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801.

'Suvidha Ltd.' is registered with an authorized capital of Rs. 10,00,00,000 divided into 10,00,000 equity shares of Rs. 100 each. The company issued 1,00,000 shares for public subscription. A shareholder holding 100 shares, failed to pay the final call of Rs. 20 per share. His shares were forfeited. The forfeited shares were re-issued at Rs. 90 per share as fully paid up. Present the 'Share Capital' in the Balance Sheet of the company as per Schedule III Part I of the Companies Act, 2013. Also prepare 'Notes to Accounts'.

Answer»

Solution :SUBSCRIBED and FULLY Paid CAPITAL RS. 1,00,000.
Discussion
802.

Suresh Ltd. On 1st April 2014 acquired assets of the value of Rs.6,00,000 and liabilities worth Rs.70,000 from P & Co., at an agreed value of Rs.5,50,000. Suresh Ltd. Issued 12% Debentures of Rs.100 each at a premium of 10% in full satisfaction of purchase consideration. The debentures were redeemable on 30th November, 2018 at a premium of 5%. Pass journal entries to record the above including redemption of debentures.

Answer»

Solution :

Note 1. DEBENTURES issued = `(5,50,000)/(10)=5,000` Debentures of Rs.100 each.
Discussion
803.

Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing profits in the ratiok of 2:2:3:3. On 1st April, 2016, their Balance Sheet was as follows : From the above date, the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ₹ 90,000. It was also agreed that : (a) Claim against Workmen Compension Reserve will be estimated at ₹ 1,00,000 and fixed assets will be depreciated by 10%. (b) The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this, necessary cash will be brought or paid by the partners as the case may be. Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer»


Answer :REVALUTION LOSS: ₹ 85,000; Capitalof EACHPARTNER in thenewfirm -₹ 1,53,750; TotalCapital of the NEW frim- ₹ 6,15,000; Cashto bebrought inSuresh- ₹ 75,250; Ramesh - ₹ 25,250; CashWithdrawn by; MAHESH - ₹25,250; Ganesh - ₹ 75,250;Total of Balance Sheet - ₹ 8,85,000.
Discussion
804.

Suresh ,sahiland sumit arepartners sharing profits in theratioof 5:3:2 .Duringthe yearended31st March, 2019 the firmearnedprofitos Rs. 3,50,000 prepareprofitand LossAppropriationAccountgivingeffectto thefollowing : (i)Each of thepartner is to getremunerationof Rs. 60,000 p.a (ii)intereston capitalis to beallowed@10%p.a Capitalsofsuresh,shailandsumitas on1stApril2018 were -Rs, 5,00,000 Rs. 5,00 ,000andRs. 7,50,000 respectively .(iii) intereston Drawing chargedchargedwas : suresh-Rs, 10,000,SahilRs. 20,000,andsumit -Rs, 25.000 (iv)sumit is guaranteedminimumprofitof Rs.1,50,000afteraboveappropriations .

Answer»

SOLUTION :
Discussion
805.

Surplus, i.e., Balance in Statement of Profit and Loss is shown as

Answer»

SHARE Capital
RESERVES and SURPLUS
Other Long-term Liabilities
None of these

Solution :Reserves and Surplus
Discussion
806.

Super Profit means

Answer»

AVERAGE PROFIT
EXCESS of average profit over NORMAL profit
Normal profit
None of these

Solution :Excess of average profit over normal profit
Discussion
807.

Sunrise Ltd purchased a building for .Rs 5,00,000 payable as 15 % in cash and balance by allotment of 9% debentures of .Rs 100 each at a premiumof 25 % Number of debentures issued will be :

Answer»

`4,250`
`4,000`
`5,000`
`3,400`

ANSWER :D
Discussion
808.

