ACCOUNTANCY CLASS XII - MLL

MINIMUM LEVEL LEARNING MATERIAL

Accounting for partnership firms –Fundamentals

Q.1. Define partnership. Ans : Partnership is the relation between persons who have agreed to share the     profits of a business carried on by all or any of them acting for all. Q.2. Write two features of partnership. i) There must be two or more partners.   ii) There must be an agreement. Q.4.Mention two conditions under which fixed capital of a firm can change?   i)When additional capital is introduced. ii) When capital is withdrawn. Q.5. If a partner draws Rs. 3000 at the beginning of every month during the year 1997, Interest on the amount being 12% p.a calculate interest on drawing. Interest on drawing=3000x12x12/100x6.5/12=Rs.2340 Q.6.In which method of maintaining capitals is current a/c maintained? Fixed capital method. Q.7Geeta is a partner in a firm. She has advanced a loan of Rs 20,000 to the firm without any agreement of interest. Calculate interest payable to Geeta.    According to Indian Partnership Act, in the absence of specific agreement, interst on partners’ loan is provided @ 6% p.a Interest on Geeta’s loan = Rs 20,000 x 6/100 = Rs 1,200 Q  8 How is interest on drawings calculated when different amounts are withdrawn at different dates ? Ans. Interest on drawings = Total of product x rate of interest/100 x 1/12        Where product = Amount withdrawn x number of months for which that amount has been used. Q 9 What are the provisions of the Indian Partnership Act, 193 which become applicable in the absence of partnership deed? Ans I) profit sharing ratio among partners is equal.             ii)No salary or remuneration is given to partners             iii) No interest on capitals is given             iv) Interest on drawings will not be charged.             v) Interest on partner’s laon @ 6% p.a Q 10 What is Profit and Loss Appropriation A/c? AnsIt is a nominal account. In fact it is an extension of P/L A/c prepared to show the adjustments related to partners and to show the distribution of divisible profit.

Accounting for partnership Firms-Reconstitution and Dissolution

1. What is the difference between gaining ratio and sacrificing ratio? GR=New profit sharing ratio-Old profit sharing ratio SR= Old profit sharing ratio- New profit sharing ratio 2. At the time of retirement, the balance in the retiring partners’ capital account will be transferred to which account? Retiring partners loan account 3. When is executor’s account prepared? AT the time of death of a partner 4. At the time retirement, the accumulated reserves and surplus will be transferred to which partners’ capital account? All partners’ capital account 5. At the event of death, the profit of the deceased partner till the date of death will be transferred to which account? Profit and loss suspense account 6 At the time of retirement of a partner, in which ratio goodwill is shared? Gaining ratio 7 A, B and C are partners sharing profit and losses in the ratio of 3:2:1. B is retiring from the firm. What will be new profit sharing ratio of partners? 3:1 8. For what share a deceased partner is eligible? Share of revaluation profit, General reserve, salary , interest on capital etc. 9. Name two adjustments at the time of retirement of the partner. Adjustment of goodwill, revaluation of assets and re assessment of liabilities. 10 Is a retiring partner liable for firm’s acts before his retirement? Yes.

Accounting for share capital

Q1. What are preliminary expenses? Ans. Those expenses which are incurred in the formation of a company. Also called as incorporation expenses. Q2. X ltd. invited applications for 1, 00, 000 shares of Rs. 10 each. It received applications for 90, 000 shares. Name the kind of subscription. Ans. Under- subscription. Q3. What do you mean by calls in arrears? Ans. Money which has been called up by the company but not paid by the shareholder. Q4. What is the maximum amount of discount at which the forfeited shares can be re-issued? Ans. Amount that actually have been received/ forfeited.  Q5. How is Calls in advance shown in the balance sheet of a company? Ans. Under current liabilities head Q6. Y ltd. Invited applications for 1, 00, 000 shares of Rs. 10 each. It received applications for 1, 50, 000 shares. Name the kind of subscription. Ans. Over subscription Q7. What is the other name for nominal capital? Ans. Authorized or registered capital Q8. What is par value of a share? Ans. Face value of a share. Q9. Who are the real owners of the company? Ans. Shareholders Q10. What is the rate of interest payable on calls in advance? Ans. 6% p.a.

Accounting for Debentures

Q1. List out the various sources of fund for the redemption of Debentures? Ans. Q2. What do you mean by redemption of debentures “Out of Capital” and redemption of debentures out of profits? Ans. Q3. What do you mean by “Call Option”? Ans. Q4 what do you mean by “Put Option’? Ans. Q5. What are the exceptions for the creation of Debenture Redemption Reserve Fund? Ans. Calculate the amount to be transferred to Debenture Redemption Reserve in the following cases: Q6 Cancellation of all 5,000 debentures of Rs. 100 each out of capital. Ans No Transfer Q7 Redemption of 5,000 debentures of Rs. 100 each. . Ans. 2,50,000 Q8 Redemption out of profits for 5,000 debentures of Rs. 100 each. Ans. 5,00,000 Q9 Redemption out of profits for 5,000 debentures of Rs. 100 each at a premium of 10%. Ans. 5,00,000 Q10 Part conversion of 10,000 debenture of Rs. 100 each into shares to the extent of 60%. The balance 40% was to be paid in cash over 5 installments. Ans 2,00,000

