UNIT I

Accounting for partnership Firms

2- Marks Questions:-
1 . Written or oral agreement in partnership firm is called:
(a) Partnership agreement (b) Partnership deed (c) Partnership Letter (d) All of these
2. Every partner has right to……profit.
(a) share (b) Decision (c) Both a and b (d) None of these
3. Interest on loan advanced by a partner to a firm is allowed at the rate of :
(a) 8% (b) 12 (c) 6% (d) 2%
4. What is minimum numbers of partners allowed in a firm?
(a) 5 (b) 2 (c) 1 (d) 4
5. On which paper partnership deed is signed:
(a) Stamp paper (b) Litmus Paper (c) Notice Paper (d) All of above
6. How many types of capital accounts are there?
(a) 5 (b) 7 (c) 3 (d) 2
7. Decrease in liability is a………….
(a) Profit (b) loss (c) Both a and b (d) None of them
Answer :(1) a (2) a (3) c (4) b (5) a (6) d (7) a
3 -Marks Questions:-
1. Name the rule which control partnership in India.
2. What is partnership Deed?
3. Write the types of partners capital accounts.
4. What is the minimum number of partners allowed in a firm?
5. What are fluctuating capital Accounts?
6. What are fixed capital Accounts?
7. What are features of partnership?
8. Why is memorandum Revaluation Account is prepared?
9. An increase in value of asset is recorded on which side of Revaluation?
10. Decrease in liabilities is recorded on which side of revaluation account?
4 - Marks Questions:-
1. Write any four Rights of a partner.
2. Write any four duties of a partner.
3. Write contents of partnership deed.
4. Write any four points of importance of partnership deed.
5. Write any four differences between profit and loss account and profit and loss appropriation account ?
6. Write any four differences between fixed and fluctuating capital?
7. Write any four differences between current account and drawings account.
8. Write any four differences between fixed capital account and current Account.
9. A Withdraws 2400 per month on first day of every month during 2014. Interest on drawings is
charged at 8% per annul. Find out interest on drawings.
10. B Withdraws 3500 per month on last day of every month for year ended 31st Dec, 2022. Interest
on drawings is charged at 10% per annually. Find out interest.
 UNIT-II
Accounting for Goodwill
2- Marks Questions:
1. Goodwill is an intangible asset. True/False
2. Goodwill is a tangible asset. True/False
3. Profit is not a factor affecting goodwill of firm. True/False
4. When actual profit is more than normal profit, it is called super profit. True/False
5. There are two methods of evaluation of goodwill. True/False
6. Value of goodwill is Permanent. True/False
7. Valuation of Goodwill is only for dissolution of firm. True/False
8. Goodwill is an ..............Asset. (Tangible/Intangible)
9. A change in relationship among the partners amount to………of partnership firm
(reconstitution/end).
10. Goodwill can be.......... in parts. (Sold/Not Sold)
11.........is excess of actual profits over normal profit. (Super Profit/Average Profit)
Answer: (1) True (2) False (3) False (4) True (5) False (6) False (7) False (8) Intangible (9)
reconstitution (10) Not sold (11) Super profit
3- Marks Questions:-
12. What is goodwill?
13. Name methods of valuation of goodwill.
14. Name any two factors affecting goodwill of a firm.
15. When is goodwill valued?
16. Give features of Goodwill.
4- Marks Questions:-
17. Explain in detail types of goodwill.
18. From the following data calculate goodwill on the basis of two years purchase of the last three
years average Profit. The profits for the three year are 2008,-40000, 2009-35000,2010-30000.
19. AB associates earned the following profit during the last four year:-
2012- 15000 2013- 22000
2014- 14000 2015- 19000
you are required to calculate the value of goodwill based on the three years Purchase of the average
of last four years.
20. From the following information, compute the value of goodwill at two years purchase of the super
Profit:
Average profit-21500, Capital employed - 200000
Normal rate of return -10%
21. The profit of A, B and C for the last four years were as under: 2012-20,000, 2013 - 30,000, 2014
40,000, 2015-45000 Calculate the value of goodwill for the 3 years purchase of average. Weighted
profit the weights are 1,2,3 and 4 in the year of 2012, 2013, 2014 and 2015.
22. The Assets of a firm are 600000 and the liabilities other than capital are 200000. The Normal rate
of profit this type of Business is 15% where as the firm earns a profit of Rs 150000. Find the value
of Goodwill according to capitalization Method.
23. Average net profit expected in future by a firm B is 480000 per year. Normal profit is B 30000 and
normal rate of return on capital employed in a similar business is 10%. Calculated goodwill of the
firm by capitalisation of super profit method.
 UNIT -III
Change in the profit sharing ratio
2- Marks Questions:
1. Profit or loss on revaluation in case of change in profit sharing ratio is transferred to partner's capital accounts
of :
(a) continuing partner (b) old partners (c) New partner (d) All partners
2. A new partner may be admitted to a partnership?
(a) written consent of old partners (b) written consent of one partner
(c) Written consent of two third of the old partners. (d) None of these.
3. Old ratio- new ratio is equal to?
(a) New ratio (b) sacrificing Ratio (c) a and b both (d) None of these.
4. Old partner's sacrifice is equal to:
(a) New Share - old Share (b) old Share - New Share (c) Their old Share (d) Their new share
5. Reconstitution of a partnership from can be done in which situations?
(a) Admission of new partner (b) Death of a partner
(c) Retirement of a partner (d) All of these
6. Reserves, Accumulated profits/losses should be distributed in new partners. True/False
7. Unrecorded liabilities are shown on debit side of the revaluation account. True/False
8. Decrease in liability is a.......... (Profit/loss)
9.Old ratio is itself is a ................ratio unless, otherwise mentioned. (sacrificing/profit)
Answer: (1)b (2)a (3)b (4)b (5)d (6)False (7) False (8) Profit (9) sacrificing
3- Marks Questions:-
1. What is the purpose of preparing Revaluation account?
2. What is sacrificing Ratio?
3. What is gaining ratio?
4. What is new profit-sharing Ratio?
5. What is amount of compensation?
6. Unrecorded assets are shown on which side of the revaluation accounts?
7. An increase in the value of assets is recorded on which side of the revaluation Account?
8. What are the circumstances for Reconstitution of partnership firm?
9. Reconstitution of a partnership firm can be done in which situation?
4- Marks Questions:-
1. A and B are partners sharing profit and Losses in equal Ratio, they decide to share future profit in Ratio of
2:3. You are required to determine the Sacrifice or gain ratio of partners.
2. What adjustments are required to be made at the time of change in profit ratio between existing partners
.Explain ?
3. What do you mean by reconstitution of partnership firm?
4. What adjustments are required to be made at the time of Reconstitution of a Partnership?
5. What do you mean by change in profit sharing ratio?
6. Gold, Silver and copper are Partners in a firm sharing profit equally. They have decided to share profit in the
ratio of 2:3:5. For this purpose the goodwill of the firm is valued at Rs 150000. Record the necessary journal
entry to give effect to the new arrangement.
7. Why is it necessary to revalue the assets and liabilities at the time of change in profit sharing ratio among the
existing partners.
8. Write difference between sacrificing ratio and gaining ratio.
9. X, Y and Z are three Partners sharing profit and losses in 5:3:2. They agree to share future profit and losses
equally .On the same date their balance sheet showed a general reserve of 54000. Pass the nursery journal
entries.
10. A, B and C are three partners sharing profit and losses in the ratio of 3:2:1. They agree to share future
profits and losses in 4:3:2. Calculate sacrificing ratio.
 UNIT-IV
Admission of A Partner

2- Marks Questions:-
1. Premium paid by the new partner is shared by the old partners in ------------- ratio.
(a) New (b) old (c) sacrifice (d) None of these
2. Profit or loss arising from revaluation is shared by partners.
(a) Old ratio (b) new ratio (c) Both (d) None of these
3. Profit on revaluation is credited to old partners in ----------ratio.
(a) Old (b) new (c) sacrificing (d) None of these
4. When there are accumulated profits and reserves at the time of admission, it is credited to old
partners in----------
(a) New ratio (b) old ratio (c) sacrificing ratio (d) None of these
5. Increase in asset on revaluation is recorded on ----- side.
(a) Debit (b) Credit (c) Both (d) None of these
6. Increase in liability on revaluation is recorded on---------- side.
(a) Debit (b) credit (c) Both (d) None of these
7. Decrease in asset on revaluation is recorded on ----------side.
(a) Debit (b) credit (c) Both (d) None of these
8. Decrease in liability on revaluation is recorded on. .......... side.
(a) Debit (b) credit (c) Both (d) None of these
9. Unrecorded asset is recorded on .................. side of revaluation account
(a) Debit (b) credit (c) Both (d) None of these
10. Unrecorded liability is recorded on ............... side of revaluation account.
(a) Debit (b) credit (c) Both (d) None of these
11. A decrease in the provision for bad and doubtful debts is recorded on the............. side of revaluation
account
(a) Debit (b) credit (c) Both (d) None of these
12. When there are accumulated profits and reserves at the time of admission, it is credited to old
partners in...............
(a) old ratio (b) new ratio (c) Both (d) None of these
13. A decrease in the provision for bad and doubtful debts is recorded on the ..............side of
revaluation account.
(a) Debit (b) credit (c) Both (d) None of these
14. Cash brought in by the new partner towards goodwill should be credited to old partners in............
(a) new ratio (b) old ratio (c) sacrifice ratio(d) NOT
Answer:(1) c (2) a (3) a (4) b (5) b (6) a (7) a (8) b (9) b (10) a (11) b (12) a (13) a (14) c

