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Mock Test Paper - Series I: December, 2024
Date of Paper: 20th December, 2024
Time of Paper: 10.30 A.M. to 1.30 P.M.

FOUNDATION COURSE
PAPER – 1: ACCOUNTING
Question No. 1 is compulsory.
Answer any four questions from the remaining five questions.
Wherever necessary, suitable assumptions should be made and disclosed
by way of note forming part of the answer.
Working Notes should form part of the answer.
(Time allowed: 3 Hours) (100 Marks)
1. (a) State with reasons whether the following statements are True or False:
(i) A claim that an enterprise is pursuing through legal process, where
the outcome is uncertain, is a contingent liability.
(ii) If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(iii) Stock at the end, if appears in the trial balance, is taken only to the
Balance Sheet.
(iv) Re-issue of forfeited shares is allotment of shares but not a sale.
(v) Both revenue and capital nature transactions are recorded in the
Receipts and Payments Account.
(vi) Since company has existence independent of its members, it
continues to be in existence despite the death, insolvency or
change of members. (6 Statements x 2 Marks = 12 Marks)
(b) Distinguish between Money Measurement concept and Matching
concept. (4 Marks)
(c) The following are the details of the spare parts of a Chemical Mill:
1-1-2024 Opening Inventory Nil
1-1-2024 Purchases 100 units @ ` 300 per unit
15-1-2024 Issued for consumption 50 units
1-2-2024 Purchases 200 units @ ` 400 per unit
15-2-2024 Issued for consumption 100 units
20-2-2024 Issued for consumption 100 units
Find out the value of Inventory as on 31.3.2024, if the company follows
Weighted Average Method. (4 Marks)
(12+4+4 =20 Marks)

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2. (a) Before preparation of the trial balance, the following errors were found
in the books of Saraswat & Sons. Give the necessary entries to correct
them.
(i) Furniture purchased for office use amounting to ` 20,000 has been
entered in the purchase day book.
(ii) An amount of ` 3,000 due from Satyam, which had been written off
as bad debts in the previous year, recovered in the current year,
and had been posted to the personal Account of Satyam.
(iii) Minor Repairs made to the building amounting to ` 18,500 were
debited to the Building Account
(iv) Goods purchased from Ram Singh amounting to ` 18,000 have
remained unrecorded so far.
(v) College fees of proprietor's son, ` 15,000 debited to the Audit fees
Account.
(vi) Receipt of ` 4,500 from Kanika credited to the Anita.
(vii) Goods amounting to ` 8,900 had been returned by a customer and
were taken into inventory, but no entry was made in the books.
(viii) ` 7,500 paid for wages to workmen for making office furniture had
been charged to wages account.
(ix) Salary paid to a clerk ` 18,000 has been debited to his personal
account.
(x) A purchase of goods from Raghav amounting to ` 20,000 has been
wrongly entered through the sales book. (10 Marks)
(b) S Chand & Associates purchased a machine for ` 3,00,000 on 1.1.2021
Another machine costing `4,50,000 was purchased on 1.7.2022. On
31.12.2023 the machine purchased on 1.1.2021 was sold for `1,50,000.
The company provides depreciation at 15% on Written Down Value
Method. The company closes its accounts on 31st December every year.
Prepare – (i) Machinery Account, (ii) Machinery Disposal Account and
(iii) Provision for Depreciation Account. (10 Marks)
(10 +10 = 20 Marks)
3. (a) P, Q, R and S had been carrying on business in partnership sharing
profits & losses in the ratio of 4:3:2:1. They decided to dissolve the
partnership on the basis of following Balance Sheet as on 30th April,
2024:
Liabilities Amount Assets Amount (`)
(`)
Capital Accounts Land & building 2,46,000
P 2,16,000 Furniture & fixtures 65,000
Q 1,44,000 3,60,000 Stock 1,00,000
Debtors 72,500
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Cash in hand 15,500
Sundry creditors 36,000 Capital overdrawn:
Mortgage loan 1,10,000 R 1,000
S 6,000 7,000
5,06,000 5,06,000
(i) The assets were realized as under: `
Land & building 2,30,000
Furniture & fixtures 42,000
Stock 72,000
Debtors 65,000
(ii) Expenses of dissolution amounted to ` 7,800.
(iii) Further creditors of ` 18,000 had to be met.
(iv) R became insolvent and nothing was realized from his private
estate.
Applying the principles laid down in Garner Vs. Murray, prepare the
Realisation Account, Partners’ Capital Accounts and Cash Account.
(12 Marks)
(b) Mr. Dilip furnishes the following trial balance and some other information:
Trial Balance as on 31st March, 2024
Particulars ` `
Capital 19,50,000
Purchases and Sales 12,90,000 29,10,000
Opening Inventory 3,30,000
Freights Inward 1,20,000
Salaries 6,30,000
Administration Expenses 4,50,000
Furniture 10,50,000
Trade receivables and Trade payables 6,30,000 5,70,000
Returns 60,000 36,000
Discount allowed and Received 57,000 27,000
Bad Debts 15,000
Investments in Government Securities 3,00,000
Cash in Hand and Cash at Bank 5,67,000
Input CGST 30,000
Input SGST 30,000
Output CGST 24,000
Output SGST 24,000

