Class 12 Accountancy Practice Paper Set 1 with Solutions

Apna CareerApna CareerApna Career

Class 12 Accountancy · Practice Paper SET-1 with Solutions

CBSE PRACTICE PAPER 2026–27 · ACCOUNTANCY (SET – 1)

www.careerinformationportal.in

CLASS : XIISUBJECT : ACCOUNTANCY (055)ROLL NO. : ..................

Time : 3 Hrs.Session : 2026–27 · Full Syllabus (Part A + Part B)M.M. : 80

General Instructions

1. This question paper contains 29 questions. All questions are compulsory. (Theory : 80 marks; Project : 20 marks is assessed separately.)
2. Section A : Q. 1 to 14 are MCQs and Q. 15–16 are Assertion–Reason questions, 1 mark each (16 marks).
3. Section B : Q. 17 to 20 are short answer questions of 3 marks each (12 marks).
4. Section C : Q. 21 to 23 are short answer questions of 4 marks each (12 marks).
5. Section D : Q. 24 to 27 are long answer questions of 6 marks each (24 marks).
6. Section E : Q. 28 and Q. 29 are long answer questions of 8 marks each (16 marks).
7. Paper covers Part A (Partnership Firms and Companies) and Part B (Analysis of Financial Statements, Ratios and Cash Flow Statement). Paper follows the typology 40% remembering / understanding, 30% applying, 30% analysing / evaluating.
8. Internal choice (OR) is provided in some questions. Show all working notes clearly. Narrations in journal entries are not required.
9. Detailed Answer Key & Solutions with marking scheme are given at the end of this paper.

SECTION A (16 × 1 = 16 Marks)

Q. 1 to Q. 14 : Multiple Choice Questions (choose the correct option)

1. In the absence of a partnership deed, a partner is entitled to

(a) salary for the work done(b) commission on firm’s profit(c) interest on loan advanced to the firm at 6% p.a.(d) interest on capital at 6% p.a.

2. Under the fixed capital method, the salary of a partner is credited to the partner’s

(a) Current Account(b) Capital Account(c) Drawings Account(d) Profit and Loss Account

3. Average profit of a firm is ₹ 90,000, the normal rate of return is 10% and the capital employed is ₹ 7,00,000. Goodwill by capitalisation of average profit is

(a) ₹ 9,00,000(b) ₹ 1,00,000(c) ₹ 1,50,000(d) ₹ 2,00,000

4. A, B and C share profits in the ratio 1/2 : 1/3 : 1/6. C retires and A and B decide to share future profits in the ratio 3 : 2. Their gaining ratio is

(a) 1 : 1(b) 3 : 2(c) 2 : 3(d) 5 : 3

5. On the death of a partner, his share of profit up to the date of death is

(a) debited to deceased partner’s Capital A/c and credited to Profit and Loss Suspense A/c(b) debited to Revaluation A/c and credited to deceased partner’s Capital A/c(c) debited to Profit and Loss Suspense A/c and credited to deceased partner’s Capital A/c(d) debited to Realisation A/c and credited to remaining partners’ Capital A/cs

6. Securities Premium Reserve can NOT be used for

(a) issuing fully paid bonus shares(b) writing off preliminary expenses(c) writing off discount on issue of debentures(d) payment of dividend to shareholders

7. A shareholder holding 100 shares of ₹ 10 each (₹ 7 called up) paid only ₹ 2 per share on application and did not pay the remaining amounts. On forfeiture the amount credited to Share Forfeiture A/c is

(a) ₹ 200(b) ₹ 700(c) ₹ 500(d) ₹ 300

8. ₹ 10 shares, on which ₹ 6 per share had been received, were forfeited and reissued as fully paid at ₹ 8 per share. The amount transferred to Capital Reserve per share is

(a) ₹ 2(b) ₹ 4(c) ₹ 6(d) ₹ 8

9. If debentures are issued at a discount of 5% and are redeemable at a premium of 10%, the loss on issue of debentures is

(a) 10% of nominal value(b) 5% of nominal value(c) 15% of nominal value(d) 5% of issue price

10. Current ratio of a company is 3 : 1 and its working capital is ₹ 4,00,000. The current liabilities are

(a) ₹ 2,00,000(b) ₹ 1,33,333(c) ₹ 4,00,000(d) ₹ 6,00,000

11. Which of the following is a financing activity as per AS-3?

(a) Purchase of machinery(b) Sale of non-current investments(c) Interest received on investments(d) Issue of debentures for cash

