isc 2014 accounts - guide for school · ... the firm has a partnership deed. (b) ... goodwill....

ACCOUNTS

ISC 2014

Md. Zeeshan Akhtar

SECTION APART I (20 Marks)Answer all questions.

Question 1 [10 × 2]

Answer each of the following questions briefly:

(i) Name the two accounts prepared to show the results of a joint venture when eachco-venturer records all transactions.

(ii) Give any two differences between fixed capital method and fluctuating capitalmethod.

(iii) What is the accounting treatment when debentures are issued as a collateral security?

(iv) Give any two differences between Revaluation Account and Realization Account.

(v) State with reason whether a company can issue a share having a face value of20 at 17.

(vi) Give the adjusting and closing entry for interest on calls in arrears due from a shareholder.

(vii) State the provisions of the Indian Partnership Act, 1932, regarding charging of intereston drawings from a partner when:

(a) The firm has a partnership deed.

(b) The firm does not have a partnership deed.

(viii) What is meant by number of years’ purchase in the valuation of a firm’s goodwill?

(ix) List any four items that may have to be deducted from a deceased partner’s capitalaccount while computing the amount payable to his legal representatives.

(x) Why is premium received on the issue of debentures considered a capital profit?

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(iv) GiveGive anyany twotwo differences betweendifferences between Revaluation AccountRevaluation Account andand Realization Accountation Account..

(v)) State with reason whether a company can issue a share having a face value ofState with reason whether a company can issue a share having a face value of20 at20 at 17.

(vi)(vi) Give the adjusting and closing entry for interest on calls in arrears due from a shareGive the adjusting and closing entry for interest on calls in arrears due from a shareholder.holde

(vii)(vii) State the provisions ofState the provisions of the Indian Partnership Act,the Indian Partnership Act, 19321 , regarding charging of interestharging of intereston drawings from a partneron drawings from a partne when:n:

(a)(a) The firm has aThe firm has a partnership deed.partnership deed.

(b)(b) TThehe firm does not havefirm does not h a partnership deed.partnership de

Comments of Examiners

(i) Many of the candidates wrote the accounts accordingto the separate set of books method- joint venture a/cand joint bank a/c while a few mentioned thememorandum joint venture account. Manycandidates were not clear that net profit is the resultof all activities of the business while CFO indicatesthe flow of cash only from its operating activities.

(ii) The candidates could answer this questionsatisfactorily.

(iii) Majority of the candidates wrote this answersatisfactorily. However, a few described the meaningof ‘debentures as a collateral security’ instead ofshowing its accounting treatment.

(iv) Candidates could answer this question satisfactorily.

(v) Many candidates could not connect the answer to aparticular provision of Section 79 of the CompaniesAct which states that shares cannot be issued at adiscount of more than 10% of the face value of theshare unless sanctioned by the Company Law Board.They ended up writing randomly the other provisionsof Section 79.

(vi) Majority of the candidates could give the entry forinterest due on calls in arrear but could not give theclosing entry.

(vii) The candidates could answer this questionsatisfactorily.

(viii) Majority of the candidates gave a very sketchyanswer to this question. It seemed that they had avague idea of the term but were not absolutely clear.

(ix) Candidates were able to answer this question with ease.

(x) Most of the candidates answered this question correctly. However, some simply gave the reasonas premium being an extra amount received on the issue of debentures.

Suggestions for teachersExplain the meaning of ‘separateset of books’ method and ‘noseparate set of books method-when each co-venturer recordsall transactions / only his owntransactions’.While doing practical sums, therequirements should be wordedaccording to the methodfollowed. In this way the studentswill be able to connect themethod with the accountsprepared in a particular method.Explain the concept along withits accounting treatment.Section 78 and Section 79 of theCompanies Act must beexplained clearly in the class andtheir provisions connected to thepractical sums otherwise itbecomes rote learning.Explain clearly each componentof the formulae used to valuegoodwill.Teachers must clearly bring outthe difference between revenueand capital profit. This topic hasto be laid stress on in Class XIitself.


GF( ) q yq y

(v) Many cMany candidates could not connect the answer to aandidates could not connect the answer to aparticular provision of Section 79 of the Companiesparticular provision of Section 79 of the CompaniesAct which states that shares cannot be issued at aAct which states that shares cannot be issued at adiscount of morediscount of than 10% of the face value of thee face value share unless sanctioned by the Company Law Board.share unless sanctioned by the Company Law BThey ended up writing randomly the other provisionsThey ended up writing randomly the other provisionsof Section 79.of Section 79.

(vi)(vi) Majority of the candidates could give the entry forMajority of the candidates could give the entry forinterest due on calls in arrear but could not give tinterest due on calls in arrear but could not giv heclosing entry.closing entry.

(vii)(vii) The candidates could answer this questionThe candidates could answer this qusatisfactorily.satisfactorily.

(viii) Majority of the candidates gave a very sketchye candidates gave a veryFSF

E ncept along withits accounting treatment.Section 78 and Section 79 of theCompanies Act must be

ained clearly in tr provisions coctical sums otherwise omes rote learning.lain clearly each component

ae used to value

hers must clearly bring outdifference between revenueapital profit. This topic laid stress on

MARKING SCHEME

Question 1.

(i) - Joint Venture Account

- Other Co-venturers’ Account / personal A/c/ Co-venturer’s A/c

(ii) Differences between Fixed Capital Method and Fluctuating Capital Method.

Fixed Capital Method Fluctuating Capital Method

1. The capital remains unchangedduring the life time of the businessexcept when capital is introduced orwithdrawn permanently.

The capital fluctuates quite frequently fromperiod to period / changes from time to time.

2. Two accounts are maintained

(a) Fixed Capital Account

(b) Drawing/Current Account

Only one account- Capital Account- ismaintained

3. All adjustments for temporarydrawings, interest on drawings,interest on capital, salary, share ofprofit/loss are made in CurrentAccount

All adjustments for temporary drawings,interest on drawings, interest on capital,salary, share of profit/loss are made inCapital Account

4. Can never show a debit balance/negative.

Can show a debit balance/ negative balance.

5. It will always show a credit balance It can have a debit/ credit balance.

(Any two)

(iii) Debenture Suspense A/c Dr

To % Debentures A/c

Or

No entry but an explanation in the Balance Sheet / Notes to Accounts


GFS(b)( ) Drawing/Drawing/Current AccountCurrent Account

GF3.3. All adjustments for temporaryAll adjustments for temporary

drawings, interest on drawings,drawings, interest on drawings,interest on capital, salary, share ofinterest on capital, salary, share ofprofit/loss are made inin CurrentCurrenAccountount

All adjustments for temporary drawings,All adjustments for temporary drawings,interest on drawings, interest on capital,interest on drawings, interest on capital,salary, share of profit/loss are made insalary, share of profit/loss are made inCapital AccountntGGFFFSGF4.4 CanCan never shownever show a debit balancedebit balance//

negativenegative..Can showCan show a debit balanceebit balance/ negative balance/ negative balance..GGFFFSGF5.5 It will always show a credit balancel always show a credit balance It can have a debit/ credit balance.nce.

((Any twoAny two((( ))GGFFFSGGGFFFFS(iii)iii) Debenture Suspense A/cDebenture Suspense A/c DrDr

To % Debentures A/co % Debentures A/c

O

(iv) Differences between Revaluation a/c and Realisation.

Revaluation Account Realisation Account

1. Prepared at the time of re-constitutionof partnership (eg on admission of anew partner, on retirement / death of apartner)

Prepared at the time of dissolution of thefirm.

2. Records the effect of revaluation ofassets and liabilities/ change in assets

Records the realization of various assetsand settlement/re- payment of liabilities/realisation/ sale of assets/ records the saleof assets and payment of liabilities

3. Is prepared to determine the net profit /loss on revaluation.

Is prepared to determine the net profit /loss on realisation

4. Even after the preparation ofrevaluation a/c, the firm continues tofunction, though with a changedrelationship among the partners

The firm discontinues its businessoperations.

5. Only the difference between the bookvalues and revised values of assets andliabilities is recorded in this account.

Book values of assets and liabilities, therealized values of assets and the actualpayment of liabilities is recorded in thisaccount.

6. This account may be prepared manytimes during the life time of a firm.

This account is prepared only once duringthe life time of a firm.

(v) A company cannot issue a 20 share at 17 as the discount is more than 10% of its facevalue. A company can issue shares at a maximum discount of 10% of its face value unless inspecial circumstances it is sanctioned by the Company Law Tribunal / Board

Or

Yes a company can issue a 20 share at 17 if it has got the sanction of the Company LawTribunal / Board to issue shares at a discount of more than 10% of their face value.

(vi) Share holder a/c Dr

To interest on calls in arrears a/c

Interest on calls in arrears a/c Dr.

To Statement of P / L

(vii) If there is a deed – any rate

If there is no deed – no interest on drawings to be charged.


