Accountancy: CUET Mock Test - 4 - CUET MCQ

They come under the head current assets.

The correct answer is Rs. 12000

Important Points A : B : Reserve = 1/2 : 1/3 : 1/6 = 3 : 2 : 1

Profit sharing Ratio A : B = 3 : 2

Balance of reserve on the date of death = Rs. 30000

At the time of retirement or death of the partner, the Balance in reserves and other accumulated profit is distributed among partners in old ratio.

B's share in Reserve = 30000 x 2/5 = Rs. 12000.

The correct answer is Rs.35.

Key PointsCalls on shares- Calls are essential for fully paying up shares and realising the full value of shares from shareholders. Two points are important regarding the calls on shares.

• The amount on any call should not exceed 25% of the face value of shares.
• There must be an interval of at least one month between the making of two calls unless otherwise provided by the articles of association of the company.

Important PointsSubscribed share capital - Rs.1,00,00,000

Shares Par Value - Rs.100

Subscribed Shares = Subscribed share capital/Shares Par Value

=Rs.1,00,00,000/100

=1,00,000 Shares

Final calls paid on shares= 97,500

Final calls unpaid on shares= 1,00,000 - 97,500

=2500 Shares

Calls in arrears amount = Rs.87,500

Calls in arrears amount per share = Calls in arrears amount/Final calls unpaid on shares

=Rs.87,500/2500

=Rs.35

Additional Information Entries for Final Calls on shares-

The correct answer is share 300, Rs.240.

Key PointsPro Data Basis-when the company received over applicants which are offer to the public, then company to decides to proportionate ratio allotment to all applicants is called pro data basis. Excess application money received can be adjusted with allotment or refunded.Important Points Total Application received - 14,000 shares

Total Application offer- 10,000 shares

F applied for shares= 420

F share of Application money =420 x 2= Rs.840

Shares to be allotted = shares offered/total application received x no. of share applied

Shares allotted to F = 10000/14000 x 420=300 Shares

Actual Application money of F= 300 x 2=600

Excess Application Money =Rs.840 - Rs.600 =Rs.240

Excess application money to be adjusted with allotment =Rs.240.

The correct answer is 6000

Key Points Purchase consideration:

• It means the purchase price payable by the company for the business acquired.
• The basis for calculating the purchase consideration, as well as the manner in which the purchase consideration is paid.

Important Points Explanation:
Assets Acquired = Rs. 7,50,000
Issue Price per share = Face Value + Premium on issue
Issue Price per share = 100 + 25% of 100
Issue Price per share = Rs. 125
Number of shares issued = Total Assets / Issue price Per share
Number of shares issued = 750000 / 125
Number of shares issued = 6000 shares

The correct answer is Board of Directors.

Key PointsBuy back of shares- refers to a company repurchasing its own shares from its existing shareholders.

Important Points According to Section 68 of Companies Act, 2013;

Every buy-back shall be completed within a period of one year from the date of passing of the special resolution, or as the case may be, the resolution passed by the Board under clause

• from the existing shareholders or security holders on a proportionate basis
• from the open market
• by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or sweat equity.
• Odd-lot shareholders

Hence, Company can't buy back their own shares from Board of Directors.

The correct answer is Provisions of the Stamp Act

Key Points

• Provisions of the Stamp Act:
  • The Stamp Act mandates the payment of stamp duty on legal documents, including partnership deeds, to confer them legal status and enforceability in a court of law.
  • It is essential for a partnership deed to be stamped appropriately as per the Stamp Act to ensure its validity and admissibility as evidence in legal proceedings.
  • The act of stamping a document serves as a measure to prevent fraud and ensures a record of all legal and official documents.

Additional Information

• Provision of Partnership Act:
  • While the Partnership Act outlines the rights, duties, and liabilities of partners in a partnership firm, it does not specifically mandate the stamping of the partnership deed.
  • However, it governs the formation, operation, and dissolution of partnership firms in general.
• Companies Act:
  • The Companies Act governs the incorporation, regulation, and winding up of companies, not partnerships, making it irrelevant for the drafting of partnership deeds.
• Registrar of Firms:
  • The Registrar of Firms is responsible for the registration of partnership firms and maintaining a record of the same, but it does not dictate the stamping requirements of the partnership deed.

The correct answer is C's capital A/C Dr. 30,000 To A's Capital A/C 30,000.

