Q.

What is realisation account?

Q. From the following Balance Sheet of Mohan Ltd., prepare cash flow Statement:

Balance Sheet of Mohan Ltd.,
as at 31st March 2016 and 31 March 2017
Particulars	Note No.	March 31, 2017 (Rs)	March 31, 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Equity share capital		3, 00, 000	2, 00, 000
b) Reserves and surplus		2, 00, 000	1, 60, 000
2. Non-current liabilities
a) Long-term borrowings	1	80, 000	1, 00, 000
3. Current liabilities
Trade payables		1, 20, 000	1, 40, 000
Short-term provisions	2	70, 000	60, 000
Total		7, 70, 000	6, 60, 000
II) Assets
1. Non-current assets
Fixed assets	3	5, 00, 000	3, 20, 000
2. Current assets
a) Inventories		1, 50, 000	1, 30, 000
b) Trade receivables	4	90, 000	1, 20, 000
c) Cash and cash equivalents	5	30, 000	90, 000
Total		7, 70, 000	6, 60, 000

Notes to accounts:

	2017	2016
1. Long-term borrowings
Bank Loan	80, 000	1, 00, 000
2. Short-term provision
Proposed dividend	70, 000	60, 000
3. Fixed assets	6, 00, 000	4, 00, 000
Less: Accumulated Depreciation	1, 00, 000	80, 000
(Net) Fixed Assets	5, 00, 000	3, 20, 000
4. Trade receivables
Debtors	60, 000	1, 00, 000
Bills receivables	30, 000	20, 000
	90, 000	1, 20, 000
5. Cash and cash equivalents
Bank	30, 000	90, 000

Additional Information:

Machine Costing Rs. 80, 000 on which accumulated depreciation was Rs. 50, 000 was sold for Rs. 20, 000.

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Q. In case of admission of a new partner, the profit and loss arising from revaluation account are distributed between the old partners in the ratio.

old
gaining
sacrificing
new

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Q.

Differentiate between redemption of debentures out capital and out of profits.

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Q.

From the following information, calculate cash from operating activities:
$\begin{matrix} Rs. Proft and Loss Balance on 1st April, 2017 & 25, 000 Profit and Loss Balance on 31st March, 2018 & 80, 000 Depreciation on Fixed Assets & 12, 500 Amortisation of Goodwill & 8, 000 Loss on Sale of Machine & 20, 000 Provision for Taxation & 15, 000 Transfer to General Reserve & 30, 000 Decrease in Trade Receivables & 22, 800 Decrease in Trade Payables & 4, 700 Outstanding Expenses on 1st April, 2017 & 5, 000 Outstanding Expenses on 31st March, 2018 & 6, 500 Prepaid Expenses on 1st April, 2017 & 2, 000 \end{matrix}$

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Q. The Balance Sheet of X, Y and Z who were sharing profits in proportion to their capitals stood as follows at 31st March, 2018:

Liabilities		Amount (₹)	Assets		Amount (₹)
Sundry Creditors		13, 800	Cash at Bank		11, 000
Capital A/cs:			Sundry Debtors	10, 000	25, 000
X	45, 000		Less: Provision for D. Debts	200	9, 800
Y	30, 000		Stock		16, 000
Z	15, 000	90, 000	Plant and Machinery		17, 000
			Land and Building		50, 000
		1, 03, 800			1, 03, 800

Y retires on 1st April, 2018 and the following readjustments were agreed upon:
(a) Out of insurance premium which was debited to the Profit and Loss Account , ₹ 1, 500 be carried forward as Unexpired Insurance.
(b) The Provision for Doubtful Debts be brought up to 5% o Debtors .
(c) The Land and Building be appreciated by 20%.
(d) A provision of ₹ 4, 000 be made in respect of outstanding bills for repairs.
(e) The goodwill of the entire firm be fixed at ₹ 21, 600.
Ys share of goodwill be adjusted to that of X and Z whoa re going to share in future profits in the ratio of 3 : 1 .
Pass necessary journal entries and give the Balance Sheet after Ys retirement.

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Q.

