Accounting Model Test Paper - 6 (Answers) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 6
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) False: Such wages being related to capital asset should be debited 
to the machinery account. 
(ii) True: Since the temporary huts were necessary for the
construction, their cost should be added to the cost of the cinema
hall and thus capitalised.
(iii) False: If the effect of errors committed cancel out, the errors will be
called compensating errors and the trial balance will agree.
(iv) True: In case of the promissory note, it is generally the maker who
makes the payment, but in case of the bill of exchange, the person
accepting the bill shall be liable to make the payment to the holder
of the bill.
(v) False: The business of the partnership firm can be carried on by all
the partners or by any one of them acting for all.
(vi) False: Debenture interest is payable before the payment of any
dividend on shares.
(b) Cash and mercantile system: Cash system of accounting is a system
by which a transaction is recognized only if cash is received or paid. In
cash system of accounting, entries are made only when cash is received
or paid, no entry being made when a payment or receipt is merely due.
Cash system is normally followed by professionals, educational
institutions or non-profit making organizations.
On the other hand, mercantile system of accounting is a system of
classifying and summarizing transactions into assets, liabilities, equity
(owner’s fund), costs, revenues and recording thereof. A transaction is
recognized when either a liability is created/ impaired and an asset is
created/impaired. A record is made on the basis of amounts having
become due for payment or receipt irrespective of the fact whether
payment is made or received actually.
Mercantile system of accounting is generally accepted accounting
system by business entities
(c) Using the Accounting Equation:
Assets = Capital + Liabilities
(i) 37,50,000
557
Page 2


ANSWERS OF MODEL TEST PAPER 6
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) False: Such wages being related to capital asset should be debited 
to the machinery account. 
(ii) True: Since the temporary huts were necessary for the
construction, their cost should be added to the cost of the cinema
hall and thus capitalised.
(iii) False: If the effect of errors committed cancel out, the errors will be
called compensating errors and the trial balance will agree.
(iv) True: In case of the promissory note, it is generally the maker who
makes the payment, but in case of the bill of exchange, the person
accepting the bill shall be liable to make the payment to the holder
of the bill.
(v) False: The business of the partnership firm can be carried on by all
the partners or by any one of them acting for all.
(vi) False: Debenture interest is payable before the payment of any
dividend on shares.
(b) Cash and mercantile system: Cash system of accounting is a system
by which a transaction is recognized only if cash is received or paid. In
cash system of accounting, entries are made only when cash is received
or paid, no entry being made when a payment or receipt is merely due.
Cash system is normally followed by professionals, educational
institutions or non-profit making organizations.
On the other hand, mercantile system of accounting is a system of
classifying and summarizing transactions into assets, liabilities, equity
(owner’s fund), costs, revenues and recording thereof. A transaction is
recognized when either a liability is created/ impaired and an asset is
created/impaired. A record is made on the basis of amounts having
become due for payment or receipt irrespective of the fact whether
payment is made or received actually.
Mercantile system of accounting is generally accepted accounting
system by business entities
(c) Using the Accounting Equation:
Assets = Capital + Liabilities
(i) 37,50,000
557
(ii) 6,75,000
(iii) 2,25,000
(iv) 1,79,40,000
2. (a) Savin &Co. 
Dr. Machinery Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
1.4.2021 To Bank A/c 1,00,000 31.3.2022 By Balance c/d 1,00,000 
1,00,000 1,00,000 
1.4.2022 To Balance 
b/d 
1,00,000 
1.10.2022 To Bank A/c 1,50,000 31.03.2023 By Balance c/d 2,50,000 
2,50,000 2,50,000 
1.4.2023 To Balance 
b/d 
2,50,000 31.03.2024 By Machinery 
Disposal A/c 
1,00,000 
31.03.2024 By Balance c/d 1,50,000 
2,50,000 2,50,000 
1.4.2024 To Balance 
b/d 
1,50,000 
Dr. Provision for Depreciation Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
31.03.2022 To Balance c/d 15,000 31.03.2022 By Depreciation A/c 15,000 
15,000 15,000 
31.03.2023 To Balance c/d 39,000 1.4.2022 By Balance b/d 15,000 
31.03.2023 By Depreciation A/c 
(` 12,750+`11,250) 
24,000 
39,000 39,000 
31.03.2024 To Machinery 
Disposal A/c 
[100000-61,413] 
38,587 1.4.2023 By Balance b/d 39,000 
31.03.2024 To Balance c/d 32,063 31.03.2024 
31.03.2024 
By Depreciation A/c 
By Depreciation- 
Machinery disposed 
20,813 
10,837 
70,650 70,650 
1.4.2024 By Balance b/d 32,063 
558
Page 3


ANSWERS OF MODEL TEST PAPER 6
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) False: Such wages being related to capital asset should be debited 
to the machinery account. 
