Accounting Model Test Paper - 8 (Questions) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


MODEL TEST PAPER 8 
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. Depreciation cannot be provided in case of loss, in a financial year. 
ii. At the end of the accounting year, all the nominal accounts of the 
ledger book are balanced.  
iii. Any amount spent for replacement of worn out part of a machine is 
capital expenditure.  
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. Debentures Suspense Account appears on the liability side of the 
Balance Sheet of a Company.  
(6 Statements x 2 Marks = 12 Marks)  
(b) Explain the objective of “Accounting Standards” in brief.       (4 Marks) 
(c) One of your clients Mr. Govind asked you to finalize his account for the 
year ended 31
st
 March,2024. As a basis for audit, Mr. Govind furnished 
you with the following statement: 
 Dr. Cr. 
Govind 's Capital   14,004 
Govind 's Drawings 5,076   
Leasehold Premises 6,750   
Sales   24,750 
Due from customers   4,770 
Purchases 11,331   
Purchase Return 2,376   
Loan from Bank   2,304 
Trade Expense 6,300   
Trade Payable 4,752   
Bills Payable 900   
55
Page 2


MODEL TEST PAPER 8 
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. Depreciation cannot be provided in case of loss, in a financial year. 
ii. At the end of the accounting year, all the nominal accounts of the 
ledger book are balanced.  
iii. Any amount spent for replacement of worn out part of a machine is 
capital expenditure.  
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. Debentures Suspense Account appears on the liability side of the 
Balance Sheet of a Company.  
(6 Statements x 2 Marks = 12 Marks)  
(b) Explain the objective of “Accounting Standards” in brief.       (4 Marks) 
(c) One of your clients Mr. Govind asked you to finalize his account for the 
year ended 31
st
 March,2024. As a basis for audit, Mr. Govind furnished 
you with the following statement: 
 Dr. Cr. 
Govind 's Capital   14,004 
Govind 's Drawings 5,076   
Leasehold Premises 6,750   
Sales   24,750 
Due from customers   4,770 
Purchases 11,331   
Purchase Return 2,376   
Loan from Bank   2,304 
Trade Expense 6,300   
Trade Payable 4,752   
Bills Payable 900   
55
Salaries and Wages 5,400   
Cash at Bank 2,034   
Opening Inventory   2,376 
Rent and Rates 4,167   
Sales Return   882 
 49,086 49,086 
 The closing inventory was ` 5,166. Mr. Govind claims that he has 
recorded every transaction correctly as the trial balance is tallied. Check 
the accuracy of the above trial balance and give reasons for the errors, 
if any.  (4 Marks) 
 (12 + 4 + 4 = 20 Marks) 
2. (a)  Sunshine Ltd. keeps no stock records but a physical inventory of stock 
is made at the end of each quarter and the valuation is taken at cost. 
The company’s year ends on 31
st
 March, 2024 and their accounts have 
been prepared to that date. The stock valuation taken on 31
st
 March, 
2024 was however, misleading and you have been advised to value the 
closing stocks as on 31st March, 2024 with the stock figure as on 31st 
December, 2023 and some other information is available to you: 
(i) The cost of stock on 31
st
 December, 2023 as shown by the 
inventory sheet was ` 80,000. 
(ii) On 31
st
 December, stock sheet showed the following 
discrepancies: 
(a) A page total of ` 5,000 had been carried to summary sheet as 
` 6,000. 
(b) The total of a page had been undercast by ` 200. 
(iii) Invoice of purchases entered in the Purchase Book during the 
quarter from January to March, 2024 totalled ` 70,000.  Out of this 
` 3,000 related to goods received prior to 31
st
 December, 2023.  
Invoices entered in April 2024 relating to goods received in March, 
2024 totalled ` 4,000. 
(iv) Sales invoiced to customers totalled ` 90,000 from January to 
March, 2024.  Of this ` 5,000 related to goods dispatched before 
31
st
 December, 2023.  Goods dispatched to customers before  
31
st
 March, 2024 but invoiced in April, 2024 totalled ` 4,000. 
(v) During the final quarter, credit notes at invoiced value of ` 1,000 
had been issued to customers in respect of goods returned during 
that period.  The gross margin earned by the company is 25% of 
cost. 
  You are required to prepare a statement showing the amount of stock at 
cost as on 31
st
 March, 2024.  (10 Marks) 
56
Page 3


