ISC EXAMINATION PAPER − 2025

ACCOUNTS
Class−12th
(Solved)
Maximum Marks: 80 Time Allotted: Three Hours Reading Time: Additional Fifteen Minutes
Instructions to Candidates:
1. You are allowed an additional fifteen minutes for only reading the paper.
2. You must NOT start writing during reading time.
3. It is divided into three sections and has 18 questions in all.
4. Section A is compulsory and has ten questions.
5. You are required to attempt all questions either from Section B or Section C.
6. Section B and Section C have four questions each.
7. Internal choices have been provided in five questions in Section A and in two questions each in Section B and
Section C.
8. While attempting Multiple Choice Questions in Sections A, B and C, you are required to write only ONE option
as the answer.
9. All calculations should be shown clearly.
10. All workings, including rough work, should be done on the same page as, and adjacent to, the rest of the answer.
11. The intended marks for questions or parts of questions are given in the brackets [].

SECTION−A (14 MARKS) subscribed 2.8 times

Answer all questions.  (Source: The Hindu, Business Line, 15 August, 2023)
Which of the following options can TVS Supply
Question 1.
Chain avail to deal with its over-subscribed shares?
In subparts (i) to (v) choose the correct options and in
P Reject all the over-subscribed shares and refund
subparts (vi) to (x) answer the questions as instructed.
the excess application money.
(i) Shiv, Ravi and Roshan are partners in a firm following
the fixed capital method. During the year 2023–24, Q Allot all shares applied for on a pro-rata basis.
Shiv withdrew ` 15,000 in the middle of each half R Allot all shares applied for.
year; Ravi withdrew ` 20,000 to pay for premium of S Allot in full to some applicants, allot shares on a
his life insurance policy; Roshan withdrew ` 12,000 pro-rata basis to a few applicants and refund the
from his capital. [1] application money to some applicants.
What is the interest on drawings charged from the (a) P, Q and R (b) Q, R and S
partners at the end of the year, if the rate of interest (c) P, R and S (d) P, Q and S
on drawings mentioned in the partnership deed is
(iv) Premium on Redemption of Debentures is debited
6% per annum?
to: [1]
(a) Shiv – 900; Ravi – Nil; Roshan – 360
(a) Debentures Account
(b) Shiv – 900; Ravi – 600; Roshan – Nil
(b) Loss on issue of Debentures Account
(c) Shiv – 1,800; Ravi – 1,200; Roshan – 720
(c) Debenture holders’ Account
(d) Shiv – 900; Ravi – 1,200; Roshan – 360
(d) Debenture Application and Allotment Account
(ii) To value the goodwill of a partnership firm at the
(v) Assertion: A partnership firm is said to maintain its
time of its reconstitution, which one of the following
accounts by the fixed capital account method when
items is added back to the previous year’s profit to
it has a separate capital account and current account
find the normal profit? [1]
for every partner. [1]
(a) Gain from sale of shares
Reason: A fixed capital account method is maintained
(b) Insurance premium paid to ensure that the balance in the current account of
(c) Undervaluation of closing stock any partner is not overdrawn at any point of time.
(d) Overvaluation of closing stock Which one of the following is correct?
(iii) Read the following news item regarding issue (a) Both Assertion and Reason are true and Reason
of shares by TVS Supply Chain and answer the is the correct explanation for Assertion.
question that follows: [1] (b) Both Assertion and Reason are true but Reason
TVS Supply Chain IPO is not the correct explanation for Assertion.
 Solved Paper - 2025 2
(c) Assertion is true and Reason is false. As at 31st March 2024
(d) Both Assertion and Reason are false.
Liabilities (`) Assets (`)
(vi) What does a new partner acquire by contributing his
share to the self-generated goodwill of the firm? [1] Creditors 15,000 Plant & Machinery 1,20,000
(vii) At the time of dissolution of a partnership firm on Sundry Debtors 1,50,000 1,35,000
31st March 2024, its Bills Payable of ` 42,000 due to Less Provision for
be paid on 31st July 2024, was settled at a rebate of Doubtful Debts  (15,000)
` 350. [1]
On the admission of Rita as a third partner for 1/4
Calculate the per annum percentage of rebate at
share in the profits, the assets and liabilities of the
which the Bills Payable was settled.
firm were revalued as under:
(viii) At the time of the dissolution of the partnership
(i) Creditors include an amount of ` 5,000 received as
firm of Sanjay and Mitali, its Balance Sheet showed
commission from Ajay. The necessary adjustment to
Deferred Revenue Expenditure of ` 30,000. [1]
be made.
Give the journal entry to treat this item.
(ii) Creditors include ` 1,000 due to Nikhil paid by
(ix) Read the following news item and answer the partner Gita privately for which she is not to be
questions which follow: [1] reimbursed.
In a strong display of innovation, IIT Kanpur filed (iii) The value of machinery, overvalued by ` 20,000 in
a total of 122 intellectual property rights (IPR) the Balance Sheet, to be revised.
applications in 2023. To date, it has 1,039 successful
(iv) Out of the total insurance premium paid, ` 6,000 to
IPRs. The patents for inventions are from varied
be treated as prepaid insurance. The amount was
domains such as MedTech and Nano Technology.
earlier debited to Profit & Loss A/c.
 (Source (edited): Financial Express. 11, January, 2024)
(v) ` 20,000 for damages claimed by a customer had
(a) Mention the sub-head under which patents been disputed by the firm. It was agreed at 70% by a
would be shown in the Balance Sheet of a compromise between the customer and the firm.
company prepared as per Schedule III of the (vi) The provision for doubtful debts to be increased to
Companies Act, 2013. ` 20,000.
(b) Give any one other item under the same sub- You are required to prepare the Revaluation
head. Account.