(ii) True: Since the temporary huts were necessary for the
construction, their cost should be added to the cost of the cinema
hall and thus capitalised.
(iii) False: If the effect of errors committed cancel out, the errors will be
called compensating errors and the trial balance will agree.
(iv) True: In case of the promissory note, it is generally the maker who
makes the payment, but in case of the bill of exchange, the person
accepting the bill shall be liable to make the payment to the holder
of the bill.
(v) False: The business of the partnership firm can be carried on by all
the partners or by any one of them acting for all.
(vi) False: Debenture interest is payable before the payment of any
dividend on shares.
(b) Cash and mercantile system: Cash system of accounting is a system
by which a transaction is recognized only if cash is received or paid. In
cash system of accounting, entries are made only when cash is received
or paid, no entry being made when a payment or receipt is merely due.
Cash system is normally followed by professionals, educational
institutions or non-profit making organizations.
On the other hand, mercantile system of accounting is a system of
classifying and summarizing transactions into assets, liabilities, equity
(owner’s fund), costs, revenues and recording thereof. A transaction is
recognized when either a liability is created/ impaired and an asset is
created/impaired. A record is made on the basis of amounts having
become due for payment or receipt irrespective of the fact whether
payment is made or received actually.
Mercantile system of accounting is generally accepted accounting
system by business entities
(c) Using the Accounting Equation:
Assets = Capital + Liabilities
(i) 37,50,000
557
(ii) 6,75,000
(iii) 2,25,000
(iv) 1,79,40,000
2. (a) Savin &Co. 
Dr. Machinery Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
1.4.2021 To Bank A/c 1,00,000 31.3.2022 By Balance c/d 1,00,000 
1,00,000 1,00,000 
1.4.2022 To Balance 
b/d 
1,00,000 
1.10.2022 To Bank A/c 1,50,000 31.03.2023 By Balance c/d 2,50,000 
2,50,000 2,50,000 
1.4.2023 To Balance 
b/d 
2,50,000 31.03.2024 By Machinery 
Disposal A/c 
1,00,000 
31.03.2024 By Balance c/d 1,50,000 
2,50,000 2,50,000 
1.4.2024 To Balance 
b/d 
1,50,000 
Dr. Provision for Depreciation Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
31.03.2022 To Balance c/d 15,000 31.03.2022 By Depreciation A/c 15,000 
15,000 15,000 
31.03.2023 To Balance c/d 39,000 1.4.2022 By Balance b/d 15,000 
31.03.2023 By Depreciation A/c 
(` 12,750+`11,250) 
24,000 
39,000 39,000 
31.03.2024 To Machinery 
Disposal A/c 
[100000-61,413] 
38,587 1.4.2023 By Balance b/d 39,000 
31.03.2024 To Balance c/d 32,063 31.03.2024 
31.03.2024 
By Depreciation A/c 
By Depreciation- 
Machinery disposed 
20,813 
10,837 
70,650 70,650 
1.4.2024 By Balance b/d 32,063 
558
Dr. Machinery Disposal Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
31.03.2024 To Machinery 
A/c 
1,00,000 31.03.2024 By Provision for 
Depreciation A/c 
38,587 
31.03.2024 By Bank A/c 50,000 
31.03.2024 By Profit & Loss 
A/c (Loss on 
Sale) 
11,413 
1,00,000 1,00,000 
Working Notes: 
1. Depreciation for the machine purchased on 1.10.2022.
For the year 2022-23 (used for 6 months) = ` 1,50,000 x 15% x 
12
6
= ` 11,250 
For the year 2023-24 (used for full year) = ` 1,38,750 x15 % = 
` 20,813 
2. Depreciation for the machine purchased on 1.4.2021.
Depreciation = ` 1,00,000 x 15% = ` 15,000
So, Depreciation for 2
nd
 year = ` 85,000 x15% = ` 12,750
Depreciation for 3
rd
 year = ` 72,250x15% = `10,837
(b) Bank Reconciliation Statement of Ms. Suman 
 Balance as per Cash Book (1,97,400) 
Add: 
Cheques issued but not 
presented for payment 
14,800 
Crossed Cheque issued to 
Abdul not presented for 
payment 
3,000 
Amounts collected by Bank on 
our behalf but 
not entered in the Cash Book 
Dividend 600 
Insurance claim 3,200 
3,800 
(-) Bank Commission 400 3,400 
Amount paid in A/c No. 2 
credited by the  
Bank wrongly to this A/c 2,000  23,200 
(1,74,200) 
559
Page 4


ANSWERS OF MODEL TEST PAPER 6
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) False: Such wages being related to capital asset should be debited 
to the machinery account. 
