part a (accounting for partnership firms and companies) · k k limited obtained a loan of rs....

Sample Question Paper

Accountancy (055): Class XII: 2017-18

Time: 3 Hours Maximum Marks: 80

General Instructions:

1) This question paper contains two parts- A and B.

2) Part A is compulsory for all.

3) Part B has two options- Analysis of Financial Statements and Computerised Accounting.

4) Attempt any one option of Part B.

5) All parts of a question should be attempted at one place.

Part A

(Accounting for Partnership Firms and Companies)

1. Six friends started a partnership business by investing Rs. 2,00,000 each. They decided to

share profit equally. Name the terms by which they will be called individually and

collectively. 1

Solution: Individually: Partners

Collectively: Firm

2. A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. B was guaranteed a

profit of Rs. 2,00,000. During the year the firm earned a profit of Rs. 84,000. Calculate the

net amount of Profit / Loss transferred to the capital accounts of A and C.1

Solution: Net Amount of Loss transferred to:

As Capital Account: Rs. 87,000

Cs Capital Account: Rs. 29,000

3. H, P and S were partners in a firm sharing profits in the ratio of 4 : 3 : 3. On August 1, 2017, P

died. His 20 % share was acquired by H and remaining by S. Calculate the new profit sharing

ratio. 1

Solution: Ratio of H, P and S is 4 : 3 : 3

Hs Gain = 3/10 X 20 /100 = 3 /50

Hs new share = Hs old share + Hs Gain

= 4/10 + 3/50 = 23/50

Ss Gain = 3/10 X 80 /100 = 12 /50

Ss new share = Ss old share + Ss Gain

= 3/10 + 12/50 = 27/50

New Profit sharing Ratio of H and S is 23 : 27

4. How is dissolution of partnership different from dissolution of partnership firm? 1

Solution: In case of dissolution of partnership, the firm continue to do business but with a changed

agreement. In case of dissolution of partnership firm, the firm ceases to exist, the assets of the firm

are realised and its liabilities are discharged. 1

5. Why are irredeemable debentures also known as perpetual debentures?1

Solution: Irredeemable debentures are called perpetual debentures because these are not

repayable during the life span of the company. 1

6. Distinguish between shares and debentures on the basis of convertibility.1

Solution: Shares cannot be converted into debentures or any other security whereas the debentures

can be converted into shares or new debentures if the terms so provide. 1

7. K K Limited obtained a loan of Rs. 10,00,000 from State Bank of India @ 9 % interest. The

company issued Rs. 15,00,000, 9 % debentures of Rs. 100/- each, in favour of State Bank of

India as collateral security. Pass necessary Journal entries for the above transactions:

(i) When company decided not to record the issue of 9 % Debentures as collateral

security.

(ii) When company decided to record the issue of 9 % Debentures as collateral security.

3

Solution: (i) K K Limited

Journal

Date Particulars L F Dr. Amount (Rs.) Cr. Amount (Rs.)

Bank Account Dr. To Bank Loan Account (Obtained loan from State Bank of India @ 9 %.)

10,00,000

10,00,000

1

(ii) K K Limited

Journal

1+1

Date Particulars L F Dr. Amount (Rs.)

Cr. Amount (Rs.)

Bank Account Dr. To Bank Loan Account ( Obtained loan from State Bank of India @ 9 %.)

10,00,000

15,00,000

10,00,000

15,00,000

Debenture Suspense Account Dr. To 9 % Debentures Account (Issued 9 % Debentures as collateral security in favour of State Bank of India)

8. P, Q and R were partners sharing profits in the ratio of 2 : 2 : 1. The firm closes its books on

March 31 every year. On June 30, 2017, R died. The following information is provided on Rs

death:

(i) Balance in his capital account in the beginning of the year was Rs. 6,50,000.

(ii) He withdrew Rs. 60,000 on May 15, 2017 for his personal use.

On the date of death of a partner the partnership deed provided for the following:

(a) Interest on capital @ 10 % per annum.

(b) Interest on drawings @ 12 % per annum.

(c) His share in the profit of the firm till the date of death, to be calculated on the basis of the

rate of Net Profit on Sales of the previous year, which was 25 %. The Sales of the firm till

June 30, 2017 were Rs. 6,00,000.

Prepare Rs Capital Account on his death to be presented to his executors.3

Solution:

Rs Capital Account

Date 2017

Particulars JF Amount (Rs)

Date 2017


Jun 30 Jun 30 Jun 30

To Drawings A/C To Interest on Drawings A/C To Rs Executors A/c

60,000 900

6,35,350

Apr 1 Jun 30 Jun 30

By Balance b/d By Interest on Capital A/c By Profit & Loss Suspense A/C

6,50,000 16,250 30,000

6,96,250 6,96,250

X 6 = 3

Note: mark may be deducted if the dates are not correctly recorded.

9. M M Limited is registered with an Authorised capital of Rs. 200 Crores divided into equity

shares of Rs. 100 each. On 1st April 2016 the Subscribed and Called up capital of the

company is Rs. 10,00,00,000. The company decided to help the unemployed youth of the

naxal affected areas of Andhra Pradesh, Chhattisgarh and Odisha by opening 100 Skill

Development Centres. The company also decided to provide free medical services to the

villagers of these states by starting mobile dispensaries. To meet the capital expenditure of

these activities the company further issued 1,00,000 equity shares during financial year

2016-17. These shares were fully subscribed and paid.

Present the share capital of the company in its Balance Sheet. Also identify any two

values that the company wants to propagate. 3

Solution: M M Limited

Balance Sheet

as at (Rs. In Crores)

Particulars Note Number

31-03-2017 Rs.

31-03-2016 Rs.

I. Equity and Liabilities 1. Shareholders Funds a) Share Capital

1

11

10

1

Notes to Accounts:

Note Number 1 (Rs. In Crores)

Particulars 31-03-2017 Rs.

Share Capital: Authorised Capital 2,00,00,000 Equity Shares of Rs. 100 each Issued Capital 11,00,000 Equity shares of Rs. 100 each Subscribed Capital Subscribed and Fully paid 11,00,000 Equity shares of Rs. 100 each

Share Capital

200

11

11

11

1

Values: Generation of Employment opportunities in backward areas.

Providing Healthcare/Medical facilities in rural areas. Or any other value 1

10. V K Limited purchased machinery from Modern Equipment Manufacturers Limited. The

company paid the vendors by issue of some equity shares and debentures and the balance

through an acceptance in their favour payable after three months. The accountant of the

company, while Journalising the above mentioned transactions, left some items blank. You

are required to fill in the blanks.3

V K Limited

Journal


Cr. Amount (Rs.)

Machinery Account Dr. To (Purchased machinery for Rs. 7,00,000 from Modern Equipment Manufacturers Limited )

..

.

.

..

Modern Equipment Manufacturers Ltd. A/C Dr. Loss on Issue of 9 % Debentures Account Dr. To .. To .. To Securities Premium Reserve Account To Premium on Redemption of Debentures A/C (Issued Rs. 1,00,000 9 % debentures at a discount of 10 % redeemable at a premium of 10 % and 50,000 equity shares of Rs. 10 each issued at a premium of 15 %)

. Dr. To ()

Solution:

V K Limited

Journal

1 + 1 +1 = 3

11. E, F and G were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On March 31, 2017, their

firm was dissolved. On the date of dissolution, the Balance Sheet of the firm was as follows:

Balance Sheet

as at March 31, 2017

Liabilities Rs. Assets Rs.

Capitals:

E 1,30,000

F 1,00,000

Creditors

Outstanding Expenses

2,30,000

45,000

17,000

Gs Capital

Profit & Loss Account

Land & Building

Furniture

Machinery

Debtors

Bank

500

10,000

1,00,000

50,000

90,000

36,500

5,000

2,92,000 2,92,000


Cr. Amount (Rs.)

