Mock Test: Principles and Practice of Accounting(Paper-1) - May 2022 | Business and Commercial Knowledge (Old Scheme) - CA Foundation PDF Download

 Page 1


1 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note forming part of 
the answer. 
Working Notes should form part of the answer. 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false: 
(i)  Wages paid for erection of machinery are debited to Profit and Loss Account.  
(ii)  Amount spent for the construction of temporary huts, which were necessary for construction 
of the Cinema House and were demolished when the Cinema House was ready, is capital 
expenditure.  
(iii)  The additional commission to the consignee who agrees to bear the loss on account of bad 
debts is called overriding commission.  
(iv) In the calculation of average due date, only the due date of first transaction must be taken as 
the base date.  
(v) The business of partnership must be carried on by all the partners.  
(vi) Debenture interest is payable after the payment of preference dividend but before the 
payment of equity dividend. (6 Statements x 2 Marks = 12 Marks) 
(b) What services can a Chartered Accountant provide to the society? (4 Marks) 
(c) Calculate the missing amount for the following. 
  Assets  Liabilities Capital 
(a)  45,00,000 7,50,000 ? 
(b)  ?  4,50,000 2,25,000 
(c)  43,50,000 ?  41,25,000 
(d)    1,71,00,000   (8,40,000)   ?      (4 Marks) 
2. (a) M/s Krishna took lease of a quarry on 1-1-2019 for ` 6,00,00,000. As per technical estimate the total 
quantity of mineral deposit is 12,00,000 tonnes. Depreciation was charged on the basis of depletion 
method. Extraction pattern is given in the following table: 
Year   Quantity of Mineral extracted 
2019    12,000 tonnes 
2020    60,000 tonnes 
2021    90,000 tonnes 
Required 
Show the Quarry Lease Account and Depreciation Account for each year from 2019 to 2021. 
Page 2


1 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note forming part of 
the answer. 
Working Notes should form part of the answer. 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false: 
(i)  Wages paid for erection of machinery are debited to Profit and Loss Account.  
(ii)  Amount spent for the construction of temporary huts, which were necessary for construction 
of the Cinema House and were demolished when the Cinema House was ready, is capital 
expenditure.  
(iii)  The additional commission to the consignee who agrees to bear the loss on account of bad 
debts is called overriding commission.  
(iv) In the calculation of average due date, only the due date of first transaction must be taken as 
the base date.  
(v) The business of partnership must be carried on by all the partners.  
(vi) Debenture interest is payable after the payment of preference dividend but before the 
payment of equity dividend. (6 Statements x 2 Marks = 12 Marks) 
(b) What services can a Chartered Accountant provide to the society? (4 Marks) 
(c) Calculate the missing amount for the following. 
  Assets  Liabilities Capital 
(a)  45,00,000 7,50,000 ? 
(b)  ?  4,50,000 2,25,000 
(c)  43,50,000 ?  41,25,000 
(d)    1,71,00,000   (8,40,000)   ?      (4 Marks) 
2. (a) M/s Krishna took lease of a quarry on 1-1-2019 for ` 6,00,00,000. As per technical estimate the total 
quantity of mineral deposit is 12,00,000 tonnes. Depreciation was charged on the basis of depletion 
method. Extraction pattern is given in the following table: 
Year   Quantity of Mineral extracted 
2019    12,000 tonnes 
2020    60,000 tonnes 
2021    90,000 tonnes 
Required 
Show the Quarry Lease Account and Depreciation Account for each year from 2019 to 2021. 
2 
(b)  On 30
th
 June. 2021, Cash Book of Ms. Suman (Bank Column of Account No. 1) shows a Bank 
Overdraft of ` 1,97,400. On going through the Bank Pass book for reconciling the Balance, she 
found the following: 
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed by the bankers on 2
nd
 
July. 
(b) A crossed cheque for ` 3000 given to Abdul was returned by him and a bearer cheque was 
issued to him in lieu on 1
st
 July. 
(c) Cash and cheques amounting to ` 13,600 were deposited in the Bank on 29
th
 June., but 
cheques worth ` 5,200 were cleared by the Bank on 1
st
 July., and one cheque for ` 1,000 
was returned by them as dishonoured on the latter date. 
