Model-Question-of-Principles-of-Accounting-II-Grade-12-XII-SETI-NEB-Solution
NATIONAL EXAMINATIONS BOARD [NEB]
Principles of Accounting II - Grade 12-XII/Class 12
SET-I Model Question with SOLUTION
Regular Students | Subject Code: 224 ‘B’
Time - 3 hrs
Full Marks - 100
Pass Marks: 35 (Only for partial students)

Candidates are required to give their answers in their own words as far as practicable. The figures in the margin indicate full marks.

Also Check:

Principles of Accounting-II | Class 12 | Question Paper 2076 [2019] | Sub Code: 224B | NEB

Also Check:

Principles Of Accounting - II | Class 12 | Exam Paper 2075 [2018] | National Examinations Board.

Question No. 1: Write any two characteristics of a company. (2)

Answer: The two characreristics of a company are as follows:

a) Legal artificial person: A joint stock company is an artificial person created by law. It makes the company as human being. The company can purchase and sell the properties in it's own name. It can sue and be sued by others in matter of dispute and conflict. As a real person, it can carry out lawful business activities and make other business contract.
b) Transferability of shares: The capital of the company is divided into small part i.e. share. A company can raise large amount of capital by selling such shares to the public. The shares issued by company are transferable except in case of private companies.

Question No. 2: Point out any three differences between equity shares and preferences shares. (3)

Answer: The three differences between equity shares and preferences shares are as follows:

Basis of difference Equity shares Preference shares
1. Payment of dividend Dividend payment is made after the payment on preference shares. Dividend is paid before the equity dividend.
2. Rate of dividend Rate of dividend may vary according to the profit earned by the company. Rate of dividend is pre-fixed at the time of issue.
3. Voting right Equity share holders enjoy the voting right. Preference shareholders do not have voting right.

Question No. 3: What do you understand by financial statement analysis? (3)

Answer: Financial statement analysis is the systematic process of analyzing the financial statements under various bases. It is the act of regrouping and rearranging the figures of financial statements to measure the financial strengths and weakness. The main purpose of financial statement analysis is to supply the various financial information to different parties, such as shareholders, management, creditors, bankers and lenders, employees and trade unions, etc.

Question No. 4: Mentions any two objectives of funds flow analysis. (2)

Answer: The two objectives of fund flow analysis are as follows:

a) To explain the changes in financial position of the firm.
b) To evaluate the operational efficiency of the firm during a period.

Question No. 5: Name and define any two types of costing. (3)

Answer: There are different types of costing. Two types of costing are defined below:

a) Contract costing: When the job is big and spread over long period of time, the method of contract costing is used. A separate account is kept for each individual contractor, builders, civil engineers, contractors, constructional and mechanical engineering firms, etc.
b) Unit or output costing: This is suitable for those industries where manufacturers are continuous and units are identical. It is also called single output costing. This method is applied in industries like mines, cement works, oil drilling, etc.

Question No. 6: Differentiate between direct and indirect cost. (2)

Answer: The differences between direct cost and indirect cost are as follow:

Basis of difference Direct cost Indirect cost
1.Meaning The cost which are directly chargable or identifiable with the cost center or unit are called direct cost. The cost which are not directly involved identifiable to the cost center or unit are called indirect cost.
2.Component It includes direct material, direct labour and direct expenses and total of these comprises prime cost. It includes indirect materials, indirect labour and indirect expenses and total of these comprises overhead or total indirect cost.

Question No. 7: Give the specimen of purchase requisition form. (2)

Answer: The specimen of purchase requisition form is as follows:


Question No. 8: What do you understand by allocation, apportionment and absorption of overhead? Write in brief. (3)

Answer: The definitions of allocation, apportionment and absorption of overhead are as follows:

a) Allocation of overhead: Allocation of overhead is the process of identifying whole items of overhead to specific department. It is the allotment of whole items of cost-to-cost centers to the charging of expenses, which can be identified fullt with the particulars department.

b) Apportionment of overhead: The items of overheads which cannot be identified with specific department or cost center and disturbed among the related departments and this way of distribution is known as apportionment. In other words, apportionment refers to the distribution of overheads cost among various departments or cost center.
c) Absorption of overhead: The term absorption refers to the process of charging of overhead to cost center or department to different cost units in a way that each cost unit bears an appropriate portion of total overhead. In other words, the way of charging the overhead to individual unit of specific product is known as absorption of overhead.