Machinery Account Dr. To Modern Equipment Manufacturers Limited (Purchased machinery for Rs. 7,00,000 from Modern Equipment Manufacturers Limited )

7,00,000

6,65,000 20,000

35,000

7,00,000

1,00,000 5,00,000

75,000 10,000

35,000

Modern Equipment Manufacturers Ltd. A/C Dr. Loss on Issue of 9 % Debentures Account Dr. To 9 % Debentures Account To Equity Share Capital Account To Securities Premium Reserve Account To Premium on Redemption of Debentures A/C (Issued Rs. 1,00,000 9 % debentures at a discount of 10 %,redeemable at a premium of 10 % and 50,000 equity shares of Rs. 10 each issued at a premium of 15 %)

Modern Equipment Manufacturers Ltd. A/C Dr. To Bills Payable Account (Acceptance given to Modern Equipment Manufacturers Limited)

F was appointed to undertake the process of dissolution for which he was allowed a

remuneration of Rs. 5,000. F agreed to bear the dissolution expenses. Assets realized as

follows:

(i) The Land & Building was sold for Rs. 1,08,900.

(ii) Furniture was sold at 25% of book value.

(iii) Machinery was sold as scrap for Rs. 9,000.

(iv) All the Debtors were realized at full value.

Creditors were payable on an average of 3 months from the date of dissolution. On discharging the

Creditors on the date of dissolution, they allowed a discount of 5%.

Pass necessary Journal entries for dissolution in the books of the firm.4

Solution: E, F and G

Journal


Realisation Account Dr. To Land & Building Account To Furniture Account To Machinery Account To Debtors Account (Individual Assets accounts closed by transferring their balances to Realisation Account)

2,76,500

45,000 17,000

1,66,900

59,750

5,000

44,940 44,940 22,470

1,00,000

50,000 90,000 36,500

62,000

1,66,900

59,750

5,000

1,12,350

Creditors Account Dr. Outstanding Expenses Account Dr. To Realisation Account (Individual External Liabilities Accounts closed by transferring their balances to Realisation Account)

Bank Account Dr. To Realisation Account ( Assets realized and debtors collected)

Realisation Account Dr. To Bank Account (Creditors paid at a discount of 5% and payment of outstanding expenses)

Realisation Account Dr. To Fs Capital Account (Remuneration paid to F for undertaking dissolution process)

Es Capital Account Dr. Fs Capital Account Dr. Gs Capital Account Dr. To Realisation Account (Loss on Realisation transferred to partners Capital Accounts)

Es Capital Account Dr. Fs Capital Account Dr. Gs Capital Account Dr. To Profit & Loss Account (Profit & Loss Account transferred to partners Capital Accounts)

4,000 4,000 2,000

24,970

81,060 56,060

10,000

24,970

1,37,120

Bank Account Dr. To Gs Capital Account ( Final payment received from G)

Es Capital Account Dr. Fs Capital Account Dr. To Bank Account ( Final payment made to E and F)

4

12. A, B & C were partners in a firm sharing profits & losses in the ratio of 3 : 2 : 1. On March 31,

2017, their Balance Sheet was as follows:

Balance Sheet



Capitals:

A 50,000

B 40,000

C 30,000

Reserve Fund

Creditors

Employees Provident Fund

1,20,000

18,000

27,000

50,000

Fixed Assets

Current Assets

1,80,000

35,000

2,15,000 2,15,000

From April 1, 2017, they decided to share future profits equally. For this purpose the followings were

agreed upon:

(i) Goodwill of the firm was valued at Rs. 3,00,000.

(ii) Fixed Assets will be depreciated by 10%.

(iii) Capitals of the partners will be in proportion to their new profit sharing

ratio. For this purpose, Current Accounts will be opened.

Pass necessary Journal entries for the above transactions in the books of the firm. 4

Solution: A, B and C

Journal


Cs Capital Account Dr. To As Capital Account (Treatment of goodwill due to change in profit

50,000

50,000

sharing ratio) 18,000

18,000

9,000 6,000 3,000

60,000

60,000

9,000 6,000 3,000

18,000

18,000

60,000

60,000

Reserve Fund Account Dr. To As Capital Account To Bs Capital Account To Cs Capital Account (Reserve Fund transferred to partners capital accounts in their old profit sharing ratio)

Revaluation Account Dr. To Fixed Assets Account (Revaluation of fixed assets on change in profit sharing ratio)

As Capital Account Dr. Bs Capital Account Dr. Cs Capital Account Dr. To Revaluation Account (Loss on revaluation transferred to partners capital accounts)

As Capital Account Dr. To As Current Account ( Adjustment of capital by opening of current account)

Cs Current Account Dr. To Cs Capital Account (Adjustment of capital by opening of current account)

4

13. L, M and N are partners in a firm sharing profits & losses in the ratio of 2 : 3 : 5.

On April 1, 2016 their fixed capitals were Rs. 2,00,000, Rs. 3,00,000 and Rs. 4,00,000 respectively.

Their partnership deed provided for the following:

(i) Interest on capital @ 9% per annum.

(ii) Interest on Drawings @ 12% per annum.

(iii) Interest on partners loan @ 12% per annum.

On July 1, 2016, L brought Rs. 1,00,000 as additional capital and N withdrew Rs. 1,00,000 from his

capital. During the year L, M and N withdrew Rs. 12,000, Rs. 18,000 and Rs. 24,000 respectively for

their personal use. On January 1, 2017 the firm obtained a Loan of Rs. 1,50,000 from M. The Net

profit of the firm for the year ended March 31, 2017 after charging interest on Ms Loan was Rs.

85,000.

Prepare Profit & Loss Appropriation Account and Partners Capital Account.6

Solution: Profit & Loss Appropriation Account

for the year ended March 31, 2017

Particulars Amount (Rs.)


To Interest on Capital: Ls Current Account 24,750 Ms Current Account 27,000 Ns Current Account 29,250 To Profit transferred to Partners Current Accounts L 1,448 M 2,172 N 3,620

81,000

7,240

By Profit & Loss Account- Net Profit b/d By Interest on Partners Drawings Ls Current Account 720 Ms Current Account 1,080 Ns Current Account 1,440

85,000

3,240

88,240 88,240

4

Partners Capital Account

Date Particulars L M N Date Particulars L M N 2016 Jul 1 2017 Mar 31

To Bank Account To Balance c/d

3,00,000

3,00,000

1,00,000

3,00,000

2016 Apr 1 Jul 1

By Balance b/d By Bank Account

2,00,000 1,00,000

3,00,000

4,00,000

3,00,000 3,00,000 4,00,000 3,00,000 3,00,000 4,00,000

2

14. Himanshu and Vikrant are partners in a firm and share profits equally. Their Balance Sheet as on

March 31, 2017 is as follows:

Balance Sheet



Capitals:

Himanshu 2,00,000

Vikrant 1,40,000

Creditors

3,40,000

60,000

Fixed Assets

Current Assets

3,60,000

40,000

4,00,000 4,00,000

During the year 2016-17, Himanshus Drawings were Rs. 30,000 and Vikrants Drawings were Rs.

40,000. During the year 2016-17 the firm earned profits ofRs. 1,00,000. While distributing profits for

the year 2016-17, interest on capital @ 5 % per annum and interest on drawings @ 12 % per annum

were ignored.

Showing your workings clearly, pass necessary rectifying entry. 6

Solution: Statement of Opening Capital

Particulars Himanshu Vikrant

Closing Capital Add: Drawings Less: Profit already Distributed Opening Capital

2,00,000 30,000

1,40,000 40,000

2,30,000 50,000

1,80,000 50,000

1,80,000 1,30,000

2

Statement Showing Adjustment

Himanshu Vikrant Total

5 % Interest on Capital (Cr.) 9,000 6,500 15,500

12 % Interest on Drawings (Dr.) 1,800 2,400 4,200

Profit to be recovered (Dr.) 5,650 5,650 11,300

Total (Dr.) 7,450 8,050 15,500

Adjustment 1,550(Cr.)1,550 (Dr.) 3

Journal


2017 Apr 1

Vikrants Capital Account Dr. To Himanshus Capital Account (Adjustment of interest on Capital and interest on drawings for previous year)

1,550 1,550

1

15. On April 1, 2013, XY Limited issued Rs. 9,00,000 10% debentures at a discount of 9%. The

debentures were to be redeemed in three equal annual instalments starting from March 31, 2015.