GFSfunction, though with a changedfunction, though with a changedrelationship among the partnersrelationship among the partners

GFS5.5. Only the difference between the bookOnly the difference between the book

values and revised values of assets andvalues and revised values of assets andliabilities is recorded in this accoliabilities is recorded in this account.unt.

Book values of assets and liabilities, theBook values of assets and liabilities, therealized values of assets and the actualof assets and the actupayment of liabilities is recorded in thisbilities is recoraccount.account.GGFFFSSGFS6.6. This account may be prepared manys account may be prepared many

times during the life time of a firm.es during the life time of a firm.This account is prepared only once duringThis account is prepared only once duringthe life time of a firm.the life time of a firm.GGFFFSSGGGFFFFSSS(v)(v) A companyA compan cannotannot issue aissue a 20 share atshare at 17 as the discount is more than 10% of its face10% of its faceGvalue. A company can issue shares at avalue. A company can issue shares at a maximum discount of 10% of its face valuemaximum discount of 10% of its face value unless inunless inFSspecial circumstances it is sanctioned by tspecial circumstances it is sanctioned by the Company Law Tribunal / Boardhe Company Law Tribunal / Board

Or

Yes a company can issue ay can issue a 20 share at 17 if it has got the sanction of the Company Lawanction

(viii) Number of years purchase is a notional figure, an estimate made by the owner of thebusiness as to how long would his business continue to earn the calculated average profits.The logic behind the no. of years’ purchase concept is that the new partner, would for someyears earn profits due to the old partner’s goodwill / effort before his own efforts begin to getdue recognition. As such the new partner compensates the old partners for the few years’profits which he gets because of their efforts.

Or

Time required by the new business to reach the position of the old business.

(ix) (a) Share of purchased goodwill written off.

(b) Share of loss from the date of the last Balance Sheet up to the date of his death.

(c) Share of Accumulated losses.

(d) Share of loss in Revaluation of Assets and Liabilities.

(e) Drawings up to the date of death.

(f) Interest on drawings charged in the year of death.

(g) Debit balance of his Current account.

(h) Deferred Revenue Expenditure written off.

(i) Loan advance taken by a partner

(j) IOL due by the partner (Any four)

(x) It is considered as a capital profit because it is not an income arising from the normal courseof business activities. / non-operating revenue / non- recurring profit / revenue arising fromcapital transactions.

PART II (40 Marks)

Answer any four questions.

Question 2 [10]

Ronnie and Annie entered into a Joint Venture to sell coal, sharing profits and losses in theratio of 1:1. Annie purchased 100 tonnes of coal @ 5,400 per tonne and paid 30,000 asfreight for sending the coal to Ronnie to be sold on joint account.

During transit, 10 tonnes of coal was lost due to breaking in bulk (normal loss). Ronniereceived the remaining tonnes of coal and paid 6,000 as landing charges. He accepted a billdrawn by Annie for 2,00,000.

Ronnie then sold 60% of the coal received by him for 4,21,200. His selling expensesamounted to 12,000.

The remaining stock, valued at original cost plus proportionate direct expenses, was sharedequally by both the co-venturers. They settled their accounts by means of a bank draft.

You are required to prepare:

(i) Memorandum Joint Venture Account.

(ii) Ronnie’s Account in the books of Annie.


GFS(g)(g) Debit balDebit balance of his Current account.ance of his Current account.

(h)(h) Deferred Revenue Expenditure written off.Deferred Revenue Expenditure written off.

(i)(i) Loan advance taken by a partnerLoan advance taken by a partner

(j)(j) IOL due by the partnerIO (Any four)

(x)(x) It is considerIt is considered as a capital profit because it is not an income arising from the normal courseed as a capital profit because it is not an income arising from the normaof business activities. / nonof business activities. / n -operating revenue / nonerating revenue / non-- recurring profit / revenue arising fromrecurring profit / revenue arising fromcapital transactions.capital transactions.GGGFSPART II (40 MPART II (40 arks)

Answerswer any fourany four questions.

Question 2Question 2 [10][1

Ronnie and Annie entered into a Jointe entered into a Jo VVenture to sell coal, sharing profitsenture to sell coal, sharing profits and lossesand losses in theiratio of 1:1 Annie purchased 100 tonnes of coal @chased 100 5 400 per tonne and paid 30 000 as


Majority of the candidates could not apply the concept ofnormal loss inflating the value of unsold stock whilecalculating the value of closing stock. They treated normalloss like abnormal loss.Some candidates made mistakes while preparing thepersonal account of the co-venturer.

MARKING SCHEME

Question 2.

Memorandum Joint Venture A/C

Particulars Amt.-Dr Particulars Amt.-Cr

To Annie: By Annie:Purchases 5,40,000 Purchases 1,15,200Freight 30,000 5,70,000

To Ronnie: By Ronnie:Landing charges 6,000 Sales 4,21,200Selling expenses 12,000 18,000 Purchases 1,15,200 5,36,400

To ProfitRonnie 31,800Annie 31,800 63,600

6,51,600 6,51,600

In the books of AnnieJoint Venture with Ronnie


To Cash (Purchases) 5,40,000 By Bills Receivable 2,00,000To Cash (Freight) 30,000 By Purchases (Stock) 1,15,200To Profit 31,800 By Bank 2,86,600

6,44,400 6,44,400

Suggestions for teachersExplain the difference betweennormal loss and abnormal lossand their treatment whilecalculating the value of unsoldstock and give adequate practiceto students.Give adequate practice withexplanation / reasons of the typesof accounts to be maintainedunder each method of JointVenture


GFSQuestion 2.

MMemorandum Joint Venture A/Cemorandum Joint Venture

ParticularsParticulars Amt.Amt.--DrDr ParticularsParticulars Amt.Amt.--CrCr

To Annie:To Annie: By Annie:Purchases 5,40,000Purchases 5,40,000 PurchasesPurchase 1,15,2001,15,200Freight 30,000Freight 30,000 5,70,0005,70,000

To Ronnie:To Ronnie: By RonnBy Ronnie:iLanding charges 6,000Landing charges 6,000 Sales 4,21,200Selling expensesSelling expenses 12,00012,000G 18,00018,000 Purchases 1,15,200,15,200S5,36,4005,36,400

To ProfitTo ProfitRonnie 31,800Ronnie 31,800Annie 31,80031,800 63,60063 600

In the books of RonnieJoint Venture with Annie


To Cash (Landing charges) 6,000 By Cash (Sales) 4,21,200

To Bills payable 2,00,000 By Purchases (Stock) 1,15,200

To Cash selling expenses) 12,000

To profit 31,800

To Bank 2,86,600

5,36,400 5,36,400Working Note 2.

Units Original cost Original cost+ expenses

Purchases 100 5,40,000 5,40,000

Freight 30,000

100 5,40,000 5,70,000

Normal loss (10) --- ---

Received by Ronnie 90 5,40,000 5,70,000

landing charges 6,000

90 5,40,000 5,76,000

Sold (54)

Unsold stock 36 2,30,400

Question 3 [10]

Mitra Ltd. invited applications from the public for the issue of 60,000 shares of 10 each, ata discount of 10%, payable as:

3 per share on application.

5 per share on allotment.

Balance on call.

The public subscribed for 50,000 shares. 2,49,000 were received by the company onallotment and 49,400 on call. The company forfeited those shares on which both, allotmentand call money was not received. 70% of the forfeited shares were reissued at 7 per share,fully called up.The company had 45,000 in its Security Premium Reserve Account which it used to writeoff any miscellaneous expenditure incurred during the year.

You are required to pass the necessary journal entries to record the above transactions.

Working Note 1.


GFS100 5,40,0005,40,000 5,70,0005,70,000

Normal lossrmal loss (10) ------ ------

Received by RonnieReceived by Ronnie 90 5,40,0005,40,000 5,70,0005,70,000

landing chargeslanding charges 6,000

90 5,40,000 5,76,000

SoldSold (54)(

Unsold stUnsold stockock 36 2,30,4002,30,400GFSQuestion 3Question 3 [10][10]

Mitra Ltd. invited applications from the public for the issue of 60,000 shares ofMitra Ltd. invited applications from the public for the issue of 60,000 shares of 10 each, at10 each, ata discount of 10%, payable as:discount of 10%, payable as:

3 per share on application.re on application.GFSFFSSGFGFGF


Candidates made errors in journal entry for recording issueof shares at a discount.Majority of the candidates did not take into considerationthat only 70% of the forfeited shares were reissued.Many candidates were unable to write off the miscellaneousexpenditure (discount on issue of shares) from the securitiespremium reserve.Some candidates did not open calls-in arrears a/c.

MARKING SCHEME

Question 3.

Particulars LF Dr. Cr

Bank A/c Dr 1,50,000

To share application a/c(Being share application received.)

