COMMERCE ZONE

S.C.F. 77, SEC-10, PANCHKULA

Mock test - 2
TIME 3 HOURS MAX. MARKS 80

Q.1 A and B are partners sharing profits and losses in the ratio of 5: 4. C is admitted for 1/5th share. 1
A and B decide to share equally in future. Sacrificing ratio will be:
a) 5:4 b) 2:7 c) 7:2 d) 1:1
Q.2 Assertion (A): Partners are principals but not the agents of other partners. 1
Reason (R): Partners are principals as well as agents of other partners.
In the context of the above two statements, which of the following is correct:
a) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
b) Both (A) and (R) are true and (R) is the correct explanation of (A).
c) Both (A) and (R) are false. d) (A) is false, but (R) is true.
Q.3 For what purpose securities premium reserve account cannot be utilized? 1
I Amortization of preliminary expenses ii Distribution of dividend
iii Issue of fully paid bonus shares iv Buy back of own shares
or
Zero Coupon Bonds are issued:
i At Zero Interest Rate ii With Specified Rate of Interest
iii Without Specified Rate of Interest iv None of These
Q.4 Sacrificing Ratio: 1
a) New Ratio - Old Ratio b) Old Ratio - New Ratio
c) Old Ratio - Gaining Ratio d) Gaining Ratio - Old Ratio
or
Which of the following statement is true?
a) All mirror cannot be admitted as a partner
b) A mirror can be admitted as a partner, only into the benefits of the partnership
c) a mirror can be admitted as a partner but his rights and liabilities are same of adult partner
d) none of the above
Q.5 Outensible partners are those who 1
a) do not contribute any capital but get some share of profit for lending their name to the business
b) contribute very less capital but get equal profit
c) do not contribute any capital and without having any interest in the business, lend their name to the
business
d) contribute maximum capital of the business
Q.6 The Principal amount of debentures will be repaid by the company either at the end of a specified period 1
or by instalments during the life time of the company. Such types of debentures are called:
i) Redeemable Debentures ii) Irredeemable Debentures
iii) Convertible Debentures iv) Bearer Debentures
or
Which of the following statements is false :
i A Company can issue redeemable debentures
ii A Company can issue debentures with voting rights
iii A Company can issue convertible debentures.
iv A Company can buy its own debentures and shares.
Q.7 Assertion (A): A company has perpetual succession. 1
Reason (R): Insolvency or death of a shareholder will not affect its existence.

In the context of the above two statements, which of the following is correct?

a) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
b) Both (A) and (R) are true and (R) is the correct explanation of (A).
c) Both (A) and (R) are false d) (A) is false, but (R) is true
Q.8 Retiring partner is compensated for parting with the firm's future profits in favour of remaining partners. The 1
remaining partners contribute to such compensation amount in:
(A) Gaining Ratio (B) Capital Ratio (C) Sacrificing Ratio D) Profit Sharing Ratio
or
The relation of partner with the firm is that of
a) An owner b) An agent c) And owner and an agent d) Manager
 COMMERCE ZONE
S.C.F. 77, SEC-10, PANCHKULA
Read the following hypothetical situation, answer question no. 9 and 10.