MODEL TEST PAPER 8 
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. Depreciation cannot be provided in case of loss, in a financial year. 
ii. At the end of the accounting year, all the nominal accounts of the 
ledger book are balanced.  
iii. Any amount spent for replacement of worn out part of a machine is 
capital expenditure.  
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. Debentures Suspense Account appears on the liability side of the 
Balance Sheet of a Company.  
(6 Statements x 2 Marks = 12 Marks)  
(b) Explain the objective of “Accounting Standards” in brief.       (4 Marks) 
(c) One of your clients Mr. Govind asked you to finalize his account for the 
year ended 31
st
 March,2024. As a basis for audit, Mr. Govind furnished 
you with the following statement: 
 Dr. Cr. 
Govind 's Capital   14,004 
Govind 's Drawings 5,076   
Leasehold Premises 6,750   
Sales   24,750 
Due from customers   4,770 
Purchases 11,331   
Purchase Return 2,376   
Loan from Bank   2,304 
Trade Expense 6,300   
Trade Payable 4,752   
Bills Payable 900   
55
Salaries and Wages 5,400   
Cash at Bank 2,034   
Opening Inventory   2,376 
Rent and Rates 4,167   
Sales Return   882 
 49,086 49,086 
 The closing inventory was ` 5,166. Mr. Govind claims that he has 
recorded every transaction correctly as the trial balance is tallied. Check 
the accuracy of the above trial balance and give reasons for the errors, 
if any.  (4 Marks) 
 (12 + 4 + 4 = 20 Marks) 
2. (a)  Sunshine Ltd. keeps no stock records but a physical inventory of stock 
is made at the end of each quarter and the valuation is taken at cost. 
The company’s year ends on 31
st
 March, 2024 and their accounts have 
been prepared to that date. The stock valuation taken on 31
st
 March, 
2024 was however, misleading and you have been advised to value the 
closing stocks as on 31st March, 2024 with the stock figure as on 31st 
December, 2023 and some other information is available to you: 
(i) The cost of stock on 31
st
 December, 2023 as shown by the 
inventory sheet was ` 80,000. 
(ii) On 31
st
 December, stock sheet showed the following 
discrepancies: 
(a) A page total of ` 5,000 had been carried to summary sheet as 
` 6,000. 
(b) The total of a page had been undercast by ` 200. 
(iii) Invoice of purchases entered in the Purchase Book during the 
quarter from January to March, 2024 totalled ` 70,000.  Out of this 
` 3,000 related to goods received prior to 31
st
 December, 2023.  
Invoices entered in April 2024 relating to goods received in March, 
2024 totalled ` 4,000. 
(iv) Sales invoiced to customers totalled ` 90,000 from January to 
March, 2024.  Of this ` 5,000 related to goods dispatched before 
31
st
 December, 2023.  Goods dispatched to customers before  
31
st
 March, 2024 but invoiced in April, 2024 totalled ` 4,000. 
(v) During the final quarter, credit notes at invoiced value of ` 1,000 
had been issued to customers in respect of goods returned during 
that period.  The gross margin earned by the company is 25% of 
cost. 
  You are required to prepare a statement showing the amount of stock at 
cost as on 31
st
 March, 2024.  (10 Marks) 
56
(b) Prepare a Bank Reconciliation statement for Ramesh Traders as on 31
st
 
