Explore topic-wise InterviewSolutions in Current Affairs.

Unrecorded Assets

Explanation: Those assets that go unrecorded or are skipped in the books of accounts are termed as unrecorded assets. Thus, as these are unrecorded in the books, they are not transferred to the Realisation Account. However, if any unrecorded asset is taken over by any partner, then it is recorded by crediting the Realisation Account and debiting the Concerned Partner’s Capital Account.

Dissolution means termination of the existing relationship between the partners of a firm. It means that the business will come to an end and the firm will wind up its business. Accordingly, all the assets will be realised and liabilities will be paid off. It can be dissolved either voluntarily by the partners or compulsorily by the order of the court.

The debit balance of the insolvent partner’s Capital Account which the insolvent partner cannot pay is called a capital deficiency.

The balance of the Realisation Account is to be transferred to Partners’ Capital Accounts in their profit-sharing ratio. If the partnership deed is silent, then profits or losses arising from Realisation Account are to be distributed in equal proportion amongst all the partners of the firm.

False

Explanation: Realisation loss is transferred to All Partners’ Capital Accounts (including the insolvent partner). After this, the total amount of capital deficiency is ascertained and is shared by the other solvent partners in their profit-sharing ratio.

Realisation A/c Dr

To Assets A/c

Realisation Account

Explanation: The account that shows realisation of assets and discharge of liabilities is Realisation Account. It is opened to ascertain the profit or the loss on sale of assets and settlement of liabilities.

When a person is unable to contribute fully or partially to discharge his/her liabilities out of his/her private assets, then that person is regarded as an insolvent. Thus, in the following two situations, a partner is declared as insolvent:

a. When his/her personal assets are insufficient

b. When his/her debit capital balance cannot be covered

Whose capital A/c shows debit balance and who is not in a position to meet his capital deficiency even from his private property is called an insolvent person.

₹ 9,000 (15,000 – 6,000) is the amount of insolvency loss to be distributed among the solvent partners.

Settlement of Accounts: In case of dissolution of a firm, the firm ceases to conduct business and has to settle its accounts. For this purpose, it disposes off all its assets for satisfying all the claims against it. In this context it should be noted that, subject to agreement among the partners, the following rules as provided in Section 48 of the Partnership Act 1932 shall apply.

(a) Treatment of Losses Losses, including deficiencies of capital, shall be paid: 

• first out of profits, 

• next out of capital of partners, and 

• lastly, if necessary, by the partners individually in their profits sharing ratio.

Private Debts and Firm’s Debts: Where both the debts of the firm and private debts of a partner co-exist, the following rules, as stated in Section 49 of the Act, shall apply.

(a) The property of the firm shall be applied first in the payment of debts of the firm and then the surplus, if any, shall be divided among the partners as per their claims, which can be utilised for payment of their private liabilities.

(b) The private property of any partner shall be applied first in payment of his private debts and the surplus, if any, may be utilised for payment of the firm’s debts, in case the firm’s liabilities exceed the firm’s assets.

It may be noted that the private property of the partner does not include the personal properties of his wife and children. Thus, if the assets of the firm are not adequate enough to pay off firm’s liabilities, the partners have to contribute out of their net private assets

Deficiency of insolvent partner = Debit side total – Credit side total 

= 10,000 – 6,000 

= ₹ 4,000.

Dissolution of Partnership

Explanation: Winding-up of partnership business is known as dissolution of partnership, which means there is a change in the business relationship among the partners but the firm may continue its business.

Realisation Account

Explanation: Realisation Account is opened to find out the profit or loss on sale of assets and settlement of liabilities at the time of dissolution of the firm.

Correct option is (D) Realisation account

(c) No partner to continue in the business

(d) Realisation Account

Difference Between Gaining Ratio and Sacrifice Ratio:

Gaining Ratio: It is calculated when a partner retires or dies. When a partner retires or dies his share of profit is taken over by the remaining partners. The ratio in which the remaining partners share increases is called the Gaining Ratio.

Gaining ratio is the ratio in which the remaining partners will pay the amount of goodwill to the retiring partner.

