VET Institute of Arts and Science

(Co-education) College
(An Institution Run by Vellalar Educational Trust)
(Affiliated to Bharathiar University)
Thindal, Erode – 638 012.
MODEL EXAMINATION – NOV - 2021
HIGHER FINANCIAL ACCOUNTING
III SEMESTER- II B.COM (A&F)
2021 - 2022
Time: 3 Hours Maximum: 75 Marks
SECTION – A (10*1=10 Marks)
Answer ALL the Questions
Choose the correct answer:
1. Profit or Loss on revaluation of assets and liabilities is shared by_______.
a) All the partners b) The old partners
c) Gaining partners d) The new partners
2. Goodwill is a________.
a) Fixed assets b) Tangible assets
c) Fictitious assets d) Wasting assets
3. Profit or Loss on revaluation at the time of retirement must be transferred to the
partners in _______.
a) Capital ratio b) Old profit-sharing ratio
c) Gaining ratio d) Both a and b
4. If goodwill raised at the time of retirement of a partner is to be written off then
the capital accounts of the remaining partners are debited in________.
a) New ratio b) Old ratio
c) Capital ratio d) Sacrificing ratio
5. The court may dissolve a firm when
a) A partner has become of unsound mind b) A partner is a drunkard
b) The business was formed for a fixed term d) A partner is a unsound mind
6. The ruling in Garner V s Murray is applicable to __________.
a) Admission of a partner b) Retirement of a partner
c) Dissolution of a partnership d) Insolvency of a partner
7. The amount of deficiency is given under___________.
a) List A b) List B
c) List C d) List H
8. Fire insurance provides cover for _________. The rate of gross profit on cost is 30%
a) Tangible assets b) Intangible assets Value of Salvaged stock ₹ 3,600
c) Fictitious assets d) Current assets (Or)
9. Voyage account is prepared _________. b) M.V. Indian express started its voyage on 1-7-1997. From India to East
a) Annually b) Quarterly Africa. It reached India back on 14-8-1997.
c) For each voyage d) Monthly Freight ₹ 25,98,000
10. Depreciation of a ship is based on_________. Standing cost per day ₹ 22,000
a) The cargo carried b) No of trips made Port charges ₹ 1,25,000
c) No of passengers. d) Ship value Depreciation (6 % p.a on the cost of the ship ₹100 lakhs)
SECTION B – (5 *5 = 25) Brokerage 2 % on freight
Answer ALL questions. Coal ₹ 7,65,000
Prepare Voyage A/c.
11. a) A and B are partners in a business sharing profits in the ratio of 5:3. They SECTION – C (5*8 = 40)
decide to admit C into the firm giving him 1/6 th share. Calculate the new
Answer ALL the questions:
profit-sharing ratio and sacrificing ratio of the partners.
(Or)
16. a) A and B are partners sharing profits in the ratio of 3:1. Their Balance Sheet
b) A and B are partners sharing profits and losses in the ratio of 5:3. They
admit C as a partner. C acquires his share 4/20 from A and 2/20 from B. stood as under on 31.12.95:
Find out the new profit-sharing ratio and sacrificing ratio. Liabilities ₹ Assets ₹
12. a) A and B and C were partners sharing profit and losses in 4:3:2 ratio Capital Stock 10,000
respectively B retired and A and C will share profits in 5:3 ratio. Calculate A: 30,000 Prepaid Insurance 1,000
the gaining ratio. B: 20,000 50,000 Debtors: 8,000
(Or) Salary due 5,000 Less: Provision 500 7,500
b) Ram, Shyam and Rahim are partners sharing profits in the ratio of 4:3:3
Creditors 40,000 Cash 18,500
Shyam retires and the goodwill at ₹ 69,000. No goodwill appears in the
books of the firm. Assuming that Ram and Rahim will share profits in Machinery 22,000
future in 5:3 ratio, pass entries for goodwill directly through partner’s Buildings 30,000
capital accounts. Furniture 6,000
13. a) Explain the rule laid down in “Garner Vs Murray’ case. 95,000 95,000
(Or) C is admitted as a new partner introducing a capital of a ₹.20, 000. For his
b) What are the modes of dissolution? 1/4th share in future profit.
14. a) Why do you prepare a deficiency account? Explain its contents. Following revaluations are made:
(Or) (i) Stock to be depreciated by 5%
b) Describe the purpose of fire insurance claim.
(ii) Furniture to be depreciated by 10%
15. a) A fire occurred on 1.9.93 in the godown of Mr. Ganesan. From the
following particulars, find out the claim to be lodged: (iii) Building to be revalued at ₹ 45,000
Stock on 1.1.93 ₹ 25,300 (iv) The provision for doubtful debts should be increased to ₹1,000.
Purchases from 1.1.93 to date of fire ₹ 50,400 Pass Journal entries, prepare Revaluation A/c and Balance Sheet after
Sales from 1.1.93 to date of fire ₹ 1,56,000 admission.
Manufacturing expenses and wages ₹ 60,000 (Or)
Goods taken by Ganesan at cost ₹ 2,500
 b) X and Y are partners sharing profits in the ratio of 3:2. They admit Z into On the date of death, it was found that:
partnership, Z paying a premium of ₹ 2,000 for ¼ share of profit. The new i) Debtors were all good.
ratio is 3:3:2. Goodwill about appears in the books at ₹ 2,000. It was ii) Investments were valued at ₹ 22,500 and were taken over by X at that
decided that goodwill should continue to appear in book at ₹ 1,600.
value.
