CBSE Class 12 Accountancy Question Paper 2024 (Set 1- 67/1/1) Available- Download Solution Pdf with Answer Key

Solution: Step 1: Understand the initial profit-sharing ratio and Damini's share.
The initial profit-sharing ratio of Atul, Beena, and Sita is 8 : 7 : 5, and Damini is admitted with a ¹⁄₅ share in the profits. Damini's share is acquired entirely from Atul.

Step 2: Calculate Atul's new share after giving Damini ¹⁄₅.
Atul's original share is ⁸⁄₂₀. Damini's share, ¹⁄₅ = ⁴⁄₂₀ , is subtracted entirely from Atul's share.
Thus, Atul's new share is:
⁸⁄₂₀ - ⁴⁄₂₀ = ⁴⁄₂₀

Step 3: Beena and Sita's shares remain unchanged.
Beena's share is ⁷⁄₂₀, and Sita's share is ⁵⁄₂₀ . These remain the same as Damini's share only affects Atul's share.

Step 4: Finalize the new profit-sharing ratio.
The new profit-sharing ratio of Atul, Beena, Sita, and Damini is:
4 : 7 : 5 : 4.

Solution: Step 1: Determine new shares: Rushil's new share = ⁴⁄₇ - ²⁄₇ = ²⁄₇.
Abheer's new share = ³⁄₇ - ¹⁄₇ = ²⁄₇. Sunil's share = ³⁄₇.

Step 2: Combine shares and simplify:
Rushil : Abheer : Sunil = ²⁄₇ : ²⁄₇ : ³⁄₇ = 26 : 20 : 3 = 2 : 2 : 3.

Solution: Step 1: Calculate the profit share of each partner.
The total profit of the firm is ₹2,00,000. The profit-sharing ratio among Abhay, Boris, and Chetan is 5 : 3 : 2. Calculating the profit share:
Abhay's share = ⁵⁄₁₀ × 2,00,000 = ₹1,00,000.
Boris's share = ³⁄₁₀ × 2,00,000 = ₹60,000.
Chetan's share = ²⁄₁₀ × 2,00,000 = ₹40,000.

Step 2: Identify the deficiency in Boris's profit.
Boris is guaranteed a profit of ₹95,000, but his actual share is only ₹60,000. The deficiency is:
Deficiency = ₹95,000 – ₹60,000 = ₹35,000.

Solution: Step 1: Total creditors' amount = ₹60,000.
Step 2: Adjust amount against furniture = ₹45,000.
Step 3: Balance payable = ₹60,000 - ₹45,000 = ₹15,000.

Solution: Step 1: Goodwill premium is distributed to old partners in their sacrificing ratio.
Step 2: Calculate the sacrificing ratio:
Sacrificing ratio = Old ratio - New ratio = 1 : 1 : 1.

Solution: Step 1: Determine the total capital of the firm.
The total capital of Alex, Benn, and Cole after adjustments is:
Total Capital = Alex's Capital + Benn's Capital + Cole's Capital.
Substituting the values:
Total Capital = ₹1,20,000 + ₹80,000 + ₹1,00,000 = ₹3,00,000.

Step 2: Calculate Dona's proportionate capital.
Dona is admitted with a ¹⁄₅ share in the future profits. The proportionate capital for Dona is calculated as:
Dona's Capital = ^{Dona's Share}⁄_{Remaining Partners' Share} × Total Capital.
Dona's share is ¹⁄₅ , and the remaining partners' share is 1 - ¹⁄₅ = ⁴⁄₅. Substituting the values:
Dona's Capital = ¹⁄₅ × ⁵⁄₄ × 3,00,000 = ¹⁄₄ × 3,00,000 = ₹75,000.

Step 3: Finalize Dona's capital contribution.
Dona's proportionate capital to be brought into the firm is ₹75,000.

Solution: Step 1: Role of partners: According to the Partnership Act, each partner acts as both a principal and an agent.
Step 2: Explanation of Reason (R): The Partnership Act defines that the business can be conducted collectively by all partners or by one partner acting on behalf of the rest.
Step 3: Conclusion: Reason (R) accurately explains Assertion (A), making both the assertion and the reason correct.