Key Points

• The partners A, B, & C were sharing profits & losses in the ratio of 3:2:1 and decided to share equally in the future.
• This decision necessitates an adjustment in their capital accounts to reflect the new sharing ratio.
• General reserve and goodwill are internal bookkeeping entries that represent undistributed profits and the value of the business's reputation, respectively.
• The adjustment for goodwill, valued at ₹1,20,000, needs to be made in the capital accounts of A, B, and C to reflect the new profit-sharing ratio.
• Given the original profit-sharing ratio, A and B need to compensate C for their higher shares of goodwill in the new equal sharing arrangement.
• The calculation involves determining the excess or deficit in capital that each partner should have according to the new sharing arrangement.
• As the partners do not want to disturb the general reserve, the adjustment focuses solely on goodwill.
• Option 3 correctly adjusts the capital accounts by debiting C's capital account and crediting A's capital account by ₹30,000, indicating that A compensates C for the change in profit-sharing ratio, making their capital contributions equitable under the new arrangement.

Additional Information

• The adjustment entry is necessary to ensure that the capital accounts of the partners are aligned with the new profit-sharing ratio, which is more equitable.
• This process is a fundamental aspect of partnership accounting, especially when there are changes in the agreement regarding profit and loss sharing.

The correct answer is ₹7000 on the receipts side.

Key Points

• The receipts and payments account is a summary of actual cash receipts and payments of a non-profit organization over a specific period, typically a year.
• It records transactions on a cash basis, meaning it only includes transactions where cash has actually been received or paid, regardless of when the transaction was initiated or completed.
• In the context of the sale of furniture, the amount to be recorded in the receipts and payments account is the actual cash received from the sale, which is ₹7000.
• The book value of the furniture (₹10,000) and the loss on sale (₹3000) are accounting figures relevant for preparing the income and expenditure account and the balance sheet but do not affect the cash-based accounting of the receipts and payments account.
• Therefore, the sale of furniture will be shown as ₹7000 on the receipts side of the receipts and payments account, reflecting the actual cash inflow from the transaction.

Additional Information

• The difference between the book value of an asset and the amount received from its sale is recognized as a gain or loss in the income and expenditure account, not in the receipts and payments account.
• The receipts and payments account provides a straightforward view of the organization's cash flow, which is crucial for assessing its immediate financial health and cash management.

The correct answer is Reserve and Surplus.

Key Points

• Reserve and Surplus:
  • Security Premium is shown under the head 'Reserve and Surplus' in the Balance Sheet as per accounting standards.
  • This amount is considered a part of the shareholders' equity, representing extra money paid by shareholders above the nominal value of the shares issued.
  • It is used for purposes specified by the company's articles of association or as prescribed by law, such as issuing fully paid bonus shares to shareholders or writing off preliminary expenses.

Additional Information

• Share Capital:
  • This includes the nominal value of shares and is not the correct head for showing Security Premium as it strictly represents the capital raised by issuing shares at their face value.
• Equity Share Capital:
  • Refers specifically to the funds raised through the issuance of equity shares. While Security Premium is related to equity, it is not shown under this head but rather under reserves and surplus.
• Shares and Liabilities:
  • This is a broader category in the Balance Sheet that encompasses all shares, debts, and other liabilities but does not specifically account for Security Premium, which has its designated place under reserves and surplus.

The correct answer is [Ctrl] + [F1].

Key Points

[Ctrl] + [F1]:

• This keyboard shortcut is universally used in Microsoft Office applications to toggle the visibility of the ribbon, effectively collapsing or expanding it.
• The ribbon is the strip at the top of the program window that contains groups of commands. Collapsing it can provide more space on the screen for document content.
• Using [Ctrl] + [F1] allows users to quickly access this feature without navigating through menus or options, improving efficiency.

Additional Information

[Ctrl] + [F3], [Ctrl] + [F5], and [Ctrl] + [F7]:

• These shortcuts are used for different purposes within various applications and do not control the visibility of the ribbon.
• For example, [Ctrl] + [F3] might be used to define a name in Excel, [Ctrl] + [F5] to restore the window size of the program, and [Ctrl] + [F7] to move the window in certain applications.
• It’s important for users to familiarize themselves with keyboard shortcuts specific to their tasks and applications for improved productivity.

Financial statements help the investors to assess long-term and short-term solvency as well as the profitability of the concern.

The fiscal policies, particularly taxation policies of the government, are related with the financial performance of corporate undertakings. The financial statements provide basic input for industrial, taxation and other economic policies of the government.

Current assets = Inventories + Trade receivables + Cash and cash equivalents + Current investments
Current assets = 50,000 + 70,000 + 50,000 + 2,30,000 = ₹ 4,00,000

Public deposits are long-term borrowings and are non-current liabilities, hence not shown on the assets side of the balance sheet.

It is included in ‘other incomes’ in the statement of profit and loss.

Lending is an operating activity for financial companies, so interest on loans is an operating income for them, hence included under revenue from operations.

The management has the responsibility to safeguard the owner’s investment and increase its value by managing the business efficiently.

Revenue from operations as it is a financial company.

It is included under non-current liabilities.

Deferred tax liabilities

Public deposits are long-term borrowings so they are included under the head non-current liabilities.