Sunrise Company Ltd. has an equity share capital of Rs. 10,00,000. The company earns a return on investment of 15% on its capital. The company needed funds for diversification. The finance manager had the following options: (i) Borrw Rs. 5,00,000 @ 15% p.a. from a bank payable in four equal quarterly instalments starting from the fifith year, or (ii) Issue Rs. 5,00,000, 9% Debentures of Rs. 100 each redeemable at a premium of 10% after five year. To increase the return to the shareholders, the company opted for option (ii). Pass necessary Journal entries for issue of debentures.

Answer»

SOLUTION :
Discussion
809.

Suraj and Dilip are partners in a firm dealing in stationery items. Then firm is well managed and enjoys the advantage of being cost effective. If buys stationery items at resonable cost from Dilip's relative who is a manufacture of stationery items. The firm's sale outlet is situated near a school. As a result, the firm has a steady demand of sationery items and is earning good profits. The firm is donating 10% of its profits to the nearby school for the education of the students of below poverly line. State any two factors afecting the value of good will of the firm.

Answer»

SOLUTION :TOW factors effecting the VALUE of GOOD will of the firm:
(a) Efficiency of MANAGEMENT,
(b) Favourable location.
Discussion
810.

Sundrycreditorsamountedto Rs, 8,000 These were paidat adiscount of 5% Realisationaccount will be debitedby …………

Answer»

RS, 8,000
Rs ,7,600
Rs,400
Rs.8,400

Answer :B
Discussion
811.

Sun Ltd., issued shares of Rs. 50 each at a premium of 20% payable as follows : {:("On Application","Rs. 15"),("On Allotment","Rs. 25 (including premium)"),("On First & Final Call","Rs. 20"):} Dev, who applied for 2,500 shares and to whom 1,000 shares were allotted on prorata basis, did not pay allotment and first & final call and his shares were forfeited. Pass entry for forfeiture of shares.

Answer»

Solution :Amount credited to Share Forfeiture ACCOUNT RS. 30,000.
HINT : Security Premium RESERVE A/c will be debited by Rs. 2,500 in the entry for forfeiture of shares.
Discussion
812.

Sun & Moon Ltd . Invited applications for 25,000 equity shares of Rs.10 each and received 30,000 applications along with the application money of Rs. 4 per share . Which of the following alternatives can be followed?(i)Refund the excess application money and full allotment to rest of the applicants.(ii)Not to allot any share to some applicants, full alloment to some of the applicants and pro rata allotment to the rest of the applicants. (iii) Not to allot any share to some applicants and make pro rata allotment to other applicants.(iv) Make pro rata allotment to all the applicants and adjust the excess money received towards call money.

Answer»

Only (i) above.
both (i) and (III) above.
All of the above.
only (II) above.

Solution :All of the above.
Discussion
813.

Sun Pharma Ltd.is registered with an authorised capital of Rs. 1,00,00,000 divided into 1,00,000 equity shares of Rs. 100 each. The company issued 50,000 shares at a premium of Rs. 40 per share. A shareholder holding 500 shares did not pay the final call of Rs. 20 per share. His shares were forfeited. Present the 'Share Capital' in the Balance Sheet of the Company as per Schedule III, Part I of the Companies Act, 2013. Also prepare Note to Accounts.

Answer»

SOLUTION :
Discussion
814.

Sun & Moon Ltd. Invited applications for 25,000 equity shares of Rs 10 each and received 30,000 applications along with the application money of Rs 4 per share. Which of the following alternative can be followed ? (i) Refund the excess application money and full allotment to rest of the applicants (ii) Not to allot any share to some applicant, full allotment to some of the applicants and pro rata allotment to the rest of the applicants (iii) Not to allot any share to some applicants and make pro rata allotment to other applicants

Answer»

only (i) above
both (i) and (III) above
all of the above
only (II) above

Solution :all of the above
Discussion
815.

Suman and Sudha were partners in a firm sharing profits equally. Their fixed capitals were Rs 50,00 and Rs 25,000 respectively. The Partnership Deed provided interests of the firm were distributed without providing interest on capital.