March,2024.  
  The cash book of Ramesh Traders shows a debit balance of ` 8,24,400 
at bank as on 31
st
 March,2024, but you find that it does not agree with 
the balance as per Pass Book. After checking you find the following:    
1.  On 12th March, 2024 the payment side of the Cash Book was under 
cast by ` 24,000/- 
2.  A cheque of  ` 1,70,000  issued on 20th March, 2024 was not taken 
in the bank column. 
3.  On 22nd March, 2024 the debit balance of ` 37,000 as on the 
previous day, was brought forwards as credit balance. 
4.  Out of the total cheques amounting to ` 84,000 issued in, the last 
week of March, 2024, cheques aggregating ` 57,000 were 
encashed in March, 2024. 
5.   Dividends of ` 70,000 collected by the Bank and Fire insurance 
premium of ` 40,000 paid by it were not recorded in the cash book. 
6.  One cheque issued to a creditor of ` 2,58,000 was recorded twice 
in the Cash book. 
7.  A debtor Mr. Sahid has deposited the Cheque for ` 64,000 into the 
bank directly in the month of March, 2024 without intimating to 
Ramesh Traders and the same cheque was dishonored by the bank 
due to insufficient funds in the month of March itself. 
8.  A cheque from customer for ` 10,000 was deposited in bank on 
28th March,2024 but was dishonored and advice received from 
bank on 3rd April, 2024. 
9. Bank paid credit card bill of ` 5,000 which is not recorded in cash 
book. 
10. Bank wrongly credited cheque of ` 50,000 of other customer in our 
account. 
11.  Bank credited cheque of ` 4,000 in savings account of proprietor of 
Ramesh Traders instead of crediting cheque in current account of 
Ramesh Traders. 
12. ` 1,000 discount received wrongly entered in bank column in cash 
book. 
13.  Bank debited charges ` 400 on 25
th
 March for which no intimation 
received till 31
st
 March (10 Marks) 
(10 +10 = 20 Marks) 
  
57
Page 4


MODEL TEST PAPER 8 
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. Depreciation cannot be provided in case of loss, in a financial year. 
ii. At the end of the accounting year, all the nominal accounts of the 
ledger book are balanced.  
iii. Any amount spent for replacement of worn out part of a machine is 
capital expenditure.  
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. Debentures Suspense Account appears on the liability side of the 
Balance Sheet of a Company.  
(6 Statements x 2 Marks = 12 Marks)  
(b) Explain the objective of “Accounting Standards” in brief.       (4 Marks) 
(c) One of your clients Mr. Govind asked you to finalize his account for the 
year ended 31
st
 March,2024. As a basis for audit, Mr. Govind furnished 
you with the following statement: 
 Dr. Cr. 
Govind 's Capital   14,004 
Govind 's Drawings 5,076   
Leasehold Premises 6,750   
Sales   24,750 
Due from customers   4,770 
Purchases 11,331   
Purchase Return 2,376   
Loan from Bank   2,304 
Trade Expense 6,300   
Trade Payable 4,752   
Bills Payable 900   
55
Salaries and Wages 5,400   
Cash at Bank 2,034   
Opening Inventory   2,376 
Rent and Rates 4,167   
Sales Return   882 
 49,086 49,086 
 The closing inventory was ` 5,166. Mr. Govind claims that he has 
recorded every transaction correctly as the trial balance is tallied. Check 
the accuracy of the above trial balance and give reasons for the errors, 
if any.  (4 Marks) 
 (12 + 4 + 4 = 20 Marks) 
2. (a)  Sunshine Ltd. keeps no stock records but a physical inventory of stock 
is made at the end of each quarter and the valuation is taken at cost. 
The company’s year ends on 31
st
 March, 2024 and their accounts have 
been prepared to that date. The stock valuation taken on 31
st
 March, 
2024 was however, misleading and you have been advised to value the 
closing stocks as on 31st March, 2024 with the stock figure as on 31st 
December, 2023 and some other information is available to you: 
(i) The cost of stock on 31
st
 December, 2023 as shown by the 
inventory sheet was ` 80,000. 
(ii) On 31
st
 December, stock sheet showed the following 
discrepancies: 
(a) A page total of ` 5,000 had been carried to summary sheet as 
` 6,000. 
(b) The total of a page had been undercast by ` 200. 
(iii) Invoice of purchases entered in the Purchase Book during the 
quarter from January to March, 2024 totalled ` 70,000.  Out of this 
` 3,000 related to goods received prior to 31
st
 December, 2023.  
Invoices entered in April 2024 relating to goods received in March, 
2024 totalled ` 4,000. 
(iv) Sales invoiced to customers totalled ` 90,000 from January to 
March, 2024.  Of this ` 5,000 related to goods dispatched before 
31
st
 December, 2023.  Goods dispatched to customers before  
31
st
 March, 2024 but invoiced in April, 2024 totalled ` 4,000. 
(v) During the final quarter, credit notes at invoiced value of ` 1,000 
had been issued to customers in respect of goods returned during 
that period.  The gross margin earned by the company is 25% of 
cost. 
  You are required to prepare a statement showing the amount of stock at 
cost as on 31
st
 March, 2024.  (10 Marks) 
56
(b) Prepare a Bank Reconciliation statement for Ramesh Traders as on 31
st
 