12. Cost of revenue from operations is ₹ 6,00,000 and the average inventory is ₹ 1,50,000. Inventory turnover ratio is

(a) 2.5 times(b) 4 times(c) 6 times(d) 3 times

13. In a common-size Balance Sheet each item is expressed as a percentage of

(a) Revenue from operations(b) Share capital(c) Total of the Balance Sheet(d) the previous year’s figure

14. Average profit of a firm is ₹ 1,40,000, normal profit is ₹ 1,10,000. Goodwill at 3 years’ purchase of super profit is

(a) ₹ 90,000(b) ₹ 1,20,000(c) ₹ 3,30,000(d) ₹ 4,20,000

Q. 15 and Q. 16 : Assertion–Reason Questions

Options: (a) Both A and R are true and R is the correct explanation of A. (b) Both A and R are true but R is not the correct explanation of A. (c) A is true but R is false. (d) A is false but R is true.

15. Assertion (A): In the absence of a partnership deed, no interest is charged on partners’ drawings.
Reason (R): The Indian Partnership Act, 1932 contains no provision for interest on drawings.

16. Assertion (A): Dividend paid by a company is shown under financing activities in the Cash Flow Statement.
Reason (R): Dividend paid is an operating activity because it is paid out of profit earned from operations.

SECTION B (4 × 3 = 12 Marks) — Short Answer Questions

17. A, B and C share profits in the ratio 5 : 3 : 2. From 1^st April 2026 they decide to share profits in the ratio 2 : 3 : 5. On that date, Goodwill of the firm (not appearing in books) was valued at ₹ 60,000, General Reserve was ₹ 50,000 and the Profit and Loss A/c showed a debit balance of ₹ 20,000. Pass the necessary journal entries.(3)

18. A and B are partners sharing profits 3 : 2 with capitals of ₹ 3,00,000 and ₹ 2,00,000 respectively. C is admitted for 1/4 share (taken from A and B in their old ratio) and brings ₹ 2,50,000 as his capital. C does not bring any amount for goodwill. Calculate the value of goodwill of the firm and pass the journal entry for C’s share of goodwill.(3)

19. Mehta Ltd. issued shares of ₹ 10 each at a premium of ₹ 2 per share, payable ₹ 3 on application, ₹ 5 on allotment (including premium) and the balance on first and final call. Ramesh, holding 400 shares, failed to pay the first and final call and his shares were forfeited. Out of these, 300 shares were reissued at ₹ 9 per share as fully paid. Pass the journal entries for forfeiture, reissue and transfer to Capital Reserve.(3)

20. X Ltd. issued 5,000, 9% debentures of ₹ 100 each at a discount of 5%, redeemable at a premium of 10%. Pass the journal entry for the issue and state how the loss on issue of debentures will be shown in the Balance Sheet.
Also pass the entry if ₹ 2,00,000 debentures are issued to a bank as collateral security for a loan of ₹ 1,50,000.(3)

SECTION C (3 × 4 = 12 Marks) — Short Answer Questions

21. Prepare a Comparative Statement of Profit and Loss of Sharma Ltd. for the years ended 31^st March 2025 and 2026. Tax rate is 30%.

Particulars	2024–25 (₹)	2025–26 (₹)
Revenue from operations	10,00,000	12,00,000
Other income	50,000	70,000
Cost of materials consumed	5,00,000	6,00,000
Other expenses	2,00,000	2,60,000

(4)

OR

Prepare a Common-size Statement of Profit and Loss of the above company for the two years.

22. From the following information calculate Cash Flow from Investing Activities: (i) Net block of fixed assets : 1^st April 2025 ₹ 12,00,000, 31^st March 2026 ₹ 14,50,000; (ii) depreciation charged ₹ 1,50,000; (iii) a machine with book value ₹ 60,000 was sold at a loss of ₹ 10,000; (iv) non-current investments of ₹ 1,00,000 were purchased; (v) interest received ₹ 20,000 and dividend received ₹ 10,000.(4)

OR

Net profit before tax of a company is ₹ 3,00,000 after considering: depreciation ₹ 40,000; interest on debentures ₹ 12,000; loss on sale of machinery ₹ 8,000; profit on sale of investments ₹ 15,000; dividend received ₹ 5,000; goodwill written off ₹ 20,000. Calculate Cash Flow from Operating Activities before changes in working capital.