(d) According to Suman’s standing instructions, the bankers have on 30
th
 June, paid ` 1,280 as 
interest to her creditors, paid quarterly premium on her policy amounting to ` 640 and have 
paid a second call of ` 2,400 on shares held by her and lodged with the bankers for safe 
custody. They have also received ` 600 as dividend on her shares and recovered an 
Insurance Claim of ` 3,200, as their charges and commission charged on the above being ` 
400. On receipt of information of the above transaction, she has passed necessary entries in 
her Cash Book on 1
st
 July.  
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by her in No. 2 account and 
wrong debit in respect of a cheque for ` 1,200 drawn against her No. 2 account. 
 Prepare a Bank Reconciliation Statement as on 30
th
 June, 2021. (10 + 10 = 20 Marks) 
3. (a)  Nishant of Noida consigned 15,000 kgs of Sugar at ` 30 per kg to his agent Raja at Gurgaon. He 
spent ` 5 per kg as freight and insurance for sending the Sugar at Gurgaon. On the way 100 kgs. 
of sugar was lost due to the leakage (which is to be treated as normal loss) and 400 kgs. of sugar 
was destroyed in transit. ` 9,000 was paid to consignor directly by the Insurance company as 
Insurance claim. 
 Raja sold 7,500 kgs. at ` 60 per kg. He spent ` 33,000 on advertisement and recurring expenses. 
You are required to calculate: 
(i) The amount of abnormal loss 
(ii) Value of stock at the end and 
(iii) Prepare Consignment account showing profit or loss on consignment, if Raja is entitled to 5% 
commission on sales.  
(b) On 1
st
 January, 2021, Aditi account in Deepti ledger showed a debit balance of ` 7,500.  The 
following transactions took place between Deepti and Aditi during the quarter ended 31
st
 March, 
2021: 
2021   ` 
Jan. 11 Deepti sold goods to Aditi 9,000 
Jan. 24 Deepti received a promissory note from Aditi due after 3 months  7,500 
Feb. 01 Aditi sold goods to Deepti 15,000 
Feb. 04 Deepti sold goods to Aditi 12,300 
Feb. 07 Aditi returned goods to Deepti 1,500 
March 01 Aditi sold goods to Deepti 8,400 
March 18 Deepti sold goods to Aditi 13,800 
March 23 Aditi sold goods to Deepti 6,000 
Page 3


1 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note forming part of 
the answer. 
Working Notes should form part of the answer. 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false: 
(i)  Wages paid for erection of machinery are debited to Profit and Loss Account.  
(ii)  Amount spent for the construction of temporary huts, which were necessary for construction 
of the Cinema House and were demolished when the Cinema House was ready, is capital 
expenditure.  
(iii)  The additional commission to the consignee who agrees to bear the loss on account of bad 
debts is called overriding commission.  
(iv) In the calculation of average due date, only the due date of first transaction must be taken as 
the base date.  
(v) The business of partnership must be carried on by all the partners.  
(vi) Debenture interest is payable after the payment of preference dividend but before the 
payment of equity dividend. (6 Statements x 2 Marks = 12 Marks) 
(b) What services can a Chartered Accountant provide to the society? (4 Marks) 
(c) Calculate the missing amount for the following. 
  Assets  Liabilities Capital 
(a)  45,00,000 7,50,000 ? 
(b)  ?  4,50,000 2,25,000 
(c)  43,50,000 ?  41,25,000 
(d)    1,71,00,000   (8,40,000)   ?      (4 Marks) 
2. (a) M/s Krishna took lease of a quarry on 1-1-2019 for ` 6,00,00,000. As per technical estimate the total 
quantity of mineral deposit is 12,00,000 tonnes. Depreciation was charged on the basis of depletion 
method. Extraction pattern is given in the following table: 
Year   Quantity of Mineral extracted 
2019    12,000 tonnes 
2020    60,000 tonnes 
2021    90,000 tonnes 
Required 
Show the Quarry Lease Account and Depreciation Account for each year from 2019 to 2021. 
2 
(b)  On 30
th
 June. 2021, Cash Book of Ms. Suman (Bank Column of Account No. 1) shows a Bank 
Overdraft of ` 1,97,400. On going through the Bank Pass book for reconciling the Balance, she 
found the following: 
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed by the bankers on 2
nd
 
July. 
(b) A crossed cheque for ` 3000 given to Abdul was returned by him and a bearer cheque was 
issued to him in lieu on 1
st
 July. 