Prepare Discount on Issue of Debenture Account for the first three years starting from April 1,

2013. Also show your workings clearly. 6

Solution:

Discount on Issue of 10 % Debentures Account

Date


Date


2013 Apr 1

2014 Apr 1

2015 Apr 1

To 10 % Debentures A/C

To Balance b/d To Balance b/d

81,000

2014 Mar 31 2015 Mar 31 2016 Mar 31

By Statement of Profit & Loss

By Balance c/d By Statement of Profit & Loss

By Balance c/d By Statement of Profit & Loss

By Balance c/d

27,000 54,000

81,000 81,000

54,000

27,000 27,000

54,000 54,000

27,000

18,000

9,000

27,000 27,000

1.5+1.5+1.5=4.5

Working Notes 1.5

Year ended Debentures Outstanding

Ratio Discount amount written off

31 March 2013 9,00,000 3 3/9x 81000 = 27,000

31 March 2014 9,00,000 3 3/9x 81000 = 27,000

31 March 2015 6,00,000 2 2/9x 81000 = 18,000

31 March 2016 3,00,000 1 1/9x 81000 = 9,000

16. ZX Limited invited applications for issuing 5,00,000 Equity shares of Rs. 10 each payable at a

premium of Rs. 10 each payable with Final call. Amount per share was payable as follows:

Rs.

On Application 2

On Allotment 3

On First Call 2

On Second & Final Call Balance

Applications for 8,00,000 shares were received. Applications for 50,000 shares were rejected

and the application money was refunded. Allotment was made to the remaining applicants as

follows:

Category Number of Shares Applied Number of Shares Allotted

I 2,00,000 1,50,000

II 5,50,000 3,50,000

Excess application money received with applications was adjusted towards sums due on

allotment. Balance, if any was adjusted towards future calls. Govind, a shareholder belonging to

category I, to whom 1,500 shares were allotted, paid his entire share money with allotment.

Manohar belonging to category II, who had applied for 11,000 shares failed to pay Second & Final

Call money. Manohars shares were forfeited after the final call. The forfeited shares were reissued

at Rs. 10 per share as fully paid up.

Assuming that the company maintains Calls in Advance Account and Calls in Arrears

Account, pass necessary Journal entries for the above transactions in the books of ZX Limited. 8

OR

(a) AX Limited forfeited 6,000 shares of Rs. 10 each for non-payment of First call of Rs. 2 per

share. The Final call of Rs. 3 per share was yet to be made. The Final call was made after

Forfeited of these shares. Of the forfeited shares, 4,000 shares were reissued at Rs. 9 per

share as fully paid up.Assuming that the company maintains Calls in Advance Account and

Calls in Arrears Account, prepare Share Forfeited Account in the books of AX Limited.

(b) BG Limited issued 2,00,000 equity shares of Rs. 20 each at a premium of Rs. 5 per share. The

shares were allotted in the proportion of 5 : 4 of shares applied and allotted to all the

applicants. Deepak, who had applied for 900 shares, failed to pay Allotment money of Rs. 7

per share (including premium) and on his failure to pay First & Final Call of Rs. 2 per share,

his shares were forfeited. 400 of the forfeited shares were reissued at Rs. 15 per share as

fully paid up.Showing your working clearly, pass necessary Journal entries for the Forfeited

and reissue of Deepaks shares in the books of BG Limited. The company maintains Calls in

Arrears Account.

(c) ML Limited forfeited 1,200 shares of Rs. 10 each allotted to Ravi for Non-payment of Second

& Final Call of Rs. 5 per share (including premium of Rs. 2 per share). The forfeited shares

were reissued for Rs. 10,800 as fully paid up. Pass necessary Journal entries for reissue of

shares in the books of ML Limited.

Solution: Journal

Date Particulars L F Dr. Amount Cr. Amount

8

OR

(a) Share Forfeited Account

Date

Particulars JF Amount (Rs.)

Date

Particulars JF Amount (Rs.)

(Rs.) (Rs.)

Bank Account Dr. To Equity Share Application Account (Application money received )

16,00,000

16,00,000

15,00,000

10,22,500

10,00,000

9,97,000 3,000

65,00,000

63,89,500 19,500 91,000

70,000 70,000

70,000

49,000

16,00,000

10,00,000 5,00,000 1,00,000

15,00,000

10,00,000 22,500

10,00,000

10,00,000

15,00,000 50,00,000

65,00,000

49,000 91,000

70,000

49,000

Equity Share Application Account Dr. To Equity Share Capital Account To Equity Share Allotment Account To Bank Account

(Application money transferred to Equity Share Capital account, Equity Share Allotment account and remaining amount refunded)

Equity Share Allotment Account Dr. To Equity Share Capital Account (Allotment money due on 5,00,000 equity shares @ Rs. 3 each)

Bank Account Dr. To Equity Share Allotment Account To Calls in Advance Account (Allotment money received along with Calls in Advance on 1,500 Shares)

Equity Share First Call Account Dr. To Equity Share Capital Account (First Call money due on 5,00,000 equity shares @ Rs. 2 each)

Bank Account Dr. Calls in Advance Account Dr. To Equity Share First Call Account (First call money received)

Equity Share Final Call Account Dr. To Equity Share Capital Account To Securities Premium Reserve Account

(Final Call money due on 5,00,000 equity shares @ Rs. 13 each including premium of Rs. 10 each)

Bank Account Dr. Calls in Advance Account Dr. Call in Arrears Account Dr. To Equity Share Final Call Account (Final call money received)

Equity Share Capital Account Dr. Securities Premium Reserve Account Dr. To Share Forfeited Account To Calls in Arrears Account ( Manohars Shares forfeited )

Bank Account Dr. To Equity Share Capital Account (Forfeited Shares of Manohar re-issued)

Share Forfeited Account Dr. To Capital Reserve Account (Share forfeited account transferred to capital reserve account)

To Share Capital Account To Capital Reserve A/C To Balance c/d

4,000 16,000 10,000

By Share Capital A/C

30,000

30,000 30,000

X 4 =2

(b) Journal

Working Notes:

(i) Since the Shares are allotted in the proportion of 5 : 4, therefore for 900 applied shares,

shares allotted are 4/5 X 900 = 720 Shares.

(ii) Application Money Received on 900 Shares = 900 X 16 = 14,400

Amount adjusted on Application = 720 X 16 =11,520

Amount to be adjusted on Allotment = 2,880

(iii) Allotment Money due on 720 Shares = 720 X 7 = 5,040

Less: Already received = 2,880

Allotment Money not received = 2,160

(iv) Calls in Arrears:

Allotment Money = 2,160

First & Final Call Money = 1,440

3,600

(1 mark for each correct Journal Entry and 1 mark for Working Notes)

(c) Journal

1 X 2 = 2


Cr. Amount (Rs.)

Share Capital Account Dr. Securities Premium Reserve Dr. To Share Forfeited Account To Calls in Arrears Account ( 720 Shares forfeited )

14,400 2,160

6,000 2,000

5,200

12,960 3,600

8,000

5,200

Bank Account Dr. Share Forfeited Account Dr. To Share Capital Account ( 400 Shares re-issued @ Rs. 15 each)

Share Forfeited Account Dr. To Capital Reserve Account (Gain on re-issue of forfeited shares transferred to capital reserve account)


Cr. Amount (Rs.)

Bank Account Dr. Share Forfeited Account Dr. To Share Capital Account (1,200 Shares re-issued for Rs. 10,800 as fully paid up)

10,800 1,200

7,200

12,000

7,200

Share Forfeited Account Dr. To Capital Reserve Account (Gain on re-issue of forfeited shares transferred to capital reserve account)

17. A, B & C were partners in a firm sharing profits & losses in proportion to their fixed capitals. Their

Balance Sheet as at March 31, 2017 was as follows:

Balance Sheet



Capitals:

A 5,00,000

B 3,00,000

C 2,00,000

General Reserve

Creditors

Outstanding Salary

Bs Loan

10,00,000

75,000

23,000

7,000

15,000

Bank

Stock

Debtors 15,000

Less: Provision for Doubtful Debts 1,500

As Loan

Plant & Machinery

Land & Building

Profit & Loss Account (For the year ending

31st March 2017)

21,000

9,000

13,500

35,500

2,00,000

6,00,000

2,41,000

11,20,000 11,20,000

On the date of above Balance Sheet, C retired from the firm on the following terms:

(i) Goodwill of the firm will be valued at two years purchase of the Average Profits of last three

years. The Profits for the year ended March 31, 2015 & March 31, 2016 were Rs. 4,00,000&Rs.