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Output IGST 18,000
55,59,000 55,59,000
Additional information
(i) Inventory as on 31st march,2024 was ` 5,40,000.
(ii) Furniture is depreciated at 15% per annum.
Prepare Trading Account, Profit and Loss Account and Balance Sheet
as on 31st March, 2024 of Mr. Dilip. (8 Marks)
(12+8 = 20 Marks)
4 (a) New State Society showed the following position on 31st March, 2023:
Balance Sheet as on 31st March, 2023
Liabilities ` Assets `
Capital fund 15,86,000 Electrical fittings 3,00,000
Expenses payable 14,000 Furniture 1,00,000
Books 8,00,000
Investment in 3,00,000
securities
Cash at bank 50,000
Cash in hand 50,000
16,00,000 16,00,000
The receipts and payment account for the year ended on 31st March,
2024 is given below:
` `
To Balance b/d By Electric charges 14,400
Cash at bank 50,000 By Postage and stationary 10,000
Cash in hand 50,000 1,00,000 By Telephone charges 10,000
To Entrance fee 60,000 By Books purchased 1,20,000
To Membership subscription By Outstanding expenses
4,00,000 14,000
paid
To Sale proceeds of old By Rent
3,000 1,76,000
papers
To Hire of lecture hall By Investment in
40,000 80,000
securities
To Interest on securities 16,000 By Salaries 1,32,000
By Balance c/d
Cash at bank 40,000
Cash in hand 22,600
6,19,000 6,19,000

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You are required to prepare Income and Expenditure account for the
year ended 31st March, 2024 after making the following adjustments:
Membership subscription included ` 20,000 received in advance.
Provide for outstanding rent ` 8,000 and salaries ` 6,000.
Books to be depreciated @ 10% per annum including additions. The
additions to the books were made on 01.04.2023. Electrical fittings and
furniture are also to be depreciated @ 10% per annum.
60% of the entrance fees is to be capitalized.
Interest on securities is to be calculated @ 15% p.a. including purchases
made on 1.10.2023 for ` 80,000. (8 Marks)
(b) The following is the Balance Sheet of M/s. Krishna Bros as at
31st March, 2024, they share profit and losses equally:
Balance Sheet as at 31st March, 2024
Liabilities ` Assets `
Capital Amit 24,600 Machinery 30,000
Lalit 24,600 Furniture 16,800
Sumit 27,000 Fixture 12,600
General Reserve 9,000 Cash 9,000
Trade payables 14,100 Inventories 5,700
Trade receivables 27,000
Less: Provision for 1,800 25,200
Doubtful debts

99,300 99,300
Sumit died on 1st April, 2024 and the following agreement was to be put
into effect.
(a) Assets were to be revalued: Machinery to ` 35,100; Furniture to
` 13,800; Inventory to ` 4,500.
(b) Goodwill was valued at ` 18,000 and was to be credited with his
share, without using a Goodwill Account.
(c) ` 6,000 is to be paid to the executors of the dead partner on 5th
April, 2024.
(d) After death of Sumit, Amit and Lalit shares the profit equally.
You are required to prepare:
(i) Journal Entry for Goodwill adjustment.
(ii) Revaluation Account, Capital Accounts of the partners and Balance
Sheet after the death of Sumit. (12 Marks)
(8 +12 = 20 Marks)

