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CBSE PRACTICE PAPER 2026–27 · ACCOUNTANCY (SET – 3)
General Instructions
- This question paper contains 29 questions. All questions are compulsory. (Theory : 80 marks; Project : 20 marks is assessed separately.)
- Section A : Q. 1 to 14 are MCQs and Q. 15–16 are Assertion–Reason questions, 1 mark each (16 marks).
- Section B : Q. 17 to 20 are short answer questions of 3 marks each (12 marks).
- Section C : Q. 21 to 23 are short answer questions of 4 marks each (12 marks).
- Section D : Q. 24 to 27 are long answer questions of 6 marks each (24 marks).
- Section E : Q. 28 and Q. 29 are long answer questions of 8 marks each (16 marks).
- The paper is of higher difficulty level (application / analysis based) and covers Part A (Partnership Firms and Companies) and Part B (Analysis of Financial Statements, Ratios and Cash Flow Statement).
- Internal choice (OR) is provided in some questions. Show all working notes clearly. Narrations in journal entries are not required.
- 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. The profit of a firm is ₹ 3,00,000. A, B and C share profits 2 : 2 : 1 and A guarantees C a minimum profit of ₹ 70,000. A’s final share of profit is
(a) ₹ 1,20,000(b) ₹ 1,30,000(c) ₹ 70,000(d) ₹ 1,10,000
2. A partner withdrew ₹ 12,000 at the beginning of each quarter during the year. If interest on drawings is charged at 10% p.a., the interest is
(a) ₹ 2,400(b) ₹ 3,600(c) ₹ 3,000(d) ₹ 4,800
3. Capital employed ₹ 8,00,000, normal rate of return 12%, average profit ₹ 1,56,000. Goodwill at 4 years’ purchase of super profit is
(a) ₹ 2,40,000(b) ₹ 6,24,000(c) ₹ 3,84,000(d) ₹ 60,000
4. A and B share profits 3 : 2. They admit C and the new ratio becomes 5 : 3 : 2. The sacrificing ratio of A and B is
(a) 3 : 2(b) 1 : 1(c) 2 : 1(d) 5 : 3
5. On dissolution of a firm, the correct order of payment of liabilities is
(a) partners’ capital, partner’s loan, then outside liabilities(b) partner’s loan, outside liabilities, then partners’ capital(c) partners’ capital, outside liabilities, then partner’s loan(d) outside liabilities, partner’s loan, then partners’ capital
6. Under the Companies Act, 2013, a company is NOT permitted to issue its shares (other than sweat equity)
(a) at a discount(b) at a premium(c) at par(d) as bonus shares
7. Applications were received for 600 shares by an applicant but only 450 were allotted. If application money is ₹ 4 per share, the excess application money to be adjusted is
(a) ₹ 1,800(b) ₹ 2,400(c) ₹ 600(d) ₹ 450
8. Shares issued at a premium of ₹ 2 were forfeited for non-payment of allotment money (including the premium). On forfeiture the entry will include
(a) a credit to Securities Premium A/c(b) a debit to Securities Premium A/c(c) a debit to Capital Reserve A/c(d) a credit to Capital Reserve A/c
9. Interest on debentures is
(a) an appropriation of profit(b) a capital expense(c) shown in the Balance Sheet only(d) a finance cost shown in the Statement of Profit and Loss
10. Current assets ₹ 6,00,000 (including inventory ₹ 1,50,000 and prepaid expenses ₹ 30,000) and current liabilities ₹ 3,00,000. Quick ratio is
(a) 2 : 1(b) 1.5 : 1(c) 1.4 : 1(d) 1 : 1
11. Which of the following is an operating activity?
(a) Cash receipts from customers(b) Proceeds from issue of shares(c) Purchase of fixed assets(d) Repayment of long-term borrowings
12. Net profit after tax ₹ 3,50,000, tax rate 30%, interest on borrowings ₹ 1,00,000. Interest coverage ratio is
(a) 5 times(b) 3.5 times(c) 4 times(d) 6 times
13. In a Comparative Statement, percentage change is calculated on the basis of
(a) the current year figure(b) the previous (base) year figure(c) total assets(d) revenue from operations
14. Which of the following is a cash equivalent?
(a) A debenture maturing after 2 years(b) Investment in equity shares of another company(c) A short-term, highly liquid investment maturing within 3 months of acquisition(d) Goodwill
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): Premium for goodwill brought by a new partner is always shared by the old partners in their old profit-sharing ratio.
Reason (R): Old partners are compensated in the ratio in which they sacrifice their share in favour of the new partner.
Reason (R): Old partners are compensated in the ratio in which they sacrifice their share in favour of the new partner.
16. Assertion (A): Interest on debentures is a finance cost and is shown in the Statement of Profit and Loss.
Reason (R): Loss on issue of debentures is shown under non-current assets until it is written off.
