ACCOUNTANCY CLASS 12

SECTION A — Objective Type (32 Marks)

Q1. Choose the correct option (Any 6 × 1 = 6)

1. When a firm issues shares at a premium, the premium amount is credited to:
   a) Share Capital A/c
   b) Share Premium Reserve
   c) Securities Premium Reserve
   d) Capital Reserve

2. A partner’s share in profit guaranteed by firm irrespective of actual profit is called:
   a) Guaranteed Profit
   b) Sacrificed Profit
   c) Fixed Profit
   d) Prior Adjustment

3. Cash Flow Statement classifies cash flows into:
   a) Operating, Trading, Capital
   b) Operating, Investing, Financing
   c) Revenue, Capital, Reserve
   d) Current, Non‑current, Deferred

4. Which ratio indicates the ability of a firm to meet its short‑term obligations excluding stock?
   a) Current Ratio
   b) Debt‑Equity Ratio
   c) Quick/Acid Test Ratio
   d) Return on Capital Employed

5. On dissolution of a partnership firm, which account is prepared to transfer balances of assets and liabilities?
   a) Revaluation Account
   b) Realisation Account
   c) Partners’ Capital Account
   d) Profit & Loss Account

6. Debentures issued as collateral security means:
   a) Debentures issued for cash
   b) Debentures issued as security against loan
   c) Debentures issued at discount
   d) Debentures forfeited

Q2. Fill in the blanks (Any 6 × 1 = 6)

1. On issue of shares at a discount, discount on issue of shares is ____________ as per accounting treatment.

2. A partner may die or retire leading to ____________ of a partnership firm.

3. In Cash Flow Statement, purchase of fixed assets is recorded under ____________ activities.

4. ____________ ratio measures overall profitability of a company.

5. When old partners give up part of their share to new partner, the ratio in which old partners give up is called ____________ ratio.

6. The amount of debentures to be redeemed in future is shown under ____________ in the balance sheet.

Q3. True / False (Any 6 × 1 = 6)
Write ‘True’ or ‘False’ for the following statements:

1. Capital Reserve is credited when shares are forfeited and not reissued.

2. In a partnership, profit guarantee implies firm will pay minimum profit to a partner even if firm incurs loss.

3. While preparing Cash Flow Statement under indirect method, net profit is adjusted for non‑cash and non‑operating items.

4. Current ratio of 2:1 always indicates good liquidity.

5. Issue of debentures at a discount increases company’s cash flow from financing activities.

6. Realisation Account is prepared during admission of a new partner.

Q4. Match the Following (Any 7 pairs = 7)

Column I	Column II
A. Sacrificing Ratio	1. Redemption of Debentures
B. Quick Ratio	2. Admission of Partner
C. Offer for shares	3. Return on Capital Employed
D. Collateral Debentures	4. Purchase of machinery
E. Operating Activities	5. Cash Flow Statement
F. Issue of Shares at Premium	6. Balance Sheet (Company)
G. Creditors’ Payment on Dissolution	7. Realisation Account

Q5. Pick the odd one out (Any 7 × 1 = 7)

1. Current Asset — Debtors, Stock, Machinery, Cash at Bank

2. Types of Shares — Equity, Preference, Debenture, Bonus

3. Ratios — Current Ratio, Debt‑Equity Ratio, Gross Profit Ratio, Goodwill Ratio

4. Methods of Goodwill Valuation — Average Profit, Super Profit, Discounted Cash Flow, Capitalisation

5. Cash Flow Activities — Operating, Investing, Financing, Accrual

6. Partnership Event — Admission of Partner, Retirement, Death, Issue of Shares

7. Company’s Liability — Share Capital, Debentures, Reserves, Outstanding Salaries (Past firm payable)

SECTION B — Short Answer / 2‑Mark Questions (Any 10 × 2 = 20 Marks)

Q6. Define the following terms:
a) Capital Reserve
b) Securities Premium Reserve

Q7. What is “Sacrificing Ratio”?

Q8. What do you mean by “Issue of Debentures as Collateral Security”?

Q9. State two advantages of preparing Cash Flow Statement.

Q10. What is “Forfeiture of Shares”?

Q11. Write a short note on “Current Ratio”.

Q12. What is meant by “Retirement of a Partner”?

Q13. Mention any two limitations of Ratio Analysis.

Q14. What is “Realisation Account”?

Q15. Define “Debenture”.

Q16. What is “Operating Activities” in Cash Flow Statement?

SECTION C — Short Answer / 3‑Mark Questions (Any 6 × 3 = 18 Marks)

Q17. Distinguish between Equity Shares and Preference Shares.

Q18. Explain the treatment of Share Premium when shares are issued above face value.

Q19. What are the uses of Financial Statements of a Company?

Q20. Explain any three types of accounting ratios.

Q21. What is meant by Reconstitution of a Partnership Firm?

Q22. Explain “Gaining Ratio” — when is it used?

Q23. Under what heads will you show ‘Debentures’ and ‘Securities Premium’ in a Company’s balance sheet?

SECTION D — Long Answer / 5‑Mark Questions (Any 4 × 5 = 20 Marks)

Q24. A firm’s profits for last three years are ₹50,000; ₹60,000; ₹70,000. On admission of a new partner, goodwill is valued at 3 years’ purchase of average profit. Calculate goodwill.

Q25. A company issues 20,000 equity shares of ₹10 each at a premium of ₹2. Amount payable as: ₹3 on application, ₹5 (including premium) on allotment, and the rest on first call. All shares were applied for and allotted. Journalise the issue of shares.

Q26. What is Cash Flow Statement? Explain its objectives and mention two limitations.

Q27. From the following Balance Sheet data of a company, calculate Current Ratio and Quick Ratio:

• Current Assets: ₹1,50,000 (including Stock ₹50,000 and Prepaid Expenses ₹10,000)

• Current Liabilities: ₹90,000

Q28. A partnership firm is to be dissolved. Assets realized amounted to ₹4,50,000; liabilities of ₹90,000 were paid off. Capital accounts of partners A and B were ₹2,50,000 and ₹1,20,000 respectively. Realisation expenses were ₹10,000. Pass necessary journal entries and prepare Realisation Account and Partners’ Capital Accounts.

SECTION E — Numerical / Problem‑Solving Questions (Any 2 × 5 = 10 Marks)

Q29. A company issued ₹5,00,000, 10% debentures at a discount of 5%. Journalise the issue and show how it will appear in the balance sheet.

Q30. From the following information prepare a Cash Flow Statement (only Cash from Operating Activities) for a company for the year ended 31st March 2025:

• Net profit before tax: ₹2,40,000

• Depreciation: ₹20,000

• Increase in Debtors: ₹15,000

• Decrease in Creditors: ₹10,000

• Outstanding Expenses: ₹5,000

• Income Tax paid: ₹30,000