Solution: Step 1: Determine the interest on capital as per the partnership deed.
The partnership deed provides for interest on capital at 10% per annum. For Abha:
Interest on Abha's capital = ₹5,00,000 × ¹⁰⁄₁₀₀ = ₹50,000.

Step 2: Check the adequacy of profits to provide full interest on capital.
The firm's total profit for the year is ₹90,000. The total interest on capital for both partners is:
Interest on Abha's capital + Interest on Babita's capital = ₹50,000 + (₹10,00,000 × ¹⁰⁄₁₀₀) = ₹50,000 + ₹1,00,000
Since the available profit (₹90,000) is less than the total interest on capital (₹1,50,000), the interest will be distributed proportionally to their capital balances.

Step 3: Distribute the available profit in proportion to capital balances.
The capital balances of Abha and Babita are ₹5,00,000 and ₹10,00,000, respectively. The ratio of their capitals is:
^{Abha's capital}⁄_{Babita's capital} = ^5,00,000⁄_10,00,000 = 1 : 2.
The available profit of ₹90,000 will be distributed in the ratio 1 : 2:
Abha's share of interest = ¹⁄₃ × 90,000 = ₹30,000.

Step 4: Finalize the interest on capital for Abha.
The amount of interest on capital allowed to Abha is ₹30,000.

Solution: Step 1: Total profit available for the firm.
The firm earned a total profit of ₹90,000 for the year. As per the partnership deed, interest on capital is provided before distributing the remaining profit.

Step 2: Calculate the total interest on capital.
The capital balances of Abha and Babita are ₹5,00,000 and ₹10,00,000, respectively. The interest on capital is calculated at 10% per annum:
Interest on Abha's capital = ₹5,00,000 × ¹⁰⁄₁₀₀= ₹50,000.
Interest on Babita's capital = ₹10,00,000 × ¹⁰⁄₁₀₀ = ₹1,00,000.
The total interest on capital required is:
₹50,000 + ₹1,00,000 = ₹1,50,000.

Step 3: Check if the available profit is sufficient to cover the interest on capital.
The available profit (₹90,000) is less than the required interest on capital (₹1,50,000). Hence, the available profit is distributed proportionally to the partners' capital balances.

Step 4: Distribute the available profit.
The ratio of capital balances is:
^{Abha's capital}⁄_{Babita's capital} = ^5,00,000⁄_10,00,000 = 1 : 2.
The available profit of ₹90,000 is distributed in the ratio 1 : 2:
Abha's share of interest = ¹⁄₃ × 90,000 = ₹30,000.
Babita's share of interest = ²⁄₃ × 90,000 = ₹60,000.

Step 5: Check if Babita's profit share remains.
Babita's interest on capital (₹60,000) is fully covered by the available profit. Since all the available profit has been used to pay the interest on capital, no additional profit remains to be distributed. Therefore, Babita's share in profit is:
Nil.

Solution: Step 1: Understand the pro-rata allotment.
The company invited applications for 50,000 equity shares, but applications were received for 2,50,000 shares. Hence, the pro-rata allotment ratio is:
Pro-rata ratio = ^{Shares Allotted}⁄_{Shares Applied} = ^50,000⁄_2,50,000 = ¹⁄₅
This means for every 5 shares applied, only 1 share was allotted.

Step 2: Calculate the total amount received on applications.
The application money for each share is ₹10 + ₹3 (premium) = ₹13. The total amount received for 2,50,000 shares is:
Total Amount Received = 2,50,000 × 13 = ₹32,50,000.

Step 3: Calculate the amount retained by the company.
Since 50,000 shares were allotted, the company retained application money for only these shares. The total amount retained is:
Amount Retained = 50,000 × 13 = ₹6,50,000.

Step 4: Calculate the amount refunded.
The amount refunded to the applicants is the difference between the total amount received and the amount retained:
Amount Refunded = Total Amount Received – Amount Retained.
Substituting the values:
Amount Refunded = ₹32,50,000 – ₹6,50,000 = ₹26,00,000.

Step 5: Finalize the refund amount.
The amount refunded by the company is ₹26,00,000.