1,50,000

Share Application a/c Dr 1,50,000

To share capital(Being share application transferred to share capitalaccount

1,50,000

Share allotment a/c Dr 2,50,000

Discount on issue of shares a/c Dr. 50,000

To share capital(Being share allotment due)

3,00,000

Bank a/c Dr. 2,49,000

Calls-in-arrears a/c Dr. 1,000

Suggestions for teachersExplain to students the logicbehind debiting discount on issueof shares at the time of allottingthe shares.Adequate practice must be givenregarding partial reissue of theforfeited shares.Theory of the chapter ‘issue ofshares’ needs to be donethoroughly. Only then will thestudents be able to identify themiscellaneous expenditure(discount on issue of shares) andconnect its writing off from thesecurities premium reserve(Section 78 of the CompaniesAct).For any instalment not received,it is mandatory to open calls-in-arrears a/c


GFSMARKING SCHEMEMARKING SCHEME

Question 3.Question 3.GFSParticularsarticulars LF Dr.Dr. CrCr

Bank A/c Dr 1,50,0001,50,000

T h li ti // 1 50 000

FSFS( of shares) andconnect its writing off from thesecurities premium reserve

tion 78 of the Companies.any instalmen

s mandatory to open caears a/c

To share allotment a/c(Being share allotment received.)

2,50,000

Share 1st and final call a/c Dr 50,000

To share capital(Being final call due)

50,000

Bank a/c Dr. 49,400

Calls-in-arrears a/c Dr. 600

To share 1st and final call(Being share call due)

50,000

Share capital a/c Dr. 2,000

To discount on issue of share a/c 200

To share forfeiture a/c 600

To Calls-in-arrears a/c(Being 200 shares forfeited)

1,200

Bank a/c/ Dr. 980

Share forfeited a/c Dr. 280

Discount on issue of shares a/c Dr. 140

To share capital(Being shares issued)

1,400

Shares forfeited a/c Dr. 140

To Capital Reserve(Being gain on reissue transferred to capital reserve.)

140

Securities Premium Reserve AccountStatement of P/L

Dr.Dr.

45,0004,940

To discount on issue of shares 49,940


of P/LDr.Dr.

45,00045,0004,9404,940

To discount on issue of sharessue of shares

GFS(Being 200 shares forfeited)200 shares forfeited)

,

Bank a/c/nk a/c/ Dr.Dr. 980980

Share forfeited a/chare forfeited a/c Dr. 280280

Discount on issue of shares a/cDiscount on iss Dr. 140140

To share capitalTo share capital(Being shares issued)(Being shares issued)

1,4001,4

Shares forfeited a/cShares forfeit Dr. 140140

To Capital ReserveTo Capital Reserve(Being gain on reissue transferred to capital reserve.)(Being gain on reissue transferred to capital reserve.)

140140

Securities Premium Reserve Accountecurities Premium Reserve Accou

49 940

Question 4 [10]

Angad, Kunal and Nitin were partners sharing profits and losses in the proportion of 2:2:1respectively. The Balance Sheet of their firm as on 31st March, 2013, stood as follows:

Liabilities Amount AssetsAmount

Capital Accounts:

Angad 12,500

Stock

Machinery

12,500

17,500

Kunal 15,000 Motor Van 4,000

Nitin 20,000 47,500 Buildings 22,500

Creditors 10,000 Bank 1,250

Bills payable 2,000 Debtors 8,000

General Reserve 6,000 Less provision fordoubtful debts (250) 7,750

65,500 65,500

Kunal retires on 1st April, 2013, subject to the following adjustments:

(a) Provision for bad and doubtful debts to be increased by 975.

(b) Stock to be appreciated by 20% and Building by 10%.

(c) Machinery to be depreciated by 10% and Motor Van by 15%.

(d) Goodwill of the firm to be valued at 9,000.

(e) The capitals of the continuing partners are to be adjusted according to the newprofit sharing ratio which is agreed between Angad and Nitin as 3:2 respectively.

(f) Excess or shortfall in Angad’s and Nitin’s Capital Accounts to be transferred totheir respective Current Accounts.

You are required to prepare:

(i) Revaluation Account.

(ii) Partners’ Capital Accounts.

(iii) Balance Sheet of the reconstituted firm.


GFSGeneral Reserveerve 6,0006,000 LessLess provision forprovision for

doubtfuldoubtful debtsdebts ((2502 ) 7,7507,750

GFSS65,5005,500 65,50065,500

GGFFSSSGFSSKunalKunal retires onretires o 1st Aprilp ,, 2013013, subject to the following a, subject to the followin djustments:GGGFFFSSSS(a)(a) Provision for bad and doubtful debts to be increased byProvision for bad and doubtful debts to be increased by 975.975

(b)(b) StockStock to be appreciated by 20% andto be appreciated by 20% and BBuilding by 10%.uilding by 10%.

(c)(c) Machinery to be depreciated by 10% andMachinery to be depreciated by 10% and Motor VMotor an by 15%.

(d)(d) Goodwill of the firm to be valued atGoodwill of the firm to be valued at 9,000.9,000.

(e)e) TThe capitals of the continuing partners are to be adjusted according to the newhe capitals of the continuing partners are to be adjusted according to the newprofit sharingprofit sharing ratio which is agreed between Aratio which is agreed between Angadng and Nitin as 3:2 respectively.2 respectively.

(f) Excess or shortfall in Angad’s and Nitin’s Capital Accounts to be transferred toall in Angad’s and Nitin’s Capital Accounts to be tra


Majority of the candidates were able to attempt this questionsatisfactorily. However, some common errors observedwere:The date of the Balance Sheet of the reconstituted firm waseither missing or was incorrect.A few candidates could not adjust the capitals of theremaining partners in the new profit sharing ratio.Some candidates closed the retiring partner’s capitalaccounts either by paying him off or by bringing down itsbalance instead of transferring it to his Loan a/c.Some candidates paid off / received cash from the remainingpartners instead of transferring the surplus / deficit to theircurrent accounts as per the requirements of the question.A few candidates did not transfer the Current a/c balances ofthe remaining partners to the Balance Sheet of thereconstituted firm.Several candidates showed the treatment of goodwill by raising and writing it off.

MARKING SCHEME

Question 4.

Revaluation Account

To Machinery 1,750 By Stock 2,500

To Motor Van 600 By Buildings 2,250

To Prov. for D/D 975

To Capital A/cs

Angad 570

Kunal 570

Nitin 285 1,425 ____

4,750 4,750

Suggestions for teachersGive adequate practice tostudents in the three types ofcapital adjustments.Treatment of goodwill onlythrough capital adjustmentshould be taught.Mentioning the date of theBalance Sheet must be stressedupon.Explain the treatment of closingthe retiring partner’s capitalaccount in the absence of anyinformation.


GFSreconstituted firm.firm.Severalral candidates showed the trcandidates showed the treatment of goodwill by raising and writing it ofnt of goodwill by raising and writing it off.f.fff

MARKING SCHEMEMARKING SCHEME

Question 4.Question 4.GFSGFSRevaluation AccountGFSGFSTo Ma 1,7 By StockGFSTo Motor Van 60 By BuildGFSTo Prov. for D/D 975GFSTo Capital A/csG S570

FSFSFS

Partners’ Capital Account

Particulars Angad Kunal Nitin Particulars Angad Kunal Nitin

To Kunal’s Capital 1,800 -- 1,800 By Balance b/d 12,500 15,000 20,000

To Kunal’s Loan A/c -- 21,570 -- By Reserve 2,400 2,400 1,200

To Nitins current A/c -- -- 6,343 By Revaluation A/c 570 570 285

To Balance c/d 20,013 -- 13,342 By Angad’s Capital -- 1,800 --

By Nitin’s Capital -- 1,800 --

By Angad’s Current 6,343 -- --_____ _____ ______ ______ _____ ______21,813 21,570 21,485 21,283 21,570 21,485

Balance Sheet of Angad and Nitin as on 1st April, 2013

Liabilities Assets

Creditors 10,000 Bank 1,250

B/P 2,000 Debtors 8,000

Kunal’s Loan 21,570 (-) Pro. for BDD 1,225 6,775

Capitals: Stock 15,000

Angad 20,013 Machinery 15,750

Kunal 13,342 33,355 Motor Van 3,400

Nitin’s Current A/c 6,343 Building 24,750

Angad’s Current A/c 6,34373,268 73,268

Workings:

Calculation of Partners’ Capital:

Total Capital of Angad and Nitin = 13,670 + 19,685 = Rs. 33,355

Angad’s Capital = 33,355 x 3/5 = Rs. 20,013

Nitin’s Capital = 33,355 x 2/5 = Rs. 13,342.

Gaining ratio : 1 : 1


GFSlities Assets

GFSCreditors 10,000 Bank 1

GFSB/P 2,000 Debtors 8 000GFSKunal’s Lo -) Pro. for BD 5FGFSCapitals: Stock 00GFSAngad ,013 Machinery 50GFSKunal 33,355 Motor VanGGFSNitin’s Current A/c 6,343 BuildingGFSAngad’s Current A/c 6,343GFS73,26 8GFSG SGFS

Question 5 [10]

Rahim and Sudesh, the two partners of a business firm, agreed to appropriate the profitsof their firm on the following terms:

(a) Interest is payable on capital @ 5% per annum.