2- Marks Questions:-
1. Sacrificing ratio and old ratio are always same. True/False
2. On the admission of a new partner all accumulated profits and losses must be transferred to
revaluation account? True/False
3. It is often desired to revalue the assets and liabilities at the time of admission of partners. True/False
 4. Goodwill brought in cash, is distributed among all old partners in their sacrificing ratio. True/False
5. It is necessary that new partner pays goodwill to the old partners. True/False
6. Profit or loss on revaluation is distributed among all the partners. True/False
7. Goodwill brought in by a new partner is cash will be credited to old partners in their sacrificing ratio.
True/False
8. When a new partner gives cash for goodwill the amount is credited to capital accounts of old
partners. True/False
9. A new partner on admission has to pay his share of goodwill to the old firm. True/False
10. Increase in asset is recorded on asset side of revaluation account. True/False
11. Decrease in liability is recorded on the credit side of revaluation account.
True/False
12. Is this formula correct: sacrificing ratio-old ratio = new ratio? True/False
13 When there is profit or loss on revaluation, it is distributed. True/False
14. among partners in new ratio. Revaluation account is a nominal account. True/False
Answer:
(1) False (2) True (3) True (4) True (5) False (6) False (7) True (8) True (9) True (10) False(11) True
(12) True (13) False (14) True
2- Marks Questions:-
1. Goodwill brought in cash, will be shared by the old partner in:
(a) old profit sharing ratio (b) new profit sharing ratio(c) sacrificing ratio (d) capita, ratio
2 The share of profit to a new partner in the future profit without any express agreement as to who will
contribute to new partner's share of profit is implied that old partner will contributed.
(a) In their profit sharing ratio (b) equally (c) In proportion of their capital (d) none of these
3. If the adjustment in the value of assets is undertaken at the time
of admission of a partners shove a profit, it should be credited to a capital account of.
(a) the old partners in their old profit sharing ratio (b) the old partners in the new profit sharing ratio
(c) all partners in their new profit sharing ratio (d) None of these
4. When a new partner does not bring his share of goodwill in cash then the amount of share of new
partner’s goodwill is debited to:
(a) Capital Account (b) Asset Account
(c) Partner’s account (d) Current Account
5. On the admission of a new partner the increase in the value of assets is credited to
(a) asset account (b) profit and loss adjustment all
(c) Old partner capital account (d) None of these.
6. A,B and C share profit and losses in the ratio 6:5:3 D is admitted into partnership for 1/8 share. The
sacrificing ratio of A:B:C is
(a) 6:5:3 (b) 5/14:4/14:3/14 (c) equal (d) none of these
7. If at the time of admission there are same unrecorded liability it will be:
(a) Transfered to old partners capital account(b) Transferred to all partners capital account
(c) Credited to revaluation account(d) Debited to revaluation account
8. When the incoming partner brings his share of goodwill in cash it is adjusted by credited to
(a) old partners capital Account (b) his capital Account(c) goodwill Account (d) None of these
9. X,Y,Z are partners in a firm. If B is to be admitted as new partner
(a) Old partnership has to be dissolved (b) old firm has to be dissolved
 (c) old firm has to be dissolved (d) Both old firm and partnership has to be dissolved.
10. on the admission of a new partner-
(a) old partnership has to be dissolved.(b) both old firm and partnership have to dissolved.
(c) neither partnership nor firm has to be dissolved.(d) old firm has to be dissolved
11. A new partner may be admitted to a partnership?
(a) with the consent of any one of the partner (b) with the consent of all the old partners.
(c) without consent of all partners. (d) with the consent of 2(3rd of all partners)
12. X and Y are sharing profits in ratio 4:3. The new ratio among X,Y,Z is 7:4:3. The sacrificing ratio
between X and Y will be-
(a) 1:2 (b) 2:1 (c) 4:3 (d) equal
13. The memorandum revaluation account is transferred to the capital account of partners in-balance of
(a) old profit snaring ratio (b) new profit showing ratio (c) assets account (d) None of these
14. on the admission of a new partner the decrease in the value of asset is debited to-
(a) old partners capital account (b) Revaluation A/c (c) Assets account (d) None of these
15. When a new partner brings his share of goodwill in cash the amount is diluted to-
(a) cash account (b) capital account of new partner(c) Goodwill account (d) capital account old of
partners
16. A and B share profit in the ratio of 4/5 and 1/5, admit C to ½ share. The profit sharing ratio of firm
would be-
(a) A4/10;B1/10,C5/10 (b) A 2/10;B3/10:C5/10 (c) A1/10;B4/10,C5/10 (d) None of these
17. When the new partner pays the firm for goodwill in cash the amount should be debited in firm's book:
(a) In cash (b) Goodwill (c) In profit and loss account account (d) none of these
Answer:(1) c (2) a (3) b (4) d (5) a (6) d (7) d (8) a (9) b (10) a (11) b (12) a (13) a (14) b (15) d (16) a
(17) a
2 - Marks Questions:
1. Define new profit ratio in case of admission of new partner.
2. State two main rights acquired by a new partner.
3. What is meant by admission of a new partner?
4. Why is it necessary to revalue the assets and liabilities in case of admission of a new partner?
5. What is the formula for calculating sacrificing ratio?
6. Give two circumstances in which sacrificing ratio may be applied.
7. In which ratio the premium brought in by new partner as a share of goodwill, is shared by old
partners?
3 - Marks Questions:-
1. What is revaluation account?
2. What is sacrificing ratio? What is the formula of calculating sacrificing ratio ?
3. Distinguish between revaluation account and memorandum revaluation account.
4. What is meant by memorandum revaluation account?
5. What adjustments are required at the time of admission of a partner of cumulative profit and loss,
reserve?
6. How would you deal with goodwill when new partner brings his share of goodwill in cash?
7. How are the capitals of old partner adjusted at the time admission of a new partner?
8. What do you mean by hidden goodwill?
9. L and M are partner sharing profit and losses in 3:2, A New Partner N is admitted for 1/5 share
which he gets 3/20 share from L and 1/20 share from M. Calculate new profit sharing ratio of
partners.
10. A and B are partners sharing profit in the ratio of 3:2. C is admitted as a partner. The new profit
sharing ratio among A, B and C is 5:3:2. Find out sacrificing ratio.
11. Give the journal entry when new partner does not bring his share of goodwill in cash
12. What will be the journal entry passed when new partner brings in goodwill in cash? In which ratio
old partner will share it.
13. At the time of admission of new partner, how will we deal with goodwill? if goodwill is already
given in the balance sheet.
14. Pass journal entries
a) Stock Rs 12,000 was increased to Rs. 15,000
b) Furniture Rs 12,000 was decreased by Rs. 10,000

4 - Marks Questions:
1. What adjustments are required at the time of admission of a new partner?
2. What is sacrificing ratio? what are the steps to calculate sacrificing ratio?
3. What is revaluation account?
4. How would you deal when new partner brings in goodwill in cash?
5. What do you mean by hidden goodwill? How it is calculated? Explain with the help of one suitable
example.
6. What steps are taken to calculate proportionate capital which is to be contributed by new partner?
7. G and H are partner in 2:1 ratio Value of goodwill is 18,000 in balance sheet. K was admitted for
1/6 share. He paid 7,50,000 to the firm, out of it 15,000 are included for goodwill. Pass the journal
entries in the books,
8. Ram and Sham are partners in firm share profit in the ratio 2.1. On March 31, 2015 their balance
sheet is as follows
Liabilities Rs. Assets Rs.

Creditors 18,000 Cash 8,000

Bill Payable 7,000 Stock 11,000
Capital Debtors 15,000
Ram 30,000 Furniture 20,000
Sham 21,000 51,000 Machinery 22,000

76,000 76,000

On the date of balance sheet, Mohan was admitted in the firm for 1/3 share. It was decided that:
(a) Mohan will bring 12,000 as capital,
(b) Value of stock decrease by 2,000 and value of furniture is 23,000.
(c) Rate of depreciation on machinery is 5%.
(d) Creditors do not claim 550. Pass the necessary journal entries.
9. A and B are partners in firm share profit in the ratio 4:3. On December 31, 2015 their balance sheet
is as follows:
 Liabilities ₹ Assets ₹

Capital A/C Sunday Assets 73,500

A 40,000 Profit and loss A/c 7,000
B 30,000 70,000
General reserve 10,500
80,500 80,500

C is admitted on 1st January, 2016. Pass necessary journal entries regarding profit and loss.

