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AHSEC Class 12 Accountancy Solved Question Paper 2024 – Overview
AHSEC Class 12 Accountancy Solved Question Paper 2024 in Detail
2024
ACCOUNTANCY
For New Course Students
Full Marks: 80
Pass Marks: 24
Time: Three hours.
CODE: 34T ACOU
The figures in the margin indicate full marks for the questions.
1. (a). Fill in the blanks with appropriate word/words (any four) 1×4= 4
(i). Partners' current accounts are prepared when the capital accounts are 'fixed'.
(ii). A company is a separate 'legal' entity. It is a separate entity from its members.
(iii). Current ratio is the relationship between current assets and 'current liabilities'.
(iv). Equity Shareholders are 'owners' of a company.
(v). At the time of dissolution of a partnership firm, assets are transferred to the Realisation Account at 'book' value.
(b). State whether the following statements are 'True' or 'False': 1×2=2
(i). Debentureholders do not have right to vote in the meetings of the company.
Answer: True.
(ii).Premium for goodwill is shared in gaining Ratio.
Answer: False. (sacrificing ratio)
(C) Choose the correct alternative: 1×2=2
(i). The portion of the authorised capital which is offered to the public for sale in the form of shares is called….?
(a) subscribed capital
(b) issued capital
(c) called-up capital
(d) paid-up capital
Answer: (b) issued capital
(ii) In the absence of partnership deed, the rate of interest allowed on partner's capital is …….?
(a) 6%
(b) 5%
(c) 6.5%
(d) None of the above
Answer: (a) 6%
Q. 2. What do you mean by re-issued of forfeited share ? 2
Answer: Re-issuing forfeited shares is the process where a company sells shares that were previously taken back from shareholders who didn't pay their dues. The company then sells these shares, often at a lower price, to new or existing investors to recover some of the lost capital.
Q. 3. Write any two demerits of partnership business. 2
Answer: Two demerits of partnership business are:
1. Unlimited liability: Partners have unlimited personal liability for the debts and obligations of the business. This means personal assets can be used to settle business debts.
2. Potential for conflict: Differences in opinions, management styles, and decision-making processes can lead to disputes and conflicts among partners, which can negatively impact the business.
Q. 4. Mention two features of a debenture.
Answer:
a. Fixed Interest Rate: Debentures carry a fixed rate of interest, which is paid to the debenture holders irrespective of the company's profit.
b. Redemption: Debentures are usually redeemable after a fixed period, meaning the principal amount is repaid to the holders at the end of this period.
OR
Q. Write the meaning of 'Cash flow from investing activities'.
Answer: Cash flow from investing activities refers to the cash generated or spent on activities related to the acquisition and disposal of long-term assets and investments. This includes cash used to purchase property, plant, and equipment, cash received from the sale of assets, and cash paid for purchasing investments.
Q. 5. Give two circumstances under which the fixed capitals of partners may change.
Answer:
a. Additional Capital Contribution: When partners decide to invest additional capital into the business.
b. Withdrawal of Capital: When partners withdraw a portion of their capital from the business for personal use.
OR
Q. Why is Profit and Loss Adjustment Account prepared?
Answer: The Profit and Loss Adjustment Account is prepared to adjust the profits or losses for any errors, omissions, or changes in accounting estimates from previous periods. It helps in correcting these errors and ensuring the accuracy of the financial statements.
Q. 6. What is meant by 'calls-in-advance'?
Answer: Calls-in-advance refer to the amount received by a company from shareholders for shares yet to be called up. Essentially, shareholders pay in advance before the company has made a formal call for the amount.
Q. 7. Mention two limitations of financial statement analysis.
Answer: Two limitations of financial statement analysis:
1. Historical Nature: Financial statements are historical in nature and may not reflect the current or future financial position of the company.
2. Subjectivity: The analysis may be influenced by the subjectivity and judgment of the person conducting it, leading to potential biases.