Answer»

Solution :Dr. SUDHA's CURRENT A/c and Cr. SUMAN's Current A/c by Rs 1,500.
Discussion
816.

Sudarshan Ltd. invited applications for 1,00,000 Equity Shares of Rs. 10 each. The shares were issued at a premium of Rs. 5 per share. The amount was payable as follows : On application and allotment Rs. 8 per share (including premium Rs. 3). Balance including premium on the first and final call. Applications for 1,50,000 shares were received. Applications for 10,000 shares were rejected and pro-rata allotment was made to the remaining applicants on the following basis : (i) Applicants for 80,000 shares were allotted 60,000 shares, and (ii) Applicants for 60,000 shares were allotted 40,000 shares. Excess application and allotment money could be utilized for calls. X, who belonged to the first category and was allotted 300 shares, failed to pay the first call money. Y, who belonged to the second category and was allotted 200 shares also failed to pay the first call money. Their shares were forfeited. The forfeited shares were re-issued @ Rs. 12 per share fully paid-up. Pass necessary Cash-Book and Journal entries.

Answer»

SOLUTION :
Discussion
817.

Sugandh Ltd. issued 60,000 shares of Rs. 10 each at a premium of Rs. Per share payable as Rs. 3 on application, Rs. 5 (including premium) on allotment and the balance on first and final call. Applications were received for 92,000 shares. The Directors resolved to allot as: {:("(i) Applicants of 40,000 shares",,"30,000 shares,"),("(ii) Applicants of 50,000 shares",,"30,000 shares,"),("(iii) Applicants of 2,000 shares",,"Nil."),(,,):} Mohan, who had applied for 800 shares in Category (i) and Sohan, who was allotted 600 shares in Category (ii)failedto pay the allotment money. Calculate amount received on allotment.

Answer»


ANSWER :AMOUNT RECEIVED on allotment-Rs. 2,05,800.
Discussion
818.

Subsription received in cash during the year amounted to Rs 5,00,000, subscription outstanding at the end of previous year was Rs 20,000 and outstanding at the end of current year was Rs 25,000. Subscription received in advance for next year was Rs 8,000 and received in advance during previous year was Rs 7,000. The amount credited to Income & Expenditure Account will be :

Answer»

RS 5,04,000
Rs 5,06,000
Rs 4,96,000
Rs 4,94,000

Answer :A
Discussion
819.

Subscriptions received in advance by a club are shown

Answer»

in the CREDIT SIDE of the income and Expenditure Account.
in the assets side of the BALANCE SHEET.
in the liabilities side of the Balance Sheet.
in the payments side of RECEIPTS and payments Account.

Solution :in the liabilities side of the Balance Sheet.
Discussion
820.

Subscription received in cash during the year amounted to Rs 3,00,000, subscription received in advance for next year was Rs 10,000 and received in advance during previous year was Rs 8,000. Subscription in arrear at the end of previous year was Rs 18,000 and subscription in arrear at the end of current year was Rs 12,000. The amount credited to Income & Expenditure Account will be :

Answer»

RS 2,96,000
Rs 3,04,000
Rs 2,92,000
Rs 3,08,000

Answer :C
Discussion
821.

Subscription received in cash during the year amounted to Rs 40,000, subscription outstanding at the end of pervious year was Rs 1,500 and outstanding at the end of current year was Rs 2,000. Subscription received in advance for next year was Rs 800. The amount credited to Income & Expenditure Account will be:

Answer»

RS 38,700
Rs 39,700
Rs 40,300
Rs 41,300

Answer :B
Discussion
822.

Subscription received in cash during the year amounted to Rs 60,000, subscription received in advance for next year was Rs 3,000 and received in advance during previous year was Rs 2,000. Subscription in arrear at the end of current year was Rs 5,400. The amount credited to Income & Expenditure Account will be :

Answer»

RS 53,600
Rs 66,400
Rs 55,600
Rs 64, 400

Answer :D
Discussion
823.

Subscription received in advance during the current year is recorded on which side of Balance Sheet?

