ISC

Analysis of Pupil
Performance

ACCOUNTS

Research Development and Consultancy Division

Council for the Indian School Certificate Examinations
New Delhi
Year 2020

Published by:
Research Development and Consultancy Division (RDCD)
Council for the Indian School Certificate Examinations
Pragati House, 3rd Floor
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Council for the Indian School Certificate Examinations.
 FOREWORD

This document of the Analysis of Pupils’ Performance at the ISC Year 12 and ICSE Year 10
Examination is one of its kind. It has grown and evolved over the years to provide feedback to
schools in terms of the strengths and weaknesses of the candidates in handling the examinations.

We commend the work of Mrs. Shilpi Gupta (Deputy Head) and the Research Development and
Consultancy Division (RDCD) of the Council who have painstakingly prepared this analysis. We
are grateful to the examiners who have contributed through their comments on the performance of
the candidates under examination as well as for their suggestions to teachers and students for the
effective transaction of the syllabus.

We hope the schools will find this document useful. We invite comments from schools on its
utility and quality.

Gerry Arathoon
November 2020 Chief Executive & Secretary

i
 PREFACE
PREFACE

The CISCE has been involved in the preparation of the ICSE and ISC Analysis of Pupil Performance
documents since the year 1994. Over these years, these documents have facilitated the teaching-
learning process by providing subject/ paper wise feedback to teachers regarding performance of
students at the ICSE and ISC Examinations. With the aim of ensuring wider accessibility to all
stakeholders, from the year 2014, the ICSE and the ISC documents have been made available on the
CISCE website www.cisce.org.

The documents for the ICSE and ISC Examination Year 2020 include a detailed qualitative analysis
of the performance of students in different subjects. The purpose of this analysis is to provide insights
into how candidates have performed in individual questions set in the question paper. This section
is based on inputs provided by examiners from examination centers across the country. It comprises
of question wise feedback on the performance of candidates in the form of Comments of Examiners
on the common errors made by candidates along with Suggestions for Teachers to rectify/ reduce
these errors. The Marking Scheme for each question has also been provided to help teachers
understand the criteria used for marking. Topics in the question paper that were generally found to
be difficult or confusing by candidates, have also been listed down, along with general suggestions
for candidates on how to prepare for the examination/ perform better in the examination.

The Analysis of Pupil Performance document for ICSE for the Examination Year 2020 covers the
following subjects/papers: English (English Language, Literature in English), History and Civics,
Mathematics, Physics, Chemistry, Commercial Studies and Environmental Science.
Subjects covered in the ISC Analysis of Pupil Performance document for the Year 2020 include
English (English Language and Literature in English), Hindi, Physics, Chemistry, Mathematics,
Computer Science, History, Political Science, Economics, Commerce, Accounts, and Environmental
Science.

I would like to acknowledge the contribution of all the ICSE and the ISC examiners who have been
an integral part of this exercise, whose valuable inputs have helped put this document together.

I would also like to thank the RDCD team of Dr. M.K. Gandhi, Dr. Manika Sharma, Mrs. Roshni
George and Ms. Mansi Guleria, who have done a commendable job in preparing this document.

We hope that this document will enable teachers to guide their students more effectively and
comprehensively so that students prepare for the ICSE/ ISC Examinations, with a better
understanding of what is required from them.

Shilpi Gupta
November 2020 Deputy Head - RDCD

ii
CONTENTS

Page No.

FOREWORD i

PREFACE ii

QUALITATIVE ANALYSIS: ACCOUNTS 1

 SECTION A
PART I (12 Marks)
Answer all questions

Question 1 [6x2]
Answer briefly each of the following questions:
(i) Why is goodwill considered to be an intangible asset and not a fictitious asset?
(ii) How will a firm deal with a situation when its partnership deed provides for interest
on capital, but the profit earned by it is not enough to do so, at the rate mentioned in
the deed?
(iii) State with reason whether Securities Premium Reserve can be used by a company to
write off the discount allowed to its debtors.
(iv) List any four items that are shown under the sub-head ‘Other Current Assets’ in the
Balance Sheet of a company prepared as per Schedule III of the Companies Act, 2013.
(v) What is the maximum limit of debentures which companies, other than Banking
Companies and All India Financial Institutions, can redeem out of capital?
(vi) (a) Mention any two circumstances which can lead to dissolution of partnership.
(b) What is the status of the firm upon the dissolution of partnership?

Comments of Examiners Suggestions for Teachers

(i) Majority of the candidates were clear in their  Clearly explain to the students in
answer about goodwill not being a fictitious asset Class XI, through examples, the
as it has a realisable value. Some candidates, meaning of and differences between
however, wrote only its property that it has no intangible and fictitious assets and
physical existence. then reiterate the same in Class XII.
 Teach accounting provisions of
(ii) Most of the candidates were able to write this Indian Partnership Act, 1932 with
answer satisfactorily. However, some common examples, and give sufficient
incorrect responses were: practice in solving questions
Interest on capital will be given by the firm: according to its provisions.
1. At the rate mentioned in the deed.  Explain with examples different
2. In the profit-sharing ratio. cases of IOC (when charged/ when
appropriation) with examples.
3. It will not be allowed.  Conduct short question tests in
4. At 6% per annum. partnership.
 Explain the nature and uses of
(iii) The question was well attempted by a majority of Securities Premium Reserve.
the students. However, some candidates wrote

1
 that Securities Premium Reserve was a revenue  Ensure that in Class XI itself,
gain and so could be used to write off discount students are able to classify the
allowed to debtors. A few candidates wrote that expenses/ losses as revenue/ capital.
discount allowed to debtors was a capital loss and  Make students understand the basics
hence could be written off from Securities of accounting.
Premium Reserve.  Clearly explain items in the Balance
Sheet of a company and the reason
(iv) Majority of the candidates were able to write at for these items being under a
least two items correctly. Some candidates wrote particular head and sub-head.
the items under the head 'Other Current  Refer to the guidelines pertaining to
Liabilities'. Schedule III of the Companies Act,
(v) Majority of the candidates wrote ‘25% out of 2013 issued by the Council and
capital’ instead of 75%. Only a few candidates advise the students also to refer to
could connect the fact that since as per Rule 18 the same.
of the Companies (Share and Debentures) Rules  Teach the sources and methods of
2014, a company is required to create out of redemption of debentures through a
profits, DRR equal to 25% of the debenture issue, flow chart.
accordingly 75% would be the maximum limit of  Explain to the students that
debentures which a company can redeem out of admission / retirement/ death of a
capital. partner, basically involves
reconstitution of the firm, leading to
(vi) (a) Majority of the candidates wrote the dissolution of partnership
correct answer. Some candidates, between/amongst the existing
however, wrote the circumstances leading partners and formation of a new
to dissolution of partnership firm as they partnership between / amongst the
were not clear about the difference new / remaining partners with the
between dissolution of partnership and firm continuing as before.
dissolution of partnership firm.
(b) Majority of the candidates were unable to
write the correct answer. Most candidates
wrote that the firm would close / cease to
exist.

