CBSE Sample Papers For Class 12 Accountancy Mock Paper 1

CBSE Class 12 Accountancy Sample Paper-1 with Solutions (2021-22)

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Q1. P and Q are in partnership sharing profits equally. R is admitted as a new partner. R brings ₹ 30,000 as his share of goodwill for 1/4th share in cash which is entirely credited to the Capital Account of P. What will be the New profit-sharing ratio?

(a) 1:2:1

(b) Equal

(c) 1:1:4

(d) 2:1:1


Answer (a)


Rs entire share is contributed by the P.New ratio =P=1214=14Q=12R=14{R’s\ entire\ share\ is\ contributed\ by\ the\ P} {.} \\ {New\ ratio\ =} \\ {P=} { } \frac{{1}}{{2}} – \frac{{1}}{{4}} { } {=} { } \frac{{1}}{{4}} \\ {Q} { } {=} { } \frac{{1}}{{2}} \\ {R} { } {=} { } \frac{{1}}{{4}}

Q2. Assertion (A): Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Reason (R): It is defined in the partnership Act, 1932.

In the context of the above two statements, which of the following is correct?

(a) Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

(c) Assertion (A) is correct, but Reason (R) is not correct.

(d) Both Assertion (A) and Reason (R) are not correct.

Ans: b)

explanation: business of the partnership can be carried on by all the partners or by any of them for all the partners. In other words, partners are agents as well as the principals.

Q3. A company forfeited 1,000 shares of ₹ 10 each at a premium of ₹ 2 each fully called ₹ 5 (including premium) has been paid, the amount shown under the ‘Calls unpaid Account’ will be

(a) ₹ 2,000.

(b) ₹ 5,000.

(c) ₹ 7,000.

(d) ₹ 9,000.

Debentures against which a charge has been created on assets of company, are called

(a) unsecured debentures.

(b) secured debentures.

(c) shares.

(d) shares charged by specific assets.

Ans: (c) ₹ 7,000.

Explanation: The price of a share is ₹ 12 (including premium) and ₹ 5 (including premium) has been paid. The amount left unpaid per share is ₹ 7.

Answer (b) secured debentures.

Explanation: Secured debentures are those which are secured either on a particular asset or on all the assets of the company in general.

Q4. Param is a partner in a firm, he withdraws ₹3,000 at the starting of each month for 12 months. The books of the firm closes on 31st March every year. Calculate the interest on drawings, if rate of drawings is @ 10%.

(a) ₹2000

(b) ₹ 2950

(c) ₹ 1900

(d) ₹ 1950

X, Y and Z are partners in a firm. There was a dispute among the partners at the time of division of profits for the year. The amount of profits before interest on partners’ capital was ₹6,000. Y computed interest @ 24% p.a. on his loan of ₹80,000. There was no agreement on this point. The amount payable to X, Y and Z is

(a) ₹2,000 to each partner.

(b) Loss of ₹4,400 for X, and Z and Y will take home ₹14,800.

(c) ₹400 for X, ₹5,200 for Y and ₹400 for Z.

(d) ₹2,400 to each partner.


Answer (d)


Calculation of Interest on drawings of Param:

Total amount withdrawn = ₹ 3000 X 12 =  ₹ 36,000

Interest on drawings = ₹ 36,000 X 6.5/12 X 10%

= ₹ 1,950

Answer: (c)


Interest on loan will be given to Y @ 6% p.a. and the rest of the profits will be divided among the partners equally.

Q5. One of the following, items, which appears on the debit side of the capital account of a partner, when capitals are fluctuating, is?

(a) share of loss.

(b) share of profit.

(c) salary to a partner.

(d) commission to a partner.


Answer: (a)

Explanation: When capitals are fluctuating, share of loss appears on the debit side of the capital account of a partner.