Ananya and Mukti are partners in a firm. On 1st April, 2020 their fixed Capitals were ₹6,00,000 and
₹4,00,000 respectively. On 1st January, 2021, Ananya granted a loan of ₹2,00,000 to the firm. Mukti had
allowed the firm to use her property for business for a monthly rent of ₹15,000. The partnership deed
provides that interest on capital will be allowed @ 8% p.a. and Mukti is to be allowed a salary of ₹10,000 per
month. The firm earned a profit of ₹63,000 for the year ended 31st March 2021 before any of the above
adjustment is made.
Based on the above information you are required to answer the following questions:
Q9 Interest on Ananya's Loan will be recorded in 1
a) Ananya's Current Account b) Ananya's Capital Account
c) Ananya's Loan Account d) Profit & Loss Appropriation Account
Q.10 Mukti's share of net loss will be: 1
a) Rs 24,000 b)Rs 64,000 c) Rs 1,60,000 d) Rs 60,000
Q.11 If a fixed amount is withdrawn by a partner on the first day of every month, interest on the total amount is 1
charged for………………. Months
a) 6 b) 6 ½ c) 5 ½ d) 12
Q.12 A Building was purchased for ₹9,00,000 and payment was made in ? 100 shares at 20% premium. 1
Securities Premium Reserve A/c will be ……………….
(A) Debited by ₹1,50,000 (B) Credited by ₹1,50,000
(C) Debited by ₹1,80,000 (D) Credited by ₹1,80,000
Q.13 Discount allowed on re-issue of forfeited shares is debited to : 1
(A) Share Capital A/c (B) Share forfeiture A/c
(C) Statement of Profit & Loss (D) General Reserve A/c
Q.14 Sacrificing ratio is used to distribute …………….. in case of admission of a partner : 1
a) Reserves b) Goodwill
c) Revaluation Profit d) Balance in Profit and Loss Account
Q.15 A and B are partners in a partnership firm without any agreement, A has withdrawn Rs 50,000 out of his 1
Capital as drawings. Interest on drawing may be charged from a by the firm
a) 5% per annum b) @ 6% per annum
C) 6% per month d) no interest can be charged
or
Sleeping partners are those who
a) take active part in the conduct of the business but provide no capital. However, salary is paid to
them
b) do not take any part in the conduct of the business but provide capital and share profits and
losses in the agreed ratio
c) take active part in the conduct of the business but provide no capital, however, share profits
and losses in the agreed ratio
d) do not take any part in the conduct of the business and contribute no capital. However, share
profits and losses in the agreed ratio
Q.16 In which condition a partnership firm is deemed to be dissolved? 1
(A) On a partner's admission (B) On retirement of a partner
(C) On expiry of the period of partnership (D) On loss in partnership
Q.17 Match the following items: 3
i Profit or Loss on Revaluation a Sacrificing Ratio
ii Retirement of a partner b Old Ratio
iii Increase in Liabilities c Loss
iv Admission of a partner d Gaining Ratio
Q.18 Fill in the missing figures in the following Accounts: 3
Profit and Loss Account
Dr. for the year ended 31.3.2014 Cr.
Particulars Amount Particulars Amount
To Manager’s Commission BY Profit for the year
10% of Rs …………… 6,000
To Net Profit transferred to
P & L Appropriation a/c
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S.C.F. 77, SEC-10, PANCHKULA
Profit and Loss Appropriation Account
Dr. for the year ended 31.3.2014 Cr.
Particulars Amount Particulars Amount
To Interest on Capitals @ 8% p.a.: By Profit and Loss a/c
X 12,000
Y 8,000
To Salary to Y
To Profit transferred to Capital
Accounts X 3/5 …………..
Y 2/5 10,000

Dr. Partner’s Capital Accounts Cr.

Particulars X Y Particulars X Y
To Balance c/d By Balance b/d
By Interest on Capital
By Salary
By P &L Appropriation a/c

or
A, B and C are partners in a firm. Their capital Accounts stood at Rs 8,00,000; Rs 6,00,00 and Rs 4,00,000
respectively on 1st April 2016. They shared profits and losses in the ratio of 3:2:1 respectively. Partners are
entitled to interest on capital @ 6% per annum and salary to B and C @ Rs 4,000 per month and Rs 6,000
per quarter respectively as per the provisions of Partnership deed.
B’s share of profit including interest on capital but excluding salary is guaranteed at a minimum of Rs 82,000
p.a. Any deficiency arising on that account shall be met by C. Profit for the year ended 31.3.2017 amounted
to Rs 3,12,000. Prepare Profit and Loss Appropriation Account for the year ended 31.3.2017.
Q.19 X Ltd secured a loan of Rs 8,00,000 from the Bank of Baroda by issuing 10,000; 9% Debentures of Rs 100 3
each as collateral security. How will you show the issue of such debentures in the Balance Sheet?

or
A Co. Forfeited a share of Rs.100 each, issued at 10% premium on which Rs.80(inc. premium) called up
and Rs.60(inc .premium) received. Company reissued share at Rs.85 fully paid up. Give Journal Entries.

Q.20 Ramesh ,Suresh and Mahesh share profits in the ratio of 3:2:1.Suresh dies on 31st March,2005.On this day, 3
the balance of their capital accounts were Rs.18,000,Rs.15,000and Rs.12,000 respectively. Goodwill was
valued at Rs.13,500 which is not to be taken into account in the books. On the basis of revaluation ,machine
and stock are reduced by Rs.2,400 and Rs.1,600 respectively. Provision made for Doubtful debts
Rs.320.Building and creditors were increased by Rs.2,100 and Rs.600.Prepare Suresh’s Capital and his
executor’s a/c

Q.21 X Ltd. has its share capital divided into shares of Rs 20 each. On 1st April, 2016 it granted 4,000 4
employees stock options at Rs 40, when the market price was Rs 90. The options were to be exercised.
The employees exercised their options for 3,000 shares only; the remaining options lapsed. The
company closes its books on 31st March every year.

