CUET Accountancy Previous Year Solved Paper 4 (30 August 2022 Slot-1) - Humanities/Arts MCQ

Prepaid expenses are shown in sub head of balance sheet under other C.A.

Bank overdraft is shown under the sub head of balance sheet under S.T. borrowings

7.5 months as beginning of each quarter

Total profit = 72000 x 3 = 216000
Remaining profit = 216000 – 33000 – 46000
= Rs.137000

Loose tools are shown under heading Inventory

380000 – 20000 = Rs.360000

COGS = OP STOCK + NET PUR + D.E – CLO STOCK

Arrears of II call on 300 shares = Rs.9000

Total no. of shares issued = 9700 + 300 = 10000

Goodwill is an intangible assets.

For IOD, P and L App a/c be credited

Proposed dividend is treated as contingent liabilities.

Turnover ratios are calculated for measuring the efficiency of operations.

Forfeited shares are shown under share capital till re issued.

Shares of public company are transferable

Goodwill of the firm = 600000

The correct answer is B: 

As per section 48 of the Partnership Act 1932, the sequence of treating losses is as follows:

A. Close Realisation Account

• Realisation Account is prepared to ascertain the profit or loss on the sale of assets and payment of liabilities during the dissolution process.
• After the sale of assets and payment of liabilities, the Realisation Account is closed, and the net balance (profit or loss) is transferred to the partners' capital accounts.

C. Pay out of Profits

• If there is a profit after the Realisation Account is closed, it is distributed among the partners in their profit-sharing ratio.
• This profit is credited to the partners' capital accounts.

B. Payout of Partners Capital

• After the distribution of profit, partners' capital accounts show their respective balances, which represent the amount payable to each partner.
• The partners' capital is paid out to them, barring any insolvent partner(s) whose capital remains in the firm.

D. Paid by the partners individually in their profit-sharing ratio

• If there is a loss after the Realisation Account is closed, it is borne by the partners individually in their profit-sharing ratio.
• This loss is debited to the partners' capital accounts.
• In case a partner's capital account has insufficient balance to bear the loss, the deficit is to be paid by the partner individually.

The correct answer is C: 
In case of dissolution of a firm, assets of the firm shall be applied in the following order:

B. Paying the debts to third parties:

• Before anything else, the firm needs to clear its outstanding debts to third parties. This ensures that the firm has no pending liabilities.

E. Paying each partner proportionately for advances:

• After clearing external debts, the firm should pay back any advances or loans made by the partners. These advances are usually given priority over capital and profit distribution.

A. Paying each partner proportionately for capital:

• Once the advances are settled, the firm should pay each partner their due share of capital. This represents the initial investment made by the partners, and it is essential to return these funds before distributing profits.

D. Dividing the residue among partners based on their profit-sharing ratio:

• After settling all debts, advances, and capital, any remaining residue should be divided among the partners based on their agreed-upon profit-sharing ratio. This ensures that each partner receives their fair share of the profits generated by the firm.

C. Transferring amount to General Reserves:

• This option is not applicable in the case of dissolution of a firm. General Reserves are created during the normal course of business operations, and such reserves are not relevant during the dissolution process.

Government grant is a source of income of NPO

The correct sequence of the Cash-flow statement as per Accounting Standards 3 is: C, B, D, A

The cash flow statement is divided into three main sections:

C. Cash Flow from Operating Activity:

• This section shows the cash inflows and outflows related to the main business operations of the company. It includes cash received from customers, cash paid to suppliers and employees, interest and taxes paid, and other operating activities.

B. Cash Flow from Investing Activity:

• This section shows the cash inflows and outflows related to the company's investments in assets and securities. It includes the purchase and sale of property, plant, and equipment, investments in other companies, and other investing activities.

D. Cash Flow from Financing Activity:

• This section shows the cash inflows and outflows related to the company's financing activities. It includes cash received from issuing shares or borrowing money, and cash used to repay loans, pay dividends, or buy back shares.

A. Cash Equivalents:

• This section shows the cash and cash equivalents held by the company at the beginning and end of the reporting period. Cash equivalents are short-term, highly liquid investments that are easily convertible to cash and have a low risk of changes in value.

So, the correct sequence is Cash Flow from Operating Activity (C), Cash Flow from Investing Activity (B), Cash Flow from Financing Activity (D), and Cash Equivalents (A).

Cash withdrawal from bank is no flow of cash

In common size balance sheet % is based on T.A or T.L.

Full settlement = 75000
Less balance after adjustments = 60000
Share of goodwill = 15000

NPR of A and R is 5 : 3

Comparative statement are also known as Horizontal analysis

Pay + op stock + clo creditors – clo stock
40000 + 10000 + 30000 – 20000
= Rs. 60000

Outflow = 85000
Inflow = 40000, 5000, 10000 = 55000
Net outflow = Rs.30000

C.Y. will be added, P.Y. will be deducted

The most appropriate sequence for the calculation of Cash Flow from operating activities is option B: 
D. Net profit as per statement of Profit & Loss A/c :

• This is the starting point for calculating cash flow from operating activities. It represents the net income of the company during the financial period.

A. Net profit before taxes & extraordinary items :

• To calculate operating cash flow, adjustments need to be made to the net profit. The first adjustment is to remove the effect of taxes and extraordinary items. This gives us the operating profit before taxes and extraordinary items.

E. Patents Amortised :

• Non-cash expenses like depreciation and amortization need to be added back to the net profit before taxes & extraordinary items. In this case, patents amortized is the non-cash expense that needs to be added back.

C. Operating profit before working capital changes :

• After making adjustments for non-cash expenses, the next step is to account for changes in working capital. This involves adjusting the operating profit for changes in current assets and current liabilities (e.g., accounts receivable, inventory, accounts payable, etc.).

B. Income Tax paid :

• Finally, the income tax paid during the financial period is deducted from the operating profit before working capital changes. This gives us the cash flow from operating activities.

In summary, the correct sequence for calculating cash flow from operating activities is: Net profit as per statement of Profit & Loss A/c (D), Net profit before taxes & extraordinary items (A), Patents Amortised (E), Operating profit before working capital changes (C), and Income Tax paid (B).