Answer»


SOLUTION :N/a
Discussion
824.

Subscription received in advance during the current year is

Answer»

an INCOME
an asset.
a LIABILITY
NONE of these

Solution :a liability
Discussion
825.

Subscription received in advance during the current year is :

Answer»

(a) an income
(B) an ASSET
(C) a LIABILITY
(d) NONE of these

Answer :C
Discussion
826.

S,T,U and V were partners ina firm sharingprofitsin theratio of 4:3:2:1.On 1st April, 2016, their Balance Sheetwas as follows: From theabovedate partners decided to share the future profits in 3: 1:2:4 ratio. Forthispurposethegoodwillof the firm was valued at ₹90,000. This partners also agreed forthe following: (i) Theclaimfor workmencompensation has been estimedat ₹70,000. (ii) To adjustthe capitals of thepartners according to new profit-sharing ratio byopeningPartners'CurrentAccounts. PrepareRevalutionsAccount,Partners' Capital Accounts andthe Balance sheet of the reconsituted firm.

Answer»

SOLUTION :

Working Notes:
1. Adjustment of Goodwill:
Value of Firm's Goodwill = RS. 90000.
CALCULATION of SACRIFICE/(Gain) share of each partner:

Journal Entryfor Adjustment of Goodwill
`{:(,"To S's Capital A/c (₹ 90,000"xx"1/10)",,"9,000"),(,"To T's Capital A/c (₹ 90,000"xx"2/10)",,"18,000"):}`
2. Total Capital of the new Firmafter Adjustemet:
`{:(,,"₹"),(,"S= ₹ 2,00,000+₹ 9,000- ₹ 4,000",="2,05,000"),(,"T= ₹1,50,000+ ₹18,000 -₹3,000", = "1,65,000"),(,"U = ₹1,00,000- ₹ 2,000" , = " 98,000"),(,"V = ₹50,000 - ₹1,000- ₹9,000 - 18,000" ,= " 22,000"),(,"Total Capital of the new Firm ", overlineunderlineunderline("4,90,000")):}`
Capital of thepartners in the new frimas PER New Profit-Sharing Ratio:
S = `₹ 4,90,000 xx 3//10 = ₹ 1,47,000`,
`T= ₹ 4,90,000 xx 1//10 = ₹ 49,000`,
`U = ₹4,90,000 xx 2//10 = ₹98,000`, and
` V = ₹ 4,90,000 xx 4//10= ₹1,96,000`.
Discussion
827.

Subham Ltd.' invited applications for issuing 12,000 equity shares of Rs. 10 each at a premium of Rs 3 per share. The amount was payable as follows: {:("On application and allotment",,-,,"Rs. 6 per share (Including Premium),"),("On first call",,-,,"Rs. 4 per share,"),("On second and final call",,-,,"the balance."):} Applications for 18,000 shares were received and pro tata allotment was made to all theapplicants. Excess money received with applications was adjusted towards sums due on first call. All calls were made and were duly received except thefirst call and second and final call on 120 shares allotted to Vibha. His shares were forfeited. Theforfeited shares were reissued at themaximum permissible discount as per the provisions of the Companies Act, 2013. Pass necessary Journal entries for the above transactions in the books of the company.

Answer»

Solution :

Working NOTES:
1. Number of Shares applied by Vibhu = `(18,000)/(12,000) xx 120 ` = 180 shares.
(a) Application money received from Vibhu = `180xx Rs. 6 = Rs. 1,080`.
(b) Application and allotment money Required = ` 120 xx Rs. 6 = 720`.
(c) Surplus application money adjusted towards FIRST call `[(a)-(b)] = Rs. 1,080 - Rs. 720 = Rs. 360`.
(d) `{:("First call money required from Vibha(120"xx"Rs.4)","Rs. 480"),("LESS: Surplus application money adjusted [WN 1 (c)]","Rs. 360"),("Unpaid Balance",barul(Rs.120)):}`
2. Maximum Permissible Discount on Reissue is equal to the amount credited to FORFEITED Shares Account, i.e., Rs 720.
Discussion
828.