3,00,000 respectively.

(ii) Provision for Bad Debts will be maintained at 5% of the Debtors.

(iii) Land & Building will be appreciated by Rs. 90,000 and Plant & Machinery Will be reduced to Rs.

1,80,000.

(iv) A agreed to repay his Loan.

(v) The loan repaid by A was to be utilized to pay C. The balance of the amount payable to C was

transferred to his Loan Account bearing interest @ 12% per annum.

Prepare Revaluation Account, Partners Capital Accounts, Partners Current Accounts and the

Balance Sheet of the reconstituted firm. 8

OR

P & K were partners in a firm. On March 31, 2017 their Balance Sheet was as follows:

Balance Sheet



Capitals:

P 3,00,000

Bank

Stock

18,000

19,000

K 2,00,000

General Reserve

Creditors

Outstanding Expenses

Cs Loan

Profit & Loss Account (Profit for 2016-17)

5,00,000

1,00,000

50,000

8,000

1,20,000

55,000

Debtors 22,000

Less: Provision for Doubtful Debts 1,500

Unexpired Insurance

Shares in X Limited

Plant & Machinery

Land & Building

20,500

5,000

65,000

1,45,500

5,60,000

8,33,000 8,33,000

On April 1, 2017, they decided to admit C as a new partner for 1/4th share in profits on

the following terms:

(i) Cs Loan will be converted into his capital.

(ii) C will bring his share of goodwill premium by cheque. Goodwill of the firm will be

calculated on the basis of Average Profits of previous three years. Profits for the

year ended March 31, 2015 and March 31, 2016 were Rs. 55,000 and Rs.

1,00,000 respectively.

(iii) 10% depreciation will be charged on Plant & Machinery and Land & Building will

be appreciated by 5%.

(iv) Capitals of P & K will be adjusted on the basis Cs capital. Adjustments be done

through bank and in case required overdraft facility be availed.

Pass necessary Journal entries on Cs admission. 8

Solution:Revaluation Account



To Plant & Machinery To Profit transferred to Partners Current Accounts A 35,375 B 21,225 C 14,150

20,000

70,750

By Provision for Doubtful Debts By Land & Building

750 90,000

90,750 90,750

Partners Current Accounts

Date Particulars A B C Date Particulars A B C 2017 Mar 31

To Cs Current Account To Profit & Loss A/C To Cs Capital Account

38,250 1,20,500

22,950 72,300

48,200 42,150

2017 Mar 31

By Revaluation Account By As Current Account By Bs Current Account By General Reserve By Balance c/d

35,375

37,500 85,875

21,225

22,500 51,525

14,150 38,250 22,950 15,000

1,58,750 95,250 90,350 1,58,750 95,250 90,350

Partners Capital Accounts

Date Particulars A B C Date Particulars A B C 2017 Mar 31

To Bank Account To Cs Loan Account To Balance c/d

5,00,000

3,00,000

35,500 2,06,650

2017 Mar 31

By Balance b/d By Cs Current Account

5,00,000

3,00,000

2,00,000 42,150

5,00,000 3,00,000 2,42,150 5,00,000 3,00,000 2,42,150

Balance Sheet


Liabilities Amount (Rs.)

Assets Amount (Rs.)

Capitals: A 5,00,000 B 3,00,000 Cs Loan Creditors Outstanding Salary Bs Loan

8,00,000 2,06,650

23,000 7,000

15,000

Bank Stock Debtors 15,000 Less: Provision for D. Debts 750 Plant & Machinery Land & Building As Current Account Bs Current Account

21,000 9,000

14,250

1,80,000 6,90,000

85,875 51,525

10,51,650 10,51,650

2 + 2 + 2 + 2 = 8

OR

Journal


Cs Loan Account Dr. To Cs Capital Account (Cs Loan account transferred to his capital account)

1,20,000

17,500

17,500

14,550

28,000

13,450

1,20,000

17,500

8,750 8,750

14,550

28,000

6,725 6,725

Bank Account Dr. To Premium for Goodwill Account (New partner C brings in his share of goodwill)

Premium for Goodwill Account Dr. To Ps Capital Account To Ks Capital Account (Premium for Goodwill transferred to old partners capital accounts in their sacrificing ratio)

Revaluation Account Dr. To Plant & Machinery Account (Revaluation of Plant & Machinery on admission of new partner)

Land & Building Account Dr. To Revaluation Account (Revaluation of Land & Building on admission of new partner )

Revaluation Account Dr. To Ps Capital Account To Ks Capital Account (Profit on revaluation transferred to partners capital accounts)

General Reserve Account Dr. To Ps Capital Account To Ks Capital Account (General Reserve transferred to partners capital account)

1,00,000

55,000

2,12,975 1,12,975

50,000 50,000

27,500 27,500

3,25,950

Profit & Loss Account Dr. To Ps Capital Account To Ks Capital Account (Profit & Loss account transferred to partners capital account)

Ps Capital Account Dr. Ks Capital Account Dr. To Bank Account (Cash paid to P and K for adjustment of capital)

8

Part B

Option I

(Analysis of Financial Statements)

18. Give any two examples of cash inflows from operating activities other than cash receipts from

sale of goods & rendering of services.1

Solution: Any two of the followings:

(i) Royalties

(ii) Commission Received

(iii) Sale of Scrap

X 2 = 1

19. P P Limited is Share Broker Company. G G Limited is engaged in manufacturing of packaged food.

P P Limited purchased 5,000 equity shares of Rs. 100 each of Savita Limited. G G Limited also

purchased 10,000 equity shares of Rs. 100 each of Savita Limited.

For the purpose of preparing their respective Cash Flow Statements, under which category

ofactivities the purchase of shares will be classified by P P Limited and G G Limited? 1

Solution: For P P Limited: Investing Activity

For G G Limited: Investing Activity

20. M K Limited is a computer hardware manufacturing company. While preparing its accounting

records it takes into consideration the various accounting principles and maintains transparency. At

the end of the accounting year, the company follows the Companies Act, 2013 and Rules

thereunder for the preparation of its Financial Statements. It also prepares its Income Statement

and Balance Sheet as per the format provided in Schedule III to the Act. Its Financial Statements

depict its true & fair financial position. For the financial year ending March 31, 2017, the accountant

of the company is not certain about the presentation of the following items under relevant Major

Heads & Sub Heads, if any, in its Balance Sheet:

(i) Securities Premium Reserve

(ii) Calls in Advance

(iii) Stores & Spares

(a) Advice the accountant of the company under which Major Heads and Sub Heads, if any, he

should present the above items in the Balance Sheet of the company,

(b) List any two values that the company is observing in the maintenance of its accounting records

and preparation of its financial statements.4

Solution: (a)

S. No. Items Major Head Sub Head (i) Securities Premium Reserve Shareholders Funds Reserves & Surplus

(ii) Calls in Advance Current Liabilities Other Current Liabilities

(iii) Stores & Spares Current Assets Inventory

3

(b) Any two of the following values: Transparency, Honesty, Abiding the Law. (Or any other relevant

value) 1

21. For the year ended March 31, 2017, Net Profit after tax of K X Limited was Rs. 6,00,000. The

company has Rs. 40,00,000 12% Debentures of Rs. 100 each. Calculate Interest Coverage Ratio

assuming 40% tax rate. State its significance also. Will the Interest Coverage Ratio change if during

the year 2017-18, the company decides to redeem debentures of Rs. 5,00,000 and expects to

maintain the same rate of Net Profit and assume that the Tax rate will not change. 4

Solution: Interest Coverage Ratio= Net Profit before Interest and Tax/ Interest on Long Term Debts

Net Profit after Tax = Rs. 6,00,000Tax Rate = 40 %

Net Profit before tax = 100/(100 Tax) X Net Profit after tax

= 100/ 60 X 6,00,000 = 10,00,000

Net Profit before Interest & Tax = Net Profit before tax + Interest on Long Term Debts

= 10,00,000 + 4,80,000 = 14,80,000

Interest Coverage Ratio= Net Profit before Interest and Tax / Interest on Long Term Debts 1

= 14,80,000 / 4,80,000 = 3.08 Times 1

Significance of Interest Coverage Ratio: It reveals the number of times Interest on Long Term Debts

is covered by the profits available. A higher ratio ensures safety of interest on Long Term Debts. 1

The Interest coverage ratio will improve if the company decides to redeem Rs. 5,00,000 debentures

assuming that Net Profit after interest and the tax rate will be same. 1

22. Following is the Statement of Profit & Loss of X L Limited for the year ended March 31, 2017:

Statement of Profit & Loss

for the year ended March 31, 2017

Particulars Notes to Accounts

2015-16 Amount (Rs.)