If the new profit sharing ratio of the remaining partners is given in the question, gaining ratio is calculated by deducting old ratio from the new ratio.
Gaining Ratio = New Ratio – Old Ratio

Accounting Treatment of Life Insurance Policy at the Time of Death of a Partner: If a joint life insurance policy is taken on lives of all partners, then sum insured is payable on death of any one partner when separate life insurance policy are taken on lives of partners, then sum insured is payable only on the policy of that partner. However, to find out the sum payable to the legal heir of the deceased partner, the surrender value of other partners policies is also kept in mind. Principally, there is no difference in the accounting procedure whether policies taken are several or joint. It is noteworthy that firm is responsible for payment of premium to insurance company ,if the policy/policies are taken by the firm.

1. Individual or Separate Life Policy
(i) For Payment of Premium
Insurance Premium A/c Dr.
To Cash/Bank A/c
(Being insurance premium paid)

(ii) For Premium Transferred to P&L A/C Every Year
Profit and Loss A/c Dr.
To Insurance Premium A/c
(Being premium transferred to P&L account)

(iii) For Amount of Policy Due on Death of Partner
Insurance Company A/c Dr.
To Life Policy of Deceased Partner’s A/c
(Being policy amount due)

(iv) For Amount of Policy Received
Bank A/ c Dr.
To Life Policy of Deceased Partner’s A/c
(Being policy amount received)

(v) On Distribution of Deceased Partner and Policy Money of Surrender Value of Surviving Partners Among All Partners.
Life Policy of Deceased Partner A/c Dr.
Life Policies of Other Partners A/c Dr.
To All Partners’ Capital A/c
(Being total amount of policy distributed in all the partners)

Alternative Method: When insurance policy account is not to be shown in books, then with the total amount of policy, amount of deceased partner and the surrender value of surviving partners are added and the share of deceased partner is ascertained and with this amount, deceased partner’s capital account is credited and surviving partners’ capital account are debited in gaining ratio.

Remaining Partners’ Capital/Current A/c Dr.
To Deceased Partner’s Capital/Current A/c
(Being deceased partner share in policy amount credited to his capital account)

2. Joint Life Insurance Policy on the Lives of Partners : In case of joint life insurance policy accounting can be done as per any one of three different methods.
(i) Treating Premium as Trade Expenses: In this situation the following entries will be passed
Journal Entries
(a) For Payment of Premium
Insurance Premium A/c Dr.
To Cash/Bank A/c
(Insurance Premium Paid)

(b) For Premium Transferred to P&L Account
Profit and Loss A/ c Dr.
To Insurance Premium A/c
(Premium Transferred to P&L account)

(c) For Amount of Policy Due on Death of Partners
Insurance Company A/c Dr.
To Joint Life Policy A/c
(Policy amount due)

(d) For Amount Received of Policy
Bank A/c Dr.
To Insurance Company A/c
(Policy Amount Received)

(e) For Distribution of Amount of Policy.
Joint Life Policy A/c Dr.
To All Partners’ Capital A/c
(Policy amount distributed)

(ii) When Premium is Treated as an Investment: In this case the total amount of premium paid is not transferred to profit and loss account but only the excess of premium paid over surrender value at the end of the year is transferred to profit and loss account. By following this method the balance in life insurance policy account always remains equal to the surrender value which is shown on the assets side of the balance sheet. 

Following entries are passed for accounting under this method:
(a) On Payment of Premium
Joint Life Policy A/c Dr.
To Bank A/c
(Being insurance premium paid)

(b) On Write Off the Amount
Profit and Loss A/c Dr.
To Joint Life Policy A/c
(Being premium transferred to P & L account)

(c) On Receiving the Amount of Policy
Insurance Company A/c Dr.
To Joint Life Policy A/c
(Policy amount due)

(d) On Receipt of sum insured
Bank A/c Dr.
To Insurance Company A/c
(Being policy amount received)

(e) On Distribution of Amount of Policy
Joint Life Policy A/c Dr.
To All Partners’ Capital A/c
(Being policy amount distributed)

(iii) When Premium is Treated as an Investment and Reserve is Correct: Sometimes, a few firms treat premium payment as an investment and simultaneously create a reserve every year. The amount calculated on the basis of surrender value i.e., excess of premium paid over surrender value is transferred to reserve account instead of profit and loss account. 