OR
Q. What is meant by the term 'cash equivalents'?
Answer: Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and have a maturity of three months or less at the time of acquisition. Examples include Treasury bills, commercial paper, and money market funds.
Q. Write three situations when a partnership firm is compulsorily dissolved.
Answer: 1. Death of a Partner: The partnership is automatically dissolved if one of the partners dies, unless otherwise agreed in the partnership deed.
2. Insolvency of a Partner: If any partner is declared insolvent, the partnership firm is compulsorily dissolved.
3. Completion of the Business Purpose: When the specific purpose for which the partnership was formed is completed or the time period specified for the partnership expires, the firm must be dissolved.
Q. 9. Give any three items that can be shown under the heading 'Reserves and Surplus' in a company's Balance Sheet.
Answer:
1. General Reserve: A portion of the profit set aside for future needs and contingencies.
2. Capital Reserve: Reserve created from capital profits, not available for distribution as dividends.
3. Retained Earnings: The accumulated portion of the net income which is retained by the company instead of being distributed as dividends.
OR
Name any three items of current assets.
Answer:
1. Cash and Cash Equivalents: Includes physical cash, bank balances, and other short-term investments.
2. Accounts Receivable: Amounts owed to the company by customers for goods or services delivered but not yet paid for.
3. Inventory: Goods available for sale, raw materials, and work-in-progress.
Q. 10. Current liabilities of a company are 3,50,000. Its current ratio is 3:1 and liquid ratio is 1.75 :1. Calculate the current assets and liquid assets.
Solution:
Current Liabilities = ₹3,50,000
Current Ratio = 3:1
Liquid Ratio = 1.75:1
Calculate Current Assets using the Current Ratio:
Current Assets = Current Ratio × Current Liabilities
Current Assets = 3×3,50,000 = ₹10,50,000
Calculate Liquid Assets using the Liquid Ratio:
Liquid Assets = Liquid Ratio × Current Liabilities
Liquid Assets =1.75 × 3,50,000 = ₹6,12,500
Thus, the Current Assets of the company are ₹10,50,000.
OR
Mention any three objectives of preparing a comparative statement. 3
Answer: Three objectives of preparing a comparative statement are:
1. Identifying Trends: Comparative statements help in identifying trends over different periods, facilitating analysis of financial performance and changes in key metrics.
2. Performance Evaluation: They aid in evaluating the company's performance against its own past performance or against competitors, providing insights into areas of strength and weakness.
3. Decision Making: Comparative statements assist in making informed decisions by providing a basis for comparison and highlighting areas requiring attention or improvement.
OR
What is computerised accounting system? 3
Answer: A computerized accounting system is a software-based solution used for recording, storing, and processing financial transactions electronically. It automates various accounting tasks such as journal entries, ledgers, payroll processing, invoicing, and financial reporting. This system replaces traditional manual accounting methods, offering advantages such as increased efficiency, accuracy, accessibility of data, and the ability to generate real-time financial reports.
Q. 11. A and B are partners sharing profits and losses equally. They have admitted C into the firm. A has surrendered 1/3 of his share and B has surrendered 1/6 of his share in favour of C. Ascertain the new profit sharing ratio. 3
Solution: Initially, both A and B share profits equally, so each has a share of 1/2.
Calculation of the share C gets from each partner:
From A: (1/3) * (1/2) = 1/6
From B: (1/6) * (1/2) = 1/12
Now, Calculation of the remaining share for A and B after surrendering a portion to C:
A's new share: (1/2) - (1/6) = 1/3
B's new share: (1/2) - (1/12) = 5/12
Therefore, the new profit sharing ratio for A, B, and C is:
A: 1/3
B: 5/12
C: 1/6 + 1/12 = 1/4
So the new profit sharing ratio is 1/3 : 5/12 : 1/4, which can be further simplified to 4:5:3
OR
Explain in brief the 'average profit method' of goodwill valuation. 3
Answer: Average Profits Method: In this method, Actual maintainable profits of business over a number of years are taken into account. Actual maintainable profits earned over a number of years are totalled and average is determined by dividing total with number of years. The average profits so determined are multiplied by the number of year's purchases to arrive at the value of goodwill.
