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Subject : Accountancy
Class : XII
Coordination by :
MS. RAJNI RAWAL
Principal, GGSSS No.1, Tagore Garden
Prepared by :
1. Mr. Anil Kumar Lecturer RPVV Kishan Ganj
2. Mr. Sunil Kumar Lecturer SKV West Patel Nagar
3. Mr. Sanjeev Kumar Lecturer GSBV Krishna Nagar
4. Mr. Rajesh Kumar Lecturer Rana Pratap GBSSS Rithala
5. Ms. Reeta Rani Lecturer GGSSS No.1, Tagore Garden
Dear Children
Every question of Accountancy signifies one or the other
value. Business proceeds ahead with certain values which are
quantified by Accountancy. Accountancy is just not figures. On
one hand it has intrinsic values and on the other there are
moral values imbibed into it. Accounting inherits the following
values--- (suggestive not exhaustive)
• Integrity.
• Professional competence with due care
• Commitment to excellence
• Transparency
• Objectivity and independence
• Confidentiality
• Communicating the material information
• Analysis, problem solving and critical thinking
• Admitting errors and rectifying them
• Efficient utilisation of resources
• Commitment to pay its liabilities in time
Partnership – Fundamentals
• X, Y and Z are partners with ` 72,000, ` 80,000 and ` 1,00,000 as
their capitals respectively. The profit for the year ending March 31,
2012 was ` 7,20,000. Before distributing profits they donated 10%
of profits to a ‗Non-Govt. organization‘ as charity for welfare of
educationally backward section of the society. Out of the remaining
profit, ` 4,00,000 is divisible as 5:3:2 ratio and the remaining is to
be divided amongst them equally.
Identify the value involves by the partnership form of X,Y and Z.
Prepare Profit and Loss appropriation Account and partner‘s
Capital Account.
• Aakash and Bhola entered into partnership on January 1, 2012
contributing ` 1,20,000 and ` 1,60,000 as capitals respectively.
Their partnership firm started the business of manufacturing shoes.
They decided to allow a discount of 30% on shoes for school going
children. They share profits in the ratio of 7:3. The profits for the
year were ` 9,60,000.
Prepare Profit and Loss Appropriation Account and the partner‘s
Capital Accounts. Also identify the value involved in this question.
• Ramesh and Gurmeet are two friends belonging to Hindu and Sikh
religion respectively. They started a business of wire manufacturing
in the form of a partnership firm. They know that the factory of
wire manufacturing pollutes the environment. Therefore there are
two options available before them. First option is that the factory
can be opened in rural area where local residents are poor and
illiterate. Second option is that an advanced pollution control plant
can be installed in their factory to control the pollution. They
decided to choose the second option which involves an additional
cost of ` 2, 00,000. To arrange this amount, they admitted their fast
friend John as a new partner for equal share in the future profits.
John brought` 2,50,000 as his share of capital. Ramesh and
Gurmeet gave him a guarantee that his share of profit will not be
less than ` 60,000 p. a. At the end of first year the firm earns a
profit of ` 1,50,000.
Mention the value involved in this question. Write the effects of
choosing option available before Ramesh and Gurmeet. Prepare
the Profit and Loss Appropriation Account for the first year.
• Deepa and Shweta are friends and after completion of their study
they started a business of readymade Garments by constituting a
partnership firm with a profit sharing ratio as 3:2 respectively.
Their partnership firm earns huge profits during few years. They
decided to start a scholarship of ` 10,000 p.a. for meritorious
and poor students. On January 1, 2012 they admit Joney, their
manager as a new partner with 1/5th share in future profits. The
value of goodwill of the form is ` 3,50,000 and Joney is not able to
bring his share of goodwill in cash. Joney belongs to a Religious
minority community and isexpert in business management. He
contributes ` 50,000 as his capital and old partners want to pass an
adjusting entry for the treatment of goodwill.
Identify the value is involved in this question and pass the journal
entries on admission of Joney. Also calculate the new profit
sharing ratio.
• Amar and Bashir are sharing profits in the ratio of 3:2 respectively.
They admit their friend Chandni with one fourth share in the future
profits. Chandni belongs to economic weaker section of the society
and not able to bring her share of goodwill. Goodwill of the firm is
valued at ` 20,000. Chandni contributes ` 30,000 as her share of
capital.
Identify the value involved in this question. Give Journal entries in the
books of the firm to record the above transactions.
On the above date, Z was admitted as a new partner in the firm for ¼
share in the profits on the following terms:
Z will bring ` 2, 40,000 for her capital and ` 40,000 for her share of
goodwill. Machinery was to be depreciated by 10% and Land &
Building was to be appreciated by ` 60,000. A provision of 5% was to be
created for doubtful debts.