23. The current ratio of Zenith Ltd. is 2.5 : 1, quick ratio is 1.5 : 1 and working capital is ₹ 3,00,000. Inventory turnover ratio is 6 times (assume closing inventory = average inventory) and the gross profit ratio is 25%. There is no prepaid expense. Calculate : (i) Current liabilities and current assets, (ii) Inventory, (iii) Cost of revenue from operations, (iv) Revenue from operations.(4)

SECTION D (4 × 6 = 24 Marks) — Long Answer Questions

24. A and B share profits 3 : 2. Their Balance Sheet on 31^st March 2026 is given below. C is admitted for 1/5 share on that date on the following terms: (i) Building is appreciated by 20% and Machinery depreciated by 10%; (ii) Provision for doubtful debts is to be created at 5% on debtors; (iii) An outstanding repair bill of ₹ 4,000 is unrecorded; (iv) Goodwill of the firm is valued at ₹ 1,00,000; (v) C brings ₹ 2,00,000 as capital and his share of goodwill in cash; (vi) General Reserve is to be distributed.
Prepare Revaluation Account and Partners’ Capital Accounts. Also find the new profit-sharing ratio.

Liabilities	₹	Assets	₹
Creditors	80,000	Building	2,50,000
General Reserve	60,000	Machinery	1,50,000
A’s Capital	3,00,000	Stock	1,00,000
B’s Capital	2,00,000	Debtors	1,20,000
		Cash	20,000
Total	6,40,000	Total	6,40,000

(6)

25. A, B and C share profits 5 : 3 : 2. Their capitals are ₹ 4,00,000, ₹ 3,00,000 and ₹ 2,00,000 and the General Reserve is ₹ 1,00,000. C retires on 31^st March 2026. Goodwill of the firm is valued at ₹ 2,50,000 (not in the books) and there is a net loss of ₹ 20,000 on revaluation of assets and liabilities. A and B will share future profits in 3 : 2. C is paid ₹ 1,00,000 in cash and the balance is transferred to his Loan Account. Prepare the Partners’ Capital Accounts.(6)

OR

Ram, Shyam and Mohan share profits 3 : 2 : 1. Mohan dies on 30^th September 2026. His capital is ₹ 1,50,000; General Reserve ₹ 60,000; goodwill of the firm is valued at ₹ 1,80,000. Interest on capital is 6% p.a. His share in profit up to the date of death is to be calculated on the basis of last year’s profit of ₹ 1,20,000. Mohan had withdrawn ₹ 12,000 and interest on drawings is ₹ 300. Ram and Shyam continue sharing profits in 3 : 2. Prepare Mohan’s Capital Account and show the amount due to his executors.

26. Nova Ltd. invited applications for 40,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share, payable : ₹ 3 on application, ₹ 5 on allotment (including premium) and ₹ 4 on first and final call. Applications were received for 60,000 shares. Applications for 10,000 shares were rejected and the money was refunded. The remaining applicants were allotted 40,000 shares pro rata. Excess application money was adjusted towards allotment. Hari, to whom 1,000 shares were allotted (applied for 1,250 shares), failed to pay the first and final call and his shares were forfeited. Pass journal entries up to forfeiture.(6)

OR

Pass the journal entries : (i) 4,000, 10% debentures of ₹ 100 each issued at 5% premium, redeemable at 10% premium; (ii) 3,000, 9% debentures of ₹ 100 each issued at 10% premium to a vendor in purchase of machinery worth ₹ 3,30,000; (iii) ₹ 2,00,000 debentures issued as collateral security for a bank loan of ₹ 1,50,000.

27. From the following information calculate : (i) Debt-Equity Ratio, (ii) Current Ratio, (iii) Quick Ratio, (iv) Inventory Turnover Ratio, (v) Trade Receivables Turnover Ratio, (vi) Return on Capital Employed.
Equity share capital ₹ 10,00,000; Reserves and surplus ₹ 6,00,000; 10% Debentures ₹ 4,00,000; Trade payables ₹ 2,00,000; Outstanding expenses ₹ 1,00,000. Fixed assets ₹ 14,00,000; Non-current investments ₹ 1,00,000; Inventory ₹ 2,00,000; Trade receivables ₹ 3,00,000; Cash ₹ 2,00,000; Prepaid expenses ₹ 1,00,000. Opening inventory ₹ 1,60,000; opening trade receivables ₹ 2,00,000. Revenue from operations (all credit) ₹ 24,00,000; Gross profit ratio 25%; Net profit after tax ₹ 2,80,000; tax rate 30%; interest on debentures ₹ 40,000.(6)

SECTION E (2 × 8 = 16 Marks) — Long Answer Questions

28. From the following Balance Sheet of Kiran Ltd. and additional information, prepare a Cash Flow Statement for the year ended 31^st March 2026 (Indirect Method).