Reason (R): Loss on issue of debentures is shown under non-current assets until it is written off.
SECTION B (4 × 3 = 12 Marks) — Short Answer Questions
17. A and B are partners with fixed capitals of ₹ 5,00,000 and ₹ 3,00,000. The net profit for the year was ₹ 3,00,000. The partnership deed provides : interest on capital @ 6% p.a.; salary to B ₹ 24,000 p.a.; profits to be shared 3 : 2. Prepare the Profit and Loss Appropriation Account.(3)
18. The profits of a firm for the last four years were : 2022 – ₹ 2,40,000; 2023 – ₹ 2,00,000 (after an abnormal loss of ₹ 40,000); 2024 – ₹ 3,20,000 (including an abnormal gain of ₹ 80,000); 2025 – ₹ 2,60,000. Calculate goodwill at 3 years’ purchase of the weighted average profit, using weights 1, 2, 3 and 4 respectively.(3)
19. Delta Ltd. issued shares of ₹ 10 each at a premium of ₹ 2, payable ₹ 4 on application, ₹ 6 on allotment (including premium) and the balance on first and final call (not yet made). Yash, holding 500 shares, paid only the application money and his shares were forfeited. Later 400 of these shares were reissued at ₹ 7 per share as fully paid up. Pass the journal entries for forfeiture, reissue and transfer to Capital Reserve.(3)
20. Pass the journal entries : (i) Issue of 2,000, 10% debentures of ₹ 100 each at a discount of 10%, redeemable at a premium of 5%; (ii) Redemption of these debentures at the end of the term.(3)
SECTION C (3 × 4 = 12 Marks) — Short Answer Questions
21. Prepare a Comparative Balance Sheet of Omega Ltd. as at 31st March 2025 and 2026.
(4)
| Particulars | 2024–25 (₹) | 2025–26 (₹) |
|---|---|---|
| Equity share capital | 10,00,000 | 12,00,000 |
| Reserves and surplus | 4,00,000 | 5,50,000 |
| Long-term borrowings | 6,00,000 | 4,50,000 |
| Trade payables | 2,00,000 | 2,50,000 |
| Fixed assets | 14,00,000 | 15,50,000 |
| Inventories | 3,00,000 | 3,60,000 |
| Trade receivables | 3,00,000 | 3,40,000 |
| Cash and cash equivalents | 2,00,000 | 2,00,000 |
OR
Prepare a Common-size Balance Sheet of the above company (percentage of Balance Sheet total) for the two years.
22. From the following, calculate Cash Flow from Financing Activities : (i) Equity share capital increased from ₹ 10,00,000 to ₹ 12,00,000 by issuing shares at a premium of 10%; (ii) Long-term borrowings were ₹ 6,00,000 on 1st April 2025 and ₹ 4,50,000 on 31st March 2026; during the year fresh loan of ₹ 1,00,000 was raised; (iii) Interest paid ₹ 54,000; (iv) Dividend paid ₹ 1,00,000.(4)
OR
Classify the following items as Operating, Investing or Financing activity (or Cash equivalent) giving reasons : (i) Purchase of goodwill; (ii) Payment of interest on debentures by a non-financial company; (iii) Refund of income tax received; (iv) Marketable securities purchased and maturing in 2 months.
23. The debt-equity ratio of a company is 1.5 : 1 and its shareholders’ funds are ₹ 8,00,000. Current liabilities are ₹ 4,00,000. Debt carries interest at 12% p.a. and the interest coverage ratio is 3 times. There are no other non-current liabilities. Calculate : (i) Debt, (ii) Total assets, (iii) Proprietary ratio, (iv) Total assets to debt ratio, (v) Profit before interest and tax, (vi) Return on capital employed (capital employed = shareholders’ funds + debt).(4)
SECTION D (4 × 6 = 24 Marks) — Long Answer Questions
24. A and B share profits 3 : 2. Their Balance Sheet on 31st March 2026 is given below. C is admitted for 1/5 share on the following terms : (i) Land is appreciated by 40%; Plant is depreciated by 20%; Stock is undervalued by 10%; (ii) Provision for doubtful debts is created at 5% on debtors; (iii) Goodwill of the firm is valued at ₹ 2,50,000, C brings his share in cash; (iv) A and B give up shares in their old ratio; (v) C brings capital equal to his share in the total capital of the new firm, calculated on the basis of A’s and B’s adjusted capitals; (vi) General Reserve is distributed.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
(6)
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 1,00,000 | Land | 4,50,000 |
| General Reserve | 1,00,000 | Plant | 3,00,000 |
| A’s Capital | 6,00,000 | Stock | 2,00,000 |
| B’s Capital | 4,00,000 | Debtors | 2,00,000 |
| Cash | 50,000 | ||
| Total | 12,00,000 | Total | 12,00,000 |
