Accounting Model Test Paper - 5 (Answers) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 5
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) 1. True: The balance represents the cash physically in existence and is
therefore an asset. 
2. False: Finished goods are normally valued at cost or net realizable value
whichever is lower.
3. False: Current year subscription shall be shown in the credit side of
the income and expenditure account and not in the balance sheet,
as it is not a capital item.
4. False: When shares are forfeited, the share capital account is
debited with called up capital of shares forfeited and the share
forfeiture account is credited with amount received on shares
forfeited.
5. True : Discount at the time of retirement of a bill is a gain for the
drawee and loss for the drawer.
6. True : Yes they are types of subsidiary books which is alternate to
the journals.
(b) The practice of accountancy has crossed its usual domain of preparation
of financial statements, interpretation of such statements and audit
thereof. Chartered Accountants are presently taking active role in
company laws and other corporate legislation matters, in taxation laws
matters (both direct and indirect) and in general management problems.
Some of the services rendered by chartered accountants to the society
are briefly mentioned hereunder:
(i) Maintenance of books of accounts;
(ii) Statutory audit;
(iii) Internal Audit;
(iv) Taxation;
(v) Management accounting and consultancy services;
(vi) Financial advice and financial investigations etc.
Other services like secretarial work, share registration work, company 
formation receiverships, arbitrations etc. 
543
Page 2


ANSWERS OF MODEL TEST PAPER 5
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) 1. True: The balance represents the cash physically in existence and is
therefore an asset. 
2. False: Finished goods are normally valued at cost or net realizable value
whichever is lower.
3. False: Current year subscription shall be shown in the credit side of
the income and expenditure account and not in the balance sheet,
as it is not a capital item.
4. False: When shares are forfeited, the share capital account is
debited with called up capital of shares forfeited and the share
forfeiture account is credited with amount received on shares
forfeited.
5. True : Discount at the time of retirement of a bill is a gain for the
drawee and loss for the drawer.
6. True : Yes they are types of subsidiary books which is alternate to
the journals.
(b) The practice of accountancy has crossed its usual domain of preparation
of financial statements, interpretation of such statements and audit
thereof. Chartered Accountants are presently taking active role in
company laws and other corporate legislation matters, in taxation laws
matters (both direct and indirect) and in general management problems.
Some of the services rendered by chartered accountants to the society
are briefly mentioned hereunder:
(i) Maintenance of books of accounts;
(ii) Statutory audit;
(iii) Internal Audit;
(iv) Taxation;
(v) Management accounting and consultancy services;
(vi) Financial advice and financial investigations etc.
Other services like secretarial work, share registration work, company 
formation receiverships, arbitrations etc. 
543
(c) Corrected Trial Balance of Mr. X as on 31
st
 March, 2024
Reasons: 
1. Due from customers is an asset, so its balance will be a debit
balance.
2. Purchases return account always shows a credit balance because
assets goes out.
3. Trade Payable is a liability, so its balance will be a credit balance.
4. Bills payable is a liability, so its balance will be a credit balance.
5. Inventory (opening) represents assets, so it will have a debit
balance.
6. Sales return account always shows a debit balance because assets
come in.
2. (a)
Date Particulars Dr. 
` 
Cr. 
` 
(1) Scooter A/c 
To Profit and Loss Adjustment 
A/c    
(Purchase of scooter wrongly 
debited to 
conveyance account now rectified-
Dr. 27,000 
27,000 
Particulars Dr. Amount ` Cr. Amount ` 
X’s Capital 4,668 
X’s Drawings 1,692 
Leasehold premises 2,250 
Sales 8,250 
Due from customers 1,590 
Purchases 3,777 
Purchase return 792 
Loan from Bank 768 
Trade expenses 2,100 
Trade Payable 1,584 
Bills payable 300 
Salaries and Wages 1,800 
Cash at Bank 678 
Inventory (1.4.2023) 792 
Rent and rates 1,389 
Sales return 294 
16,362 16,362 
544
Page 3


ANSWERS OF MODEL TEST PAPER 5
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) 1. True: The balance represents the cash physically in existence and is
therefore an asset. 
2. False: Finished goods are normally valued at cost or net realizable value
whichever is lower.