Q6. A company has ₹ 4,40,000, 7.5% Debentures of ₹ 100 each of which 25% the amount is due for redemption at a premium of 10%. The company has in its Debenture Redemption Reserve Account a balance of ₹ 45,500. The minimum amount of profit required to be transferred to Debenture Redemption Reserve before the redemption begins will be

a. ₹ 27,500

b. ₹64,500

c. ₹30,250

d. NIL


A company secured a loan of ₹ 25,90,000 from a Bank on mortgage of Plant and machinery and issue of 9,000, 6% Debentures of ₹ 100 each as collateral security. While passing the journal entry, the account to be debited will be

a. Debenture suspense account with ₹ 9,00,000

b. 6% debentures account with ₹ 9,00,000

c. Bank loan account with ₹ 25,90,000

d. Debenture suspense account with ₹ 25,90,000

Ans: The minimum amount required = 4,40,000 x 25/100 = ₹ 1,10,000. Since there is already a balance of ₹ 45,500 in the DRR. Amount required to be transferred = 1,10,000 – 45,500 = ₹ 64,500.


Particulars LF. Dr. (₹) Cr. (₹)
Debentures Suspense A/c 9,00,000
  To 6% Debentures A/c 9,00,000

Q7. A company invited applications for 1,00,000 shares and it received applications for 1,50,000 shares. Applications for 30,000 shares were rejected and the remaining were allotted shares on prorate basis. How many shares an applicant for 3,000 shares will be allotted?

a. 2,500 shares

b. 3,600 shares

c. 2,000 shares

d. 4,500 shares

Ans: He will be allotted lesser number of shares as he has applied for 3,000 shares.

3000 x 1,00,000/ 1,20,000 = 2,500 shares

Q8. He will be allotted lesser number of shares as he has applied for 3,000 shares.

3000 x 1,00,000/ 1,20,000 = 2,500 shares


Particulars Dr. (₹) Cr. (₹)
Investment Fluctuation Reserve A/c 70,000
  To Investments A/c 30,000
  To X’s Capital A/c 20,000
  To Y’s Capital A/c 12,000
  To Z’s Capital A/c 8,000


Amount should be credited to A and B = ₹3,000 and ₹1,000 (= ₹4,000)

Amount wrongly credited as profit is ₹2,000 each (₹4,000 divided equally)

Q9. M and N are partners in a firm. Their capitals were

 2,20 000 and ₹₹1,98,000  M was to get a commission of 10% on the net profits before charging any commission. However, N was to get a commission of 10% on the net profits after charging all commissions.

Fill in the missing figures in the following Profit & Loss Appropriation Account for the year ended 31st March, 2021:

Dr. Profit and Loss Appropriation Account

for the year ended 31st March, 2021

Particulars Particulars
To M’s Commission

(₹____ x 10/100)



By Profit & Loss A/c ______
To N’s Commission
To Profit transferred to Capital A/cs:
M _______
N _______ ______
______ ______

N’s Commission will be-

(a) ₹18,000

(b) ₹1,98,000

(c) ₹2,20,000

(d) ₹90,000

Ans: The correct option is (a).

Dr. Profit and Loss Appropriation Account

For the year ended 31st March, 2021

Particulars Particulars
To M’s Commission

(₹2,20,000 x 10/100)



By Profit & Loss A/c 2,20,000
To N’s Commission

(₹1,98,000 x 10/110)



To Profit transferred to Capital A/cs:
M 90,000
N 90,000 1,80,000
2,20,000 2,20,000

WorkingNotes:(i)CalculationofprofitbeforecharginganycommisionMsCommission@10%onthenetprofitsbeforecharginganycommission=₹22,000∴TotalProfitbeforecharginganycommission=₹22,000×10010=₹2,20,000(ii)CalculationofNscommissionProfitafterchargingMscommission=₹1,98,000(₹2,20,000−22,000)CommissionofN=₹1,98,000×10110=₹18,000{Working} { } {Notes} { } {:} \\ {(i)} { } {Calculation} { } {of} { } {profit} { } {before} { } {charging} { } {any} { } {commision} { } \\ {Ms} { } {Commission} { } {@} { } {10\%} { } {on} { } {the} { } {net} { } {profits} { } {before} { } {charging} \\ {any} { } {commission} { } {=} { } {₹} { } {22,000} \\ \therefore { } {Total} { } {Profit} { } {before} { } {charging} { } {any} { } {commission} { } {=} { } {₹} { } {22,000} { } {×} { } \frac{{100}}{{10}} { } {=} { } {₹} { } {2,20,000} \\ {(ii)} { } {Calculation} { } {of} { } {Ns} { } {commission} { } \\ {Profit} { } {after} { } {charging} { } {Ms} { } {commission} { } {=} { } {₹} { } {1,98,000} { } \left({₹} { } {2,20,000} { } {-} { } {22,000}\right) \\ {Commission} { } {of} { } {N} { } {=} { } {₹} { } {1,98,000} { } {×} { } \frac{{10}}{{110}} { } {=} { } {₹} { } {18,000}

