Accounting Model Test Paper - 3 (Questions) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


MODEL TEST PAPER 3 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1  is compulsory. 
Answer 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) (100 Marks) 
1. (a) State with reasons whether the following statements are True or False:
i. Insurance claim received on account of plant and machinery
completely damaged by fire is a capital receipt.
ii. In the balance sheet of Angel Limited, preliminary expenses
amounting to ` 15 lakhs and securities premium account of ` 105
lakhs are appearing; The accountant can use the balance in
securities premium account to write off preliminary expenses.
iii. The financial statements must disclose all the relevant and reliable
information in accordance with the Full Disclosure Principle.
iv. In case of admission of a new partner in a partnership firm, the
profit/loss on revaluation account is transferred to all partners in
their new profit sharing ratio.
v. The debit notes issued are used to prepare Sales Return Book.
vi. Debenture holders enjoy the voting rights in the company.
(6 Statements x 2 Marks = 12 Marks) 
(b) Change in accounting policy may have a material effect on the items of
financial statements.” Explain the statement with the help of an example.
 (4 Marks) 
(c) A Plant & Machinery costing ` 80,00,000 is depreciated on straight line
basis assuming 10 year working life and zero residual value, for four
years. At the end of the fourth year, the machinery was revalued upwards
by ` 3,20,000. The remaining useful life was reassessed at 8 years.
Calculate Depreciation for the fifth year. (4 Marks)
(12 + 4 + 4 = 20 Marks)
2. (a)  M/s Manas, Profit and loss account showed a net profit of ` 32,00,000,
after considering the closing stock of ` 30,00,000 on 31
st
 March, 2024. 
Subsequently the following information was obtained from scrutiny of the 
books: 
(i) Purchases for the year included ` 1,20,000 paid for new electric
fittings for the shop.
18
Page 2


MODEL TEST PAPER 3 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1  is compulsory. 
Answer 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) (100 Marks) 
1. (a) State with reasons whether the following statements are True or False:
i. Insurance claim received on account of plant and machinery
completely damaged by fire is a capital receipt.
ii. In the balance sheet of Angel Limited, preliminary expenses
amounting to ` 15 lakhs and securities premium account of ` 105
lakhs are appearing; The accountant can use the balance in
securities premium account to write off preliminary expenses.
iii. The financial statements must disclose all the relevant and reliable
information in accordance with the Full Disclosure Principle.
iv. In case of admission of a new partner in a partnership firm, the
profit/loss on revaluation account is transferred to all partners in
their new profit sharing ratio.
v. The debit notes issued are used to prepare Sales Return Book.
vi. Debenture holders enjoy the voting rights in the company.
(6 Statements x 2 Marks = 12 Marks) 
(b) Change in accounting policy may have a material effect on the items of
financial statements.” Explain the statement with the help of an example.
 (4 Marks) 
(c) A Plant & Machinery costing ` 80,00,000 is depreciated on straight line
basis assuming 10 year working life and zero residual value, for four
years. At the end of the fourth year, the machinery was revalued upwards
by ` 3,20,000. The remaining useful life was reassessed at 8 years.
Calculate Depreciation for the fifth year. (4 Marks)
(12 + 4 + 4 = 20 Marks)
2. (a)  M/s Manas, Profit and loss account showed a net profit of ` 32,00,000,
after considering the closing stock of ` 30,00,000 on 31
st
 March, 2024. 
Subsequently the following information was obtained from scrutiny of the 
books: 
(i) Purchases for the year included ` 1,20,000 paid for new electric
fittings for the shop.
18
(ii) M/s Manas gave away goods valued at ` 3,20,000 as free samples
for which no entry was made in the books of accounts.
(iii) Invoices for goods amounting to ` 20,00,000 have been entered on
25
th
 March, 2024, but the goods were not included in stock.
(iv) In March, 2024 goods of ` 16,00,000 sold and delivered were taken
in the sales for April, 2024.
(v) Goods costing ` 6,00,000 were sent on sale or return in March,
2024 at a margin of profit of 33-1/3% on cost. Though approval was
given in April, 2024 these were taken as sales for March, 2024.