3. False: Current year subscription shall be shown in the credit side of
the income and expenditure account and not in the balance sheet,
as it is not a capital item.
4. False: When shares are forfeited, the share capital account is
debited with called up capital of shares forfeited and the share
forfeiture account is credited with amount received on shares
forfeited.
5. True : Discount at the time of retirement of a bill is a gain for the
drawee and loss for the drawer.
6. True : Yes they are types of subsidiary books which is alternate to
the journals.
(b) The practice of accountancy has crossed its usual domain of preparation
of financial statements, interpretation of such statements and audit
thereof. Chartered Accountants are presently taking active role in
company laws and other corporate legislation matters, in taxation laws
matters (both direct and indirect) and in general management problems.
Some of the services rendered by chartered accountants to the society
are briefly mentioned hereunder:
(i) Maintenance of books of accounts;
(ii) Statutory audit;
(iii) Internal Audit;
(iv) Taxation;
(v) Management accounting and consultancy services;
(vi) Financial advice and financial investigations etc.
Other services like secretarial work, share registration work, company 
formation receiverships, arbitrations etc. 
543
(c) Corrected Trial Balance of Mr. X as on 31
st
 March, 2024
Reasons: 
1. Due from customers is an asset, so its balance will be a debit
balance.
2. Purchases return account always shows a credit balance because
assets goes out.
3. Trade Payable is a liability, so its balance will be a credit balance.
4. Bills payable is a liability, so its balance will be a credit balance.
5. Inventory (opening) represents assets, so it will have a debit
balance.
6. Sales return account always shows a debit balance because assets
come in.
2. (a)
Date Particulars Dr. 
` 
Cr. 
` 
(1) Scooter A/c 
To Profit and Loss Adjustment 
A/c    
(Purchase of scooter wrongly 
debited to 
conveyance account now rectified-
Dr. 27,000 
27,000 
Particulars Dr. Amount ` Cr. Amount ` 
X’s Capital 4,668 
X’s Drawings 1,692 
Leasehold premises 2,250 
Sales 8,250 
Due from customers 1,590 
Purchases 3,777 
Purchase return 792 
Loan from Bank 768 
Trade expenses 2,100 
Trade Payable 1,584 
Bills payable 300 
Salaries and Wages 1,800 
Cash at Bank 678 
Inventory (1.4.2023) 792 
Rent and rates 1,389 
Sales return 294 
16,362 16,362 
544
capitalization of `27,000, i.e.,
`30,000 less 10% depreciation) 
(2) Suspense A/c Dr. 1,00,000 
To Profit & Loss Adjustment 
 A/c 
1,00,000 
(Purchase Account overcast in the 
previous year error now rectified). 
(3) Profit & Loss Adjustment A/c Dr. 40,000 
To Sam’s Account 40,000 
(Credit purchase from Sam’s 
`20,000, entered as sales last year, 
now rectified) 
(4) Bhaskar’s A/c Dr. 10,000 
To Anand’s A/c 10,000 
(Amount received from Mr. Anand 
wrongly posted to the account of Mr. 
Bhaskar; now rectified) 
(5) Suspense A/c Dr. 10,000 
To Paras’s A/c 10,000 
(` 5,000 received from Paras 
wrongly debited to his account; now 
rectified) 
(6) Trade receivables (Ramesh) / 
Ramesh A/c 
Dr. 5,000 
To Suspense A/c 5,000 
(`5,000 due by Mr. Ramesh not 
taken into trial balance now rectified) 
(7) Ram’s A/c Dr. 20,000 
To Profit & Loss Adjustment 
 A/c 
20,000 
(Sales to Ram omitted last year; now 
adjusted) 
(8) Suspense A/c Dr. 1,980 
To Profit & Loss Adjustment 
 A/c 
1,980 
(Excess posting to purchase account 
last year, `25,930, instead of 
`23,950, now adjusted) 
(9) Profit & Loss Adjustment A/c Dr. 1,08,980 
To Manas’s Capital A/c 1,08,980 
(Balance of Profit & Loss Adjustment 
A/c transferred to Capital Account) 
545
Page 4


ANSWERS OF MODEL TEST PAPER 5
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) 1. True: The balance represents the cash physically in existence and is
therefore an asset. 