Solution: Step 1: Understand reserve capital: Reserve capital refers to the uncalled portion of the subscribed capital that is earmarked for use only in case of company liquidation.

Step 2: Purpose of reserve capital: It acts as a safeguard for creditors during the winding-up process.

Solution: Step 1: Understand the structure of share capital.
The face value of each share is ₹10, and the amount payable is as follows:
On Application = ₹4, On Allotment = ₹5, On First and Final Call = ₹1.

Step 2: Determine the forfeiture conditions.
1,500 shares were forfeited immediately after the allotment, and the first and final call was not made. At the time of forfeiture, the Share Capital Account is debited by the amount that was credited earlier for the forfeited shares.

Step 3: Calculate the amount credited to Share Capital Account for forfeited shares.
For each forfeited share, the following amounts had been credited to the Share Capital Account:
Application money = ₹4, Allotment money = ₹5.
Thus, the total credited amount per share is:
Total credited per share = ₹4 + ₹5 = ₹9.
For 1,500 forfeited shares, the total amount debited to Share Capital Account is:
Total Debited = 1,500 × 9 = ₹13,500.

Step 4: Finalize the answer.
The Share Capital Account will be debited by ₹13,500 at the time of forfeiture.

Solution: Step 1: Understand irredeemable debentures: These are long-term debentures without a fixed maturity date.

Step 2: Explanation of the reason: Repayment of these debentures is either on winding up or as specified by the company after a long duration.

Solution: Step 1: Definition of calls in advance: Calls in advance refer to the amount received from shareholders before the call is made by the company's directors.

Step 2: Accounting treatment: This amount is considered a liability until the call is made and is credited to the Calls in Advance Account.

Solution: Step 1: Rules for reissue of forfeited shares: As per the Companies Act, forfeited shares can be reissued at a price not less than the unpaid amount.

Step 2: Calculate the unpaid amount: Unpaid amount = ₹100 (face value) - ₹80 (amount received) = ₹20.

Step 3: Determine the minimum price: The minimum price for reissue is ₹20, which is the unpaid amount on the share.

Solution: Step 1: Calculate the total amount forfeited.
The amount paid on forfeited shares was ₹7 per share. For 500 shares, the total amount forfeited is:
Total Forfeited Amount = 500 × 7 = ₹3,500.

Step 2: Calculate the total amount reissued.
The shares were reissued for ₹9 per share. For 500 shares, the total amount reissued is:
Total Reissued Amount = 500 × 9 = ₹4,500.

Step 3: Determine the total nominal value and premium.
The nominal value of each share is ₹10. Since the shares were reissued for ₹9 per share, the loss on reissue per share is:
Loss on Reissue = ₹10 - ₹9 = ₹1 per share.
For 500 shares, the total loss is:
Total Loss = 500 × 1 = ₹500.

Step 4: Calculate the amount transferred to Capital Reserve Account.
The amount forfeited is adjusted against the loss on reissue. The remaining balance is transferred to the Capital Reserve Account:
Capital Reserve = Total Forfeited Amount – Total Loss.
Substituting the values:
Capital Reserve = ₹3,500 - ₹500 = ₹3,000.

Step 5: Finalize the answer.
The amount transferred to the Capital Reserve Account is ₹3,000.

Solution: Step 1: Identify the profit-sharing ratios: Old ratio = 5 : 3 : 2. New ratio = 2 : 3 : 5.

Step 2: Calculate the change in ratios:
Gain or loss = Old Ratio - New Ratio.

Step 3: Adjust General Reserve: Dan's gain = ⁵⁄₁₀ - ²⁄₁₀ = ³⁄₁₀ . Furhan's loss = ²⁄₁₀ - ⁵⁄₁₀ = ^-3⁄₁₀ .

Adjustment amount = General Reserve × Change in Ratio = ₹90,000 × ³⁄₁₀ = ₹27,000.

Solution: Step 1: Determine the old profit-sharing ratio: Old ratio = 3 : 2 : 1.

Step 2: Distribute the debit balance of Profit and Loss Account: - Sia's share = ³⁄₆ × 60,000 = ₹30,000. - Tom's share = ²⁄₆ × 60,000 = ₹20,000. - Vidhi's share = ¹⁄₆ × 60,000 = ₹10,000.