Q10. M and N are partners in a firm. Their capitals were M was to get a commission of 10% on the net profits before charging any commission. However, N was to get a commission of 10% on the net profits after charging all commissions.

Fill in the missing figures in the following Profit & Loss Appropriation Account for the year ended 31st March, 2021:

Dr. Profit and Loss Appropriation Account

for the year ended 31st March, 2021

Particulars Particulars
To M’s Commission

(₹____ x 10/100)



By Profit & Loss A/c ______
To N’s Commission
To Profit transferred to Capital A/cs:
M _______
N _______ ______
______ ______

N’s share of profit will be: –









Ans: The correct option is (a).


Total profit before charging any commission of M – M’s Commission – N’s Commission

(2,20,000 – 22,000 – 18,000) = 1,80,000/2 = 90,000

Q11. A, B and C are partners sharing profits and losses equally. According to the partnership agreement, B is to get a minimum amount of ₹25,000 as his share of profits every year.

The net profit for the year ended 31st March 2021 amounted to ₹60,000.

Determine the excess of the guaranteed amount which will be borne by A and B in their profit-sharing ratio.

a. ₹5,000

b. ₹20,000

c. ₹25,000

d. ₹30,000


Share of profit (1:1:1)

A = ₹20,000

B = ₹20,000

C = ₹20,000

Since the minimum amount guaranteed to C is ₹25,000. The excess of guaranteed amount is

₹25,000 – ₹20,000 =₹ 5,000

Q12. H Ltd. issued 20,000 shares of ₹10 each payable ₹2 on application and ₹5 on allotment. Applications received were for 24,000 shares and pro-rata allotment was made to all the applicants. Money over paid on application will be utilised for sum due on allotment. Ramesh to whom 400 shares were allotted failed to pay allotment and his shares were forfeited immediately. The amount of share forfeiture account will be

a. ₹800.

b. ₹960.

c. ₹1,600.

d. ₹1,920.

Ans: Ramesh has applied for 480 shares.

Hence the amount paid by him will be 480 x ₹2 = ₹960.

Q13. A company purchased a running business from Tee Ltd. for a sum of ₹ 6,65,000 payable ₹  1,65,000 by a cheque and balance by the issue of fully paid 8% Debentures of ₹ 100 each at a premium of 25%. In this case securities premium reserve account will be credited with

a. ₹ 4,00,000

b. ₹ 1,00,000

c. ₹ 1,66,250

d. ₹ 1,25,000

Ans: Value of debentures to be issued = 6,65,000 – 1,65,000 = ₹ 5,00,000.

s + 25 % of x = ₹ 5,00,000

x = ₹  4,00,000 Premium = 25 % of 4,00,000 = ₹ 1,00,000

Q14. A and B are in partnership sharing profits and losses equally. The capitals of A and B after all adjustments is ₹1,20,000 each. They admit C as a third partner who is to contribute proportionate capital to acquire a 1/5th share of capital of the new firm equally from A and B. What will be the capital to be brought in by C?

a. ₹60,000

b. ₹1,20,000

c. ₹2,40,000

d. ₹3,00,000


Let the total share = 1

Samira’s share = 1/5

Remaining share of A and B = 1-1/5 = 4/5

Adjusted combined capital of Aand B = ₹2,40,000

Computing the total capital of the new firm

= ₹2,40,000 x 5/4 (Reciprocal of total share of A and B) = ₹3,00,000

Proportionate capital of C = ₹3,00,000 x 1/5 = ₹60,000

Q15. P and Q are partners in a firm with the capitals of   ₹ 1,00,000 & ₹ 50,000 respectively. They agreed that interest on capital be allowed as well as be charged on drawings at @ 12% p.a. Q’s drawings were ₹ 6,000 during the year. There was no other provision in their partnership deed. A presented the following Profit & Loss Appropriation A/c according to which the profit was ₹ 77,280.