You are required to determine the adjusted net profit for the year ended 
on 31.3.2024 and calculate the value of stock on 31
st
 March, 2024.  
(10 Marks) 
(b) On 30
th
 September, 2023, the bank account of Akhil, according to the
bank column of the Cash- Book, was overdrawn to the extent of ` 16,248.
On the same date the bank statement showed a credit balance of
` 83,032 in favour of Akhil. An examination of the Cash Book and Bank
Statement reveals the following:
1. A cheque for ` 52,56,000 deposited on 29th September, 2023 was
credited by the bank only on 3rd October, 2023
2. A payment by cheque for ` 64,000 has been entered twice in the
Cash Book.
3. On 29th September, 2023, the bank credited an amount of
` 4,69,600 received from a customer of Akhil, but the advice was
not received by Akhil until 1st October, 2023.
4. Bank charges amounting to ` 2,320 had not been entered in the
Cash Book.
5. On 6th September, 2023, the bank credited ` 80,000 to Akhil in
error.
6. A bill of exchange for ` 5,60,000 was discounted by Akhil with his
bank. This bill was dishonoured on 28th September, 2023 but no
entry had been made in the books of Akhil.
7. Cheques issued upto 30th September, 2023 but not presented for
payment upto that date totalled ` 53,04,000.
You are required : 
(a) to show the appropriate rectifications required in the Cash Book of
Akhil, to arrive at the correct balance on 30
th
 September, 2023 and
(b) to prepare a bank reconciliation statement as on that date.
(10 Marks) 
(10 +10 = 20 Marks) 
3. (a) Following are the Manufacturing A/c, Creditors A/c and Raw Material A/c
provided by M/s. Praveen related to financial year 2023-24. There are 
certain figures missing in these accounts. 
19
Page 3


MODEL TEST PAPER 3 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1  is compulsory. 
Answer 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) (100 Marks) 
1. (a) State with reasons whether the following statements are True or False:
i. Insurance claim received on account of plant and machinery
completely damaged by fire is a capital receipt.
ii. In the balance sheet of Angel Limited, preliminary expenses
amounting to ` 15 lakhs and securities premium account of ` 105
lakhs are appearing; The accountant can use the balance in
securities premium account to write off preliminary expenses.
iii. The financial statements must disclose all the relevant and reliable
information in accordance with the Full Disclosure Principle.
iv. In case of admission of a new partner in a partnership firm, the
profit/loss on revaluation account is transferred to all partners in
their new profit sharing ratio.
v. The debit notes issued are used to prepare Sales Return Book.
vi. Debenture holders enjoy the voting rights in the company.
(6 Statements x 2 Marks = 12 Marks) 
(b) Change in accounting policy may have a material effect on the items of
financial statements.” Explain the statement with the help of an example.
 (4 Marks) 
(c) A Plant & Machinery costing ` 80,00,000 is depreciated on straight line
basis assuming 10 year working life and zero residual value, for four
years. At the end of the fourth year, the machinery was revalued upwards
by ` 3,20,000. The remaining useful life was reassessed at 8 years.
Calculate Depreciation for the fifth year. (4 Marks)
(12 + 4 + 4 = 20 Marks)
2. (a)  M/s Manas, Profit and loss account showed a net profit of ` 32,00,000,
after considering the closing stock of ` 30,00,000 on 31
st
 March, 2024. 
Subsequently the following information was obtained from scrutiny of the 
books: 
(i) Purchases for the year included ` 1,20,000 paid for new electric
fittings for the shop.
18
(ii) M/s Manas gave away goods valued at ` 3,20,000 as free samples
for which no entry was made in the books of accounts.
(iii) Invoices for goods amounting to ` 20,00,000 have been entered on
25
th
 March, 2024, but the goods were not included in stock.
(iv) In March, 2024 goods of ` 16,00,000 sold and delivered were taken
in the sales for April, 2024.
(v) Goods costing ` 6,00,000 were sent on sale or return in March,
2024 at a margin of profit of 33-1/3% on cost. Though approval was
given in April, 2024 these were taken as sales for March, 2024.