2016-17 Amount (Rs.)

Revenue from Operations Expenses:

50,00,000

80,00,000

(a) Employee Benefit Expenses: 10 % of Revenue from Operations (b) Other Expenses

10,00,000

12,00,000

Tax Rate 40 %

Prepare Comparative Statement of Profit & Loss of X L Limited.4

Solution: X L Limited

Comparative Statement of Profit & Loss

for the year ended March 31, 2016 and 2017

Particulars 2015-16 Amount

(Rs.)

2016-17 Amount

(Rs.)

Absolute Change (Rs.)

% age Change

Revenue from Operations Expenses: (a) Employee Benefit Expenses: 10 % of Revenue from Operations (b) Other Expenses Net Profit before Tax Less: Tax Net Profit after Tax

50,00,000

5,00,000 10,00,000

80,00,000

8,00,000 12,00,000

30,00,000

3,00,000 2,00,000

25,00,000 10,00,000 15,00,000

60

60 20

71.43 71.43 71.43

35,00,000 14,00,000

60,00,000 24,00,000

21,00,000 36,00,000

(1 mark for each column)4

23. From the following Balance Sheet of Ajanta Limited as on March 31, 2017, prepare a Cash Flow

Statement:

Particulars Note Number

31-3-2017 (Rs.)

31-3-2016 (Rs.)

I.Equity and Liabilities (1) Shareholders Funds (a) Equity Share Capital (b) Reserves and Surplus

(2) Non- Current Liabilities Long-Term Borrowings- 9 % Debentures

(3) Current Liabilities (a) Trade Payables (b) Other Current Liabilities

1

2 3

10,00,000 2,40,000

3,20,000

1,80,000 1,80,000

10,00,000 1,20,000

2,40,000

2,40,000 1,60,000

Total 19,20,000 17,60,000

II. Assets (1) Non-Current Assets

(a) Fixed Assets Tangible Assets

(b) Non-Current Investments

(2) Current Assets (a) Inventories (b) Trade Receivables (c) Cash and Cash Equivalents

4 5

13,40,000 2,40,000

1,20,000 1,60,000

60,000

12,00,000 1,60,000

1,60,000 1,60,000

80,000

Total 19,20,000 17,60,000

Notes to Accounts

Note Number

Particulars 31-3-2017 (Rs.)

31-3-2016 (Rs.)

1

2

3

4

5

Reserves and Surplus General Reserve Balance in Statement of Profit & Loss

1,20,000 1,20,000

1,20,000

2,40,000 1,20,000

Trade Payables Creditors Bills Payable

1,40,000

40,000

1,20,000 1,20,000

1,80,000 2,40,000

Other Current Liabilities Outstanding Rent

1,80,000

1,60,000

1,80,000 1,60,000

Tangible Assets Plant & Machinery Accumulated Depreciation

14,90,000 (1,50,000)

13,00,000 (1,00,000)

13,40,000 12,00,000

Non-Current Investments Shares in XYZ Limited

2,40,000

1,60,000

2,40,000 1,60,000

Additional Information:

(a) During the year 2016-17, a machinery costing Rs. 50,000 and accumulated

depreciation thereon Rs. 15,000 was sold for Rs. 32,000.

(b) 9 % Debentures Rs. 80,000 were issued on April 1, 2016. 6

Solution: Ajanta Limited

Cash Flow Statement

for the year ended 31st March, 2014


I CASH FLOW FROM OPERATING ACTIVITIES Surplus: Balance in the Statement of Profit & Loss Adjustment for Non- Cash and Non-Operating Items Depreciation 65,000 Loss on sale of Machinery 3,000 Interest on Debentures 28,800 Operating Profit before changes in working capital Add: Decrease in Current Assets and Increase in Current Liabilities Inventories 40,000 Outstanding Rent 20,000 Creditors 20,000 Less: Increase in Current Assets and Decrease in Current Liabilities Bills Payable Cash Flow from Operating Activities II- CASH FLOW FROM INVESTING ACTIVITIES Purchase of Machinery Sale of Machinery Purchase of Shares in XYZ Limited

1,20,000

96,800

2,16,800

2,16,800

80,000

(80,000)

2,16,800

(2,40,000) 32,000

(80,000)

(2,88,000)

Cash Flow from Investing Activities III- CASH FLOW FROM FINANCING ACTIVITIES Issue of 9 % Debentures Interest on Debentures Cash Flow from Financing Activities Net Cash Flow Add: Opening Balance of Cash and Cash Equivalents Closing Balance of Cash and Cash Equivalents

80,000 (28,800)

(2,88,000)

51,200

51,200

(20,000) 80,000

60,000

2+1+1

Plant & Machinery Account



To Balance b/d To Bank Account

13,00,000 2,40,000

By Bank Account By Accumulated Depreciation Account By Statement of Profit & Loss By Balance c/d

32,000 15,000

3,000 14,90,000

15,40,000 15,40,000

1

Accumulated Depreciation Account



To Plant & Machinery Account To Balance c/d

15,000 1,50,000

By Balance b/d By Statement of Profit & Loss

1,00,000 65,000

1,65,000 1,65,000

1

PART B

Option-II

Computerised Accounting

18. While navigating in the workbook, which of the following commands is used to move to the

beginning of the Current row: 1

a. [ctrl] + [home]

b. [page up]

c. [Home]

d. [ctrl] + [Back space]

Sol: (c)

19. Join line in the context of Access table means: 1

a. Graphical representation of tables between tables

b. Lines bonding the data within table

c. Line connecting two fields of a table

d. Line connecting two records of a table

Sol: (b)

20. Enumerate the basic requirements of computerized accounting system for a business

organization.

Sol: The computerized accounting is one the database-oriented applications wherein the transaction

data is stored in well-organized database. The user operates on such database using the required

interface and also takes the required reports by suitable transformations of stored data into

information. Therefore, the fundamentals of computerized accounting include all the basic

requirements of any database-oriented application in computers. 4

Accounting framework [2]

It is the application environment of the computerized accounting. A healthy accounting framework

interms of accounting principles, coding and grouping structure is a pre-condition for any

computerizedaccounting system.

Operating procedure........ [2]

A well-conceived and designed operating procedure blended with suitable operating environment of

the enterprise is necessary to work with the computerized accounting system.

21. The generation of ledger accounts is not a necessary condition for making trial balance in a

computerized accounting system. Explain. 4

Sol: In computerized accounting system, every day business transactions are recorded with the help

of computer software. Logical scheme is applied for codification of account and transaction. Every

account and transaction is assigned a unique code. The grouping of accounts is done from the first

stage.

[Briefly explaining what is account groups and hierarchy of ledger.]

The hierarchy of ledger accounts is maintained and the data is transferred into Ledger accounts

automatically by the computer. In order to produce ledger accounts the stored transaction data is

processed to appear as classified so that same is presented in the form of report. The preparation of

financial statements is independent of producing the trial balance. 4

22. Internal manipulation of accounting records is much easier in computerized accounting than in

manual accounting. How? 4

Sol: Internal manipulation of accounting records is much easier in computerized accounting due to

thefollowing:

i. Defective logical sequence at the programming stage

ii. Prone to hacking

23. Computerisation of accounting data on one hand stores voluminous data in a systematic and

organized manner whereas on the other hand suffers from threats of vulnerability and

manipulations. Discuss the security measures you would like to employ for securing the data from

such threats. 6

Sol: Every accounting software ensures data security, safety and confidentiality. Therefore every,

software should provide for the following:

Password Security: Password is a mechanism, which enables a user to access a system including

data. The system facilitates defining the user rights according to organization policy. Consequently, a

person in an organization may be given access to a particular set of a data while he may be denied

access to another set of data. 2

Data Audit: This feature enables one to know as to who and what changes have been made in the

original data thereby helping and fixing the responsibility of the person who has manipulated the

data and also ensures data integrity. Basically, this feature is similar to Audit Trial. 2

Data Vault: Software provides additional security through data encryption. 2

MARKING SCHEME

BUSINESS STUDIES (054)

CLASS XII (2017-18)

Ans1. Co-ordination. (1 mark)

Ans2. The manager/planner is required to make assumptions about the future. These assumptions

are called planning premises. (1 mark)

Ans 3. Communication. (1mark)

Ans 4. Benefits of Autocratic or Authoritarian leader: (Any one) (1 mark for the statement)

a. This leadership style is effective in getting productivity in many situations.

b. Quick decision-making is also facilitated by this style of leadership.