(c) Cash and cheques amounting to ` 13,600 were deposited in the Bank on 29
th
 June., but 
cheques worth ` 5,200 were cleared by the Bank on 1
st
 July., and one cheque for ` 1,000 
was returned by them as dishonoured on the latter date. 
(d) According to Suman’s standing instructions, the bankers have on 30
th
 June, paid ` 1,280 as 
interest to her creditors, paid quarterly premium on her policy amounting to ` 640 and have 
paid a second call of ` 2,400 on shares held by her and lodged with the bankers for safe 
custody. They have also received ` 600 as dividend on her shares and recovered an 
Insurance Claim of ` 3,200, as their charges and commission charged on the above being ` 
400. On receipt of information of the above transaction, she has passed necessary entries in 
her Cash Book on 1
st
 July.  
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by her in No. 2 account and 
wrong debit in respect of a cheque for ` 1,200 drawn against her No. 2 account. 
 Prepare a Bank Reconciliation Statement as on 30
th
 June, 2021. (10 + 10 = 20 Marks) 
3. (a)  Nishant of Noida consigned 15,000 kgs of Sugar at ` 30 per kg to his agent Raja at Gurgaon. He 
spent ` 5 per kg as freight and insurance for sending the Sugar at Gurgaon. On the way 100 kgs. 
of sugar was lost due to the leakage (which is to be treated as normal loss) and 400 kgs. of sugar 
was destroyed in transit. ` 9,000 was paid to consignor directly by the Insurance company as 
Insurance claim. 
 Raja sold 7,500 kgs. at ` 60 per kg. He spent ` 33,000 on advertisement and recurring expenses. 
You are required to calculate: 
(i) The amount of abnormal loss 
(ii) Value of stock at the end and 
(iii) Prepare Consignment account showing profit or loss on consignment, if Raja is entitled to 5% 
commission on sales.  
(b) On 1
st
 January, 2021, Aditi account in Deepti ledger showed a debit balance of ` 7,500.  The 
following transactions took place between Deepti and Aditi during the quarter ended 31
st
 March, 
2021: 
2021   ` 
Jan. 11 Deepti sold goods to Aditi 9,000 
Jan. 24 Deepti received a promissory note from Aditi due after 3 months  7,500 
Feb. 01 Aditi sold goods to Deepti 15,000 
Feb. 04 Deepti sold goods to Aditi 12,300 
Feb. 07 Aditi returned goods to Deepti 1,500 
March 01 Aditi sold goods to Deepti 8,400 
March 18 Deepti sold goods to Aditi 13,800 
March 23 Aditi sold goods to Deepti 6,000 
3 
 Accounts were settled on 31
st
 March, 2020 by means of a cheque. Prepare an Account Current to 
be submitted by Deepti to Aditi as on 31
st
 March, 2021, taking interest into account @ 10% per 
annum.  Calculate interest to the nearest multiple of a rupee.  
(c)  Mr. Somnath sends goods to his customers on Sale or Return. The following transactions took 
place during the month of December, 2021. 
 December 12
th
 - Sent goods to customers on sale or return basis at cost plus 25% - ` 1,60,000  
 December 20
th
 - Goods returned by customers ` 70,000  
 December 22
nd
 - Received letters from customers for approval ` 70,000  
 December 27
th
 - Goods with customers awaiting approval ` 30,000  
 Mr. Somnath records sale or return transactions as ordinary sales. You are required to pass the 
necessary Journal Entries in the books of Mr. Somnath assuming that the accounting year closes 
on 31
st
 Dec., 2021. Considered that the transaction values are at involve price (including profit 
margin)  (10 + 5 + 5 = 20 Marks) 
4. (a) Amal, Kamal and Tamal are partners in a firm sharing profits and losses as 8:5:3. Their balance sheet 
as at 31
st
 December, 2021 was as follows: 
Particulars Amount` Particulars Amount` 
Sundry creditors 3,00,000 Cash 80,000 
General reserve 1,60,000 Bills receivable 1,00,000 
Partners’ loan accounts:   Sundry debtors 1,20,000 
Amal 80,000 Stock 2,40,000 
Kamal 60,000 Fixed assets 5,60,000 
Partners’ capital accounts:      
Amal 2,00,000    
Kamal 1,60,000    
Tamal 1,40,000                   
 11,00,000  11,00,000 
 From 1
st
 January, 2022 they agreed to alter their profit-sharing ratio as 5:6:5. It is also decided 
that: 
(a) The fixed assets should be valued at ` 6,62,000; 
(b) A provision of 5% on sundry debtors to be made for doubtful debts; 
(c) Goodwill of the firm at this date be valued at three years’ purchase of the average net profits 
of the last five years before charging insurance premium; and 
(d) Stock be reduced to ` 2,24,000. 