You are required to determine the adjusted net profit for the year ended 
on 31.3.2024 and calculate the value of stock on 31
st
 March, 2024.  
(10 Marks) 
(b) On 30
th
 September, 2023, the bank account of Akhil, according to the
bank column of the Cash- Book, was overdrawn to the extent of ` 16,248.
On the same date the bank statement showed a credit balance of
` 83,032 in favour of Akhil. An examination of the Cash Book and Bank
Statement reveals the following:
1. A cheque for ` 52,56,000 deposited on 29th September, 2023 was
credited by the bank only on 3rd October, 2023
2. A payment by cheque for ` 64,000 has been entered twice in the
Cash Book.
3. On 29th September, 2023, the bank credited an amount of
` 4,69,600 received from a customer of Akhil, but the advice was
not received by Akhil until 1st October, 2023.
4. Bank charges amounting to ` 2,320 had not been entered in the
Cash Book.
5. On 6th September, 2023, the bank credited ` 80,000 to Akhil in
error.
6. A bill of exchange for ` 5,60,000 was discounted by Akhil with his
bank. This bill was dishonoured on 28th September, 2023 but no
entry had been made in the books of Akhil.
7. Cheques issued upto 30th September, 2023 but not presented for
payment upto that date totalled ` 53,04,000.
You are required : 
(a) to show the appropriate rectifications required in the Cash Book of
Akhil, to arrive at the correct balance on 30
th
 September, 2023 and
(b) to prepare a bank reconciliation statement as on that date.
(10 Marks) 
(10 +10 = 20 Marks) 
3. (a) Following are the Manufacturing A/c, Creditors A/c and Raw Material A/c
provided by M/s. Praveen related to financial year 2023-24. There are 
certain figures missing in these accounts. 
19
Raw Material A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Opening Stock A/c 1,27,000 By Raw Materials 
Consumed 
To Creditors A/c - By Closing Stock - 
Creditors A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Bank A/c 
23,50,000 
By Balance b/d 15,70,000 
To Balance c/d 6,60,000 - 
Manufacturing A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Raw Material A/c - By Trading A/c 17,44,000 
To Wages 3,65,000 
To Depreciation 2,15,000 
to Direct Expenses 2,49,000 
Additional Information: 
(i) Purchase of machinery worth ` 12,00,000 on 1
st
 April; 2023 has
been omitted, Machinery is chargeable at a depreciation rate of
15%.
(ii) Wages include the following:
Paid to factory workers - ` 3,15,000
Paid to labour at office - ` 50,000
(iii) Direct expenses included the following :
Electricity charges - ` 80,000
of which 25% pertained to office
Fuel charges - ` 25,000
Freight inwards - ` 32,000
Delivery charges to customers - ` 22,000
You are required to prepare revised Manufacturing A/c and Raw Material 
A/c.    (10 Marks) 
(b) Ram Lakhan and Bharat are partners in a firm.  On 1
st
 April 2022 their
fixed capital stood at ` 1,50,000, ` 75,000 and ` 75,000 respectively.
As per the provision of partnership deed:
20
Page 4


MODEL TEST PAPER 3 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1  is compulsory. 
Answer 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) (100 Marks) 
1. (a) State with reasons whether the following statements are True or False:
i. Insurance claim received on account of plant and machinery
completely damaged by fire is a capital receipt.
ii. In the balance sheet of Angel Limited, preliminary expenses
amounting to ` 15 lakhs and securities premium account of ` 105
lakhs are appearing; The accountant can use the balance in
securities premium account to write off preliminary expenses.
iii. The financial statements must disclose all the relevant and reliable
information in accordance with the Full Disclosure Principle.
iv. In case of admission of a new partner in a partnership firm, the
profit/loss on revaluation account is transferred to all partners in
their new profit sharing ratio.
v. The debit notes issued are used to prepare Sales Return Book.
vi. Debenture holders enjoy the voting rights in the company.
(6 Statements x 2 Marks = 12 Marks) 
(b) Change in accounting policy may have a material effect on the items of
financial statements.” Explain the statement with the help of an example.