MARKING SCHEME
Question 1
(i) Goodwill can be realized / sold while a fictitious asset cannot be realized/ cannot be sold/
has no value/ is written off.
(ii) The available profit will be distributed between the partners in their capital ratio/ ratio of
interest on capital.
OR
Through an example with information of:
Either

2
 Partners’ capitals, rate of IOC, trading profits and IOC brought down to the trading profits
in the capital ratio.
OR
Absolute amount of IOC, trading profits and IOC brought down to the trading profits in the
ratio of IOC.
(iii) No / Cannot be used
Reason:
Securities Premium Reserve a capital profit /capital gain /capital reserve. / Securities
Premium Reserve can be used only for purposes mentioned in Section 52 (2) and Section
68 A of the Companies Act 2013/ can be used for issuing fully paid bonus shares to the
members / to write off capital losses/ preliminary expenses of the company/expenses on
the issue of shares and debentures / discount allowed on the issue of debentures/ to provide
for premium payable on the redemption of Redeemable Preference Shares or on debentures
of the company/ to purchase (buy back) its own shares /Discount allowed to debtors is a
charge against profits/revenue expense/ revenue loss/ written off from revenue profits/
Provision for discount on debtors.
(iv) • Prepaid expenses (any expense specified)
• Dividend Receivable
• Interest accrued on investments / Accrued income (any income specified)
• Advance Tax
• Discount on issue of debentures / Loss on issue of debentures to be written off in the
next financial year.
• Any capital loss/ miscellaneous expenditure to be written off in the next financial/
accounting year.
(v) 75% is the maximum limit of debentures which a company can redeem out of capital.
(vi) (a) Dissolution of Partnership arises when there is a change in the constitution of
partnership/ admission/retirement/ death of a partner/ change in the profit- sharing
ratio/ reconstitution of the firm/ insolvency of one partner.
(b) In case of dissolution of partnership, the firm as a whole is not closed down/ it only
results in the end of the old agreement between the partners and its replacement with
the new agreement/ only the agreement between the partners comes to an end/ the
firm continues to carry on the business with a new agreement/ no physical disposal
of assets/ it could/ may result in the dissolution of partnership firm.

3
 PART II (48 Marks)
Answer any four questions

Question 2
(A) From the following information, calculate goodwill of the firm of Anmol and [4]
Sujay at the time of admission of Dhruv:
(i) At three years’ purchase of Super Profit.
(ii) On the basis of Capitalisation of Super Profit.
(a) Actual Average Profits of the firm for the last three years is ₹ 25,000.
(b) Normal Rate of Return is 10%.
(c) Balance Sheet of Anmol and Sujay
As at 31st March, 2019
Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors 40,000 Plant and Machinery 40,000
Bills Payable 10,000 Land and Building 80,000
General Reserve 20,000 Investments (Non-trade) 50,000
Capital Accounts: Sundry Debtors 15,000
Anmol 80,000 Bank 55,000
Sujay 90,000 1,70,000
2,40,000 2,40,000

(B) Manoj, Hari and Karan are partners in a firm sharing profits and losses in the ratio [8]
4:2:1. Their Balance Sheet as at 31st March, 2019, was as follows:
Balance Sheet of Manoj, Hari and Karan
As at 31st March, 2019
Liabilities Amount (₹ ) Assets Amount (₹ )
Sundry Creditors 32,600 Plant and Machinery 20,000
Bills Payable 4,000 Goodwill 7,000
General Reserve 8,400 Stock 38,000
Capital Accounts: Bank 20,000
Manoj 16,000
Hari 14,000
Karan 10,000 40,000

85,000 85,000

4
 Hari retired from the business on 1st April, 2019. The remaining partners decided to
carry on the business. The terms of retirement provided the following:
(a) Out of the total insurance premium paid, ₹7,000 to be treated as prepaid
insurance. The amount was earlier debited to Profit & Loss Account.
(b) General Reserve not to be distributed.
(c) Hari to be paid ₹24,400 in full settlement.
You are required to prepare Partners’ Capital Accounts.

Comments of Examiners Suggestions for Teachers

(A) Almost all the candidates were able to write the  Do not depend upon the textbooks
correct formulae for calculating goodwill by the but constantly refer to the scope of
Super Profit and Capitalisation of Super Profit the syllabus wherein the formula of
Methods. However, majority of the candidates capital employed being Total assets
were unable to calculate the correct value of excluding purchased goodwill, non-
goodwill as they applied the incorrect formula for trade investments and fictitious
calculating capital employed. Most candidates assets less outside liabilities is very
did not subtract non-trade investments from the clearly stated.
total assets.  The topic calculation of 'Hidden
Goodwill' of the retiring partner is
(B) Majority of the candidates did not realise that stated in Unit 1 C II (ii) of the scope
they were supposed to calculate the retiring of the syllabus. Question 2 of the
partner's share in the self-generated goodwill of Specimen Paper of the year 2018
the firm. deals with this topic.
Many candidates did the posting in the retiring
Partner's Capital A/c as per the following entry:
P/L Suspense A/c Dr 8,000
To Hari's Capital A/c 8,000
Instead of posting as per:
Manoj's Capital A/c Dr 6,400
Karan's Capital A/c Dr 1,600
To Hari's Capital A/c 8,000 (Hari's share of
GW)
This clearly indicates that the candidates had no
knowledge of the topic 'Hidden Goodwill' at the
time of retirement of a partner.
Apart from this error, some candidates, for the
amount to be paid to the retiring partner, instead
of crediting the Cash A/c with it, either credited
his loan account with this amount or carried it
forward. A few candidates distributed the entire
General Reserve whereas, according to the
question it was not to be distributed.

5
 MARKING SCHEME
Question 2
(A) (i) Goodwill = Super Profit × No. of years’ purchase
Super profit = Actual/ Average (maintainable) profits – Normal profit
Normal Rate of Rerturn
Normal profit = Average Capital Employed x
100
Actual Capital Employed = Total Assets (excluding goodwill if existing in the
Balance Sheet, non-trade investments and fictitious assets) – outside liabilities.
10
Normal Profit = × (2,40,000 – 50,000 – 50,000)
100
10
= × 1,40,000 = 14,000
100
Super Profit = 25,000 – 14,000 = ₹ 11,000
Goodwill = 11,000 × 3 = ₹ 33,000

(ii) Capitalisation of Super Profits Method

Goodwill= Capitalised Super Profit
Normal Rate of Return
Goodwill = Super profit x either formula
100
100
Goodwill = 11,000 × = ₹ 1,10,000
10

(B) Partners’ Capital Accounts

Particulars Manoj Hari Karan Particulars Manoj Hari Karan
To Goodwill 4,000 2,000 1,000 By Bal b/d 16,000 14,000 10,000
To Hari Cap 1,920 480 By Manoj Cap 1,920
To Hari Cap 6,400 1,600 By Karan Cap 480
To Bank 24,400 By Manoj Cap 6,400
To Bal c/d 7,680 7,920 By Karan Cap 1,600
By 4,000 2,000 1,000
Revaluation
20,000 26,400 11,000 20,000 26,400 11,000

6
 [12]
Question 3
Sudesh Ltd. was registered with an authorised capital of ₹40,00,000 divided into 4,00,000
Equity Shares of ₹10 each.
The company offered 50,000 shares to the public at a premium of ₹2 per share, payable as
follows:
₹ 3 on application
₹ 6 on allotment (including premium)
₹ 3 on first and final call (due two months after allotment)
Applications were received for 60,000 shares and pro-rata allotment was made as follows:
Category A: The applicants of 40,000 shares were allotted 30,000 shares.
Category B: The applicants of 20,000 shares were allotted in full.
Excess money paid on application was utilized towards allotment.
Nobby, a shareholder from Category A, who had applied for 1,200 shares failed to pay the
allotment and call money.
Vineet, a shareholder from Category B, who had been allotted 1,000 shares, paid the call
money due, along with allotment.
The company forfeited Nobby’s shares after the first and final call and paid interest on Calls-
in-advance to Vineet @ 12% per annum on the day of the final call.
You are required to:
(i) Pass journal entries to record the above transactions in the books of the company
(including entries for interest on Calls-in-advance).

