AHSEC| CLASS 12| ACCOUNTANCY| SOLVED PAPER - 2018| H.S. 2ND YEAR
2018
ACCOUNTANCY
Full Marks: 100
Pass Marks: 24
Time: Three hours
The figures in the margin indicate full marks for the questions
1. (a) Fill in the blanks with appropriate word/words: 1x4=4
(i) The interest due to the retiring partner is transferred to his loan account in case it is not paid
immediately.
(ii) A partner acts as agent
of the firm.
(iii) In case of fixed capital, a partner's capital account always
shows a credit balance.
(iv) Unrecorded assets when realised are credited to Realisation Account.
(b) Choose the correct alternative: 1x2=2
(i) Balance Sheet shows:
(1) Financial position of company
(2) Profit and Loss of a company
(3) Cash flow of a company
(4) All of the above
(ii) Financial statements are:
(1) Detailed reports of the recorded facts.
(2) Detailed reports of the cash transaction only.
(3) Summarised reports of recorded facts.
(4) Summarised reports of the financial institutions only.
(c) State whether the following statements are true or false: 1x2=2
(i) Interest on Partner's Capital is credited to Partners' Drawings Account.
False
(ii) Life membership fee is a Revenue receipt. False
2. State any two features of a
not-for-profit organisation. 2
Ans:- Following are the characteristics
of non-profit organization:-
(i) Records of cash transactions and personal accounts are properly
maintained and do not contain any information regarding revenues or profits,
expenses or losses, assets and liabilities;
(ii) Personal transactions of owners can also be recorded in the cash
book;
3. What is a Common Size Statement? 2
Ans:- Common
size statement is a form of analysis and interpretation of financial
statements. This is also known as vertical analysis. This method analyzes
financial statements by considering each line item as a percentage of the base
amount for that particular accounting period.
Common
size statements are not financial ratios of any kind, but rather a simple way
of expressing financial statements, making those statements easier to analyze.
4. Mention any two distinctions between
shares and debentures. 2
Ans:- Two differences between shares and
debentures:-
(i) Shares are the capital owned by the company. Debentures are the
borrowed capital of the company.
(ii) The person who holds shares is called a shareholder. The person
who holds the debenture is called the debenture holder.
5. What do you mean by Forfeiture of
shares? 2
Ans:- If a
shareholder fails to pay the allotment amount or any call money on his shares,
his shares may be confiscated, if this is authorized by the articles of
association. Cancellation of shares and forfeiture of the amount received in
exchange for those shares is known as forfeiture of shares.
6. What do you mean by Comparative
statement? 2
Ans:-
Comparative statements or comparative financial statements are statements of
the financial position of a business over different periods. These statements
help determine the profitability of a business by comparing financial data from
two or more accounting periods.
Data
from two or more periods are updated simultaneously, which is why it is also
known as horizontal analysis. The advantage of this type of analysis is that it
helps investors identify business trends, check the company's progress and compare
it with its competitors.
7. Explain the meaning of Cash Flow from
Financing Activities. 3
Ans:- The
cash flow statement is one of the three main financial statements that show the
financial position of a company. The other two important details are the
balance sheet and the income statement. The balance sheet shows the assets and
liabilities as well as shareholders' equity at a particular date. Also known as
the profit and loss statement, the income statement focuses on business income
and expenses. The cash flow statement measures the cash generated or used by a
company during a given period.
Or
From the following information, calculate Stock Turnover Ratio: 3
Sales: Rs. 4,00,000/-
Average Stock = Rs. 55,000/-
Gross Loss Ratio = 10%
Solution:-
8. Mention any three objectives of
financial statement analysis. 3
Ans:- The objectives of preparing
financial statements are:-
(i) A financial statement provides timely and reliable information
on the financial position of a company over a specified period. It also makes
information available to external users or stakeholders who do not have direct
access to the information.
(ii) A financial statement helps to reveal the actual financial
position of a company. It includes information related to liquidity,
profitability, financial viability and solvency of an organization.
(iii) A financial statement is helpful in evaluating the earning
potential of a firm.
