Accountancy All India (Set 2)

General Instructions:

Read the following instructions very carefully and strictly follow them:

1. This question paper comprises two · PARTS - A and B. There are 32 questions in the question paper. All questions are compulsory.
2. Part - A is compulsory for all candidates.
3. Part - B has two options i.e. (i) Analysis of Financial Statement and
4. Computerized Accounting. You have to attempt only one of the given OPTIONS.
5. Heading of the option opted must be written on the Answer-Book before attempting the questions of that particular OPTION.
6. Question number 1 to 13 and 23 to 29 are very short answer type questions carrying 1 mark each.
7. Question number 14 and 30 are short answer type-I questions carrying 3 marks each.
8. Question number 15 to 18 and 31 are short answer type-II questions carrying 4 marks each.
9. Question number 19 to 20 and 32 are also long answer type-I questions carrying 6 marks each.
10. Question number 21 and 22 are long answer type-II questions carrying 8 marks each.
11. Answer should be brief and to the point. The answer of each part should be written at one place.

1. There is no overall choice. However, an internal choice has been provided

in 2 questions of three marks, 2 questions of four marks, 1 question of six marks and 2 questions of eight marks. You have to attempt only one of the choices in such questions.

1. However, separate instructions are given with each section and question, wherever necessary.

Question 1

Why does the Fixed Capital Account of partners show credit balance even when the firm suffers losses year after year?

Solution:

Fixed Capital Account of the Partner shows credit balance even after losses year after year because loss is charged to the current account of the partners rather than the capital account under the fixed capital method. Therefore, the balance in the capital

account of the partners remains unchanged except when additional capital is introduced or existing capital is withdrawn.

Question 2

Milan, Khilan and Silam were partners sharing profits in the ratio of 2:2:1. They decided to share future profits in the ratio of 7:5:3 with effect from 1st April, 2019. After the revaluation of assets and re-assessment of liabilities, Revaluation Account showed a loss of ₹ 15,000. The amount to be debited in the capital account of Milan because of loss on revaluation will be:

1. ₹ 15,000
2. ₹ 6,000
3. ₹ 7,000
4. ₹ 5,000

Solution:

Loss on revaluation is divided among all the existing partners in old ratio. Thus, amount to be debited to Milan's Capital will be ₹6,000 (i.e. 15,000 × 2/5). Hence, the correct answer is option B.

Question 3

Name an item which is transferred to credit side of Realisation Account at the time of dissolution of partnership firm, but does not involve cash payment.

Solution:

All the liabilities (except Bank Overdraft, Partner Capital Account, Free Reserves, Credit balance of Profit and Loss Account, Partner's Loan, General Reserve, Reserve Fund, etc.) are transferred to the credit side of Realisation Account but does not involve cash payment.

Question 4

Which of the following statements does not relate to 'Reserve Capital':

1. It is part of uncalled capital of a company.
2. It cannot be used during the lifetime of a company.
3. It is part of subscribed capital.
4. It can be used for writing off capital losses.

Solution:

Reserve Capital is used only in the event of winding up of the company thus; it cannot be used to write off capital losses.

Hence, the correct answer is option C.