Particulars	31-03-2026 (₹)	31-03-2025 (₹)
I. EQUITY AND LIABILITIES
Share capital	8,00,000	6,00,000
Reserves and surplus (Surplus in P&L)	3,20,000	2,00,000
10% Debentures (Long-term borrowings)	2,00,000	3,00,000
Trade payables	1,20,000	90,000
Short-term provisions (Provision for tax)	60,000	50,000
Total	15,00,000	12,40,000
II. ASSETS
Fixed assets (Tangible, net)	9,00,000	8,00,000
Non-current investments	1,00,000	80,000
Inventories	1,50,000	1,10,000
Trade receivables	1,40,000	1,00,000
Cash and cash equivalents	2,10,000	1,50,000
Total	15,00,000	12,40,000

Additional information : (i) Net profit before tax for the year was ₹ 2,10,000 after charging depreciation ₹ 1,00,000, interest on debentures ₹ 25,000 and loss on sale of a machine ₹ 20,000, and after crediting dividend received ₹ 5,000; (ii) A machine (cost ₹ 1,20,000, accumulated depreciation ₹ 70,000) was sold for ₹ 30,000; (iii) Provision for tax of ₹ 50,000 was made during the year; (iv) Dividend paid ₹ 40,000; (v) Debentures of ₹ 1,00,000 were redeemed at par and interest of ₹ 25,000 was paid; (vi) Share capital was issued at par for cash; (vii) Investments purchased ₹ 20,000.

(8)

29. A and B share profits 3 : 2. They decided to dissolve the firm on 31^st March 2026. Balance Sheet on that date is given below. The following was agreed : (i) Land was sold at 10% above book value; (ii) Machinery realised ₹ 1,00,000; (iii) A took over the stock at ₹ 80,000; (iv) Debtors realised ₹ 72,000; (v) B took over the investments at ₹ 52,000; (vi) Furniture, fully written off earlier, was sold for ₹ 10,000; (vii) Creditors were paid ₹ 1,10,000 in full settlement; (viii) Realisation expenses of ₹ 12,000 were paid by the firm.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account.

Liabilities	₹	Assets	₹
Creditors	1,20,000	Land	2,00,000
B’s Loan	60,000	Machinery	1,30,000
General Reserve	50,000	Stock	90,000
A’s Capital	2,00,000	Debtors	80,000
B’s Capital	1,50,000	Investments	50,000
		Cash	30,000
Total	5,80,000	Total	5,80,000

(8)

ANSWER KEY & SOLUTIONS · ACCOUNTANCY PRACTICE PAPER (SET – 1)

www.careerinformationportal.in

CLASS : XIISUBJECT : ACCOUNTANCY (055)ROLL NO. : ..................

Time : 3 Hrs.Class XII · Session : 2026–27M.M. : 80

SECTION A — Answer Key (1 mark each)

Q.1	(c)	Q.2	(a)	Q.3	(d)	Q.4	(b)
Q.5	(c)	Q.6	(d)	Q.7	(a)	Q.8	(b)
Q.9	(c)	Q.10	(a)	Q.11	(d)	Q.12	(b)
Q.13	(c)	Q.14	(a)	Q.15	(a)	Q.16	(c)

Hints for Q.1–16. (1) Sec. 13 : interest on loan @ 6%; no salary/commission, interest on capital only if deed says so. (2) Fixed capital ⇒ all adjustments through Current A/c. (3) Capitalised value = 90,000 × 100/10 = 9,00,000; goodwill = 9,00,000 − 7,00,000 = ₹ 2,00,000. (4) A : 3/5 − 1/2 = 1/10; B : 2/5 − 1/3 = 1/15; ratio = 3/30 : 2/30 = 3 : 2. (5) Profit till death is credited to deceased’s capital (Dr P&L Suspense A/c). (6) Section 52 : dividend cannot be paid from Securities Premium. (7) Forfeiture A/c = amount received = 100 × 2 = ₹ 200. (8) Received ₹ 6, discount ₹ 2 ⇒ Capital Reserve = 6 − 2 = ₹ 4. (9) Discount 5% + premium on redemption 10% = 15%. (10) CA = 3x, CL = x; 2x = 4,00,000 ⇒ CL = ₹ 2,00,000. (11) Issue of debentures is a financing activity. (12) 6,00,000 ÷ 1,50,000 = 4 times. (13) Common-size B/S uses Balance Sheet total. (14) Super profit = 1,40,000 − 1,10,000 = 30,000 × 3 = ₹ 90,000. (15) (a) : both true, and R explains A. (16) (c) : dividend paid is a financing activity, so R is false.

