SRI SCHOOL

Affiliation no – 3330235
MID TERM EXAMINATION
Session - 2021-22
Subject: Accountancy M. Time: 2hours
Class: XII M. Mark: 40
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General Instruction:
1. All questions are compulsory

I . Multiple Choice questions (1X40=40M)

1 . A and B were partners in a firm sharing profit or loss equally. With effect from 1st April 2019 they agreed to share
profits in the ratio of 4 : 3. Due to change in profit sharing ratio, A’s gain or sacrifice will be :
(a) Gain 1/14 (b) Sacrifice 1/14
(c) Gain 4/7 (d) Sacrifice 3/7

2. Features of a partnership firm are:

(a) Two or more persons
(b) Sharing profit and losses in the agreed ratio
(c) Business carried on by all or any of them acting for all
(d) All of the above

3. A and B are partners sharing profits and losses as 2 : 1. C and D are admitted and profit sharing ratio becomes 3 : 2 : 4
: 1. Goodwill is valued at Rs 90,000. C and D bring required goodwill in Cash. Credit will be given to:
(a) A 30,000; B 15,000 (b) A 66,000; B 24,000
(c) A 33,000; B 12,000 (d) A 27,000; B 18,000

4. Which one of the following ratios is most important in determining the long-term solvency of a company?
(a) Profitability Ratio (b) Debt-Equity Ratio
(c) Stock Turnover Ratio (d) Current Ratio

5. Which analysis is considered as Dynamic:

(a) Horizontal Analysis (b) Vertical Analysis
(c) Internal Analysis (d) External Analysis

6. Fluctuating capital account is credited with :

(a) Interest on capital (b) Profit of the year
(c) Remuneration of partners (d) All of these
7. A, B and C were partners sharing profit or loss in the ratio of 7 : 3 : 2. From Jan. 1,2019 they decided to share profit
or loss in the ratio of 8 : 4 : 3. Due to change in the profit-loss sharing ratio, B’s gain or sacrifice will be :
(a) Gain 1/60 (b) Sacrifice 1/60
(c) Gain 2/60 (d) Sacrifice 3/60

8. Ramesh and Suresh are partners sharing profits in the ratio of 2 : 1 respectively. Ramesh Capital is 1,02,000 and
Suresh Capital is 73,000. They admit Mahesh and agree to give him 1/5th share in future profit. Mahesh brings
14,000 as his share of goodwill. He agrees to contribute capital in the new profit sharing ratio. How much capital will
be brought by Mahesh?
(a) 43,750 (b) 45,000
(c) 47,250 (d) 48,000

9. Reserve capital means :

(a) A part of subscribed uncalled capital (b) Reserve Profit
(c) A part of Capital Reserve (d) A part of Capital Redemption Reserve
10. Calculate interest on drawings @ 12% p.a. for Gambhir if he withdrew 7 2,000 once at the beginning of each month:
(a) 7 1,560 (b) 7 1,500
(c) 7 1,200 (d) 7 1,000

11. J. Ltd. re-issue 2,000 shares which where forfeited by crediting share forfeiture account by 3,000. These shares
were re-issued at 9 per share. The amount transferred to capital reserve will be :
(a) 3,000 (b) 2,000
(c) 1000 (d) Nil

12. Which of the following is NOT true in relation to goodwill?

(a) It is an intangible asset (b) It is fictitious asset
(c) It has a realisable value (d) None of the above

13. Operating Ratio is:

(a) Profitability Ratio (b) Activity Ratio
(c) Solvency Ratio (d) None of these

14. The liability of members in a company is :

(a) Limited (b) Unlimited
(c) Stable (d) Fluctuating

15. The average profit of a business over the last five years amounted to 60,000. The normal commercial yield on
capital invested in such a business is deemed to be 10% p.a. The net capital invested in the business is 5,00,000.
Amount of goodwill, if it is based on 3 years purchase of last 5 years super profits will be :
(a) 1,00.000 (b) 1,80,000
(c) 30.000 (d) 1,50,000

