Accountancy 2019 Abroad Set-3

General Instructions:

1. This question paper contains two parts A and B.
2. Part A is compulsory for all.
3. Part B has two options: Analysis of Financial Statements and Computerized Accounting.
4. Attempt only one option of Part B.
5. All parts of a question should be attempted at one place.

Question 1

A and B were partners in a firm sharing profits in the ratio of 3:2. C and D were admitted as new partners. A sacrificed 1/4 th of his share in favour of C and B sacrificed 50% of his share in favour of D. Calculate the new profit sharing ratio of A, B, C and D.

SOLUTION:

Profit-sharing ratio between A & B = 3:2

A's new share = Old Share - Share sacrificed in favour of <math>C = \frac{3}{5} - (\frac{1}{4} \times \frac{3}{5}) = \frac{9}{20}</math>

C's Share <math>= \left(\frac{1}{4} \times \frac{3}{5}\right) = \frac{3}{20}</math>

B’s Share = Old Share – Share sacrificed in favour of <math>D=\frac{2}{5}-\left(\frac{1}{2}\times\frac{2}{5}\right)=\frac{1}{5}</math>

D's Share <math>= \left(\frac{1}{2} \times \frac{2}{5}\right) = \frac{1}{5}</math>

New profit-sharing ratio between A, B, C and D

1. B: C: D = <math>\frac{9}{20}</math>: <math>\frac{4}{20}</math>: <math>\frac{3}{20}</math>: <math>\frac{4}{20}</math>

Question 2

Distinguish between 'Reconstitution of Partnership' and 'Dissolution of Partnership Firm' on the basis of 'Closure of books'.

OR

State the basis of calculating the amount of profit payable to the legal representative of a deceased partner in the year of death.

SOLUTION:

Reconstitution of

Basis of Difference Dissolution of a Partnership Firm

Partnership

Books of accounts are not

There is a closure of the books of

Closure of Books of Accounts change in the existing accounts as there is discontinuance

of business of the firm.

partners.

OR

The legal representative of the deceased partner is eligible for profits on the basis of either:

Time Basis = Average Profits <math>\times</math> No. of months partner remained /12 <math>\times</math> Share of deceased Partner; or

Sales Basis = Previous Year's Profit/ Previous Year's Sale × Sales till the death of a partner × Share of Deceased Partner

Question 3

OR

What is meant by 'Issue of Debentures as Collateral Security'?

State the provision of the Companies Act, 2013 for the creation of Debenture Redemption Reserve.

SOLUTION:

Issue of debentures as collateral security means the issue of debentures as a secondary security in addition to the primary security and acts as an extra cushion to the lender against default in repayment of loan.

OR

As per the provisions of the Companies Act, 2013, at-least twenty-five per cent of the nominal value of the debentures being redeemed is to be transferred to this reserve before the redemption takes place.

Question 4

Differentiate between 'Receipt and Payments Account' and 'Income and Expenditure Account' on the basis of 'Period'.