SECTION B — Solutions (3 marks each)

17. Sacrifice/Gain = Old − New : A = 5/10 − 2/10 = 3/10 (sacrifice); B = 3/10 − 3/10 = 0; C = 2/10 − 5/10 = −3/10 (gain). C compensates A for 3/10 × 60,000 = ₹ 18,000. (1)

Particulars	Dr. (₹)	Cr. (₹)
C’s Capital A/c   Dr	18,000
To A’s Capital A/c		18,000
General Reserve A/c   Dr	50,000
To A’s Capital A/c (5/10)		25,000
To B’s Capital A/c (3/10)		15,000
To C’s Capital A/c (2/10)		10,000
A’s Capital A/c   Dr	10,000
B’s Capital A/c   Dr	6,000
C’s Capital A/c   Dr	4,000
To Profit and Loss A/c		20,000

Goodwill entry (1) + General Reserve (1) + P&L debit balance in old ratio 5 : 3 : 2 (1).

18. Implied capital of the new firm = 2,50,000 × 4 = ₹ 10,00,000. Actual capital = 3,00,000 + 2,00,000 + 2,50,000 = ₹ 7,50,000. Goodwill of the firm = 10,00,000 − 7,50,000 = ₹ 2,50,000 (1½). C’s share = 1/4 × 2,50,000 = ₹ 62,500, adjusted in sacrificing ratio 3 : 2 (A : 37,500; B : 25,000) (½).

Particulars	Dr. (₹)	Cr. (₹)
C’s Capital A/c   Dr	62,500
To A’s Capital A/c		37,500
To B’s Capital A/c		25,000

(1)

19. Amount received per share = 3 (application) + 3 (allotment, excluding premium ₹ 2 which stays credited to Securities Premium) = ₹ 6; call due = ₹ 4.

Particulars	Dr. (₹)	Cr. (₹)
Share Capital A/c   Dr (400 × 10)	4,000
To Calls-in-Arrears A/c (400 × 4)		1,600
To Share Forfeiture A/c (400 × 6)		2,400
Bank A/c   Dr (300 × 9)	2,700
Share Forfeiture A/c   Dr (discount 300 × 1)	300
To Share Capital A/c (300 × 10)		3,000
Share Forfeiture A/c   Dr (300 × 6 − 300)	1,500
To Capital Reserve A/c		1,500

Forfeiture (1) + Reissue (1) + Capital Reserve (1).

20. Issue price = ₹ 95 per debenture; Bank = 5,000 × 95 = 4,75,000; Premium on redemption = 5,000 × 10 = 50,000; Loss on issue = 25,000 (discount) + 50,000 (premium) = ₹ 75,000.

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c   Dr	4,75,000
Loss on Issue of Debentures A/c   Dr	75,000
To 9% Debentures A/c		5,00,000
To Premium on Redemption of Debentures A/c		50,000

(1½) The loss on issue (₹ 75,000) is shown under Non-current assets – Other non-current assets (unamortised, written off in the Statement of P&L / Securities Premium) (½). Collateral security : Debentures Suspense A/c Dr 2,00,000 To 9% Debentures A/c 2,00,000 (optional entry; shown as a note below the loan) (1).

SECTION C — Solutions (4 marks each)

21. Comparative Statement of P&L :

Particulars	2024–25 (₹)	2025–26 (₹)	Absolute change (₹)	% change
Revenue from operations	10,00,000	12,00,000	2,00,000	20.00%
Other income	50,000	70,000	20,000	40.00%
Total Revenue	10,50,000	12,70,000	2,20,000	20.95%
Cost of materials consumed	5,00,000	6,00,000	1,00,000	20.00%
Other expenses	2,00,000	2,60,000	60,000	30.00%
Total Expenses	7,00,000	8,60,000	1,60,000	22.86%
Profit before tax	3,50,000	4,10,000	60,000	17.14%
Tax (30%)	1,05,000	1,23,000	18,000	17.14%
Profit after tax	2,45,000	2,87,000	42,000	17.14%

(4 : Total Revenue 1, Total Expenses 1, PBT & Tax 1, PAT & % changes 1)
OR Common-size Statement (% of Revenue from operations) :