(ii) Prepare Calls-in-arrears Account.

Comments of Examiners Suggestions for Teachers

(i) Majority of the candidates were able to pass  Ensure that the students pass closing
the correct journal entries. However, a few journal entries for every
candidates did not pass the closing entry for expense/income.
interest on Calls-in- Advance.  Explain to the students that if Securities
Premium Reserve has not been received
(ii) Some candidates, were unable to split the
then Calls- in- arrears A/c will have to
credit amount of ₹7,200 in Calls-in-arrear A/c
be credited with both Share Capital not
into ₹5,400 for Share Capital A/c and ₹1,800
received and Securities Premium not
for Securities Premium Reserve A/c.
received.
 Lay stress not only in passing journal
entries, but also in preparing ledger
accounts.

7
 MARKING SCHEME
Question 3
(i) Journal of Sudesh Ltd.
Date Particulars LF Debit(₹) Credit (₹)
Bank A/c Dr 1,80,000
To Share application A/c 1,80,000
(Being share app received)
Share application A/c Dr 1,80,000
To Equity Share Capital A/c 1,50,000
To Share allotment A/c 30,000
(Being share app transferred to share capital and
share allotment)
Share allotment A/c Dr 3,00,000
To Equity Share Capital A/c 2,00,000
To Securities Premium Reserve A/c 1,00,000
(Being share allot due)
Bank A/c Dr 2,68,500
Calls-in-arrears A/c Dr 4,500
To Share allotment A/c 2,70,000
To Call-in advance A/c 3,000
(Being share allot and calls-in advance received)
Share First & Final Call A/c Dr 1,50,000
To Equity Share Capital A/c 1,50,000
(Being share final call due)
Bank A/c Dr 1,44,300
Calls-in-arrears A/c Dr 2,700
Call-in advance A/c Dr 3,000
To Share First & Final Call A/c 1,50,000
(Being share call received)
Equity Share Capital A/c Dr 9,000
Securities Premium Reserve A/c Dr 1,800
To Share Forfeiture A/c 3,600

8
 To Calls-in-arrears A/c 7,200
(Being 900 shares forfeited)
Interest on Calls-in-advance A/c Dr 60
To Shareholders / Sundry Members A/c 60
(Being int on calls-in-advance due to shareholders)
Shareholders / Sundry Members A/c Dr 60
To Bank A/c 60
(Being int on calls-in-advance paid)
Statement of P/L Dr 60
To Interest on Calls-in-advance A/c 60
(Being interest on Calls-in-advance A/c transferred
to St of P/L)

(ii) Call-in arrears A/c

Particulars Amount (₹) Particulars Amount (₹)
To Share Allotment A/c 4,500 By Share Capital A/c 5,400
To Share Final Call A/c 2,700 By Securities Premium 1,800
Reserve A/c
7,200 7,200

Question 4
(A) Mike and Ajay are partners sharing profits and losses in proportion to their capitals, [8]
which on 31st March, 2019, stood at ₹6,00,000 and ₹4,00,000 respectively. On this
date, the firm had ₹1,00,000 in its Workmen Compensation Reserve and its outside
liabilities amounted to ₹6,00,000, which included Creditors of ₹2,00,000 and Bills
Payable of ₹60,000.
The firm was dissolved on 31st March, 2019, on which date, the assets, apart from
Cash of ₹70,000, realised ₹14,00,000 and the liabilities were discharged as follows:
(a) Creditors due on 31st May, 2019, were paid off at a discount of 3% per annum.
(b) Bills Payable were discharged at a rebate of ₹1,000.
(c) Workmen Compensation Claim of ₹40,000 was met.
(d) Expenses of dissolution amounting to ₹30,000 were paid.

9
 You are required to prepare:
(i) Realisation Account.
(ii) Partners’ Capital Accounts.
(B) Xen, Sam and Tim are partners in a firm. For the year ended 31st March, 2019, the [4]
profits of the firm ₹ 1,20,000, were distributed equally amongst them, without
providing for the following provisions of the partnership deed:
(a) Sam’s guarantee to the firm that the firm would earn a profit of at least
₹1,35,000. Any shortfall in these profits would be personally met by him.
(b) Profits to be shared in the ratio of 2:2:1.
You are required to pass the necessary journal entries to rectify the error in
accounting.

Comments of Examiners Suggestions for Teachers

(A) Majority of the candidates were unable to solve  Prepare students with four types of
this question satisfactorily. problems in the topic 'Dissolution of
Partnership Firm' and these are:-
(i) The common errors made by most of the
(i) Preparing the Realisation
candidates were:
Account, Partners' Capital A/c
- Not calculating the book value of the
and Cash A/c from a given
realisable assets, either by preparing a
Balance Sheet and additional
Memorandum Balance Sheet or by
information
applying the accounting equation.
(ii) Passing journal entries- refer
- Taking the cash balance as the opening Analysis of Pupil Performance
balance of the Realisation A/c when a of the year 2014
Realisation A/c does not have an (iii) Preparing only the Partners'
opening balance. Capital A/c with the profit/ loss
- Not taking into consideration the number on realisation of assets and
of months while calculating the amount settlement of liabilities being
to be paid to the creditors. given in the question along with
information related to partners'
- Taking the rebate being given on the capital accounts- refer Analysis
discharge of the Bills Payable as the of Pupils Performance of the
amount to be paid. year 2019.
(ii) All candidates were able to prepare the (iv) Preparing the Memorandum
partners' capital accounts. Balance Sheet to calculate the
(B) Very few candidates were able to rectify the error book value of realisable assets
by passing journal entries- entries for cancelling and then proceed with
the incorrect profit, Sam meeting his guarantee preparing the Realisation
and then the entry for distribution of the correct Account, Partners’ Capital A/c
profit. Majority of the candidates either made a and Cash A/c.
table showing the amounts to be debited or
credited or passed a single journal entry which
10
 was not the requirement of the question. A few  Ensure that the students know how
candidates rectified the error through P/L to open and close the partners'
Appropriation A/c instead of through P/L capital accounts.
Adjustment A/c.  Teach past adjustments through
both, a single journal entry through
capital accounts and multiple
entries through P/L Adjustment A/c,
which involve passing a journal
entry to reverse the error and then
adjusting and closing entries of
what was supposed to be done
according to the deed.

MARKING SCHEME
Question 4
(A) (i) Realisation Account
Particulars Amount Particulars Amount
To Sundry Assets 16,30,000 By S. Liabilities
To Cash A/c Creditors 2,00,000
Creditors 1,99,000 Bills Payable 60,000
Bills Payable 59,000 WCC 40,000
WCC 40,000 Other Liab 3,40,000 6,40,000
Other Liabilities 3,40,000
Realisation Exp 30,000 6,68,000 By Cash A/c 14,00,000
By Mike’s Capital 1,54,800
By Ajay’s Capital 1,03,200
22,98,000 22,98,000

(ii) Partners’ Capital Accounts

Particulars Mike Ajay Particulars Mike Ajay
To Real(loss) 1,54,800 1,03,200 By Bal b/d 6,00,000 4,00,000
To Cash A/c 4,81,200 3,20,800 By WCR 36,000 24,000
6,36,000 4,24,000 6,36,000 4,24,000
Working Notes Memorandum Balance Sheet
As at 31st March, 2019
Liabilities Amount Assets Amount

11
 Capital Accounts Cash 70,000
Mike 6,00,000 Sundry Assets 16,30,000
Ajay 4,00,000 10,00,000
WCR 1,00,000
Creditors 2,00,000
Bills Payable 60,000
Other Liabilities 3,40,000
17,00,000 17,00,000