UNIT-V
Retirement and Death of a partner
2- Marks Questions:-
Q.1 What is Gaining Ratio?
Q.2 Who are called Gaining partner?
Q.3 What do you understand by Retirement of a partner?
Q4. In which ratio the undistributed profit/losses and reserve are distributed among the partner at the
time of death/retirement of a partner?
Q5. Under what circumstances does a partner retire from the firm?
Q.6 At what ratio the interest to a retired/decreased partner is given on the amount left with the firm as
per section 31 of Indian partnership act 1932?
Q.7 How Goodwill is recorded on the retirement or death of a partner?
Q.8 What is meant by reconstitution of a partnership firm?
Q.9 At the time of retirement, how will you deal with the goodwill when goodwill appear in the
balance sheet ?
Q.10 How goodwill is recorded on retirement or death of partner?
Q11. What treatment is given to accumulated profit and loss on the retirement of a partner?
Q.12 What is basis of calculation of deceased partner share of profits from the date of last balance
sheet the date of death?
Q.13 What is ratio profit or loss disclosed by revaluation account is distributed among the partner, at
the time of retirement or death of partner?
Q.14 What will you deal with the amount due to an outgoing partner in case it is not paid
immediately?
Q.15 What is the method of calculating the share of profit to outgoing partner, when retirement or
death is after the preparation final account?
Q.16 X,Y and Z are partners, sharing profit in ratio 5:3:2 If the new profit sharing ratio on retirement
of Z is 5:3 what is the gaining ratio.
Q.17 What is the formula of calculating gaining ratio?
Answers:
(1) Ratio acquired by continuing partners on the retirement of a partner.
(2) The partner whose share have increased as a result of change in profit sharing ratio is the
gaining partner.
(3) Reconstructing the firm under which old partnership comes to end and new partnership begins.
(4) Old profit sharing Ratio.
(5) By consent of all partners, by expiry of agreement, by notice.
(6) 6% p.a.
(7) Continuing partners capital account are debited in gaining Ratio and Retiring partners account is
credited with his share in goodwill.
(8) Any change in existing agreement of partnership amount to reconstitution of partnership firm.
(9) The goodwill account will be credited with full amount and all partners capital account will be
debited in profit sharing Ratio.
(10) Continuing partner’s capital account.
(11) Accumulated profits and reserves are distributed among partners in old ratio.
(12) On the basis of average profit of the year of death.
(13) Old profit sharing Ratio.
(14) The amount can be treated as a loan by partner to the firm and will be paid in installment along
with interest.
(15) On the basis of previous year’s profits (b) on the basis of sale
(16) 5:3
(17) Gaining Ratio = New Ratio - Old Ratio
2- Marks Questions:-
1. Gaining Ratio = New Ratio - .......... (Old Ratio/Sacrificing Ratio)
2 Sacrificing Ratio = old Ratio-.......... (New Ratio/Gaining Ratio)
3. Retiring partner share of goodwill is adjusted from remaining partner capital account in ……...
(Gaining Ratio/Sacrificing Ratio)
4. Revaluation account is a ………account. (Nominal /Real)
Answer:(1) Old Ratio (2) New Ratio (3) Gaining Ratio (4) Nominal
2- Marks Questions:-
1. Profit all loss on revaluation transfer to retiring partner capital account only. True/False
2. New and gaining ratio between remaining partners are always the same.
True/False
3. The amount due to retiring partner will always be settled in cash. True/False
4. Unexpired insurance is an Asset. True/False
5. Entire share of remaining partner may be same as if acquired by one partner alone. True/False
6. The executors of deceased partners are entitled to receive the share in profit for the period between
last financial statements to the date of death. True/False
7. Decrease in the precision for bad and doubtful debt is gain. True/False
8. At the retirement or death of a partner profit from revaluation account is distribution in new profit
sharing ratio among partners. True/False
9. Profit from revaluation of assets at the time of retirement is not called capital gain. True/False
10. In case of death or retirement of partner, profit and loss are shared on the basis of old ratio.
True/False
11. In the event of death, the combined share of profit of contributing partner will increase.
True/False
12. A partner can retire from the firm with the consent for all the other partners only. True/False
13. Retiring partner capital account will be debited while making partner of amount due to him.
True/False
14. Amount due to deceased partner is generally transferred to his executers loan account. True/False
 Answers:
(1) False (2) False (3) False (4) True (5) True (6) True (7) True (8) False (9) False (10) False (11) True
(12) True (13 ) False(14) True
2- Marks Questions:-
1. A, B and C were partners sharing profits in Ratio 5:4.1 account from the firm. The new profit
sharing ratio will be (a) 3:1 (b) 4:1 (c) 2:1 (d) 1:1
2. The profit or loss on revaluation of assets and liabilities is transferred to the capital of:
(a) Only reciting partner (b) Remaining partner(c) All partners (d) None of these
3. In the case of retirement of a partner goodwill is credited to the account of
(a) Only retiring partner (b) Only remaining (c) All partners (d) None of these
4. If the adjustments in value of assets at the time of retirement of a partner shows a profit it should
be credited to the capital accounts of:
(a) The remaining partners in their old profit sharing ratio
(b) All the old partners in their profit sharing ratio
(c) The remaining partners in their new profit sharing ratio
(d) None of these
5. On the retirement of a partner, any reserve built out of profits etc should be transferred to the
capital accounts of:
(a) Neither the retiring partner nor the remaining partner
(b) All partners in old profit sharing ratio
(c) Remaining partners in new profit sharing ratio
(d) None of these
6. At the time of retirement of partner, profit on revaluation of assets will be credited to capital
accounts of:
(a) Remaining partners in new profit sharing ratio (b) Retiring partner
(c) All partners in old profit sharing ratio (d) Remaining partners in their old profit sharing ratio
7. A, B and C are partners sharing profits in the ratio 5:21. C retires the new profit sharing ratio
between A and B will be.......
(a)5:2 (b) 2:1 (c) 5:1 (d) 1:1
Answer:(1) b (2) c (3) b (4) b, (5) b (6) c (7) a
3 -Marks Questions:-
1. What do you understand by retirement of partner?
2. How can a partner retire from the firm?
3. What is need for settlement of the amount due to retiring partner?
4. What is gaining Ratio? How is it calculated?
5. What are the items for which the retiring partner is liable?
6. What are the items to be credited in the account of a retiring partner?
7. X,Y and Z are the partners sharing profit 2:1:3. Z retires and is share is taken equally by X and Y.
Find out the gaining or sacrificing ratio.
8. Alfa, Beeta and Gamma are partners sharing in 9:5:4. Beeta retires and his share is taken by gamma.
Find out new profit sharing ration between Alfa and Gamma.
9. Ram sham and Sohan are partner sharing profit in 3:2:1 Ram retired calculate the new profit sharing
Ratio?
10. A,B and C are partners in the ratio 3:2:1. A retires the value of goodwill is 72000. Pass the journal
entries.
4 -Marks Questions:-
1. Write any four differences between sacrificing Ratio and Gaining Ratio.
2. What is the new profit sharing Ratio and how is this generally calculated on the retirement of
partner?
3. What are the items to be credited in the account of a retiring partner? Discuss.
4. X,Y and Z are partners. At the end of 31 March, 2015, they earned profit 40,000, they share profit in
the ratio 5:3:2. On June 30, 2016 the partner Y dies, calculate share of his profit for three months on
the basis of profit of previous year.
5. How will you compile the amount payable to a decreased partner?
6. What adjustment are required to be made at the time of retirement of a partner?
7. What is made of settlement of the amount due to Retiring Partner?
8. Define the term goodwill. What treatment of goodwill is necessary in case of retirement of death of
partner ?
9. P.Q.R are sharing profit in the Ratio 3:2:1, goodwill is appearing in the book at the value of 10800.
Q Retired and on the day of a retirement. Goodwill is value at 18,000. P and R decided to share
further profit and loss in Ratio 3:2 Pass Journal Entries.
10. Anju, Manju and Sanju are partners, share profit & loss in the ratio 3:1:1, their balance sheet on
31st March, 2015 was as follows:
Liabilities ₹ Assets ₹

Bills Payable 30,000 Bank 31,000

Creditors 90,000 Debtors 70,000
Capital accounts: Less Provision 2,000 68,000
Anju 1,50,000 Stock 80,000
Manju 1,00,000 Building 2,70,000
Sanju 99,000 Profit & Loss A/c 20,000

4,69,000 4,69,000

Manju retired on following terms:

