 Chander died on 12/06/2022. According to the partnership deed, the legal representatives of the
deceased partner were entitled to the following:
(i) Balance in his Capital Account.
(ii) Interest on Capital @ 12%.p.a.
(iii) Share of goodwill. Goodwill of the firm on Chander’s death was valued at ₹ 60,000.
(iv) Share in the profits of the firm till the date of his death, calculated on the basis of last year’s
profit. The profit of the firm for the year ended 31/03/2022 was ₹ 5,00,000.
Prepare Chander’s Capital Account to be presented to his representatives. (6)
PART-B
(Analysis of Financial Statements)
27. A company has an operating cycle of eight months. It has accounts receivables amounting to
₹ 1,00,000 out of which ₹ 60,000 have a maturity period of 13 months. How would the information be
presented in the balance sheet?
(a) ₹ 40,000 as current assets and ₹ 60,000 as non-current assets.
(b) ₹ 60,000 as current assets and ₹ 40,000 as non-current assets.
(c) ₹ 1,00,000 as non-current assets.
(d) ₹ 1,00,000 as current assets.
OR
Which one of the following is correct?
(i) Total assets to Debt ratio shows relationship between total assets and long-term debts of the
business.
(ii) Total Assets to Debt Ratio = Total Assets /Long term Debts.
(iii) Long term Debts refers to debt that will mature after one year from the date of Balance Sheet or
after the period of operating cycle.
(iv) A total asset to debt ratio of 3:1 is considered safe for the investors.
Choose the correct option:
(a) Only (i) and (ii) (b) Only (i) and (iii)
(c) Only (i) and (iv) (d) Only (i), (ii) and (iii) (1)
28. Based on the following information, calculate Net assets or Capital Employed Turnover Ratio:
Shareholders’ Funds ₹ 40,00,000, Equity Share Capital ₹ 15,00,000, 7 % Preference Share Capital
₹ 10,00,000, Reserves and Surplus ₹ 15,00,000, 8 % Debentures ₹ 10,00,000 and Revenue from
Operations ₹ 75,00,000. (1)
29. Modern Ltd. purchased machinery of ₹ 2, 50,000 issuing a cheque of ₹ 1, 00,000 and 9% Debentures
of ₹ 1,50,000. In the cash flow statement, the transaction will be shown as:
(a) Outflow under investing activity ₹ 2,50,000 inflow under financing activity as Receipt for
Debentures of ₹ 1,50,000.
(b) Outflow under investing activity ₹ 1,00,000.
(c) Inflow of ₹ 1,50,000 as financing activity.
(d) Inflow of ₹ 1,50,000 as Investing Activity and Outflow under financing activity of ₹ 2,50,000.
OR
Balance Sheet (an Extract)
Equities and liabilities st
31 March, 2019 31st March, 2020
12% Debentures 2,00,000 1,60,000
Additional Information:
Interest on debentures is paid on half yearly basis on 30th September and 31st March each year.
Debentures were redeemed on 30th September, 2019.

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 How much amount (related to above information will be shown in Financing Activity for Cash Flow
Statement prepared on 31st March, 2020?
(a) Outflow ₹ 40,000 (b) Inflow ₹ 42,600
(c) Outflow ₹ 61,600 (d) Outflow ₹ 64,000 (1)

30. JJK Ltd. purchased a plant and machinery for ₹ 12,00,000. It received dividend of
₹ 90,000 on investments. The company also sold old equipment for ₹ 2,40,000 at a loss of ₹ 20,000.
The cash flow from investing activities for Cash Flow Statement will be:
(a) Cash Inflow ₹ 8,70,000 (b) Cash Outflow ₹ 8,70,000
(c ) Cash Inflow ₹ 12,00,000 (d) Cash Outflow ₹ 12,00,000 (1)

31. Under which major headings and sub-headings will the following items be shown in the Balance Sheet
of a company as per Schedule III Part I of the Companies Act, 2013:
(i) Net loss as shown by Statement of Profit and Loss
(ii) Capital redemption reserve
(iii) Bonds
(iv) Loans repayable on demand
(v) Unclaimed dividend
(vi) Building (3)

32. One of the objectives of ‘Financial Statement Analysis’ is to judge the ability of the firm to repay its
debt and assessing the short- term as well as the long-term liquidity position of the firm. State two
more objectives of this analysis. (3)
33. Calculate Debt to Capital Employed Ratio from the following information:
(₹)
Shareholder’s Funds 50,00,000
Non- current Liabilities:
Long term Borrowings 20,00,000
Long term Provisions 17,50,000 37,50,000
Non-Current Assets:
Property, Plant and Equipment and Intangible Assets 90,00000
Non- current Investments 12,50,000 1,02,50,000
Current Assets 23,75,000
OR
Assuming that the current ratio is 2.1:1.2. State with reasons whether this ratio would increase,
decrease or remain unchanged in the following cases:
(a) Redeemed 9 % debentures of ₹ 1,00,000 at a premium of 10 %.
(b) Received from debtors ₹ 17,000.
(c) Issued ₹ 2,00,000 equity shares to the vendors of machinery.
(d) Purchase of Loose Tools against cash. (3)

34. Read the following hypothetical situation, and answer the questions that follow:
After completing his MBA, Manak Gupta initiated a start-up that provides a platform for the
‘App Development’. Following are the Balance Sheets of his start up Dreams Converge Ltd. as at
31/03/2022 and 31/03/2021.

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 Particulars Note 31/03/22 31/03/21
No. (₹) (₹)
I EQUITY AND LIABILITIES
(1) Shareholder’s Funds:
(a) Share Capital 7,00,000 5,00,000
(b) Reserves and Surplus 3,50,000 2,00,000
(Profit and Loss Balance)
(2) Share Application money pending
allotment
(3) Non- current Liabilities: 50,000 1,00,000
Long Term Borrowings
(4) Current Liabilities
(a) Trade Payables 1,22,000 1,05,000
(b) Short – term Provisions 50,000 30,000
(Provision for tax)
Total 12,72,000 9,35,000
II ASSETS
1. Non-current Assets
(a) Property, Plant and Equipment
(Fixed Assets)
(i) Tangible Assets 1 5,00,000 5,00,000
(ii) Intangible Assets 2 95,000 1,00,000
(b) Non-current Investments 1,00,000 Nil
2. Current Assets
(a) Inventory 1,30,000 55,000
(b) Trade Receivables 1,47,000 80,000
(c) Cash and Cash Equivalents 3,00,000 2,00,000
Total 12,72,000 9,35,000

Note No. Particulars 31/03/22 31/03/21

Tangible Assets
1. Computers and related equipment 2,80,000 2,00,000
Less: Accumulated Depreciation (1,00,000) (80,000)
1,80,000 1,20,000
Office Premises 3,20,000 3,80,000
5,00,000 5,00,000
2. Intangible Assets
Goodwill 95,000 1,00,000
During the year, the company had to sell some computers of the book value of 80,000 (accumulated
depreciation ₹ 20,000) at a loss of ₹ 18,000.
You are required to:
(i) Calculate operating profit before working capital changes.
(ii) Calculate cash inflow from operating activities
(iii) Prepare ‘Computers and Related Equipment’s Account. (6)

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