For calculation of goodwill following steps are to be followed
1. Calculate Actual maintainable profits with the help of following formula. Actual maintainable profits = Net Profit + Abnormal loss - Abnormal Gain - regular business expenses not considered in accounts.
2. Calculate Average maintainable Profit = Total Actual maintainable profits /no of years.
3. Calculate goodwill Average maintainable Profit x no. of year's purchase
OR
Write three advantages of using graphs. 3
Answer: Three advantages of using graphs are:
1. Visual Representation: Graphs provide a visual representation of data, making complex information easier to understand and interpret at a glance.
2. Comparison: Graphs allow for easy comparison between different data sets, trends, or categories, facilitating quick analysis and identification of patterns or outliers.
3. Clarity and Communication: Graphs enhance clarity and communication of data, enabling effective presentation to stakeholders, decision-makers, or the general audience, promoting better understanding and decision-making.
12. Prepare a Common Size Income Statement of Maina Ltd. from the following informations:
Solution:
Common Size Income Statement for 2022
Common Size Income Statement for 2023
Working:
1. Calculation of Net Sales: Net Sales Sales Sales Returns Net Sales in 2022₹1,05,000-₹5,000 ₹1,00,000 Net Sales in 2023 = ₹1,10,000-₹10,000 = ₹1,00,000
2. Calculation of Cost of Goods Sold (COGS): COGS in 2022₹70,000 COGS in 2023 = 274,800
3. Calculation of Gross Profit: Gross Profit Net Sales COGS Gross Profit in 2022 = 1,00,000-₹70,000 = ₹30,000 Gross Profit in 2023 = ₹1,00,000-₹74,800 = ₹25,200
4. Calculation of Operating Expenses: Operating Expenses Office Expenses + Non-operating Expenses Operating Expenses in 2022 = ₹3,000 + ₹1,000 - ₹4,000 Operating Expenses in 2023₹3,200+₹1,100 = ₹4,300
5. Calculation of Operating Income: Operating Income Gross Profit-Operating Expenses Operating Income in 2022 ₹30,000-₹4,000 = 26,000 Operating Income in 2023₹25,200-₹4,300 = ₹20,900
6. Calculation of Net Income Before Tax: Net Income Before Tax Operating Income + Non-operating Incomes Net Income Before Tax in 2022226,000+₹5,000 ₹31,000 Net Income Before Tax in 2023₹20,900+₹6,600 ₹27,500
7. Calculation of Income Tax: Income Tax Income Tax Rate Net Income Before Tax Income Tax in 2022 =50%*₹31,000=₹15,500 Income Tax in 2023-50%*₹27,500 - ₹13,750
8. Calculation of Net Income After Tax: Net Income After Tax Net Income Before Tax-Income Tax Net Income After Tax in 2022 = ₹31,000-₹15,500 ₹15,500 Net Income After Tax in 2023 = ₹27,500 ₹13,750 = ₹13,750
In short:-
OR
Explain in brief the tools of financial analysis. 6
Ans: The tools of financial analysis :
Comparative Statements: These are the statements showing the profitability and financial position of a firm for different periods of time in a comparative form to give an idea about the position of two or more periods. It usually applies to the two important financial statements, namely, balance sheet and statement of profit and loss prepared in a comparative form. The financial data will be comparative only when same accounting principles are used in preparing these statements. If this is not the case, the deviation in the use of accounting principles should be mentioned as a footnote. Comparative figures indicate the trend and direction of financial position and operating results. This analysis is also known as ‘horizontal analysis’.
b) Common Size Statements: Common size statement is a statement in which amounts of individual item of balance sheet and profit and loss account for one or more years are expressed in terms of percentage of a common base. The common base can be net sales in the case of profit and loss account and total of balance sheet for the balance sheet.