1. Building is to be appreciated by 10%.
2. Creditors of 10,000 will not be claimed.
3. There was an outstanding repair bill 2,000.
4. Provide for doubtful debts 10% on debtors.
5. Goodwill of firm valued at 75000.
6. Manju is paid 20,000 in cash and the Balance is transferred to her loan account.
Prepare Revaluation account, partner Capital account and balance sheet.
 UNIT- VI
Dissolution of partnership Firm
2- Marks Questions:-
Q1. Give two cases of compulsory dissolution of firm.
Q2. Write any two circumstances under which a firm which is dissolved.
Q3. What do you mean by dissolutions of partnership firm?
Q4. When any the court order dissolution of a firm?
Q5. What are the important causes of dissolution of partnership firm?
Q6. What is dissolution by notice?
Q7. What is compulsory dissolution of firm?
Q8. Enumerate any two circumstances under which a firm is dissolved?
Q9. Write two causes of dissolution by the court.
Q10. What is dissolution by agreement?
Q11. Explain the 'Realisation expenses?'
Q12. Which liability is paid first of all after the date of Asset?
Q13. Pass necessary journal entry at the time of dissolution of firm when rupees 2,50,000, realized
from the Assets of firm.
Q14. Where will you show payment of unrecorded Liability?
Q15. How will you treat with 'Partners loan Account?'
Q16. How will you treat unrecorded Assets?
Q17. Stock worth 8,000 is taken by our partner Sohan. Pass necessary journal entry at the time of
dissolution of partnership firm?
Q18. Name the various accounts to be prepared at the time of dissolution of firm.
Q19. Realisation expenses 4,000 were agreed to be payable to partner Mohan by the firm the actual
expenses were however 26,000. Pass necessary journal entries.
Q20. Realisation expenses of 75,000 were paid by a partner Jeevan out of his own pocket. Pass
necessary journal entry.
Q21. How will you deal with provision of doubtful debts appearing in balance sheet?
Q22. In the event of dissolution of a firm the partners personal Assets are first used for payment of
which type of Liability.
Answer: (1) (i) On the solvency of any partner (ii) Business of firm developed illegal.
(2) (i) On the solvency of any partner (ii) Business of firm developed illegal.
(3) According to section 39 of partnership Act 1932: "Dissolution of firm means dissolution
of partnership between all the partners in the firm.
(4) (i) Partners become of unsound mind (ii) Permanent incapability of partner.
(5) A firm may be dissolved by agreement, by hampering of an event voluntarily.
(6) When any partner gives a notice in writing to other partner.
(7) That condition under which dissolution of firm has become compulsory it is called
compulsory disruption firm.
(8) (i) Compulsory dissolution (ii) Dissolution due to happening of a certain event.
(9) (1) Partners becoming of unsound mind (ii) Permanent incapacity of partner.
(10) When all partners agree to dissolve the partnership.
(11) The expenses incurred for realisation of assets and payment of liabilities are called
realization expresses.
(12) Payment to the third parties.
(13) Bank A/c Dr.
To realization A/C
 (Being assets realised for cash)
(14) On the Dr. side of Realisation account.
(15) After the payment of third party liabilities, partner’s loans are repaid.
(16) Credit side of realization account with amount realized.
(17) Sohan’s capital A/c Dr.
To realization A/C
(Being stock taken over by Sohan)
(18) Realization account, partners loan account, partners capital account cash or Bank account.
(19) Realisation account how.
(20) Do yourself.
(21) Transfer to the credit side of realisation account along with other liabilities.
(22) Personal.
2- Marks Questions:-
1. Amount received from realisation of an unrecorded asset is shown on ------------ side of Realisation
Account. (Debit/credit)
2. When firm is dissolved goodwill account is closed by transfer to ------- --.
(Realisation account/Nominal)
3. Realisation account is a ------------account. , (Nominal/Book)
4. On dissolution of all assets and liabilities are transferred to the realization account at their respective
------------------values. (Letter/(Book)
5. In the event of dissolution of a firm partners---------------- assets are first use are payment of
personal liabilities. (Real/Personal)
Answer:
(1) credit (2) Realisation account (3) Nominal (4) Book(5) Personal
2- Marks Questions:-
1. Profit/loss account on the assets side of balance sheet shows profit. True/False
2. While preparing cash or bank account, in case of dissolution Dr. and Cr. side this account must be
equal. True/False
3. Realisation account is a nominal account. True/False
4. The payment of outside liabilities is must in case of even if the question keep quite about it.
True/False
5. We shall not pass any entry regarding realisation expenses, one of the partner agreed to bear
personally/privately. True/False
6. Items appearing in the balance sheet are posted in one place only. True/False
7. At the time of dissolution of partnership firm, fictitious assets are transferred to capital accounts of
partners. True/False
8. Workmen compensation fund is an outside liability. True/False
9. Employees provident fund is an outside liability. True/False
10. Employees saving fund is an outside liability. True/False
Answer:(1) False (2) True(3) True (4) True (5) True (6) True (7) True (8) False (9) True (10) True
2- Marks Questions:-
1. When a firm is dissolved, profit or loss on realization is shared by the partners.
(a) in the profit sharing ratio
(b) equally
(c) in the ratio of their capital balance
(d) None of above
2. On the dissolution all Assets are transferred to realization account
 (a) cost or market value whichever less(b) book value (c) Market value(d) None of these
3. In the event of dissolution of firm are first used for payment of the
(a) Firm Liabilities (b) The personal Liabilities (c) None of two (d) Both of two
4. Provision for bad and doubtful debts appearing in the books at the time of dissolution of firm is
transferred to
(a) bad debts account (b) Capital account of the partners (c) stock account (d) Realization account
5. on the dissolution of a firm, an amount realized firm the underscored assets is credited to
(a) cash account (b) realization account (c) revaluation account(d) None of these
6 Out of the proceeds received from the sale of Sundry asset-will be paid first and all.
(a) Partner's capital(b) Creditors liability(c) Partner's loss (d) None of these
7. When a firm is dissolved goodwill account is closed by transfer to
(a) realization account (b) capital account of the partner(c) revaluation account (d) None of these
8. Unrecorded Liability when paid on dissolution of a firm is debited to
(a) Liability account (b) Realization account
(c) partners capital account (d) None of these
9. At the time of dissolution on unrecorded assets taken away by Mr. X a partner should be debited to
(a) assets account (b) Mr. X capital account (c) profit and loss (d) None of these
10. The balance left in the capital account on dissolution of firm is transferred to
(a) bank account (b) Realisation account (c) profit and loss (d) None of above
11. Ram, who was looking after the dissolution agreed to accept Rs 900 towards realisation expenses.
The actual realisation expense were Rs,1200. Realisation Account should be debited
with ................ for expenses.
(a) Rs. 1200 (b) Rs.300 (c) Rs. 900 (d) Rs 2100
12. Realisation account is a
(a) Nominal account (b) Personal account (c) Real account (d) None of these
13. On the dissolution of a firm, if a partner has a debit balance, in his capital account then
(a) he is required to bring in cash to clear off his debit balance
(b) he shall not show in the profit or loss on dissolution.
(c) he need not bring cash.
(d) None of above
14. In settling the account of firm after dissolution, the realization from the assets of the firm must
first be applied in
(a) the debit of the firm to the third party payments.
(b) to each partner ratably to what is due to him from the first for advance.
(c) the private credit of a partner
(d) to each partner ratably to what is due to him on account ofcapital.
15. Amount received from sale of unrecorded assts is shown at…………
(a) credit side of realization a/c and credit side of cash a/c
(b) debit side of realization a/c and credit side of cash a/c
(c) debit side of realization a/c and credit side of cash a/c
(d) credit side of realization a/c and debit side of cash a/c
Answer Key:
(1) in the profit sharing ratio.(2) Cost or market value whichever less. (3) The personal liabilities.
(4) Realization account(5) Realization account(6) Creditors liability (7) Realization account
(8) Realization account(9) Mr. X capital account(10) Bank account(11) Rs. 900(12) Nominal account
 (13) He is required to bringing in cash to clear off his debit balance (14) The debt of the firm to third
party (15) Credit side of realization a/c and debit side of cash a/c.
3- Marks Questions:-
Q1. What is meant by compulsory dissolution of firm?
Q2. What is realization account?
Q3. What are the various item which or recorded on the debit side of realization account?
Q4. What do you mean by dissolution of partnership firm?
Q5. What are adjustments are required in book of account at dissolution of firm?
(i) When payment is made for unrecorded liability.
(ii) When partner takes responsibility to pay unrewarded liability himself.
Q6. What are the various steps to be taken at the time of dissolution of firm.
Q7. What do you mean by dissolution of partnership firm?
Q8. What entries are recorded for dissolution of journal reserve and profit or loss on realization of
assets & liabilities among various partners?
Q9. Difference between firm's debt and private debt?
Q10. What are the various items which are recorded on the credit side of realisation Account?
Q11. Z and Y were two partners sharing profit in the ratio 2:1 .Give the journal entries at the time of
dissolution in following cases?
(i) Deferred revenue advertising expenditure appeared at 30,000.
(ii) Profit and Loss account was appearing on the asset side of Balance at 60,000.
(iii) An unrecorded Investment realised of Rs 6000,
Q12. Maninder, Jatinder and Rupinder are partners in a firm sharing profit in the Ratio of 4:3:3
respectively on 1-4-2015. The decided to dissolve the firm. On that date sundry assets were R1,74,
230. The Creditors amounts to Rs 23,150 and cash in hand was 3,920. The assets realized Rs 1,44,910
and the Exp of dissolution was Rs. 1,860 Prepare Realisation Account
4 - Marks Questions:-
Q1. What are steps to be taken at the time of dissolution of
Q2. Enumerate four circumstances under which a firm is dissolved?
Q3. Draw a format of realization Account?
Q4. Give any four differences between dissolution of partnership and dissolution of partnership?
Q5. Give any four differences between revaluation account and realisation account?
Q6. Pass the necessary journal entries for the following transactions on the dissolution on the firm of
A and B after the various assets and outside liabilities have been transferred to realisation
Account.
1. Bank Loan Rs 34000 was paid.
2. Furniture worth Rs 70,000 was taken over by partner A at Rs 43,000.
3. Partner N agreed to pay a creditor Rs 7500
4. A Computer previously written of fully, realized Rs 3,900.
5. Expenses of realization Rs 3,200 were paid by partner. A
6. Profit on realization Rs 4,800 was distributed between A and B in 5 3 ratio.
Q7. X's capital Rs 30,000, Loan from Y Rs 20,000 Advance to X Rs 20000 profit and loss Rs 80,000,
Y's current a/c (cr) Rs 30,000 Y's capital; Rs 40,000 loan from Mrs. Y R 1,20.000 .Trade creditors
Rs 1,20,000, Fixed and current assets other than cash and Bank balance Rs 1,70,000 prepare
Balance sheet .
8. A and B were partners in a firm sharing profit in the ratio of 4:3. The firm was dissolved on
28.02.2012. Pass the journal entry for the following transactions.
(i) Debtors of Rs 60,000 was taken over by partner A for Rs 54,000.
(ii) Creditors of Rs 45,000 were paid of at a discount of 5%.
(iii) Realisation Expenses Rs 3000 were paid by partner B.
(iv) Loss on realization was Rs 21,000.