Salary outstanding was ` 10,000.
Prepare Revaluation Account, Partners‘ Capital Accounts and the
Balance Sheet of the new firm.
Which values of life does Revaluation Account signify?
The firm was dissolved on the above date and the following
arrangements were decided upon:
(i) Y is authorized to sell the assets of the firm and he will get a
fixed amount of ` 2,000 for his work.
(i) X agreed to pay off his wife‘s loan.
(ii) Debtors of ` 5,000 proved bad.
(iii) Y decided to sale the building for ` 9,000 to his brother.
Market value of the building was ˆ 80,000.
(iv) Others assets realized – Investments 20% less; and Goodwill at
60%. (v) One of the creditors for ˆ 5,000 was paid only ˆ 3,000.
(vi) Y took over part of Stock at ` 4,000 (being 20% less that the
book valve).
Balance stock realized 50%.
(vii) Realization expenses amounted to ` 2,000.
State which value are being violated in the above question and also
prepare Realization A/c.
39.From the following balance sheets of ABC Ltd., find out cash from
operating activities only:
Particulars 31-3-2011 31-3-2012
• EQUITY AND LIABILITIES
Shareholder‟s Funds:
Equity Share Capital 30,000 35,000
Reserve and Surplus: 31.3.2011 31.3.2012
General Reserve 10,000 15,000
Profit and Loss Balance (6,000)* 7,000
4,000 22,000 4,000 22,000
10% Debentures 21,000 25,000
Trade Payables 8,500 12,500
TOTAL 63,500 94,500
• ASSETS:
Machinery 41,000 54,000
Less: Provision for Depreciation 9,000 13,000
32,000 41,000
Goodwill 10,000 8,000
10% Investments 3,000
8,000
Inventory 6,000 24,500
Cash and Bank 12,000 13,000
Discount on Debentures 500
TOTAL 63,500 94,500
*Bracket denotes negative balance.
Additional Information:
Debentures were issued on 31.3.2012.
Investments were made on 31.3.2012.
Identify the value involved in preparation of cash flow statement.
9,60,000 9,60,000
3. Value involved:
(i) Good relations between persons of different religions.
(ii) Women empowerment
(iii) Welfare of differently abled persons.
(iv) Protection of the interest of differently abled
(v) National integration
Profit & Loss Appropriation Account
For the year ended on March 31, 2011
Particulars ` Particulars `
To profit distributed By Net Profit 1,60,000
Renu 84,000-56,000 =
24,000
Reshma 36,000-24,000= 1,60,000
12,000 1,60,000 1,60,000
Rehana 40,000+80,000 =
1,20,000
10. Values
1. Unity
2. Pooling of Resources
3. Efficient use of resources
11. Values:
1. Transparancy
2. Evidence
3. Awareness
12. Values:
• Financial Security
• Sure Return on capital employed.
21. Journal
Date Particulars LF Dr. Amount Cr.
Amount
Journal
Date Particulars LF Dr. Amount Cr.
Amount
60,000 60,000
26.
Dr. Realization Account Cr
Particulars ` Particulars `
To Goodwill 10,000 By Investment
To Buildings 25,000 Fluctuation Fund 5,000
To Investments 25,000 By Provision for
To Stock 15,000 Doubtful Debts 2,000
To Debtors 17,000 By Creditors 8,000
To X‘s Capital A/c By X‘s Wife Loan 6,000
(X‘s wife loan) 8,000 By Bank A/c: 8,000
To Bank A/c: (Assets realized
(Creditors) Debtors
To Y‘s Capital A/c 6,000 12,000
(Expenses on Investments
Realisation) 2,000 20,000
Goodwill
6,000 72,000
Buildings
9,000 4,000
Stock
5,000)
(10,000*50/100)
-----
----
By Y‘s Capital A/c
(Stock)
By Loss transferred
to:
X‘s Capital A/c
23,200
Y‘s Capital A/c
5,800 29,000
--------
1,08,000 - 1,08,000
________
------------- ------------
Values involved—
1.Mutual understanding
2 Transparancy
27 Values:
(i) Equality
(ii) Equal opportunity to all members of public
Rehan Ltd.
Journal
Date Particulars L.F. Dr.(`) Cr.(`)
bank A/c 2,00,000
Dr. 2,00,000
to Share Application A/c
(Application money received on
50,000 shares @ ` 4 each) 2,00,000
Share application A/c 2,00,000
Dr.
To share capital A/c
(Application money transferred to 3,00,000
share capital A/c) 3,00,000
Share Allotment A/c
Dr.