Choose from the following, profits or losses that will be shared between partners.

a. Losses: P 30,000 & Q 15,000

b. Profits: P 30,000 & Q 15,000

c. Losses: P 45,000 & Q 30,000

d. Profits: P 45,000 & Q 30,000


What shall be the interest on drawings of Paul @ 10% per annum for the year ended 31st March, 2021 in each of the following alternative cases:

Case 1: Withdraw ₹ 12,000 at the beginning of each quarter.

Case 2: Withdraw ₹ 12,000 at the end of each quarter.

Case 3: Withdraw ₹ 18,000 during the middle of each quarter.

a. 3000, 1800 & 3600

b. 1800, 3000 & 3600

c. 3600, 1800 & 3000

d. 2600, 1800 & 3000


Profit & Loss Appropriation A/c

For the year ended ……..

Particulars Particulars
To Interest on capital
By Net profit b/f 77,280
P 12,000
By Int. on drawings 720
Q 6,000 18,000
To Salary to P 15,000
To Profit- 30,000
15,000 45,000


Case 1: (Beginning  of each quarter)

Interest on Drawings = ₹ 48,000 X 7.5/12 X 10% = ₹ 3,000

Case 2 : (End of each quarter)

Interest on Drawings = ₹ 48,000 X 4.5/12 X 10% = ₹ 1,800

Case 3: (During the middle of each quarter)

Interest on Drawings = ₹ 72,000 X 6/12 X 10% = ₹ 3,600

Q16. On dissolution of a firm, firm’s balance sheet total is ₹80,000. On the assets side of the balance sheet items shown were preliminary expenses ₹2,000; profit and loss account (debit balance) ₹4,000 and cash balance ₹1,800. Loss on realisation was ₹6,300. Total assets (including cash) realised will be

a. ₹71,200

b. ₹74,000

c. ₹67,700

d. ₹65,900


Value of Sundry assets (including cash) = 80,000 – 2,000 – 4,000 = ₹74,000

Realised value of total assets (including cash) = 74,000 – 6,300 = ₹67,700

Q17. P, R and S are partners in a firm. R died three months after the last balance sheet date. His share of goodwill amounted to ₹ 1,45,000.

New profit profit-sharing ratio between P and S in future will be 4:1.

Treatment of goodwill is to be done by first raising the goodwill account and then writing off the value of goodwill.


Particulars LF. Dr. (₹) Cr. (₹)
Goodwill A/c (₹ 1,45,000 × 3) 4,35,000
  To P’s Capital A/c 1,45,000
  To R’s Capital A/c 1,45,000
  To S’s Capital A/c 1,45,000
(Being the goodwill raised at its full value and credited to all partners in their old profit-sharing ratio)
P’s Capital A/c 3,48,000
S’s Capital A/c 87,000
  To Goodwill A/c 4,35,000
(Being the goodwill written off in their new profit-sharing ratio, i.e., 4:1)

Q18. P and Q are partners in a firm. They share profits and losses in the ratio of 2:5. They admit R the new profit-sharing ratio is 3:2:2 respectively. R is to be given profits with guaranteed amount of ₹55,000. Deficiency, if any shall be borne by P and Q in the ratio of 3:2. The profits for the year 2020-2021 (after admission) amounted to ₹1,40,000. Give the necessary journal entries in the books of the firm assuming partners have fixed capital accounts.