The following is the trial balance of Alfa Ltd., for the year ended June 30, 2005

Details	Amount Rs	Details	Amount Rs
Land and Buildings	3, 00, 000	Sundry Creditors	40, 000
Plant and Machinery	4, 50, 000	Bills Payable	20, 000
Furniture and Fittings	40, 000	General Reserve	2, 00, 000
Goodwill	60, 000	Profit and Loss Account Balance (on 1.7.04)	90, 000
Sundry Debtors	60, 000	Sales	6, 25, 000
Bills Receivable	26, 000	Purchase Returns	15, 000
Investments (5% Govt. Securities)	30, 000	Equity Share Capital	5, 00, 000
Cash in Hand	2, 000	8% Preference Share Capital	2, 00, 000
Cash at Bank	55, 000
Preliminary Expenses	29, 000
Purchases	4, 00, 000
Sales Return	10, 000
Stock on 1-7-04	85, 000
Wages	47, 000
Salaries	55, 000
Rent, rates and taxes	9, 000
Carriage Inwards	6, 500
Law Charges	2, 500
Trade Expenses	23, 000
	16, 90, 000		16, 90, 000

Prepare the Profit and Loss Account and Balance Sheet of the company after taking the following particulars into consideration:

a) The original cost of land and building plant and machinery and furniture and fittings was Rs 2, 50, 000, Rs 6, 00, 000 and Rs 60, 000 respectively. Additions during the year were: Building Rs 50, 000 and Plant Rs 20, 000.

b) Depreciation is to be charged on plant and machinery and furniture and fitting at 10 per cent on original cost.

c) Of the sundry debtors, Rs 10, 000 is outstanding for a period exceeding 6 months, Rs 5, 000 are considered doubtful, while the others are considered good.

d) The directors are entitled to a commission at 1 percent of the net profits before charging such commission.

e) Stock on 30th June, 2005 is Rs 1, 30, 000.

f) Provide Rs 34, 800 for income tax

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Q.

A and B share profits in the proportions of 3/4 and 1/4. Their Balance Sheet on Dec. 31, 2016 was as follows:

Balance Sheet of A and B as on December 31, 2016
Liabilites		Amount (Rs)	Assets	Amount (Rs)
Sundry creditors		41, 500	Cash at Bank	26, 500
Reserve fund		4, 000	Bills Receivable	3, 000
Capital Accounts			Debtors	16, 000
	A	30, 000	Stock	20, 000
	B	16, 000	Fixtures	1, 000
			Land & Building	25, 000
		91, 500		91, 500

On Jan. 1, 2017, C was admitted into partnership on the following terms:

(a) That C pays Rs 10, 000 as his capital.

(b) That C pays Rs 5, 000 for goodwill. Half of this sum is to be withdrawn by A and B.

(c) That stock and fixtures be reduced by 10% and a 5%, provision for doubtful debts be created on Sundry Debtors and Bills Receivable.

(d) That the value of land and buildings be appreciated by 20%.

(e) There being a claim against the firm for damages, a liability to the extent of Rs 1, 000 should be created.

(f) An item of Rs 650 included in sundry creditors is not likely to be claimed and hence should be written back.

Record the above transactions (journal entries) in the books of the firm assuming that the profit sharing ratio between A and B has not changed. Prepare the new Balance Sheet on the admission of C.

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Q.

Profit/loss on revaluation of assets is shared by the old partners in their :

sacrificing ratio
old profit sharing ratio
capital ratio
new profit sharing ratio

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Q.

Any decrease in the value of the asset will be _______ to the revaluation account

Debited
None of the above
Either A or B
Credited

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Q. From the following information, prepare cash flow statement for Yogeta Ltd.
Balance Sheet

\begin{matrix} Capital and Liabilites & 2010 (Rs.) & 2011 (Rs.) & Assets & 2010 (Rs) & 2011 (Rs) Equity Share Capital & 2, 00, 000 & 3, 00, 000 & Bank & 45, 000 & - Preference Share Capital & - & 1, 00, 000 & Cash & 5, 000 & - Profit and Loss Account & 1, 00, 000 & 2, 00, 000 & Stock & 1, 00, 000 & 1, 70, 000 Loan & 2, 00, 000 & - & Bills Receivable & 50, 000 & 1, 00, 000 Provision for Taxation & 30, 000 & 50, 000 & Fixed Assets & 4, 00, 000 & 7, 00, 000 Bills Payable & 50, 000 & 70, 000 Bank Overdraft & - & 1, 00, 000 Loan from Rahul & 20, 000 - -------- - & 1, 50, 000 - --------- - 6, 00, 000 - --------- - & 9, 70, 000 - --------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 6, 00, 000 - --------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 9, 70, 000 - --------- - \end{matrix}

Additional Information:
Net profit for the year after charging Rs. 50, 000 as depreciation was Rs. 1, 50, 000, dividend paid on share was Rs. 50, 000, tax provision created during the year amounted to Rs. 60, 000.

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Q.

Identify various matters that need adjustments at the time of admission of a new partner.

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Q.

In case of revaluation account is prepared, the assets & liabilities appear in the books of the reconstituted firm at their:

realizable figures
revalued figures
market values
old book values

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Q. For the decrease in the value of assets, we debit account and credit account.

asset
bank
revaluation
partners' capital

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Q.