Particulars	2024–25 (₹)	2025–26 (₹)	2024–25 (%)	2025–26 (%)
Revenue from operations	10,00,000	12,00,000	100.00%	100.00%
Other income	50,000	70,000	5.00%	5.83%
Total Revenue	10,50,000	12,70,000	105.00%	105.83%
Cost of materials consumed	5,00,000	6,00,000	50.00%	50.00%
Other expenses	2,00,000	2,60,000	20.00%	21.67%
Total Expenses	7,00,000	8,60,000	70.00%	71.67%
Profit before tax	3,50,000	4,10,000	35.00%	34.17%
Tax (30%)	1,05,000	1,23,000	10.50%	10.25%
Profit after tax	2,45,000	2,87,000	24.50%	23.92%

(4)

22. Working : Closing net block = Opening + Purchases − Depreciation − Book value of machine sold ⇒ 14,50,000 = 12,00,000 + P − 1,50,000 − 60,000 ⇒ Purchases P = ₹ 4,60,000 (1). Sale proceeds = 60,000 − 10,000 = ₹ 50,000 (½).

Cash Flow from Investing Activities	₹
Purchase of fixed assets	(4,60,000)
Purchase of non-current investments	(1,00,000)
Sale proceeds of machine	50,000
Interest received	20,000
Dividend received	10,000
Net cash used in investing activities	(4,80,000)

(2½)
OR

Operating profit before working capital changes	₹
Net profit before tax	3,00,000
Add : Depreciation	40,000
Add : Interest on debentures	12,000
Add : Loss on sale of machinery	8,000
Add : Goodwill written off	20,000
Less : Profit on sale of investments	(15,000)
Less : Dividend received	(5,000)
Operating profit before working capital changes	3,60,000

(4)

23. (i) Current ratio 2.5 : 1 ⇒ CA = 2.5 CL; Working capital = 2.5 CL − CL = 1.5 CL = 3,00,000 ⇒ CL = ₹ 2,00,000; CA = ₹ 5,00,000 (1). (ii) Quick assets = 1.5 × 2,00,000 = ₹ 3,00,000; Inventory = CA − Quick assets (no prepaid) = ₹ 2,00,000 (1). (iii) Inventory turnover = Cost of revenue ÷ Average inventory ⇒ 6 = Cost ÷ 2,00,000 ⇒ Cost of revenue from operations = ₹ 12,00,000 (1). (iv) Gross profit = 25% of Revenue ⇒ Cost = 75% of Revenue ⇒ Revenue = 12,00,000 ÷ 0.75 = ₹ 16,00,000 (1).

SECTION D — Solutions (6 marks each)

24. Revaluation Account (2)

Particulars	₹	Particulars	₹
Machinery A/c (10% × 1,50,000)	15,000	Building A/c (20% × 2,50,000)	50,000
Provision for Doubtful Debts (5% × 1,20,000)	6,000
Outstanding repair bill	4,000
Profit transferred : A’s Capital (3/5)	15,000
B’s Capital (2/5)	10,000
Total	50,000	Total	50,000

Partners’ Capital Accounts (3½)

Particulars	A (₹)	B (₹)	C (₹)	Particulars	A (₹)	B (₹)	C (₹)
Balance c/d	3,63,000	2,42,000	2,00,000	Balance b/d	3,00,000	2,00,000
				Bank (Capital)			2,00,000
				General Reserve (3 : 2)	36,000	24,000
				Revaluation Profit	15,000	10,000
				Bank (Goodwill ₹ 20,000, 3 : 2)	12,000	8,000
Total	3,63,000	2,42,000	2,00,000	Total	3,63,000	2,42,000	2,00,000

Working : C’s share of goodwill = 1/5 × 1,00,000 = ₹ 20,000. A and B give 1/5 in the old ratio 3 : 2 ⇒ A = 3/5 × 4/5 = 12/25, B = 2/5 × 4/5 = 8/25, C = 5/25. Sacrifice : A = 3/5 − 12/25 = 3/25; B = 2/5 − 8/25 = 2/25 ⇒ 3 : 2 (goodwill shared 12,000 : 8,000). New ratio = 12 : 8 : 5 (½).

25. Gaining ratio : A = 3/5 − 5/10 = 1/10; B = 2/5 − 3/10 = 1/10 ⇒ 1 : 1 (1). C’s share of goodwill = 2/10 × 2,50,000 = ₹ 50,000, borne by A and B equally (₹ 25,000 each) (1).