(b) Rahim will be entitled to a salary of 500 per month.

(c) Interest on loan to be given by the firm to the partners @ 10% per annum.

(d) Interest on drawings to be charged from the partners @ 5% per annum.

(e) Sudesh will get commission @ 1% on the sales made during the year.

(f) Rahim is entitled to a rent of 25,000 per annum for allowing the firm to carry onthe business in his premises.

The net profit of the firm for the year ended 31st March, 2013, was 1,80,000 beforetaking into account any of the above terms.

Rahim Sudesh

Capital Balances on 1st April, 2012 1,50,000 1,40,000

Loan advanced on 1st October, 2012 1,00,000

Drawings made during the year 40,000 30,000

During the year 2012-13, sales of the firm amounted to 7,00,000.

From the above information, prepare:

(a) Profit and Loss Appropriation Account.

(b) Partners’ Capital Accounts.

Comments of ExaminersMost of the candidates could answer this questionsatisfactorily. Some common errors were:A few candidates could not calculate the interest ondrawings charged from the partners. They did not take intoaccount the average time period.Some candidates treated interest on loan and rent due to thepartner as an appropriation of profit and not as a chargeagainst profits.Several candidates did not transfer the rent due to thepartner to his capital account.Instead of debiting the P/L Appropriation a/c with theappropriation a/c, a few candidates debited the partner’scapital account, resulting in incorrect particulars.

Suggestions for teachersGive adequate practice tostudents in calculating interest ondrawings.Distinction betweenappropriation of profit andcharge against profit must beexplained along with itstreatment in the books ofaccounts.


GFSRahimRa Sudeshdesh

Capital Balances on 1pital Balances on 1stst April, 2012April, 20 1,50,0001,50,000 1,40,0001,40,000

Loan advanced on 1Loan advanced on st October, 2012 1,00,0001,00,00

Drawings made during the yearDrawings made during the year 40,00000 30,00030,000

During theDuring the year 2012year 2012--13, sales13, sales of the firmof the firm amounted toamounted to 7,00,000.7,00,000.

From the above information, prepare:From the above information, pre

(a)(a) Profit and Loss Appropriation Account.Profit and Loss Appropriation Account.

(b)(b) Partners’ Capital Accounts.Partners’ Capital Accounts

Comments of ExaminersrsG

MARKING SCHEME

Question 5.

Profit and Loss Appropriation Account for the year ended 31st March 2013

Particulars Particulars

To interest on capital By P/L /NP b/d 1,80,000

Rahim’s cap 7,500 Less int. on loan 5,000

Sudesh’s cap 7,000 Less rent _25,000 1,50,000

To salary – Rahim’s cap 6,000

To commission –Sudesh’s cap

7,000 By interest ondrawing

To Profit Rahim’s capSudesh’cap

1,000

750 1,750

Rahim 62,125

Sudesh 62,125 1,24,250 _______

1,51,750 1,51,750

Partners Capital Accounts

Particulars Rahim Sudesh Particulars Rahim Sudesh

To drawings 40,000 30,000 By Bal b/d 1,50,000 1,40,000

To interest ondrawings

1,000 750 By Interest oncapital

7,500 7,000

To balance c/d 2,09,625 1,85,375 By salary 6,000 --

By commission -- 7,000

By rent 25,000 --

By P/Lappropriation

62,125 62,125

2,50,625 2,16,125 2,50,625 2,16,125


GFSSudesh’capSudesh’cap 750

S1,7501,75

Rahim 62,125him 62,125

Sudesh 62,125Sudesh 62,125 1,24,250250

GF______________

1,51,7500GF 1,51,750SPartners Capital Accountsrtners Capital Accounts

ParticularsParticular RahimRahim SudeshSudesh ParticularsParticulars Rahimim SudeshSudesh

To drawingsTo drawings 40,00040,000 30,0000 By Bal b/dBy Bal b/d 1,50,000 1,40,0001,40,000

To interest onTo interest ondrawingsrawings

1,0001,000 7500 By Interest onBy Interescapitalcapital

7,50000 7,0007,000

To balance c/d/d 2,09,6252,09,625 1,85,3751,85,375 By salaryBy salary 6,00000 --

By commission 7 000

Question 6 [10]You are required to pass journal entries for the issue of debentures in the followingconditions:

(a) Ben Ltd. issued 5,000, 12% Debentures of 100 each at par, redeemable at 5%premium after five years.

(b) Rex Ltd. issued 2,00,000, 12% Debentures of 100 each at a discount of 2%,redeemable at a premium of 5% after 10 years.

(c) Josh Ltd. issued 6000, 12% Debentures of 100 each at a premium of 5%,redeemable at a premium of 10% after 6 years.

(d) Oxygen Ltd. issued 30,000, 7% debentures of 100 each to a Creditor for25,000 in full satisfaction of his claim. The company had purchased machinery

from him.

Comments of Examiners(a) Most of the candidates attempted this part of the

question satisfactorily. However, a few candidatescombined the due and issue entries while a few wrote‘issue of shares’ instead of ‘issue of debentures’

(b) Most of the candidates attempted this part of thequestion satisfactorily. A few candidates combined thedue and issue entries while a few wrote ‘issue ofshares’ instead of ‘issue of debentures’. Somecandidates were unable to calculate the amount of losson issue of debentures.

(c) Most of the candidates were able to attempt this partcorrectly. Some candidates combined the due and issueentries. Some could not distinguish between ‘Premiumon redemption of Debentures’ and ‘Securities PremiumReserve’.

(d) Most of the candidates attempted this part well. However a few candidates debited the ‘SundryAssets’ a/c instead of ‘Fixed Assets / Machinery a/c’.

MARKING SCHEMEQuestion 6.

(a) Bank Dr 5,00,000

To Deb app & allot a/c

(Being application and allotment money received)

5,00,000

Deb app & allotment a/c Dr 5,00,000

Loss on issue of debentures Dr 25,000To 12% Debentures 5,00,000

To Premium on Redemption

(Being 5000 debentures issued)

25,000

Suggestions for teachersThe meaning of ‘Loss on Issue ofDebentures’ a/c needs to beexplained and considerablepractice given to calculate it.Distinction between ‘‘Premiumon redemption of Debentures’and ‘Securities PremiumReserve’ must be made clear.Adequate practice should begiven in sums dealing with issueof debentures for considerationother than cash.


GFSquestion satisfactorily. Howevery , a few candidatescandidacombined the due and issue entries while a few wrobined the due and issue entries while a few wrotete‘issue of shares’ instead of ‘issue of debentures’‘issue of shares’ instead of ‘issue of debentures’

(b)) Most of the candidates attempted this part of theMost of the candidates attempted this part of thequestion satisfactorily.question satisfactori A few candidates combined thedates combinfdue and issue entries while a few wrote ‘issue ofdue and issue entries while a few wrote ‘issshares’ instead of ‘issue of debentures’.shares’ instead of ‘issue of debentures’. SomeSomecandidates were unable to calculate the amount of losscandidates were unable to calculate the amount of losson issue of debentures.on issue of debentures.

(c)(c) Most of the candidatesMost of the candidates were able towere able to attempt this partattempt this partcorrectlcorrectly.y. SomeS candidates combined the due and issueandidates combined the due andentries.entries. SomeSome could not distinguish between ‘Premiumcould not distinguish between ‘Preon redemption ofon redemption of Debentures’ and ‘Securities PremiumDebentures’ and ‘Securities PreReserve’.Reserve’.

(d) Most of the candidates attempted this partt of the candidates attempted this part wellwell. However a few candidates debited the ‘Sundry. However a few candidates debited theAssets’ a/c instead of ‘Fixed Assets / Machinery a/c’.of ‘Fixed AFSFS

The meaning of ‘Loss on Issue ofDebentures’ a/c needs to beexplained and considerable

tice given to calculate it.inction betweeredemption o

‘Securities Premiumserve’ must be made clear.equate practice should be

aling with issueor consideration

r than cash.

(b) Bank a/c Dr 1,96,000

To Deb app & allot a/c

(Being application and allotment money received)

1,96,000

Deb app & allotment a/c Dr 1,96,000

Loss on issue of debentures 14,000

To 12% Debentures 2,00,000

To Premium on Redemption

(Being 2000 debentures issued)

10,000

(c) Bank a/c Dr 6,30,000

To Deb app & allot a/c(Being application and allotment money received)

6,30,000

Deb app & allotment a/c Dr 6,30,000Loss on issue of debentures 60,000

To 12% Debentures 6,00,000To Premium on Redemption 60,000To Security Premium Reserve

(Being 6000 debentures issued)30,000

(d) Machine a/c Dr 25,000

To Vender / Creditor(Being machinery purchased)

25,000

(e) Vender / Creditor a/c Dr 25,000

Discount on issue of debentures a/c 5,000

To 7% debentures(Being 3000 debentures issued to vendor)

30,000

Question 7

(a) Sharp Ltd. was formed on 1st December, 2013, with a capital of 5,00,000 dividedinto shares of 10 each. It offered 80% of the shares to the public.