Step 3: Record the adjustment: The journal entry reflects the adjustment of the debit balance against the partners' capital accounts.

Solution: Step 1: Calculate the old ratio of Anju and Divya: - Anju's old share = ³⁄₆ = ¹⁄₂. - Divya's old share = ²⁄₆ = ¹⁄₃.

Step 2: Calculate the new ratio: - Total remaining share = 1 - ¹⁄₆ = ⁵⁄₆. - Anju's new share = ⁵⁄₈ × ⁵⁄₆ = ²⁵⁄₄₈. - Divya's new share = ³⁄₈ × ⁵⁄₆ = ¹⁵⁄₄₈.

Step 3: Find the gaining ratio:
Gain = New Share - Old Share.
- Anju's gain = ²⁵⁄₄₈ - ²⁴⁄₄₈ = ¹⁄₄₈. - Divya's gain = ¹⁵⁄₄₈ - ¹⁶⁄₄₈ = ^-1⁄₄₈.

The gaining ratio between Anju and Divya is 3 : 1.

Solution: Step 1: Calculate Atul's share: Atul's share = ¹⁄₆ (as total ratio = 3 + 2 + 1 = 6).

Step 2: Distribute Atul's share between Mita and Veena:
- Mita's additional share = ¹⁄₅ × ¹⁄₆ = ¹⁄₃₀.
- Veena's additional share = ⁴⁄₅ × ¹⁄₆ = ⁴⁄₃₀ = ²⁄₁₅.

Step 3: Calculate new profit-sharing ratios:
- Mita's new share = ³⁄₆ + ¹⁄₃₀ = ¹⁵⁄₃₀ + ¹⁄₃₀ = ¹⁶⁄₃₀ = ⁸⁄₁₅.
- Veena's new share = ²⁄₆ + ⁴⁄₃₀ = ¹⁰⁄₃₀ + ⁴⁄₃₀ = ¹⁴⁄₃₀ = ⁷⁄₁₅.

The new profit-sharing ratio between Mita and Veena is 8 : 7.

Solution: Step 1: Determine the old profit-sharing ratio:
Old ratio = 3 : 3 : 2. - Aamir's old share = ³⁄₈, Bashir's old share = ³⁄₈, Chirag's old share = ²⁄₈.

Step 2: Determine the new profit-sharing ratio: New ratio = 1 : 2. - Aamir's new share = ¹⁄₃, Bashir's new share = ²⁄₃.

Step 3: Calculate the gaining ratio:
Gaining ratio = New share - Old share.
- Aamir's gain = ¹⁄₃ - ³⁄₈ = ⁸⁄₂₄ - ⁹⁄₂₄= ^-1⁄₂₄ (no gain).
- Bashir's gain = ²⁄₃ - ³⁄₈ = ¹⁶⁄₂₄ - ⁹⁄₂₄ = ⁷⁄₂₄.

Conclusion: The entire adjustment of goodwill will be borne by Bashir in the ratio 1 : 7.
Step 4: Calculate Chirag's share of goodwill: - Total goodwill = ₹5,40,000. - Chirag's share of goodwill = ²⁄₈ × 5,40,000 = ₹1,35,000.

Step 5: Pass the journal entry:

Solution: Step 1: Adjust the profits for 2022–2023: The profit for 2022–2023 is adjusted for the overvaluation of stock:
Adjusted profit for 2022–2023 = ₹33,000 - ₹5,000 = ₹28,000.

Step 2: Calculate the average profit for four years:
Profits (after adjustment): 2019–2020: ₹35,000, 2020–2021: ₹25,000, 2021–2022: ₹32,000, 2022–2023: ₹28,000
Average Profit = ^{Sum of Profits}⁄_{Number of Years}
Average Profit = ^{35,000 + 25,000 + 32,000 + 28,000}⁄₄ = ^1,20,000⁄₄ = ₹30,000.

Step 3: Calculate normal profit: Normal profit is based on the normal rate of return (10 %)
Normal Profit = ₹2,50,000 × ¹⁰⁄₁₀₀ = ₹25,000.