Particulars	A (₹)	B (₹)	C (₹)	Particulars	A (₹)	B (₹)	C (₹)
Revaluation Loss (5 : 3 : 2)	10,000	6,000	4,000	Balance b/d	4,00,000	3,00,000	2,00,000
Goodwill (Gaining 1 : 1)	25,000	25,000		General Reserve (5 : 3 : 2)	50,000	30,000	20,000
Bank A/c			1,00,000	A’s & B’s Capital (Goodwill)			50,000
C’s Loan A/c			1,66,000
Balance c/d	4,15,000	2,99,000
Total	4,50,000	3,30,000	2,70,000	Total	4,50,000	3,30,000	2,70,000

(Capital A/c : 4 marks) Amount due to C = 2,00,000 + 20,000 + 50,000 − 4,000 = ₹ 2,66,000; paid ₹ 1,00,000, balance ₹ 1,66,000 to Loan A/c (1).
OR Gaining ratio : Ram = 3/5 − 3/6 = 1/10; Shyam = 2/5 − 2/6 = 1/15 ⇒ 3 : 2 (1). Goodwill share of Mohan = 1/6 × 1,80,000 = 30,000 (Ram 18,000; Shyam 12,000).

Particulars	₹	Particulars	₹
Drawings	12,000	Balance b/d	1,50,000
Interest on Drawings	300	General Reserve (1/6 × 60,000)	10,000
Executors’ A/c (balance due)	1,92,200	Ram’s Capital (3/5 gain)	18,000
		Shyam’s Capital (2/5 gain)	12,000
		Interest on Capital (6% × 1,50,000 × 6/12)	4,500
		P&L Suspense A/c (1/6 × 1,20,000 × 6/12)	10,000
Total	2,04,500	Total	2,04,500

(5)

26. Working : Pro-rata allotment 4 : 5; Application money received = 60,000 × 3 = 1,80,000; required = 40,000 × 3 = 1,20,000; refund = 10,000 × 3 = 30,000; excess adjusted to allotment = 30,000. Allotment due = 40,000 × 5 = 2,00,000 ⇒ received = 1,70,000. Hari paid 1,250 × 3 = 3,750 + 4,250 (allotment after adjusting excess 750) = 8,000 = ₹ 8 per share; call due 4 per share (1).

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c   Dr	1,80,000
To Share Application A/c		1,80,000
Share Application A/c   Dr	1,80,000
To Share Capital A/c (40,000 × 3)		1,20,000
To Bank A/c (refund)		30,000
To Share Allotment A/c		30,000
Share Allotment A/c   Dr (40,000 × 5)	2,00,000
To Share Capital A/c (40,000 × 3)		1,20,000
To Securities Premium A/c (40,000 × 2)		80,000
Bank A/c   Dr	1,70,000
To Share Allotment A/c		1,70,000
Share First & Final Call A/c   Dr	1,60,000
To Share Capital A/c		1,60,000
Bank A/c   Dr	1,56,000
Calls-in-Arrears A/c   Dr (1,000 × 4)	4,000
To Share First & Final Call A/c		1,60,000
Share Capital A/c   Dr (1,000 × 10)	10,000
To Calls-in-Arrears A/c		4,000
To Share Forfeiture A/c (1,000 × 6)		6,000

(5 : seven entries, ⅔–1 mark each)
OR

Particulars	Dr. (₹)	Cr. (₹)
(i) Bank A/c   Dr (4,000 × 105)	4,20,000
Loss on Issue of Debentures A/c   Dr	40,000
To 10% Debentures A/c		4,00,000
To Securities Premium A/c		20,000
To Premium on Redemption of Debentures A/c		40,000
(ii) Machinery A/c   Dr	3,30,000
To Vendor A/c		3,30,000
Vendor A/c   Dr	3,30,000
To 9% Debentures A/c (3,000 × 100)		3,00,000
To Securities Premium A/c (3,000 × 10)		30,000
(iii) Bank A/c   Dr	1,50,000
To Bank Loan A/c		1,50,000
Debentures Suspense A/c   Dr	2,00,000
To Debentures (Collateral Security) A/c		2,00,000

(2½ + 2 + 1½)

27. Total liabilities = 10,00,000 + 6,00,000 + 4,00,000 + 3,00,000 = ₹ 23,00,000 = Total assets. Shareholders’ funds = 16,00,000; Current liabilities = 3,00,000; Current assets = 2+3+2+1 = ₹ 8,00,000; Gross profit = 6,00,000 ⇒ Cost of revenue = ₹ 18,00,000 (1).