 There is a joint life insurance policy for ` 4,00,000 for which an annual premium of `  20,000 is 
paid, the premium being charged to profit and loss account. The surrender value of the policy on  
31
st
 December, 2021 was ` 1,56,000. 
 The net profits of the firm for the last five years were ` 28,000, ` 34,000, ` 40,000, ` 44,000 and 
` 54,000. 
 Goodwill and the surrender value of the joint life policy was not to appear in the books. 
 Draft journal entries necessary to adjust the capital accounts of the partners and prepare the 
revised balance sheet.  (20 Marks) 
Page 4


1 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note forming part of 
the answer. 
Working Notes should form part of the answer. 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false: 
(i)  Wages paid for erection of machinery are debited to Profit and Loss Account.  
(ii)  Amount spent for the construction of temporary huts, which were necessary for construction 
of the Cinema House and were demolished when the Cinema House was ready, is capital 
expenditure.  
(iii)  The additional commission to the consignee who agrees to bear the loss on account of bad 
debts is called overriding commission.  
(iv) In the calculation of average due date, only the due date of first transaction must be taken as 
the base date.  
(v) The business of partnership must be carried on by all the partners.  
(vi) Debenture interest is payable after the payment of preference dividend but before the 
payment of equity dividend. (6 Statements x 2 Marks = 12 Marks) 
(b) What services can a Chartered Accountant provide to the society? (4 Marks) 
(c) Calculate the missing amount for the following. 
  Assets  Liabilities Capital 
(a)  45,00,000 7,50,000 ? 
(b)  ?  4,50,000 2,25,000 
(c)  43,50,000 ?  41,25,000 
(d)    1,71,00,000   (8,40,000)   ?      (4 Marks) 
2. (a) M/s Krishna took lease of a quarry on 1-1-2019 for ` 6,00,00,000. As per technical estimate the total 
quantity of mineral deposit is 12,00,000 tonnes. Depreciation was charged on the basis of depletion 
method. Extraction pattern is given in the following table: 
Year   Quantity of Mineral extracted 
2019    12,000 tonnes 
2020    60,000 tonnes 
2021    90,000 tonnes 
Required 
Show the Quarry Lease Account and Depreciation Account for each year from 2019 to 2021. 
2 
(b)  On 30
th
 June. 2021, Cash Book of Ms. Suman (Bank Column of Account No. 1) shows a Bank 
Overdraft of ` 1,97,400. On going through the Bank Pass book for reconciling the Balance, she 
found the following: 
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed by the bankers on 2
nd
 
July. 
(b) A crossed cheque for ` 3000 given to Abdul was returned by him and a bearer cheque was 
issued to him in lieu on 1
st
 July. 
(c) Cash and cheques amounting to ` 13,600 were deposited in the Bank on 29
th
 June., but 
cheques worth ` 5,200 were cleared by the Bank on 1
st
 July., and one cheque for ` 1,000 
was returned by them as dishonoured on the latter date. 
(d) According to Suman’s standing instructions, the bankers have on 30
th
 June, paid ` 1,280 as 
interest to her creditors, paid quarterly premium on her policy amounting to ` 640 and have 
paid a second call of ` 2,400 on shares held by her and lodged with the bankers for safe 
custody. They have also received ` 600 as dividend on her shares and recovered an 
Insurance Claim of ` 3,200, as their charges and commission charged on the above being ` 
400. On receipt of information of the above transaction, she has passed necessary entries in 
her Cash Book on 1
st
 July.  
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by her in No. 2 account and 
wrong debit in respect of a cheque for ` 1,200 drawn against her No. 2 account. 