2. False: Finished goods are normally valued at cost or net realizable value
whichever is lower.
3. False: Current year subscription shall be shown in the credit side of
the income and expenditure account and not in the balance sheet,
as it is not a capital item.
4. False: When shares are forfeited, the share capital account is
debited with called up capital of shares forfeited and the share
forfeiture account is credited with amount received on shares
forfeited.
5. True : Discount at the time of retirement of a bill is a gain for the
drawee and loss for the drawer.
6. True : Yes they are types of subsidiary books which is alternate to
the journals.
(b) The practice of accountancy has crossed its usual domain of preparation
of financial statements, interpretation of such statements and audit
thereof. Chartered Accountants are presently taking active role in
company laws and other corporate legislation matters, in taxation laws
matters (both direct and indirect) and in general management problems.
Some of the services rendered by chartered accountants to the society
are briefly mentioned hereunder:
(i) Maintenance of books of accounts;
(ii) Statutory audit;
(iii) Internal Audit;
(iv) Taxation;
(v) Management accounting and consultancy services;
(vi) Financial advice and financial investigations etc.
Other services like secretarial work, share registration work, company 
formation receiverships, arbitrations etc. 
543
(c) Corrected Trial Balance of Mr. X as on 31
st
 March, 2024
Reasons: 
1. Due from customers is an asset, so its balance will be a debit
balance.
2. Purchases return account always shows a credit balance because
assets goes out.
3. Trade Payable is a liability, so its balance will be a credit balance.
4. Bills payable is a liability, so its balance will be a credit balance.
5. Inventory (opening) represents assets, so it will have a debit
balance.
6. Sales return account always shows a debit balance because assets
come in.
2. (a)
Date Particulars Dr. 
` 
Cr. 
` 
(1) Scooter A/c 
To Profit and Loss Adjustment 
A/c    
(Purchase of scooter wrongly 
debited to 
conveyance account now rectified-
Dr. 27,000 
27,000 
Particulars Dr. Amount ` Cr. Amount ` 
X’s Capital 4,668 
X’s Drawings 1,692 
Leasehold premises 2,250 
Sales 8,250 
Due from customers 1,590 
Purchases 3,777 
Purchase return 792 
Loan from Bank 768 
Trade expenses 2,100 
Trade Payable 1,584 
Bills payable 300 
Salaries and Wages 1,800 
Cash at Bank 678 
Inventory (1.4.2023) 792 
Rent and rates 1,389 
Sales return 294 
16,362 16,362 
544
capitalization of `27,000, i.e.,
`30,000 less 10% depreciation) 
(2) Suspense A/c Dr. 1,00,000 
To Profit & Loss Adjustment 
 A/c 
1,00,000 
(Purchase Account overcast in the 
previous year error now rectified). 
(3) Profit & Loss Adjustment A/c Dr. 40,000 
To Sam’s Account 40,000 
(Credit purchase from Sam’s 
`20,000, entered as sales last year, 
now rectified) 
(4) Bhaskar’s A/c Dr. 10,000 
To Anand’s A/c 10,000 
(Amount received from Mr. Anand 
wrongly posted to the account of Mr. 