Following entries are passed under this method:
(a) To Paid Premium Every Year
Joint Life Policy A/c Dr.
To Bank A/c
(Being insurance premium paid)

(b) To Make Joint Life Insurance Policy Reserve Every Year
Profit and Loss Appropriation A/c Dr.
To Joint Life Policy Reserve A/c
(Being joint Life policy reserve created)

(c) To Difference in Balance of Reserve Account and Insurance Account
Joint Life Policy Reserve A/c Dr.
To Joint Life Policy A/c
(Being difference charged to reserve account)

(d) To due Insurance Amount
Insurance Company A/c Dr.
To Joint Life Policy A/c
(Being policy amount received)

(e) To Received Insurance Amount
Bank A/c Dr.
To Insurance Company A/c
(Policy amount received)

(f) To Close Joint Life Insurance Policy Reserve Account
Joint Life Policy Reserve A/c Dr.
To Joint Life Policy A / c
(Being balance of reserve account transferred to JLP account)

(g) To Divide Insurance Policy Amount in All Partners
Joint Life Policy A/c Dr.
To Partner’s Capital A/c
(Being policy amount distributed)

(c) Generally Accepted Accounting Provisions

As per companies Act 2013, a company shall not issue shares at a discount except as provided in section 54 for issue of sweat equity shares. Any share issued by a company at a discounted price shall be void.

Calculation of Funds From Operations

1. True

2. True

Calculation of Funds From Operations

ADJUSTED PROFIT AND LOSS ACCOUNT

It is the  Discretion of management to prepare Funds Flow Statement.

(c) Both of the above 

(a) current assets and current liabilities

Funds Flow Statement deals with Movement of funds.

(b) Decrease in working capital 

(a) Internal sources

Income Statement and Funds Flow Statement are Complementary to each other.

Non-fund items are not disclosed in FFS.

FFS considers both Capital and revenue nature of income and expenditure. 

One of the advantages of Funds Flow Statement is that it facilitates evaluation of change in Working capital.

Moropant Pingale

Sardar Daudkhan

His fingers get hurt when the zip of his carry-on bag gives way. He is bleeding profusely. All belongings in his bag come flying across the floor of the waiting hall of the airport. He seems to be making a mockery of himself and of being civilized and way of behaving at a particular place.

The author had self-pity and was cursing the accident that had caused him and his wife great pain and inconveniences in the daily routine. But the two little boys, one almost scarred to death with both eyes gone and the other with amputated arm and no hope of recovery wrere together celebrating the joy of being alive. They minded the business of living ignoring pain, surgery and the sickly environment. Dr. Barnard leamt the lesson from the children that the business of living is joy in the real sense of the w ord. It was not just something for pleasure, amusement or recreation. The business of living is the celebration of being alive.

1. Because India adopted democracy which commit equal rights and opportunities to each and every human being in place of dividing them. 

2. It was argued by Jawaharlal Nehru not only for ethical and sentimental reasons but prudential reasons also to realize long cherished goals and principles as socialism, equality, and fraternity. 

3. If this minority was not provided security and rights it may effect: 

(i)  Basic nature of democratic system. 

(ii) It is against secular nature of India. 

(iii) It may effect India’s foreign policy also. 

(iv) It may threat to other minorities also. 

(v) Most important it may lead to disintegration of the nation.

The boys had taught Dr. Barnard the lesson in getting on with the business of living. The business of living is the celebration of being alive.

Correct answer is (i) pneumatic

The poem ‘The Farmer’s Wife’ is structured like a dramatic monologue in which the woman addresses her dead husband, as though he was sitting right in front of her.

In veiled anger and a mocking tone she tells him that it was a virtue that he had died without being forced to suffer the humiliation of standing before his creditors with a bent head and a hand stretched out or selling off his crops. But she is a sinner and hence having been born as a woman, with a bent head and a hand outstretched, had to sell her self-esteem all through her life. She asks him why he had left her to suffer despite knowing her status in society. She accuses him of intentionally committing suicide, despite being aware of her predicament as a ‘widow’. She castigates him for consuming poison and poisoning her existence.

Using the cotton crop as an analogy, she tries to convey the idea that the ‘cotton crop’ has a limited life and once it is sold, or it perishes owing to vagaries of weather, we forget it once and for all. But, her family has to continue to eke out a living, generation after generation.