(ii) True: Since the temporary huts were necessary for the
construction, their cost should be added to the cost of the cinema
hall and thus capitalised.
(iii) False: If the effect of errors committed cancel out, the errors will be
called compensating errors and the trial balance will agree.
(iv) True: In case of the promissory note, it is generally the maker who
makes the payment, but in case of the bill of exchange, the person
accepting the bill shall be liable to make the payment to the holder
of the bill.
(v) False: The business of the partnership firm can be carried on by all
the partners or by any one of them acting for all.
(vi) False: Debenture interest is payable before the payment of any
dividend on shares.
(b) Cash and mercantile system: Cash system of accounting is a system
by which a transaction is recognized only if cash is received or paid. In
cash system of accounting, entries are made only when cash is received
or paid, no entry being made when a payment or receipt is merely due.
Cash system is normally followed by professionals, educational
institutions or non-profit making organizations.
On the other hand, mercantile system of accounting is a system of
classifying and summarizing transactions into assets, liabilities, equity
(owner’s fund), costs, revenues and recording thereof. A transaction is
recognized when either a liability is created/ impaired and an asset is
created/impaired. A record is made on the basis of amounts having
become due for payment or receipt irrespective of the fact whether
payment is made or received actually.
Mercantile system of accounting is generally accepted accounting
system by business entities
(c) Using the Accounting Equation:
Assets = Capital + Liabilities
(i) 37,50,000
557
(ii) 6,75,000
(iii) 2,25,000
(iv) 1,79,40,000
2. (a) Savin &Co. 
Dr. Machinery Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
1.4.2021 To Bank A/c 1,00,000 31.3.2022 By Balance c/d 1,00,000 
1,00,000 1,00,000 
1.4.2022 To Balance 
b/d 
1,00,000 
1.10.2022 To Bank A/c 1,50,000 31.03.2023 By Balance c/d 2,50,000 
2,50,000 2,50,000 
1.4.2023 To Balance 
b/d 
2,50,000 31.03.2024 By Machinery 
Disposal A/c 
1,00,000 
31.03.2024 By Balance c/d 1,50,000 
2,50,000 2,50,000 
1.4.2024 To Balance 
b/d 
1,50,000 
Dr. Provision for Depreciation Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
31.03.2022 To Balance c/d 15,000 31.03.2022 By Depreciation A/c 15,000 
15,000 15,000 
31.03.2023 To Balance c/d 39,000 1.4.2022 By Balance b/d 15,000 
31.03.2023 By Depreciation A/c 
(` 12,750+`11,250) 
24,000 
39,000 39,000 
31.03.2024 To Machinery 
Disposal A/c 
[100000-61,413] 
38,587 1.4.2023 By Balance b/d 39,000 
31.03.2024 To Balance c/d 32,063 31.03.2024 
31.03.2024 
By Depreciation A/c 
By Depreciation- 
Machinery disposed 
20,813 
10,837 
70,650 70,650 
1.4.2024 By Balance b/d 32,063 
558
Dr. Machinery Disposal Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
31.03.2024 To Machinery 
A/c 
1,00,000 31.03.2024 By Provision for 
Depreciation A/c 
38,587 
31.03.2024 By Bank A/c 50,000 
31.03.2024 By Profit & Loss 
A/c (Loss on 
Sale) 
11,413 
1,00,000 1,00,000 
Working Notes: 