Step 4: Determine the super profit:
Super Profit = Average Profit – Normal Profit.
Super Profit = ₹30,000 – ₹25,000 = ₹5,000.

Step 5: Calculate goodwill: Goodwill is based on three years' purchase of super profit:
Goodwill = Super Profit × 3 = ₹5,000 × 3 = ₹15,000.
Goodwill of the firm = ₹15,000.

Solution: Step 1: Calculate the issue price of debentures: - Face value of each debenture = ₹100. - Discount = 4% of ₹100 = ₹4. - Issue price = ₹100 - ₹4 = ₹96 per debenture.

Step 2: Calculate the number of debentures to be issued: Number of Debentures to be Issued = ^{Purchase Consideration}⁄_{Issue Price} = ^4,80,000⁄₉₆ = 5,000 debentures.

Step 3: Journal entries in the books of Sunrise Ltd.:

Solution: Step 1: Calculate the issue price of debentures:
- Face value of each debenture = ₹100.
- Premium = 20% of ₹100 = ₹20.
- Issue price = ₹100 + ₹20 = ₹120 per debenture.

Step 2: Calculate the number of debentures to be issued:
Number of Debentures to be Issued = ^{Purchase Consideration}⁄_{Issue Price} = ^18,00,000⁄₁₂₀= 15,000 debentures.

Step 3: Journal entries in the books of Grapple Ltd.:

Solution: Step 1: Calculate the correct interest on capital: Correct rate of interest = 5%.
- Mohan: ₹2,00,000 × ⁵⁄₁₀₀ = ₹10,000. - Suhaan: ₹1,00,000 × ⁵⁄₁₀₀ = ₹5,000. - Adit: ₹1,00,000 × ⁵⁄₁₀₀ = ₹5,000.
Total correct interest = ₹10,000 + ₹5,000 + ₹5,000 = ₹20,000.

Step 2: Calculate the credited interest on capital:
Credited rate of interest = 8%. - Mohan: ₹2,00,000 × ⁸⁄₁₀₀ = ₹16,000.
- Suhaan: ₹1,00,000 × ⁸⁄₁₀₀= ₹8,000.
- Adit: ₹1,00,000 × ⁸⁄₁₀₀ = ₹8,000.
Total credited interest = ₹16,000 + ₹8,000 + ₹8,000 = ₹32,000.

Step 3: Calculate the excess interest credited: Excess interest = Total credited interest - Total correct interest:
Excess interest = ₹32,000 - ₹20,000 = ₹12,000.

Step 4: Adjust excess interest through profit-sharing ratio 3 : 2 : 1: - Mohan's share of adjustment = ³⁄₆ × ₹12,000 = ₹6,000. - Suhaan's share of adjustment = ²⁄₆ × ₹12,000 = ₹4,000. - Adit's share of adjustment = ¹⁄₆ × ₹12,000 = ₹2,000.

Step 5: Pass the adjusting journal entry:

Solution:
In the Books of Manoj and Nitin
JOURNAL

Solution:
Calculations:
• Interest on Varsha's Capital:
Interest on Capital = Capital × Rate × ^Months⁄₁₂
Interest on Varsha's Capital = 3,00,000 × 6% × ⁴⁄₁₂ = 6,000

• Goodwill:
Goodwill of the Firm = Average Profits × Years' Purchase
Goodwill = 90,000 × 3 = 2,70,000
Varsha's Share of Goodwill: 2,70,000 × ⁵⁄₁₀= 1,35,000

• Varsha's Share of Profit: Profit till the date of death is calculated proportionally to sales:
Profit Ratio = ^{Sales during the period}⁄_{Total Sales} × Profit for the year
Varsha's Share of Profit = ^15,00,000⁄_60,00,000 × 12,00,000 × ⁵⁄₁₀ = 75,000

Journal Entries:

Solution: Step 1: Calculate Robit's Entitlements - Capital Account Balance: ₹20,000 (as given).
- General Reserve: ¹⁄₅ × ₹60,000 = ₹12,000.
- Interest on Capital:
Interest = ₹20,000 × ¹⁰⁄₁₀₀ × ³⁄₁₂ = ₹500.
- Goodwill Calculation :
Goodwill of the firm = Average Profit × 3 (as given) = ₹14,000 × 3 = ₹42,000.
Robit's Share of Goodwill = ¹⁄₅ × ₹42,000 = ₹8,400.