(x) Why is it advisable for an unlisted manufacturing Question 3.
company to start transferring its profits to Debenture On 1st April 2023, Vishesh Co. Ltd.made an issue,
Redemption Reserve from the year of the issue of its which was fully subscribed, of 8,000, 5% Debentures
non-convertible debentures? [1] of ` 100 each at a premium of 10% repayable at par
Question 2. at the end of 10 years. The debentures were allotted
Ajay and Bijoy are two partners sharing profits and losses on 31st August 2023, subscriptions being payable:[3]
in the ratio of 2:1. [3] 10% with Application
Balance Sheet of Ajay and Bijoy (extract) 50% (along with premium) on Allotment
As at 31st March 2024 20% with First Call
Liabilities (`) Assets (`) Balance on the Second & Final Call
One debenture holder holding 200 debentures paid
Workmen Compensation Reserve 1,200
the First Call with Allotment.
Additional information: You are required to prepare the Cash Book for
(a) On 1st April 2024, they admitted Sujay as a the year 2023–24 to record the above issue of
partner with ½ share in the profits. debentures. (Ignore interest on debentures).
(b) The Workmen Compensation Reserve to be OR
reduced to ` 900 in the reconstituted firm. Mint Ltd. issued 5,000, 6% Debentures of ` 100 each
to be redeemed at par after five years.
You are required to give the accounting treatment
of Workmen Compensation Reserve on the date of The issue price was payable as follows:
Sujay’s admission. ` 25 on Application payable on 1st May 2023
OR ` 25 on Allotment payable on 1st July 2023
Gita and Mita are partners in a firm sharing profits ` 20 on First Call payable on 1st October 2023
and losses in the ratio of 3:2. An extract of their Balance on Second & Final Call payable on 1st
Balance Sheet as at 31st March 2024, is as follows:  [3] February 2024
Balance Sheet of Gita and Mita (extract)
3 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12
All these debentures were subscribed and amounts Question 6.
due on them duly received. Hoody Ltd. made the following borrowings in the
One debenture holder holding 1,000 debentures, year 2023–24: [6]
paid the amount of both the calls with allotment.
On 1st April 2023: ` 25,00,000
According to the Articles of Association of the
company, interest @ 12% per annum is payable on Ten year, 10% Bank Loan from AZ
calls-in-advance. The interest on calls-in-advance Bank secured by a primary security
was paid by the company to the debenture holder and 20,000, 6% Debentures of ` 100
on 1st February 2024. each as collateral security, the issue
The company follows the financial year and closes of which was recorded in the books.
its books accordingly. On 1st October 2023: ` 5,00,000
You are required to prepare the following for the 5,000, 8% Debentures of ` 100 each,
year 2023–24: redeemable at par in five equal
(i) Interest on Calls-in-Advance Account. [1] annual instalments.
(ii) Second & Final Call Account. [2]
The terms of the borrowings were:
Question 4.
• The redemption of 8% Debentures to begin from
Shyla Ltd., an unlisted manufacturing company,
had 30,000, 6% Debentures of ` 100 each due for 30th September 2024.
redemption at par on 31st March 2024. On this • Interest on Bank Loan and Debentures to be
date, the company had the required amount in its paid annually.
Debenture Redemption Reserve. Additional information:
Investment, as required by the law, made on 1st In the year 2023–24, the company defaulted on the
April 2023, earning interest @ 5% per annum, was payment of the interest on bank loan.
realised at 97% on the date of redemption and the You are required to show the above items in Notes
debentures were redeemed on the due date. to Accounts accompanying the Balance Sheet of
Tax @ 10% on the interest was deducted at the Hoody Ltd. prepared as per Schedule III of the
source of the investment. Companies Act, 2013. as at 31st March 2024.
You are required to prepare the following for the Question 7.
year 2023–24: Uma and Aman were partners in a firm sharing
(i) Debenture Redemption Investment Account. profits and losses in the ratio of 2:1. They closed their
 [1.5] books on 31st March every year. Uma died on 31st
(ii) Interest on Debenture Redemption Investment July 2024, when the Balance Sheet of the firm was as
Account. [1.5] follows:
Question 5. Balance Sheet of Uma and Aman
Anu, Benu and Sara are partners in a firm sharing As at 31st July 2024
profits and losses in the ratio of 4/9: 2/9: 1/3. Anu Liabilities (`) Assets (`)
retires from the firm on 1st April 2024. She gives half
of her share to Benu and the remaining half to Sara. Sundry Creditors 30,000 Cash at Bank 84,000
On Anu’s retirement, it is decided that goodwill Loan from Uma 10,000 Fixed Assets 78,000
of the firm be valued at two years’ purchase of the General Reserve 24,000 Goodwill 24,000
average profits of the preceding four years which
were as follows: Profit for four months
(before any interest
Year Profit and appropriations) 62,000
2020–21 ` 40,000 (including gain from speculation
Capital Accounts:
` 4,000)
Uma  36,000
2021–22 ` 80,000 (excluding repairs of machinery
` 6,000) Aman 24,000 60,000
2022–23 ` 1,10,000 1,86,000 1,86,000
2023–24 ` 40,000 (loss)
According to the terms of their partnership deed:
You are required to calculate: (a) Interest on capital to be allowed to the partners
(i) The new profit-sharing ratio of the remaining @ 4% per annum.
partners in the reconstituted firm.  [1] (b) Uma to be allowed a salary of ` 250 per month.
(ii) The firm’s goodwill on the date of Anu’s The firm’s non-purchased goodwill on the date of
retirement. Uma’s death was valued at ` 12,000.
(Show the workings clearly with the formula) [2] The amounts due to Uma were transferred to her
representative’s loan account.
 Solved Paper - 2025 4
You are required to prepare: as shown in the Balance Sheet as at 31st March 2024,
(i) Uma’s Capital Account.  [5] represented by ‘?’.
(ii) Uma’s Loan Account.  [1] Question 9. [10]