SECTION-B

UNIT- VII
Accounting for Share Capital
2 -Marks Questions:-
1. What are the redeemable preference shares?
2. What are participating preference shares?
3. What is subscribed capital?
4. Name the types of shares issued as per company's Act 2013?
5. What is meant by private placement of shares?
6. What are the two types of shares which a company can issue?
7. What is meant by forfeiture of shares?
8. What do you mean by issue of shares at premium?
9. What is pro-rata allotment?
10. What is accounting treatment of interest on calls in arrears?
11. What is share capital?
12. What do you mean by calls-in-advance?
13. What is under-subscription?
14. What are non-cumulative preference shares?
15. State two essential features of company?
16. What is called up capital?
17 What do you mean by equity shares?
18. Under which head of balance sheet, bill securities, premium will be shown?
19. Under which head, are call in arrears are written in balance sheet?
20. What is meant by calls-in advance?
21. Name the account, in which balance available in share forfeited account is transferred after the re-
issue of all the shares?
22. What is capital Reserve?
23. State two essential features of public company?
24. What do you mean by company?
25. When company received application of shares more than of its issued capital, then this is the case
of..........
26. What is meant by minimum subscription?
27 What is accounting treatment of interest on calls in advance?
28. Under which schedule company's balance sheet is to be prepared?
29. What is the journal entry for transfer of balance of share forfeiture account after reissue of for
forfeited shares ?
30. With what amount share forfeiture account is transferred to capital reserve?
 31. What is the minimum amount of application money?
32. What is the minimum subscription as per SEBI guidelines?
33. Excess amount over the nominal value of share must be credited to?
34. What is meant by preliminary expenses?
35. What is over subscription?
36. What is sweat equity share?
37. Which type of the preference shares have the right to receive dividends unpaid in previous years,
whenever earnings become adequate?
38. At the time forfeiture of shares, with what amount of share capital is a share capital account,
debited?
39. Give definition of company as per Companies Act 2013?
40. What is preference share?
41. What are cumulative preference shares?
42. What is paid up capital?
43. At what rate, interest on calls in advance may be paid by accompany according to Table F' of
Companies Act, 2013?
44. What is meant by Buy Back of share?
45. When forfeited shares are reissued at a price in excess of its paid up value, the excess amount shall
be transferred to. ........ ?
46. What are participating preference shares?
47. State two essential features of a private company?
48. What is issued Capital?
49. What is reserve Capital?
50. What do you mean by issue of shares at pat?
51. Under which head are calls in advance shown in balance sheet?
52. When premium has not been received on forfeited shares, then what entry will be passed at the
time of forfeiture of shares?
53. As per' Table F' of companies Act 2013, what is the rate of interest on calls in Arrears?
54. Which shares have fixed rate of dividend?
55. What are convertible preference shares?
2 -Marks Questions:-
1. A new company cannot issue shares at a………... (Discount/Premium)
2. A public company cannot issue……..shares. (Deferred/Equity)
3. The balance in share forfeited account for the reissue of forfeited shares is shown on the............... side
of balance sheet. (Liabilities/Assets)
4. Shares which are not preference shares are called……… (Equity Share /debenture)
5. Premium received on issue of shares is shown on the side of balance sheet. (Assets/Liabilities)
6. Balance in share forfeited account is shown in balance sheet under the head .................(Shares
Capital/Current Liabilities)
7. Shares having preferential right as to dividend and repayment of capital are termed as………
(Preference Share/ Equity share)
8. Share allotment account is a .............account.(Personal/Real)
9. The amount of the share premium received by the company is show under the heading ............ in the
company's balance sheet. (Reserve and Surplus/Current Assets)
10. When shares are forfeited, the unpaid calls account is ............. The portion of the authoresses capital
which can be called up only on the liquidation of company is called… ............. (Debited/Credited)
 11. The portion of the authorized capital which can be called up only on the liquidation of company is
called .............(Reserve capital/Capital Resume)
Answer:(1) Discount (2) deferred (3) Liabilities (4) Equity shares (5)Liabilities (6) Share capital (7)
Preference shares (8) Personal (9)Reserve and surplus (10) Credited (11) Reserve capital
2 -Marks Questions:-
Choose the correct answer
1. Equity shareholders are..........:
(i) Customers of the company (ii) Owners of the company
(iii)Creditors (iv) Debtors
2. Which one of the following items is not a part of subscribed capital:
(i) Preference share (ii) Forfeited share.
(iii) Authorized Capital (iv) Reserve Capital
3. Preference share holder are:
(i) Owners (ii) Creditor
(iii) Debtors (iv) None of these
4. On an ordinary share of Rs. 50, the minimum amount of application money under the law should be:
(i) 12.50 (ii) 2.50
(iii) 5 (iv) 7
5. Public limited companies cannot issue :
(i) Deferred share (ii) Equity share
(iii) Debenture (iv) None of these
6. Nominal share capital is:
(i) Amount actually paid by the share holders (ii) The maximum amount of share capital which a
company is authorized to issue.(iii) For forfeited Capital (iv) Reserve Capital
7. Share application account is a:
(i) Nominal account (ii) Real account
(iii) Personal Account (iv) None of these
8. Amount received on account of securities premium is creditor to:
(i) Capital reserve account (ii) Share capital account (iii) Securities premium account (iv)NOT
9.Interest on calls in arrears is charged according to
(i) 7% (ii) 10%
(iii) 11% (iv) 12%
10. Preference share holders have:
(i) Preferential right on the dividend as well as repayment of capital at the time of liquidation of the
company.
(ii) Preferential right in the management.
(iii) No right in Management
(iv) All of these
11. Minimum share application money is:
(i) 25% of the nominal value of share
(ii) 50% of the nominal value of share
(iii) 10% of the Nominal value of share
(iv) 20% of the Nominal value of share
12. Discount allowed on re-issue of forfeited shares is shown to:
 (i) Assets side of balance sheet (ii) Liabilities side of balance sheet
(iii) No Treatment (iv) None of these
13.If a company has adopted table F, the company is required to pay interest on call in advance.
(i) 12% (ii) 6% (iii) 8% (iv) 15%
14. Premium on issue of shares can be used for:
(i) Issuing fully paid bonus shares.(ii) Distribution of profits
(iii) Distribution among share holders (iv) None of these
15. Premium on the issue of shares should be shown on the;
(i) Liabilities side of balance sheet(ii) Assets side of balance sheet (iii) Both (a) and (b)
16. Balance of forfeited shares is transferred to:-
(i) Capital reserve (ii) reserve and surpluses
(iii) Dividend (iv) Discount
17. Balance of share forfeiture account is shown in the balance sheet under the head:
(i) Share capital (ii) reserve and surplus
(iii) Current liability (iv) Tangible Assets
18. At the time of forfeiture of shares, the share capital account is:
(i) Credited with called up amount of the shares.
(ii) Debited with called up amount of the forfeited shares.
(iii) Credited with Paid up amount of shares.
(iv) None of these
19. For which of the following purposes, share premium reserve account can be used:
(i) In writing off the preliminary expenses of the company.
(ii) In writing off the discount on debentures of the company.
(iii) Issue of preferences shares
(iv) None of these
4- Marks questions:-
1. Write four differences between over subscription and under subscription.
2. Write four differences between calls in arrear and calls in advance.
3. What do you mean by reissue of forfeited of shares?
4. What are sweat equity shares?
5. What is buy back shares?
6. What do you mean by ESOP?
7. What are deferred shares?
8. What is right issue?
9. What do you mean by company?
10. What is meant by equity shares?
11. What are cumulative preference shares?
12. A Limited company forfeited 100 equity shares of the face value of 10 each. Rs 6
per share called up, for non-payment of first call of Rs 2 per share, The forfeited share were
subsequently re-issued as fully paid @Rs7 each. Give necessary entries in company's journal.
13. A Ltd. Purchased assets for Rs 4,50,000 from B & Co. A sum of Rs1.75,000 was paid by means of
bank draft and for the balance due A 1.td. issued equally share of Rs 10 each at a premium of 10%
journalise the above transactions in the books of the company.
14. (Issue of shares to promoters and under-writers) Angad Ltd. issued 2,500 shares @Rs 10 each
creditor as fully paid to the promoters for their services and issued 2,000 shares of Rs 10 each. As fully
paid to the under writers. For their under writing services. Journalise these transactions.
15. Aneesha Ltd. purchased machinery of Rs 90,000 from Arsh Ltd. The payment to Arsh
Ltd. was made by issuing equity shares of Rs 100 each pass necessary journal entries
in the books of Aneesha Ltd. For purchase of machinery and the issue of :
(i) Shares were issued at par
(ii) Shares were issued at 25% premium.
16. Ram Ltd. received first call on 19,2000 equity shares @Rs 3 per share. Which was due on
1,4.2012. Mr. Raja holding 800 equity shares, however, did not the first call on the due date. This
amount was received on 15 2012 together with interest @ 5% pa open calls in arrear account and
received the above transactions in the books of company on 1.4.2012.
17. A company purchased a running firm X Ltd. For a sum of Rs. 1,50,000 Payable liabilities
consisted of the following
Plant & Machinery Rs 40,000 Stock Rs 50,000
Building Rs 40,000 Cash Rs 20,000
Sundry Debtor Rs. 30,000 Sundry Creditors Rs 20,000
You are requites to pass necessary journal entries in the company's books.