Question No. 9: A company forfeited 200 shares of Rs. 100 each of  a shareholder for non-payment of final call money of Rs. 30 per share. These shares were reissued at Rs.60 per share as fully paid.
Required: Journal entries for (a) Forfeiture (b) Reissue (c) Transfer. (3)

Answer:

Solution

Journal Entries

Date Particulars LF Debit Rs. Credit Rs.
a. Forfeiture of Shares
Share capital a/c (200 x 100) ..... Dr. 20,000
To Share forfeiture a/c (200 x 70) 14,000
To Calls-in-arrear a/c (200 x 30) 6,000
(Being forfeiture of 200 shares for non-payment of final call money)
b. Re-issue of Shares
Bank a/c (200 x 60) ..... Dr. 12,000
Share forfeiture a/c (200 x 40) ..... Dr. 8,000
To Share capital a/c (200 x 100) 20,000
(Being re-issue of 200 shares @Rs. 60 each)
c. Transfer Entry
Share forfeiture a/c (200 x 30) ..... Dr. 6,000
To Capital reserve 6,000
(Being gain on forfeiture amount transferred to capital reserve account)

Question No. 10: A company limited invited applications for 1,000 shares of Rs. 100 each at a premium of Rs. 20 per share payable as under:

On application - Rs. 30
On allotment (including premium) - Rs. 50
On first and final call - Rs. 40

The public applied for 1,500 shares. Applications for 300 shares were rejected and allotment of shares were made among the remaining applicants on pro-rata basis. It was decided to utilize excess application money in part payment of allotment. One shareholder, holding 20 shares, failed to pay the money due on allotment and the call. His shares were forfeited.

Required: Journal entries for: (a) Share allotment (b) Share first and final call and (c) Share forfeiture. (6)

Answer:

Solution

Journal Entries

Date Particulars LF Debit Rs. Credit Rs.
(a) Share allotment
Share allotment a/c (1,000 x 50) ..... Dr. 50,000
To share capital a/c (1,000 x 30) 30,000
To Share premium a/c (1,000 x 20) 20,000
(Being share allotment money made due at premium)
Bank a/c [50,000 - 6,000 - (20 x 44)] ..... Dr. 43,120
Calls-inarrear a/c (20 x 44) ..... Dr. 880
To Share allotment a/c 44,000
(Being share allotment money received except on 20 shares)
(b) Share first and final call
Share first and final call a/c (1,000 x 40) ..... Dr. 40,000
To Share capital a/c 40,000
(Being share first and final call money made due)
Bank a/c [40,000 - (20 x 40)] ..... Dr. 39,200
Calls-in-arrear a/c (20 x 40) ..... Dr. 800
To Share first and final call a/c 40,000
(Being share first and final call money received)
(c) Forfeiture of shares
Share capital a/c (20 x 100) ..... Dr. 2,000
Share premium a/c (20 x 20) ..... Dr. 400
To Share forfeiture a/c (20 x 36) 720
To Calls in arrear a/c (20 x 84) 1,680
(Being forfeiture of 20 share for non-payment of allotment and call money)

Working notes:

Calculation of call-in-arrear on share allotment

Shares allotted ratio = 1200:1000 or 6:5
No. of shares applied by defaulter (20 ÷ 5 x 6) = 24
Application money received from defaulter (24 x 30) = Rs. 720
Excess application money transferred to shares allotment [720 - (20 x 30)] = Rs. 120

Total allotment money due from defaulter = 20 x 50 = Rs. 1,000
Less: Excess application money transferred to allotment = Rs. 120
So, Calls-in-arrear = Rs. 880
Therefore, Calls-in-arrear per share = 880 ÷ 20 = Rs. 44

Alternatively,

Calls-in-arrear per share or share allotment = (1,000 x 50) - (200 x 30) ÷ 1,000 = Rs. 44

Question No. 11: R. Co. Ltd. took over the following assets and liabilities of S. Co. Ltd. at on agreed purchase price of Rs. 69,000:

Sundry debtors - 60,000
Machinery - 1,00,000
Sundry creditors - 40,000
Stock in trade - 76,000
Cash and bank - 5,000
Outstanding expenses - 15,000

The company issued fully paid equity shares of Rs. 100 each at Rs. 115 per share for the payment of purchase consideration amount.

Required: Journal entries. (3)

Answer:

Solution

In the book of R. Co. Ltd.

Journal Entries

Date Particulars LF Debit Rs. Credit Rs.
Sundry debtors a/c ..... Dr. 60,000
Machinery a/c ..... Dr. 1,00,000
Stock in trade a/c ..... Dr. 76,000
Cash and bank a/c ..... Dr. 5,000
To Sundry creditors a/c 40,000
To Outstanding expenses a/c 15,000
To S. Co. Ltd a/c 69,000
To Capital reserve (Balancing figure) 1,17,000
(Being assets and liabilities taken over)
S. Co. Ltd a/c ..... Dr. 69,000
To Equity share capital a/c (600 x 100) 60,000
To Share premium a/c (600 x 15) 9,000
(Being issue of 600 shares @ Rs. 115 to S. Co. Ltd for purchase consideration)

Working notes:

No. of shares issued = Amount payable∕F.V. of Share + Premium per share = 69,000∕100 + 15 =600 shares.