Trend Analysis: Trend analysis is an important tool of horizontal financial analysis. This is helpful in making a comparative study of the financial statements over several years. Under this method trend percentages are calculated for each item of the financial statements taking the figure of base year as 100. Normally the starting year is taken as the base year. The trend percentages show the relationship of each item with its preceding year’s percentages.
OR
Explain the concepts of 'data validation' and 'data verification'. 6
Answer:
1. Data Validation:
- Definition: Data validation is the process of ensuring that data entered into a system meets certain predefined standards or criteria.
- Purpose: It helps maintain data integrity by preventing incorrect or inappropriate data from being entered into a system.
- Methods: Validation can be performed through various techniques such as range checks, format checks, consistency checks, and completeness checks.
- Example: In a form where users enter their age, data validation would ensure that only numeric values within a certain range (e.g., 1 to 150) are accepted.
2. Data Verification:
- Definition: Data verification is the process of confirming that the data entered matches the original source or that it is accurate and complete.
- Purpose: It ensures the accuracy and reliability of data by comparing it against a trusted source or by using other verification methods.
- Methods: Verification can involve double entry, cross-referencing with other records, or comparing against a master dataset.
- Example: In a customer database, data verification might involve cross-referencing a customer's address provided online with their address on file to ensure they match.
In essence, data validation focuses on ensuring that data meets specific criteria or rules, while data verification ensures the accuracy and completeness of the data by comparing it against trusted sources or using other methods. Both are crucial for maintaining data quality and integrity.
13. Give Journal entries in the books of Pakhi Ltd. for issue of debentures under the following situations: 1+1+1+1+2=6
(a) Issued 5,000, 8% debentures of ₹ 100 each at par redeemable at 5% premium after 4 years.
(b) Issued 6,000, 9% debentures of ₹100 each at 5% premium, redeemable at par after 4 years.
(e) Issued 7,000, 10% debentures of 2 100 each at 5% discount, redeemable at par after 4 years.
(d) Issued 8,000, 10% debentures of 2 100 each at 5% premium, redeemable at 10% premium after 4 years.
(e) Issued 5,000, 9% debentures of ₹ 100 each to the vendors for purchasing machinery of ₹5,00,000.
Solution:
(a) Issued 5,000, 8% debentures of ₹ 100 each at par redeemable at 5% premium after 4 years.
Ans: Debentures Issued at Par (₹100 each)
To Record Redemption Premium (5% on ₹5,00,000)
(b) Issued 6,000, 9% debentures of ₹ 100 each at 5% premium, redeemable at par after 4 years.
Ans: Debentures Issued at 5% Premium (₹100 + ₹5 = ₹105 each)
(c) Issued 7,000, 10% debentures of ₹ 100 each at 5% discount, redeemable at par after 4 years.
Ans: Debentures Issued at 5% Discount (₹100 – ₹5 = ₹95 each)
(d) Issued 8,000, 10% debentures of ₹100 each at 5% premium, redeemable at 10% premium after 4 years.
Ans: Debentures Issued at 5% Premium (₹100 + ₹5 = ₹105 each)
To Record Redemption Premium (10% on ₹8,00,000)
(e) Issued 5,000, 9% debentures of ₹ 100 each to the vendors for purchasing a machinery of ₹5,00,000.
Ans: Debentures Issued to Vendors (₹100 each)
OR
Q. Give six points of distinctions between a share and a debenture.
Answer:
OR
Q. Explain the applications of Spreadsheet in Accounting. 6
Answer: Spreadsheets have a wide range of applications in accounting. Here are six key applications:
1. Financial Statements Preparation: Spreadsheets are used to create financial statements such as income statements, balance sheets, and cash flow statements. They allow for easy organization, calculation, and updating of financial data.
2. Budgeting and Forecasting: Accountants use spreadsheets to prepare budgets and financial forecasts. Spreadsheets facilitate scenario analysis and the comparison of actual results against budgeted figures, helping in financial planning and decision-making.