UNIT VIII
Accounting for Debentures
2- Marks Questions:-
1. Debenture holders are the owners of the company. True/False
2. Debenture holders are not the member of the company. True/False
3. Debentures constitute loan to the company True/False
4. Debentures cannot be issued at discount. True/False
5. Debentures are normally known as secured debentures. True/False
6. Discount on issue of debentures is an fictitious assets. True/False
7. A company cannot buy its own debenture on the purpose of redemption. True/False
8. A company can start business only by issuing debenture. True/False
9. The issuance of debt letter is currently in full swing. True/False
10. Debenture interest is payable only when company makes profit. True/False
11. Premium on redemption on debenture is in the nature of:
(a) Personal Account(b) Real Account(c) Nominal Account(d) Memorandum Account
12. Premium on redemption of debentures account is
(a) Assets(b) Liability(c) Expenses(d) Income
13.Debenture holders are:
(a) Customers of the company (b) Creditors of the company(c) Owners of the company(d) None of
these
14. Loss on issue of debenture account is:
(a) Liability (b) Assets (c) Expense (d) Gain
15. If the Loan of Rs. 40,000 is issued for a net assets of Rs. 25,000, then the remaining 15,000 will be
consider as
(a) Prestige(b) Capital Reserve (c) Expense (d) Gain
 Answers :1 False, 2. True, 3. True, 4. False, 5. False, 6 True, 7 False, 8 False, 9True, 10. False
11. (a) 12. (b) 13 (a) 14. (a) 15. (b)
3 -Marks Questions:-
16. What is debenture ?
17. What is meant by convertible debentures?
18. What is meant by non convertible debentures?
19. What do you mean by redeemable debentures?
20.What is meant by bearer debentures?
21.What do you mean by irredeemable debentures?
22.What are fully convertible debentures?
23. What do you mean by redemption of debenture?
24. Name the method of redemption of debentures?
25. When does redemption of debentures occurs ?
26. What is DRR?
27. What do you mean by issue of debentures at discount?
28. What do you mean by issue of debentures at premium?
29. What is meant by redemption of debentures out of profit?
30. What are deep discount debentures?
31. What is coupon rate?
32. What entries are passed, when debentures are purchased for cancellation.
33. Name the source of finance for redemption of debentures.
34. Give the other name of sinking fund.
35. What is Ex-interest price?
36. X Ltd issued 50,000, 9 debentures of Rs 1000 each on April 1, 2018 redeemable after 10 years
according items of prospectus Rs 400 payable on application and balance of allotment of
debenture. Record necessary entries regarding issue of debenture.
37. State Bank of India has 500, 9% debentures of Rs. 100 each. Debentures were redeemed on 1st
August, 2018, how much amount should be created for debenture redemption reserve. Pass the
journal entries for the redemption of debentures.
38. UTI issued 1000, 9% debentures on 1st April, 2014 @ Rs. 100. Debentures were redeemed on 1st
April, 2018. The debentures were kept privately What amount is needed before the redemption of
debentures. Pass the journal entry for issue and redemption of debentures.
39. What is the difference between shares and debentures?
40. What is meant by debentures? Explain in detail the important features of debentures.

UNIT - IX
Analysis of Financial statements
Lesson-1
2 -Marks Questions:-
1. What is financial statement?
2. Name basic financial statements?
3. What is meant by contingent liabilities?
4. Name the terms required to be presented under the Reserve and surplus?
5. What is the treatment of preliminary Expenses Account?
6. List four items which are included under the head 'current assets.
7. List four terms which are included under the heading Current liabilities .
8. Last four terms which are included under the heading of non- current assets .
9. Give any two items of non- current assets.
10. In which heading share capital is presented.
11. Give any two items presented under the heading long term borrowings" in the balance sheet of a
company.
12. List any two items presented under the head Intangible Assets “in the Balance sheet of a company
13. Capital reserve is presented under the which heading of current liabilities?
14. Name the forms of Balance sheet.
15. Balance sheet of firm prescribed under Indian Partnership Act, 1932 whereas Balance sheet of a
company prescribed under.
Answer Key:
1. A statement which explains necessary financial information about an organization.
2. Profit and loss account, balance sheet.
3. Those liabilities which are not yet arise but may arise in future.
4. Capital reserve, securities premium reserve account, profit and loss account, sinking fund account
capital redemption reserve account.
5. These are deducted from securities premium.
6. Cash in hand, cash at bank, stock in trade, debtors, bills receivable.
7. Creditors, bills payable, short term loans,
8. Land and building, plant and machinery, furniture.
9. Do yourself.
10. Do yourself.
11. Debentures, bank loan.
12. Goodwill, patents.
13. Do yourself.
14. Vertical and Horizontal.
15. Companies Act-2013.
2 -Marks Questions:-
1. Unclaimed dividend is not shown on the assets side of the balance sheet of the company. True/False
2. Preliminary expenses is a current liability. True/False
3. Discount allowed on the issue of shares of debentures is deducted from reserve. True/False
4 Goodwill is not an intangible asset. True/False
5. Live stock is current assets. True/False
6. Bills payable will appear under the heading "current assets" True/False
7 The balance sheet should be prepared according to schedule III. True/False
8. Amount of contingent liability is added to the current capabilities and provision. True/False
9. Debentures are shown in the balance sheet under current assets. True/False
10. Balance sheet of a company can be prepared in vertical from only. True/False
11. Contingent liabilities are shown as a footnote. True/False
12. Loose tools appear under the heading "current assets" True/False
13. Dividend can also be paid in the form of debentures. True/False
14. The Indian companies Act prescribed the forms of the final. True/False
15. In the balance sheet of a company the items goodwill, patents and trademarks are shown under the
heading intangible asset. True/False
Answer Key:1. True2. False 3. True4. False5. False6. False 7. True8. Falsc9. False10. True 11
True12. True13. False14 True 15 True
3 -Marks Questions:-
1. What do you mean by financial statements?
2. Differentiate between provision and Reserve?
3. What is meant by contingent liabilities?
4 Distinguish between 'Balance sheet of a company' and Balance sheet of a firm?
5. Discuss nature of the financial statements.
6. List any three examples of current assets?
7. List any three examples of reserve and surplus.
8. Discuss main characteristics of financial statement.
9. What are merits of an ideal financial statements?
12. Discuss main importance of financial statement .
12. Discuss any four limitations of financial analysis.
13. Write the nature of financial statement.
14. Discuss the various type of financial statement analysis.
15. The following figures were extracted from the trial Balance of Y Ltd.
Particulars Rs
Share capital 2,00,000
Securities premium Reserve 20,000
12% Debenture 70,000
Fixed Deposit 15,000
Creditors 8,000
You are required to draw up the liabilities side of the Balance Sheet.
16.The following items appeared in the trial balance of ABC Ltd. Prepare the items according to the
provisions of the companies Act 2013 Schedule
Dr. Rs Cr. Rs
Share Capital - 60000
Equity shares @ 210 each fully
Paid up -
Live Stock 30000 -
Mortgage - 20000
Trade Receivable 50000 -

UNIT - IX
Analysis of Financial statement
Lesson-2
2- Marks questions:-
1. A balance sheet is statement of the assets and liabilities as on a given date. True/False
2. The term financial analysis includes both analysis and interpretation. True/False
3. Financial statements include both incomes statement and position statement. True/False
4. The preparation of financial statement is not an end goal.
True/False
5. Financial statements are only interim reports. True/False
6. Certain assumptions are necessary to prepare financial statement. True/False
7. Financial statements are prepared on the basis of realizable value. True/False
8. Are the investors interested in taking part in financial analyses? True/False
9. Analysis of financial statements does not ignore price level changes. True/False

Answer: (1) True (2) true (3) True (4) False (5) True (6) True (7) False (8) True (9) False

3 Marks Questions:-
1. What is meant by financial statements? Write its two types?
2. Write three limitations of financial statements?
3. Write objectives of financial statement Analysis?
4. What do you mean by Analysis? Write methods of analysis.
5. Prepare format of comparative statement of profit and loss account.
6. What is meant by common size statement? Write its objectives.
7. Write merits and demerits of common size statements.
8. Write limitations of common size statements.
9. Write any three differences between intra firm and inter firm comparison.
10. What do you mean by comparative balance sheet? Write the procedure to prepare comparative
balance sheet.