 (4 Marks) 
(c) A Plant & Machinery costing ` 80,00,000 is depreciated on straight line
basis assuming 10 year working life and zero residual value, for four
years. At the end of the fourth year, the machinery was revalued upwards
by ` 3,20,000. The remaining useful life was reassessed at 8 years.
Calculate Depreciation for the fifth year. (4 Marks)
(12 + 4 + 4 = 20 Marks)
2. (a)  M/s Manas, Profit and loss account showed a net profit of ` 32,00,000,
after considering the closing stock of ` 30,00,000 on 31
st
 March, 2024. 
Subsequently the following information was obtained from scrutiny of the 
books: 
(i) Purchases for the year included ` 1,20,000 paid for new electric
fittings for the shop.
18
(ii) M/s Manas gave away goods valued at ` 3,20,000 as free samples
for which no entry was made in the books of accounts.
(iii) Invoices for goods amounting to ` 20,00,000 have been entered on
25
th
 March, 2024, but the goods were not included in stock.
(iv) In March, 2024 goods of ` 16,00,000 sold and delivered were taken
in the sales for April, 2024.
(v) Goods costing ` 6,00,000 were sent on sale or return in March,
2024 at a margin of profit of 33-1/3% on cost. Though approval was
given in April, 2024 these were taken as sales for March, 2024.
You are required to determine the adjusted net profit for the year ended 
on 31.3.2024 and calculate the value of stock on 31
st
 March, 2024.  
(10 Marks) 
(b) On 30
th
 September, 2023, the bank account of Akhil, according to the
bank column of the Cash- Book, was overdrawn to the extent of ` 16,248.
On the same date the bank statement showed a credit balance of
` 83,032 in favour of Akhil. An examination of the Cash Book and Bank
Statement reveals the following:
1. A cheque for ` 52,56,000 deposited on 29th September, 2023 was
credited by the bank only on 3rd October, 2023
2. A payment by cheque for ` 64,000 has been entered twice in the
Cash Book.
3. On 29th September, 2023, the bank credited an amount of
` 4,69,600 received from a customer of Akhil, but the advice was
not received by Akhil until 1st October, 2023.
4. Bank charges amounting to ` 2,320 had not been entered in the
Cash Book.
5. On 6th September, 2023, the bank credited ` 80,000 to Akhil in
error.
6. A bill of exchange for ` 5,60,000 was discounted by Akhil with his
bank. This bill was dishonoured on 28th September, 2023 but no
entry had been made in the books of Akhil.
7. Cheques issued upto 30th September, 2023 but not presented for
payment upto that date totalled ` 53,04,000.
You are required : 
(a) to show the appropriate rectifications required in the Cash Book of
Akhil, to arrive at the correct balance on 30
th
 September, 2023 and
(b) to prepare a bank reconciliation statement as on that date.
(10 Marks) 
(10 +10 = 20 Marks) 
3. (a) Following are the Manufacturing A/c, Creditors A/c and Raw Material A/c
provided by M/s. Praveen related to financial year 2023-24. There are 
certain figures missing in these accounts. 
19
Raw Material A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Opening Stock A/c 1,27,000 By Raw Materials 
Consumed 
To Creditors A/c - By Closing Stock - 
Creditors A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Bank A/c 
23,50,000 
By Balance b/d 15,70,000 
To Balance c/d 6,60,000 - 
Manufacturing A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Raw Material A/c - By Trading A/c 17,44,000 
To Wages 3,65,000 
To Depreciation 2,15,000 
to Direct Expenses 2,49,000 
Additional Information: 
(i) Purchase of machinery worth ` 12,00,000 on 1
st
 April; 2023 has
been omitted, Machinery is chargeable at a depreciation rate of
15%.
(ii) Wages include the following:
Paid to factory workers - ` 3,15,000
Paid to labour at office - ` 50,000
(iii) Direct expenses included the following :
Electricity charges - ` 80,000
of which 25% pertained to office
Fuel charges - ` 25,000
Freight inwards - ` 32,000
Delivery charges to customers - ` 22,000
You are required to prepare revised Manufacturing A/c and Raw Material 
A/c.    (10 Marks) 
(b) Ram Lakhan and Bharat are partners in a firm.  On 1
st
 April 2022 their
fixed capital stood at ` 1,50,000, ` 75,000 and ` 75,000 respectively.