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5. (a) Ali draws a bill for `45,000 on Akbar on 15th April, 2024 for 3 months,
which is returned by Akbar to Ali after accepting the same. Ali gets it
discounted with the bank for ` 44,100 on 18th April, 2024 and remits one-
third amount to Akbar. On the due date Ali fails to remit the amount due
to Akbar, but he accepts bill of ` 52,500 for 3 months, which Akbar
discounts for `51,300 and remits ` 8,475 to Ali.
Pass necessary Journal entries for the above transactions in the books
of Ali. (5 Marks)
(b) Varun does not maintain proper books of accounts. However, he
maintains a record of his bank transactions and also is able to give the
following information from which you are requested to prepare trading
and profit and loss account for the year 2024:
1.1.2024 31.12.2024
` `
Stock 50,000 62,500
Fixed Assets 7,500 9,000
Details of his bank transactions were as follows:
`
Sale of fixed assets (book value ` 2,500) 1,750
Expenses paid 49,250
Purchase of fixed assets 5,000
No cash transactions took place during the year. Goods are sold at cost
plus 25%. Cost of goods sold was ` 2,60,000. (5 Marks)
(c) Following is the extract of the Balance Sheet of Substance Ltd. as at
31st March, 2024
Authorised capital: `
45,000 12% Preference shares of ` 10 each 4,50,000
4,50,000 Equity shares of ` 10 each 45,00,000
49,50,000
Issued and Subscribed capital:
36,000 12% Preference shares of ` 10 each fully paid 3,60,000
4,05,000 Equity shares of ` 10 each, ` 8 paid up 32,40,000
Reserves and surplus:
General Reserve 5,40,000
Capital Reserve (profit realized on sale of plant) 1,80,000
Securities premium 1,12,500
Profit and Loss Account 9,00,000
On 1st April, 2024, the Company has made final call @ ` 2 each on
4,05,000 equity shares. The call money was received by 20th April, 2024.
Thereafter, the company decided to capitalize its reserves by way of
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bonus at the rate of one share for every four shares held. Company
decides to use Capital Reserve for bonus issue as it has been realized
in cash.
Show necessary journal entries in the books of the company and prepare
the extract of the Balance Sheet as on 30th April, 2024 after bonus issue.
(10 Marks)
(5+5+10=20 Marks)
6. (a) X Limited issued 2,00,000 Equity shares of, 10 each at a premium of
10%, payable ` 2 on application; ` 4 on allotment (including premium);
` 2 on first call and balance on the final call. All the shares were fully
subscribed. Mr. P who held 20,000 shares paid full remaining amount on
first call itself. The final call which was made after 4 months from the first
call was fully paid except a shareholder having 2,000 shares and one
another shareholder having 1,000 shares. They paid their due amount
after 3 months and 4 months respectively along with interest on calls in
arrears, Company also paid interest on calls in advance to Mr. P. The
Company maintains Calls in Arrear and Calls in Advance A/c. Give
journal entries to record these transactions. Show workings of Interest
calculation. (15 Marks)
(b) From the following particulars, prepare a Bank Reconciliation Statement
on 31st March 2024·
Particulars Amount (`)
Bank balance as per Pass Book 75,00,000
Bills discounted dishonored not recorded in Cash Book 37,50,000
Cheque received entered twice in Cash Book 75,000
Bank charges entered twice in Cash Book 15,000
Insurance premium paid directly by Bank under-
standing instruction 4,50,000
Cheque issued but not presented to Bank for payment 37,50,000
Cheque received, but not sent to Bank 84,00,000
Cheque deposited in Bank, but no entry passed in the 37,50,000
Cash Book
Credit side of the Bank column cast short 15,000
OR
(c) Explain in brief objective and advantages of setting Accounting
Standards. (5 Marks)
(15 + 5 = 20 Marks)

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