Or
Briefly explain the nature of financial statements. 3
Ans:- Financial statements are the end
product of the accounting process. Financial statements not only reveal the
actual financial position of the company but also help various accounting users
in the decision making and policy designing process. The nature of financial
statements depends on the following aspects such as facts recorded,
conventions, concepts and personal judgment
(i) Facts recorded: Items recorded in
the financial statements reflect their original cost i.e. the cost at which
they were acquired. As a result, financial statements do not disclose the
current market value of items. Furthermore, financial statements fail to
capture the effects of inflation.
(ii) Conventions: Preparation of
financial statements is based on certain accounting conventions like prudence
convention, materiality convention, matching concept etc. Following such
accounting conventions makes financial statements easier to understand, compare
and reflect true and fair financials. Company status.
(iii) Accounting Assumptions: These
basic accounting assumptions like going concern concept, money measurement
concept, realization concept etc. are called assumptions. Certain principles
are followed while preparing financial statements. The nature of these
assumptions is reflected in the nature of the financial statements.
(iv) Personal Judgment: Personal value
judgments play an important role in deciding the nature of financial
statements. Different judgments are associated with different practices of
recording transactions in financial statements. For example, recording stock at
market price or cost requires a value judgment. Similarly, provisions on
various assets, method of charging depreciation, period relating to write off
of intangible assets depend on individual decision. Thus, personal decisions
largely determine the nature of financial statements.
9. Mention any three limitations of
financial statements. 3
Ans:- Financial statements are very
useful for an organization but still, they suffer from the following
limitations:-
(i) Historical data: Financial
statements are prepared on the basis of historical cost. Since the purchasing
power of money is changing, the values of assets and liabilities shown in
financial statements do not reflect current market conditions.
(ii) Assets cannot be recovered: Accounting
is done on the basis of certain conventions. If the company is forced into
liquidation, some assets may not realize their stated values. The assets shown
in the balance sheet reflect only the unexpired or unchanged cost.
(iii) Bias: Financial statements are the
result of facts recorded, accounting concepts and conventions used and personal
judgments made by accountants in different situations. Therefore, bias may be
seen in the results, and the financial position reflected in the financial
statements may not be realistic.
Or
Explain the meaning of Ratio Analysis. 3
Ans:- Ratio analysis is known as the
study or analysis of line items present in the financial statements of a
company. It can be used to examine various factors of a business such as
profitability, liquidity, solvency and efficiency of the company or business.
Ratio analysis is primarily performed by external analysts because
financial statements are the primary source of information for external
analysts.
Analysts rely heavily on current and past financial statements to
obtain important data to analyze the financial performance of a company. Thus
the data or information obtained during analysis is helpful in determining
whether the financial position of a company is improving or deteriorating.
10. Mention any three distinctions
between Fund-based Accounting and Non-fund-based Accounting. 3
Ans:- Here are some of the differences
between fund-based accounting and non-fund-based accounting:-
(i) Focus: Fund-based accounting focuses
on the use of funds for various activities. Non-fund-based accounting focuses
on the financial position and performance of the business, regardless of the
activities of the funds.
(ii) Accounting Principles: Fund-based
accounting treats each fund as a separate entity. Non-fund-based accounting
follows the principle of separate legal entity.
(iii) Accountability: Fund-based
accounting is accountable to regulatory agencies. Non-funds-based accounting is
accountable to owners, consumers, and regulatory agencies.
Or
What do you mean by Income and Expenditure Account? 3
Ans:- Income and Expenditure Account is
prepared by non-business entities to determine the surplus or deficit of income
over expenditure for a particular time frame. The accrual or cumulative concept
of accounting is strictly followed while preparing the Income and Expenditure
Account of non-trading entities. It is prepared as a part of the final accounts
of non-business entities and is equivalent to the profit and loss account
reported by profit making business entities.
Features of Income and Expenditure Account:
The distinctive features of Income and Expenditure Account are given
below:-
(i) Income and Expenditure Account presented by non-business
concerns is similar to Profit and Loss Account presented by business concerns.
(ii) It is prepared by strictly following the basic principles of
bookkeeping or double-entry system of accounting.
(iii) It is always prepared during the end of the period which
generally covers 1 year.
11. Amar and Bahadur are partners of a firm
sharing profits in the ratio of 3:2. They admit Mery as a new partner for 1/4th
share in the future profits. The new profit-sharing ratio between Amar and
Bahadur is agreed to be 2:1. Calculate their sacrificing ratio. 3
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