25. X, Y and Z share profits 5 : 3 : 2. Z dies on 31st July 2026; accounts are closed on 31st March each year. On that date Z’s capital was ₹ 3,00,000, General Reserve ₹ 1,00,000 and Joint Life Policy was shown at its surrender value of ₹ 1,60,000, the policy amount being ₹ 4,00,000, which is received on Z’s death. Goodwill of the firm is valued at ₹ 3,00,000. Interest on capital is 5% p.a. Z’s share in profit from 1st April 2026 to the date of death is to be based on sales : sales for last year ₹ 12,00,000 with profit ₹ 1,80,000; sales from 1st April to 31st July 2026 were ₹ 3,00,000. Z’s drawings were ₹ 18,000. X and Y will share future profits in 3 : 2. Prepare Z’s Capital Account and calculate the amount due to his executors.(6)
26. Gamma Ltd. invited applications for 50,000 equity shares of ₹ 10 each at a premium of ₹ 2, payable : ₹ 4 on application, ₹ 5 on allotment (including premium) and ₹ 3 on first and final call. Applications were received for 80,000 shares; applications for 20,000 shares were rejected and money refunded; the remaining applicants were allotted 50,000 shares pro rata, excess application money being adjusted towards allotment. Kamal, who had applied for 720 shares, failed to pay the first and final call and his shares were forfeited. Of these, 500 shares were reissued at ₹ 8 per share fully paid up. Pass journal entries (including cash entries).(6)
OR
Pass the journal entries : (i) 3,000, 12% debentures of ₹ 100 each issued at 6% discount, redeemable at 8% premium; (ii) 2,500, 12% debentures of ₹ 100 each issued at 5% discount to a creditor in full settlement of ₹ 2,37,500; (iii) 1,000 debentures of ₹ 100 redeemed at 10% premium.
27. From the following calculate : (i) Operating Ratio, (ii) Net Profit Ratio, (iii) Interest Coverage Ratio, (iv) Working Capital Turnover Ratio, (v) Proprietary Ratio, (vi) Trade Payables Turnover Ratio.
Revenue from operations ₹ 30,00,000; Cost of revenue from operations ₹ 21,00,000; Other operating expenses ₹ 3,00,000; Other income ₹ 50,000; Interest on debentures ₹ 60,000; Tax rate 30%. Shareholders’ funds ₹ 14,00,000; Long-term borrowings ₹ 6,00,000; Current liabilities ₹ 4,00,000 (of which Trade payables ₹ 3,00,000); Current assets ₹ 9,00,000. Opening inventory ₹ 2,00,000; Closing inventory ₹ 3,00,000; Opening trade payables ₹ 2,50,000. All purchases are on credit.(6)
Revenue from operations ₹ 30,00,000; Cost of revenue from operations ₹ 21,00,000; Other operating expenses ₹ 3,00,000; Other income ₹ 50,000; Interest on debentures ₹ 60,000; Tax rate 30%. Shareholders’ funds ₹ 14,00,000; Long-term borrowings ₹ 6,00,000; Current liabilities ₹ 4,00,000 (of which Trade payables ₹ 3,00,000); Current assets ₹ 9,00,000. Opening inventory ₹ 2,00,000; Closing inventory ₹ 3,00,000; Opening trade payables ₹ 2,50,000. All purchases are on credit.(6)
SECTION E (2 × 8 = 16 Marks) — Long Answer Questions
28. From the Balance Sheet of Sigma Ltd. and the additional information, prepare a Cash Flow Statement for the year ended 31st March 2026 (Indirect Method).
| Particulars | 31-03-2026 (₹) | 31-03-2025 (₹) |
|---|---|---|
| I. EQUITY AND LIABILITIES | ||
| Share capital | 10,00,000 | 8,00,000 |
| General reserve | 1,20,000 | 1,00,000 |
| Surplus in Statement of P&L | 4,10,000 | 3,00,000 |
| 12% Debentures | 3,00,000 | 5,00,000 |
| Trade payables | 1,60,000 | 1,40,000 |
| Provision for tax | 70,000 | 60,000 |
| Total | 20,60,000 | 19,00,000 |
| II. ASSETS | ||
| Fixed assets (net) | 11,50,000 | 10,00,000 |
| Goodwill | 60,000 | 80,000 |
| Non-current investments | 1,80,000 | 2,00,000 |
| Inventories | 2,70,000 | 2,30,000 |
| Trade receivables | 2,40,000 | 2,10,000 |
| Cash and cash equivalents | 1,60,000 | 1,80,000 |
| Total | 20,60,000 | 19,00,000 |
Additional information : (i) Net profit before tax ₹ 2,70,000 after charging depreciation ₹ 1,10,000, interest on debentures ₹ 36,000, goodwill written off ₹ 20,000 and loss on sale of a machine ₹ 15,000, and after crediting profit on sale of investments ₹ 8,000 and dividend received ₹ 12,000; (ii) The machine sold had a book value of ₹ 45,000; (iii) Investments costing ₹ 40,000 were sold; (iv) Provision for tax made during the year ₹ 80,000; (v) Dividend paid ₹ 60,000; ₹ 20,000 transferred to General Reserve; (vi) Debentures of ₹ 2,00,000 were redeemed at par and shares of ₹ 2,00,000 were issued at par.