OR Tim and Leena started a partnership business on
Ravi, Ali and Siya are partners in a firm sharing 1st July 2023, with fixed capital contributions of
profits and losses in the ratio of 4:3:2.  [6] ` 3,00,000 and ` 2,50,000 respectively.
Ali retired from the firm on 31st March 2024, when On 1st January 2024, they decided that:
the capitals of the partners before the following The total fixed capital of the firm to be ` 6,00,000
necessary adjustments stood at: contributed by the partners in the profit-sharing
Ravi ` 23,000 ratio. Accordingly on 1st January 2024, Tim and
Leena introduced or withdrew capital.
Ali ` 12,000
Their partnership deed contained the following
Siya ` 9,000
clauses:
Adjustments:
(a) Interest on capital to be allowed @10% per
(a) The firm’s goodwill to be valued at ` 21,600.
annum to both the partners.
(b) Loss on revaluation of assets and liabilities to be
(b) Rent @ ` 2,000 per month to Tim for the use of
` 2,700.
his premises for business purposes.
On the date of Ali’s retirement, the firm had:
(c) 10% of the Trading Profit to be transferred to
General Reserve of ` 6,300
General Reserve.
Cash & Bank Balance of ` 18,600
(d) The profit-sharing ratio of the partners to be 3:2.
It was decided that Ali be paid through cash brought
The trading profit of the firm for the first year of
in by Ravi and Siya in such a manner so as to make
the partnership after considering all charges against
their capitals proportionate to their new profit-
profits was ` 1,50,000.
sharing ratio and a minimum Cash & Bank Balance
of ` 10,000 to be maintained in the reconstituted You are required to pass journal entries for the year
firm. 2023–24.
You are required to pass journal entries to record OR
the above transactions. (A) Nida and Pia, each doing business as sole proprietors,
Question 8. [6] started a partnership on 1st April 2023, with capital
contributions of ` 5,00,000 and ` 4,00,000.
Mihir and Farhan were partners in a firm sharing
profits and losses equally. They dissolved their Their partnership deed contained the following
partnership firm on 31st March 2024. clauses:
On this date, the Balance Sheet of their firm, apart (a) Interest on capital to be allowed @ 10% per
from the realisable assets and outside liabilities, annum to both the partners.
showed the following: (b) Annual commission of 30,000 to be allowed to
Nida.
Particulars (`)
(c) Interest on drawings to be charged @ 4% per
Mihir’s Capital 60,000 (Cr.) annum.
Farhan’s Capital 20,000 (Dr.) (d) The profit-sharing ratio to be 3:2.
Workmen Compensation Reserve 12,000 Nida withdrew 10,000 during the year 2023–24.
Profit & Loss Account 6,000 (Cr.) The trading profit of the firm for the year ending 31st
March 2024, was 70,640 before considering accrued
Bank Account ‘?’ interest on investments of ` 1,600.
On the date of dissolution: Although the accountant had recorded the drawings
made by the partners, he distributed the profits
(a) The firm, upon realisation of assets and
before charging interest on drawings from Nida but
settlement of liabilities, suffered a loss of ` 10,000.
after considering the following:
(b) The amount paid to settle the liabilities exceeded
• Accrued interest on investments of ` 1,600.
the amount realised from the sale of the assets by
• Allowing the appropriations of interest on
` 8,000.
capital and commission.
(c) Stock worth ` 3,000 was taken over by Farhan.
You are required to prepare the following for the
(d) Mihir discharged the Bills Payable, recorded in year 2023–24:
the books at ` 5,000, at a rebate of ` 100. (i) Profit and Loss Appropriation Account as
(e) There was a workmen compensation claim of prepared by the accountant of the firm. [5.5]
` 4,000. (ii) Nida’s Drawings Account. [2]
You are required to prepare on the date of (B) At the beginning of the next financial year, the
dissolution of the firm: accountant realised his error of not having charged
(i) The Partners’ Capital Accounts. interest on drawings from Nida. He rectified the
(ii) The Bank Account to determine its balance at bank error by passing a single adjustment entry. [2.5]
5 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12
You are required to give the rectified adjustment You are required to:
entry passed by the accountant. (i) Pass journal entries to record the above
(Show your workings clearly) transactions in the books of the company. [8.5]
Question 10. (ii) Prepare the Calls-in-arrears Account. [1.5]
Cosmic Ltd. issued 40,000 equity shares of ` 10 each OR
at a premium of ` 1 per share payable: NM Co. Ltd. issued a prospectus inviting applications
On Application `3 for 12,000 shares of ` 10 each at a premium of ` 1 per
share.
On Allotment ` 4 (including premium)
The public applied for 30,000 shares. The company
On First and Final Call Balance 3 made pro-rata allotment on 24,000 shares. A
shareholder who had applied for 2,000 shares, was
The public applied for 60,000 shares. Pro-rata allotted 1,000 shares. After having paid ` 4 per share
allotment was made to the applicants of 50,000 on application, he did not pay the allotment money
shares. Where no allotment was made, money was of ` 5 per share (including premium).
to be refunded in full.
On his subsequent failure to pay the first call of ` 1
One shareholder who had applied for 500 shares did per share, his shares were forfeited.
not pay the allotment money and his shares were
These shares were reissued at the rate of ` 7 per
forfeited after the allotment stage. The company was
share ` 9 paid up.
able to immediately reissue all the forfeited shares at
` 5 per share. The company incurred ` 5,000 as share issue
expenses.
Three months later, the First and Final Call was
made to all the shareholders. Based on the information given above and the
ledger accounts given below, answer the questions
that follow:
Share Issue Expenses A/c
Particulars Amount (`) Particulars Amount (`)
To’?’ ’?’ By ‘?’ ’?’