The issue price was payable as follows:

30% of the face value per share was payable with application.

20% of the face value per share was payable with allotment.

The balance as and when required. The company did not call for the balance duringthe year.

[5]


GFSTo 12% DebenturesTo 12% Debentures 6,00,0006,00,00To Premium on RedemptionTo Premium on Redem 60,00060,00To Security Premium ReserveTo Security Premium Reserve

(Being 6000 debentures issued)(Being 6000 debent30,00030,000

(d)(d) Machine a/cMachin Dr 25,00025,00

To Vender / CreditorTo Vender / Creditor(Being machinery purchased)(Being machinery purchase

225,0005,000

(e)(e) Vender / Creditor a/cVender / Creditor a/c Dr 25,00025,000

Discount on issue of debentures a/cDiscount on issue of debentures a/c 5,000,000

To 7% debenturesTo 7% debentures(Being 3000 debentures issued to vendor)(Being 3000 debentures issued to vendor)

30,00030,00GGGFFFSSSSS

All the shares offered by the company were subscribed for. The company did notreceive the allotment money on 3000 shares.

You are required to:

(i) Show the Share Capital in the Balance Sheet of the Company (preparedas per Revised Schedule VI of the Companies Act, 1956) at the end of thefinancial year.

(ii) Prepare Notes to Accounts.

(b) Under which heads and sub heads will the following items appear in the BalanceSheet of a company as per Revised Schedule VI of the Companies Act, 1956:

[5]

(i) Bills Receivable

(ii) Interest accrued and due on debentures

(iii) Trade Creditors

(iv) Provision for Taxation

(v) Stores and spares


(a) Few candidates attempted this question. Among thosewho attempted, majority gave the correct solution.However, common errors made by candidates were:incorrect headings and sub headings; incorrect date ofthe Balance Sheet.

(b) Majority of the candidates answered this questionsatisfactorily.

Suggestion for teachersRefer to the guidelines issued bythe Council regarding thepreparation of the Balance Sheetas per the Revised Schedule VIand the type of problems to bedone in the class from this topic.


GFS( )

(iv)(iv) Provision for TaxationProvision for Taxat

(v)(v) Stores and sStores and spareparess

Comments of ExaminersComments of ExG(a)(a) FewFew candidates attempted this question. Among thosecandidates attempted this question. Among thosewho attempted, majority gave the correct solution.who attempted, majority gave the correct solution.HoweverHowever,, commmon errors made by candidates were:mon errors made by candidates were:iincorrect headings and sub headingsncorrect headings and sub headings; i; incorrect date ofncorrect dathe Balance Sheet.the Balance Sh

(b)(b) Majority of theMajority of the candidatescandidates answered this questionered this qusatisfactorily.satisfactorily. FSFSSuggestion for teachersFSfer to the guidelines issued by

Council regarding theBalance Sheet

Revised Schedule VIthe type of problems to bein the class from this topic.

MARKING SCHEME

Question 7.

(a) Balance Sheet of Sharp Ltd.As at 31st March, 2014 (an extract)

Particulars Note No. 31-3-2014 31-3-20131. 2 3 4.

I. EQUITY AND LIABILITIES 1.Shareholders Funds

Share Capital 1 1,94,000

Notes to Accounts: 1.

Particulars Amount ( )(a) Share Capital

Authorised Capital50,000 shares of 10 each

Issued Capital40,000 shares of 10 each

Subscribed Capital

Subscribed but not fully paid up40,000. Shares of 10 each, 5 Called up 2,00,000Less calls –in- arrear (6,000)

5,00,000

4,00,000

1,94,000

TOTAL 1,94,000

(b) Item Head Sub head(i) Bills Receivable Current Asset Trade Receivable(ii) Interest accrued and due on

debenturesCurrent Liabilities Other Current

Liabilities(iii) Trade Creditors Current Liabilities Trade Payables(iv) Provision for Taxation Current Liabilities Short Term Provision(v) Stores and Spares Current Assets Inventories


GFS(a) Share Capitalapital

Authorised CapitalAuthorised Capital50,000 shares of50,000 shares of 10 each10

Issued CapitalIssued Capit40,000 shares of40,00 10 each

Subscribed CapitalSubscribed Capital

Subscribed but not fully paid upSubscribed but not fully paid up40,000. Shares of40,000. Shares of 10 each,10 e 5 Called up5 Called up 2,00,000Less callsLess calls ––inin-- arrear arrear (6,000)

5,00,0005,00,000

S4,00,0004,0S1,94,0001,94,000G STOTAL 1,94,0001,94,000GGFSSSGGGFSSSS(b)

GGGGGG

Question 8 [10]Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessaryjournal entries for the following after various assets (other than Cash and Bank) andthird party liabilities have been transferred to Realisation A/c.

(a) There was furniture worth 50,000. Aman took over 50% of the furniture at 10%discount and the remaining furniture was sold at 30% profit on book value.

(b) Profit and Loss Account was showing a credit balance of 15,000 which wasdistributed between the partners.

(c) Harsh’s loan of 6,000 was discharged at 6,200.

(d) The firm paid realization expenses amounting to 5,000 on behalf of Harsh who hadto bear these expenses.

(e) There was a bill for 1,200 under discount. The bill was received from Soham whoproved insolvent and a first and final dividend of 25% was received from his estate.

(f) Creditors, to whom the firm owed 6,000, accepted stock of 5,000 at a discount of5% and the balance in cash.

(g) The loss on dissolution was 8,000.


(a) Majority of the candidates answered this questionsatisfactorily.

(b) Instead of debiting P/L a/c, many candidates credited it.(c) Several candidates did not take into account the interest

on the partner’s loan.(d) A number of candidates did not debit the partner’s

capital account.(e) Many candidates answered this question satisfactorily.(f) Several candidates seemed unaware that there is no accounting treatment when a creditor is paid

off by giving him an asset.(g) This part was answered well by most of the candidates.

MARKING SCHEME

Question 8.

(a) Aman’s Capital a/c Dr 22,500 --

Cash/Bank a/c Dr 32,500

To Realisation a/c 55,000

(Being furniture sold)

(b) Profit & Loss a/c Dr 15,000

To Aman’s Capital a/c 7,500

To Harsh’s Capital a/c 7,500(Being P/L distributed)

Suggestion for teachersAdequate practice needs to begiven in passing journal entries inthe chapter ‘Dissolution ofPartnership firm’.


GFS5% and the balance in cash.he balance in cas

(g) The loss on dissolution wasThe loss on dissolution wa 8,000.000.

Comments of Examinersomments of Examiners

G(a)a) Majority of theMajority of candidates answered this questionered this qusatisfactorilysatisfactori .

(b)(b) Instead of debiting P/L a/c, many candidates credited it.Instead of debiting P/L a/c, many candidates credited it.(c)(c) Several cSeveral candidates did not take into account the interestandidates did not take into account the interest

on the partner’s loan.on the partner’s loan.(d)(d) A number ofA number candidatesdidates did not debit the partner’sdid not debit the pa

capital account.capital account.(e)(e) Many candidatMany candidateses answered this question satisfactorily.answered this question satisfactor(f)f) Several candidatesSeveral candidates seemed unaware that there is no accounting treatment when a creditor is paidseemed unaware that there is no accounting treatment when a creditor is pa

off by giving him an asset.ff by giving him an asset.FS(g) This part was answered well by most of the candidates.ered well by most of the canFSFStion for teacherFSequate practice need

en in passing journal entries inchapter ‘Dissolution of

firm’

(c) Harsh’s loan a/c Dr 6,000Realisation Dr 200

To Cash/Bank a/c 6,200(Being Harsh’s loan discharged

(d) Harsh’s Capital a/c Dr 5,000To Cash/Bank a/c 5,000

(Being realization expenses made by firm)

(e) Cash/Bank a/c Dr 300To Realization a/c 300

(Being first and final dividend of 25% received fromSoham)

Realization a/c Dr 1,200To Bank/Cash a/c 1,200

(Being payment made to bankers)

(f) Realisation a/c Dr 1,250To Cash/Bank a/c 1,250

(Being payment made to creditors)

(g) Aman’s Capital a/c Dr 4,000Harsh’s Capital a/c Dr 4,000

To Realization ac 8,000(Being loss on realization written off)

SECTION BAnswer any two questions.

Question 9

(a) How does the quality of Ratio Analysis of a business depend upon the accuracy of itsfinancial statements?