1. Depreciation for the machine purchased on 1.10.2022.
For the year 2022-23 (used for 6 months) = ` 1,50,000 x 15% x 
12
6
= ` 11,250 
For the year 2023-24 (used for full year) = ` 1,38,750 x15 % = 
` 20,813 
2. Depreciation for the machine purchased on 1.4.2021.
Depreciation = ` 1,00,000 x 15% = ` 15,000
So, Depreciation for 2
nd
 year = ` 85,000 x15% = ` 12,750
Depreciation for 3
rd
 year = ` 72,250x15% = `10,837
(b) Bank Reconciliation Statement of Ms. Suman 
 Balance as per Cash Book (1,97,400) 
Add: 
Cheques issued but not 
presented for payment 
14,800 
Crossed Cheque issued to 
Abdul not presented for 
payment 
3,000 
Amounts collected by Bank on 
our behalf but 
not entered in the Cash Book 
Dividend 600 
Insurance claim 3,200 
3,800 
(-) Bank Commission 400 3,400 
Amount paid in A/c No. 2 
credited by the  
Bank wrongly to this A/c 2,000  23,200 
(1,74,200) 
559
Less: 
Cheques deposited in the 
bank but no cleared 
6,200 
(` 5,200 + ` 1,000) 
Payments made by Bank on 
our behalf but not entered in 
the Cash Book 
Interest 1,280 
Premium 640 
Second call 2,400 4,320 
Cheques issued against A/c 
No. 2 but wrongly  
debited by the Bank to this A/c 1,200 (11,720) 
Overdraft as per Pass Book 1,85,920 
3. (a) Corrected Receipts and Payments Account of Gold Smith Club 
for the year ended 31
st
 March, 2024 
Receipts ` Amount ` Payments Amount ` 
To 
To 
Balance b/d 
Subscription 
Annual Income 91,800 
9,000 By 
By 
By 
Expenses 
(` 1,26,000 –  
` 54,000) 
Sports Material 
Balance c/d 
72,000 
54,000 
18,14,400 
Less: Receivable 
as on 31.3.2024 
Add: Advance 
received for the 
year 2024–2025 
5,400 
1,800 
(Cash in Hand and at 
Bank) 
Add: Receivable as 
on 31.3.2023 3,600 
Less: Advance 
received as on 
31.3.2023 
1,800 
90,000 
To Other Fees 36,000 
To Donation for 
Building 
18,00,000 
To Sale of Furniture      5,400 
19,40,400 19,40,400 
560
Page 5


ANSWERS OF MODEL TEST PAPER 6
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) False: Such wages being related to capital asset should be debited 
to the machinery account. 
(ii) True: Since the temporary huts were necessary for the
construction, their cost should be added to the cost of the cinema
hall and thus capitalised.
(iii) False: If the effect of errors committed cancel out, the errors will be
called compensating errors and the trial balance will agree.
(iv) True: In case of the promissory note, it is generally the maker who
makes the payment, but in case of the bill of exchange, the person
accepting the bill shall be liable to make the payment to the holder
of the bill.
(v) False: The business of the partnership firm can be carried on by all
the partners or by any one of them acting for all.
(vi) False: Debenture interest is payable before the payment of any
dividend on shares.
(b) Cash and mercantile system: Cash system of accounting is a system
by which a transaction is recognized only if cash is received or paid. In
cash system of accounting, entries are made only when cash is received
or paid, no entry being made when a payment or receipt is merely due.
Cash system is normally followed by professionals, educational
institutions or non-profit making organizations.
On the other hand, mercantile system of accounting is a system of
classifying and summarizing transactions into assets, liabilities, equity
(owner’s fund), costs, revenues and recording thereof. A transaction is
recognized when either a liability is created/ impaired and an asset is
created/impaired. A record is made on the basis of amounts having
become due for payment or receipt irrespective of the fact whether
payment is made or received actually.
Mercantile system of accounting is generally accepted accounting
system by business entities
(c) Using the Accounting Equation:
Assets = Capital + Liabilities
(i) 37,50,000
557
(ii) 6,75,000
(iii) 2,25,000
(iv) 1,79,40,000
2. (a) Savin &Co. 
Dr. Machinery Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
1.4.2021 To Bank A/c 1,00,000 31.3.2022 By Balance c/d 1,00,000 
1,00,000 1,00,000 
1.4.2022 To Balance 
b/d 
1,00,000 
1.10.2022 To Bank A/c 1,50,000 31.03.2023 By Balance c/d 2,50,000 
2,50,000 2,50,000 
1.4.2023 To Balance 
b/d 
2,50,000 31.03.2024 By Machinery 
Disposal A/c 
1,00,000 
31.03.2024 By Balance c/d 1,50,000 
2,50,000 2,50,000 
1.4.2024 To Balance 
b/d 
1,50,000 
Dr. Provision for Depreciation Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
31.03.2022 To Balance c/d 15,000 31.03.2022 By Depreciation A/c 15,000 
15,000 15,000 
31.03.2023 To Balance c/d 39,000 1.4.2022 By Balance b/d 15,000 
31.03.2023 By Depreciation A/c 
(` 12,750+`11,250) 
24,000 
39,000 39,000 
31.03.2024 To Machinery 
Disposal A/c 
[100000-61,413] 
38,587 1.4.2023 By Balance b/d 39,000 
31.03.2024 To Balance c/d 32,063 31.03.2024 
31.03.2024 
By Depreciation A/c 
By Depreciation- 
Machinery disposed 
20,813 
10,837 
70,650 70,650 
1.4.2024 By Balance b/d 32,063 
558
Dr. Machinery Disposal Account Cr. 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
31.03.2024 To Machinery 
A/c 
1,00,000 31.03.2024 By Provision for 
Depreciation A/c 
38,587 
31.03.2024 By Bank A/c 50,000 
31.03.2024 By Profit & Loss 
A/c (Loss on 
Sale) 
11,413 
1,00,000 1,00,000 
Working Notes: 