Calls-in-Arrears A/c
Particulars Amount (`) Particulars Amount (`)
To Share Allotment A/c ’?’ By Share Capital A/c ’?’
To Share First Call A/c ’?’ By Securities Premium A/c ’?’

You are required to: their salaries back.”

(i) Draw the ledger accounts given above filling up  (Source (edited): Mint, 14 February, 2024)
the missing information represented by ‘?’. [3] The original Current Ratio and Quick Ratio of
(ii) What is the balance left in the Securities Red Health are more than one. Which one of the
Premium A/c after all the transactions relating to following will be correct for the month of January
the shares have been completed by NM Co. Ltd? 2024 if the company had held back the salaries of its
employees for the same month?  [1]
 [1]
(a) Both Current Ratio and Quick Ratio will decrease.
(iii) Give the journal entries for: [6]
(b) Both Current Ratio and Quick Ratio will increase.
(a) The amount due on allotment.
(c) No change in the Quick Ratio but the Current
(b) The amount received on allotment.
Ratio will increase.
(c) Transferring the net gain made on reissue of
(d) No change in the Current Ratio but the Quick
shares to Capital Reserve Account.
Ratio will increase.
SECTION−B (20 MARKS) (ii) On 1st April 2023, Tarzan Ltd. purchased 7,000, 7%
Question 11. Debentures of ` 100 each of Tintin Ltd. It received
In subparts (i) and (ii) choose the correct options interest of ` 7,000 on these debentures on 31st March
and in subparts (iii) to (v) answer the questions as 2024. [1]
instructed. How will this information be presented in the Cash
(i) Red Health, an ambulance aggregator has paid its Flow Statement of Tarzan Ltd. for the year 2023–24?
employees only half their January salaries. The P ` 70,000 as cash outflow in Investing Activity
company has gone in for funding. In response to Q ` 70,000 as cash outflow in Financing Activity
queries from Mint, Red Health’s founder and CEO R ` 7,000 as cash inflow in Investing Activity
said, “Our funding round is closed and we are S ` 7,000 as cash ouflow in Operating activity
waiting money to be wired by this week. On the
(a) Only P and R (b) Only P and S
basis of that, and to manage our working capital,
we had given a choice to our old employees to hold (c) Only P and Q (d) Only R and S
 Solved Paper - 2025 6
(iii) According to the ratings agency, Crisil, the food and (ii) Calculate the Trade Receivables Turnover Ratio of
grocery players will cap their debt raising in FY 25 in Planet Ltd. from the particulars given below: [2]
order to ensure that one of the key debt protection
metrics, the interest cover, remains healthy in line Particulars (`)
with the previous fiscal’s level of 13 times. [1] Revenue from Operations 3,60,000
 (Source(edited): Financial Express, 23 December, 2023) Cash Revenue from Operations 90,000
You are required to give the formula to calculate the
Net Closing Trade Receivables 45,000
interest cover.
(iv) While preparing the Cash Flow Statement, the Provision for Doubtful Debts 10,000
accountant of Red Hill Co. Ltd. was undecided (iii) Bajaj Hindustan Sugar, one of the largest sugar and
about the impact of amortisation of discount on ethanol producers, in order to revive the company,
issue of debentures of ` 10,000 on the company’s Net has offered to invest ` 2,500 crore as fresh equity of
Operating Profit before working capital changes. which ` 1,000 crore has already been infused.  [2]
What should the accountant do to resolve this  (Source(edited): Economic Times, Mumbai Edition 08,
issue? Give a reason for your answer. [1]
 August 2023)
(v) Read the news item given below and answer the
What will be the effect of this decision of Bajaj
questions that follow: [1]
Hindustan Sugar on its following ratios?
Online news aggregator, InShorts, saw its loss widen
(a) Proprietary Ratio
by over a third during the year ended March 2023,
to ` 309·7 crore, from ` 231·8 crore in fiscal 2022, as (b) Debt to Total Assets Ratio
expense rose faster than revenue. Advertisement (iv) Calculate the Earning per share of Hemisphere Ltd.
income – the company gets most of its ads on its from the particulars given below: [2]
app-increased 4·3% to ` 147 crore. The remainder of
Particulars (`)
its income came from support services.
 (Source: Economic Times, November 26, 2023) 10% Debentures 5,00,000
(a) Mention whether Advertising income is an 8% Bank Loan 3,00,000
operating income or a non-operating income for 5% Preference Share Capital 2,00,000
InShorts.
Profit before Interest and Tax 2,44,000
(b) What is the percentage increase in loss of
InShorts in the fiscal year 2022–23 as compared Provision for Tax 20,000
to 2021–22? Tax paid 18,000
Question 12. [3] Equity Share Capital (@ ` 10 each) 8,00,000
Following are the particulars of Richmond Ltd.
Question 14.
Particulars 31.03.2024 31.03.2023 From the following information of Realty Ltd., you
(`) (`) are required to calculate the company’s Cash and
Revenue from Operations 5,00,000 4,00,000 Cash Equivalent as on 31st March 2024, by preparing
a Cash Flow Statement (as per AS 3). [6]
Purchases of stock-in-trade 3,00,000 3,36,000
Information pertaining to the year 2023–24:
Opening inventory of stock-in- 1,40,000 1,00,000 (i) Net profit before tax was ` 14,00,000.
trade (ii) Tax of ` 5,00,000 was paid.
Adjusted purchases of stock- 4,10,000 3,20,333 (iii) The opening inventory was higher than the
in-trade closing inventory by ` 50,000.
You are required to calculate the absolute change and (iv) The Trade Creditors showed a decrease of
percentage change of the following items at the end of ` 20,000 on 31st March 2024, when compared to
the year 2023–24 vis-a-vis the closing amounts of the the amount of Trade Creditors on 31st March 2023.
year 2022–23: (v) Plant & Machinery on 31st March 2023, and
(i) Revenue from operations 31st March 2024, amounted to ` 20,00,000 and
(ii) Purchases of stock in trade ` 26,00,000 respectively.
(iii) Closing inventory of stock-in-trade (vi) New machinery was purchased for ` 9,00,000;
Question 13. the purchase consideration being 4% debentures
Answer any three of the following questions: of the face value of ` 100 each issued at a discount
(i) Calculate the Gross Profit of Saturn Ltd. from the of 10%.
particulars given below:  [2] (vii) The 4% debentures on 31st March 2023, and
Particulars 31st March 2024, amounted to ` 5,00,000 and
` 20,00,000 respectively.
Average Inventory 8,000
(viii) ` 60,000 was paid by the company for interest on
Inventory Turnover Ratio 6 times debentures against the amount due of ` 80,000.
Selling Price 25% above cost
7 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12
(ix) Investments of ` 5,00,000 were purchased on 30th (x) The cash and cash equivalent as on 31st March
November 2023, on which interest of ` 40,000 2023, was ` 3,15,000.
was earned and received.
OR
Read the following information of Celestial Ltd., and answer the questions that follow:
Statement of Profit and Loss
for the year ended 31st March 2024
Particulars Note No. (`)
Revenue from Operations 10,00,000
Other Income 1 40,000
Total Revenue 10,40,000
Expenses:
Employee Benefit Expenses 1,60,00
Depreciation and Amortisation Expenses 2 60,000
Finance Cost 3 50,000
Other Expenses 2,20,000
Total Expenses 4,90,000
Profit before Tax 5,50,000
Less Provision for Tax (2,00,000)
Profit after Tax 3,50,000

Notes to Accounts:
Particulars (`)
1. Other Income
Interest on Short-term Loans and Advances 1,00,000
(including interest accrued `10,000)
2. Depreciation and Amortisation Expenses:
Depreciation on Plant & Machinery 60,000
3. Finance Cost
Interest on Debentures (including outstanding interest ` 20,000) 50,000

Additional information: 2. An extract of the Balance Sheets of the company

1. During the year 2023–24, the company paid tax as at 31st March 2023, and as at 31st March 2024 is
of ` 2,50,000. as follows:
Particulars 31st March 2024 (`) 31st March 2023 (`)
Plant & Machinery (At Gross Value) 19,00,000 16,00,000
Accumulated Depreciation 4,00,000 5,00,000
Short-term Loans and Advances 5,00,000 6,50,000

