Advance tutoring by Aarish Sir: PRACTICE PAPER 1 ACCOUNT 2025-26 (UPTO FORFEITURE)

Friday, November 07, 2025

Class 12 – Accountancy Practice Paper

Maximum Marks: 80 Time: 3 Hours

Section – A: Multiple Choice Questions (1 mark each, Total 10 marks)

A partnership agreement may be —
(A) Oral (B) Written (C) Oral or Written (D) Registered only
If the partnership deed is silent about the profit-sharing ratio, profits will be shared —
(A) In the ratio of capital (B) Equally (C) In the ratio of time (D) No sharing
Goodwill is a —
(A) Tangible Asset (B) Intangible Asset (C) Current Asset (D) Liability
Goodwill is paid to the incoming partner for —
(A) Future benefits (B) Past benefits (C) Name of the firm (D) Capital contribution
A share of ₹10 is issued at a premium of ₹2. The issue price is —
(A) ₹8 (B) ₹10 (C) ₹12 (D) ₹2
On the death of a partner, his capital account is —
(A) Closed (B) Continued (C) Cancelled (D) Debited to Goodwill
Forfeiture of shares means —
(A) Reissue of shares (B) Returning shares (C) Cancelling shares (D) Taking back shares from a shareholder
Profit on reissue of forfeited shares is transferred to —
(A) Capital Reserve (B) Profit & Loss A/c (C) Share Application (D) Share Premium
Interest on capital in partnership is allowed —
(A) 5% (B) 6% (C) 10% (D) As per agreement
When a new partner is admitted, the existing profit-sharing ratio changes. This affects —
(A) Goodwill (B) Revaluation (C) Profit-sharing ratio (D) All of these

Partnership is governed by the __________ Act, 1932.
In the absence of an agreement, profits are shared __________ among partners.
Interest on drawings is credited to __________ account.
Goodwill is shown in the balance sheet under the head __________.
When a partner retires, his share of goodwill is credited to his __________ account.
The value of goodwill is affected by the firm’s __________.
Share Capital represents the __________ of the company.
When a share is forfeited, the Share Capital account is __________.
Discount allowed on reissue of forfeited shares cannot exceed the __________ amount.
The profit on reissue of forfeited shares is transferred to __________.

Define partnership and state any two features.
What is goodwill? Write any two methods of its valuation.
What is meant by “Revaluation of Assets and Liabilities”?
Explain the term “Sacrificing Ratio” and its importance.
What is meant by “Forfeiture of Shares”? Write any two conditions under which shares can be forfeited.

A and B are partners sharing profits equally. Their capitals are ₹60,000 and ₹40,000 respectively. Interest on capital is allowed @10% p.a. The firm earned a profit of ₹10,000 during the year.
Prepare the Profit and Loss Appropriation Account.
X and Y are partners sharing profits in the ratio 3:2. Z is admitted as a new partner for 1/5th share.
Calculate the new profit-sharing ratio and sacrificing ratio.
A Ltd. forfeited 200 shares of ₹10 each for non-payment of final call of ₹2 per share. These shares were reissued at ₹9 per share as fully paid-up.
Pass Journal Entries for forfeiture and reissue of shares.
Calculate the value of goodwill on the basis of 3 years’ purchase of average profit:
Year 1 – ₹40,000; Year 2 – ₹50,000; Year 3 – ₹60,000.
P, Q and R are partners. P retires and goodwill of the firm is valued at ₹30,000. The new ratio between Q and R is 3:2. Pass the Journal Entry for goodwill adjustment.

A, B and C are partners sharing profits in the ratio of 5:3:2. Their capitals are ₹50,000, ₹30,000 and ₹20,000 respectively. Interest on capital @10% p.a. and salary to C ₹2,000 per month is allowed.
The firm made a profit of ₹40,000. Prepare Profit & Loss Appropriation Account and show distribution.
X Ltd. issued 1,000 shares of ₹10 each at a premium of ₹2 per share, payable as follows:

A shareholder holding 100 shares failed to pay the final call.
Pass necessary Journal Entries for issue, call money, and forfeiture of his shares