Subscription received by a school for organising annual function is treated as:

Answer»

Capital RECEIPT (i.e., Liability)
REVENUE Receipt (i.e., Income)
Asset
EARNED Income

Answer :A
Discussion
829.

Strong Ltd. has 10,000, 10% Debentures of Rs. 1,000 each outstanding as on 31st March, 2018. These debentures are due for redemption on 31st March =, 2019 at a premium of 10% Ascertain the missing values in the following Journal of Strong Ltd. JOURNAL

Answer»

SOLUTION :
Discussion
830.

Statement of profit and loss account shows the operating performance of an enterprise for a period of time.

Answer»


ANSWER :1
Discussion
831.

Status the rights acquired by a newly admitted partner.

Answer»

SOLUTION :When a partner is ADMITTED in the firm, he GETA following two rights,
(i) RIGHT to SHARE future profits of the firm, and
(ii) Right to share in the assets of the firm.
Discussion
832.

State with reasons, whether the Operating Ratio of a company will increase, decrease or not change due to the following transactions:(a) Paid Wages Rs. 1,000,(b) Issued Rs. 1,00,000, 12% Debentures,(c ) Sold Goods on Credit Rs. 15,000, (d) Paid Rs. 5,000 Commission on Sales and (e) Paid Rs. 4,000 for Advertisement.

Answer»

Solution :(a) Increase,(B)No CHANGE,(c ) DECREASE,(d)Increase and(e)Increase.
Discussion
833.

State with reasons whether the following statements are TRUE or FALSE:The balancing figure on credit side of Income and Expenditure Account denotes excess of expenses over incomes.

Answer»

SOLUTION : TRUE
Discussion
834.

State with reasons whether the following statements are TRUE or FALSE: Opening balance sheet is prepared when the opening balance of capital fund is not given.

Answer»

SOLUTION : TRUE
Discussion
835.

State with reasons whether the following statements are TRUE or FALSE: Receipt and Payment Account does not differentiate between capital and revenue receipts.

Answer»

SOLUTION : TRUE
Discussion
836.

State with reasons whether the following statements are TRUE or FALSE: Donations for specific purposes are always capitalized.

Answer»

SOLUTION : TRUE
Discussion
837.

State with reason, whether the issue of 9% Debentures to the vendors for the purchase of machinery of Rs. 50,000 will result in inflow, outflow or no flow of cash.

Answer»

Solution :No flow of CASH, since ISSUE of 9% Debentures to the VENDORS for the PURCHASE of machinery does not involve cash.
Discussion
838.

State with reason, whether 'Purchase of fixed asset on long-term deferred payment' would result in inflow, outflow or no flow.

Answer»

Solution :It will result in no FURNITURE does not INVOLVE CASH since depreciation is a non-cash expense. Therefore, there is no FLOW of cash.
Discussion
839.

State with reason whether at the time of Admission of a Partne, partnership is dissolved or partnership firm is dissolved.

Answer»

Solution :partnership is dissolved not the partnership FIRM SINCE the firm continues to carry on its BUSINESS.
Discussion
840.

State with reason, whether charging of depreciation on furniture will result into inflow, outflow or no flow of cash.

Answer»

Solution :CHARGING of DEPRECIATION on FURNITURE does not INVOLVE CASH since depreciation is a non-cash expense. Therefore, there is no flow of cash.
Discussion
841.

State with reason, whether 'Old furniture written off' would result into inflow/outflow or no flow of cash.

Answer»

SOLUTION :No FLOW of CASH SINCE it has been written off and not sold.
Discussion
842.

State with reason, whether 'Discount received on making payment to suppliers' would result into inflow, outflow or no flow of cash.

Answer»

SOLUTION :No FLOW of Cash.
Reason: 'Discount received on PAYMENT to suppliers' does not INVOLVE cash.
Discussion
843.