(i) State the reason for a part of the accumulated (i) What is the cell reference for a range of cells that
depreciation being written off by the company. starts in cell B1 and goes over to column G and
 [1] down to row 10? [1]
(ii) What is the cash flow of interest on debentures? (a) B1-G10 (b) B1.G10
 [1] (c) B1;G10 (d) B1:G10*
(iii) Calculate Cash from Investing Activities. [1.5] (ii) Which property describes the various characteristics
of an entity in DBMS? [1]
(iv) Calculate Cash from Operating Activities. [2.5]
(a) ER Diagram (b) Column
SECTION−B (20 MARKS) (c) Relationship (d) Attribute
Question 15. (iii) Name the spreadsheet which can be used to manage
In subparts (i) and (ii) choose the correct options online records like Signup Form or Registration Form.
and in subparts (iii) to (v) answer the questions as  [1]
instructed. (iv) How can the records of a spreadsheet be: [1]
 Solved Paper - 2025 8
(a) Imported? Question 18.
(b) Exported? Premier Furniture Ltd. runs a furniture store in city
(v) Give the description of the following two errors in C. The store has three Sales Executives, SE1, SE2 and
Excel: [1] SE3.
(a) # NULL The company has a policy of awarding incentives.
(b) # NUM SE2 was awarded an incentive as from 1ª April 2023,
equal to 10% of his monthly Basic Pay. The incentive
Question 16. [3]
was combined with Other Allowances.
(i) Give the meaning of Database design.
Another policy of Premier Furniture Ltd. is that an
(ii) What does the PMT function calculate? employee can increase his portion of PF contribution
Question 17. from 10% to 15% of the Basic Pay. The contribution
Answer any three of the following questions. of the employer remains the same at 10% of the
(i) What is the utility of Freeze Panes in spreadsheets? Basic Pay.
 [2] SE1 accordingly increased his PF contribution from
(ii) What is a Data Model? [2] 1st April 2023, itself, to 15%.
(iii) List the components of storage manager. [2] The payroll summary representing the cumulative
(iv) Give any two differences between DELETE position of the three executives at the end of the year
2023–24 is as follows:
command and TRUNCATE command. [2]
Payroll Summary of Premier Furniture Ltd. for the year ended 31st March 2024
A B C D E F G H I J K
1 Emp Basic HRA Convey Other PF- PF- Misc. Income Gross Net
loyee Pay ance Allowa Emplo Employee Deduct Tax Salary Salary
nces yer Contribut ions
Contri ion from
bution Salary
2 SE1 30,00,000 75,000 60,000 30,000 30,000 ?? 20,000 5,000 ??
3 SE2 2,40,000 60,000 48,000 ?? 24,000 24,000 25,000 4,000 3,84,000 ??
4 SE3 2,00,000 50,000 40,000 30,000 20,000 20,000 15,000 3,000 ??

Based on the above transactions and the information (ii) Net Salary of SEl in Cell K2. [2]
given in the spreadsheet, answer any three of the (iii) Other Allowances (excluding the incentive)
following questions: earned by SE2 in Cell E3. [2]
(i) PF contribution of SEI in Cell G2. [2] (iv) Gross Salary of SE3 in Cell J4. [2]
9 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12

ANSWERS
SECTION – A Current Account can show both credit or debit
balance, So assertion is true but reason is false.
Answer 1.
(vi) A new partner gets the share of additional profit
(i) Option (b) is correct.
over the normal profit in future profits of the firm
Explanation: Average time for Shiv’s because of the value and reputation the old partners
9+3 have built by contributing his share to the self-
=  = 6 months
 2  generated goodwill of the firm.
Interest on his drawings
(vii) Rebate
6 6
= (15, 000 × 2 ) × × = ` 900
= Amount × Time outstanding ×
Rate of rebate
100 12 6 6 100
Interest on Ravi’s drawings = 20 , 000 × =` 600
100 12 4 Rate of rebate
Interest on Roshan’s drawings = Nil (As his capital 350 = 42 , 000 × ×
12 100
has been reduced for the withdrawn amount) 350 × 12 × 100
(ii) Option (c) is correct. Rate of rebate = = 2.5%
42 , 000 × 4
Explanation: Since the closing stock was undervalued, (Viii) Sanjay’s Capital A/c Dr. 15,000
the profit for that year was understated. Adding it Mital’s Capital A/c Dr. 15,000
back correct the profit figure.
   To Deferred Revenue Expenditure 30,000
(iii) Option (d) is correct.
(Being deferred revenue expenditure transferred to
Explanation: Subscribed capital cannot be more than partner’s Capital A/c)
issued capital. Hence, TVS Supply Chain cannot
(ix) Patents will be shown under the sub-head Property,
allot all the shares applied for as these are more than
Plant , Equipment and Intangible assets.
the number of shares issued for subscription.
Goodwill is another item which is shown under this
(iv) Option (b) is correct.
sub-head.
Explanation: When debentures are to be redeemed
(x) It is advisable for an unlisted manufacturing
at a premium, the premium amount is considered a
company to start transferring its profits to DRR
loss for the company. This loss is transferred to Loss
from the year of the issue of its non-convertible
on Issue of Debenture A/c.
debentures due to following reasons:
(v) Option (c) is correct.
(a) Financial Security: Ensures funds for debenture
Explanation: Under the Fixed Capital method, two
redemption.
accounts — Capital and Current — are maintained
for each partner. The purpose of separating these (b) Smoother Cash Flow: Avoids large, sudden
accounts is to keep the original capital investment payouts.
distinct from the fluctuations caused by regular (c) Legal Compliance: Many jurisdictions and
business transactions. All the adjustments related laws make it mandatory in order to make funds
to partner’s capital (except additional capital available at the time of redemption of debentures.
introduced or permanent capital withdrawn) are (d) Protection: It protect debenture holders, and
passed through partner’s Current Account. Hence, maintain the company’s creditworthiness
Answer 2.
Journal Entries
Date Particulars L.F. Amount Dr. (`) Amount Cr. (`)
Workmen Compensation Reserve A/c Dr. 300 -
   To Ajay’s Capital A/c - 200
   To Bijoy’s Capital A/c - 100
(Being WCR ` 300 transferred to old partner’s Capital A/c)
Sujoy’s Capital A/c Dr. 225 -
   To Ajay’s Capital A/c - 150
   To Bijoy’s Capital A/c - 75
(Being adjustment of accumulated profit on admission of
Sujoy)
1 be credited to Ajay and Bijoy’s Capital A/c in their
Working Note: Share of Profit of Sujoy =
1 4 sacrificing ratio i.e., 2 :1.
So, of ` 900 to be debited to Sujoy’s capital and to
4
 Solved Paper - 2025 10
OR
Revaluation A/c
Dr. Cr.
Particulars Amount (`) Particulars Amount (`)
To Machinery 20,000 By Creditors A/c 5,000
To Claim for damages 14,000 By Creditors A/c (not to be paid) 1,000
To P.B.D. 5,000 By Prepaid Insurance A/c 6,000
By Partner’s Capital A/c: (Loss)
  Gita 16,200
  Mita 10,800 27,000
39,000 39,000
Working Note: Nothing has been mentioned about claim for damages in firm’s balance. Hence, it is assumed that
claim was not accepted earlier but now it has been accepted 70% of 20,000, i.e., ` 14,000.
Answer 3.
In the Books of Vishesh Co.
Dr. Cash Book Cr.
Particulars Amount (`) Particulars Amount (`)
To Debenture App. A/c 80,000 By Balance c/d 8,80,000
To Debenture Allot. A/c 4,80,000
To Debenture first call A/c 4,000
To Debenture first call A/c 1,56,000
To Debenture final call A/c 1,60,000
8,80,000 8,80,000
OR
In the Books of Mint Limited
Dr. Interest on Calls in Advance A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Debenture holder’s A/c 2,700 By P& L A/c 2,700
2,700 2,700
Working Note :
Calculation of interest on Calls in Advance 12% of 20,000 for 3 months + 12% of 30,000 for 7 months
 12 3   12 7 
=  20 , 000 × 100 × 12  +  30 , 000 × 100 × 12 
   