A and B share profits and losses in the ratio of 3/5 and 2/5 respectively and having capital account balances of Rs 1, 00, 000 each. At the time of revaluation, the firm’s total book value of assets was Rs 60, 000 while they can only be sold for Rs 40, 000. Which of the following is the balance of A’s capital account after revaluation of firm’s assets?

Rs 1, 12, 000
Rs 1, 00, 000
Rs 72, 000
Rs 88, 000

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Q.

Describe"Indirect" method of ascertaining Cash Flow from Operating Activities.

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Q.

The following balances appeared in the books of Parasuram Flour Mills Ltd., as on December 31, 2005 :

Details	Rs	Details	Rs
Stock of wheat	9, 500	Furniture	5, 100
Stock of flour	16, 000	Vehicles	5, 100
Wheat Purchases	4, 05, 000	Stores and spare parts	18, 300
Manufacturing Expenses	90, 000	Advances	24, 500
Flour Sales	5, 55, 000	Book Debts	51, 700
Salaries and Wages	13, 000	Investments	4, 000
Establishment	4, 700	Share Capital	72, 000
Interest (Cr.)	500	Pension Fund	23, 000
Rent Received	800	Dividend Equalisation fund	10, 000
Profit and Loss Account (Cr.)	15, 000	Taxation Provision	8, 500
Director’s Fees	1, 200	Unclaimed Dividends	900
Dividend for 2004	9, 000	Deposits (Cr.)	1, 600
Land	12, 000	Trade Creditors	1, 24, 000
Buildings	50, 500	Cash in Hand	1, 200
Plants and Machinery	50, 500	Cash at Bank	40, 000

Prepare the company’s trading and profit and loss account for the year and balance sheet as on December 31, 2005 after taking the following adjustments into account:

(a) Stock on December 31, 2005 were: Wheat at cost, Rs 14, 900: Flour at market price, Rs 21, 700; (b) Outstanding expenses: Manufacturing expenses, Rs 23, 500; and salaries and wages, Rs 1, 200; (c) Provide depreciation : Building at 2% ; Plant and machinery at 10%: Furniture at 10% ; and Vehicle 20%. (d) Interest accrued on Government Securities, Rs100: (e) A tax provision of Rs 8, 000 is considered necessary. (f) The directors propose a dividend of 20%. (g) The authorised capital consists of 12, 000 equity shares of Rs 10 each of which 7, 200 shares were issued and fully paid up.

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Q.

What is the entry for transferring the revaluation surplus ?

Partners current accounts = Debit and Revaluation surplus = Credit
None of the above
Partners capital accounts = Debit and Revaluation surplus = Credit
Revaluation = Debit and Partners capital accounts = Credit

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Q.

How will you deal with the accumulated profit and losses and reserves on the admission of a new partner?

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Q.

Identify various matters that need adjustments at the time admission of a new partner .

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Q.

Why is Reserves and Surplus credited to the old Partners' Capital Accounts in their old profit sharing ratio at the time of admission of a partner?

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Q.

The following was the Balance Sheet of Arun, Bablu and Chetan sharing profits and losses in the ratio of respectively.

Liabilites			Amount (Rs)	Assets	Amount (Rs)
Creditors			9, 000	Land and Buildings	24, 000
Bills Payable			3, 000	Furniture	3, 500
Capital Accounts				Stock	14, 000
	Arun	19, 000		Debtors	12, 600
	Bablu	16, 000		Cash	900
	Chetan	8, 000	43, 000
			55, 000		55, 000

They agreed to take Deepak into partnership and give him a share of 1/8 on the following terms:

(a) that Deepak should bring in Rs 4, 200 as goodwill and Rs 7, 000 as his Capital;

(b) that furniture be depreciated by 12%;

(c) that stock be depreciated by 10% ;

(d) that a Reserve of 5% be created for doubtful debts;

(e) that the value of land and buildings having appreciated be brought upto Rs 31, 000;

(f) that after making the adjustments the capital accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of Deepak’s Capital to his share in the business, i.e., actual cash to be paid off to, or brought in by the old partners as the case may be.

Prepare Cash Account, Profit and Loss Adjustment Account (Revaluation Account) and the Opening Balance Sheet of the new firm.

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Q.

Radha, Sheela and Meena were in partnership sharing profits and losses in the proportion of 3:2:1. On April 1, 2017, Sheela retires from the firm. On that date, their Balance Sheet was as follows:

Liabilities		Amount Rs	Assets	Amount Rs
Trade Creditors		3, 000	Cash-in-Hand	1, 500
Bills Payable		4, 500	Cash at Bank	7, 500
Expenses Owing		4, 500	Debtors	15, 000
General Reserve		13, 500	Stock	12, 000
Capitals:			Factory Premises	22, 500
Radha	15, 000		Machinery	8, 000
Sheela	15, 000		Losse Tools	4, 000
Meena	15, 000	45, 000
		70, 500		70, 500

The terms were:

a) Goodwill of the firm was valued at Rs 13, 500.

b) Expenses owing to be brought down to Rs 3, 750.

c) Machinery and Loose Tools are to be valued at 10% less than their book value.

d) Factory premises are to be revalued at Rs 24, 300.