Q.22 What Journal entries would be passed for the following transactions on the dissolution of a firm of partners A 4
and B:
(1) ‘Z’ an old customer whose account for Rs 10,000 was written off as bad in the previous year,
paid 70%.
(2) A agreed to takeover the firm’s goodwill (Not recorded in the books of a firm) at Rs 50,000.
(3) There was an old computer which had been written off completely from the books. It was estimated
to realise Rs 5,000. It is taken by B a partner at the estimated price less 30%.
(4) Investments costing Rs 20,000 (Comprising 1,000 shares), had been written off from the books.
These investments (shares) are valued @ Rs 15 each and dividend among the partners in their profit
sharing ratio.
 COMMERCE ZONE
S.C.F. 77, SEC-10, PANCHKULA
Q.23 Vani Limited invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of 10%. The 6
amounts were payable as under:
On Application and Allotment - ₹ 4 per share (including premium ₹ 1)
On first call - ₹ 4 per share
On second and final call - ₹ 3 per share
Applications for 1,50,000 shares were received and pro-rata allotment was made to all the applicants.
Excess application money was adjusted towards sums due on calls. Parth, a shareholder who had applied
for 600 shares did not pay the first call. His shares were forfeited. The second and final call was not yet
made. Half of the forfeited shares were reissued at ₹ 8 per share fully paid up.
Journalise the above transactions in the books of Vani Limited by opening calls in arrears and calls in
advance account wherever necessary.
OR
Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
(i) Vipin Ltd. forfeited 10,000 shares of ₹ 10 each issued at a premium of ₹ 1 per share, for non-payment of
Second and final call of ₹ 2 per share. Out of these, 60% of the shares were reissued at ₹ 7 per share
fully paid up.

(ii) Deepak Ltd. forfeited 800 shares of ₹ 10 each, ₹ 8 per share called up, for non-payment of first call of ₹ 3
Per share. All the forfeited shares were reissued for ₹ 12 per share fully paid.
Q.24 X and Y were partners in a firm sharing profits in 5:3 ratio. They admitted Z as a new partner for 1/3rd share 6
in the profits. Z was to contribute Rs. 20,000 as his capital. The Balance Sheet of X and Y on
1.4.2009 the date of Z's admission was as follows :
Liabilities Rs. Assets Rs.
Sundry Creditors 27,000 Land and Building 25,000
General Reserve 16,000 Plant and Machinery 30,000
Capitals : Stock 15,000
X 50,000 Debtors 20,000
Y 35,000 85,000 Less: Provision for 1,500 18,500
Doubtful Debts
Investments 20,000
Cash 19,500
1,28,000 1,28,000
Other terms agreed upon were :
(i) Goodwill of the firm was valued at Rs. 12,000.
(ii) Land and Building were to be valued at Rs. 35,000 and Plant and Machinery at Rs. 25,000.
(iii) The provision for doubtful debts was found to be in excess by Rs. 400.
(iv) A liability for Rs. 1,000 included in sundry creditors was not likely to arise.
(v) The capitals of the partners be adjusted on the basis of Z's contribution of capital in the firm.
(vi) Excess or shortfall if any to be transferred to current accounts.
Which values of life does Revaluation Account signify? Give Journal,
Prepare Revaluation A/c, Partner's Capital Accounts and the Balance sheet of the new firm.

K, P and R were partners in a firm sharing profits in the ratio of 3:1:1. On 1 st April 2012 their Balance Sheet
was as follow: Balance sheet of K, P and R as on 1 st April, 2012
Liabilities Amount Assets Amount
Creditors 1,20,000 Cash 70,000
Bills Payable 1,80,000 Debtors 2,00,000
General Reserve 1,20,000 Less: Provision 10,000 1,90,000
Capitals: Stock 2,20,000
K, 3,00,000 Furniture 1,20,000
P 2,80,000 Building 3,00,000
R 3,00,000 8,80,000 Land 4,00,000
13,00,000 13,00,000
On the above date R retired and the following was agreed:
i) Goodwill of the firm was valued at Rs 40,000
ii) Land was to be appreciated by 30% and building was to be depreciated by Rs 1,00,000
iii) Value of Furniture was to be reduced by Rs 20,000
iv) Bad debts reserve is to be increased to Rs 15,000
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S.C.F. 77, SEC-10, PANCHKULA
v) 10% of the amount payable to R was paid in cash and the balance was transferred to her Loan
Account
vi) Capitals of K and P will be in proportion to their new profit sharing ratio. The Surplus/deficit, if
any in their Capital Accounts will be adjusted through Current Accounts.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of K and P after R’s
Retirement.
25 Ram, Mohan and Sohan were partners sharing profits and losses in the ratio of 5:3:2. On 31.3.2014 6
their Balance Sheet was as under:
Liabilities Amount Assets Amount
Capitals: Lease hold 1,25,000
Ram 1,50,000 Patents 30,000
Mohan 1,25,000 Machinery 1,50,000
Sohan 75,000 3,50,000 Stock 1,90,000
Creditors 1,55,000 Cash at Bank 40,000
Workmen’s Compensation Reserve 30,000
5,35,000 5,35,000
Sohan died on 1.4.2014. It was agreed that:
a) Goodwill of the firm is to be valued at Rs 1,75,000
b) Machinery be valued at Rs 1,40,000; Patents at Rs 40,000; Leasehold at RS 1,50,000 on this date
c) For the purpose of calculating Sohan’s share in the profits of 2014-15, the profits should be taken
to have accrued on the same scale as in 2014-15 which were Rs 75,000.
d) Sohan mentioned in his will that the amount payable to his legal representatives should be used for
welfare of the society.
Prepare Revaluation Account and Sohan’s Capital Account. Suggest any two ways by which the
amount payable to Sohan’s legal representative may be utilized for welfare of the society.
26 Chiranjeevi limited issued 2000, 10% debentures of ₹ 100 each. Past the necessary journal entries for the 6
issue of debentures in the following cases.
a) When the debentures were issued at 10% premium, redeemable at 5% premium.
b) When debentures are issued at 5% discount, redeemable at 10% premium.
c) When the debentures were issued at par, redeemable at a premium of 10%

