TIME: 3 HOURS M.

MARKS: 80 MARKS
GENERAL INSTRUCTIONS:
1. This question paper contains 34 questions. All questions are
compulsory.
2. Question Nos.1 to 20 carries 1 mark each.
3. Questions Nos. 21 to 26 carry 3 marks each.
4. Questions Nos. from 27 to 29 carry 4 marks each.
5. Questions Nos. from 30 to 34 carry 6 marks each.
6. There is no overall choice. However, an internal choice has been
provided in some questions.
Multiple Choice Questions (1* 20 = 20 marks)
Q1. Sacrificing Ratio is calculated as:
a) Old Ratio – New Ratio
b) New Ratio – Old Ratio
c) Old Ratio + New Ratio
d) New Ratio / Old Ratio
Q2. If partners share profits equally, and a reserve of ₹24,000 is to be
distributed on retirement, how much will each partner get?
a) ₹8,000 b) ₹12,000
c) ₹24,000 d) ₹6,000
Q3. A firm earns ₹1,80,000 average profits, normal profits ₹1,20,000,
goodwill valued at 2 years’ purchase of super-profit. What will be the
amount of Goodwill?
 a) ₹1,60,000 b) ₹1,20,000 Q9. A, B and C share profits in 5:3:2. D is admitted for 1/6th share, which
he gets equally from A and B. What will be A’s new share?
c) ₹60,000 d) ₹40,000
a) 5/12 b) 19/48
Q4. Profit and Loss Appropriation A/c is used to appropriation of net profit
among: c) 9/28 d) 7/12
a) Partners only b) External creditors Q10. When part of retiring partner’s capital is converted into loan, the firm
records:
c) Owners and shareholders d) Company and
partners a) A liability b) An asset
Q5. On death of a partner, his share of profit till the date of death is c) An expense d) A reserve
transferred to:
Q11. Profit & Loss Appropriation A/c is prepared to:
a) Remaining Partners’ A/c b) Executor’s A/c
a) Calculate net profit
c) Realisation A/c d) Reserve A/c
b) Distribute profits among partners
Q6. At dissolution, loan by a partner is settled after:
c) Show liabilities of the firm
a) Distribution of cash among partners b) Outside Liabilities
d) Transfer assets
c) Transfer of reserves d) Realisation
Expenses Q12. Capital employed = Assets – ______.

Q7. Issue of shares at a price lower than the face value is called: a) Drawings b) Reserves

a) Issue at Premium b) Issue at Par c) Liabilities d) Goodwill

c) Issue at Discount d) Bonus Issue Q13. At the time of forfeiture of shares, which account is credited?

Q8. Realisation A/c is prepared: a) Calls in Arrears A/c b) Share Forfeiture

A/c
a) To ascertain goodwill
c) Share Capital A/c d) Bank A/c
b) To distribute profits among partners
Q14. When a partner takes over an asset at dissolution, the account debited
c) To close books of accounts on dissolution is:
d) To adjust revaluation a) Bank A/c b) Realisation A/c
c) Partner’s Capital A/c d) Reserve A/c
Q15. When goodwill is introduced by a new partner in cash, which account Q21.X, Y, and Z are sharing profits and losses in the ratio of 5 : 3 : 2. They
is debited? decide to share future profits and losses in the ratio of 2 : 3 : 5 with effect
from 1st April, 2023. They also decide to record the effect of the following
a) Goodwill A/c b) Premium A/c accumulated profits, losses, and reserves without affecting their book values
by passing a single entry. Pass an Adjustment Entry. (3)
c) Cash A/c d) Bank A/c
Q22. Prathma, Madhyama and Tritiya were partners in a firm sharing
Q16. At the time of dissolution, if assets are transferred to Realisation A/c,
profits and losses in the ratio of 2 : 2 : 1. On 1st April, 2023, their capital
the account credited is:
accounts showed balances of ₹10,00,000, ₹8,00,000 and
a) Partners’ Capital A/c b) Profit & Loss A/c ₹6,00,000,respectively. The partnership deed provided for interest on
capital @ 10% p.a. Show the treatment of interest on capital in the
c) Assets A/c d) Liabilities A/c following cases if :
Q17. If average profits of a firm are ₹1,50,000 and normal profits are (i) During the year ended 31st March, 2024, the firm earned a profit of
₹1,00,000, what will super-profit be? ₹3,00,000.
a) ₹2,50,000 b) ₹50,000 (ii) During the year ended 31st March, 2024, the firm earned a profit of
₹1,20,000.
c) ₹1,00,000 d) ₹25,000
OR
Q18. Which of the following cannot be used for writing off preliminary
expenses? A and B are partners sharing profits and losses in the proportion of 3:2.
They agree to admit C into the partnership who is to get 1/5th share in the
a) Securities Premium b) Capital Reserve business. C brings in ₹1,00,000 for his capital and ₹40,000 for 1/5th share
c) General Reserve d) Revenue Reserve of goodwill which he acquires as 3/20 from A and 1/20 from B. The profit
for the first year of the new partnership amounted to ₹2,00,000. Make the
Q19. On retirement of a partner, accumulated profits and reserves are necessary Journal entries in connection with C's admission and apportion
transferred to: the profit between the partners. Profits distributed are A ₹90,000; B
₹70,000; C ₹40,000.
a) Revaluation A/c b) Retiring Partner’s A/c (3)
only
Q23. Anant, Gulab and Khushbu were partners in a firm sharing profits in
c) Remaining Partners in new ratio d) All partners in old ratio the ratio of 5:3:2. From 1.4.2024, they decided to share the profits equally.
For the purpose the goodwill of the firm was valued at ₹2,40,000.
Q20. Premium on issue of shares is shown under:
Pass necessary journal entry for the treatment of goodwill on change in the
a) Current Liabilities b) Share Capital
profit-sharing ratio of Anant, Gulab and Khushbu.
c) Reserves & Surplus d) Non-Current Liabilities (3)
Q24. Abha and Sara were partners in a firm. Their capitals were: Abha balance starting from 31st March, 2021. The firm closes its books on 31st
₹3,00,000 and Sara ₹2,00,000. The normal rate of return in similar business March every year.
is 10%. The profits of the firm of Abha and Sara for the last three years
were: Prepare Rohit’s Loan Account till it is fully paid. (4)