11. From the following information prepare comparative Balance sheet of Niti Ltd.
Particulars March 31,2010 March 31,2011

Equity share capital 12,00,000 15,00,000

Reserve and surplus 2,00,000 4,00,000
Investment 4,00,000 5,00.000
Current Assets 200.000
Fixed Assets 10,00,000 1200,000

12. From the following information prepare comparative income statement. Particulars
Particulars 31-3-2015 31-3-2016

Revenue from operations 400,000 600,000

Cost of Material Consumed 2,00,000 3,00,000

Depreciation on Assets 1,00,000 1,20,000

provisions for tax 60,000 80,000
13. Prepare comparative income statement from the following information:
Particulars 31-3-2015 31-3-2016

Revenue from operations 6,00,000 7,50,000

Purchase of stock in trade 4,00,000 6,00,000
Finance Cost 60,000 1,00,000
Other Income 25,000 35,000
Income tax 50,000 60,000

14. From the following information, Prepare a comparative income statement.

Particulars 31-3-2015 31-3-2016

Revenue from operations 1,00,000 1,20,000

Purchase of stock in trade 75,000 85,000

Cost of material consumed 2,000 2,500

Employees Benefit 3,000 4,000

Expresses-Depreciation 500 1,000
Other Income - 500

Income Tax 10,000 12,000

15. From the following information, Prepare a comparative income statement. 31-3-2016
Particulars 31-3-2015 31-3-2016

Revenue from operations 15% of cost of Material 200% of Cost of Material

cost of material consumed consumed
Employees Benefit Expresses 12.00,000 10,00,000
20% of Gross profit 20% of Gross profit

Income Tax 50% of Net profit 50% of net profit

16. Prepare Common Size Balance Sheet of Nirmal Ltd.

Particular 31-3-2015 31-3-2016

Equity share capital 8.00,000 6,00,000

Securities premiums reserve 2,00,000. 1,00,000

Long-term Borrowings 2,00,000. 3,00,000

Land and Building 8,00,000 7,50,000
Current Assets 4,00,000 2,50,000
17.Prepare Common Size Statement of profit and loss of Komal company
Particulars 31-3-2016 31-3-2015

Revenue from operations 8,40,000 8,40,000

Other Income 6,000 5,040

Depreciation 48,000 53,760

Finance Cost 32,000 30.240

Income Tax 40% 40%

UNIT – IX
Analysis of Financial statement
Lesson-3
2 -Marks Questions:-
1. What do you mean Ratio Analysis?
2. Give the names of liquidity Ratio.
3. What is another name of current Ratio?
4. Name different type of current Ratio?
5. What is liquidity Ratio?
6. What level of quick Ratio is considered satisfactory?
7. What level of current Ratio is considered satisfactory Ideal?
8. What is the ideal debt equity Ratio?
9. What level of absolute liquid Ratio is satisfactory?
10. How is working capital calculated?
11. What is the absolute liquid Ratio?
12. What are the components of shareholder's fund?
13. Give any two names of solvency Ratio?
14. How is debt- equity Ratio calculated?
15. What is debt equity ratio?
16. What are/Give the name of Activity Ratios?
17. How to calculate stock turnover ratio?
18. What is debtor turnover Ratio?
19. How to calculate payable turnover ratio?
20. How is fixed assets turnover Ratio calculated?
21.How to calculate current turnover ratio?
22.How to calculate working capital turnover ratio?
23. How to calculate profitability ratio?
24. How is gross profit Ratio calculated?
25. How is net profit Ratio calculated?
26. How to calculate operating ratio?
27. How to calculate return on investment ratio?
28. How to calculate activity ratio?
29. What is meant price earnings Ratio?
30. What is meant by Dividend per share Ratio?
Answer Key
1. Analysis of financial statements with the help of Ratio called Radio Analysis.
2. Current Ratio, Quick Ratio and absolute liquid Ratio.
3. Working capital turnover Ratio.
4. Liquidity Ratio, solvency Ratio, Activity Ratios, Profit Ratios.
5. Ratio used to measure short- turn solvency of the firm
6. 1:1
7. 2:1
8. 2:1
9. 5:1
10. Current Assets- current liabilities.
11. Ratio of absolute liquid assets to current liabilities.
12. Shareholder fund= equity show capital preference show capital + reserve and surplus fictitious
assets and losses.
13. Debt, equity ratio, total assets to debt ratio.
14. Do yourself.
15. Shareholder's funds:-
16. Stock turnover Ratio, Debtors Turnover, Ratio, Payable Turnover Ratio, working capital, Turnover
Ratio, Fixed assets turnover Ratio.
17. Stock turnover Ratio= Cost of goods sold
Average Stock

18. It indicates the velocity of debt collection of firm.

19. Creditor turnover Ratio= Net credet Purchases
Average Trades Credetors
20. Current Asset turnover Ratio= Net Sales
Net Fixed Assets
21. Current Asset turnover Ratio- Net Sales
Net Current Assets
22. Working capital turnover Ratio- Net Sales
Working capital
23. Equity share holders Profit, Operating Ratio,
24. Gross profit Ratio = Grose Profit × 100
Net Sales
25. Net Profit Ratio - Net Profit ×100
Net Sales
26. Operating Ratio =Operating Cost × 100
Net Sales
27. Return on investment Ratio = Net Profit before interest and taxes(EBIT)
EBIT
Capital employed
× 100
28. Operating Profit Ratio= Operating Profit ×100
Net Sales

29. This Ratio measures the market price of an equity share to the earning per share.
30. This Ratio measures the dividend distributed among the equity share holders on a per share basis.
2 -Marks Questions:-
1. Ratio can be expressed in fraction? True/False
2. Turnover ratio are generally expressed in times. True/False
3. Working capital is excess of current assets over current liabilities. True/False
4. Higher turnover ratio indicate efficient use of resources. True/False
5. Fictitious Assets are considered which calculating capital employed. True/False
6. Ratio Analysis help to make comparison between two firms. True/False
7. Marketable securities are considered in absolute liquid assets. True/False
8. Non- trade investment are included in capital employed. True/False
9. Ideal Ratio between liquid assets & current liabilities is 1:1. True/False
10.Earnings per share measures the net profit earned per share. True/False
Answer key:1.True 2. True3. True4. True5. False6. True7. True8. False 9. True10. True
3- Marks Questions:-
1. What do you mean by Ratio analysis?
2. What is window Dressing?
3. What is difference between current Ratio and quick Ratio?
4. What does net profit Ratio show?
5. What are elements of debt-equity Ratio?
6. What are the components of debtors Turnover Ratio?
7. What are steps involved in Ratio Analysis?
8. Why is the bank over draft included in current liability?
9. What are the components of operating ratio?
10. State the reasons of impact of on "Issue of shares against the purchase of fixed assets" on a
debt equity ratio of 1:17
11. Explain any four advantages of Ratio Analysis.
12. Give any four limitations of Ratio Analysis.
13. What are the components of Ratio Analysis?
14. What are the objectives of Ratio Analysis?
15. What is functional classification of Ratio Analysis?