Ratio	Working	Answer
(i) Debt-Equity	Long-term debt ÷ Shareholders’ funds = 4,00,000 ÷ 16,00,000	0.25 : 1
(ii) Current Ratio	8,00,000 ÷ 3,00,000	2.67 : 1
(iii) Quick Ratio	Quick assets = 8,00,000 − 2,00,000 − 1,00,000 = 5,00,000; 5,00,000 ÷ 3,00,000	1.67 : 1
(iv) Inventory Turnover	Average inventory = (1,60,000 + 2,00,000) ÷ 2 = 1,80,000; 18,00,000 ÷ 1,80,000	10 times
(v) Trade Receivables Turnover	Average receivables = (2,00,000 + 3,00,000) ÷ 2 = 2,50,000; 24,00,000 ÷ 2,50,000	9.6 times
(vi) Return on Capital Employed	PBT = 2,80,000 ÷ 0.7 = 4,00,000; PBIT = 4,40,000; Capital employed = 20,00,000; (4,40,000 ÷ 20,00,000) × 100	22%

(1 mark each)

SECTION E — Solutions (8 marks each)

28. Working notes : (i) Net profit before tax is given. (ii) Fixed assets purchased : 9,00,000 = 8,00,000 + P − 1,00,000 − 50,000 (book value of machine = 1,20,000 − 70,000) ⇒ P = ₹ 2,50,000 (1). (iii) Tax paid = Opening provision 50,000 + Provision made 50,000 − Closing provision 60,000 = ₹ 40,000 (1). (iv) Check : surplus 2,00,000 + (2,10,000 − 50,000) − 40,000 dividend = ₹ 3,20,000 ✓.

Cash Flow Statement of Kiran Ltd. for the year ended 31-03-2026	₹	₹
A. Cash flow from operating activities
Net profit before tax	2,10,000
Add : Depreciation	1,00,000
Add : Interest on debentures	25,000
Add : Loss on sale of machine	20,000
Less : Dividend received	(5,000)
Operating profit before working capital changes		3,50,000
Increase in trade receivables	(40,000)
Increase in inventories	(40,000)
Increase in trade payables	30,000
Cash generated from operations		3,00,000
Less : Tax paid	(40,000)
Net cash from operating activities		2,60,000
B. Cash flow from investing activities
Purchase of fixed assets	(2,50,000)
Sale of machine	30,000
Purchase of non-current investments	(20,000)
Dividend received	5,000
Net cash used in investing activities		(2,35,000)
C. Cash flow from financing activities
Issue of share capital	2,00,000
Redemption of debentures	(1,00,000)
Interest paid	(25,000)
Dividend paid	(40,000)
Net cash from financing activities		35,000
Net increase in cash and cash equivalents (A + B + C)		60,000
Add : Opening cash and cash equivalents		1,50,000
Closing cash and cash equivalents		2,10,000

(Operating 3½, Investing 2, Financing 1½, Net change/closing cash 1)

29. Realisation Account (3)

Particulars	₹	Particulars	₹
Land A/c	2,00,000	Creditors A/c	1,20,000
Machinery A/c	1,30,000	Bank A/c (Land)	2,20,000
Stock A/c	90,000	Bank A/c (Machinery)	1,00,000
Debtors A/c	80,000	Bank A/c (Debtors)	72,000
Investments A/c	50,000	Bank A/c (Furniture)	10,000
Bank A/c (Creditors paid)	1,10,000	A’s Capital A/c (Stock taken)	80,000
Bank A/c (Expenses)	12,000	B’s Capital A/c (Investments taken)	52,000
		Loss : A’s Capital (3/5)	10,800
		B’s Capital (2/5)	7,200
Total	6,72,000	Total	6,72,000

Partners’ Capital Accounts (3)

Particulars	A (₹)	B (₹)	Particulars	A (₹)	B (₹)
Realisation (Loss)	10,800	7,200	Balance b/d	2,00,000	1,50,000
Realisation (Asset taken)	80,000	52,000	General Reserve (3 : 2)	30,000	20,000
Bank A/c	1,39,200	1,10,800
Total	2,30,000	1,70,000	Total	2,30,000	1,70,000

Bank Account (2) (B’s loan is paid before the capital)

Particulars	₹	Particulars	₹
Balance b/d	30,000	Realisation (Creditors)	1,10,000
Realisation (Land)	2,20,000	Realisation (Expenses)	12,000
Realisation (Machinery)	1,00,000	B’s Loan A/c	60,000
Realisation (Debtors)	72,000	A’s Capital A/c	1,39,200
Realisation (Furniture)	10,000	B’s Capital A/c	1,10,800
Total	4,32,000	Total	4,32,000

Loss on realisation = 6,72,000 − 6,54,000 = ₹ 18,000 shared 3 : 2.