= 600 + 2,100

= ` 2,700
Dr. Second and Final Call A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Debenture Capital A/c 1,50,000 By Bank A/c 1,20,000
By Calls in Advance A/c 30,000
1,50,000 1,50,000
Answer 4.
In the books of Shyla Ltd.
Dr.              Debenture Redemption Investment A/c Cr.
Date Particulars Amount (`) Date Particulars Amount (`)
1 April 2023 To Bank A/c 4,50,000 March 31 2024 By Bank A/c 4,36,500
By P &L A/c (Loss on sale) 13,500
4,50,000 4,50,000
11 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12
Dr. Interest on Debenture Redemption Investment A/c Cr.
Date Particulars Amount (`) Date Particulars Amount (`)
31 March 2024 To Statement of P&L 22,500 31 March 2024 By Bank A/c 20,250
By TDS deposited A/c 2,250
22,500 22,500
Answer 5.
4 2 1 4:2:3
(i) Old Ratio of Anu, Benu and Sara = = : : = 4:2:3
9 9 3 9
 4
Anu retires  Anu's share = 
 9
1 4 2
Half of Anu’s share = × =
2 9 9
2 2 4
Benu’s new share = + =
9 9 9
3 2 5
Sara’s new share = + =
9 9 9 4 5
New profit sharing ratio of Benu and Sara = : = 4 : 5
9 9
(ii) Adjusted profit for 2020–21 = 40,000 – 4,000 (abnormal gain) = ` 36,000
Adjusted profit for 2021–22 = 80,000 – 6,000 (repair of machinery) = ` 74,000
2022–23 = ` 1,10,000
2023–24 = ` 40,000 (Loss)
Average profit of the preceding four years
36 , 000 + 74 , 000 + 1, 10 , 000 + ( 40 , 000 )
= = ` 45,000
4
Goodwill = Average profit × No. of year’s purchase
= 45,000 × 2
= ` 90,000
Answer 6.
In the Books of Hoody Ltd.
Balance Sheet (An Extract)
as at 31st March 2024
Particulars Note No. Amount (`)
I. EQUITY AND LIABILITIES
Non–Current Liabilities
   Long-term Borrowings 1 29,00,000
Current Liabilities
   Short-term Borrowings 2 1,00,000
Other Current Liabilities 3 2,70,000
Notes to Accounts
Particulars Amount (`)
(1) Long-term Borrowings
   (a) 10% bank loan (taken on 1st April 2023 repayable in 10 years) 25,00,000
   (b) 6% Debentures 25,00,000
    Less: Debentures Suspense (25,00,000)
   (c) 8% Debentures 4,00,000 29,00,000
(2) Short-term Borrowings
   8% Debentures (to be redeemed within 12 months of balance sheet date) 1,00,000
(3) Other Current Liabilities
   (a) Interest on 10% bank Loan (Defaulted) 2,50,000
   (b) Interest on 8% Debentures 20,000 2,70,000
 Solved Paper - 2025 12
Answer 7.
Working Notes
Dr. Profit and Loss Appropriation A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Interest on Partner’s Capital By Profit & Loss 62,000
  Uma   480
  Aman   
320 800
To Salary (Four month)
  Uma 1,000
To Partner’s Capital A/c
  Uma   40,133
  Aman   
20,067 60,200
62,000 62,000
Dr. Uma’s Capital A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Goodwill A/c 16,000 By Balance b/d 36,000
To Uma’s Executor’s Loan A/c 85,613 By Interest on Capital 480
By Salary 1,000
By General Reserve 16,000
By P& L Appropriation A/c 40,133
By Aman’s Capital A/c 8,000
1,01,613 1,01,613
Dr. Uma’s Loan A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Uma’s Executor’s Loan A/c 10,000 By Balance b/d 10,000