Step 2: Share of Profits up to the Date of Death:
Profit for 2022–23 = ₹15,000 (last year's profit).
Profit for 3 months = ₹15,000 × ³⁄₁₂= 3,750.
Robit's Share of Profit = ¹⁄₅ × ₹3,750 = ₹750.

Step 3: Total Amount Payable to Robit's Legal Representatives:
Capital Balance: ₹20,000.
Add: Share of General Reserve: ₹12,000.
Add: Interest on Capital: ₹500.
Add: Share of Goodwill: ₹8,400.
Add: Share of Profit: ₹750.

Total = ₹41,650.

Step 4: Prepare Robit's Capital Account:

Solution:

Solution:
Additional Information: Applications for 1,60,000 shares were received. Applications for 10,000 shares were rejected, and pro-rata allotment was made to the remaining applicants. Excess money received on application was returned. Dheeraj, who was allotted 200 shares, failed to pay the first and final call money. His shares were forfeited and reissued at ₹5 per share fully paid-up.

Step 1: Calculation of Total Application Money Received
Total Shares Applied = 1,60,000, Application Money per Share = ₹8.
Total Money Received on Application = 1,60,000 × ₹8 = ₹12,80,000.

Step 2: Refund for Rejected Shares
Shares Rejected = 10,000, Refund Amount = 10,000 × ₹8 = ₹80,000.

Step 3: Pro-rata Allotment and Adjustments
Shares Allotted = 1,00,000, Excess Money Adjusted Toward Call.

Step 4: Forfeiture and Reissue Dheeraj failed to pay the first and final call for 200 shares.
Unpaid Amount (per share) = Face Value + Premium - Amount Already Paid.
Unpaid = (₹10 + ₹6 - ₹8) = ₹8 per share.
Forfeited Shares = 200, Total Unpaid = 200 × ₹8 = ₹1,600.
Shares reissued at ₹5 per share fully paid.

Journal Entries in the Books of Qumtan Ltd.:

Solution: Step 1: Calculation of Application Money Received
Total Shares Applied = 1,50,000, Application Money per Share = ₹3.
Total Money Received on Application = 1,50,000 × ₹3 = ₹4,50,000.

Step 2: Refund for Rejected Applications
Shares Rejected = 10,000, Refund Amount = 10,000 × ₹3 = ₹30,000.

Step 3: Pro-rata Allotment and Adjustments Category A: 80,000 applicants were allotted 40,000 shares (ratio 2 : 1). Excess money = 80,000 – 40,000 = 40,000 shares × ₹3 = ₹1,20,000.

Category B: 60,000 applicants were allotted 40,000 shares (ratio 3 : 2). Excess money = 60,000 - 40,000 = 20,000 shares × ₹3 = ₹60,000.
Total Excess Money Adjusted: ₹1,20,000 + ₹60,000 = ₹1,80,000.

Step 4: Allotment Money Due and Received
Allotment Money per Share = ₹2, Shares Allotted = 80,000.
Allotment Money Due = 80,000 × ₹2 = ₹1,60,000.
Excess Money Adjusted = ₹1,80,000; Allotment Due (₹1,60,000).
Excess Remaining After Allotment = ₹1,80,000 - ₹1,60,000 = ₹20,000.

Step 5: First and Final Call Money Due and Received
Call Money per Share = ₹5, Call Money Due = 80,000 × ₹5 = ₹4,00,000.
Excess Money Remaining (₹20,000) Adjusted Toward Call, Net Call Money Received = ₹4,00,000 - ₹20,000 = ₹3,80,000.

Journal Entries in the Books of Printkit Limited:

Solution: Step 1: Revaluation of Assets and Liabilities
Depreciation on Fixed Assets = 30% of ₹90,000 = ₹27,000.
Increase in Stock Value = ₹45,000 - ₹38,000 = ₹7,000.
Net Loss on Revaluation = ₹27,000 - ₹7,000 = ₹20,000.
Revaluation Loss Shared in Ratio 3:2: Shubhi = ₹12,000, Revanshi = ₹8,000.