16. The term fixed assets include :

(a) Cash (b) Machinery
(c) Debtors (d) Prepaid Expenses

17. If equity share of 10 Rs. each is issued at 12 each, it is called:

(a) Issued at Par (b) Issued at Premium
(c) Issued at Discount (d) None of these

18. Partnership may be :

(a) Limited (b) Unlimited
(c) At will (d) All of these

19. The ideal liquid ratio is :

(a) 2 : 1 (b) 1 : 1
(c) 5 : 1 (d) 4 : 1

20. Stock turnover ratio comes under :

(a) Liquidity Ratio (b) Profitability Ratio
(c) Activity Ratio (d) None of these

21. Gain / loss on revaluation at the time of change in profit sharing ratio of existing partners is shared by
(i)______ whereas in case of admission of a partner it is shared by____(ii)_____.
(A) (i) Remaining Partners, (ii) All Partners.
(B) (i) All Partners, (ii) Old partners.
(C) (i) New Partner, (ii) All partner.
(D) (i) Sacrificing Partner, (ii) Incoming partner.
22. Calculate the amount of second & final call when Abhijit Ltd, issues Equity shares of 10 each at a premium of
40% payable on Application 3, On Allotment 5, On First Call 2.
(A) Second & final call 3.
(B) Second & final call 4.
(C) Second & final call 1.
(D) Second & final call 14.
23. Anish Ltd, issued a prospectus inviting applications for 2,000shares. Applications were received for 3,000 shares
and pro- rata allotment was made to the applicants of 2,400 shares. If Dhruv has been allotted 40 shares, how many
shares he must have applied for?
(A) 40
(B) 44
(C) 48
(D) 52
24. Ambrish Ltd offered 2,00,000 Equity Shares of 10 each, of these 1,98,000 shares were subscribed. The amount
was payable as 3 on application, 4 an allotment and balance on first call. If a shareholder holding 3,000 shares
has defaulted on first call, what is the amount of money received on first call?
(A) 9,000.
(B) 5,85,000.
(C) 5,91,000.
(D) 6,09,000.
25. What will be the correct sequence of events?
(i) Forfeiture of shares. (ii) Default on Calls.
(iii) Re-issue of shares. (iv) Amount transferred to capital reserve.
Options:
(A) (i), (iv), (ii), (iii)
(B) (ii), (iv), (i), (iii)
(C) (ii), (i), (iii), (iv)
(D) (iii), (iv), (i) (ii)
26. Arun and Vijay are partners in a firm sharing profits and losses in the ratio of 5:1.
Balance Sheet (Extract)
Liabilities Assets
Machinery 40,000
If the value of machinery reflected in the balance sheet is overvalued by 33 %, find out the value of Machinery
to be shown in the new Balance Sheet:
(A) 44,000
(B) 48,000
(C) 32,000
(D) 30,000
27. Which of the following is true regarding Salary to a partner when the firm maintains fluctuating capital accounts?
(A) Debit Partner’s Loan A/c and Credit P & L Appropriation A/c.
(B) Debit P & L A/c and Credit Partner’s Capital A/c.
(C) Debit P & L Appropriation A/c and Credit Partner’s Current A/c.
(D) Debit P & L Appropriation A/c and Credit Partner’s Capital A/c.
28. At the time of reconstitution of a partnership firm, recording of an unrecorded liability will lead to:
(A) Gain to the existing partners
(B) Loss to the existing partners
(C) Neither gain nor loss to the existing partners
(D) None of the above
29. E, F and G are partners sharing profits in the ratio of 3:3:2. According to the partnership agreement, G is to get a
Minimum amount of 80,000 as his share of profits every year and any deficiency on this account is to be
personally borne by E. The net profit for the year ended 31st March 2021 amounted to 3,12 ,000.
Calculate the amount of deficiency to be borne by E?
(A) 1,000
(B) 4,000
(C) 8,000
(D) 2,000
30. At the time of admission of a partner, what will be the effect of the following information?
Balance in Workmen compensation reserve 40,000. Claim for workmen compensation 45,000.
(A) 45,000 Debited to the Partner’s capital Accounts.
(B) 40,000 Debited to Revaluation Account.
(C) 5,000 Debited to Revaluation Account.
(D) 5,000 Credited to Revaluation Account.
31. Asha and Nisha are partner’s sharing profits in the ratio of 2:1. Kashish was admitted for 1/4 share of which
1/8 was gifted by Asha. The remaining was contributed by Nisha. Goodwill of the firm is valued at 40,000.
How much amount for goodwill will be credited to Nisha’s Capital account?
(A) 2,500.
(B) 5,000.
(C) 20,000.
(D) 40,000.
32. At the time of admission of new partner Vasu, Old partners Paresh and Prabhav had debtors of 6,20,000 and a