3. Expense Tracking and Management: Spreadsheets help in tracking and managing expenses. They enable detailed recording and categorization of expenses, making it easier to monitor spending and identify areas for cost control.
4. Tax Calculations: Spreadsheets can be used to perform various tax-related calculations. They simplify the process of computing tax liabilities, managing deductions, and preparing tax returns.
5. Data Analysis and Reporting: Spreadsheets are powerful tools for analyzing financial data. Accountants can use them to perform ratio analysis, trend analysis, and other analytical tasks. Spreadsheets also facilitate the creation of reports and visualizations to communicate financial insights effectively.
6. Accounts Reconciliation: Spreadsheets assist in reconciling accounts, such as bank reconciliations. They allow for the comparison of different sets of records, identification of discrepancies, and adjustment of entries to ensure accurate financial records.
These applications make spreadsheets an essential tool in the accounting profession, enhancing efficiency, accuracy, and the ability to analyze and present financial data.
14. Susanta, Ananta and Diganta were in partnership sharing profits and losses in the ratio of 3:2:1. On 1.1.2023. Susanta retires from the firm. On that date Balance Sheet of the firm was as follows:
BALANCESHEET
The terms of the retirement were:
(i) Goodwill of the firm were valued at 21,20,000.
(ii) Land and Building to be appreciated by 20,000.
(iii) Provision for Bad Debts to be made @ 2% on debtors.
(iv) Furniture to be depreciated by ₹4,000.
(v) Susanta's capital is to be transferred to his Loan Account.
Give Journal entries relating to the above transactions.
Solution:
Journal entries
(Calculation: ₹80,000 + ₹60,000 – ₹3,500)
OR
Explain how the amount due to a deceased partner is ascertained? 6
Ans: The amount due to a deceased partner in a partnership is ascertained through several key steps, ensuring that the partner's estate receives their rightful share of the partnership's assets and earnings.
The Following are the outline of the process:
1. Review the Partnership Agreement:
- Examine the partnership agreement for any specific clauses related to the death of a partner. The agreement may detail how the deceased partner's share is to be valued and distributed.
2. Determine the Deceased Partner's Capital Account:
- Calculate the balance in the deceased partner's capital account, which includes their initial capital contribution, additional contributions, retained earnings, and share of profits or losses up to the date of death.
3. Valuation of Partnership Assets:
- Conduct a valuation of the partnership's assets and liabilities as of the date of the partner's death. This helps in determining the net worth of the partnership.
4. Calculate the Deceased Partner’s Share:
- Ascertain the deceased partner’s share of the net assets of the partnership. This is usually based on the profit-sharing ratio or the capital contribution ratio specified in the partnership agreement.
5. Adjust for Outstanding Obligations:
- Deduct any amounts owed by the deceased partner to the partnership from their share.
- Include any salary, interest on capital, or other entitlements due to the deceased partner up to the date of death.
6. Settlement of Accounts:
- The final amount due to the deceased partner is the net amount after accounting for their share of the net assets, any entitlements, and any amounts owed.
7. Payment to the Estate:
- The determined amount is then payable to the deceased partner’s estate. This can be done through a lump sum payment, installments, or through transfer of partnership assets, as per the agreement or mutual consent of the remaining partners and the deceased partner's estate.
8. Tax Considerations:
- Ensure compliance with any tax obligations related to the transfer of the deceased partner’s share to their estate.
By following these steps, the partnership can accurately determine and settle the amount due to the deceased partner’s estate.