March,2024.  
  The cash book of Ramesh Traders shows a debit balance of ` 8,24,400 
at bank as on 31
st
 March,2024, but you find that it does not agree with 
the balance as per Pass Book. After checking you find the following:    
1.  On 12th March, 2024 the payment side of the Cash Book was under 
cast by ` 24,000/- 
2.  A cheque of  ` 1,70,000  issued on 20th March, 2024 was not taken 
in the bank column. 
3.  On 22nd March, 2024 the debit balance of ` 37,000 as on the 
previous day, was brought forwards as credit balance. 
4.  Out of the total cheques amounting to ` 84,000 issued in, the last 
week of March, 2024, cheques aggregating ` 57,000 were 
encashed in March, 2024. 
5.   Dividends of ` 70,000 collected by the Bank and Fire insurance 
premium of ` 40,000 paid by it were not recorded in the cash book. 
6.  One cheque issued to a creditor of ` 2,58,000 was recorded twice 
in the Cash book. 
7.  A debtor Mr. Sahid has deposited the Cheque for ` 64,000 into the 
bank directly in the month of March, 2024 without intimating to 
Ramesh Traders and the same cheque was dishonored by the bank 
due to insufficient funds in the month of March itself. 
8.  A cheque from customer for ` 10,000 was deposited in bank on 
28th March,2024 but was dishonored and advice received from 
bank on 3rd April, 2024. 
9. Bank paid credit card bill of ` 5,000 which is not recorded in cash 
book. 
10. Bank wrongly credited cheque of ` 50,000 of other customer in our 
account. 
11.  Bank credited cheque of ` 4,000 in savings account of proprietor of 
Ramesh Traders instead of crediting cheque in current account of 
Ramesh Traders. 
12. ` 1,000 discount received wrongly entered in bank column in cash 
book. 
13.  Bank debited charges ` 400 on 25
th
 March for which no intimation 
received till 31
st
 March (10 Marks) 
(10 +10 = 20 Marks) 
  
57
3. (a) Summary of Receipts and Payments of Natures Beauty Society for the 
year ended 31st March, 2024 are as follows: 
Receipts Amount Payments Amount 
Subscription Received 5,00,000 Payment for Medicine 
Supply 
3,00,000 
Donation Raised for 
meeting revenue 
expenditure 
1,50,000 Honorarium to Doctors 1,00,000 
Interest on Investments 
@ 9% p.a. 
90,000 Salaries 2,80,000 
Charity Show Collection 1,25,000 Sundry Expenses 10,000 
  Equipment Purchase 1,50,000 
  Charity Show Expenses 15,000 
Additional Information: 
Particulars 01.04.2023 31.03.2024 
Subscription due 
Subscription received in advance 
Stock of medicine 
Amount due for medicine supply 
Value of equipment 
Value of building 
Cash Balance 
Opening Balance of Capital Fund 
15,000 
12,000 
1,00,000 
90,000 
2,10,000 
5,00,000 
80,000 
18,03,000 
22,000 
7,000 
1,50,000 
1,30,000 
3,00,000 
4,80,000 
90,000 
 You are required to prepare: 
(i)   Income and Expenditure Account for the year ended 31
st
 March, 
2024. 
(ii)  Balance Sheet as on 31
st
 March, 2024.   (10 Marks) 
(b) A, B and C shared profits and losses in the ratio of 5:3:2. They took out 
a Joint Life Policy in 2020 for ` 50,000, a premium of ` 3,000 being paid 
annually on 10th June. The surrender value of the policy on 31st 
December of various years was as follows: 
2020    Nil 
2021    ` 900 
2022    ` 2,000 
2023    ` 3,600 
A retired on 15
th
 April, 2024 and the policy was surrendered. You are 
required to prepare Joint Life Policy Account from 2020 to 2024 
(assuming the Policy Account is maintained at surrendered value basis). 
(5 Marks) 
58
Page 5