UNIT-X
Cash Flow Statement
2 - Marks Questions:-
1. What is cash flow statement?
2. State the different activities of cash flow statement.
3. What is cash equivalent?
4. What is net cash flow?
5. Give two examples of non- cash expenses.
6. State two items of cash inflow under financing.
7. What are non cash transactions?
8. Name the statements required for preparation of cash flow statement?
9. How bank overdraft will be treated in cash flow statement?
10. State two items of cash inflow from investing activities.
11. State two items of cash inflow under operating activities
12. How depreciation is treated in determining cash flow from operating activities?
13. What are operative activities?
14. What do you mean by investing activities?
15. Explain financing activities?
2 - Marks Questions:-
1. Cash flow statement is prepared under As-39 Revised). True/False
2. Cash increases with the decrease in the value of fixed assets. True/False
3. Cash flow statement is based upon accrual basis of accounting. True/False
4. Example of cash flow from investing activity is sale of investment by a financial enterprises.
True/False
5. Dividend paid is not a source of cash. True/False
6. Example of cash flow from financing activity is payment of dividend. True/False
7. Sale of goods on credit is not a source of funds. True/False
Answer Key :1. False 2. False 3. False 4. False 5. True 6. False 7. True
2 - Marks Questions:-
1. Cash from operations will increase due to…………..
(a) Increase in current liabilities (b) Taxes or dividend paid (c) neither of the two (d) neither of the two
2. Cash flow statement is based upon
(a) Hybrid System of Accounting (b) Accrual Basis of accounting (c) Cash basis of Accounting (d)
None of these
3.Inflow of cash will take place due to …………..
(a) Increase in land (b) Issue of shares(c) Decreased in capital (d) payment of tax
4. Cash flow statement is required for the financial planning of
(a) medium range (b) long range(c) short range (d) very long range
5. Interest and dividend received in the case of manufacturing enterprise should be classified as cash
flow from.
(a) Medium range(b) short range(c) Financing Activities(d) None of these
Answer Key:
1. (a) Increase in current liabilities 2. (c) Cash basis of Accounting 3. (b) Issue of shares 4.
(c) short range 5. (c) Financing Activities
4 -Marks Questions:
1. What is the difference between cash flow statement and cash budget?
2. Give some examples of non cash expenses.
3. What do you mean by Trading Receipts?
4. What do you mean by Trading Receipts?
5. What do you mean by non trading Receipts?
6. What do you mean by cash Equivalent?
7. Classification of activities is given below Explain these :
1) Operating activities 2) Investing Activates 3) Financing Activities
8. From the following write inflow/outflow/no effect:
a) Cash deposited in to bank
b) Dividend declared by company
c) Dividend Received by Finance Company
d) Interest on long term debt paid
 e) Payment of cash to creditor
f) Receipt from Loans
g) Refund of Tax
9. What is cash flow statement?
10. What are the objectives of cash flow statement?
11. What are profits of cash flow statement?
12. Write limitations of cash flow statement?
13. State the different activities of cash flow statement.
14. What is included in investing activities in cash flow statement?
15. What is included in financial activities in cash flow statement?
16. How cash flow statement is prepared?
17. Form the following information calculate cash flow from operating activities.
Cash sales 2,00,000
Cash received from debtor 50,000
Commission Received 25,000
Cash Purchase 19,000
Office expenses paid 10,000
Income Tax Paid 8,000
18. Calculate cash from operating activities
31-03-15 31-03-16
Profit & Loss A/C 1,10,000 1,20,000
Debtors 50,000 62,000
Outstanding Rent 24,000 42,000
Good Will 80,000 76,000
Prepaid Insurance 8,000 4,000
Creditors 26,000 36,000
19. Calculate net cash flow from financing activities.
31-03-16 31-03-17
Equity Share capital 9,00,000 10,00,000
Security Premium 2,50,000 2,60,000
12% Debenture 1,50,000 1,00,000
Additional Information: Interest paid on Debenture Rs. 18000)
20. Calculate cash from investing activities:
Purchase Sold
Plant 2,50,000 150000
Investment 300000 400000
Goodwill 100,000 -
Interest received on debenture held as Investment 10000. Dividend received on share held as
investment Rs. 8000.

SECTION-C
Unit-7
Overview of Computerized Accounting System
2- Marks Questions:-
1. Speed and accuracy are the features of computer (True/false)
 2. Which of the following is the security feature in Computerized Accounting system.
(i) Password (ii) School Code (iii) Block Code (iv) Sequential Code
3. Grouping of accounts means classification of accounting data into homogeneous groups.
(True/false)
4. Which device is used in digital computers
(i) Keyboard (ii) Mouse (iii) Touch pad (iv) All of these
All of these
5................. is the basic function of accounting information system (Document preparation/Software
preparation)
6. AIS is Accounting information system (True/false)
7. Which deals with generation of reports that are vital for management decision making?
(i) Costing Subsystem (ii) Payroll accounting sub system
(iv) Budget Subsystem (v) Management Information System.

8. The cost of development installation and maintenance of Tailor made software is very cheap
(True/false)
9. The different parts of Computerized accounting system are Input, Processing and output
(True/false)
10................... is not a feature of computer (Accuracy/Intelligence)
Answer Key:
1. True 2. True 3. True 4. All of these 5. Document Preparation 6. True 7. Management
Information System 8. False 9. True 10. Intelligence
4- Marks Questions:-
1. Give 4 differences between Readymade Software and Customised Softwares.
2. Write four Subsystems of Accounting Information System.
3. Explain/Write four features of computerized Accounting System.
4. Write the different security features available in Computerized Accounting System.
5. What is Data & information?
6. Name the five pillars of Computerized Accounting System.
Unit-8
Using Computerized accounting system
2- Marks Questions:-
1. Function of All +A in Tally is to add a voucher in a report (True/false)
2. In which group will you record the income "Commission received"?
(i) Direct income (ii) Indirect income
(iii) Revenue (iv) Direct expense
3. The shortcut key for calculator in Tally is.............. (Ctrl+X / Ctrl+N).
4. Bank accounts come under
(i) Current Assets (ii) Loans (iii) Current liabilities (iv) Capital Account
5. There are two pre-defined primary groups in Tally (True/false)
6. Amount received by way of cash or Cheque is recorded in Tally by using........... voucher
(Receipt /Payment).
7. The Group name of furniture in Tally is ……... (fixed asset / current asset)
 Answer Key: 1. True 2. Indirect income 3. Ctrl+N 4. Current Assets 5. True 6. Receipt
7. fixed asset
3- Marks Questions:-
1. How can a company be deleted in Tally?
2. Name the vouchers in which the following transactions can be recorded in Tally.
(i) Cash received from Shyam Rs. 10,000.
(ii)Paid salary to staff Rs. 4,000.
(iii)Withdrew cash from Bank for office use Rs. 20,000.
3. What is contra voucher?
4. What are the salient features Tally?
5. Write the shortcut keys for the following.
(i) To access help in Tally.
(ii) To access company info in Tally.
(iii) To access Calculator in Tally.
6. What are the security features in Tally?
7. Write the steps to after a company in Tally.
8. Write the steps to create cash Account in Tally from the following transactions.
(i) Ritu started business with cash 40,000
(ii) Purchased goods 10,000
(iii) Sold goods 20,000
Unit-9
Electronics Spreadsheet
2- Marks Questions:-
1. The address of the active cell is displayed in the ............ (Status bar/Name box)
2. The feature of automatically filling the data is called .......................(Formula/Auto fill)
3. .............. is the spreadsheet part of MS-office. (MS-PowerPoint/MS-Excel)
4 ..................... is used to make the text bold.
(i) Ctrl+X (ii) Ctrl+V (iii) Ctrl+P (iv) Ctrl+B
5. DA in payroll accounting means Dearness allowance. (True/false)
6. Excel documents are also called spreadsheets. (True/false)
7. A workbook in excel is a combination of excel sheets. (True/false.
8. Multiplication in excel is represented by asterisk symbol. (True/false)
9. Which function is used to round off the number to a specified digit
(i) Sum function(ii) Average function(iii) Round function(iv) None of these
10. Ms-Access is an example of................. (Spreadsheet/Database)
11. In MS-Access tables are created from forms. (True/false)
12. DBMS stands for database Management System. (True/false)
13. Query is not an extract of Table in DBMS. (True/false)
14. SQL Stands for Sequential Query Language . (True/false)

Answer Key: 1.Name box 2.Autofill 3.MS-Excel 4.Ctrl+B 5.True 6.True 7.True 8.True
9.Round function 10.Database 11.False 12.False 13. False 14.True
3- Marks Questions:-
1. Give three advantages of DBMS.
2. Give three limitations of DBMS.
3. Write the method to create table from the following data in DBMS.
Roll No. Name M arks in Accountancy
202 Vikram 64
203 Sanjay 73
204 Ritu 84
4. Discuss 3 features of DBMS.
5. What are the advantages of MS-Excel?
6. What are the components of DBMS?
7. What are macros in MS-Excel?
8. What is meant by database?
9. What is Primary Key?

Unit-10
Accounting application of electronic spreadsheet
2- Marks Questions:-
1. The full form of DDB function is Depreciating Declining Balance method. (True/false)
2. SYD function is used to calculate Deprecation in MS-Excel. (True/false)
3. Which of the following is not the Component of the Payroll statement?
(i) D.A. (ii) D.B (iii) HRA (iv) PF
4. Identify the function used to calculate monthly installments (EMI) of a loan.
(i) PMT( ) (ii) SYD( )
5. The formula in MS-Excel starts with.......... (=/+)
6. HRA in payroll stands for House Rent allowance . (True/false)
7. All allowances are.............. in Basic pay . (added/Subtracted)
Answer Key: 1. False 2. True 3. D.B. 4. PMT( ) 5. = 6. True 7. Added

3-Marks Questions:-
10. Write a short note on PMT function.
11. Explain in brief any 2 business applications of MS-Excel.
12. A machinery which costs Rs. 2,00,000 is depreciated at 25% per year using straight line
method Write the formula for calculating depreciation in MS-Excel.
13. Calculate Annual depreciation by SLN function from the following information.
Cost of Machinery Rs. 5,00,000.
Estimated Scrap value Rs. 50,000.
Number of years of expected life 5 years.
14. Explain the screen of MS-Excel.