Part – B
Analysis of Financial Statement
27 The Balance Sheet provides information about financial position of an enterprise: 1
I Over a period of time Ii During a period of time
Iii For a period of time Iv At a point of time
or
Which of the following transactions will improve the quick ratio?
I Sale of goods for cash Ii Sale of goods on credit
Iii Issue of new shares for cash Iv All of the Above

Q.28 A Company's liquid assets are Rs 10,00,000 and its current liabilities are Rs 8,00,000. Subsequently, it 1
purchased goods for Rs 1,00,000 on credit. Quick ratio will be....
I 1.11:1 Ii 1.22:1 Iii 1.38:1 Iv 1.25: 1

Q.29 Which of the following is source of cash? 1

A) Cash deposited into Bank B) Cash withdrawn from Bank
C) Sale of Goods costing Rs 10,000 for ₹8,000 D) Sale of marketable securities for cash
Q.30 While calculating operating profit which will be added to net profit: 1
A Preliminary Expenses Written off B Depreciation
C Loss on Sale of Asset D All of the Above
Q.31 Under what heads the following items on the Assets side of the Balance Sheet of a Co. will be presented: 3

1 Sundry Debtors 5 Advance recoverable in cash

2 Patents and Trade Marks 6 Prepaid Insurance
3 Shares in D.C.M. Ltd 7 Work in Progress
4 Bills Receivable
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S.C.F. 77, SEC-10, PANCHKULA
Q.32 Calculate the amount of opening trade receivables and closing trade receivables from the following figures: 3
Trade receivable Turnover ratio 4 times, Cost of revenue from operation
Rs.3,20,000 Gross Profit ratio 20%,Closing trade receivable were
Rs.20,000 more than at the beginning, Cash revenue from operation being
1/3rd or 33.33% of credit revenue from operation.

Q.33 From the following information, prepare a Common-Size income statement for the year ended 31st Mar,2015 4
Particulars Amount
Revenue From Operations 2,00,000
Other Income 15,000
Total Revenue 2,15,000
Expenses :
Cost of Material Consumed 1,10,000
Other Expenses 5,000
Total Expenses 1,15,000
Provision for Tax 40,000
or
Prepare the comparative Income Statement from the following information
and identify the value involved in it
Particulars 2013 2014
Revenue From Operation 16,50,000 15,00,000
Purchase of Stock in Trade 13,20,000 12,00,000
Office & Selling Expenses 90,000 75,000
Interest Paid 60,000 60,000
Tax 50% 50%
Q.34 From the following Balance sheets of B.C.R Ltd. as on 31.3.2010 and 31.3.2011, prepare a Cash Flow 6
Statement:
Particulars 31.3.2013 31.3.2014
1 EQUITY AND LIABILITIES
(1) Shareholder’ funds
Share Capital 5,00,000 7,00,000
Reserve and Surplus:
Statement of Profit and Loss 2,00,000 3,50,000
(2) Non-Current Liabilities
Bank Loan 1,00,000 85,000
(3) Current Liabilities
Trade Payables (Creditors) 55,000 52,000
Short term Provision:
Proposed Dividend 30,000 15,000
Provision for Tax 50,000 70,000
Total 9,35,000 12,72,000
II ASSETS
1. Non Current assets:
Fixed Assets:
Tangible Assets : Equipment 5,00,000 5,00,000
Intangible Assets : Goodwill 1,00,000 1,05,000
Investments ---------- 90,000
2. Current Assets:
Trade Receivables(Debtors) 80,000 1,47,000
Inventories (Stock) 55,000 1,30,000
Cash and Cash Equivalent : Cash 2,00,000 3,00,000
Total 9,35,000 12,72,000
Additional Information:
During the year Equipment costing Rs 1,00,000 was purchased. Loss on sale of Equipment amounted to
Rs 12,000. Rs 18,000 depreciation was charged on Equipment. Identify the value involved in preparation of
cash flow statement.