 Prepare a Bank Reconciliation Statement as on 30
th
 June, 2021. (10 + 10 = 20 Marks) 
3. (a)  Nishant of Noida consigned 15,000 kgs of Sugar at ` 30 per kg to his agent Raja at Gurgaon. He 
spent ` 5 per kg as freight and insurance for sending the Sugar at Gurgaon. On the way 100 kgs. 
of sugar was lost due to the leakage (which is to be treated as normal loss) and 400 kgs. of sugar 
was destroyed in transit. ` 9,000 was paid to consignor directly by the Insurance company as 
Insurance claim. 
 Raja sold 7,500 kgs. at ` 60 per kg. He spent ` 33,000 on advertisement and recurring expenses. 
You are required to calculate: 
(i) The amount of abnormal loss 
(ii) Value of stock at the end and 
(iii) Prepare Consignment account showing profit or loss on consignment, if Raja is entitled to 5% 
commission on sales.  
(b) On 1
st
 January, 2021, Aditi account in Deepti ledger showed a debit balance of ` 7,500.  The 
following transactions took place between Deepti and Aditi during the quarter ended 31
st
 March, 
2021: 
2021   ` 
Jan. 11 Deepti sold goods to Aditi 9,000 
Jan. 24 Deepti received a promissory note from Aditi due after 3 months  7,500 
Feb. 01 Aditi sold goods to Deepti 15,000 
Feb. 04 Deepti sold goods to Aditi 12,300 
Feb. 07 Aditi returned goods to Deepti 1,500 
March 01 Aditi sold goods to Deepti 8,400 
March 18 Deepti sold goods to Aditi 13,800 
March 23 Aditi sold goods to Deepti 6,000 
3 
 Accounts were settled on 31
st
 March, 2020 by means of a cheque. Prepare an Account Current to 
be submitted by Deepti to Aditi as on 31
st
 March, 2021, taking interest into account @ 10% per 
annum.  Calculate interest to the nearest multiple of a rupee.  
(c)  Mr. Somnath sends goods to his customers on Sale or Return. The following transactions took 
place during the month of December, 2021. 
 December 12
th
 - Sent goods to customers on sale or return basis at cost plus 25% - ` 1,60,000  
 December 20
th
 - Goods returned by customers ` 70,000  
 December 22
nd
 - Received letters from customers for approval ` 70,000  
 December 27
th
 - Goods with customers awaiting approval ` 30,000  
 Mr. Somnath records sale or return transactions as ordinary sales. You are required to pass the 
necessary Journal Entries in the books of Mr. Somnath assuming that the accounting year closes 
on 31
st
 Dec., 2021. Considered that the transaction values are at involve price (including profit 
margin)  (10 + 5 + 5 = 20 Marks) 
4. (a) Amal, Kamal and Tamal are partners in a firm sharing profits and losses as 8:5:3. Their balance sheet 
as at 31
st
 December, 2021 was as follows: 
Particulars Amount` Particulars Amount` 
Sundry creditors 3,00,000 Cash 80,000 
General reserve 1,60,000 Bills receivable 1,00,000 
Partners’ loan accounts:   Sundry debtors 1,20,000 
Amal 80,000 Stock 2,40,000 
Kamal 60,000 Fixed assets 5,60,000 
Partners’ capital accounts:      
Amal 2,00,000    
Kamal 1,60,000    
Tamal 1,40,000                   
 11,00,000  11,00,000 
 From 1
st
 January, 2022 they agreed to alter their profit-sharing ratio as 5:6:5. It is also decided 
that: 
(a) The fixed assets should be valued at ` 6,62,000; 
(b) A provision of 5% on sundry debtors to be made for doubtful debts; 
(c) Goodwill of the firm at this date be valued at three years’ purchase of the average net profits 
of the last five years before charging insurance premium; and 
(d) Stock be reduced to ` 2,24,000. 
 There is a joint life insurance policy for ` 4,00,000 for which an annual premium of `  20,000 is 
paid, the premium being charged to profit and loss account. The surrender value of the policy on  
31
st
 December, 2021 was ` 1,56,000. 
 The net profits of the firm for the last five years were ` 28,000, ` 34,000, ` 40,000, ` 44,000 and 
` 54,000. 
 Goodwill and the surrender value of the joint life policy was not to appear in the books. 
 Draft journal entries necessary to adjust the capital accounts of the partners and prepare the 
revised balance sheet.  (20 Marks) 
4 
5. (a) The trial balance of Sahil  as at 31st March, 2021 is as follows: 
  Dr. Cr. 