Step 2: Goodwill Adjustment
Pari's Share in Profits = ¹⁄₄. Remaining Share = ³⁄₄.
Total Goodwill = ₹50,000 (Pari's Contribution) × 4 = ₹2,00,000.
Shubhi's Share = ³⁄₅ of ₹1,50,000 = ₹90,000.
Revanshi's Share = ²⁄₅ of ₹1,50,000 = ₹60,000.

Premium for Goodwill Shared: Shubhi = ₹30,000, Revanshi = ₹20,000.

Step 3: Capital Adjustment Based on Pari's Capital
Pari's Capital = ₹50,000 (After Goodwill Adjustment).
Capitals of Shubhi and Revanshi Adjusted to Match Pari's Capital Proportionately.

Revaluation Account:

Solution: Step 1: Revaluation Account Calculation

Solution: The Quick Ratio is calculated as:
Quick Ratio = ^{Quick Assets}⁄_{Current Liabilities}

- Quick Assets include assets like cash, marketable securities, and accounts receivable but exclude inventory and prepaid expenses.
- Current Liabilities include liabilities like accounts payable, short-term loans, and other short-term obligations.

When goods are purchased on cash:
- Inventory (a non-quick asset) increases, and cash (a quick asset) decreases by the same amount.
- Current liabilities are unaffected.
Thus, the Quick Ratio increases as non-quick assets are replaced with quick assets.

Solution: Cash Inflows from Operating Activities refer to the cash generated from the primary business operations of a company.
Examples include:
- Cash received from customers for goods or services rendered.
- Receipts from debtors as part of credit sales collections.

In this case, the amount received from debtors represents cash collection for goods or services sold, which is directly related to operating activities.
Other options (like dividends and interest) fall under investing activities unless the entity is a financial institution. Payments to creditors are classified as cash outflows for operating activities.

Solution: Trade Payables are short-term creditors who supply goods or services to the firm on credit terms.
- They are primarily interested in the company's ability to meet its short-term liabilities, which is evaluated using liquidity ratios such as the Current Ratio and Quick Ratio.
For example:
Quick Ratio = ^{Quick Assets}⁄_{Current Liabilities}
This indicates whether the firm can meet its short-term obligations promptly.

Solution: Solvency Ratios are used to evaluate a company's capacity to meet its long-term financial obligations. Examples include:
1. Debt-to-Equity Ratio: Measures the proportion of debt in the company's capital structure.

2. Interest Coverage Ratio: Assesses the firm's ability to meet interest payments on outstanding debt.
Interest Coverage Ratio = ^{Earnings Before Interest and Taxes (EBIT)}⁄_{Interest Expense} These ratios provide insights into the financial leverage and long-term financial stability of a business.

Solution: The given transaction represents a non-cash transaction since machinery is acquired in exchange for equity shares. - There is no inflow or outflow of cash as no physical exchange of funds occurs.
- Such transactions are reported as supplementary notes in the Cash Flow Statement but do not impact cash flows under operating, investing, or financing activities.

Solution: Capital gains tax arises from the sale of fixed assets, which is a component of investing activities.
- Taxes paid on capital gains directly relate to the disposal of long-term assets.
- Therefore, they are treated as a cash outflow under Investing Activities in the cash flow statement.

Solution:

Solution: (a) Quick Ratio:
Quick Ratio = ^{Quick Assets}⁄_{Current Liabilities}
Quick Assets exclude inventory.
Quick Assets = Current Assets – Inventory = ₹4,00,000 – ₹1,00,000 = ₹3,00,000.
Current Liabilities = ₹2,00,000.
Quick Ratio = ^3,00,000⁄_2,00,000 = 1.5 : 1.

(b) Inventory Turnover Ratio:
Inventory Turnover Ratio = ^{Cost of Goods Sold (COGS)}⁄_{Average Inventory}
COGS is calculated as:
COGS = Revenue from Operations × (1 – Gross Profit Ratio).
COGS = ₹10,00,000 × (1 – 0.2) = ₹10,00,000 × 0.8 = ₹8,00,000.
Average Inventory = ₹1,00,000 (given).
Inventory Turnover Ratio = ^8,00,000⁄_1,00,000= 8 times.