(B) Journal
Date Particulars LF Debit(₹) Credit(₹)
Xen’s Capital A/c Dr 40,000
Sam’s Capital A/c Dr 40,000
Tim’s Capital A/c Dr 40,000
To P/L Adjustment A/c 1,20,000
(Being incorrect profits cancelled)
Sam’s Capital A/c Dr 15,000
To P/L Adjustment A/c 15,000
(Being Sam meeting his guarantee of
shortfall in profits)
P/L Adjustment A/c Dr 1,35,000
To Xen’s Capital A/c 54,000
To Sam’s Capital A/c 54,000
To Tim’s Capital A/c 27,000
(Being correct profits distributed in the
profit- sharing ratio)

12
Question 5
(A) Zee Ltd. purchased a running business from Rainbow Ltd. for a sum of [4]
₹6,60,000. Zee Ltd. paid 5% of the purchase consideration by drawing a Promissory
Note in favour of Rainbow Ltd. and the balance by the issue of fully paid 7%
Debentures of ₹100 each at a premium of 10%. The assets and liabilities of Rainbow
Ltd. consisted of:
(₹)
Fixed Assets 6,50,000
Sundry Creditors 80,000
You are required to pass the necessary journal entries in the books of Zee Ltd.

(B) On 1st April, 2016, the following balances appeared in the books of Shikhar Ltd. [8]
10% Debentures ₹ 14,00,000
Premium on Redemption of Debentures ₹ 1,40,000
Debenture Redemption Reserve ₹ 75,000
The debentures were to be redeemed at a premium of 10% in two equal annual
instalments beginning from 31st March, 2018. To meet the requirements of the
Companies Act, 2013, the company transferred the balance amount to Debenture
Redemption Reserve on 31st March, 2017. On 30th April, 2017, it met the
requirements of the Companies Act, 2013 regarding Debenture Redemption
Investment and redeemed the debentures on the scheduled dates.
You are required to pass necessary journal entries to record the above
transactions in the books of Shikhar Ltd. (Ignore interest on Debentures).

Comments of Examiners Suggestions for Teachers

(A) Majority of the candidates were able to pass the  Give ample practice to calculate
necessary journal entries. A few candidates, debentures issued for consideration
however, created a Promissory Note Account other than cash, when issued at par,
instead of a Bills Payable Account. discount or premium.
 Ensure that the provisions of the
(B) Majority of the candidates were able to do this Companies Act, 2013 are complied
question. However, a few candidates calculated with when teaching the topic on
the amount of DRI to be purchased equal to 15% Redemption of Debentures.
of the total face value of the debentures to be
redeemed and not of the debentures to be
redeemed in the year under consideration and so
passed an incorrect journal entry. A few
candidates, instead of transferring the
proportionate amount of DRR to General
Reserve in both the years of redemption,

13
 transferred its entire amount at the end of the
second year.

MARKING SCHEME
Question 5
(A) Journal of Zee Ltd
Date Particulars LF Debit(₹) Credit(₹)
Fixed Assets A/c Dr 6,50,000
Goodwill A/c Dr 90,000
To Sundry Creditors A/c 80,000
To Rainbow Ltd 6,60,000
(Being business purchased)

Rainbow Ltd Dr 6,60,000

To Bills Payable A/c 33,000
To 5 % Debentures A/c 5,70,000
To Securities Premium Reserve A/c / 57,000
Securities Premium
(Being payment made to Rainbow Ltd by
accepting a B/P and by issuing 5,700
debentures @ premium of ₹ 10/deb)

(B) Journal of Shikhar Ltd.

Date Particulars LF Debit (₹) Credit (₹)
31/3/17 Surplus in Statement of P/L Dr 2,75,000
To Deb Redemption Reserve A/c 2,75,000
(Being 25% of the total face value of deb
transferred to DRR)
30/4/17 Debenture Redemption Investment A/c Dr 1,05,000
To Bank A/c 1,05,000
(Being purchase of DRI equal to 15% of
₹7,00,000 debentures due for redemption)
31/3/18 10% Debentures A/c Dr 7,00,000
Premium on Redemption of Debentures A/c Dr 70,000
To Debenture holders A/c 7,70,000
(Being amount due to debenture holders)
31/3/18 Debenture holders A/c Dr 7,70,000

14
 To Bank A/c 7,70,000
(Being debentures redeemed)
31/3/18 Debenture Redemption Reserve A/c Dr 1,75,000
To General Reserve A/c 1,75,000
(Being transfer of proportionate amount of DRR
to General Reserve)
31/3/19 Bank A/c Dr 1,05,000
To Debenture Redemption Investment A/c 1,05,000
(Being DRI sold)
31/3/19 10% Debentures A/c Dr 7,00,000
Premium on Redemption of Debentures A/c Dr 70,000
To Debenture holders A/c 7,70,000
31/3/19 (Being amount due to debenture holders)
31/3/19 Debenture holders A/c Dr 7,70,000
To Bank A/c 7,70,000
(Being debentures redeemed)
31/3/19 Debenture Redemption Reserve A/c Dr 1,75,000
To General Reserve A/c 1,75,000
(Being proportionate DRR transferred to
General Reserve)

[12]
Question 6
Anita and Tony, each doing business as sole proprietors, started a partnership on 1stApril,
2018. Anita brought in Plant and Machinery valued at ₹5,00,000 whereas Tony brought in
furniture costing ₹50,000 and ₹7,00,000 in cash.
Since the business needed more funds, Tony gave a loan of ₹2,00,000 to the firm on 30th
June, 2018.
Their partnership deed provided for:
(a) Interest on capital to be allowed @10% per annum.
(b) Interest on drawings to be charged @ 6% per annum.
(c) Anita to be given a commission of 4% on the corrected net profits before charging
commission.

15
 (d) Tony to be given a salary of ₹12,000 per annum.
Tony withdrew ₹5,000 at the end of every month and Anita withdrew ₹30,000 on
1st August,2018.
The net profit of the firm, for the year 2018-19, after debiting Tony’s salary of ₹12,000 per
annum but before considering any interest due to and due from the partners, was ₹4,00,000.
You are required to prepare for the year 2018-19:

(i) Profit and Loss Appropriation Account.

(ii) Partners’ Capital Accounts.

Comments of Examiners Suggestions for Teachers

(i) Majority of the candidates were able to prepare the  Spend sufficient time on the topic
P/L Appropriation A/c correctly. However, common 'Fundamentals of Partnership' as
errors made by some candidates were: this is the basis of the entire unit of
(a) Not mentioning the period for which the account partnership.
was being prepared.  Give sufficient practice in
(b) Interchanging the interest on drawings of the calculating interest on drawings
partners.  Advise students to read the
(c) Writing 'By Net Profit' instead of 'By Profit and question carefully to see whether
Loss Account' while posting the trading profits in they are preparing the accounts of
the P/L Appropriation A/c. a newly formed business or an
ongoing one.
 Explain the treatment of items
(ii) Most of the candidates made errors in the Partners'
which are charge against profits
Capital A/c. They did not realise that they were
and which are appropriation of
preparing the accounts of a newly started business
profit. This can best be done
wherein the partners were investing capital in cash
through adjusting and closing
and kind. They considered the capital balances as that
entries.
of an ongoing business and thus brought down the
 Explain the transfer of net profit
capital balances of the partners as if they were the
from P/L A/c to P/L Appropriation
opening ones. Many candidates also interchanged the
A/c and profits to the partners'
drawings of the two partners.
capital accounts.