  ` ` 
Sahil’s capital account -  1,91,725  
Stock 1
st
 April, 2020 1,17,000   -  
Sales -  9,74,000 
Returns inward 21,500   -  
Purchases 8,04,250   -  
Returns outward  -  14,500  
Carriage inwards 49,000   -  
Rent & taxes 11,750   -  
Salaries & wages 23,250  -  
Sundry debtors 60,000   -  
Sundry creditors  -  37,000  
Bank loan @ 14% p.a.  -  50,000  
Bank interest 2,750   -  
Printing and stationary expenses 36,000   -  
Bank balance 20,000   -  
Discount earned  -  11,100  
Furniture & fittings 12,500   -  
Discount allowed 4,500   -  
General expenses 28,625   -  
Insurance   3,250   -  
Postage & telegram expenses 5,825   -  
Cash balance 950   -  
Travelling expenses 2,175   -  
Drawings 75,000   -  
  12,78,325  12,78,325 
The following adjustments are to be made: 
(1) Provision for bad and doubtful debts be created at 5% and for discount @ 2% on sundry 
debtors. 
(2) Personal purchases of Sahil amounting to ` 1,500 had been recorded in the purchases day 
book. 
(3) Depreciation on furniture & fittings @ 10% shall be written off. 
(4) Included amongst the debtors is ` 7,500 due from Sunder and included among the creditors 
` 2,500 due to him. 
(5) A quarter of the amount of printing and stationary expenses is to be carried forward to the 
next year. 
Page 5


1 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way of note forming part of 
the answer. 
Working Notes should form part of the answer. 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false: 
(i)  Wages paid for erection of machinery are debited to Profit and Loss Account.  
(ii)  Amount spent for the construction of temporary huts, which were necessary for construction 
of the Cinema House and were demolished when the Cinema House was ready, is capital 
expenditure.  
(iii)  The additional commission to the consignee who agrees to bear the loss on account of bad 
debts is called overriding commission.  
(iv) In the calculation of average due date, only the due date of first transaction must be taken as 
the base date.  
(v) The business of partnership must be carried on by all the partners.  
(vi) Debenture interest is payable after the payment of preference dividend but before the 
payment of equity dividend. (6 Statements x 2 Marks = 12 Marks) 
(b) What services can a Chartered Accountant provide to the society? (4 Marks) 
(c) Calculate the missing amount for the following. 
  Assets  Liabilities Capital 
(a)  45,00,000 7,50,000 ? 
(b)  ?  4,50,000 2,25,000 
(c)  43,50,000 ?  41,25,000 
(d)    1,71,00,000   (8,40,000)   ?      (4 Marks) 
2. (a) M/s Krishna took lease of a quarry on 1-1-2019 for ` 6,00,00,000. As per technical estimate the total 
quantity of mineral deposit is 12,00,000 tonnes. Depreciation was charged on the basis of depletion 
method. Extraction pattern is given in the following table: 
Year   Quantity of Mineral extracted 
2019    12,000 tonnes 
2020    60,000 tonnes 
2021    90,000 tonnes 
Required 
Show the Quarry Lease Account and Depreciation Account for each year from 2019 to 2021. 
2 
(b)  On 30
th
 June. 2021, Cash Book of Ms. Suman (Bank Column of Account No. 1) shows a Bank 
Overdraft of ` 1,97,400. On going through the Bank Pass book for reconciling the Balance, she 
found the following: 
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed by the bankers on 2
nd
 
July. 
(b) A crossed cheque for ` 3000 given to Abdul was returned by him and a bearer cheque was 
issued to him in lieu on 1
st
 July. 
(c) Cash and cheques amounting to ` 13,600 were deposited in the Bank on 29
th
 June., but 
cheques worth ` 5,200 were cleared by the Bank on 1
st
 July., and one cheque for ` 1,000 
was returned by them as dishonoured on the latter date. 
(d) According to Suman’s standing instructions, the bankers have on 30
th
 June, paid ` 1,280 as 
interest to her creditors, paid quarterly premium on her policy amounting to ` 640 and have 
paid a second call of ` 2,400 on shares held by her and lodged with the bankers for safe 
custody. They have also received ` 600 as dividend on her shares and recovered an 
Insurance Claim of ` 3,200, as their charges and commission charged on the above being ` 
400. On receipt of information of the above transaction, she has passed necessary entries in 
her Cash Book on 1
st
 July.  