15. Distinguish between dissolution of partnership and dissolution of firm.
Ans:
OR
Ravi and Vicky are partners in a firm sharing profits and losses in the ratio of 3:2. They decided to dissolve their firm on 31st December, 2022. Their Balance Sheet on that date was as under:
Ravi took over the investments at an agreed value of 23,800. Other assets were realised as follows:
Furniture - 218,000
Debtors 90% of Book value
Stock 22,800
Creditors of the firm agreed to accept 5% less. Expenses of realisation amounted to 2400. Close the firm's books by preparing a Realisation Account, Partners' Capital Accounts and Bank Account. 6
Solution:
Realisation Account
Partners’ Capital Accounts
Bank Account
16. Anvi Ltd. has issued 10,000 equity shares of ₹10 each at a premium of 22 each payable as follows: 8
On Application - 2
On Allotment 25 (including premium)
On First and Final Call - 25
The shares have been fully subscribed, called up and paid-up except the following:
(a) Allotment and First and Final Call money on 500 shares held by Ritu, and
(b) First and Final Call money on 600 shares held by Jitu.
All these shares have been forfeited and re-issued at 10% discount as fully paid.
Give Journal entries in the books of the company.
Journal entries of Anvi Ltd.
OR
For what purposes 'securities premium' can be used? 5
Ans: Securities premium is the extra amount a company gets when it sells its shares for more than their face value. This money can only be used for specific purposes:
1. Issuing bonus shares:
- Giving extra shares to current shareholders for free.
2. Covering preliminary expenses:
- Paying off the costs incurred when starting the company.
3. Writing off issue costs:
- Paying for the expenses, commission, or discount related to issuing shares or debentures.
4. Paying premium on redemption:
- Paying the extra amount owed when redeeming preference shares or debentures.
5. Buying back shares:
- Repurchasing the company’s own shares from the market.
(b) Write three distinctions between equity share and preference share.
Ans: The three distinctions between equity share and preference share:-
OR
What are the steps involved in installation of computerised Accounting system (CAS)? 8
Ans: The following are the steps involved in installing a Computerized Accounting System (CAS) :
1.Choose Software: Select and purchase accounting software that suits your business needs.
2.System Requirements: Check if your computer meets the software's requirements.
3. Install Software: Follow the software's installation instructions.
4. Setup: Input initial business information and configure settings.
5. Data Migration: Transfer existing financial data into the new system.
6. Training: Train staff on using the new software.
7. Testing: Ensure the system works correctly before full implementation.
17. Mihir and Karan are partners in a firm sharing profits in the ratio of 3:2. On April 1, 2022 their Balance Sheet was as under:
On the above date, they admitted Sunil as a new partner on the following terms:
(i) Sunil will bring 250,000 for his capital.
(i) He would get 1/5th share in the future profits.
(iii) Goodwill of the firm is valued at ₹ 1,20,000.
(iv) Sunil will bring necessary premium for goodwill.
Pass Journal entries to record the above transaction. Prepare Partner’s Capital Accounts and Balance Sheet of the new firm.
Solution: .
Journal entries
Partner’s Capital Accounts
Balance Sheet
OR
(i). Distinguish between Profit and Loss Account and Profit and Loss Appropriation Account. 5
Ans:
(ii). Mention any three rights of a partner.3
Ans: Following are the three rights of a partner in a partnership:
1. Right to participate in management: Every partner generally has the right to participate in the management and decision-making processes of the partnership, unless otherwise specified in the partnership agreement.
2. Right to share profits: Partners are entitled to a share of the profits of the partnership according to the terms of the partnership agreement or, in the absence of specific terms, equally.
3. Right to access information: Partners have the right to access and inspect the books and records of the partnership. This right ensures transparency and allows partners to monitor the financial health and operations of the business.
18. Biswa and Pradip are partner partners in a firm. The Trial Balance of the firm as on 31st December, 2022 was as under:
Prepare Profit and Loss Account, Profed Loss Appropriation Account and the Balance Sheet of the firm for the year ended 31st December, 2022 after considering the following information:
(a) Partners are to share profits and losses in the proportion of 3/5 and 2/5 respectively.
(b) Write off depreciation 10% on Machinery and 20% on Motor.
(c) Create a provision of 5% on Sundry Debtors for Doubtful Debts.
(d) Partners are entitled to Interest on Capital @ 5% per annum and Pradip is entitled to a salary of 21,800 per annum.
