Accounts Class - XII (CBSE) 
Sample Paper - 1997- Set - 3
(Solved)

PART 'A'
(Accounting III)

Q) Give any three characteristics of partnership. (Marks 3)
Ans) Three characteristics of partnership :
1) There must be an agreement entered into by one or more persons.
2) There must be lawful business.
3) Business must be carried on by all or any of them acting for all.

Q) A, B and C were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. Their fixed capitals were Rs. 10,00,000, Rs. 2,00,000 and Rs. 3,00,0000 respectively. For the year 1996 interest on capital was credited to them @ 10% instead of 9% p.a.. Showing your wokring notes clearly pass the necessary adjusting journal entry.
Ans) Working Notes :
Statement showing adjustment
Capitals..................................1000000              200000             300000
Interest credited @10%.............100000                20000              30000
Interest to be credited @ 9%          9000               18000             27000
Partners over -
Credited with                              1000                   2000              3000
Thus, the profit will increase
by 6000 divisible as 4 : 3 : 3       2400                  1800              1800
         Adjustment                                   1400(Cr)            200(Dr)        1200(Dr.)

Adjusting Journal Entry

Q) X, Y and Z were partners in a firm sharing profits in 4 : 3 : 2 ratio. They had a joint life policy of Rs. 1,80,000 on which the annual premium paid was considered as an expense. On 1st January, 1996 X died. On that date there was a debit balance of Rs. 45,000 in their profit and loss account. Pass the necessary journal entries on X's death. (Marks 4)
Ans5)

Journal

Q) L, M and O were partners in a firm sharing profits in 1 : 3 : 2 ratio. L retired and the new profit sharing ratio between M and O was 1 : 2. On L's retirement the goodwill of the firm was valued at Rs. 1,20,000. Pass necessary journal entry for the treatment of goodwill without opening goodwill account on L's retirement.
(Marks 4)
Ans) Working Notes :
L's share of goodwill = 1/6 x 120000 => 20000
Gain of M = M's new share - M's old share
               = 1/3 - 3/6 = -1/6 (loss)
Gain of O = 2/3 - 2/6 = 1/3 (Gain)
Thus, M will be compensated by O to the extent of M's loss (1/6)
O's share of goodwill to be given to M = 1/6 x 120000 = 20000
Thus, the entry is,

Journal

Q ) The following is the position of Current Assets and Current Liabilities of X Ltd.

The Company incurred a loss of Rs. 50,000 during the year. Calculate Cash from Operations.
Ans) Calculation of cash from operations:

Thus cash loss from operations = -48000

Q) "Comparison with the help of ratios is not possible if different firms follow different accounting policies." Comment. (Marks 4)
Ans) Comparison with the help of ratios is not possible if different firms follow different accounting policies. 
For example one firm may provide depreciation on straight line method whereas the other firm may adopt the written down value method. Similarly, the method of valuation of closing stock may also differ from one firm to another. Thus, the results obtained from the comparison of financial statements of such firms may give misleading picture.

Q) A company has a loan of Rs. 30,00,000 as part of its capital employed. Interest payable on the loan is 12% and the ROI of the company is 25%. The rate of income tax is 40%. What is the gain to the shareholders due to the loan raised by the company? (Marks 5)
Ans) Return on Investment = Profit before Interest, tax x 100
                                                 Capital Employed
Profit earned by company on the loan = 3000000 x 25/100 = 750000
Less: Interest on loan             360000
(12/100 x 3000000)                   ______
Net Profit after interest               390000
Less: Tax (40/100 x 390000)      156000
Net Profit after tax                     234000
Thus, gain to shareholder = 234000