Prepare:

1. Revaluation account

2. Partner’s capital accounts and

3. Balance sheet of the firm after retirement of Sheela.

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Q.

A.Ltd. purchased its own debentures of the face value of Rs.2, 00, 000 from the open market for immediate cancellation at Rs.92. Record the journal entries.

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Q. Select the most appropriate alternative from those given below :

In case of dissolution assets and liabilities are transferred to _____________A/c.
a) Bank A/c
b) Partner’s capital A/c
c) Realisation A/c
d) Partner’s current A/c

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Q. Closing stock appearing in the Trial Balance will be taken to __________.

Trading account only
Balance sheet only
Trading account and balance sheet
None of the above

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Q.

From the following Balance Sheet of Mohan Ltd. Prepare cash flow Statement:

Balance Sheet of Mohan Ltd.
as at 31 Mar. 2016 and 31 Mar. 2017
Particulars	Note No.	March 31, 2017 (Rs)	March 31, 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Equity share capital		3, 00, 000	2, 00, 000
b) Reserves and surplus		2, 00, 000	1, 60, 000
2. Non-current liabilities
a) Long-term borrowings	1	80, 000	1, 00, 000
3. Current liabilities
Trade payables		1, 20, 000	1, 40, 000
Short-term provisions	2	70, 000	60, 000
Total		7, 70, 000	6, 60, 000
II) Assets
1. Non-current assets
a) Fixed assets	3	5, 00, 000	3, 20, 000
2. Current assets
a) Inventories		1, 50, 000	1, 30, 000
b) Trade receivables		4, 90, 000	1, 20, 000
c) Cash and cash equivalents		5, 30, 000	90, 000
Total		7, 70, 000	6, 60, 000

Notes

	2017	2016
1. Long-term borrowings
Bank Loan	80, 000	1, 00, 000
2. Short-term provision
Proposed dividend	70, 000	60, 000
3. Fixed assets	6, 00, 000	4, 00, 000
Less: Accumulated Depreciation	1, 00, 000	80, 000
(Net) Fixed Assets	5, 00, 000	3, 20, 000
4. Trade receivables
Debtors	60, 000	1, 00, 000
Bills receivables	30, 000	20, 000
	90, 000	1, 20, 000
5. Cash and cash equivalents
Bank	30, 000	90, 000

Additional Information:
Machine Costing Rs. 80, 000 on which accumulated depreciation was Rs. 50, 000 was sold for Rs. 20, 000.

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Q.

The following is the Balance sheet of Tanu and Manu, who shares profit and losses in the ratio of 5:3, On December 31, 2017:

Balance Sheet of Tanu and Manu as on December 31, 2017
Liabilities		Amount Rs	Assets	Amount Rs
Sundry Creditors		62, 000	Cash at Bank	16, 000
Bills Payable		32, 000	Sundry Debtors	55, 000
Bank Loan		50, 000	Stock	75, 000
Reserve fund		16, 000	Motor car	90, 000
Capital:			Machinery	45, 000
Tanu	1, 10, 000		Investment	70, 000
Manu	90, 000	2, 00, 000	Fixtures	9, 000
		3, 60, 000		3, 60, 000

On the above date the firm is dissolved and the following agreement was made: Tanu agree to pay the bank loan and took away the sundry debtors. Sundry creditors accepts stock and paid Rs 10, 000 to the firm. Machinery is taken over by Manu for Rs 40, 000 and agreed to pay of bills payable at a discount of 5%.. Motor car was taken over by Tanu for Rs 60, 000. Investment realised Rs 76, 000 and fixtures Rs 4, 000. The expenses of dissolution amounted to Rs 2, 200.

Prepare Realisation Account, Bank Account and Partners Capital Accounts.

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Q. Consider the following statements :
1. At the time of admission of new partner undistributed profit or losses are distributed to all partners in new ratio.
2. Profit or loss on revaluation of assets and liabilities is transferred to old partner's capital account in old profit sharing ratio.
3. Goods brought in by incoming partner in cash for joining in a partnership firm is taken away by the old partner's in their new profit-sharing ratio.
Which of the above statement/s is/are true ?

1, 2 and 3
Only 1
Only 2
Only 3

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Q. Current liabilities of a company were Rs. 1, 75, 000 and its current ratio was 2: 1. It paid Rs. 30, 000 to a creditor. Calculate current ratio after payment :

2: 1
1: 1
1: 5: 1
2.21: 1

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Revaluation of Assets

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