To Share capital A/c 3,00,000
(Allotment money due on 50,000 3,00,000
shares @ ` 6 each)
Bank A/c
Dr.
To Share Allotment A/c
(Allotment money received)
31Journal
Date Particulars LF Dr. Amount Cr.
Amount
2011
March 31 9% Debentures a/c Dr. 100,000
To Debenture holders 100,000
(Being payment due to Debenture
Holders on redemption)
-----------------------------------------
March 31 Debenture holders a/c Dr. 100,000
To Bank a/c 100,000
(Being payment made)
• Current Ratio =
Current Assets = Closing Inventory + Trade Receivables + Cash +
Marketable Securities + Income Tax Paid in Advance
= ` 2,00,000 + ` 1,00,000 + ` 30,000 + ` 20,000 + `10,000
= `3,60,000
Current Liabilities = Taxation (Current) + Trade Payables +
Outstanding Salaries + Bank Overdraft + Dividents Payable
= `20,000 + `34,000 + `5,000 + `25,000 + `36,000
= `1,20,000
Current Ratio =
• Quick Ratio =
Liquid Assets = Trade Receivables + Cash + Marketable Securities
= `1,00,000 + `30,000 + `20,000
= `1,50,000
Quick Ratio =
Comments: The short-term financial position of the company is
sound because its current ratio is 3 : 1, which is more than the ideal
ratio of 2 : 1. Liquid ratio o the company is 1.25 : 1, which is also
more than the ideal ratio of 1 : 1. Therefore, it can be said that the
company is in a position to pay its current liabilities instantly.
40
CASH FLOW STATEMENT
(Indirect Method)
` `
• Cash flows from Operating Activities:
Net profit before taxation:
Profit during the year (1) 82,000
+Dividend paid 36,000 1,18,000
Adjustments for:
Depreciation on fixed assets(3) 26,000
Provision for doubtful debts 6,000
Discount on issue written off 4,000
Interest Paid 35,000
1,89,000
Less: Profit on sale of investments 4,000
Profit on sale of fixed assets 5,000 9,000
Operating profit before working 1,80,000
capital change
Add: Decrease in Current Assets:
Trade Receivables 1,20,000
Increase in Current Liabilities:
Trade Payables 60,000 1,80,000
3,60,000
Less: Increase in Current Assets:
Inventory 50,000
Net cash from operating activities 3,10,000 3,10,000
• Cash flows from Investing Activities:
Purchase of Fixed Assets (2) (3,20,000)
Sale of Fixed Assets 17,000
Purchase of Investments (4) (15,000)
Sale of Investments 14,000
Net cash used in investing activities (3,04,000)(3,04,000)
• Cash flows from financing activities:
Issue of Equity Shares 1,00,000
Premium received on issue of shares 60,000
Issue of Debentures 50,000
Redemption (Repayment) of Preference (25,000)
Shares
Dividend paid (36,000)
Interest paid (35,000)
Net cash from financing activities 1,14,000 1,14,000
Net increase in cash and cash equivalents 1,20,000
Cash and cash equivalents at the beginning
of the period 94,000
Cash and cash equivalents at the end of the
Period 2,14,000
Note: 1. Negative balance of Profit & Loss amounting to ` 10,000
appearing in the Balance Sheet on 31st March, 2011 represent an amount
of loss. In the current year, after covering this loss of ` 10,000, the Profit
~ Loss shows a profit of ` 72,000. It means that net profit during the
current year must have been ` 72,000 + ` 10,000 = ` 82,000.
2.
FIXED ASSETS A/C (On Original Cost)
` `
To Balance b/d 2,000 By Bank (sale) 17,000
To P & L A/c (Being By Accumulated Dep. A/c
Profit on the sale of
fixed Assets) 5,000 (Being depreciation on fixed8,000
assets sold)
To Bank A/c (Balancing
Fig. being 3,20,000 By Balance c/d 5,00,000
purchases) 5,25,000 5,25,000
3.
ACCUMULATED DEPRECIATION A/C
` `
To Fixed Assets A/c By Balance b/d 30,000
(being the transfer of By P & L A/c (Balancing figure,
Depreciation on fixed being current year‘s
Assets sold) 8,000
TO Balance c/d 48,000 depreciation 26,000
56,000 56,000
4.
INVESTMENTS A/C
` `
To Balance b/d 40,000 By Bank A/c
To P&L A/c (Profit (Sale proceeds) 14,000
On sale of
Investments) 4,000 By Balance c/d 45,000
To Bank A/c (Balancing
Fig.-being purchases)15,000
59,000 59,000
42
• Equality all employees treated equally
• Health consciousness—use of sanitizer and sterilised clothes
• Balanced regional development