P, Q and R were partners in a firm having capitals of ₹30,000; ₹30,000 and ₹40,000 respectively. Their Current Account balances were, P: ₹5,000; Q: ₹2,500 and R: ₹1,000 (Dr.). As per the deed, the partners were entitled to interest on capital @5% p.a. Z, being the working partner, was also entitled to a salary of ₹3,000 p.a. The profits were to be divided as:a) The first ₹10,000 in proportion to their capitalsb) Next ₹15,000 in the ratio of 5:3:2c) Remaining profits to be shared equallyThe firm made a profit of ₹81,000 before any of the above items. Prepare the Profit and Loss Appropriation Account and pass the necessary Journal entry for apportionment of profit.



Particulars LF Dr.


Cr. (₹)
P & L Appropriation A/c 1,40,000
  To P’s Current A/c 60,000
  To Q’s Current A/c 40,000
  To R’s Current A/c 40,000
(Being the distribution of profits as if there is no guarantee)
P’s Current A/c 9,000
Q’s Current A/c 6,000
  To R’s Current A/c 15,000
(Being the deficiency met by guaranteeing partner in the agreed ratio of 3:2)
Rs Actual Share of Profit = 27of ₹1,40,000 = ₹40,000Deficiency = ₹ 55,000 – ₹ 40,000 = ₹ 15,000Deficiency is to be borne by P and Q in the ratio of 3:2 as follows:Deficiency to be borne by P = 35 × .15,000 = ₹.9,000Deficiency to be borne by Q =25× ₹.15,000 = ₹.6,000 \begin{array}{l}{R’s Actual Share of Profit = }\frac{{2}}{{7}}{\hspace{0.33em}}{of ₹}{\hspace{0.33em}}{1,40,000 = ₹}{\hspace{0.33em}}{40,000}\\ {Deficiency = ₹ 55,000 – ₹ 40,000 = ₹ 15,000}\\ {Deficiency is to be borne by P and Q in the ratio of 3:2 as follows:}\\ {Deficiency to be borne by P = }\frac{{3}}{{5}}{ × }₹{.15,000 = ₹}{.9,000}\\ {Deficiency to be borne by Q =}\frac{{2}}{{5}}{\hspace{0.33em}}{× ₹}{.15,000 = ₹}{.6,000}\end{array}


Dr. Profit and Loss Appropriation A/c Cr.
Particulars Amount Particulars Amount
To Interest on Capitals: By Net Profit 81,000
P 1,500
Q 1,500
R 2,000 5,000
To Salary to Z 3,000
To Profits Transferred to Current Accounts
P 26,500
Q 23,500
R 23,000 73,000
81,000 81,000

Journal Entry:

Date Particulars L.F. Dr. Cr.
Profit and Loss Appropriation A/c Dr. 73,000
   To P’s Current A/c 26,500
   To Q’s Current A/c 23,500
   To R’s Current A/c 23,000
(For distribution of profits among partners)

Working Note:

1. Division of Profits

Particulars P Q R
First ₹10,000 in Capital Ratio 3,000 3,000 4,000
Next ₹15,000 in 5:3:2 7,500 4,500 3,000
Remaining ₹48,000 16,000 16,000 16,000
Total 26,500 23,500 23,000

Q19. (a) Differentiate between ‘Discount on Issue of Debentures’ and ‘Loss on Issue of debentures.’

(b) Aisha Ltd. issued ₹1,00,000; 15% Debentures of  ₹100 each at a premium of 5%, redeemable at a premium of 10% at the end of 4 years. The Board of Directors decided to transfer the minimum required amount to Debenture Redemption Reserve Account at the time of redemption.

Pass the Journal entries at the time of Redemption of Debentures.


​BEE, CEE and DEE are partners in a firm. They share profits and losses in the ratio of 3:2:2, respectively. The new profit-sharing ratio of P and R will be 1:3. Value of stock increased by ₹ 800 be provided for. A debtor whose dues of ₹ 7,300 were written off as bad debts last year paid ₹ 3,200 in full Settlement. There is a liability of ₹ 3,000, included in Sundry Creditors that is not likely to arise. Pass the necessary journal entries.​​

Ans: (a) Discount on issue of debentures is the amount of loss of the company, which is incurred on issue of debentures. While loss on issue is the amount of loss which is incurred at the time of issue debentures and also on redemption of debentures.