As per the provision of partnership deed:
20
(1) Bharat was entitled for a salary of 15,000 p.a.
(2) All the partners were entitled to interest on capital at 5% p.a.
(3) Profits and losses were to be shared in the ratio of Capitals of the
partners.
Net Profit for the year ended 31
st
 March, 2023 of ` 99,000 and 
31
st
 March,2024 of ` 1,35,000 was divided equally without providing for 
the above adjustments. 
You are required to pass an adjustment journal entry to rectify the above 
errors.  (5 Marks) 
(c) The profits and losses for the previous years are: 2020 Profit ` 10,000,
2021 Loss ` 17,000, 2022 Profit ` 50,000, 2023 Profit ` 75,000. The
average Capital employed in the business is ` 2,00,000. The rate of
interest expected from capital invested is 10%. The remuneration from
alternative employment of the proprietor ` 6,000 p.a. Calculate the value
of goodwill on the basis of 2 years’ purchases of Super Profits based on
the average of 3 years.   (5 Marks)
(10 + 5 + 5 = 20 Marks)
4. (a)  The Balance Sheet of a Partnership Firm M/s Alpha and Associates
consisted of two partners X and Y who were sharing Profits and Losses 
in the ratio of 5 : 3 respectively. The position as on 31-03-2024 was as 
follows: 
Liabilities ` Assets ` 
X's Capital 4,10,000 Land & Building 3,80,000 
Y's Capital 3,30,000 Plant & Machinery 1,70,000 
Profit & Loss A/c 1,12,000 Furniture 1,09,480 
Trade Creditors 54,800 Stock 1,45,260 
Sundry debtors 60,000 
Cash at Bank. 42,060 
9,06,800 9,06,800 
On the above date, Z was admitted as a partner on the following terms: 
(a) Z should get 1/5
th
 of share of profits.
(b) Z brought ` 2,40,000 as his capital and ` 32,000 for his share of
Goodwill.
(c) Plant and Machinery would be depreciated by 15% and Land &
Buildings would be appreciated by 40%.
A provision for doubtful debts to be created at 5% on sundry
debtors.
An unrecorded liability of ` 6,000 for repairs to Buildings would be
recorded in the books of accounts.
(d) Immediately after Z’s admission, Goodwill brought by him would be
adjusted among old partners. Thereafter, the capital accounts of
21
Page 5


MODEL TEST PAPER 3 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1  is compulsory. 
Answer 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) (100 Marks) 
1. (a) State with reasons whether the following statements are True or False:
i. Insurance claim received on account of plant and machinery
completely damaged by fire is a capital receipt.
ii. In the balance sheet of Angel Limited, preliminary expenses
amounting to ` 15 lakhs and securities premium account of ` 105
lakhs are appearing; The accountant can use the balance in
securities premium account to write off preliminary expenses.
iii. The financial statements must disclose all the relevant and reliable
information in accordance with the Full Disclosure Principle.
iv. In case of admission of a new partner in a partnership firm, the
profit/loss on revaluation account is transferred to all partners in
their new profit sharing ratio.
v. The debit notes issued are used to prepare Sales Return Book.
vi. Debenture holders enjoy the voting rights in the company.
(6 Statements x 2 Marks = 12 Marks) 
(b) Change in accounting policy may have a material effect on the items of
financial statements.” Explain the statement with the help of an example.
 (4 Marks) 
(c) A Plant & Machinery costing ` 80,00,000 is depreciated on straight line
basis assuming 10 year working life and zero residual value, for four
years. At the end of the fourth year, the machinery was revalued upwards
by ` 3,20,000. The remaining useful life was reassessed at 8 years.
Calculate Depreciation for the fifth year. (4 Marks)
(12 + 4 + 4 = 20 Marks)
2. (a)  M/s Manas, Profit and loss account showed a net profit of ` 32,00,000,
after considering the closing stock of ` 30,00,000 on 31
st
 March, 2024. 