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by her in No. 2 account and 
wrong debit in respect of a cheque for ` 1,200 drawn against her No. 2 account. 
 Prepare a Bank Reconciliation Statement as on 30
th
 June, 2021. (10 + 10 = 20 Marks) 
3. (a)  Nishant of Noida consigned 15,000 kgs of Sugar at ` 30 per kg to his agent Raja at Gurgaon. He 
spent ` 5 per kg as freight and insurance for sending the Sugar at Gurgaon. On the way 100 kgs. 
of sugar was lost due to the leakage (which is to be treated as normal loss) and 400 kgs. of sugar 
was destroyed in transit. ` 9,000 was paid to consignor directly by the Insurance company as 
Insurance claim. 
 Raja sold 7,500 kgs. at ` 60 per kg. He spent ` 33,000 on advertisement and recurring expenses. 
You are required to calculate: 
(i) The amount of abnormal loss 
(ii) Value of stock at the end and 
(iii) Prepare Consignment account showing profit or loss on consignment, if Raja is entitled to 5% 
commission on sales.  
(b) On 1
st
 January, 2021, Aditi account in Deepti ledger showed a debit balance of ` 7,500.  The 
following transactions took place between Deepti and Aditi during the quarter ended 31
st
 March, 
2021: 
2021   ` 
Jan. 11 Deepti sold goods to Aditi 9,000 
Jan. 24 Deepti received a promissory note from Aditi due after 3 months  7,500 
Feb. 01 Aditi sold goods to Deepti 15,000 
Feb. 04 Deepti sold goods to Aditi 12,300 
Feb. 07 Aditi returned goods to Deepti 1,500 
March 01 Aditi sold goods to Deepti 8,400 
March 18 Deepti sold goods to Aditi 13,800 
March 23 Aditi sold goods to Deepti 6,000 
3 
 Accounts were settled on 31
st
 March, 2020 by means of a cheque. Prepare an Account Current to 
be submitted by Deepti to Aditi as on 31
st
 March, 2021, taking interest into account @ 10% per 
annum.  Calculate interest to the nearest multiple of a rupee.  
(c)  Mr. Somnath sends goods to his customers on Sale or Return. The following transactions took 
place during the month of December, 2021. 
 December 12
th
 - Sent goods to customers on sale or return basis at cost plus 25% - ` 1,60,000  
 December 20
th
 - Goods returned by customers ` 70,000  
 December 22
nd
 - Received letters from customers for approval ` 70,000  
 December 27
th
 - Goods with customers awaiting approval ` 30,000  
 Mr. Somnath records sale or return transactions as ordinary sales. You are required to pass the 
necessary Journal Entries in the books of Mr. Somnath assuming that the accounting year closes 
on 31
st
 Dec., 2021. Considered that the transaction values are at involve price (including profit 
margin)  (10 + 5 + 5 = 20 Marks) 
4. (a) Amal, Kamal and Tamal are partners in a firm sharing profits and losses as 8:5:3. Their balance sheet 
as at 31
st
 December, 2021 was as follows: 
Particulars Amount` Particulars Amount` 
Sundry creditors 3,00,000 Cash 80,000 
General reserve 1,60,000 Bills receivable 1,00,000 
Partners’ loan accounts:   Sundry debtors 1,20,000 
Amal 80,000 Stock 2,40,000 
Kamal 60,000 Fixed assets 5,60,000 
Partners’ capital accounts:      
Amal 2,00,000    
Kamal 1,60,000    
Tamal 1,40,000                   
 11,00,000  11,00,000 
 From 1
st
 January, 2022 they agreed to alter their profit-sharing ratio as 5:6:5. It is also decided 
that: 
(a) The fixed assets should be valued at ` 6,62,000; 
(b) A provision of 5% on sundry debtors to be made for doubtful debts; 
(c) Goodwill of the firm at this date be valued at three years’ purchase of the average net profits 
of the last five years before charging insurance premium; and 
(d) Stock be reduced to ` 2,24,000. 
 There is a joint life insurance policy for ` 4,00,000 for which an annual premium of `  20,000 is 
paid, the premium being charged to profit and loss account. The surrender value of the policy on  
31
st
 December, 2021 was ` 1,56,000. 
 The net profits of the firm for the last five years were ` 28,000, ` 34,000, ` 40,000, ` 44,000 and 
` 54,000. 