(8)29. P, Q and R share profits 3 : 2 : 1. They decided to dissolve the firm on 31st March 2026. Balance Sheet on that date is given below. The following was agreed : (i) Building sold for ₹ 4,00,000; Machinery realised ₹ 1,60,000; (ii) Stock realised 90% of book value; (iii) Debtors realised ₹ 1,14,000; (iv) Q took over the investments at ₹ 51,000; (v) Creditors were paid ₹ 1,40,000 in full settlement; Bills Payable were paid in full; (vi) R was allowed a commission of ₹ 6,000 for completing dissolution and realisation expenses of ₹ 9,000 were paid by the firm.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account.
(8)
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 1,50,000 | Building | 3,50,000 |
| Bills Payable | 50,000 | Machinery | 2,00,000 |
| R’s Loan | 80,000 | Stock | 1,40,000 |
| General Reserve | 60,000 | Debtors | 1,20,000 |
| P’s Capital | 3,00,000 | Investments | 60,000 |
| Q’s Capital | 2,00,000 | Cash | 70,000 |
| R’s Capital | 1,00,000 | ||
| Total | 9,40,000 | Total | 9,40,000 |
ANSWER KEY & SOLUTIONS · ACCOUNTANCY PRACTICE PAPER (SET – 3)
SECTION A — Answer Key (1 mark each)
| Q.1 | (d) | Q.2 | (c) | Q.3 | (a) | Q.4 | (b) |
| Q.5 | (d) | Q.6 | (a) | Q.7 | (c) | Q.8 | (b) |
| Q.9 | (d) | Q.10 | (c) | Q.11 | (a) | Q.12 | (d) |
| Q.13 | (b) | Q.14 | (c) | Q.15 | (d) | Q.16 | (b) |
Hints for Q.1–16. (1) C’s share = 60,000, deficiency 10,000 borne by A ⇒ 1,20,000 − 10,000 = ₹ 1,10,000. (2) Total 48,000; average period 7.5 months ⇒ 48,000 × 10% × 7.5/12 = ₹ 3,000. (3) Normal profit = 96,000; super profit = 60,000 × 4 = ₹ 2,40,000. (4) A : 3/5 − 1/2 = 1/10; B : 2/5 − 3/10 = 1/10 ⇒ 1 : 1. (5) Outside liabilities → partner’s loan → partners’ capital. (6) Sec. 53 prohibits issue at discount. (7) Excess = 150 × 4 = ₹ 600. (8) Premium not received ⇒ Securities Premium A/c is debited. (9) Interest is a finance cost. (10) Quick assets = 6,00,000 − 1,50,000 − 30,000 = 4,20,000 ⇒ 4,20,000 ÷ 3,00,000 = 1.4 : 1. (11) Receipts from customers are operating. (12) PBT = 3,50,000 ÷ 0.7 = 5,00,000; EBIT = 6,00,000 ⇒ 6,00,000 ÷ 1,00,000 = 6 times. (13) Base-year figure. (14) 3-month, highly liquid investment. (15) (d) : premium is shared in the sacrificing ratio (not always the old ratio), so A is false and R is true. (16) (b) : both true; R does not explain A.
SECTION B — Solutions (3 marks each)
17. Interest on capital : A = 5,00,000 × 6% = 30,000; B = 3,00,000 × 6% = 18,000. Profit left = 3,00,000 − 72,000 = ₹ 2,28,000 (3 : 2) ⇒ A 1,36,800; B 91,200.
(Interest 1, Salary 1, Distribution 1)
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Interest on Capital : A | 30,000 | Profit and Loss A/c (Net profit) | 3,00,000 |
| B | 18,000 | ||
| Salary to B | 24,000 | ||
| Profit transferred to A’s Current A/c | 1,36,800 | ||
| Profit transferred to B’s Current A/c | 91,200 | ||
| Total | 3,00,000 | Total | 3,00,000 |
18. Adjusted profits : 2022 = 2,40,000; 2023 = 2,00,000 + 40,000 = 2,40,000; 2024 = 3,20,000 − 80,000 = 2,40,000; 2025 = 2,60,000 (1). Weighted average = (2,40,000×1 + 2,40,000×2 + 2,40,000×3 + 2,60,000×4) ÷ 10 = 24,80,000 ÷ 10 = ₹ 2,48,000 (1). Goodwill = 2,48,000 × 3 = ₹ 7,44,000 (1).
19. Application ₹ 4 received; allotment (6 = capital 4 + premium 2) and call not received. Share capital called up = 4 + 4 = ₹ 8 per share.