Solution:
Profit and loss A/c of the firm for the year ended 31st December, 2022
Profit and Loss Appropriation Account
for the year ended
31st December, 2022
Balance Sheet
As on 31st December, 2022
For Old Course: fin lieu of Project Works)
19. Answer the following questions: (any four) 5×4= 20
(a) Write distinctions between, Fixed Capital Account and Fluctuating Capital Account.
Ans: The distinctions between, Fixed Capital Account and Fluctuating Capital Account:-
(b) What is Ratio Analysis? Mention any three limitations of ratio analysis.
Ans: Ratio analysis is a method used to evaluate and compare relationships between financial data in a company's financial statements. It helps to understand how well a company is performing financially by looking at ratios like profitability, liquidity, and efficiency.
Limitations of ratio analysis:
1. Dependence on Historical Data: Ratios rely on past financial information, which may not reflect current market conditions or future trends accurately.
2. Limited Understanding: Ratios provide numbers without context, making it necessary to interpret them carefully to understand their true meaning.
3. Comparison Challenges: Comparing ratios between companies in different industries can be misleading due to varying business models and accounting practices.
(c) Explain uses of Financial Statement.
Ans: Financial statements serve several crucial purposes for businesses, investors, creditors, and other stakeholders:
1. Performance Evaluation: They provide a snapshot of a company's financial performance, indicating profitability, revenue trends, and cost management effectiveness over a period.
2. Decision-Making: Investors use financial statements to assess the company's financial health and potential for future growth. They help in making investment decisions by evaluating factors like profitability ratios, liquidity, and debt levels.
3. Creditworthiness: Creditors use financial statements to evaluate the company's ability to repay loans and manage debt. They assess factors like liquidity ratios and debt-to-equity ratios to determine credit risk.
4. Transparency and Accountability: Financial statements promote transparency by disclosing financial information to stakeholders, ensuring accountability to investors, regulators, and the public.
5. Strategic Planning: Management utilizes financial statements to formulate business strategies, allocate resources effectively, and identify areas needing improvement based on financial performance indicators.
(d) What is meant by Cash Flow Statement? Mention any three objectives of preparing a cash flow statement.
Ans: A Cash Flow Statement is a financial statement that provides information about the cash inflows (receipts) and outflows (payments) of a business during a specific period. It categorizes cash flows into three main sections: operating activities, investing activities, and financing activities.
Objectives of preparing a cash flow statement:
1. Cash Position Assessment: It helps in assessing the liquidity and cash position of the business by showing the sources and uses of cash over a period.
2. Financial Performance Evaluation: The statement aids in evaluating the ability of the business to generate cash from its core operations and to meet its financial obligations.
3. Forecasting and Planning: It assists in forecasting future cash flows based on historical data, allowing management to plan for capital expenditures, debt repayments, and other financial commitments effectively.
(e) Explain the average profit method of valuation of goodwill. What is Revaluation Account?
Ans: The average profit method of valuation of goodwill is a technique used to determine the value of goodwill based on the average profits earned by a business over a certain period.
1. Calculate Average Profits: First, the average annual profit of the business is calculated over a specific number of years. This period is typically chosen to reflect a reasonable and consistent measure of the business's profitability.
2. Multiplier Application: A suitable multiplier (also known as a capitalization rate) is then applied to this average annual profit. The multiplier is derived based on various factors such as industry standards, risk factors associated with the business, and the expected rate of return on investments.
3. Valuation of Goodwill: Finally, the value of goodwill is determined by multiplying the average annual profit by the multiplier. This gives an estimate of the economic value of the goodwill associated with the business.
Revaluation Account: A Revaluation Account is a financial statement used to record adjustments to the values of assets and liabilities in a business. It is typically prepared when there is a change in the value of assets and liabilities due to various reasons such as revaluation of fixed assets, changes in market conditions, or changes in accounting policies.
The main purposes of a Revaluation Account include:
1.- Updating Asset Values: It helps in adjusting the book values of assets to their current market values or revalued amounts.