Solution:

Solution:
Explanation: 1. Purpose of Comparative Statement:
- Comparative financial statements show changes in absolute values and percentage changes between two periods.
- It helps in analyzing trends in revenues, expenses, and profitability.

2. Key Observations:
- Revenue and Employee Benefit Expenses both increased by 25%.
- Other Expenses increased disproportionately by 37.5%, resulting in no change in Profit After Tax (PAT).

Solution:
Cash Flows from Operating Activities

Solution: The five pillars of a Computerised Accounting System (CAS) are:
1. Data, 2. People, 3. Procedures, 4. Hardware, 5. Software.

The missing pillars in the statement are People and Procedures, both of which are essential for the smooth functioning of CAS.

Solution: The Cash and Bank sub-system is responsible for managing all cash-related activities such as:
- Receipts from customers, Payments to suppliers, Electronic fund transfers (EFTs).
It ensures accurate recording, reconciliation of funds, and monitoring of liquidity for smooth operations.

Solution: Batch processing refers to processing a large volume of data in one operation at a scheduled time.

For example: Payroll systems calculate salaries monthly using batch processing.

This is effective for routine tasks that don't require immediate processing.

Solution: Excel pie charts effectively display data for up to 20 categories.
- More than 20 categories make the chart cluttered and unreadable.

Solution: Block codes group categories into distinct ranges for easier organization. For example:
100-199 → Cycle tyres, 200-299 → Cycle seats.

This makes data classification efficient and systematic.

Solution: The error “#####” in Excel appears when the column width is too narrow to display the content of a cell.

This happens especially with dates, large numbers, or text values that exceed the width of the column.

To resolve this issue:
- Increase the column width by dragging its edge or using AutoFit Column Width.

Solution: 1. Doughnut Chart:
- A doughnut chart is similar to a pie chart but has a hollow center.
- It represents parts-to-whole relationships and supports multiple data series in concentric rings.
Example: Comparing sales data of products across regions.

2. Exploded Doughnut Chart:
- An exploded doughnut chart is a variation where slices or rings are separated or "exploded" for emphasis.
- It highlights specific data points by detaching them from the chart.
Example: Highlighting the top-performing product in sales data.

Solution: 1. Transparency and Control:
- Ensures accurate and up-to-date records for all financial transactions.
- Facilitates audit trails by tracking all entries, modifications, and deletions in the system.
- Enhances accountability by making every transaction traceable.

2. Accuracy and Speed:
- Automates calculations to reduce human error.
- Speeds up processes like generating invoices, receipts, and reports.
- Provides real-time access to financial data for better decision-making.

Solution: 1. Efficiency:
- Automates routine accounting tasks such as payroll and invoicing, saving time and resources.

2. Accuracy:
- Minimizes human errors in calculations with built-in checks and validations.

3. Real-Time Reporting:
- Provides instant access to updated financial data for better decision-making.
Example: Generating profit and loss statements instantly.

4. Cost-Effectiveness:
- Reduces manual labor and paperwork, offering long-term cost savings.

Solution: 1. Password Security:
- Restricts unauthorized access to financial data.
- Ensures only authorized users can edit or delete sensitive records.
- Enhances security by controlling access based on user roles.

2. Data Audit:
- Tracks changes to financial records, including user details and timestamps.
- Identifies errors or unauthorized modifications.
- Facilitates compliance with regulatory requirements.

Solution: The ‘LOOKUP‘ function searches for a value and returns corresponding results.
Its two syntax forms are:
1. Vector Form:
- Syntax:
=LOOKUP(lookup_value, lookup_vector, result_vector)
- Searches a value in one row/column and returns the result from another.
Example:
Product Codes: A101, B202; Prices: 500, 700.
To find B202's price:
=LOOKUP("B202", A2:A4, B2:B4) Result: 700.

2. Array Form:
- Syntax:
=LOOKUP(lookup_value, array)
- Searches for a value in a 2D array and returns the matching value.
Example:
Names: John, Sarah; Grades: A, B.
To find Sarah's grade:
=LOOKUP("Sarah", A2:A4, B2:B4) Result: B.