Question No. 12: X. Co. Ltd issued 200, 10% debentures of Rs. 100 each at a discount of 10% and redeemable at the end of years at a premium of 5%. The debentures were redeemed after 5 years.

Required: Journal entries for issue and redemption of debentures. (4)

Answer:

Solution

In the book of X. Co. Ltd.

Journal Entries

Date Particulars LF Debit Rs. Credit Rs.
Entry for issue
Bank a/c (200 x 90) ..... Dr. 18,000
Discount on issue of debenture a/c (200 x 10) ..... Dr. 2,000
Loss on issue of debenture a/c (200 x 5) ..... Dr. 1,000
To 10% Debenture a/c (200 x 100) 20,000
To Premium on redemption of debenture a/c (200 x 5) 1,000
(Being issue of 200, 10% debentures at discount 10% redeemable at premium 5%)
Entry for redemption
10% Debenture a/c (200 x 100) ..... Dr. 20,000
Premium on redemption debenture a/c (200 x 5) ..... Dr. 1,000

To Bank a/c 21,000
(Being redemption of debenture at premium 5%)

Question No. 13: The Trial Balance of a company as on 31st Chaitra, last year is given below:

Particulars Debit Rs. Credit Rs.
Building 90,000
Machinery 66,000
Land 1,07,000
Creditors 68,000
Advanced rent 12,000
Share capital 80,000
Cash at bank 40,000
Debtors 14,000
Prepaid insurance 6,000
General reserve 44,000
Revenue 3,22,000
Wages 1,10,000
Salaries 20,000
Sundry expenses 40,000
Interest 9,000
Insurance 24,000
Total 5,26,000 5,26,000

Additional Information: (i) Outstanding wages Rs.10,000 (ii) Outstanding Interest Rs.1,000 (iii) Depreciation on Building and Machinery 10% (iv) Insurance premium Rs.4,000 advance paid.

Required: Ten-column worksheet. (15)

Answer:

Solution

Worksheet

S.N.

Particulars

Part I

Part II

Part III

Part IV

Part V

Unadjustable Trial Balance

Adjustments

Adjusted Trial Balance

Income Statement

Balance Sheet

 

 

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

1.

Building

90,000

 

 

iii.9,000

81,000

 

 

 

81,000

 

2.

Machinery

66,000

 

 

iii.6,600

59,400

 

 

 

59,400

 

3.

Land

1,07,000

 

 

 

1,07,000

 

 

 

1,07,000

 

4.

Creditors

 

68,000

 

 

 

68,000

 

 

 

68,000

5.

Advance rent

 

12,000

 

 

 

12,000

 

 

 

12,000

6.

Share capital

 

80,000

 

 

 

80,000

 

 

 

80,000

7.

Cash at bank

40,000

 

 

 

40,000

 

 

 

40,000

 

8.

Debtors

14,000

 

 

 

14,000

 

 

 

14,000

 

9.

Insurance prepaid

6,000

 

 

 

6,000

 

 

 

6,000

 

10.

General reserve

 

44,000

 

 

 

44,000

 

 

 

44,000

11.

Revenue

 

3,22,000

 

 

 

3,22,000

 

3,22,000

 

 

12.

Wages

1,10,000

 

i. 10,000

 

1,20,000

 

1,20,000

 

 

 

13.

Salaries

20,000

 

 

 

20,000

 

20,000

 

 

 

14.

Sundry expenses

40,000

 

 

 

40,000

 

40,000

 

 

 

15.

Interest

9,000

 

Ii.1,000

 

10,000

 

10,000

 

 

 

16.

Insurance

24,000

 

 

iv.4,000

20,000

 

20,000

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

 

17.

O/S wages

 

 

 

10,000

 

10,000

 

 

 

10,000

18.

O/S Interest

 

 

 

1,000

 

1,000

 

 

 

1,000

19.

Depreciation on building

 

 

iii.9,000

 

9,000

 

9,000

 

 

 

20.

Depreciation on machinery

 

 

iii.6,600

 

6,600

 

6,600

 

 

 

21.

Prepaid insurance

 

 

4,000

 

4,000

 

 

 

4,000

 

22.

Net profit

 

 

 

 

 

 

96,400

 

 

96,400

23.

Total

5,26,000

5,26,000

30,600

30,600

5,37,000

5,37,000

3,22,000

3,22,000

3,11,400

3,11,400

...

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1Comments
  1. Unknown
    Unknown
    Your blog is very helpful but I was searching for cash flow statement which I couldn't find here.

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