16
 MARKING SCHEME
Question 6
(i) P/L Appropriation A/c
For the year ending 31st March, 2019/ for the year 2018-19
Particulars Amount (₹) Particulars Amount (₹)
To Interest on Capital A/c By P/L A/c 4,00,000
Anita’s Capital 50,000 Add Tony’s salary 12,000
Tony’s Capital 75,000 1,25,000 Less IOL (9,000) 4,03,000

To Salary A/c By Interest on Drawings

Tony’s Capital 12,000 Anita’s Capital 1,200
2,850
Tony’s Capital 1,650
To Commission
Anita’s Capital 16,120

To Anita’s Capital (profit) 1,26,365

To Tony’s Capital (profit) 1,26,365

4,05,850 4,05,850

(ii) Partners’ Capital Accounts

Particulars Anita Tony Particulars Anita Tony
To Drawings 30,000 60,000 By P/M 5,00,000
To IOD 1,200 1,650 By Furniture 50,000
To Balance c/d 6,61,285 9,01,715 By Cash/Bank 7,00,000
By IOC 50,000 75,000
By Commission 16,120
By Salary 12,000
By P/L App A/c 1,26,365 1,26,365
6,92,485 9,63,635 6,92,485 9,63,635

17
 [12]
Question 7
Smita and Punita are partners in a firm sharing profits and losses in the ratio of 3:2. Their
Balance Sheet as at 31st March, 2019, is as follows:
Balance Sheet of Smita and Punita
As at 31st March, 2019
Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors 14,000 Cash in hand 30,000

Bank Loan 6,000 Sundry Debtors 22,000

General Reserve 10,000 Less Provision for doubtful 20,000

debts (2000)
Capital Accounts: Furniture 10,000

Smita 30,000 Stock 40,000

Punita 40,000 70,000

1,00,000 1,00,000

On 1st April, 2019, Mita is admitted as a new partner on the following terms:
(a) The new profit sharing ratio of Smita, Punita and Mita to be 5:3:2.
(b) Provision for doubtful debts to be raised to 10% of the debtors.
(c) Punita to take over the firm’s investments (not recorded in the books) at ₹3,000.
(d) Goodwill of the firm to be valued at ₹50,000. Mita to bring in cash for her share of
goodwill.
(e) 50% of the goodwill to be withdrawn by the old partners.
(f) Mita to pay off the Bank Loan on behalf of the firm. The amount due to her by the firm,
to be considered as part of her capital contribution.
(g) Mita to bring in the balance of her capital in cash, so as to make her capital equal to 1/5th
of the total capital of the firm.
You are required to:

(i) Pass journal entries at the time of Mita’s admission.

(ii) Prepare the Balance Sheet of the reconstituted firm.

18
Comments of Examiners Suggestions for Teachers
(i) Many candidates were able to pass the correct journal  Give sufficient practice to the
entries. However, common errors made by some students regarding revaluation of
candidates were: assets and liabilities.
(a) Creating the provision for doubtful debts equal  Sufficient practice needs to be given
to 10% of the debtors and not with only the in calculating the gaining ratio.
amount required to raise the existing provision  Ensure that right from Class XI,
to 10% of the debtors. students are made to understand the
basic accounting concepts, for
(b) Paying off the Bank Loan through the
example, when a liability decreases
Revaluation A/c.
it has to be debited while an asset is
(c) Not passing the entry for revaluation of
credited when it decreases.
investment (unrecorded) and taken over by a
 Ensure that whenever a Balance
partner.
Sheet is prepared by the students,
(d) Not being able to calculate the gaining ratio and they must mention the date of its
so incorrect amounts were credited to the old preparation.
partners' capital accounts as compensation for  Insist on the formation of a proper
self- generated goodwill. journal format with the heading
(ii) Almost all the candidates were able to prepare the 'Journal' and all journal entries to
Balance Sheet with its correct date - Balance Sheet be accompanied with narrations.
of... As at 1st April, 2019.

MARKING SCHEME
Question 7
(i) Smita Punita Mita
OR 3 : 2
NR 5 : 3 : 2
SR 1 : 1

Journal
Date Particulars L.F Debit(₹) Credit(₹)
Cash / Bank A/c Dr 25,200
Bank Loan A/c Dr 6,000
To Mita’s Capital A/c 21,200
To Premium for goodwill A/c 10,000
(Being cash brought in for capital
and goodwill)
Premium for goodwill A/c Dr 10,000
To Smita’s Capital A/c 5,000

19
 To Punita’s Capital A/c 5,000
(Being old partners compensated for
goodwill in Sacrificing Ratio)
Smita’s Capital A/c Dr 2,500
Punita’s Capital A/c Dr 2,500
To Cash/ Bank A/c 5,000
(Being 50% of goodwill credited to
old partners withdrawn by them)
General Reserve A/c Dr 10,000
To Smita’s Capital A/c 6,000
To Punita’s Capital A/c 4,000
(Being General Reserve distributed
in the Old Ratio)
Investments A/c Dr 3,000
To Revaluation A/c 3,000
(Being gain on revaluation of
investments)
Revaluation A/c Dr 200
To Provision for Doubtful debts 200
A/c
(Being increase in prov. For doubtful
debts)
Revaluation A/c Dr 2,800
To Smita’s Capital A/c 1,680
To Punita’s Capital A/c 1,120
(Being net gain on revaluation of
assets and liabilities transferred to
old partners in Old Ratio)
Punita’s Capital A/c Dr 3,000
To Investments A/c 3,000
(Being investments taken over by
Punita)
In lieu of entry 1
Cash / Bank A/c Dr 25,200

20
 To Mita’s Capital A/c 15,200
To Premium for goodwill A/c 10,000
(Being balance of capital and GW
brought in by the new partner)
Bank Loan A/c Dr 6,000
To Mita’s Capital A/c 6,000
(Being bank loan paid by Mita)

(ii) Balance Sheet of Smita, Punita and Mita

As at 1st April, 2019
Liabilities Amount Assets Amount (₹)
(₹)
Capital Accounts Cash in hand 50,200
Smita 40,180 Sundry Debtors 22,000
Punita 44,620 Less prov for d/d (2,200) 19,800
Mita 21,200 1,06,000 Stock 40,000
Sundry Creditors 14,000 Furniture 10,000
1,20,000 1,20,000
Working Notes:
Partners’ Capital Accounts
Particulars Smita Punita Mita Particulars Smita Punita Mita
To Cash 2,500 2,500 By Bal b/d 30,000 40,000
To Invest 3,000 By Gen Res 6,000 4,000
To Bal c/d 40,180 44,620 21,200 By Cash 15,2
By Pr for 5,000 5,000
GW
By Reval 1,680 1,120
By Bank 6,00
Loan
42,680 50,120 21,200 42,680 50,120 21,2
Calculation of Mita’s Capital:
Final Capital of the firm= (40,180 + 44,620) × 5/4 = ₹1,06,000
Mita’s Capital = 1/5 × 1,06,000 = ₹21,200

21
Question 8
(A) Xylo Ltd. was formed on 1st April, 2017, with an authorized capital of ₹12,00,000 [8]
divided into Equity Shares of ₹ 10 each. It issued a prospectus inviting applications
for 30,000 shares to be issued at par. The issue was fully subscribed and the amount
due on the shares was received by the company.
On 1st April, 2018, the company issued another 60,000 shares at a premium of ₹2
per share to be received with allotment. Applications for 55,000 shares were
received which were duly allotted.
All the amounts due on these shares were received except the final call of ₹2 per
share on 1,000 shares.
On 1st October, 2018, the company also issued 2,000, 6% debentures of ₹100 each
at par, to be redeemed at par in five equal annual instalments beginning from 1st
October, 2019. The entire issue price of these debentures was received by the
company with application.
Half yearly interest on the debentures of ₹6,000 was paid by the company to the
debenture holders on 31st March, 2019.
You are required to show the relevant items under:
(i) Equity and Liabilities in the Balance Sheet of the Company as at
31st March, 2019 (prepared as per Schedule III of the Companies Act,
2013).
(ii) Notes to Accounts.
(B) Under which heads and sub-heads will the following items appear in the Balance [4]
Sheet of a company as per Schedule III of the Companies Act, 2013:
(i)
Trade Debtors
(ii) Marketable Securities
(iii) Finished Goods
(iv) Patents