[2]

(b) From the following information, calculate Trade Receivables Turnover Ratio: [2]

Particulars

Credit Revenue from Operations 9,60,000

Gross Debtors 1,90,000

Bills Receivable 50,000

Provision for Doubtful Debts 10,000


GFS(f) Realisation a/cRealisation a/c DrDr 1,21,25050

To Cash/Bank a/cTo Cash/Bank a/c 1,2501,250(Being payment made to creditors)(Being payment made to creditors)

(g)g) Aman’s Capital a/cAman’s C Dr 4,0004,000Harsh’s Capital a/cHarsh’s Capital a/c Dr 4,0004,000

To Realization acTo Realization ac 8,0008,000(Being loss on realization written off)(Being loss on realization written off)GGGFFFSSSSECTION BSECTIO

Answerswer any twoany two questions.

Question 99

( ) H d h li f R i A l i f b i d d h f ii f R [2]

(c) From the following information, calculate the following ratios (up to two decimalplaces):

[6]

(i) Debt-Equity Ratio

(ii) Interest Coverage Ratio

(iii) Proprietary RatioAmount

Equity Share Capital 2,00,000

5% Preference Share Capital 60,000

General Reserve 1,20,000

Fixed Assets 5,05,000

Current Assets 1,20,000

Current Liabilities 40,000

Loan @ 10% interest 5,00,000

Tax paid during the year 30,000

Profit for the current year after interest and tax (available for theshareholders) 90,000


(a) Most candidates could answer this question with ease.(b) A number of candidates could answer this question

satisfactorily. However, a few wrote incorrect formulaor considered debtors instead of gross debtors.

(c) Majority of the candidates did not take profit for thecurrent year as part of Equity.

MARKING SCHEME

Question 9.

(a) Ratios are calculated from the financial statements, so the reliability of ratios is dependentupon the correctness of the financial statements.If the financial statements are not true and fair the analysis will give a false picture of theaffairs of the business. E.g. if the closing stock is over- valued, not only will the profitabilitywill be overstated but the financial position will also appear to be better. Thus ratios are asaccurate as accounts.

(b) Credit Revenue from Operation

Average Trade ReceivableTrade Receivables Turnover Ratio

Trade Receivable Turnover Ratio =50,0001,90,000

9,60,000= 4 times

Suggestion for teachersMake students understand thelogic behind the formula andaccordingly explain to them thecomponents of the ratio.


GFSLoan @ 10% interestn @ 10% interest 5,00,0005,00,000

Tax paid during the yearTax paid during the year 30,00030,000

Profit for the current year after interestProfit for the current year after interest and tax (available for theand tax (available for tshareholders)shareholde 90,0009

Comments of ExaminersComments of ExaminersG(a)(a) Most candidatesMost candidates could answer this question with ease.could answer this question with ease.(b)(b) A numberA numbe of candidates could answer this questionndidates could answer this question

satisfactorily. Howeversatisfactorily. However,, a few wrote incorrect formulaa few wrote incorrect fooror considered debtorsconsidered debtors instead of gross debtors.instead of gross debtors.

(c)(c) Majority of the candidates did not take profit for theMajority of the candidates did not take profit fcurrent year as part of Equity.current year as part of Equity.

MARKING SCHEMEEGFSFSFSSuggestion for teachersFSdents understand the

formula andrdingly explain to them theponents of the ratio.

(c)(i) Debt to Equity Ratio:

Fundsrs'ShareholdeEquity /

DebtTermLongDebt /

=000,90000,20.1000,60000,00,2

000,00,5

= 5,00,000 / 4,70,000

= 1.06:1

(ii) Interest coverage ratio =Net profit before interest and taxes

Interest

=000,50

000,50000,30000,90

= 1,70,000/ 50,000

= 3.4 times

(iii) Proprietary Ratio =AssetsTotal

EquityFunds/rsShareholde

=assets)(current000,20,1assets)fixed(000,05,5

000,70,4

= 4,70,000 / 6,25,000

= 0.75:1

OR

s)Liabilitie(Current40,000(Loan)5,00,000(Equity)4,70,0004,70,000

= 4,70,000 / 10,10,000

= 0.47:1


GFS= 1,70,000/ 50,0001,70,000/ 50,000

= 3.4 times3.4 times

(iii)(iii) Proprietary RatioProprietary Ratio ==FAssetsTotal AssetsTotal

EquityFunds/rs FursShareholdeareholde

==FSassets)(current000,20,1assets)fixed(000,05,5 afixed(000,5

000,70,4 000704

== 4,70,000 / 6,25,0000,000 / 6,25,0

== 0.75:15:1

Question 10 [10]

From the following data, prepare a Common Size Balance Sheet of Teak Wood Ltd:(Note: Current year’s figures appear in the first column and the previous year’s figuresare in the second column.)

Particulars 31.03.2013 31.03.2012

Share Capital 3,00,000 2,40,000

Reserves and Surplus 80,000 70,000

Trade Payables 1,00,000 1,10,000

Trade Receivables 1,90,000 1,80,000

Short Term Provision 40,000 15,000

Fixed Assets 2,90,000 2,30,000

Long Term Provision 80,000 65,000

Current Investments 10,000 8,000

Inventory 1,01,000 72,000

Cash and Cash Equivalents 9,000 10,000


Most candidates could answer this question satisfactorily.However, a few candidates did not write the dates of theBalance Sheets.Some candidates lost marks in this question as they endedup preparing the Comparative Balance Sheet instead of theCommon Size Balance Sheet.A few candidates took the Fixed Assets and Share Capital as the base instead of Total Assets and TotalLiabilities.

Suggestion for teachersTeachers need to give adequatepractice to students


GFSCurrent Investmentsstments 10,00010,0 8,0008,000

GFSSInventoryInventory 1,01,0001,01,0 72,00072,000

GFSSCash and Cash ECash and Cash Equivalentsquivalents 9,0009,0 10,00010,000

GGGFFFFSSSSSSComments of ExaminersComments of ExaGMostMost candidates could answer this question satisfactorily.candidates could answer this question satisfactorily.HoweverHowever,, a few candidates did not write the dates of thea few candidates did not write the dates of theBalance Sheets.Balance SheeSome candidatesSome candida lost marks in this question as they endedmarks in this question as they endedup preparing thup preparing the Comparative Balance Sheet instead of thee Comparative Balance Sheet instead Common Size Balance Sheet.Common Size Balance Sheet.A few candidates took the Fixed Assets and Share Capital as the base instead of Total Assets and TotalA few candidates took the Fixed Assets and Share Capital as the base instead of Total Assets and TotaLiabilities.iabilities. FSFSSuggestion for teachersFSachers need to give adequate

ctice to students

MARKING SCHEME

Question 10.

Common Size Balance Sheet of Teak Wood Ltd.

as at 31st March 2013 and 2012

Particulars NoteNo.

Absolute Amount

2012-13 2011-12

% of Balance SheetTotal

2012-13 2011-12

I. EQUITY AND LIABILITIES

Shareholders Funds

(a) Share Capital

(b) Reserves and Surplus

Non- Current Liabilities

Long Term Provision

Current Liabilities

(a) Trade payable

(b)Short term provision

3,00,00080,000

80,000

1,00,000

40,000

2,40,00070,000

65,000

1,10,000

15,000

50.00

13.33

13.33

16.67

6.67

48.0014.00

13.00

22.00

3.00

TOTAL 6,00,000 5,00,000 100 100

II. ASSETS

Non- Current Assets

Fixed Assets

Current Assets

(a) Current Investments

(b) Inventories

(c) Trade Receivables

(d) Cash and cash equivalents

2,90,000

10,000

1,01,000

1,90,000

9,000

2,30,000

8,000

72,0001,80,000

10,000

48.33

1.67

16.83

31.67

1.50

46.00

1.60

14.40

36.00

2.00

TOTAL 6,00,000 5,00,000 100 100

Question 11

(a) State with reason whether the following would result in inflow, outflow or no flow ofcash:

[2]

(i) Charging depreciation on furniture.

(ii) Cash withdrawn for bank for office use.


GFSLong Term ProvisionLong Term Provision

Current LiabilitiesCurrent Liabilities

(a)(a) Trade payable

(b)(b Short term provisionhort term provisio

80,00080,000

1,00,000

40,00040,000

1,10,000000

15,000,00016.6716.67

6.676.6

13.0013.00

22.00

3.00GFFFSSTOTALAL 6,00,0006,00,000 5,00,0000,000 100100 100100GGFFFFFFFSSSSSGFFFSSII.II. ASSETSASSE

NonNon-- Current AssetsCurrent Assets

Fixed AssetsFixed Assets

Current AssetsAssets

2,90,000 2,30,00000048.3348.33

46.0046.00GGFFFFFFFSSSSSGFFFSS

(b) From the following extracts of a company’s Balance Sheets, calculate for theyear ending 31st March, 2013:

[8]

(i) Cash from investing activities.

(ii) Cash from financing activities.

(Note: Current year’s figures appear in the first column and the previous year’sfigures are in the second column.)