She questions the popular idea of ‘manhood’ as propagated by society. She recalls how she had struggled hard to keep his family alive, despite being kicked and verbally abused by him, in a drunken mood. She tells him sarcastically, that she had suffered such cruel treatment, only because she had firmly believed that he would act like a real ‘man’ and would take care of her family. She mocks him for dying like a coward and giving her a death blow. She accuses him of being selfish, self-centred and irresponsible. She admits that it was true that the crop he had hoped to raise had perished and hence his debts had remained unpaid.

Consequently, they were looked down upon and were forced to cry in humiliation. At this juncture, he had only thought of ‘his crop’ and ‘his dignity’ and hence had taken recourse to suicide. But, by doing so, he had proved that he was utterly selfish, an irresponsible husband and father. He should also have thought of his duty and responsibility, as a husband and to his four children, which she had borne and harvested from her womb. She asks a rhetorical question ‘Can I leave them to the wind like worm-eaten cotton pods?’ She intends to say that ‘crops’ can be left to perish and not her children.

She expresses her contempt saying that he had died like a coward most irresponsibly without bothering about his kids. In the last part, she expresses her stance as a ‘mother’. She declares that she would stay alive not merely to take care of her children but also to show to her children how to embrace life and to struggle for life with a clenched fist.

1. Jinnah’s statement does not contradict the ‘Two Nations’ Theory’ as he aimed at the creation of separate state for Muslims without any interference in other communities like Pathans, Punjabis, Shias and Sunnis. 

2. The essence of Jinnah’s statement in this passage is his secular outlook regarding the protection and promotion of every community by giving freedom to practices one’s own beliefs (religiously). 

3. Pakistan did not live up to Jinnah’s expectations because Pakistan became an orthodox Muslim country that did not respect interests of another communities after independence.

(c) a will to survive against all odds.

The attitude of the speaker is cynical. She cannot accept her husband’s act of cowardice. She uses the word ‘virtuous’ ironically. She mocks at the possibility of all praising the farmer as a man of dignity who couldn’t bear the idea of taking loans from others. It is customary for all of us to praise the dead and so the farmer would get nothing but sympathy. However, the speaker considers his act cowardly. She says ironically that she will be taken as a ‘poor sinner’ because she is still alive when her virtuous husband has become a martyr.

She is justifiably angry that the ‘man’ of the house has turned out to be a coward. The man who abused her because of his advantage of being ‘but a man’ in a patriarchal society, has left her behind to do the work of a man, that is, earning a living for the sake of the four children. The woman rightly points out that the farmer should have had the strength of character to ask the questions, ‘What of this?’ and ‘Why is this?’ and fought against the odds in life to come out of difficulty. But he showed no such courage and left his family behind in dire straits to fend for themselves.

The farmer’s wife.

The poem ‘The Farmer’s Wife’ by the Volga takes up the contemporary problem of many a farmer committing suicide unable to repay the debt taken. It takes a refreshingly different angle of perceiving the problem from the farmer’s wife’s angle. The poem is an eye-opener because generally when we hear or read about the acts of suicide, we think only about the tragic plight of the farmer who was pushed into the act of committing suicide.

While it is true that the state of the farmer deserves our sympathy, it is equally true that not many of us view the problem from the angle of the family that is left behind. The fact remains that the family would continue to be in the state of insolvency and such a family would be in the worst state of affairs because the so-called ‘man of the house’ is dead and the family still has no source of income. The widow of the farmer or any other person who is left behind to shoulder the onus is in a very pitiable condition indeed! Hence, the aim of the poem is not to single out one case of suicide, but to throw light on a social problem which needs government intervention to be resolved.

On the one hand, the poem is a plea to all those who give up their struggle not to do so and to brave the storm courageously, and on the other hand, it is a tribute to the women who show greater forbearance than men in facing difficulty and in tackling problems. The poem also mocks at the idea of a man as the breadwinner and his sense of superiority over the woman he takes for a wife. The poem, at yet another level, is an appeal to the government and perhaps even social organisations to support those people who want to live with dignity but are forced to eat dirt.

1. The Indian National Congress has been referred to as the interim government. 

2. The Muslim League opposed the Indian National Congress because it was of the view that the states should be free to adopt any course they liked. 

3. Sardar Patel was India’s Deputy Prime Minister and the Home Minister during the crucial period immediately following Independence. He negotiated with the rulers of princely states firmly but diplomatically and brought most of them into the Indian Union.