Comments of Examiners Suggestions for Teachers

(A) Majority of the candidates, who attempted this  Explain each and every item of the
question, were able solve it correctly. However, Balance Sheet of a company which
some candidates: is included in the scope of the
(i) Did not show 1/5th of the Debentures as an syllabus. The explanation must
'Other Current Liability - Current maturities of include the reason for the item being
long term debt'. They took the entire amount under a particular head and sub-
of Debentures as a Non-Current Liability. head.
(ii) Added the interest paid on debentures to the
amount of debentures instead of showing it

22
 under the heading Shareholders' Funds, sub-  Teach the students how to present
heading Reserves and Surplus. Authorised, Issued and Subscribed
Capital in the Notes to Accounts.
(B) Almost all the candidates who attempted this  Explain heads and sub-heads and
question were able to write the items under the the items under each sub-head in
proper heads and sub-heads. However, some Balance Sheet of a Company
candidates classified ‘finished goods’ as ‘non- prepared as per Schedule III of the
current assets’ and ‘marketable securities’ as Companies Act,2013, and conduct
‘cash and cash equivalents’. For patents, a few quizzes and short tests on this
candidates wrote 'Intangible Assets' under the chapter.
sub-head without mentioning 'Fixed Assets'.

MARKING SCHEME
Question 8
(A) (i) Balance Sheets of Xylo Ltd.
As at 31st March,2019
Particulars Note 31.3.2019 (₹)
No.
I EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 1 8,48,000
(b) Reserves and Surplus 2 1,04,000
2. Non- Current Liabilities
Long Term Borrowing 3 1,60,000
3. Current Liabilities
Other Current Liabilities 4 40,000

(ii) Notes to Accounts:

Particulars ₹
1. Share Capital
Authorised Capital
1,20,000 Equity Shares @ ₹10 each 12,00,000
Issued Capital
90,000 Equity Shares @ ₹10 each 9,00,000
Subscribed Capital
Subscribed and fully paid

23
 84,000 Equity Shares @ ₹10 each
Subscribed but not fully paid 8,40,000
1,000 Equity Shares @ ₹ 10 each 10,000
Less Calls-in-arrears (2,000) 8,000
8,48,000

2. Reserves and Surplus 1,10,000

Securities Premium Reserve (6,000)
Balance of Statement of P/L (interest on debentures)
1,04,000

1,60,000
3. Long Term Borrowing
1,600, 6% Debentures of ₹ 100 each

4. Other Current Liabilities

40,000
Current Maturity of Long-Term Debt-
400, 6% Debentures of ₹100 each

(B) Item Head Sub-head

(i) Trade Debtors Current Assets Trade Receivables
(ii) Marketable Securities Current Assets Current Investments
(iii) Finished Goods Current Assets Inventory
(iv) Patents Non-Current Assets Fixed Assets (intangible)

SECTION B (20 Marks)

Answer any two questions

Question 9
(A) Assuming that the current ratio of a company is 0·7: 1, mention whether this ratio [2]
would increase, decrease or not change after the following transactions:
(i) Payment of ₹ 15,000 made to a creditor.
(ii) Purchase of inventory worth ₹ 1,00,000 on credit.

24
(B) Prepare a Comparative Statement of Profit and Loss of Cosmos Ltd. from the [6]
following information:
Particulars 31.03.2019 31.03.2018

Revenue from Operations ₹ 20,00,000 ₹ 10,00,000

Purchases of stock-in-trade ₹ 12,00,000 ₹ 6,00,000

Charge in Inventories of 25% of purchases of 20% of purchases of

Stock-in-trade stock-in trade stock-in trade
Other Expenses ₹ 1,00,000 ₹ 80,000
Tax Rate 40% 40%

(C) From the following extract of the Balance Sheet of Regal Ltd., taking into [2]
consideration the additional information, you are required to calculate the
amounts of the following items to be shown in the company’s Cash Flow
Statement for the year 2018-19:
(i) Fixed asset purchased.
(ii) Fixed asset sold.
(iii) Profit/Loss on sale of fixed asset.
(iv) Depreciation charged on fixed assets.

Particulars 31.03.2019 (₹) 31.03.2018 (₹)

Fixed Asset 6,00,000 4,90,000

Additional information:
(i)The provision for depreciation on fixed assets stood at ₹1,40,000 on
31st March, 2018 and ₹1,80,000 on 31st March, 2019.
(ii)During the year 2018-19, a fixed asset costing ₹60,000 (book value
₹ 30,000) was sold for ₹20,000.

Comments of Examiners Suggestions for Teachers

(A) Almost all the candidates who attempted this  Clearly explain formulas of ratios
question were able to write the correct answer of and the effect on a ratio when there
both the parts. is an increase or decrease in any of
its components.
(B) This part was well answered by almost all the  Ensure that while preparing a
candidates. However, the heading written by comparative statement, the students
some candidates was incomplete as it did not
include the date of the previous year with which
25
 the current year figures were being compared. A always mention the dates/ years of
few candidates prepared a Common Size both the years under consideration.
Statement of P/L.  Lay stress in Class XI, on the
Methods of Recording Depreciation
(C) Almost all the candidates who attempted this especially when Provision for
question were able to write the sale price of the Depreciation Account is opened, as
asset and calculate the correct loss incurred on the basics of this topic is required in
sale. Many students were able to calculate the Class XII while preparing Cash
depreciation charged during the year and the Flow Statement.
purchase price of the asset. However, some
candidates considered the accumulated
depreciation on the asset sold as the depreciation
charged during the year and hence got an incorrect
value of the asset purchased.

MARKING SCHEME
Question 9
(A) (i) Decrease

(ii) Increase

(B) Comparative Statement of Profit & Loss

For the years ending 31st March, 2018 and 31st March,2019
Particulars 31.3.2019 31.3.2018 Absolute % change
(₹) (₹) Change

Revenue from Operations 20,00,000 10,00,000 10,00,000 100

Expenses
Purchase of Stock-in 12,00,000 6,00,000 6,00,000 100
Trade
Changes of Inventories 3,00,000 1,20,000 1,80,000 150
Other Expenses 1,00,000 80,000 20,000 25
Total Expenses 16,00,000 8,00,000 8,00,000 100
Profit before Tax 4,00,000 2,00,000 2,00,000 100
Less Tax (1,60,000) (80,000) (80,000) 100
Profit after Tax 2,40,000 1,20,000 1,20,000 100