(1 + 1 + 1)
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Share Capital A/c Dr (500 × 8) | 4,000 | |
| Securities Premium A/c Dr (500 × 2) | 1,000 | |
| To Share Allotment A/c (500 × 6) | 3,000 | |
| To Share Forfeiture A/c (500 × 4) | 2,000 | |
| Bank A/c Dr (400 × 7) | 2,800 | |
| Share Forfeiture A/c Dr (400 × 3) | 1,200 | |
| To Share Capital A/c (400 × 10) | 4,000 | |
| Share Forfeiture A/c Dr (400 × 4 − 1,200) | 400 | |
| To Capital Reserve A/c | 400 |
20. Issue price ₹ 90; Bank = 2,000 × 90 = 1,80,000; premium on redemption = 10,000; loss on issue = 20,000 + 10,000 = 30,000.
(1½ + 1½)
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Bank A/c Dr | 1,80,000 | |
| Loss on Issue of Debentures A/c Dr | 30,000 | |
| To 10% Debentures A/c | 2,00,000 | |
| To Premium on Redemption of Debentures A/c | 10,000 | |
| 10% Debentures A/c Dr | 2,00,000 | |
| Premium on Redemption of Debentures A/c Dr | 10,000 | |
| To Debentureholders A/c | 2,10,000 | |
| Debentureholders A/c Dr | 2,10,000 | |
| To Bank A/c | 2,10,000 |
SECTION C — Solutions (4 marks each)
21. Comparative Balance Sheet :
(4)
OR Common-size Balance Sheet :
(4)
| Particulars | 2024–25 (₹) | 2025–26 (₹) | Absolute change (₹) | % change |
|---|---|---|---|---|
| Equity share capital | 10,00,000 | 12,00,000 | 2,00,000 | 20.00% |
| Reserves and surplus | 4,00,000 | 5,50,000 | 1,50,000 | 37.50% |
| Long-term borrowings | 6,00,000 | 4,50,000 | (1,50,000) | -25.00% |
| Trade payables | 2,00,000 | 2,50,000 | 50,000 | 25.00% |
| Total Equity and Liabilities | 22,00,000 | 24,50,000 | 2,50,000 | 11.36% |
| Fixed assets | 14,00,000 | 15,50,000 | 1,50,000 | 10.71% |
| Inventories | 3,00,000 | 3,60,000 | 60,000 | 20.00% |
| Trade receivables | 3,00,000 | 3,40,000 | 40,000 | 13.33% |
| Cash and cash equivalents | 2,00,000 | 2,00,000 | 0 | 0.00% |
| Total Assets | 22,00,000 | 24,50,000 | 2,50,000 | 11.36% |
OR Common-size Balance Sheet :
| Particulars | 2024–25 (₹) | 2025–26 (₹) | 2024–25 (%) | 2025–26 (%) |
|---|---|---|---|---|
| Equity share capital | 10,00,000 | 12,00,000 | 45.45% | 48.98% |
| Reserves and surplus | 4,00,000 | 5,50,000 | 18.18% | 22.45% |
| Long-term borrowings | 6,00,000 | 4,50,000 | 27.27% | 18.37% |
| Trade payables | 2,00,000 | 2,50,000 | 9.09% | 10.20% |
| Total | 22,00,000 | 24,50,000 | 100% | 100% |
| Fixed assets | 14,00,000 | 15,50,000 | 63.64% | 63.27% |
| Inventories | 3,00,000 | 3,60,000 | 13.64% | 14.69% |
| Trade receivables | 3,00,000 | 3,40,000 | 13.64% | 13.88% |
| Cash and cash equivalents | 2,00,000 | 2,00,000 | 9.09% | 8.16% |
| Total | 22,00,000 | 24,50,000 | 100% | 100% |
22. Shares issued = 2,00,000 at 10% premium ⇒ premium 20,000 ⇒ cash 2,20,000. Loans : 6,00,000 + 1,00,000 − repaid = 4,50,000 ⇒ repaid = ₹ 2,50,000 (1).
(3)
OR (i) Purchase of goodwill – Investing (acquisition of a long-term asset). (ii) Interest paid by a non-financial company – Financing (cost of borrowing). (iii) Refund of income tax – Operating (tax cash flows are operating unless linked to investing/financing). (iv) Marketable securities maturing in 2 months – Cash equivalent (short-term, highly liquid, original maturity ≤ 3 months) (1 each).
| Cash Flow from Financing Activities | ₹ |
|---|---|
| Proceeds from issue of shares (including premium) | 2,20,000 |
| Proceeds from fresh long-term loan | 1,00,000 |
| Repayment of long-term borrowings | (2,50,000) |
| Interest paid | (54,000) |
| Dividend paid | (1,00,000) |
| Net cash used in financing activities | (84,000) |
OR (i) Purchase of goodwill – Investing (acquisition of a long-term asset). (ii) Interest paid by a non-financial company – Financing (cost of borrowing). (iii) Refund of income tax – Operating (tax cash flows are operating unless linked to investing/financing). (iv) Marketable securities maturing in 2 months – Cash equivalent (short-term, highly liquid, original maturity ≤ 3 months) (1 each).