Dr. ₹

Cr. ₹

Debenture Redemption Investment A/c Dr.


 To Bank A/c


(Being investment made in government securities of amount equal to 15% of debentures to be redeemed)

Statement of Profit& Loss Dr.


 To DRR A/c


(Being transfer of profit to DRR for redemption)

Bank A/c


 To Debenture Redemption Investment A/c


(Being investment made as earlier now encashed)

15% Debentures A/c Dr.


Premium on redemption of Debentures Dr.


 To Debentureholders A/c


(Being amount due to debentureholders)

Debentureholders A/c Dr.


 To Bank A/c


(Being amount paid to Debentureholders)

DRR A/c Dr.


 To General Reserve


(Balance of DRR A/c transferred to General reserve)

Particulars LF Dr. (₹) Cr. (₹)
Stock A/c               Dr. 800
Bank A/c (Bad Debts Recovered) Dr. 3,200
Creditors A/c          Dr. 3,000
  To Revaluation A/c 7,000
(Being increase in value of Assets & decrease in value of Liabilities recorded)
Revaluation A/c         Dr. 7,000
  To BEE’s Capital A/c 3,000
  To CEE’s Capital A/c 2,000
  To DEE’s Capital A/c 2,000
(Being the Profit on Revaluation t/f to partners in their old profit-sharing ratio)

Q20. P and Q are partners in a firm. They share profits and losses in the ratio of 4:1. Their capitals are ₹ 25,000 and ₹ 20,000 respectively. The partnership deed provides for Interest on Capital @ 5% p.a. as a charge against the profits. The firm earned profits of ₹ 1,850 (before interest on capitals) during the period. Which account will you prepare in this case profit and loss account or profit and loss appropriation account? Show the above treatments.


P & L Account

Particulars Particulars
To interest on Capital: By Profits before Interest


P 1,250 By Loss transferred to:
Q 1,000 2,250 P’s Capital A/c 320
Q’s Capital A/c  80 400
2,250 2,250

In this case profit and loss account should be prepared instead of profit and loss appropriation account because all charges against profits are shown in the profit and loss account.

Q21. On 1st April, 2018, Ashok Ltd. was formed with an authorized capital of ₹1,00,00,000 divided into 2,00,000 equity shares of ₹50 each. The company issued prospectus inviting applications for 1,50,000 shares. These issue price was payable as under.

On Application: ₹15

On Allotment: ₹20

On Call: Balance.

The issue was fully subscribed and the company allotted shares to all the applicants.

The Company did not make the call during the year.

The company also issued 5,000 shares of ₹50 each fully paid up to the vendor for purchase of office premises.

Show the:

  1. Share Capital in the Balance Sheet of the Company as per Schedule III of the Companies Act, 2013.
  2. Also prepare ‘Notes to Accounts’



Balance Sheet of Ashok Ltd.
as at 31st March 2019 (Extract)
(₹ in ‘000’)
Particulars Note 31/03/19
Equity and Liabilities
1.Shareholder’s funds
  1. Share Capital
1 5500 —–
Total 5500 ——-


Notes to Accounts (1)

(₹ in ‘000’)
Particulars 31/03/2019
Authorized Capital:
2,00,000 equity shares of ₹50 each 10,000
Issued Capital:
5000 shares of ₹50 each (fully paid up issued
issued To vendors) 250
1,50,000 shares ₹50 each issued to public 7,500
Subscribed Capital:
Subscribed and Fully paid
5000 shares ₹50 each issued to vendors 250
Subscribed but not fully paid
1,50,000 shares of ₹50 each issued to public
₹35 called up 5,250
Total 5,500

Q22. P, Q and R were partners. They decided to dissolve their firm.
(a) There were total debtors of ₹ 75,500. A provision of bad and doubtful debts also stood in the books at ₹ 6,500. ₹ 15,500 debtors proved bad and rest paid the amount due.
(b) An unrecorded liability of ₹ 6,000 was discharged at a discount of ₹ 100.
(c) An equipment which was not recorded in the books was taken over by R at ₹ 2,200, whereas its expected value was ₹ 3,500.