10,000 10,000
OR
Dr. Partner’s Capital A/c Cr.
Particulars Ravi Ali Siya Particulars Ravi Ali Siya
To Revaluation A/c 1,200 900 600 By Balance b/d 23,000 12,000 9,000
To Ali’s Capital A/c 4,800 - 2,400 By General Reserve 2,800 2,100 1,400
To Balance c/d 19,800 20,400 7,400 By Ravi’s Capital A/c - 4,800 -
By Siya’s Capital A/c - 2,400 -
25,800 21,300 10,400 25,800 21,300 10,400
To Bank A/c - 20,400 - By Balance b/d 19,800 20,400 7,400
To Balance c/d 26,000 13,000 By Bank A/c 6,200 5,600
26,000 20,400 13,000 26,000 20,400 13,000
Working Note: Amount to be paid = ` 20,400 and cash balance to maintained = 10,000 = 30,400
Available cash = 18,600
Remaining cash to be brought in = 30,400 – 18,600 = ` 11,800
Combined capital of Ravi and Siya = 19,800 + 7,400 = 27,200
+ Cash to be brought in = 11,800 = 39,000
Capital of New Firm = 27,200 + 11,800 = 39,000
4
Capital of Ravi as new ratio = 39 , 000 × = ` 26,000
6
Existing capital = 19,800
13 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12
Cash to be brought in by Ravi = 26,000 – 19,800 = 6,200
2
Capital of Siya as new ratio = 39 , 000 × = ` 13,000
6
Existing capital = 7,400
Cash to be brought in by Siya = 13,000 – 7,400 = ` 5,600
Answer 8.
Dr. Partner’s Capital A/c Cr.
Particulars Mihir Farhan Particulars Mihir Farhan
To Balance b/d - 20,000 By Balance b/d 60,000 -
To Realisation A/c - 3,000 By Workmen 4,000 4,000
Compensation Reserve
A/c
To Realisation A/c 5,000 5,000 By Realisation A/c 4,900 -
To Bank A/c 66,900 - By P&L A/c 3,000 3,000
By Bank A/c - 21,000
71,900 28,000 71,900 28,000
Dr.                      Bank A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Balance b/d (Bal.Fig.) 53,900 By Realisation A/c 8,000
To Farhan’s capital A/c 21,000 To Mihir’s capital A/c 66,900
74,900 74,900
Answer 9.
In the Books of Tim and Leena
Journal Entries
Date Particulars L.F. Amount Dr. (`) Amount Cr. (`)
1 July 2023 Cash A/c Dr. 5,50,000
   To Tim’s Capital A/c 3,00,000
   To Leena’s Capital A/c 2,50,000
(Being capital brought in by partners)
1 January 2024 Cash A/c Dr. 60,000 -
   To Tim’s Capital A/c 60,000
(Being additional capital brought in by Tim)
Leena’s Capital A/c Dr. 10,000 -
   To Cash A/c - 10,000
(Being capital withdrawn by Leena)
31 March 2024 Profit and Loss A/c Dr. 18,000 -
   To Tim’s Current A/c - 18,000
(Being rent allowed to Tim)
Profit and Loss A/c Dr. 1,50,000 -
   To P&L Appropriation A/c - 1,50,000
(Being net profit transferred)
P&L Appropriation A/c Dr. 15,000 -
   To general reserve - 15,000
(Being 10% Profit transferred to Reserve)
Interest on Capital A/c Dr. 42,500 -
   To Tim’s Current A/c - 24,000
   To Leena’s Current A/c - 18,500
(Being interest on capital of partners)
 Solved Paper - 2025 14

P&L Appropriation A/c Dr. 42,500 -

   To Interest on Capital A/c - 42,500
(Being appropriation of interest on capital)
Profit and Loss Appropriation A/c Dr. 92,500 -
   To Tim’s Current A/c 55,500
   To Leena’s Current A/c 37,000
(Being P&L balance transferred)
Working Note:
Interest on Tim’s capital: 10% of 3,00,000 for 6 months + 10% of 3 ,60,000 for 3 months
10 6 10 3
= 3, 00 , 000 × × + 3, 60 , 000 × = 15,000 + 9,000 = ` 24,000
100 12 100 12
Interest on Leena ‘s capital: 10% of 2,50,000 for 6 months + 10% of 2 ,40,000 for 3 months
10 6 10 3
= 2 , 50 , 000 × × + 2 , 40 , 000 × = 12,500 + 6,000 = ` 18,500
100 12 100 12
OR
(A)                 Profit
Dr. and Loss Appropriation A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Partner’s Capital A/c By P& L A/c 70,640
  Nida   48,160 Add: Accrued int.on inv. 1,600 72,240
  Pia    24,080 72,240
72,240 72,240
Working Note :
Interest on Nida’s capital = 50,000
Interest on Pia’s capital = 40,000
Commission to Nida’s = 30,000
Total appropriation = 50,000 +40,000 +30,000 = ` 1,20,000 (which is more than available profit)
Hence, profit to be distributed in the ratio of appropriations
Nida Pia
50,000 -
30,000 40,000
80,000 40,000 = 2 :1
2
Nida ‘s Share in profit = 72 , 240 × =` 48,160
3
1
Pia ‘s Share in profit = 72 , 240 × =` 24,080
3
Nida’s Drawings A/c
Particulars Amount (`) Particulars Amount (`)
To Cash A/c 10,000 By Nida’s Capital A/c 10,200
To Interest A/c 200

10,200 10,200
(B)                   Table Showing Adjustment
Particulars Nida Pia Total
Interest on Drawings (Dr) 200 - 200
(Division of ` 200 in 3 : 2) (Cr.) 120 80 200
Dr.80 Cr. 80 -
15 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12
Adjustment Entry
Date Particulars L.F. Amount Dr. (`) Amount Cr. (`)
Nida’s Capital A/c Dr. 80 -
   To Pia’s Capital A/c - 80
(Being adjustment entry passed)
Answer 10.
In the books of Cosmic Ltd.
(i)        Journal Entries
Date Particulars L.F. Amount Dr. (`) Amount Cr. (`)
(i) Bank A/c Dr. 1,80,000 -
   To Equity Share App. A/c - 1,80,000
(Being applications for 60,000 shares received)
(ii) Equity Share App. A/c Dr. 1,80,000
   To Share Capital A/c - 1,20,000
   To Equity Share Allotment A/c - 30,000
   To Bank A/c - 30,000
(Being app. money adjusted)
(iii) Equity Share Allotment A/c Dr. 1,60,000 -
   To Share Capital A/c - 1,20,000
   To Securities Premium A/c - 40,000
(Being allotment money adjusted)
(iv) Bank A/c Dr. 1,28,700 -
Calls in Arrear A/c Dr. 1,300 -
   To Equity Share Allotment A/c 1,30,000
(Being allotment money received)
(v) Equity Share Capital A/c Dr. 2,400 -
Securities Premium A/c Dr. 400 -
   To Calls in arrears A/c - 1,300
   To Share forfeiture A/c - 1,500
(Being 400 shares forfeited)
(vi) Bank A/c Dr. 2,000 -
Share Forfeiture A/c 400 -
   To Share Capital A/c - 2,400
(Being 400 forfeited shares reissued)
(vii) Equity Share first and Final Call A/c Dr. 1,60,000
   To Share Capital A/c 1,60,000
(Being first and final call adjusted)
(viii) Bank A/c Dr. 1,60,000 -
   To Equity Share First and Final Call A/c - 1,60,000
(Being amount received)
(ix) Share Forfeiture A/c Dr. 1,100 -
   To Capital Reserve A/c - 1,100
(Being balance of share forfeiture transferred to capital reserve)
Working Note: 40 , 000
(1) Shareholder applied for 500 shares : allotted to him= 500 × = 400 shares
50 , 000
Hence, he paid 100 × 3 = ` 300 in excess
Hence, actual Calls in Arrear = 400 × 4 = 1600 - 300 = ` 1,300
 Solved Paper - 2025 16
(2) It is assumed that excess application money has been utilised for share allotment.
(3) It is also assumed that the shares that will reissued were not full paid . First call was to be paid on them also.
Dr.                   Calls in Arrears A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Share Allotment A/c 1,300 By Share Capital A/c 900
By Securities Premium A/c 400
1,300 1,300
OR
(i)                   In the Books of NM. Co
Dr.                 Share Issue Expenses A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Bank A/c 5,000 By Securities Premium A/c 5,000