2021-22 ₹ 60,000 Q28. X, Y and Z are partners sharing profits in 4:3:2. Z retires. On that date:

2022-23 ₹ 90,000 ● Furniture increased by ₹10,000

and 2023-24 ₹ 1,20,000 ● Stock decreased by ₹5,000

Calculate goodwill of the firm on the following basis: ● Unrecorded liability of ₹6,000 found

(i) Four years purchase of the average profits for the last three years. ● Goodwill of firm valued at ₹27,000
Pass journal entries to record the above and show the calculation of
(ii) Capitalisation of super- profits. (3) gaining ratio. (4)
Q25. Vijay, Ravi and Raman were partners in a firm sharing profits and Q29. A and B are partners sharing profits in 3:2 ratio. They
losses in the ratio of 5 : 3 : 2. On 1st April, 2024, they admitted Kamal as a admit C for 1/5th share. He brings ₹80,000 as capital and
new partner for 1/10th share in the profits. It was decided that new profit- ₹40,000 as goodwill premium.
sharing ratio will be 4 : 2 : 3 : 1. On Kamal’s admission, the goodwill of the
firm was valued at ₹6,00,000. Kamal brought his share of goodwill ● New profit-sharing ratio is 5:3:2
premium in cash.
● Goodwill is to be adjusted through sacrificing ratio
(i) Calculate the sacrificing ratio.
● Capital accounts before admission: A = ₹1,20,000; B = ₹80,000.
(ii) Pass necessary journal entries for the treatment of goodwill on Kamal (a) Pass journal entries for C’s admission.
admission. Show your working notes clearly. (4) (b) Prepare the Partners’ Capital Accounts after admission. (4)

Q26. KM Ltd. acquired assets worth ₹7,20,000 and took over liabilities of Q30. A and B are partners in a firm with capitals of ₹1,00,000 and ₹80,000
₹2,00,000 of LS Ltd. for a purchase consideration of ₹9,60,000. KM Ltd. respectively. They share profits and losses in the ratio of 3:2. According to
issued 12% shares of ₹100 each at a premium of 4% in favour of LS Ltd. the partnership deed:
for payment of purchase consideration.
Interest on capital is to be allowed at 10% p.a.
Pass necessary journal entries for the above transactions in the books of KM
B is entitled to a salary of ₹12,000 p.a.
Ltd. (4)
The net profit for the year is ₹50,000.
Q27. Rohit, Mohit and Sandeep were partners in a firm sharing profits and
losses in the ratio of 5 : 3 : 2. On 1st April, 2020, Rohit retired. On the date Prepare the Profit and Loss Appropriation Account. (4)
of retirement ₹6,00,000 were due to him. Mohit and Sandeep agreed to pay
Rohit in four equal yearly instalments plus interest @ 9% p.a. on the unpaid
Q31. Radhika Ltd. invited applications for issuing 40,000 equity shares of Q32. Nithya, Sathya and Mithya were partners sharing profits and losses in
₹100 each at a premium of ₹50 per share. The amount was payable as the ratio of 5: 3:2 respectively. Their Balance Sheet as at March 31, 2019
follows : was as follows:
On Application and Allotment - ₹40 per share (including ₹10 Liabilities ₹ Assets ₹
premium)
Creditors 14,000 Investments 10,000
On First call - ₹45 per share (including ₹5 premium)
Reserve Fund 6,000 Goodwill 5,000
On Second and final call - Balance
Capital Premises 20,000
Applications for 39,000 shares were received. Allotment was made in full Accounts:
to all the applicants. Dinu, to whom 100 shares were allotted, failed to pay Patents 6,000
the first call money. His shares were immediately forfeited. The forfeited Nithya 30,000
Machinery 30,000
shares were re-issued thereafter at 70 per share fully paid up. The second
Sathya 30,000
and final call was not yet made. 80,000 Stock 13,000
Mithya 20,000
Pass necessary journal entries for the above transactions in the books of Debtors 8,000
Radhika Ltd. (6)
Bank 8,000
OR
1,00,000 1,00,000
Sona Ltd. invited applications for issuing 60,000 equity shares of ₹50 each.
The amount was payable as follows : Mithya dies on 1-8-2019. The agreement between the executors of Mithya
and the partners stated that:
On Application - ₹20 per share
(a) Goodwill of the firm be valued at 2.5 times the average profits of last
On Allotment - ₹ 25 per share four years. The profits of four years ending 31st March were : 2016 Rs
On First and final call - Balance 13,000, 2017 Rs12,000, 2018 Rs16,000 and 2019 Rs15,000.