Particulars 2012-13 2011-12

Equity Share Capital 13,00,000 12,00,000

Long Term Borrowing (10% Bank Loan) 60,000 1,00,000

Proposed Dividend 20,000 21,000

Fixed assets:

Plant and Machinery 1,70,000 1,40,000

Less Accumulated Depreciation (24,000)1,46,000

(40,500)99,500

Non-current investments 1,00,000 20,000

Land (at cost) 5,00,000 7,00,000

Goodwill 30,000 40,000

Additional information:

(i) The Loan instalment and interest on loan was paid at the end of the financialyear.

(ii) During the year 2012-13:

(a) Dividend of 17,000 was proposed.

(b) The company provided depreciation on Plant and Machinery amounting to13,500.

(c) The company sold 70% of its non-current investments which it held at thebeginning of the year, at a profit of 20% on its book value.

Comments of Examiners(a) A number of candidates could answer this question

satisfactorily(b) While many candidates could answer this question

satisfactorily, a few candidates did not seem to know thetreatment of accumulated depreciation. Some candidateswere not clear with the concept of machine discarded.

Suggestions for teachersGive sufficient practice tostudents in calculating theamount spent on purchase of afixed asset from its net value /gross value.The scope of the syllabus mustbe referred to.


GFS1,46,0001,46,0

F99,50099,500

SGFSSNonNon--current investmentscurrent investments 1,00,0001,00,0 20,00020,000

GFSSLand (at cost)Land (at cost) 5,00,0005 00 0 7,00,0007,00,000GFSSGoodwillGoodwill 30,000 40,00040,GFSSAdditional information:Additional information:GGGFFFSSSS(i)(i) The Loan instalment and interest on loan was paid at the end of the financialThe Loan instalment and interest on loan was paid at the end of the financialyear.yea

(ii)(ii) During the year 2012During the year 2012--13:13

(a)(a) Dividend ofDividend of 17,000 was proposed.17,000 was proposed.

(b)(b) The company provided depreciation on Plant and Machinery amoThe company provided depreciation on Plant and Machinery amounting tounting to13 50000

MARKING SCHEME

Question 11.

(a) (i) No flow. It does not involve cash as it is a non-cash expense / book entry.

(ii) No flow. It represents movement between items of cash / cash and cash equivalent

(b) Working Note: 1Plant & Machinery a/c

Particulars Amount ( ) Particulars Amount ( )To Balance b/dTo Cash

1,40,00060,000

2,00,000

By acc.depreciationBy Balance c/d

30,0001,70,0002,00,000

Working Note: 2Accumulated Depreciation a/c

Particulars Amount ( ) Particulars Amount ( )To P/M( dep on assetdiscarded) bal figureTo Balance c/d

30,000

24,00054,000

By Balance b/d

By St of P/L

40,500

13,50054,000

Working Note: 3Investments a/c

Particulars Amount ( ) Particulars Amount ( )To Balance b/dTo gain on sale of Inv.To Cash

20,0002,800

94,0001,16,800

By cashBy Balance c/d

16,8001,00,000

1,16,800Working Note: 4

Proposed Dividend a/cParticulars Amount ( ) Particulars Amount ( )To CashTo Balance cd

18,00020,00038,000

By Balance b/dBy St of P/L

21,00017,00038,000

Solution:

Cash from Investing ActivitiesPurchase of P/MSale of LandSale of InvestmentsPurchase of Investments

Cash flow from Investing Activities

Cash from Financing activitiesIssue of Share CapitalRepayment of Bank LoanInterest paid on Bank Loan

(60,000)2,00,000

16,800(94,000)

1,00,000(40,000)(10,000)

62,800


GFS( p

discarded) bal figurediscarded) bal figureTo Balance c/dTo Balance c/d

,

24,00024,000

GF54,00054,000

yy

By St of P/LBy St of P/L

,

13,50013,500

S54,00054,000

GGGGGGFFFFSSSSSSWorking Note: 3Working NoteInvestments a/cInvest

ParticularsParticulars Amount (Amount ( )) ParticularsParticulars Amount (Amount ( ))GGGGFFFSSSSGGFSSTo Balance b/dTo Balance b/dTo gain on sale of Inv.To gain on sale of Inv.To CashTo C

20,00020,0002,8002,800

94,00094,000GF1,16,8001,16,800

By cashBy cashBy Balance c/dBy Balance c

16,8016,80001,00,0001,00,000S1,16,8001,16,800GGGGFFFSSSSGGGGGGFFFFSSSSSSWorking Note: 4Working Note: 4

Proposed Dividend a/cProposed ParticularsParticulars Amount (mount ( )) ParticularsP Amount (Amount ( ))GGGGFFFSSSSGGFSSTo CashT B l d

18,00018 00020 000

By Balance b/dB S f P/L

21,00017 000

GGGGFFFSSSSGGFSS

Dividend paidCash flow from Financing activities

(18,000)32,000

SECTION – CAnswer any two questions

Question 12 [10]

(a) Mention any two demerits of using electronic spreadsheets.

(b) Write a formula in spreadsheet for calculating the “Take Home Pay” under the givencondition:

Salary is more than 50,000 then the “Take Home Pay” is 80%.

(c) How would you create a filter for data stored in a column in a spreadsheet?

(d) State the steps involved in merging two cells in a spreadsheet.

(e) What is the difference between the functions AVERAGEA ( ) and AVERAGEIFS ( )?


Very few candidates attempted this question. Many of thosewho did make an attempt, could not answer it correctly.

MARKING SCHEME

Question 12.

(a) Demerits of using Electronic Spreadsheets:

If an error is made in a formula, every single calculation done where that formula is usedon that spread sheet will be incorrect.

Sometimes, it is difficult to apply very complex models and the layouts become difficult tounderstand.

In case of hardware/software failures, the spread-sheet cannot be used.

System is dependent on a working hardware and spreadsheet software

Formatting/printing of an electronic spread-sheet needs to be learnt.

(b) = IF(A2>50000, A2*80/100,A2)

= IF(A2>50000, A2-20%*A2,A2)

= IF(A2>50000, A2-0.2*A2,A2)

= IF(A2>50000, A2*0.8,A2)

= IF(A2>50000, A2*80%,A2)

“Take Home Pay” = IF (Salary >50000,Salary*0.8,Salary)

Suggestion for teachersTeachers need to be well versedwith the Excel and DBMS toteach the topics included in thescope of the syllabus.


GFS(e) What is the difference betweenbe the functionsons AVERAGEA ( )AVERAGEA ( ) and AVERAGEIFS ( )?

Commments of Examinersments of Examiners

GVery few candidates attempted this question.ery few candidates attempted this question. Many of thoseMany of thosewho didwho did make an attemptmake an a , could not answer it correctly.wer it correctly


Question 12.Question 12.GFS(a)a) Demerits of using Electronic SpreadsheetsDemerits of using Electronic Spreadsheets::GFIf an error is made in a formula, everyn error is made in a formula, every single calculation done where that formula is usedsingle calculation done where that formuon that spread sheet will be incorrectead sheet wi

FSFSFSion for teachersFSchers need to bh the Excel anch the topics included in thepe of the syllabus.

(c) The candidate can do the filter operation in many ways, such as:

(i) Go to the first row of the column.

Select the column and click the filter option in the DATA sub-menu.

OR

(ii) Select the Data by the use of keyboard / mouse.

Filter by the use of right click button of the mouse or touch pad.

(iii) Go to the first row of the column.

Click on Sort & Filter Option in the HOME sub-menu.

Click on filter from the drop down menu.

(d) (i) Select the two cells by moving the cursor over both the cells being merged.

(ii) Click format option from the menu.

(iii) Select cells under the format drop down menu.

(iv) Select the option alignment.

(v) Click merge cells.

Or

Select the two cells by moving the cursor over both the cells being merged.

Select Format Cells Alignment Merge cells

Or

Select the two cells by moving the cursor over both the cells being merged.

Click on on the HOME sub-menu.

(e) AVERAGEA( ) and AVERAGEIFS( ) are both statistical functions. AVERAGEA( ) is used toinclude logical values and text representations as part of calculations. AVERAGEIFS( ) isused to calculate the average of only the values that meet the criteria.

Question 13 [10]

A B C D E1 Particulars 2010 2011 2012 2013

(Estimates)2 SALES OF GOODS 10,000 15,000 18,0003 SALES OF SERVICES 1,200 1,280 1,5004 INCOME FROM OTHER

SOURCES800 900 1,000

5 GROSS PROFIT6 SALARIES 9,000 10,000 12,0007 RENTS 900 1,000 1,5008 PURCHASES 1,100 1,200 1,4009 NET PROFIT


GFS(iv) Select the optionct the option alignment.

(v)(v) ClickClick merge cells.merge cells.

OrOr

Select the two cells by moving the cursor over both the cells being merged.Select the two cells by moving the cursor over both the cells being merged.

Select Format Cells Alignment Format Cells Alignmen Merge cellss

OrOr

Select the two cells by moving the cursor over both the cells being merged.elect the two cells by moving the cursor over both the cells being merged.