Subsequently the following information was obtained from scrutiny of the 
books: 
(i) Purchases for the year included ` 1,20,000 paid for new electric
fittings for the shop.
18
(ii) M/s Manas gave away goods valued at ` 3,20,000 as free samples
for which no entry was made in the books of accounts.
(iii) Invoices for goods amounting to ` 20,00,000 have been entered on
25
th
 March, 2024, but the goods were not included in stock.
(iv) In March, 2024 goods of ` 16,00,000 sold and delivered were taken
in the sales for April, 2024.
(v) Goods costing ` 6,00,000 were sent on sale or return in March,
2024 at a margin of profit of 33-1/3% on cost. Though approval was
given in April, 2024 these were taken as sales for March, 2024.
You are required to determine the adjusted net profit for the year ended 
on 31.3.2024 and calculate the value of stock on 31
st
 March, 2024.  
(10 Marks) 
(b) On 30
th
 September, 2023, the bank account of Akhil, according to the
bank column of the Cash- Book, was overdrawn to the extent of ` 16,248.
On the same date the bank statement showed a credit balance of
` 83,032 in favour of Akhil. An examination of the Cash Book and Bank
Statement reveals the following:
1. A cheque for ` 52,56,000 deposited on 29th September, 2023 was
credited by the bank only on 3rd October, 2023
2. A payment by cheque for ` 64,000 has been entered twice in the
Cash Book.
3. On 29th September, 2023, the bank credited an amount of
` 4,69,600 received from a customer of Akhil, but the advice was
not received by Akhil until 1st October, 2023.
4. Bank charges amounting to ` 2,320 had not been entered in the
Cash Book.
5. On 6th September, 2023, the bank credited ` 80,000 to Akhil in
error.
6. A bill of exchange for ` 5,60,000 was discounted by Akhil with his
bank. This bill was dishonoured on 28th September, 2023 but no
entry had been made in the books of Akhil.
7. Cheques issued upto 30th September, 2023 but not presented for
payment upto that date totalled ` 53,04,000.
You are required : 
(a) to show the appropriate rectifications required in the Cash Book of
Akhil, to arrive at the correct balance on 30
th
 September, 2023 and
(b) to prepare a bank reconciliation statement as on that date.
(10 Marks) 
(10 +10 = 20 Marks) 
3. (a) Following are the Manufacturing A/c, Creditors A/c and Raw Material A/c
provided by M/s. Praveen related to financial year 2023-24. There are 
certain figures missing in these accounts. 
19
Raw Material A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Opening Stock A/c 1,27,000 By Raw Materials 
Consumed 
To Creditors A/c - By Closing Stock - 
Creditors A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Bank A/c 
23,50,000 
By Balance b/d 15,70,000 
To Balance c/d 6,60,000 - 
Manufacturing A/c 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
To Raw Material A/c - By Trading A/c 17,44,000 
To Wages 3,65,000 
To Depreciation 2,15,000 
to Direct Expenses 2,49,000 
Additional Information: 
(i) Purchase of machinery worth ` 12,00,000 on 1
st
 April; 2023 has
been omitted, Machinery is chargeable at a depreciation rate of
15%.
(ii) Wages include the following:
Paid to factory workers - ` 3,15,000
Paid to labour at office - ` 50,000
(iii) Direct expenses included the following :
Electricity charges - ` 80,000
of which 25% pertained to office
Fuel charges - ` 25,000
Freight inwards - ` 32,000
Delivery charges to customers - ` 22,000
You are required to prepare revised Manufacturing A/c and Raw Material 
A/c.    (10 Marks) 
(b) Ram Lakhan and Bharat are partners in a firm.  On 1
st
 April 2022 their
fixed capital stood at ` 1,50,000, ` 75,000 and ` 75,000 respectively.
As per the provision of partnership deed:
20
(1) Bharat was entitled for a salary of 15,000 p.a.
(2) All the partners were entitled to interest on capital at 5% p.a.
(3) Profits and losses were to be shared in the ratio of Capitals of the
partners.