5,000 5,000
Dr.                    Calls in Arrears A/c Cr.
Particulars Amount (`) Particulars Amount (`)
To Share Allotment A/c 1,000 By Share Capital A/c 1,000
To Share First Call A/c 1,000 By Securities Premium A/c 1,000
2,000 2,000
(ii) Amount left in securities premium = 12,000 – ( 1,000 + 5,000) = 12,000 – 6,000 = ` 6,000
(iii)
Date Particulars L.F. Amount Dr. (`) Amount Cr. (`)
(a) Share Allotment A/c Dr. 60,000 -
   To Share Capital A/c - 48,000
   To Securities Premium A/c - 12,000
(Being allotment money due)
(b) Bank A/c Dr. 11,000 -
Calls in Arrears A/c Dr. 1,000 -
   To Share Allotment A/c 12,000
(Being allotment money received)
(c) Share Forfeiture A/c Dr. 6,000 -
   To Capital Reserve A/c - 6,000
(Being balance of share forfeiture transferred to capital reserve)
Working Note:
(1) A shareholder applied for 2,000 shares, was allotted 1,000 shares. Excess money received from him on application
= 4 × 1,000 = ` 4,000
Amount to be paid by him on allotment = 1,000 × 5 = ` 5,000
Actual Calls in Arrears = 5,000 – 4,000 = ` 1,000
On allotment = ` 1,000 (considering that amount of securities premium was not paid)
Calls in Arrears on First Call = 1×1,000 = ` 1,000
(2) Actual amount received on forfeited shares = 8 ×1,000 = 8,000
Discount allowed on reissue shares = 2 × 1,000 = ` 2,000
Amount to be transferred to Capital Reserve = 8,000 – 2,000 = ` 6,000
SECTION – B
Answer 11.
Explanation: Debenture purchased by the company
(i) Option (b) is correct. is like an investment by Tarzan Ltd. in Tintin Ltd.
(ii) Option (a) is correct. (Only P and R) and interest received on this investment is also an
investing activity.
17 Oswaal ISC Question Bank Chapterwise & Topicwise, ACCOUNTS, Class-12
(iii) Interest Coverage Ratio
Earning Before Interest and Taxes(EBIT ) Answer 13.
= Interest Expenses (i) Inventory turnover ratio
(iv) Amortisation of discount on issue of debentures Cost of Revenue from Operations
=
is a non-cash expense that reduces the company’s Average Inventory
accounting profit. Hence, it is adjusted (added to) Cost of Revenue from Operations
with net profit before tax and extraordinary items 6=
 8 , 000
to calculate Net Operating Profit before Working
Cost of Revenue From Operation = 48,000
Capital Changes.
Selling Price = 48,000 + 25% of 48,000
(v) (a) As advertising income forms the core business
activity for revenue generation for InShorts. Hence, = 48,000 + 12,000 = 60,000
advertising income will be operating income for Gross Profit = 60,000 – 48,000 = ` 12,000
InShorts. (ii) Opening trade receivables = Net closing trade
(309.7 − 231.8) receivables + Provision for doubtful debt
(b) Percentage increase in loss = × 100 = 45,000 + 10,000 = ` 55,000
231.8
= 33.60% Average trade receivables
Answer 12. Opening T/R+Closing T/R
=
Items Absolute Percentage 2
Change Change 55, 000 + 45, 000
=
(in `) (%) 2
(i) Revenue from 1,00,000 25 = ` 50,000
Operations Credit Revenue from Operations = Revenue from
Operations – Cash Revenue from Operations
(ii) Purchase of Stock (60,000) (16.67)
in Trade = 3,60,000 – 90,000 = ` 2, 70,000
Trade Receivables Turnover ratio
(iii) Closing Inventory (1,10,000) (78.57)
Credit Revenue from Operations
of Stock in Trade =
Average Trade Receivables
Working Note: 2 , 70 , 000
Closing Inventory of Stock in Trade = Opening =
50 , 000
Inventory + Purchase of Stock in Trade – COGS
(Adjusted Purchase) = 5.4 times
Closing Inventory for 2023–24 (iii) (a) It will increase the proprietary ratio as both
1,40,000 + 3,00,000 – 4,10,000 = ` 30,000 shareholders’ funds as well as total assets are
increased by the same amount.
Closing Inventory for 2022-23
(b) It will decrease the debt to total assets ratio as
1,00,000 + 3,60,000 – 3,20,000 = ` 1,40,000
debt will not change but total assets will increase.
Net Profit ( After interest , tax and dividend on preference share )
(iv) Earning per share =
Number of Equity Shares

Here, profit before interest and tax = ` 2, 44,000
Net profit after interest, tax and preference dividend

Interest on debentures = 50,000
= 2,44,000 – (50,000 + 24,000 + 20,000 + 10,000)

Interest on bank Loan = 24,000
= 2,44,000 – 1,04,000 = ` 1,40,000

Provision for tax = 20,000 1, 40 , 000

Earning per share = = ` 1.75 per share

Preference dividend = 10,000 80 , 000

Answer 14.
In the Books of Reality Ltd.
Cash Flow Statement
Particulars Amount (`) Amount (`)
A. Net Profit before Tax 14,00,000
Adjustments for non- cash and non-operating items
Add: Depreciation on Machinery 3,00,000
Interest Due on Debentures 80,000
Less: Interest on Investment (40,000)
Add: Discount on issue of debentures.written off 1,00,000
Operating Profit before Working Capital Changes 18,40,000
 Solved Paper - 2025 18

Add: Decrease in Inventory 50,000

Less: Decrease in Creditors (20,000) 30,000
18,70,000
Less : Tax Paid (5,00,000)
Net Cash from Operating Activities 13,70,000 13,70,000
B. Cash flow from Investing Activities
Interest on investment 40,000
Purchase of investment (5,00,000)
Net Cash Used in Investing Activities (4,60,000) (4,60,000)
C. Cash Flow from Financing Activities
Proceeds from Issue of debentures 5,00,000
Interest on Debentures Paid (60,000)
Net Cash Flow From Financing Activities 4,40,000 4,40,000
Net Increase in Cash and Cash Equivalents 13,50,000
Add: Opening Cash and Cash Equivalents 3,15,000
Cash and Cash Equivalents at the End 16,65,000