26
(C) Fixed Asset A/c
Particulars Amount (₹) Particulars Amount (₹)
To Balance b/d (NV) 4,90,000 By Depreciation 70,000
To Cash 2,10,000 By Cash 20,000
By Loss on sale 10,000
By Balance c/d 6,00,000
7,00,000 7,00,000
Accumulated Depreciation A/c
Particulars Amount (₹) Particulars Amount (₹)
To Fixed Asset A/c 30,000 By Balance b/d 1,40,000
To Balance c/d 1,80,000 By Statement of P/L/ dep 70,000
2,10,000 2,10,000
Or
Fixed Asset A/c
Particulars Amount (₹) Particulars Amount (₹)
To Balance b/d (GV) 6,30,000 By Acc Depreciation 30,000
To Cash 2,10,000 By Cash 20,000
By Loss on sale 10,000
By Balance c/d 7,80,000
8,40,000 8,40,000
Accumulated Depreciation A/c
Particulars Amount (₹) Particulars Amount (₹)
To Fixed Asset A/c 30,000 By Balance b/d 1,40,000
To Balance c/d 1,80,000 By Statement of P/L/ dep 70,000
2,10,000 2,10,000

Or
(₹)
(i) Fixed Asset purchased 2,10,000
(ii) Fixed Asset sold 20,000
(iii) Loss on sale of fixed asset 10,000
(iv) Depreciation charged on fixed assets 70,000

27
 [10]
Question 10
You are required to prepare a Cash-Flow Statement (as per AS-3) for the year 2018-
19 from the following Balance Sheets.
Balance Sheets of Hillock Ltd.
As at 31st March, 2018 and 31st March 2019
Particulars Note 31.3.2019 31.3.2018
No. (₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds:
(a) Equity Share Capital 1 2,50,000 2,00,000
(b) Reserves and Surplus 2 90,000 50,000
2. Current Liabilities: --
(a) Short-term Borrowings 10,000
(Bank overdraft)
(b) Trade Payables 20,000 15,000

(c) Other Current Liabilities 5,000 5,000

(d) Short-term Provisions 25,000 20,000

(Provision for Tax)
Total 3,90,000 3,00,000

II. ASSETS
1. Non-Current Assets:
Fixed Assets 2,55,000 2,35,000
Tangible
2. Current Assets:
(a) Current Investments 30,000 --

(b) Inventories 15,000 25,000

(c) Trade Receivables 40,000 10,000

(d) Cash and Bank Balances 50,000 30,000

Total 3,90,000 3,00,000

28
 Notes to Accounts:
Particulars 31.3.2019 31.3.2018
(₹) (₹)
1. Reserves and Surplus
Balance in Statement of Profit and Loss 70,000 40,000
Securities Premium Reserve 20,000 10,000
90,000 50,000
2. Other Current Liabilities
Outstanding Expenses 1,000 5,000
Unclaimed Dividend 4,000 --
5,000 5,000
3. Contingent Liability
Proposed Dividend 5,000 10,000
Additional Information:
During the year 2018-19:
(i) A tangible fixed asset costing ₹ 50,000 was purchased.
(ii) Tax paid ₹ 15,000.
(iii) Interest of ₹ 1,000 was paid on the bank overdraft.

Comments of Examiners Suggestions for Teachers

A large number of the candidates were able to do this  Ensure that the students have
question correctly. However, some candidates, despite clearly understood the preparation
the fact that there was no information of sale of any Plant of the Asset A/c at its Gross Value
along with the Accumulated
& Machinery, considered the decrease in the amount of Depreciation A/c and the Asset A/c
Plant & Machinery as sale of the asset instead of as at its Net Value.
depreciation charged during the year on it. A few  Explain to the students that any
candidates did not reduce the outflow of dividend paid amount of unclaimed dividend /
by the amount of unclaimed dividend but considered dividend payable would result in
unclaimed dividend as an item of change in the working less amount of dividend paid (to the
capital. A few candidates also did not mention the period extent of dividend payable).
 Ensure that the students show the
for which the Cash Flow Statement was being prepared. calculation of 'Net Profit before
Tax' as a working note and not in
the main body of the Cash Flow
Statement.
 Clarify to the students that Bank
Overdraft is a financing activity.
 Insist that every Cash Flow
Statement prepared by the students
must have the period for which it is
being prepared.

29
 MARKING SCHEME
Question 10
Working Note: 1 Plant & Machinery A/c
Particulars Amount (₹) Particulars Amount (₹)
To Balance b/d 2,35,000 By Depreciation 30,000
To Cash 50,000 By Balance c/d 2,55,000
2,85,000 2,85,000
Working Note: 2 Provision for Tax A/c
Particulars Amount (₹) Particulars Amount (₹)
To Cash A/c 15,000 By Balance b/d 20,000
To Balance c/d 25,000 By Statement of P/L 20,000
40,000 40,000
Working Note: 3 (₹)
Net Profit for the year 30,000
Dividend declared 10,000
Provision for Tax 20,000
Net Profit before Tax 60,000
Cash Flow Statement of Global Ltd.
For the year ending 31st March, 2019/ For the year 2018-19
Particulars ₹ ₹ ₹
I. Cash from Operating Activities
NP before Tax (WN 3) 60,000
Add non op / non cash exp
Depreciation on Plant & Machinery 30,000
Interest on Bank overdraft 1,000
Net Op Profit before WC changes 91,000
Add Trade Payables 5,000
Less Trade Receivables (30,000)
Less Outstanding expenses (4,000)
Less Current Investments (30,000)
Add Inventories 10,000 (49,000)
Cash from Operating Activities before Tax pd 42,000
Less Tax paid (15,000)
Cash flow from Operating Activities 27,000
II. Cash from Investing Activities

30
 Purchase of Plant & Machinery (50,000)
Cash used in Investing Activities (50,000)
III. Cash from Financing Activities
Issue of Share Capital 50,000
Bank overdraft repaid (10,000)
Interest on bank overdraft paid (1,000)
Dividend paid (6,000)
Securities Premium Reserve 10,000
Cash Flow from Financing Activities 43,000
Net increase in Cash as per I, II and III 20,000
Add Op Cash and Cash Equivalents
Cash at Bank 30,000
Closing Cash and Cash Equivalents
Cash at Bank 50,000
50,000 50,000

Question 11
(A) State the objective of calculating Liquidity Ratios. [2]

(B) From the following information, calculate Earnings per share (up to two decimal [2]
places):
Particulars
10% Preference Share Capital ₹ 6,00,000
Equity Share Capital (3,00,000 shares of ₹ 10 each) ₹ 30,00,000
Profit before Tax ₹ 15,00,000
Tax Rate 30%

(C) From the following information, calculate the following ratios (up to two decimal [6]
places):

(i) Debt to Total Assets Ratio

(ii) Proprietary Ratio

(iii) Inventory Turnover Ratio

31
 Particulars (₹)
Fixed Assets 14,00,000
Current Assets (including inventory of ₹ 2,00,000) 10,00,000
Shareholders’ Funds 14,40,000
Non- Current Liabilities (10% Long-term Bank Loan) 8,00,000
Current Liabilities 5,00,000
Revenue from Operations 15,00,000
Gross Profit 6,00,000

Comments of Examiners Suggestions for Teachers

(A) Majority of the candidates were able to write the  Clearly explain the objective
answer to this question satisfactorily. However, a behind preparing the liquidity,
few candidates simply wrote the formula of solvency, turnover and
Current Ratio/ Liquid Ratio. profitability ratios.
 Explain that EPS is calculated only
(B) A large number of candidates were able to
for equity shareholders.
calculate the Earning per Share. But some
 Teach the Balance Sheet Ratios
candidates lost marks in the formula. They wrote
through the accounting equation
‘Net Profit after Tax and Dividend’ or ‘Preference
A= L+C or through the equation=
Shares’ instead of ‘Preference Dividend’. A few
Shareholders' Funds + NCL + CL
candidates, instead of considering Number of
= NCA + CA.
Equity Shares in the denominator wrote Number of
 Teach the formulae of the ratios as
Shares.
per the scope of the syllabus.
(C) Many candidates were unable to calculate the Debt
to Total Assets Ratio and Proprietary Ratio as they
took the total of Fixed Assets and Current Assets
to be Total Assets. Almost all candidates were able
to calculate the Inventory Turnover Ratio.