23. (i) D/E = 1.5 ⇒ Debt = 1.5 × 8,00,000 = ₹ 12,00,000 (½). (ii) Total assets = 8,00,000 + 12,00,000 + 4,00,000 = ₹ 24,00,000 (1). (iii) Proprietary ratio = 8,00,000 ÷ 24,00,000 = 0.33 : 1 (½). (iv) Total assets to debt = 24,00,000 ÷ 12,00,000 = 2 : 1 (½). (v) Interest = 12% × 12,00,000 = 1,44,000; coverage 3 ⇒ PBIT = ₹ 4,32,000 (1). (vi) Capital employed = 8,00,000 + 12,00,000 = 20,00,000; ROCE = 4,32,000 ÷ 20,00,000 × 100 = 21.6% (½).
SECTION D — Solutions (6 marks each)
24. Revaluation profit = (1,80,000 + 20,000) − (60,000 + 10,000) = ₹ 1,30,000. New ratio = 12 : 8 : 5. C’s share of goodwill = 1/5 × 2,50,000 = ₹ 50,000 (A 30,000; B 20,000) (1).
Revaluation Account (1½)
Partners’ Capital Accounts (2½)
Working : A : B adjusted capitals = 7,68,000 : 5,12,000 = 3 : 2 and together they hold 4/5 of the new firm ⇒ total capital = 12,80,000 × 5/4 = ₹ 16,00,000 ⇒ C’s capital = 1/5 × 16,00,000 = ₹ 3,20,000 (½).
Balance Sheet of the new firm (1)
Revaluation Account (1½)
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Plant A/c (20% × 3,00,000) | 60,000 | Land A/c (40% × 4,50,000) | 1,80,000 |
| Provision for Doubtful Debts (5% × 2,00,000) | 10,000 | Stock A/c (10% × 2,00,000) | 20,000 |
| Profit transferred : A’s Capital (3/5) | 78,000 | ||
| B’s Capital (2/5) | 52,000 | ||
| Total | 2,00,000 | Total | 2,00,000 |
| Particulars | A (₹) | B (₹) | C (₹) | Particulars | A (₹) | B (₹) | C (₹) |
|---|---|---|---|---|---|---|---|
| Balance c/d | 7,68,000 | 5,12,000 | 3,20,000 | Balance b/d | 6,00,000 | 4,00,000 | |
| Bank (Capital) | 3,20,000 | ||||||
| General Reserve (3 : 2) | 60,000 | 40,000 | |||||
| Revaluation Profit | 78,000 | 52,000 | |||||
| Bank (Goodwill ₹ 50,000, 3 : 2) | 30,000 | 20,000 | |||||
| Total | 7,68,000 | 5,12,000 | 3,20,000 | Total | 7,68,000 | 5,12,000 | 3,20,000 |
Balance Sheet of the new firm (1)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 1,00,000 | Land | 6,30,000 |
| A’s Capital | 7,68,000 | Plant | 2,40,000 |
| B’s Capital | 5,12,000 | Stock | 2,20,000 |
| C’s Capital | 3,20,000 | Debtors (net of provision) | 1,90,000 |
| Cash (50,000 + 3,20,000 + 50,000) | 4,20,000 | ||
| Total | 17,00,000 | Total | 17,00,000 |
25. Working notes : (i) Gaining ratio : X = 3/5 − 5/10 = 1/10; Y = 2/5 − 3/10 = 1/10 ⇒ 1 : 1 (1). (ii) Goodwill of Z = 2/10 × 3,00,000 = ₹ 60,000 (½). (iii) JLP : policy amount 4,00,000 − book value 1,60,000 = 2,40,000 surplus, Z’s share 2/10 = ₹ 48,000 (1). (iv) Profit rate = 1,80,000 ÷ 12,00,000 = 15%; profit up to death = 3,00,000 × 15% = 45,000; Z’s share 2/10 = ₹ 9,000 (1).
Z’s Capital Account (2½)
Amount due to executors = ₹ 4,24,000.