MODEL TEST PAPER 8 
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. Depreciation cannot be provided in case of loss, in a financial year. 
ii. At the end of the accounting year, all the nominal accounts of the 
ledger book are balanced.  
iii. Any amount spent for replacement of worn out part of a machine is 
capital expenditure.  
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. Debentures Suspense Account appears on the liability side of the 
Balance Sheet of a Company.  
(6 Statements x 2 Marks = 12 Marks)  
(b) Explain the objective of “Accounting Standards” in brief.       (4 Marks) 
(c) One of your clients Mr. Govind asked you to finalize his account for the 
year ended 31
st
 March,2024. As a basis for audit, Mr. Govind furnished 
you with the following statement: 
 Dr. Cr. 
Govind 's Capital   14,004 
Govind 's Drawings 5,076   
Leasehold Premises 6,750   
Sales   24,750 
Due from customers   4,770 
Purchases 11,331   
Purchase Return 2,376   
Loan from Bank   2,304 
Trade Expense 6,300   
Trade Payable 4,752   
Bills Payable 900   
55
Salaries and Wages 5,400   
Cash at Bank 2,034   
Opening Inventory   2,376 
Rent and Rates 4,167   
Sales Return   882 
 49,086 49,086 
 The closing inventory was ` 5,166. Mr. Govind claims that he has 
recorded every transaction correctly as the trial balance is tallied. Check 
the accuracy of the above trial balance and give reasons for the errors, 
if any.  (4 Marks) 
 (12 + 4 + 4 = 20 Marks) 
2. (a)  Sunshine Ltd. keeps no stock records but a physical inventory of stock 
is made at the end of each quarter and the valuation is taken at cost. 
The company’s year ends on 31
st
 March, 2024 and their accounts have 
been prepared to that date. The stock valuation taken on 31
st
 March, 
2024 was however, misleading and you have been advised to value the 
closing stocks as on 31st March, 2024 with the stock figure as on 31st 
December, 2023 and some other information is available to you: 
(i) The cost of stock on 31
st
 December, 2023 as shown by the 
inventory sheet was ` 80,000. 
(ii) On 31
st
 December, stock sheet showed the following 
discrepancies: 
(a) A page total of ` 5,000 had been carried to summary sheet as 
` 6,000. 
(b) The total of a page had been undercast by ` 200. 
(iii) Invoice of purchases entered in the Purchase Book during the 
quarter from January to March, 2024 totalled ` 70,000.  Out of this 
` 3,000 related to goods received prior to 31
st
 December, 2023.  
Invoices entered in April 2024 relating to goods received in March, 
2024 totalled ` 4,000. 
(iv) Sales invoiced to customers totalled ` 90,000 from January to 
March, 2024.  Of this ` 5,000 related to goods dispatched before 
31
st
 December, 2023.  Goods dispatched to customers before  
31
st
 March, 2024 but invoiced in April, 2024 totalled ` 4,000. 
(v) During the final quarter, credit notes at invoiced value of ` 1,000 
had been issued to customers in respect of goods returned during 
that period.  The gross margin earned by the company is 25% of 
cost. 
  You are required to prepare a statement showing the amount of stock at 
cost as on 31
st
 March, 2024.  (10 Marks) 
56
(b) Prepare a Bank Reconciliation statement for Ramesh Traders as on 31
st
 
March,2024.  
  The cash book of Ramesh Traders shows a debit balance of ` 8,24,400 
at bank as on 31
st
 March,2024, but you find that it does not agree with 
the balance as per Pass Book. After checking you find the following:    
1.  On 12th March, 2024 the payment side of the Cash Book was under 
cast by ` 24,000/- 
2.  A cheque of  ` 1,70,000  issued on 20th March, 2024 was not taken 
in the bank column. 
3.  On 22nd March, 2024 the debit balance of ` 37,000 as on the 
previous day, was brought forwards as credit balance. 
4.  Out of the total cheques amounting to ` 84,000 issued in, the last 
week of March, 2024, cheques aggregating ` 57,000 were 
encashed in March, 2024. 
5.   Dividends of ` 70,000 collected by the Bank and Fire insurance 
premium of ` 40,000 paid by it were not recorded in the cash book. 
6.  One cheque issued to a creditor of ` 2,58,000 was recorded twice 
in the Cash book. 
7.  A debtor Mr. Sahid has deposited the Cheque for ` 64,000 into the 
bank directly in the month of March, 2024 without intimating to 
Ramesh Traders and the same cheque was dishonored by the bank 
due to insufficient funds in the month of March itself. 
8.  A cheque from customer for ` 10,000 was deposited in bank on 
28th March,2024 but was dishonored and advice received from 
bank on 3rd April, 2024. 
9. Bank paid credit card bill of ` 5,000 which is not recorded in cash 
book. 
10. Bank wrongly credited cheque of ` 50,000 of other customer in our 
account. 
11.  Bank credited cheque of ` 4,000 in savings account of proprietor of 
Ramesh Traders instead of crediting cheque in current account of 
Ramesh Traders. 
12. ` 1,000 discount received wrongly entered in bank column in cash 
book. 
13.  Bank debited charges ` 400 on 25
th
 March for which no intimation 
received till 31
st
 March (10 Marks) 
(10 +10 = 20 Marks) 
  