Pass necessary journal entries for the above after various assets and the third-party liabilities have been transferred to Realisation Account.



Particulars Dr. (₹) Cr. (₹)
Bank A/c (75,500 – 15,500) 60,000
  To Realisation A/c 60,000
(Being amount realized from Debtors)


Particulars Dr. (₹) Cr. (₹)
Realisation A/c 5,900
  To Bank A/c 5,900
(Being payment of unrecorded liability)


Particulars Dr. (₹) Cr. (₹)
R’s Capital A/c 2,200
  To Realisation Ac 2,200
(Unrecorded equipment taken over by R)

Q23. X Ltd. has an Authorized capital of ₹1,50,000 divided into 1,00,000 equity shares of ₹10 each and 50,000- 9% Preference shares of ₹10 each.

The company invited applications for all the preference shares but only 90,000 equity shares.

All the preference shares were subscribed, called and paid while subscriptions were received for only 85,000 equity shares.

During the first year ₹8 per share were called.

Ram holding 1,000 shares and shyam holding 2,000 shares did not pay first call of ₹2.

Shyam’s shares were forfeited after the first call and later on 1,500 of the forfeited shares were reissued at ₹6 per share ₹8 called up.

1) Show Share capital in the Balance Sheet as per schedule III as at 31st March 2019.

2) Prepare relevant ‘Notes to Accounts’


Dyne Ltd. Invited applications for issuing 10,000 Equity shares of ₹10 each. The amount was payable as follows:

On Application: ₹1

On Allotment: ₹2

On First Call: ₹3

On Second and Final Call: Balance amount

The issue was fully subscribed. Roy to whom 100 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment.

Sam, to whom 150 shares allotted, failed to pay the first call. His shares were also forfeited after the first call. Afterwards the second and final call was made. Myke to whom 50 shares were allotted failed to pay the second and final call. His shares were also forfeited. All the forfeited shares were re-issued at ₹9 per share fully paid up.

Pass necessary journal entries in the books of Dyne Ltd.


Balance Sheet of X Ltd.

as at 31st March 2019 (Extract)

Particulars Note 31/03/2019 (₹)
Equity and Liabilities
1.Shareholder’s funds
  1. Share Capital
1 11,77,000
  1. Reserves and Surplus
2 6,000
Total 11,83,000


Notes to Accounts (1)

Particulars 31/03/2019 (₹)
Authorized Capital:
1,00,000 equity shares of ₹10 each 10,00,000
50000,9% Pref.shares of ₹10 each 5,00,000
Total 15,00,000
Issued Capital:
90,000 equity shares of ₹10 each 9,00,000
50000,9% Pref.shares of ₹10 each 5,00,000
Total 14,00,000
Subscribed Capital:
Subscribed and Fully paid:
50,000,9% Pref.shares of ₹10 each 5,00,000
Subscribed but not fully paid:
84,500 equity shares of ₹10 each,
₹8 called up 6,76,000
Less calls in arrears (2,000) 6,74,000
Add shares forfeited 3,000
Capital Reserve 6,000
Total 11,83,000