Z’s Capital Account (2½)
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Drawings | 18,000 | Balance b/d | 3,00,000 |
| Executors’ A/c (balance due) | 4,24,000 | General Reserve (2/10 × 1,00,000) | 20,000 |
| JLP surplus (2/10 × 2,40,000) | 48,000 | ||
| X’s Capital (goodwill, gain 1 : 1) | 30,000 | ||
| Y’s Capital (goodwill, gain 1 : 1) | 30,000 | ||
| Interest on Capital (3,00,000 × 5% × 4/12) | 5,000 | ||
| P&L Suspense A/c (profit share) | 9,000 | ||
| Total | 4,42,000 | Total | 4,42,000 |
26. Working : Pro rata 5 : 6 (50,000 of 60,000); application received 80,000 × 4 = 3,20,000; required 2,00,000; refund 20,000 × 4 = 80,000; excess to allotment 40,000. Allotment due = 50,000 × 5 = 2,50,000, received 2,10,000. Call due = 50,000 × 3 = 1,50,000. Kamal : allotted 600 shares (5/6 of 720); paid 4 + 5 = ₹ 9 per share (₹ 5,400), call 600 × 3 = ₹ 1,800 unpaid; capital forfeited = 600 × 10 = 6,000; Forfeiture A/c = 5,400 − premium 1,200 = ₹ 4,200 (1).
(5)
OR
(2 + 2 + 2)
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Bank A/c Dr | 3,20,000 | |
| To Share Application A/c | 3,20,000 | |
| Share Application A/c Dr | 3,20,000 | |
| To Share Capital A/c (50,000 × 4) | 2,00,000 | |
| To Bank A/c (refund) | 80,000 | |
| To Share Allotment A/c | 40,000 | |
| Share Allotment A/c Dr | 2,50,000 | |
| To Share Capital A/c (50,000 × 3) | 1,50,000 | |
| To Securities Premium A/c (50,000 × 2) | 1,00,000 | |
| Bank A/c Dr | 2,10,000 | |
| To Share Allotment A/c | 2,10,000 | |
| Share First & Final Call A/c Dr | 1,50,000 | |
| To Share Capital A/c | 1,50,000 | |
| Bank A/c Dr | 1,48,200 | |
| Calls-in-Arrears A/c Dr | 1,800 | |
| To Share First & Final Call A/c | 1,50,000 | |
| Share Capital A/c Dr (600 × 10) | 6,000 | |
| To Calls-in-Arrears A/c | 1,800 | |
| To Share Forfeiture A/c | 4,200 | |
| Bank A/c Dr (500 × 8) | 4,000 | |
| Share Forfeiture A/c Dr (500 × 2) | 1,000 | |
| To Share Capital A/c | 5,000 | |
| Share Forfeiture A/c Dr (500 × 7 − 1,000) | 2,500 | |
| To Capital Reserve A/c | 2,500 |
OR
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| (i) Bank A/c Dr (3,000 × 94) | 2,82,000 | |
| Loss on Issue of Debentures A/c Dr (18,000 + 24,000) | 42,000 | |
| To 12% Debentures A/c | 3,00,000 | |
| To Premium on Redemption of Debentures A/c | 24,000 | |
| (ii) Creditors A/c Dr | 2,37,500 | |
| Loss on Issue of Debentures A/c Dr (2,500 × 5) | 12,500 | |
| To 12% Debentures A/c | 2,50,000 | |
| (iii) 12% Debentures A/c Dr | 1,00,000 | |
| Premium on Redemption of Debentures A/c Dr | 10,000 | |
| To Debentureholders A/c | 1,10,000 | |
| Debentureholders A/c Dr | 1,10,000 | |
| To Bank A/c | 1,10,000 |
27. Working : Gross profit = 30,00,000 − 21,00,000 = 9,00,000; Operating cost = 21,00,000 + 3,00,000 = 24,00,000; EBIT = 30,00,000 − 24,00,000 + 50,000 = 6,50,000; PBT = 6,50,000 − 60,000 = 5,90,000; Tax = 1,77,000; PAT = ₹ 4,13,000; Working capital = 9,00,000 − 4,00,000 = 5,00,000; Purchases = Cost 21,00,000 + Closing 3,00,000 − Opening 2,00,000 = 22,00,000; Total assets = 14,00,000 + 6,00,000 + 4,00,000 = 24,00,000 (1).
(5, ⅚ each)
| Ratio | Working | Answer |
|---|---|---|
| (i) Operating Ratio | (21,00,000 + 3,00,000) ÷ 30,00,000 × 100 | 80% |
| (ii) Net Profit Ratio | 4,13,000 ÷ 30,00,000 × 100 | 13.77% |
| (iii) Interest Coverage | EBIT ÷ Interest = 6,50,000 ÷ 60,000 | 10.83 times |
| (iv) Working Capital Turnover | 30,00,000 ÷ 5,00,000 | 6 times |
| (v) Proprietary Ratio | 14,00,000 ÷ 24,00,000 | 0.58 : 1 |
| (vi) Trade Payables Turnover | Credit purchases ÷ Average payables = 22,00,000 ÷ [(2,50,000 + 3,00,000) ÷ 2] | 8 times |
SECTION E — Solutions (8 marks each)
28. Working notes : (i) Fixed assets purchased : 11,50,000 = 10,00,000 + P − 1,10,000 − 45,000 ⇒ P = ₹ 3,05,000 (1). (ii) Machine sold for 45,000 − 15,000 = ₹ 30,000. (iii) Investments : 1,80,000 = 2,00,000 − 40,000 + P ⇒ purchased ₹ 20,000; sold for 40,000 + 8,000 = ₹ 48,000 (1). (iv) Tax paid = 60,000 + 80,000 − 70,000 = ₹ 70,000 (1). (v) Transfer to General Reserve is a non-cash appropriation, ignored.