Ans5. A high Debt Service Coverage Ratio indicates better ability to meet cash commitments

and consequently, the companys potential to increase debt component in its capital structure.(1)

Ans 6. Factors affecting working capital requirements: (Any one)

a. Credit Allowed.

b. Operating Efficiency. (1 mark)

Ans7. The following function was performed by SEBI- Calling for information by undertaking

inspection, conducting enquiries and audits of stock exchanges and intermediaries. Regulatory

Function. (1 mark for the statement)

Ans 8. Right to be heard. (1 mark)

Ans9.

a. It would be in the best interest of the organization if the existence of such groups is recognized and the roles that their members play are identified.

b. The knowledge of such groups can be used to gather their support and consequently lead to improved organizational performance. Such groups can also provide useful communication

channels.

c. Instead of confronting them, the management should take skillfully take advantage of both formal and informal organization so that work continues smoothly. (3 marks)

Ans 10. Decisions Shyam should take to ensure low investment in fixed capital requirement with

respect to:

a. Nature of Business: Instead of setting up a manufacturing unit, Shyam should start a trading concern of buying handicrafts from the craftsmen and selling them.

b. Scale of operations: Shyam should keep the scale of his organization small.

c. Financing alternatives: A developed financial market may provide for leasing facilities. So instead of making outright purchase of assets, for example of office space, Shyam

should take them on lease and reduce his requirement of fixed capital. (1x3=3

marks)

Ans11. Following are the functions of a supervisor: (Any three)

a. Supervisor maintains day-to-day contact and maintains friendly relations with workers.

b. Supervisor acts as a link between management and workers.

c. Supervisor plays a key role in maintaining group unity among workers placed under his control.

d. Supervisor ensures performance of work according to the targets set.

e. Supervisor provides good on-the-job training to the workers and employees.

f. Supervisory leadership plays a key role in influencing the workers in the organization.

g. A good supervisor analyses the work performed and gives feedback to the workers. (1x3=3)

(1 mark for each statement)

Ans 12.

A. Advertising. (1 mark)

B. Merits of advertising: (Any two)

a. Advertising enhances customer satisfaction and confidence, as they feel more comfortable and

assured about the product quality and hence feel more satisfied.

b. With the developments in art, computer designs, and graphics, advertising has developed into

one of the most forceful and expressive medium of communication.

c. Advertising is a very economical mode of communication if a large number of people are to be

reached. (1x2=2)


Ans 13. Following are the consumer responsibilities that a consumer must keep in mind while

purchasing gold jewelry: (Any three)

a. Be aware about various goods(types of jewelry) available in the market so that an intelligent and wise choice can be made.

b. Buy only standardized jewelry as they provide quality assurance. Thus, look for Hallmark on jewelry.

c. Learn about risks associated with the product, follow manufacturers instructions.

d. Read labels carefully so as to have information about prices, net weight, etc.

e. Assert yourself to ensure a fair deal.

f. Be honest in your dealings.

g. Ask for a cash memo on purchase of the jewelry. (1x3=3)


Ans 14 A. Following is the step in process of Planning:

Setting objectives: The first and foremost step is setting objectives. Objectives may be set for the

entire organization and each department or unit within the organization. Objectives or goals

specify what the organization wants to achieve. Objectives should be stated clearly. Management

must contribute ideas and participate in the objective setting process. If the end result is clear it

becomes easier to work towards the goal. (1/2 mark for identification+1 marks for

explanation)

B. Following is the last step to be performed by Quick Bizz as part of the process of Planning:

Follow up action: To see whether plans are being implemented and activities are performed

according to schedule is also part of the planning process. Monitoring the plans is equally

important to ensure that objectives are achieved. (1/2 mark for the heading + 1 marks for the

explanation)

Ans 15. The following needs given as per Maslows Need Hierarchy Theory will not be satisfied

by the two incentives- Basic pay and allowances (satisfies basic needs) & Retirement Benefits

(satisfy safety and security needs) discussed above: (Any two)

a. Affiliation /Belonging Needs: These needs refer to affection, sense of belongingness, acceptance and friendship.

b. Esteem Needs: These include factors such as self-respect, autonomy status, recognition and attention.

c. Self Actualization Needs: It is the highest level of need in the hierarchy. It refers to the drive to become what one is capable of becoming. (2x2=4)

(1/2 mark for heading + 1 marks for explanation)

Ans 16. Following are the first four steps in the screen-based trading for buying and selling of

securities in the secondary market:

a. The investor has to approach a registered broker or sub-broker and sign a broker-client agreement and a client registration form before placing an order to buy or sell securities.

b. The investor has to open a demat account or beneficial owner account with a depository participant for holding and transferring securities in the demat form.

c. The investor then places an order with the broker to buy or sell shares, the broker will go ahead with the deal and issue the order confirmation slip to the investor.

d. The broker then will go on-line and connect to the main stock exchange and match the share and best price available. (1x4=4)

(One mark for each statement)

Ans 17. A.

a. The voice and opinion of the general public is important as they may be interested in the company and its product and have an impact on the business ability to achieve its

objectives. Thus, it is imperative to manage public opinion and the companys relation

with the public on a regular basis.

b. Consumer Activist groups need to be satisfied because they can impose restriction on the sales of the firms products directly by urging customers to refrain from buying them

through the imposition of laws. (1x2=2)

B. The following departments in the firm can be given the task to disseminate information and

build goodwill:

a. The marketing department.

b. A separate department to manage public relations.(1x2=2)

Ans18. The following are the variables used by R&T Reality to prepare its market offering:

a. Product: Product means goods or services or anything of value, which is offered to the market for sale. The concept of product relates to not only the physical product but also

the benefits offered by it from customers view point. The concept of product also

includes the extended product or what is offered to the customers by way of after sales

services, handling complaints, etc. The important product decisions include deciding

about the features, quality, packaging, labeling and branding of the products.

b. Price: Price is the amount of money customers have to pay to obtain the product. The marketers have not only to decide about the objectives of price setting but to analyse the

factors determining the price and fix a price for the firms products. Decisions have to be

taken in respect of discounts to customers, traders and credit terms, etc, so that the

customers perceive the price to be in line with the value of the product.

c. Place: Place or physical distribution include activities that make firms products available to the large customers. Important decision areas in this respect include selection of

intermediaries to reach the customers, providing support to the intermediaries. The other

decision areas relate to managing inventory, storage and warehousing and transportation

of goods from the place it is produced to the place it is required by the buyers.

d. Promotion: Promotion of products and services include activities that communicate availability, features, merits, etc, of the products to the target customers and persuade

them to buy it. Most marketing organizations undertake various promotional activities

and spend substantial amount of money on the promotion of their goods through using

number of tools such as advertising, personal selling and sales promotion techniques.

(1 x4=4) (1/2 mark for the heading+ 1/2 mark for the explanation)

Ans 19. The dimensions of Business environment discussed above which brought about the

above change are:

a. Legal environment- Legal environment includes various legislations passed by the Government, administrative orders issued by government authorities, court judgments, as

well as the decisions rendered by various commissions and agencies at every level of

government-Center, State, Local. Non-Compliance of laws can land the business

enterprises into legal problems.

b. Political environment- Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government

representatives hold towards business. Attitudes of the government officials may have

either positive or negative impact upon business.