 Goodwill and the surrender value of the joint life policy was not to appear in the books. 
 Draft journal entries necessary to adjust the capital accounts of the partners and prepare the 
revised balance sheet.  (20 Marks) 
4 
5. (a) The trial balance of Sahil  as at 31st March, 2021 is as follows: 
  Dr. Cr. 
  ` ` 
Sahil’s capital account -  1,91,725  
Stock 1
st
 April, 2020 1,17,000   -  
Sales -  9,74,000 
Returns inward 21,500   -  
Purchases 8,04,250   -  
Returns outward  -  14,500  
Carriage inwards 49,000   -  
Rent & taxes 11,750   -  
Salaries & wages 23,250  -  
Sundry debtors 60,000   -  
Sundry creditors  -  37,000  
Bank loan @ 14% p.a.  -  50,000  
Bank interest 2,750   -  
Printing and stationary expenses 36,000   -  
Bank balance 20,000   -  
Discount earned  -  11,100  
Furniture & fittings 12,500   -  
Discount allowed 4,500   -  
General expenses 28,625   -  
Insurance   3,250   -  
Postage & telegram expenses 5,825   -  
Cash balance 950   -  
Travelling expenses 2,175   -  
Drawings 75,000   -  
  12,78,325  12,78,325 
The following adjustments are to be made: 
(1) Provision for bad and doubtful debts be created at 5% and for discount @ 2% on sundry 
debtors. 
(2) Personal purchases of Sahil amounting to ` 1,500 had been recorded in the purchases day 
book. 
(3) Depreciation on furniture & fittings @ 10% shall be written off. 
(4) Included amongst the debtors is ` 7,500 due from Sunder and included among the creditors 
` 2,500 due to him. 
(5) A quarter of the amount of printing and stationary expenses is to be carried forward to the 
next year. 
5 
(6) Credit purchase invoice amounting to ` 1,000 had been omitted from the books. 
(7) Stock on 31.03.2021 was ` 1,96,500. 
(8) Interest on bank loan shall be provided for the whole year. 
You are required to prepare Trading & profit and loss account for the year ended 31. 03.2021.  
(b) The following information of M/s. Badminton Club are related for the year ended 31
st
 March, 2021: 
(1) 
Balances As on 01-04-2020 
(`) 
As on 31-3-2021 
(`) 
Stock of Sports Material                4,50,000         6,75,000  
Amount due for Sports Material                4,05,000         5,85,000  
Subscription due                   67,500             99,000  
Subscription received in advance                    54,000             31,500  
(2) Subscription received during the year ` 22,50,000 
(3)  Payments for Sports Material during the year ` 13,50,000 
 You are required to: 
(A)  Ascertain the amount of Subscription and Sports Material that will appear in Income & 
Expenditure Account for the year ended 31.03.2021 and 
(B)  Also show how these items would appear in the Balance Sheet as on 31.03.20 21. 
 (15 + 5 = 20 Marks) 
6. (a) Give necessary journal entries for the forfeiture and re-issue of shares: 
(i) Akhil Pvt. Ltd. forfeited 9,000 shares of ` 10 each fully called up, held by Aditya for non-
payment of allotment money of ` 3 per share and final call of ` 4 per share. He paid the 
application money of ` 3 per share. These shares were re-issued to Katen for ` 8 per share. 
(ii) Mr. C, who was the holder of 10,000 preference shares of ` 100 each, on which ` 70 per 
share has been called up, could not pay his dues on Allotment and First call each at ` 20 per 
share. The Directors forfeited the above shares and reissued 8,000 of such shares to Mr. D 
at ` 60 per share paid-up as ` 70 per share.  
(b) Galaxy Limited issued 10,000 8% Debentures of the nominal value of `1,00,00,000 as follows: 
(a) To sundry persons for cash at 90% of nominal value of ` 25,00,000. 
(b) To a vendor for purchase of fixed assets worth ` 10,00,000 – ` 12,50,000 nominal value. 
(c) To the banker as collateral security for a loan of ` 10,00,000 – ` 12,50,000 nominal value 
You are required to prepare necessary Journal Entries.  
(c) Write short notes on: 
(i)  Adjusted Selling Price method of determining cost of stock. 
(ii)  Principal methods of ascertainment of cost of inventory. (10 + 5 + 5 = 20 Marks)