(Operating 3, Investing 1½, Financing 1, Net change/closing cash ½)
| Cash Flow Statement of Sigma Ltd. for the year ended 31-03-2026 | ₹ | ₹ |
|---|---|---|
| A. Cash flow from operating activities | ||
| Net profit before tax | 2,70,000 | |
| Add : Depreciation | 1,10,000 | |
| Add : Interest on debentures | 36,000 | |
| Add : Goodwill written off | 20,000 | |
| Add : Loss on sale of machine | 15,000 | |
| Less : Profit on sale of investments | (8,000) | |
| Less : Dividend received | (12,000) | |
| Operating profit before working capital changes | 4,31,000 | |
| Increase in trade receivables | (30,000) | |
| Increase in inventories | (40,000) | |
| Increase in trade payables | 20,000 | |
| Cash generated from operations | 3,81,000 | |
| Less : Tax paid | (70,000) | |
| Net cash from operating activities | 3,11,000 | |
| B. Cash flow from investing activities | ||
| Purchase of fixed assets | (3,05,000) | |
| Sale of machine | 30,000 | |
| Sale of investments (40,000 + 8,000) | 48,000 | |
| Purchase of investments | (20,000) | |
| Dividend received | 12,000 | |
| Net cash used in investing activities | (2,35,000) | |
| C. Cash flow from financing activities | ||
| Issue of share capital | 2,00,000 | |
| Redemption of 12% debentures | (2,00,000) | |
| Interest paid | (36,000) | |
| Dividend paid | (60,000) | |
| Net cash used in financing activities | (96,000) | |
| Net decrease in cash and cash equivalents (A + B + C) | (20,000) | |
| Add : Opening cash and cash equivalents | 1,80,000 | |
| Closing cash and cash equivalents | 1,60,000 |
29. Realisation Account (3)
Partners’ Capital Accounts (3)
Bank Account (2) (R’s loan is paid before the capital)
Loss on realisation = ₹ 24,000, shared 3 : 2 : 1.
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Building A/c | 3,50,000 | Creditors A/c | 1,50,000 |
| Machinery A/c | 2,00,000 | Bills Payable A/c | 50,000 |
| Stock A/c | 1,40,000 | Bank A/c (Building) | 4,00,000 |
| Debtors A/c | 1,20,000 | Bank A/c (Machinery) | 1,60,000 |
| Investments A/c | 60,000 | Bank A/c (Stock) | 1,26,000 |
| Bank A/c (Creditors paid) | 1,40,000 | Bank A/c (Debtors) | 1,14,000 |
| Bank A/c (Bills Payable paid) | 50,000 | Q’s Capital A/c (Investments) | 51,000 |
| Bank A/c (Expenses) | 9,000 | Loss : P’s Capital (3/6) | 12,000 |
| R’s Capital A/c (Commission) | 6,000 | Q’s Capital (2/6) | 8,000 |
| R’s Capital (1/6) | 4,000 | ||
| Total | 10,75,000 | Total | 10,75,000 |
| Particulars | P (₹) | Q (₹) | R (₹) | Particulars | P (₹) | Q (₹) | R (₹) |
|---|---|---|---|---|---|---|---|
| Realisation (Loss) | 12,000 | 8,000 | 4,000 | Balance b/d | 3,00,000 | 2,00,000 | 1,00,000 |
| Realisation (Investments) | 51,000 | General Reserve (3 : 2 : 1) | 30,000 | 20,000 | 10,000 | ||
| Bank A/c | 3,18,000 | 1,61,000 | 1,12,000 | Realisation (Commission) | 6,000 | ||
| Total | 3,30,000 | 2,20,000 | 1,16,000 | Total | 3,30,000 | 2,20,000 | 1,16,000 |
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Balance b/d | 70,000 | Realisation (Creditors) | 1,40,000 |
| Realisation (Building) | 4,00,000 | Realisation (Bills Payable) | 50,000 |
| Realisation (Machinery) | 1,60,000 | Realisation (Expenses) | 9,000 |
| Realisation (Stock) | 1,26,000 | R’s Loan A/c | 80,000 |
| Realisation (Debtors) | 1,14,000 | P’s Capital A/c | 3,18,000 |
| Q’s Capital A/c | 1,61,000 | ||
| R’s Capital A/c | 1,12,000 | ||
| Total | 8,70,000 | Total | 8,70,000 |