Applications for 90,000 shares were received. Applications for 10,000 (b) The patents are to be valued at Rs8,000, Machinery at Rs25,000 and
shares were rejected and application money refunded. Shares were allotted Premises Rs25,000.
on pro-rata basis to the remaining applicants. Excess money received with (c) The share of profit of Mithya should be calculated on the basis of the
applications was adjusted towards sums due on allotment. Rahul, to whom profit of 2019.
600 shares were allotted, failed to pay the allotment money and his shares
were forfeited immediately. Afterwards, the first and final call was made. (d) Rs4,200 should be paid immediately and the balance should be paid in 4
Mona, to whom 1,000 shares were allotted, failed to pay the first and final equal half-yearly instalments carrying interest @ 10% p.a.
call. Her shares were also forfeited. Pass necessary journal entries in the
books of Sona Ltd. for the above transactions. Record the necessary journal entries to give effect to the above and write
the executor's account till the amount is fully paid. Also prepare the balance
sheet of Nithya and Sathya as it would appear on 1-8-2019 after giving Q34. A, B and C were partners in a firm sharing profits and losses in the
effect to the adjustments. (6) ratio of 4:3:3. Their Balance Sheet as on 31st March, 2025 was as follows:
Q33. A, B, and C were partners sharing profits and losses in the ratio 3:2:1. Liabilities Amount (₹) Assets Amount (₹)
They decided to dissolve their firm on 31st March, 2025. Their Balance
Sheet was as follows: Sundry Creditors 30,000 Cash 10,000

Balance Sheet as at 31st March, 2025 General Reserve 20,000 Debtors 40,000

Liabilities Amount (₹) Assets Amount (₹) A’s Capital 60,000 Stock 30,000

Creditors 40,000 Cash 10,000 B’s Capital 50,000 Furniture 20,000

Bills Payable 20,000 Debtors 50,000 C’s Capital 40,000 Machinery 1,00,000

A’s Capital 60,000 Stock 30,000 Total ₹2,00,000 Total ₹2,00,000

B’s Capital 40,000 Furniture 15,000

C’s Capital 25,000 Machinery 80,000 C died on 1st July, 2025. The partnership deed provides the following:

Total ₹1,85,000 Total ₹1,85,000 i). Goodwill is to be valued at 2 years’ purchase of the average profits
of the last 3 years: ₹20,000, ₹30,000 and ₹40,000.
Additional Information: ii). Revaluation of assets:
iii). Stock to be increased by ₹5,000
i). Debtors realised ₹48,000/ iv). Furniture to be depreciated by 10%
ii). Stock was taken over by A at ₹28,000 v). C’s share of profit till the date of death is to be calculated on the
iii). Furniture was sold for ₹12,000 basis of last year’s profit (assume last year’s profit is ₹40,000)
iv). Machinery was sold for ₹70,000 vi). C’s capital is to be settled by paying ₹10,000 in cash, and the
v). Bills Payable were settled at ₹18,000 balance is transferred to his executor’s loan account.
vi). Realisation expenses amounted to ₹2,000
vii). One creditor of ₹5,000 was untraceable, so not paid the remaining Prepare the following:
amount was paid to partners.
1. Revaluation Account
Prepare the following accounts: 2. Partners’ Capital Accounts
3. C’s Executor’s Loan Account (6)
1. Realisation Account
2. Partners’ Capital Accounts
3. Cash Account (6)