Net Profit for the year ended 31
st
 March, 2023 of ` 99,000 and 
31
st
 March,2024 of ` 1,35,000 was divided equally without providing for 
the above adjustments. 
You are required to pass an adjustment journal entry to rectify the above 
errors.  (5 Marks) 
(c) The profits and losses for the previous years are: 2020 Profit ` 10,000,
2021 Loss ` 17,000, 2022 Profit ` 50,000, 2023 Profit ` 75,000. The
average Capital employed in the business is ` 2,00,000. The rate of
interest expected from capital invested is 10%. The remuneration from
alternative employment of the proprietor ` 6,000 p.a. Calculate the value
of goodwill on the basis of 2 years’ purchases of Super Profits based on
the average of 3 years.   (5 Marks)
(10 + 5 + 5 = 20 Marks)
4. (a)  The Balance Sheet of a Partnership Firm M/s Alpha and Associates
consisted of two partners X and Y who were sharing Profits and Losses 
in the ratio of 5 : 3 respectively. The position as on 31-03-2024 was as 
follows: 
Liabilities ` Assets ` 
X's Capital 4,10,000 Land & Building 3,80,000 
Y's Capital 3,30,000 Plant & Machinery 1,70,000 
Profit & Loss A/c 1,12,000 Furniture 1,09,480 
Trade Creditors 54,800 Stock 1,45,260 
Sundry debtors 60,000 
Cash at Bank. 42,060 
9,06,800 9,06,800 
On the above date, Z was admitted as a partner on the following terms: 
(a) Z should get 1/5
th
 of share of profits.
(b) Z brought ` 2,40,000 as his capital and ` 32,000 for his share of
Goodwill.
(c) Plant and Machinery would be depreciated by 15% and Land &
Buildings would be appreciated by 40%.
A provision for doubtful debts to be created at 5% on sundry
debtors.
An unrecorded liability of ` 6,000 for repairs to Buildings would be
recorded in the books of accounts.
(d) Immediately after Z’s admission, Goodwill brought by him would be
adjusted among old partners. Thereafter, the capital accounts of
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old partners would be adjusted through the current accounts of 
partners in such a manner that the capital accounts of all the 
partners would be in their profit sharing ratio. 
Prepare Revaluation A/c, Capital Accounts of the partners, New profit 
sharing ratio and Balance Sheet of the Firm after the admission of Z. 
(10 Marks) 
(b) Ram carried on business as retail merchant. He has not maintained
regular account books.  However, he always maintained ` 10,000 in cash
and deposited the balance into the bank account.  He informs you that
he has sold goods at profit of 25% on sales.
Following information is given to you:
Assets and Liabilities As on 1.4.2023 As on 31.3.2024 
Cash in Hand 10,000 10,000 
Sundry Creditors 40,000 90,000 
Cash at Bank 50,000 (Cr.) 80,000 (Dr.) 
Sundry Debtors 1,00,000 3,50,000 
Stock in Trade 2,80,000 ? 
Analysis of his bank pass book reveals the following information: 
(a) Payment to creditors ` 7,00,000
(b) Payment for business expenses ` 1,20,000
(c) Receipts from debtors ` 7,50,000
(d) Loan from Laxman ` 1,00,000 taken on 1.10.2023 at 10% per
annum
(e) Cash deposited in the bank ` 1,00,000
He informs you that he paid creditors for goods ` 20,000 in cash and 
salaries ` 40,000 in cash.  He has drawn ` 80,000 in cash for personal 
expenses.  During the year Ram had not introduced any additional 
capital.  Surplus cash if any, to be taken as cash sales. 
Prepare: 
(i) Trading and Profit and Loss Account for the year ended 31.3.2024.
(ii) Balance Sheet as at 31
st
 March, 2024. (10 Marks) 
(10 + 10 = 20 Marks) 
5. (a) M/s. VB wires were unable to agree the Trial Balance as on 31
st
 March,
2024 and have raised a suspense account for the difference. Next year 
the following errors were discovered: 
(i) Repairs made during the year were wrongly debited to the building
A/c - ` 37,500.
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