Bhaskar; now rectified) 
(5) Suspense A/c Dr. 10,000 
To Paras’s A/c 10,000 
(` 5,000 received from Paras 
wrongly debited to his account; now 
rectified) 
(6) Trade receivables (Ramesh) / 
Ramesh A/c 
Dr. 5,000 
To Suspense A/c 5,000 
(`5,000 due by Mr. Ramesh not 
taken into trial balance now rectified) 
(7) Ram’s A/c Dr. 20,000 
To Profit & Loss Adjustment 
 A/c 
20,000 
(Sales to Ram omitted last year; now 
adjusted) 
(8) Suspense A/c Dr. 1,980 
To Profit & Loss Adjustment 
 A/c 
1,980 
(Excess posting to purchase account 
last year, `25,930, instead of 
`23,950, now adjusted) 
(9) Profit & Loss Adjustment A/c Dr. 1,08,980 
To Manas’s Capital A/c 1,08,980 
(Balance of Profit & Loss Adjustment 
A/c transferred to Capital Account) 
545
(10) Manas’s Capital A/c Dr. 1,06,980 
To Suspense A/c 1,06,980 
(Balance of Suspense Account 
transferred to Capital Account) 
(b) Profit and Loss Adjustment A/c 
`  `  
To Advertisement 
(samples) 
80,000 By Net profit 8,00,000 
To Sales  2,00,000 By Electric fittings 30,000 
(goods approved in 
April to be taken as 
April sales) 
By Samples 80,000 
To Adjusted net profit 16,80,000 By Stock (Purchases of 
      March not included in 
      stock) 
5,00,000 
By Sales (goods sold in 
      March wrongly taken 
      as April sales) 
4,00,000 
By Stock (goods sent on 
      approval basis not 
      included in stock) 
1,50,000 
19,60,000 19,60,000 
Calculation of value of inventory on 31
st
 March, 2024 
`  
Stock on 31
st
 March, 2024 (given) 7,50,000 
Add: Purchases of March, 2024 not included in the stock 5,00,000 
Goods lying with customers on approval basis  1,50,000 
14,00,000 
3. (a) Trading and Profit and Loss Account of Mr. Saurav 
for the year ended 31
st
 March, 2024 
` ` ` ` 
To Opening 
stock 
1,17,000 By Sales 9,74,000 
To Purchases 8,04,250 Less: Returns 21,500 9,52,500 
Add: Omitted 1,000 By Closing stock 1,96,500 
invoice 8,05,250 
Less: Returns 14,500 
7,90,750 
Less: Drawings 1,500 7,89,250 
546
Page 5


ANSWERS OF MODEL TEST PAPER 5
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) 1. True: The balance represents the cash physically in existence and is
therefore an asset. 
2. False: Finished goods are normally valued at cost or net realizable value
whichever is lower.
3. False: Current year subscription shall be shown in the credit side of
the income and expenditure account and not in the balance sheet,
as it is not a capital item.
4. False: When shares are forfeited, the share capital account is
debited with called up capital of shares forfeited and the share
forfeiture account is credited with amount received on shares
forfeited.
5. True : Discount at the time of retirement of a bill is a gain for the
drawee and loss for the drawer.
6. True : Yes they are types of subsidiary books which is alternate to
the journals.
(b) The practice of accountancy has crossed its usual domain of preparation
of financial statements, interpretation of such statements and audit
thereof. Chartered Accountants are presently taking active role in
company laws and other corporate legislation matters, in taxation laws
matters (both direct and indirect) and in general management problems.
Some of the services rendered by chartered accountants to the society
are briefly mentioned hereunder:
(i) Maintenance of books of accounts;
(ii) Statutory audit;
(iii) Internal Audit;
(iv) Taxation;
(v) Management accounting and consultancy services;
(vi) Financial advice and financial investigations etc.
Other services like secretarial work, share registration work, company 
formation receiverships, arbitrations etc. 
543
(c) Corrected Trial Balance of Mr. X as on 31
st
 March, 2024
Reasons: 
1. Due from customers is an asset, so its balance will be a debit
balance.
2. Purchases return account always shows a credit balance because
assets goes out.
3. Trade Payable is a liability, so its balance will be a credit balance.
4. Bills payable is a liability, so its balance will be a credit balance.
5. Inventory (opening) represents assets, so it will have a debit
balance.
6. Sales return account always shows a debit balance because assets
come in.
2. (a)
Date Particulars Dr. 
` 
Cr. 
` 
(1) Scooter A/c 
To Profit and Loss Adjustment 
A/c    
(Purchase of scooter wrongly 
debited to 
conveyance account now rectified-
Dr. 27,000 
27,000 
Particulars Dr. Amount ` Cr. Amount ` 
X’s Capital 4,668 
X’s Drawings 1,692 
Leasehold premises 2,250 
Sales 8,250 
Due from customers 1,590 
Purchases 3,777 
Purchase return 792 
Loan from Bank 768 
Trade expenses 2,100 
Trade Payable 1,584 
Bills payable 300 
Salaries and Wages 1,800 
Cash at Bank 678 
Inventory (1.4.2023) 792 
Rent and rates 1,389 
Sales return 294 
16,362 16,362 
544
capitalization of `27,000, i.e.,
`30,000 less 10% depreciation) 
(2) Suspense A/c Dr. 1,00,000 
To Profit & Loss Adjustment 
 A/c 
1,00,000 
(Purchase Account overcast in the 
previous year error now rectified). 