provision for doubtful debts of 20,000 in their books. As per terms of admission, assets were revalued, and it was
found that debtors worth 15,000 had turned bad and hence should be written off. Which journal entry reflects the
correct accounting treatment of the above situation.
(A) Bad Debts A/c Dr.
To Sundry Debtors
Provision for Doubtful Debts A/c Dr.
To Bad Debts A/c
15,000
15,000
15,000
15,000
(B) Bad Debt A/c Dr.
To Sundry Debtors
Revaluation A/c Dr.
To Provision for Doubtful Debts A/c
15,000
15,000
15,000
15,000
(C) Revaluation A/c Dr.
To Sundry Debtors A/c
15,000
15,000
(D) Bad Debt A/c Dr.
To Revaluation A/c
15,000
15,000
33. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R)
Assertion (A): Transfer to reserves is shown in P & L AppropriationA/c.
Reason (R): Reserves are charge against the profits.
In the context of the above statements, which one of the following is correct?
Codes:
(A) (A) is correct, but (R) is wrong.
(B) Both (A) and (R) are correct.
(C) (A) is wrong, but (R) is correct.
(D) Both (A) and (R) are wrong.
34. Anubhav, Shagun and Pulkit are partners in a firm sharing profits and losses in the ratio of 2:2:1. On 1st April 2021,
they decided to change their profit-sharing ratio to 5:3:2. On that date, debit balance of Profit & Loss A/c 30,000
appeared in the balance sheet and partners decided to pass an adjusting entry for it.
Which of the under mentioned options reflect correct treatment for the above treatment?
(A) Shagun's capital account will be debited by 3,000 and Anubhav’s capital account credited by 3,000
(B) Pulkit's capital account will be credited by 3,000 and Shagun's capital account will be credited by 3,000
(C) Shagun's capital account will be debited by 30,000 and Anubhav’s capital account credited by 30,000
(D) Shagun's capital account will be debited by 3,000 and Anubhav’s and Pulkit’s capital account credited by
2,000 and 1,000 respectively.
35. A, B and C are partners, their partnership deed provides for interest on drawings at 8% per annum. B withdrew a
fixed amount in the middle of every month and his interest on drawings amounted to 4,800 at the end of the year.
What was the amount of his monthly drawings?
(A) 10,000.
(B) 5,000.
(C) 1,20,000.
(D) 48,000.
36. Abhay and Baldwin are partners sharing profit in the ratio 3:1. On 31st March 2021, firm’s net profit is 1,25,000.
The partnership deed provided interest on capital to Abhay and Baldwin 15,000 & 10,000 respectively and
Interest on drawings for the year amounted to 6000 from Abhay and 4000 from Baldwin. Abhay is
also entitled to commission @10% on net divisible profits. Calculate profit to be transferred to Partners Capital
A/c’s.
(A) 1,00,000
(B) 1,10,000
(C) 1,07,000
(D) 90,000
37. Which of the following are included in traditional classification of ratios?
(i) Liquidity Ratios.
(ii) Statement of Profit and loss Ratios.
(iii) Balance Sheet Ratios.
(iv) Profitability Ratios.
(v) Composite Ratios.
(vi) Solvency Ratios.
(A) (ii), (iii) and (v)
(B) (i), (iv) and (vi)
(C) (i), (ii) and (vi)
(D) All (i), (ii), (iii), (iv), (v), (vi)
38. The following groups of ratios primarily measure risk:
(A) solvency, activity, and profitability
(B) liquidity, efficiency, and solvency
(C) liquidity, activity, and profitability
(D) liquidity, solvency, and profitability
39. Which one of the following is correct?
(i) A ratio is an arithmetical relationship of one number to another number.
(ii) Liquid ratio is also known as acid test ratio.
(iii) Ideally accepted current ratio is 1: 1.
(iv) Debt equity ratio is the relationship between outsider’s funds and shareholders’ funds.
In the context of the above two statements, which of the following options is correct?
(A) All (i), (ii), (iii) and (iv) are correct.
(B) Only (i), (ii) and (iv) are correct.
(C) Only (ii), (iii) and (iv) are correct.
(D) Only (ii) and (iv) are correct.
40.For which of the following situations, the old profit sharing ratio of partners is used at the time of admission of a
new partner?
a. When new partner brings only a part of his share of goodwill.
b. When new partner is not able to bring his share of goodwill.
c. When, at the time of admission, goodwill already appears in the balance sheet.
d. When new partner brings his share of goodwill in cash.