Analysis of financial statements

Q1. What do you understand by comparative statement? Ans. Showing percentage of change on abs.olute figures Q2. Name any tools of financial statement analysis. Ans. Cash flow analysis, comparative, common-size, trend analysis. Q3. What do you understand by inter-firm and intra-firm comparison? Ans. Comparison of data of two firms. Q4. What do you understand by common size statement? Ans. Showing percentage of same year items with total of the items. Q5. State any one limitation of comparative statement. Ans.it does not give qualitative jedgement. Q6. What do you mean by trend analysis? Ans. It shows the change in long-term. Q6. Give one advantage of trend analysis. Ans.suitable for sales, purchases, profit. Q7. Clarify whether comparative statement is a form of vertical analysis or horizontal analysis? Ans. Vertical form. Q8. Give one objective of financial analysis. Ans. For financial efficiency of business. Q9. Give one advantage of common size statement. Ans. We can understand proportion with total. Q10. What is common size balance sheet? Ans. Where percentage of each item with total is shown. RATIO ANALYSIS Q11. What do you mean by Ratio analysis? Ans. Showing proportion of two related figures. Q12. State one objective of ratio analysis. Ans. Make quick decision about different areas. Q13. State the various ways by which a ratio can be expressed Ans. Rate , percentage, times etc. Q14. What is purpose of liquidity ratio. Ans. Shows short-term solvency. Q15. How many ratios come under liquidity ratio? Name them. Ans. Current and quick. Q16. Give formula of current ratio. Ans. Current assets/ current liabilities. Q17. Name the various solvency ratios. Ans. Debt-equity, proprietory. Q18. What is the objective of turnover ratio? Ans. To check efficiency of business. Q19. Give formula for stock turnover ratio. Ans. Revenue from operation/ average stock. Q20. What will be included in average accounts receivable? Ans. Debtors and bills receivable.

Cash flow statement

Q1.What is a Cash Flow Statement? Ans .CFS is a tool to find out the inflow and outflow of cash Q2.What are the three sources of inflow and outflow of cash Ans. The three activities are Operating Financing and Investing Q3. What are operating activities? Ans.Operating Activities are related to the basic activities of sale and purchase. Q4. What are Investing Activities? Ans.Investing Activities are related to purchase and sale of non current assets Q5. What are Financing Activities? Ans.Financing Activities are related to the investment in shares and debentures Q6. How do you treat Refund of Tax? Ans. Deducted from operating activities and added to the operating profit before working capital change s Q7. What are cash equivalents? Ans. Cash or anything equivalent to cash which can be easily converted into cash within a short period of time Q8. What is working capital? Ans.Excess of current assets over current liabilities Q9. Give one example of financing activities Ans. Payment of dividend Q10. How will you treat depreciation? Ans.It will be added to the net profit

ACCOUNTING FOR PARTNERSHIP

Q.1. Define partnership.

Ans : Partnership is the relation between persons who have agreed to share the     profits of a business carried on by all or any of them acting for all.

Q.2. Write two features of partnership.

i) There must be two or more partners.

  ii) There must be an agreement.

Q.4.Mention two conditions under which fixed capital of a firm can change?  

i)When additional capital is introduced.

ii) When capital is withdrawn.

Q.5. If a partner draws Rs. 3000 at the beginning of every month during the year 1997, Interest on the amount being 12% p.a calculate interest on drawing.

Interest on drawing=3000x12x12/100x6.5/12=Rs.2340

Q.6.In which method of maintaining capitals is current a/c maintained?

Fixed capital method.

Q.7Geeta is a partner in a firm. She has advanced a loan of Rs 20,000 to the firm without any agreement of interest. Calculate interest payable to Geeta.

   According to Indian Partnership Act, in the absence of specific agreement, interst on partners’ loan is provided @ 6% p.a

Interest on Geeta’s loan = Rs 20,000 x 6/100 = Rs 1,200

Q  8 How is interest on drawings calculated when different amounts are withdrawn at different dates ?

Ans. Interest on drawings = Total of product x rate of interest/100 x 1/12

       Where product = Amount withdrawn x number of months for which that amount has been used.

Q 9 What are the provisions of the Indian Partnership Act, 193 which become applicable in the absence of partnership deed?

Ans I) profit sharing ratio among partners is equal.

            ii)No salary or remuneration is given to partners

            iii) No interest on capitals is given

            iv) Interest on drawings will not be charged.

            v) Interest on partner’s laon @ 6% p.a

Q 10 What is Profit and Loss Appropriation A/c?

AnsIt is a nominal account. In fact it is an extension of P/L A/c prepared to show the adjustments related to partners and to show the distribution of divisible profit.

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MINIMUM LEVEL LEARNING:

Q1. What are preliminary expenses?

Ans.Those expenses which are incurred in the formation of a company.Also called as incorporation expenses.

Q2. X ltd. invited applications for 1, 00, 000 shares of Rs. 10 each. It received applications for 90, 000 shares. Name the kind of subscription.

Ans. Under- subscription.

 Q3. What do you mean by calls in arrears?

Ans. Money which has been called up by the company but not paid by the shareholder.

Q4. What is the maximum amount of discount at which the forfeited shares can be re-issued?

Ans. Amount that actually have been received/ forfeited.

Q5. How is Calls in advance shown in the balance sheet of a company?

Ans. Under current liabilities head

Q6. Y ltd. Invited applications for 1, 00, 000 shares of Rs. 10 each. It received applications for 1, 50, 000 shares. Name the kind of subscription.

Ans. Over subscription

Q7. What is the other name for nominal capital?

Ans. Authorized or registered capital

Q8. What is par value of a share?

Ans. Face value of a share.

Q9. Who are the real owners of the company?

Ans. Shareholders

Q10. What is the rate of interest payable on calls in advance?

Ans. 6% p.a.