57
3. (a) Summary of Receipts and Payments of Natures Beauty Society for the 
year ended 31st March, 2024 are as follows: 
Receipts Amount Payments Amount 
Subscription Received 5,00,000 Payment for Medicine 
Supply 
3,00,000 
Donation Raised for 
meeting revenue 
expenditure 
1,50,000 Honorarium to Doctors 1,00,000 
Interest on Investments 
@ 9% p.a. 
90,000 Salaries 2,80,000 
Charity Show Collection 1,25,000 Sundry Expenses 10,000 
  Equipment Purchase 1,50,000 
  Charity Show Expenses 15,000 
Additional Information: 
Particulars 01.04.2023 31.03.2024 
Subscription due 
Subscription received in advance 
Stock of medicine 
Amount due for medicine supply 
Value of equipment 
Value of building 
Cash Balance 
Opening Balance of Capital Fund 
15,000 
12,000 
1,00,000 
90,000 
2,10,000 
5,00,000 
80,000 
18,03,000 
22,000 
7,000 
1,50,000 
1,30,000 
3,00,000 
4,80,000 
90,000 
 You are required to prepare: 
(i)   Income and Expenditure Account for the year ended 31
st
 March, 
2024. 
(ii)  Balance Sheet as on 31
st
 March, 2024.   (10 Marks) 
(b) A, B and C shared profits and losses in the ratio of 5:3:2. They took out 
a Joint Life Policy in 2020 for ` 50,000, a premium of ` 3,000 being paid 
annually on 10th June. The surrender value of the policy on 31st 
December of various years was as follows: 
2020    Nil 
2021    ` 900 
2022    ` 2,000 
2023    ` 3,600 
A retired on 15
th
 April, 2024 and the policy was surrendered. You are 
required to prepare Joint Life Policy Account from 2020 to 2024 
(assuming the Policy Account is maintained at surrendered value basis). 
(5 Marks) 
58
(c)  Mr. Nikhil gives the following particulars in respect of business carried 
on by him: 
Particulars Amount (`) 
Capital Invested in business 
Market rate of interest on investment 
Rate of risk return on capital invested in business 
Remuneration per annum from alternative 
employment of proprietor if he was not engaged in 
business 
9,00,000 
8% 
3% 
 
36,000 
 The business earned profits of ` 2,40,000, ` 2,16,000 and ` 3,00,000 in 
the years 2020, 2021 and 2023 respectively but made a loss of ` 36,000 
in the year 2022. 
 Compute the value of Goodwill on the basis of 6 years' purchase of super 
profits of the business, calculated on the basis of average profit of last 
four years. (5 Marks) 
 (10 + 5 + 5 = 20 Marks) 
4.  (a)  The Balance Sheet of a Partnership Firm M/s Dutch and Associates 
consisted of two partners P and Q who were sharing Profits and Losses 
in the ratio of 5 : 3 respectively. The position as on 31
st
 March,2024 was 
as follows:  
Liabilities  ` Assets  ` 
P's Capital  4,10,000  Land & Building  3,80,000  
Q'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, R was admitted as a partner on the following terms:  
(a)  R should get 1/5
th
 of share of profits.  
(b) R 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%.  
(d) A provision for doubtful debts to be created at 5% on sundry 
debtors.  
(e) An unrecorded liability of ` 2,000 for repairs to Buildings would be 
recorded in the books of accounts and trade creditors are to be 
increased by ` 4,000.  
59