Click onn on the HOME subon the HOME sub--menu.me

(e)(e) AVERAGEA( ) and AVERAGEIFS( ) are both statistical functions. AVERAGEA( ) is used toAVERAGEA( ) and AVERAGEIFS( ) are both statistical functions. AVERAGEA( ) is used toinclude logical values and teinclude logical values and xt representations as part of calculations. AVERAGEIFS( ) isrepresentations as part of calculations. AVERAGEIFS( ) iused to calculate the average of only the values that meet the criteria.used to calculate the average of only the values that meet the criteria.GGGFSFFFFGG

(a) Write the expression to calculate GROSS PROFIT & NET PROFIT in the Cells(B5, B9), for the Year 2010.

(b) Write the expression to calculate the average GROSS PROFIT for the year 2010, 2011and 2012.

(c) Write a function to select the maximum Value for NET PROFIT for the years 2010,2011 and 2012.

(d) Write a suitable expression to calculate the following for 2013 (Estimates) where:

(i) SALES OF GOODS in Cell E2 where SALES OF GOODS have decreased 10%over 2012.

(ii) SALES OF SERVICES in Cell E3 where SALES OF SERVICES have increased10% over 2011.

(iii) INCOME FROM OTHER SOURCES in Cell E4 where INCOME FROMOTHER SOURCES have increased 25% over 2010.

(iv) GROSS PROFIT in Cell E5.


Many of the candidates who attempted this question couldnot answer it correctly.

MARKING SCHEME

Question 13.

(a) Gross profit = B5 = B2 +B3 –B8

or B2 – B8

or B5 = Sum (B2 : B3) - B8

For Cell B9

Net Profit = (B2 + B3 +B4) – (B6 + B7 + B8)

or B5 + B4 -B6 - B7

or B5 + B3 + B4 –B6 – B7

or = Sum (B2 : B4) - Sum (B6 : B8)

or = Sum (B4 : B5) - Sum (B6 : B7)

or = Sum (B3 : B5) - Sum (B6 : B7)

(b) Go to another cell, say, F5, and select the function AVG

= AVG (B5:D5)

Or

= Sum (B5:D5) / 3 Or

= (B5+C5+D5) /3

Suggestion for teachersGive more practice to students inanswering similar type ofquestions.


GFSComments of Examinersnts of Examiners

GMany of the candidates who attempted this question couldany of the candidates who attempted this question couldnot answer it correctly.ot answer it correctly.


Question 13.Question 13.GFS(a)(a) Gross profit = B5 = B2 +B3Gross profit = B5 = B2 +B –B88

or B2or B2 –– B8B8

or B5or B5 = Sum (B2 : B3)= Sum (B2 : B3) -- B8B8

For Cell B9FSFSFS

Suggestion for teachers

FSe more practice to stuwering similastions.

(c) = MAX (B9 : D9)

Or

In say F9, chose the function MAX and select the range B9: D9.

(d) (i) Go to Row (Sales of goods) of Column E (2013 Estimates) OR Go to Cell E2

Enter = (90/100)*D2

Any one of the following

E2 = ( 9)*D2

E2 = D2*( 9)

E2 = D2*(90/100)

E2 = D2*90%

(ii) Go to Row (Sales of services) of Column E (2013 Estimates) OR Go to cell E3

Enter = (110/100)*C3

Any one of the following as correct:

E3 = (1 10)*C3

E3 = C3*(1 10)

E3 = C3*(110/100)

E3 = C3*110%

E3=(10%*C3)+C3

(iii) Go to Row (Income from other sources) of Column E (2013 Estimates) OR Go toCell E4

Enter = (125/100) *E2

Any one of the following as correct:

E4 = (1 25)* B4

E4 = B4*(1 25)

E4 = B4*(125/100)

E4 = B4*125%

E4=(25%*B4)+B4

(iv) E5=E2+E3-E8

or E2– E8

or =Sum(E2:E3) – E8


GFSy f f gf g

E3 = (E3 = (11 1010)*C3)*C3

E3 =E3 = C3C3*(1*(1 10)10)

E3 =E3 = C3C3*(110/100)*(1

E3 = C3*110%

E3=(10%*C3)+C3E3=(10%*C3)+C

(iii)(iii) Go to Row (Income from other sources)Go to Row (Income from other sources) of Column E (2013 Estimates) OR Go toof Column E (2013 Estimates) OR Go toCell E4l E4

Enter = (125/100) *E2Enter = (125/100)

Any one of the following as correctAny one of the following as correct::

E4 = (E4 = (11 2525)*)* B4B4

E4 =E4 = B4B4*(1*(1 2525))

E4 B4B4*(125/100)*(125/100

Question 14 [10]

(a) What is the use of Data dictionary in RDBMS?

(b) What is SQL?

(c) What is a Unique Key?

(d) Define SQL update statement.

(e) What is meant by normalization of a database system?


Few candidates attempted this question. Many of those whodid make an attempt, could not answer it correctly.

MARKING SCHEME

Question 14.

(a) Data Dictionary in RDBMS is a set of tables and the database objects and is stored in a specialarea of the database and maintained by the kernel.

The information in the Data Dictionary helps to provide access to the objects and maps intoactual physical storage location.

(b) SQL: Structured Query Language / (SQL) is a language designed specifically forcommunicating with databases. / SQL is an ANSI (American National Standards Institute)standard.

(c) Unique key:

Unique key is same as primary key and uniquely identifies each row in a table, with differencebeing the existence of null. Unique key field allows one value as NULL value.

(d) SQL update statement:

SQL update is used to update data in a row or set of rows specified in the filter condition.

The basic format of an SQL UPDATE statement is, Update command followed by table to beupdated and SET command followed by column names and their new values followed by filtercondition that determines which rows should be updated.

(e) Normalization of a database system is the process of analyses of database tables and splitting thetable into multiple tables, (based on logical relation between multiple tables) to removeredundant data.

There can be first normal form, second normal form and third normal form, when normalizationof database is done.

Suggestion for teachersGive more practice to students inanswering similar type ofquestions.


being the existence of null. Unique key field allows one value as NULL value.

(d)GFS

MARKING SCHEMECHEME

Question 14.stion 14.

(a)) Data Dictionary in RDBMS is a set of tables and the database objects and is stored in a specialData Dictionary in RDBMS is a set of tables and the database objects and is stored in a speciaarea of the database and maintained by the kernel.area of the database and maintained by the kern

The information in the Data Dictionary helps to provide access to the objects and maps intoThe information in the Data Dictionary helps to provide access to the objectsactual physicalactual physical storage location.storage locat

(b)(b) SQL: Structured Query Language / (SQL) is a language designed specifically forSQL: Structured Query Language / (SQL) is a language designed specifically forcommunicating with databases. / SQL is an ANSI (American National Standards Institute)communicating with databases. / SQL is an ANSI (American National Standards Institute)standard.standar

(c)(c) Unique key:Unique key:

Unique key is same as primary key and uniquely identifies each row in a table, with differenceUnique key is same as primary key and uniquely identifies each row in a table, with differenc

SQL update statement:ement:

GENERAL COMMENTS:

(a) Topics found difficult by candidates in the Question Paper:

Treatment of normal loss in joint venture

Writing off miscellaneous expenditure

Calculation of interest on drawings

Ratio Analysis- Formulae and calculations

Cash Flow Statement- concept of accumulated depreciation.

(b) Concepts in which candidates got confused:

Methods of Joint Venture

Treatment of retiring partner’s loan a/c

Treatment of interest on loan and rent due to a partner

The relevant heads and subheads in the Balance Sheet of a company.

Whether to take Gross Debtors or Net Debtors while calculating Trade Receivables TurnoverRatio

(c) Suggestions for candidates:

Do not neglect the Class XI syllabus

Be clear in understanding the concepts. This will help in answering the theory questions.

Study the entire syllabus thoroughly

Practice sums from at least two text books

Do not write short forms in the ratios formulae

Always practice sums with proper formats drawn

Solve past years question papers

Solve the current years and past years Specimen Papers released by the Council


The relevant heads and subheads in the Balance Sheet of a company.eads and subheads in the Balance Sheet of a co

Whether to take Gross Debtors or Net Debtors while calculating Trade Receivables TurnoverWhether to take Gross Debtors or Net Debtors while calculating Trade Receivables TurnoveRatioRatio

GFSc) Suggestions for candid

Do not neglect the Class XI syllabusDo not neglect the Class XI syllabus

Be clear in understanding the concepts. This will help in answering the theory questions.Be clear in understanding the concepts. This will help in answering the theory questions.

Study the entire syllabus thoroughlyStudy the entire syllabus thoroughly

Practice sums from at least two text booksPractice sums from at least two text books

Do not write short formsDo not write short forms in the ratios formulaein the ratios formulae

Always practice sums with proper formats drawnAlways practice sums with proper formats dra

Solve past years question papersSolve past years question p

Solve the current years and past years Specimen Papers released by the Councilnt years and

isc 2014 accounts - guide for school · ... the firm has a partnership deed. (b) ... goodwill....

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