(2x2=4) (1/2 mark for heading+ 1 marks for explanation)

Ans 20. Following are the characteristics of management: (Any five)

a. Management is a goal oriented process which unites the efforts of different individuals in the organization towards achieving these goals.

b. Management is all pervasive as the activities involved in managing an enterprise are common to all organizations whether economic, social or political.

c. Management is multidimensional as it is a complex activity that has three dimensions: Management of work, Management of people, Management of operations.

d. Management is a process consisting of continuous, composite, but separate functions.

e. Management is a group activity which ensures team work and coordination of individual effort in a common direction.

f. Management is a dynamic function and has to adapt itself to the changing environment.

g. Management is an intangible force that cannot be seen but its presence can be felt in the way the organization functions. (1x5=5)

Ans 21 A. Controlling. ( 1 mark)

B. The steps of controlling discussed above are:

a. Analysing deviations: Some deviation in performance is expected in all activities. It is

therefore, important to determine the acceptable range of deviations. Also, deviations in key

areas of business need to be attended more urgently as compared to deviations in certain

insignificant areas. Critical point control and management by exception should be used by the

manager in this regard. After identifying the deviations that demand managerial attention these

deviations need to be analyzed for their causes.

b. Taking Corrective Action: The final step in the controlling process is taking corrective action.

No corrective action is required when the deviations are within acceptable limits. However,

when the deviations go beyond the acceptable range, especially in the important areas, it

demands immediate managerial attention so that deviations do not occur again and standards are

accomplished. (2x2=4)(1/2 mark for heading+1 marks for explanation)

Ans 22.A. Factors that should be kept in mind by the company while making the investment

decision: (Any two)

a. The amount of cash flows should be carefully analyzed before considering the decision.

b. The rate of return of the project based on expected return and assessment of the risk involved from each proposal should be analyzed.

c. The decision to invest in a particular project involves a number of calculations regarding the amount of investment, interest rate, cash flows and rate of return. (1x2=2)

B. The following are the reasons that make the above decision to be made carefully: (Any one)

a. These decisions have a bearing on the long term growth.

b. These decisions result in a substantial portion of capital funds being blocked in long-term

project.

c. These decisions influence the overall business risk complexion of the firm.

d. These decisions once taken, are not reversible without incurring heavy losses. (1 mark)

C. Following are the values being fulfilled by Saksham Ltd.: (Any two)

a. Responsibility

b. Respect for law and order

c. Sensitivity to environment

d. Development of backward regions.

e. Generating employment opportunities

(or any other suitable value) (1x2=2) (2+1+2=5)

Ans 23. A. The function of management being performed by GIPRA to maintain a satisfactory

work force is Staffing. (1 mark)

B. The two steps of staffing discussed above are:

a. Training and development: The organization should facilitate employee learning by having

either in-house training centers or have forged alliances with training and educational institutes

to ensure continuing learning of their employees. The organizations also benefit.

b. Performance Appraisal: All organizations have some formal or informal means of appraising

their employees performance. Performance Appraisal means evaluating an employees current

and/or past performance as against certain predetermined standards. The performance appraisal

process includes defining the job, appraising performance, and providing feedback. (1 1/2 x2=3)

(1/2 mark for identification+1 mark for the explanation)

C. Following are the two steps in the process of staffing that the management had to perform

before performing the above steps: (Any two)

a. Estimating manpower requirements, which involves not merely knowing how many persons

the company needs but also what type.

b. Recruitment is defined as the process of searching for prospective employees and stimulating

them to apply for jobs in the organization.

c. Selection is the process of choosing from among the pool of the prospective candidates

developed at the stage of recruitment.

d. Orientation is introducing the selected employee to other employees and familiarizing him

with the rules and policies of the organization. Placement refers to the employee occupying the

position or post which the person has been selected. (1x2=2) (1 mark for each statement)

Ans 24.

A. Following are the principles of management highlighted by Rajat in his address to the employees: (Any Four)

a. Initiative: Initiative means taking the first step in self motivation. It is thinking out and executing the plan. But it does not mean going against the established practices of the

company for the sake of being different.

b. Stability of personnel: Employee turnover should be minimized to maintain organizational efficiency. according to Fayol. Personnel should be selected and

appointed after due and rigorous procedure. But once selected they should be kept at their

post/position for a minimum fixed tenure.

c. Discipline: Discipline is the obedience to organizational rules and employment agreement which are necessary for the working of the organization. According to Fayol, discipline

requires good superiors at all levels, clear and fair agreements and judicious application

of penalties.

d. Equity: There should be no discrimination against anyone on account of sex, religion, language, caste, belief or nationality, etc. Good sense and experience are needed to

ensure fairness to all employees, who should be treated as fairly as possible.

e. Espirit de corps: Management should promote a team spirit of unity and harmony among employees, according to Fayol. A manager should replace I withWe in all his

conversations with workers to foster team spirit.

f. Subordination of individual interest to general interest: In all situations the interests of the group/company will supersede the interest of any one individual. This is so because

larger interests of the workers and stakeholders are more important than the interest of

any one person. (1x4=4) (1/2 mark for the heading +1/2 mark for the explanation)

B. Following are values that Rajat wanted to spread in the organization: (Any two)

a. Responsibility

b. Discipline.

c. Conflict resolution.

d. Good behavior in human interaction.

e. Team work

(or any other suitable value) (1x2=2)

Ans 25. Following is the meaning and difference between Delegation and Decentralization :

Basis of difference Delegation Decentralization

1. Meaning Delegation is the entrustment of responsibility and authority to

another and the creation of

accountability for performance.

(or any other suitable meaning)

Decentralization explains the

manner in which decision-

making responsibilities are

divided among hierarchical

levels. (or any other suitable

meaning)

2. Nature Delegation is a compulsory act because no individual can

perform all tasks on his own.

Decentralization is an optional

policy decision. It is done at the

discretion of the top

management.

3. Freedom of action

More control by superiors hence

less freedom to take own

decisions.

Less control over executives

hence greater freedom of action.

4. Status It is a process followed to share tasks.

It is the result of the policy

decision of the top management.

5. Scope It has narrow scope as it is limited to superior and his

immediate subordinate.

It has wide scope as it implies

extension of delegation to the

lowest level of management.

6. Purpose To lessen the burden of the manager.

To increase the role of the

subordinates in the organization

by giving them more autonomy.

(1/2x2=1 mark for the meaning)

(1x5=5marks for the differences)

SAMPLE QUESTION PAPER

BUSINESS STUDIES (054)

CLASS XII (2017-18)

1. Name the process which provides the requisite amount, quality, timing and sequence of efforts and ensures that planned objectives are achieved with a minimum of conflict.

(1)

2. What are Planning premises? (1)

3. Name the process of exchange of information between two or more persons to reach common understanding. (1)

4. Sara worked in a call center. Her team manager did not wish to be contradicted and gave rewards depending on the result. State one benefit of the style of leadership being

followed by Saras team manager. (1)

5. What does a high Debt Service Coverage Ratio indicate? (1)

6. Aarohan Ltd. an automobile manufacturer was diversifying into manufacturing two-wheelers. They knew that India is on a growth path and a new breed of consumer is

eager for a first vehicle. The market responded very well to the new product. The

company did not have to allow credit, as it had advance orders from four to six months

with deposits paid. Also, due to efficiency in managing their operations as soon as a

vehicle was off the assembly line, it was out to the dealers. Give any one reason discussed

above which helped the firm in managing its working capital efficiently. (1)

7. SEBI recently called for information and issued a show cause notice to NSE and its 14 officials seeking explanation on the Preferential Access allegations at the Exchanges

Co-location facility. State the function that SEBI performed by doing so. (1)

8. Identify the right of a consumer under Consumer Protection Act, 1986 which Consumer organizations help a consumer to claim by performing the function of encouraging

consumers to strongly protest and take an action against unscrupulous, exploitative and

unfair trade practices of sellers. (1)

9. Progress Ltd. Is facing difficulties in introduction of machinery of latest technology as they are facing resistance from the informal groups who are pressurizing the members to

work against organizational interests. As the Human Resources manager of the company

would you advise the management of the company to confront them or give them some

other suggestion to deal with the informal groups. (3)

10. Shyam wanted to start a business of selling handicrafts by getting in touch with the craftsmen in the rural areas of Bengal. He wants to make a low investment in fixed

Capital. Advise him in taking suitable decisions regarding the Nature of Business, Scale of

operations and Financing Alternatives (in a developed financial market) that he needs to

take for the purpose. (3)