2.- Adjusting Liabilities: It also adjusts the values of liabilities to reflect any changes that affect their financial position.
3.- Distributing Gains or Losses: It facilitates the distribution of any revaluation gains or losses among the relevant stakeholders, such as shareholders or partners.
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Download AHSEC Class 12 Accountancy Solved Question Paper 2024 PDF
Detailed Analysis of AHSEC Class 12 Accountancy Question Paper 2024
Exam Format and Mark Distribution:
- Total Marks: 80
- Passing Marks: 24
- Time Allotted: 3 hours
- Questions are divided into three sections:
- Objective questions (MCQs, true/false, fill in the blanks).
- Short and medium descriptive questions (2–3 marks each).
- Long problem-solving and case-study-based questions (6–8 marks).
Key Topics Covered:
- Partnership Accounts:
- Surrendering shares.
- Goodwill adjustments.
- Dissolution of partnership firms.
- Revaluation accounts.
- Company Accounts:
- Journal entries for issuing and forfeiting shares, debentures.
- Calls-in-advance and share premium calculations.
- Financial Analysis:
- Ratio analysis (current ratio, liquid ratio, profitability).
- Preparation of comparative and common-size statements.
- Goodwill Valuation:
- Average profit method.
- Practical Problem-Solving:
- Trial balance adjustments, profit & loss accounts, and preparation of balance sheets.
- Partnership Accounts:
Question Variety:
- Objective-Type Questions (8 Marks):
- Includes fill in the blanks, true/false, and MCQs.
- Tests conceptual clarity.
- Short-Answer Questions (30 Marks):
- Definitions and distinctions (e.g., between equity shares and debentures).
- Basic calculations like goodwill valuation, financial ratios, and cash flow.
- Long-Answer Questions (42 Marks):
- Case studies and numerical problems involving journal entries, financial statement preparation, and partnership adjustments.
- Objective-Type Questions (8 Marks):
Complexity of Questions:
- Mix of straightforward theoretical questions and moderately challenging numerical problems.
- Analytical problems requiring adjustments for revaluation, depreciation, or creating provisions.
- Practical scenarios to test application skills (e.g., reissuing forfeited shares, partner settlements).
Skills Tested:
- Conceptual Understanding:
- Core principles of accounting, partnership dynamics, and corporate finance.
- Problem-Solving:
- Accurate calculations and preparation of financial documents.
- Analytical Thinking:
- Interpreting financial data and making informed decisions.
- Application Skills:
- Real-world tasks like journal entries, balance sheet preparation, and ratio analysis.
- Conceptual Understanding:
Suggestions for Students:
- Revise Fundamentals:
- Focus on key topics like debentures, partnership accounts, and goodwill valuation.
- Practice Numericals:
- Solve previous years’ papers to master calculations and journal entries.
- Memorize Formats:
- Learn proper layouts for financial statements and revaluation accounts.
- Focus on Financial Ratios:
- Current, liquid, and profitability ratios are essential.
- Time Management:
- Practice answering all types of questions within the given time frame.
- Revise Fundamentals:
Final Outcome:
The paper evaluates a student's theoretical knowledge, practical skills, and analytical abilities. Success depends on a strong grasp of core concepts, precise calculations, and the ability to adapt to real-world accounting scenarios.
Expert Tips for Scoring High in AHSEC Class 12 Accountancy
- Understand Concepts: Focus on core concepts instead of memorization.
- Practice Regularly: Solve previous years' question papers.
- Time Management: Allocate time for each section during practice.
- Revise Thoroughly: Review key formulas and important topics.
Why Use Solved Question Papers for AHSEC Class 12 Accountancy?
- Understand Exam Pattern: Know the structure and weightage of each section.
- Improve Time Management: Practice within a limited time frame.
- Clarify Doubts: Learn step-by-step solutions to challenging problems.
- Boost Confidence: Build confidence by practicing real exam questions.