1. Depreciation for the machine purchased on 1.10.2022.
For the year 2022-23 (used for 6 months) = ` 1,50,000 x 15% x 
12
6
= ` 11,250 
For the year 2023-24 (used for full year) = ` 1,38,750 x15 % = 
` 20,813 
2. Depreciation for the machine purchased on 1.4.2021.
Depreciation = ` 1,00,000 x 15% = ` 15,000
So, Depreciation for 2
nd
 year = ` 85,000 x15% = ` 12,750
Depreciation for 3
rd
 year = ` 72,250x15% = `10,837
(b) Bank Reconciliation Statement of Ms. Suman 
 Balance as per Cash Book (1,97,400) 
Add: 
Cheques issued but not 
presented for payment 
14,800 
Crossed Cheque issued to 
Abdul not presented for 
payment 
3,000 
Amounts collected by Bank on 
our behalf but 
not entered in the Cash Book 
Dividend 600 
Insurance claim 3,200 
3,800 
(-) Bank Commission 400 3,400 
Amount paid in A/c No. 2 
credited by the  
Bank wrongly to this A/c 2,000  23,200 
(1,74,200) 
559
Less: 
Cheques deposited in the 
bank but no cleared 
6,200 
(` 5,200 + ` 1,000) 
Payments made by Bank on 
our behalf but not entered in 
the Cash Book 
Interest 1,280 
Premium 640 
Second call 2,400 4,320 
Cheques issued against A/c 
No. 2 but wrongly  
debited by the Bank to this A/c 1,200 (11,720) 
Overdraft as per Pass Book 1,85,920 
3. (a) Corrected Receipts and Payments Account of Gold Smith Club 
for the year ended 31
st
 March, 2024 
Receipts ` Amount ` Payments Amount ` 
To 
To 
Balance b/d 
Subscription 
Annual Income 91,800 
9,000 By 
By 
By 
Expenses 
(` 1,26,000 –  
` 54,000) 
Sports Material 
Balance c/d 
72,000 
54,000 
18,14,400 
Less: Receivable 
as on 31.3.2024 
Add: Advance 
received for the 
year 2024–2025 
5,400 
1,800 
(Cash in Hand and at 
Bank) 
Add: Receivable as 
on 31.3.2023 3,600 
Less: Advance 
received as on 
31.3.2023 
1,800 
90,000 
To Other Fees 36,000 
To Donation for 
Building 
18,00,000 
To Sale of Furniture      5,400 
19,40,400 19,40,400 
560
Income and Expenditure Account of Gold Smith Club 
for the year ended 31
st
 March, 2024 
Expenditure ` Amount 
` 
Income Amoun
t ` 
To 
To 
Sundry Expenses 
Sports Material 
Balance as on 
1.4.2023 
1,33,200 
72,000 
 
By 
By 
By 
Subscription 
Other fees 
Interest on investment 
(5% on ` 5,40,000) 
91,800 
36,000 
27,000 
T
o
Add: Purchases 
Less: Balance as on 
31.3.2023 
Loss on sale of 
Furniture 
54,000 
(36,000 ) 1,51,200 
     3,600 
By Deficit: Excess of  
Expenditure over Income 
72,000 
2,26,800 2,26,80 0
Balance Sheet of Gold Smith Club 
as on 31
st
 March, 2024 
Liabilities Amount 
(`) 
Assets Amount 
 (`) 
Capital Fund (W N) 
Less: Excess of 
Expenditure over 
Income 
7,20,000 
   72,000 
6,48,000 
Furniture 
Less: Sold 
5% Investment 
36,000 
   9,000    27,000 
5,40,000 
Building Fund 18,00,000 Interest Accrued 
on Investment 
    27,000 
Subscription Received 
in advance  
1,800 Sports Material 
Subscription 
Receivable 
    36,000 
     5,400 
Cash in Hand and 
at Bank 
18,14,400 
24,49,800 24,49,800 
Working Note: 
Balance Sheet of Gold Smith Club as on 1
st
 April, 2023 
Liabilities Amount 
` 
Assets Amount 
` 
Subscription 
Received in Advance 1,800 
Furniture 
Investment 
36,000 
5,40,000 
Capital Fund  
(Balancing Figure) 
7,20,000 Sports Material 
Subscription 
Receivable 
1,33,200 
 3,600 
561