11. State any three functions of a supervisor. (3)

12. Malaysian budget airline group Sky Europe announced discounted fares, starting as low as Rs.1,099 for domestic destinations operated by its Indian Joint Venture carrier and

Rs.2,099 for international flights operated by other group airlines under a limited period

offer. A. Identify the medium of communication which can be used by the firm to inform

a large number of people about the new fares. B. Also, state any two merits of the

communication tool, apart from the one discussed above. (3)

13. State any three responsibilities that a consumer must keep in mind while purchasing gold jewelry. (3)

14. Having transformed 2500 Kirana stores across eight cities in to virtual super markets, the start up Quick Bizz further decided in advance, to collaborate with 15000-20,000 store

owners in top 30 cities of the country by the end of this year. The company has set its eye

on digitizing over 1,00,000 kirana stores over next 18-24 months. A. Identify and explain

the step in the process of one of the functions of management discussed above. B. Also

explain the last step to be performed by Quick Bizz as part of the process. (4)

15. At present, apart from the basic pay and allowances as a part of compensation, the employees and employers contribute 12% of basic wages each towards Employees

Provident Fund scheme and Employees Pension Fund scheme. A proposal to reduce the

contribution by employers and employees to 10% of basic pay and dearness allowance

was listed on the agenda for a recent meeting of Employees Provident Fund Organization

held. The stakeholders expressed their reservations about it and they feel that it should be

continued at 12%. Explain any two needs as suggested by Maslows Need Hierarchy

Theory, which will not be satisfied by the incentives discussed above. (4)

16. State the first four steps which are involved in the screen-based trading for buying and selling of securities in the secondary market. (4)

17. Bye-Bye Motors recently informed the media about its aim to train up to 4000 people in the next 3 years in the skills associated with automobile industry as part of its program to

provide technical and vocational education for unemployed youth. The firm has already

started the program in collaboration with Automobile Skill Development Council. This

news in the media has helped the firm in promoting its image in the eyes of the public and

consumer activist groups.

A. Why is it important for the company to satisfy the public and the consumer activist

groups. Give reasons.

B. Which departments in the firm can be given the responsibility to disseminate

information and build goodwill of the firm? (4)

18. R&T Reality, the property development arm of the construction and engineering giant R&T in a recent report to the media shared that it is betting on bigger and better projects

providing greater benefits to the customers, lower prices and faster execution to boost its

growth. The spokesperson of the company informed the media that besides the innovative

features, quality and brand, the fair pricing followed by the company is also a hit with the

buyers. He said that the company is also focusing on accurate, speedy and timely delivery.

Proper communication with the market was being maintained through advertising. Even

dealers were to be offered incentives to boost the sales.

The above para describes the combination of variables used by R&T Reality to prepare

its market offering. Identify and explain the variables. (4)

19. It is heartening that the implementation of compliance requirements of the Companies Act, 2013 has progressed substantially with NIFTY 500 companies. Data shows a

significant increase in womens participation in the top management of Indian Companies

from 5% few years ago to 13% now. Even companies which are not in NIFTY 500 have

undertaken drives to increase womens participation across different areas of work. The

government had also announced that it would support such companies. Identify and

explain the dimensions of business environment discussed above which brought about the

change. (4)

20. Give any five characteristics of management. (5)

21. Textile manufacturer Super textiles reported 43% fall in its profits in the fourth quarter ended 31 March 2017, which is beyond the acceptable range 25% decided by the

company. This was due to higher fuel cost and lower yield on account of demonetization.

The company aims to implement cost saving measures by restructuring contracts and its

business processes to meet its targets in the future.

A. Name the function of management discussed above.

B. Also identify and explain the steps of the function of management discussed above.

(5)

22. Saksham Ltd. a firm manufacturing textiles, wished to diversify their business. They were considering two options, either to diversify into manufacturing tooth-paste or switches.

They wanted to invest in the purchase of land, to set up a manufacturing unit in the

backward areas of Gujarat, which would also lead to the generation of employment

opportunities in the area, but only after fulfilling all legal requirements and taking

appropriate steps to ensure that the environment was not polluted. The finance manager of

the company, Mr. Ramakant was asked by the management to prepare a report on the

factors which should be considered while making the above investment decision.

A. State any two factors that Mr. Ramakant would give in his report.

B. Also state any one reason which makes it important for the above decision to be made

carefully.

C. And state two values being fulfilled by Saksham Ltd. (5)

23. The IT major GIPRA is terminating the employment of its senior managers, if after evaluating their performance against pre-determined standards if it is found lacking. With

this disruption analysts say a large portion of the employees may become irrelevant unless

they learn new skills and apply the knowledge to work on emerging technologies. GIPRA

is ready to facilitate employee learning, through its in-house centers.

A. Name the function of management performed by GIPRA to maintain a satisfactory

work force.

B. Identify and explain the two steps in the process of the function of management

discussed above.

C. Also state any two steps of the function of management discussed, that the firm had

to perform before performing the above steps. (6)

24. Rajat joined as a CEO of Bharat Ltd, a firm manufacturing Computer hardware. On the first day he addressed the employees. He said that he believed that a good company should

have an employee suggestion system and he wished to minimize employee turnover to

maintain organizational efficiency. He informed all employees that he would ensure that

all agreements were clear, fair and there was judicious application of penalties. However,

he said that he believed that lazy personnel should be dealt with sternly to send the

message that everyone was equal in the eyes of management. Also that he would want to

promote a team spirit of unity and harmony among employees, which would give rise to a

spirit of mutual trust and belongingness among team members and eventually minimize

need for using penalties. He told all present that the interests of the organization should

take priority over the interests of any one individual employee.

A. Identify and briefly explain any four principles of management given by Fayol, which

Rajat highlighted in his address to the employees.

B. Also state two values that Rajat wanted to spread in the organization.

(6)

25. Put simply, decentralization refers to delegation of authority throughout all the levels of the organization. In the light of the above statement give the meaning of and difference

between Delegation of authority and decentralization. (6)

Marking Scheme

Economics (030)

Cass XII (2017-18)

SECTION A : MICROECONOMICS

1 b) Government should be concerned with how to reduce unemployment

1

2 Marginal Physical Product is the change in output produced by employing one additional unit

of the variable input. It can be calculated as :

=

or

= -

1

3 i) 140 1

4 Zero. 1

5 Two factors that may shift the Production Possibility Frontier of an economy away from

origin (to the right) are:

(a) Increase in resources available to an economy (natural, physical or human resource).

New resources may increase the output potential in an economy resulting in shift of

PPF away from origin.

(b) Improvement in technology, when technology improves the production potential

increases, i.e. economy may be able to produce more output using existing resources

efficiently.

Or

Since Marginal Rate of Transformation is constant, PPC will be a straight line.

3

6 (i) Demand of the good X will increases, hence demand curve of good X shifts towards

right.

(ii) Demand of Good X may decrease as people may be inclined to consume less due to

3

media reports of harmful effect of the good X, as a result, demand curve may shift

towards left.

(iii)When income of consumer increases the disposable income increases and consumer is

in a better position of spending more on the good X. Hence consumer may consume

more of the commodity due to which the demand for the good increases and demand

curve shifts away from origin.

7 a) -0.53, -0.80, -0.87,- 3.1 (minus sign only represents the inverse relation between price and

quantity demanded)

b)

Price (in ) Quantity (in units)

Original = 28 Original = 50

New = 23 New = 100

Ed = Change in Quantity Demanded x Original Price

Change in Price Original Quantity (Absolute values taken)

= X

= 5.6 (Ed>1, relatively more elastic demand.)

4

8 A Floor price is the minimum price at which a commodity can be sold legally. Floor price if

fixed above the equilibrium price, serves the purpose of welfare of the producers (say

farmers). When price floor is fixed at P quantity demanded will contract to OQ but at this

price, suppliers will be ready to supply OQ. As a result, surplus of QQ will emerge.

Imposition of floor prices above equilibrium price will have the following major implications:

a) Surpluses: The quantity actually brought and supplied will shrink as a direct consequence

of price flooring, as a result, a part of producers stock will remain unsold

part a (accounting for partnership firms and companies) · k k limited obtained a loan of rs....

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