Journalise.
17. a) A, B and C are partners in a firm sharing profits and losses in the ratio of iii) Stocks were valued at ₹ 75,000
1/3;1/2;1/6 respectively. Their Balance Sheet as on 31-12-1990 was as iv) Building was valued at ₹ 1,71,000
follows. v) A liability for workmen’s compensation for ₹ 9,000 was to be provided
Liabilities ₹ Assets ₹ for.
Sundry creditors 25,000 Building 50,000 vi) Goodwill was to be valued at one year’s purchase of average profits of last
Loan payable 15,000 Machinery 40,000 5 years.
Reserve fund 16,000 Furniture 10,000 vii) Z’s share of profit up to the date of death was to be calculated on the basis
Capital A 30,000 Stock 25,000 of last year’s profit.
B 40,000 Debtors 18,000 The profit of the last 5 years was as under – 1986 - ₹ 34,500, 1987
₹ 37,500, 1988 - ₹ 24,000, 1989 - ₹ 30,000, 1990 - ₹ 36,000.
C 25,000 Less: Provision 500 17,500
Prepare Revaluation account, capital a/c’s and Balance Sheet of remaining
Cash 8,500 partners.
1,51,000 1,51,000 18. a) The Following is the Balance Sheet of X, Y and Z on 31.3.94.
C retires on 31.12.90 subject to the following conditions:
Liabilities ₹ Assets ₹
i) A goodwill account is created in the books for ₹ 24,000.
ii) Machinery to be depreciated by 10% Capital A/c’s Furniture 40,000
iii) Furniture to be depreciated by 5% X 50,000 Plant and Machinery 20,000
iv) Stock to be appreciated by 15% and buildings to be appreciated by Y 30,000 Stock 40,000
10% General Reserve 30,000 Sundry Debtors 20,000
v) Reserve for doubtful debts to be raised to ₹ 2,000. Sundry Creditors 40,000 Cash at bank 12,000
Prepare necessary Ledger accounts and show the Balance Sheet of the new Z’s capital 18,000
firm.
1,50,000 1,50,000
(Or)
Z is insolvent but his estate pays ₹ 4,000. It is decided to dissolve the
b) X, Y and Z partners sharing profit equally. Z died on 31.3.1991. The
partnership.
Balance Sheet of the firm as at 31.12.90 was under:
The assets realized as follows:
Liabilities ₹ Assets ₹
(i) Sundry Debtors ₹ 15,000
Capital A/c’s Goodwill 40,500
(ii) Furniture ₹ 28,000
X 90,000 Buildings 90,000
(iii) Stock ₹ 32,000
Y 75,000 Investment (of cost) 24,000
(iv) Plant and Machinery ₹ 14,000
Z 63,000 Debtors 54,000
The dissolution expenses amounted to ₹ 5,000.
Reserve fund 18,000 Less Provision 5,400 48,600
Give accounts to close the books of the firm if the capitals are
Investment fluc fund 6,300 Stock 84,000
fluctuating.
Creditors 46,800 Cash at Bank 12,000
(Or)
2,99,100 2,99,100
 Income tax 1,000
Wages of four servants 1,400
b). Red, White and Blue are in Partnership. The following is their Balance Salaries 1,000
Sheet as at 31.12.85. On which date, they dissolved partnership. They Municipal Tax 400
share profits in the ratio of 5:3:2. Wages 6,000
Liabilities ₹ Assets ₹ 20. a) S.S. Latha sailed from Bombay port on 1.1.2002 and arrived at Chennai
Capital: Premises 40,000 port on 31.3.2002 via Kochin port. The following goods loaded:
Red 50,000 Plant 30,000 200 tons and 40 tons loaded at Bombay for Chennai and Kochin ports
White 15,000 Stock 30,000 respectively. 100 tons loaded at Kochin for Chennai port.
Blue 45,000 Debtors 60,000 The freight charges were:
Creditors 40,000 Bombay to Chennai: ₹ 1,500 per ton
Red’s loan 10,000 Bombay to Kochin: ₹ 1,000 per ton
1,60,000 1,60,000 Kochin to Chennai: ₹ 800 per ton
It was agreed to repay the amounts due to the partners as and when the The freight is subject to 10% primage and 5% address commission.
assets were realized viz: Calculate the freight, primage and address commission:
₹ (Or)
1.2.86 30,000 b) State the advantages and limitations of Human Resource Accounting.
1.4.86 73,000
1.6.86 47,000
Prepare a statement showing how the distribution to the partners should be
made.
19. a) A fire occurred on November 3, 1999 in the shop of Raja. From the
following particulars, calculate the amount of fire claim:
(i) Stock on 1.1.99 ₹ 8,500
(ii) Purchases from 1.1.99 to date of fire ₹ 85,000; Sales ₹ 1, 00,000.
(iii) Wages and manufacturing expenses ₹ 8,500
(iv) Stock salvaged ₹ 2,000
(v) The rate of Gross profit on sales 25%
(Or)
b) What are Preferential Creditors in the following liabilities of insolvent
Bhupesh according to presidency Towns Insolvency Act and Provincial
Insolvency Act?
₹
3 Month’s salary for 10 clerks 3,600
One-month wages of 12 labourers 1,600
Sales Tax 400
3 months’ rent of landlord 600