(3) Profit & Loss Adjustment A/c Dr. 40,000 
To Sam’s Account 40,000 
(Credit purchase from Sam’s 
`20,000, entered as sales last year, 
now rectified) 
(4) Bhaskar’s A/c Dr. 10,000 
To Anand’s A/c 10,000 
(Amount received from Mr. Anand 
wrongly posted to the account of Mr. 
Bhaskar; now rectified) 
(5) Suspense A/c Dr. 10,000 
To Paras’s A/c 10,000 
(` 5,000 received from Paras 
wrongly debited to his account; now 
rectified) 
(6) Trade receivables (Ramesh) / 
Ramesh A/c 
Dr. 5,000 
To Suspense A/c 5,000 
(`5,000 due by Mr. Ramesh not 
taken into trial balance now rectified) 
(7) Ram’s A/c Dr. 20,000 
To Profit & Loss Adjustment 
 A/c 
20,000 
(Sales to Ram omitted last year; now 
adjusted) 
(8) Suspense A/c Dr. 1,980 
To Profit & Loss Adjustment 
 A/c 
1,980 
(Excess posting to purchase account 
last year, `25,930, instead of 
`23,950, now adjusted) 
(9) Profit & Loss Adjustment A/c Dr. 1,08,980 
To Manas’s Capital A/c 1,08,980 
(Balance of Profit & Loss Adjustment 
A/c transferred to Capital Account) 
545
(10) Manas’s Capital A/c Dr. 1,06,980 
To Suspense A/c 1,06,980 
(Balance of Suspense Account 
transferred to Capital Account) 
(b) Profit and Loss Adjustment A/c 
`  `  
To Advertisement 
(samples) 
80,000 By Net profit 8,00,000 
To Sales  2,00,000 By Electric fittings 30,000 
(goods approved in 
April to be taken as 
April sales) 
By Samples 80,000 
To Adjusted net profit 16,80,000 By Stock (Purchases of 
      March not included in 
      stock) 
5,00,000 
By Sales (goods sold in 
      March wrongly taken 
      as April sales) 
4,00,000 
By Stock (goods sent on 
      approval basis not 
      included in stock) 
1,50,000 
19,60,000 19,60,000 
Calculation of value of inventory on 31
st
 March, 2024 
`  
Stock on 31
st
 March, 2024 (given) 7,50,000 
Add: Purchases of March, 2024 not included in the stock 5,00,000 
Goods lying with customers on approval basis  1,50,000 
14,00,000 
3. (a) Trading and Profit and Loss Account of Mr. Saurav 
for the year ended 31
st
 March, 2024 
` ` ` ` 
To Opening 
stock 
1,17,000 By Sales 9,74,000 
To Purchases 8,04,250 Less: Returns 21,500 9,52,500 
Add: Omitted 1,000 By Closing stock 1,96,500 
invoice 8,05,250 
Less: Returns 14,500 
7,90,750 
Less: Drawings 1,500 7,89,250 
546
To Carriage 
Inwards 49,000 
To Gross profit 
c/d 1,93,750 
11,49,000 11,49,000 
To Rent and 
taxes 11,750 
By Gross profit 
b/d 1,93,750 
To Salaries and 
wages 23,250 
By Discount 
received 11,100 
To Bank interest 2,750 
Add: Due 4,250 7,000 
To Printing and 
stationary 36,000 
Less: Prepaid 
(1/4) 9,000 27,000 
To Discount 
allowed 4,500 
To General 
expenses 28,625 
To Insurance 3,250 
To Postage & 
telegram  
expenses 5,825 
To Travelling 
expenses 2,175 
To Provision for 
bad debts [W.N.] 2,875 
To Provision for 
discount on 
debtors [W.N.] 1,093 
To Depreciation 
on furniture & 
fittings 1,250 
To Net profit 86,257 
2,04,850 2,04,850 
Working Note: 
Provision for bad & doubtful debts: 
@ 5% on ` 57,500 (60,000-2,500) 
Provision for discount: 
2% on ` 54,625 (57,500 -2,875) 
2,875 
     1,093 
547