State why shareholders are interested in Financial Statement Analysis.

Answer»

Solution :Shareholders invest capital to conduct the BUSINESS. They are interested in the PROFITABILITY, DIVIDENDS, safety and MARKET value of their holdings and long-term SOLVENCY of the business concern.
Discussion
844.

State which of the following would result in inflow/outflowlno flow of Cash and Cash Equivalents: (i) Sale of fixed assets (Book value ₹50,000) at a loss of ₹5,000, (ii) Purchase of Stock-in-Trade for cash, (iii) Purchase of fixed assets against issue of shares, (iv) Cash received from debtors ₹10,000, (v)Cash deposited into Bank,(vi) Cash withdrawn from Bank, (vii) Issue of fully paid bonus shares, (viii) Sale of marketablesecuritiesfor cashat par, (ix) Declaration of final divided ₹25,000.

Answer»

SOLUTION :
Discussion
845.

State which of the following would result in inflow or outflow or no flow of Cash and Cash Equivalenes (a) Sale of Fixed Assets, Book Value ₹1,00,000 at a profit of ₹ 10,000 (b) Sale of goods against cash. (c) Purchase of machinery for cash. (d)Purcahase of machinery for cash. (e) Issued fully paid Bonus shares. (f) Cash withdrawn forn bank. (g) Payment of Interim dividend.(h) Proposed Dividend.

Answer»


Answer :Inflow ;(a), (b);Outflow:(C),(G); No FLOW: (d),(E), (f),(h).
Discussion
846.

State which of the following statements are True or False. (a) The only purpose of financial reporting is to keep the managers informed about the progress of operations. (b) Analysis of data provided in the financial statements is termed as financial analysis. (c) Long-term borrowings are concerned about the ability of a firm to discharge its obligations to pay interest and repay the principal amount. (d) A ratio is always expressed as a quotient of one number divided by another.(e) Ratios help in comparisons of a firm’s results over a number of accounting periods as well as with other business enterprises. (f) A ratio reflects quantitative and qualitative aspects of results.

Answer»


ANSWER :(a) F,(B) T, (C) T, (d) F, (E) T, (F) F
Discussion
847.

State why Cash Flow Statement is not a substitute for income statement.

Answer»

Solution :CASH Flow STATEMENT is not a substitute for INCOME statement as it does not CALCULATE profit earned or loss incurred by the BUSINESS.
Discussion
848.

State whether the following statements are true or false: (i) Valid partnership can be formulated even without a written agreement between the partners, (ii) Each partner carrying on the business is the principal as well as the agent for all the other partners, (iii) Maximum number of partners can be 50, (iv) Methods of settlement of dispute among the partners can’t be part of the partnership deed, (v) If the deed is silent, interest at the rate of 6% p.a. would be charged on the drawings made by the partner, (vi) Interest on partner’s loan is to be given@ 12%p.a. if the deed is silent about the rate.

Answer»

Solution :(i) True, (II) True, (iii) True, (IV) False, (V) False, (VI) False
Discussion
849.

State whether the payment of cash to creditors will result in inflow, outflow or no flow of cash.

Answer»

SOLUTION :It will RESULT in OUTFLOW of CASH.
Discussion
850.

State whether the following statements are True or False (i) Realisation Account is a Real Account. (ii) On dissolution of a firm, the firm is not closed. (iii) Any amount realised from the unrecorded asset is credited to Realisation Account. (iv) Goodwill at the time of dissolution is treated like any other asset and is closed by transferring it to Realisation Account. (v) Assets, when realised, are credited to Realisation Account. (vi) In dissolution, closing balance of Cash Account will be nil at the end (vii) All assets inculsive of cash are transferred to the Realisation Account. (viii) Dissolution of the firm means the dissolution of the partnership.

Answer»


Solution :(i) False (II) TRUE (iii) True (iv) True (V) True (vi) True (vii) False (VIII) True
Discussion