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 MARKING SCHEME
Question 11
(A) Liquidity means the capacity or ability of a firm to meet its short-term liabilities as and
when they become due.
These ratios show the short-term solvency of the business / capacity or ability of a firm to
meet its short-term liabilities/ Current Liabilities as and when they become due.
(B) Net Profit after Tax and Preference Dividend
Earnings per share =
No. of Equity Shares

Net profit after tax and preference dividend

= 15,00,000 – 4,50,000 – 60,000= 9,90,000
9,90,000
EPS =
3,00,000

= ₹ 3·30
(C) (i) Long Term Debt
Debt to Total Asset Ratio =
Total Assets

Total Assets = 14,40,000 +5,00,000 + 8,00,000 = 27,40,000

8,00,000
=
27,40,000
= 0·29:1

(ii) Shareholders Funds/ Equity

Proprietary Ratio =
Total Assets
14,40,000
=
27,40,000
= 0·53:1
(iii) Cost of Revenue from Operations
Inventory Turnover Ratio =
Average Inventory

9,00,000
=
2,00,000

= 4·5 times

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 SECTION C (20 Marks)
Answer any two questions.

Question 12
(a) You enter 50+16 in a cell. The worksheet does not display 66 in the cell, instead it [2]
shows 50 + 16. What is the reason for this?
(b) Explain the meaning of the following functions: [2]
(i) Count(C15:30)
(ii) Max(A4:A10)
(c) What is Auto filling? [2]
(d) What does the error # VALUE mean? [2]
(e) Give the full form of SQL. [2]

Comments of Examiners Suggestions for Teachers

Very few candidates attempted this question but those who  Explain the theory of the
did attempt it were able to write the correct answer. Worksheet in detail.

MARKING SCHEME
Question 12
(a) Because in MS Excel, formulae start with equal to sign (=).
(b) (i) Function will count the number of cells from (C15:30) that contains numbers.
(ii) Function will give the largest value in the range of A4 to A10.
(c) Auto filling occurs when Excel automatically fills selected cells with data. Excel has several
pre-set series, for example, months of the year and days of the week that are used with the
fill handle.
If January is typed in a cell and the fill handle is used to select adjacent cells, Excel will
those cells with the next names in the series … February, March, April and so on.
(Any other example)
(d) It means wrong type of data in a formula or function, such as trying to add numbers and text
(any other example)
(e) Structured Query Language

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Question 13
The spread sheet below shows the sales of Nippon Ltd. made by four salesmen in the four
quarters of the financial year 2018-19:
A B C D E F G H
1 Sales in ₹
Salesman Qtr 1 Qtr Qtr 3 Qtr 4 Total Commission Commission
2 2 Sales
No. @8% of sales @5% of sales
3 S1 7000 ? 8500 9500
4 S2 6000 7000 8400 9200
5 S3 7200 8000 9300 9000
6 S4 9100 9000 9600 8700
7 Total

Answer the following questions based on the above spreadsheet:

(a) It is the policy of the company to sell its goods at a profit of 25% on cost.
Write the formula to calculate:
(i) The profit made on the goods sold by Salesman No. S2 in Qtr 3. [2]
(ii) The cost of goods sold by Salesman No. S3 in Qtr 4. [2]
(iii) The total cost of the goods sold by the company in cell F7. [2]
(b) Calculate the price at which Salesman No. S1 would have made sales in Qtr 2 if the [2]
profit made on the sales was ₹ 1,500.
(c) Write an expression to show the effect on the profits, if the rate of commission was [2]
reduced from 8% to 5% of the sales.

Comments of Examiners Suggestions for Teachers

Very few candidates attempted this question but those  Ensure that from Class XI itself,
who did attempt it were unable write to write the correct students are able to calculate
formula as they took the profit on sales instead of on cost profit when given as % of cost /
as given in the question. sales.
 Give more practice to students in
attempting questions based on
application of spreadsheets.

35
 MARKING SCHEME
Question 13
(a) (i) = D4*20%
Or
= D4*0·20
Or
= (D4 - D4*80%)
Or
= (D4 – D4*0·80)
Or
= (D4 *0·25/125)
8400 - 6720 = ₹ 1680

(ii) = E5 *80%
Or
= E5 *0·80
Or
= (E5 – E5*20%)
Or
= (E5 – E5*0·20)
Or
= (E5/125) *100
9000-1800= ₹ 7200

(iii) = Sum (B3:E6) *80%

Or
= Sum (B3:E6) *0·80
Or
= (F3 + F4 + F5 + F6) *80%
Or
= (F3 + F4 + F5 + F6) * 0·80
Or
= (F3 + F4 + F5 + F6)/125 * 100

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 (b) 1,500 * 125/25 = ₹ 7,500

(c) = (G7- H7)

Or
= F7*0·08 - F7 *0·05
Or
= F7*8% - F7 *5%

Question 14
(a) What is meant by the terms Back-end and Front-end as used in data applications? [4]
(b) Define: [2]
(i) Table
(ii) Field
(c) Name any two business applications of DBMS [2]
(d) Give any two features of a primary key. [2]

Comments of Examiners Suggestions for Teachers

Not many candidates attempted this question and those  Explain Database Management
who did attempt it were unable to write the correct system in detail to students.
answers.

MARKING SCHEME
Question 14
(a) Back-end: It is an application where data is stored. For example: MS Access, Oracle, Excel
Front-end: It is an interface through which data is accessed from the back-end. For example:
Visual Basic, Java
(b) (i) Table: An object of database where records of an entity is stored.
(ii) Field: The column names to store same type of data.
(c) • Inventory Management system
• Bank Reconciliation Statement
• Payroll Management System
• Employee Database Management System
• Flight Reservation System
(any two)

37
 (d) • Uniquely identifies a record in a tableannot accept null values
• By default, primary key is clustered index and data in the database table is physically
organized in the sequence of clustered index.
• There can be only one Primary key in a table
(any two)

GENERAL COMMENTS

• Valuation of Goodwill- calculation of Capital Employed

• Calculating Hidden Goodwill at the time of retirement of a partner.
• Preparation of Calls-in-arrears A/c.
Topics found • Calculation of the book value of the assets at the time of dissolution of the
difficult by partnership firm and calculating the amount to be paid to the creditors.
• Posting of Capital brought in kind in the Partners' Capital Accounts.
candidates • Passing journal entries for goodwill compensation being withdrawn by the old
partners and a partner discharging a firm's liability.
• Redemption of Debentures.
• Calculating depreciation charged on assets while preparing Cash Flow
Statement.
• Determining the correct amount of Total Assets in order to calculate the ratios.

Concepts in • Circumstances leading to dissolution of partnership and the status of the firm
which after dissolution of partnership.
candidates got • Depreciation charged on assets while preparing Cash Flow Statement.
confused • Posting in Partners' Capital A/c when capital had been introduced in kind.

• Not to neglect the Class XI syllabus.

• Ensure that the accounting concepts are clear. This will help in answering the
theory questions.
• Understand the concept before attempting any question.
Suggestions for • Do not resort to selective study. The entire syllabus must be done in totality.
Students • The scope of the syllabus should be strictly adhered to.
• Do not write short forms in the formulae of the ratios.
• Always practice sums with proper formats drawn and correct dates/ years.
• All journal entries must be accompanied with narrations.
• Practice solving past years' question papers.
• Solve the sample papers released by the Council.

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