Particulars Dr. (₹) Cr. (₹)
Bank A/c Dr. 10,000
 To Equity Share Application A/c 10,000
(Application money received)
Equity Share Application A/c Dr. 10,000
 To Equity Share Capital A/c 10,000
(Application money trfd. to Share Capital)
Equity Share Allotment A/c Dr. 20,000
 To Equity Share Capital A/c 20,000
(Allotment money due on 10,000 shares)
Bank A/c Dr. 19,800
 To Equity Share Allotment A/c 19,800
(Allotment money received Except on 100 shares)
Equity Share Capital A/c (100 x  ₹3) Dr. 300
 To Equity Share Allotment A/c (100 x  ₹2) 200
 To Forfeited Shares A/c (100 x ₹1) 100
(100 shares forfeited for non- payment of allotment money)
Equity Share First Call A/c Dr. 29,700
 To Equity Share Capital A/c 29,700
(First call money due on 9,900 Shares @ ₹3 per share)
Bank A/c Dr. 29,250
 To Equity Share First Call A/c 29,250
(First call money received except On 150 shares)
Equity Share Capital A/c (150 x  ₹6) Dr. 900
 To Equity Share First Call A/c (150 x  ₹3) 450
 To Forfeited Shares A/c (150 x  ₹3) 450
(150 shares forfeited due to Non-payment of first call money)
Equity Share 2nd & Final Call A/c Dr. 39,000
 To Equity Share Capital A/c 39,000
(Second & Final Call money due
on 9,750 shares @ ₹4 per share)
Bank A/c Dr. 38,800
 To Equity Share 2nd & Final Call 38,800
(Final call money received except On 50 shares)
Equity Share Capital A/c (50 x  ₹10) Dr. 500
To Equity Share 2nd & Final Call (50 x  ₹4) 200
 To Forfeited Shares A/c (50 x  ₹6) 300
(50 shares forfeited due to non Payment of second call)
Bank A/c (300 x ₹9) Dr. 2,700
Forfeited Shares (300 x  ₹1) Dr. 300
 To Equity Share Capital A/c 3,000
(All 300 shares re-issued at ₹9 Per share fully paid-up)
Forfeited Shares A/c Dr. 550
 To Capital Reserve A/c 550
(Profit transferred to Capital Reserve A/c)

Notes to Accounts:


Profit on 100 Shares of Roy 100
Profit on 150 Shares of Sam 450
Profit on 50 Shares of Myke 300
Less: Loss on Re-issue (300)
Transferred to Capital Reserve 550

Q24. A, B and C are partners in a firm. Their Balance Sheet as at 31st March, 2020 was as follows:

Liabilities Assets
Sundry Creditors 25,000 Cash at Bank 60,000
Reserve Fund 20,000 Debtors 50,000
Capital A/cs Stock 85,000
A 1,55,000 Plant and machinery 1,75,000
B 1,50,000 Investments 1,30,000
C 1,50,000
5,00.000 5,00.000

They decided to change their profit-sharing ratio from 10/20:6/20:4/20 to 1:1:1w.e.f. 1st April, 2020. The following information is given on that date:

(i) Value of Investments be appreciated by 10%

(ii) Sundry Creditors will allow a discount of 10%.

(iii) Depreciate Plant and machinery by 15%

(iv) Value of stock is increased by ₹5,000.

(v) A Reserve for Doubtful Debts be created @ 5% on Debtors.

Pass necessary Journal entries.


X, Y and Z were carrying on partnership business sharing profits in the ratio of 2:2:1 respectively on March 31, 2018.

The balance sheet of the firm stood as follows:

Balance Sheet



Creditors 27,180 Cash 9,400
Capital A/cs: Debtors 16,000
X 30,000 Stock 23,380
Y 20,000 Building 46,000
Z 20,000 70,000 Profit & Loss A/c 2,400
97,180 97,180

Y retired on the above mentioned date on the following terms:

Building to be appreciated by ₹14,000.

Provision for doubtful debts to be made at 10% on debtors.

Goodwill of the firm is valued at ₹36,000 and adjustments in this respect to be made in the continuing partner’s capital accounts without raising goodwill account.

₹6,000 to be paid to Y immediately and the balance in his capital account to be paid after one year along with interest @10% p.a.

Prepare Revaluation Account, Y’s Capital Account and his Loan Account till it is finally paid off.


Particulars LF Dr. (₹) Cr. (₹)
Reserve Fund A/c…….Dr. 20,000
  To A’s Capital A/c 10,000
  To B’s Capital A/c 6,000
  To C’s Capital A/c 4,000
(Being the Reserve fund credited to Partners’ Capital Accounts in their old profit-sharing ratio)
Investment A/c…….Dr. 13,000
Stock A/c…….Dr. 5,000
  To Revaluation A/c 18,000
(Being the increase in the value of Investment and stock)
Revaluation A/c…….Dr. 28,750
  To Plant and machinery A/c 26,250
  To Reserve for Doubtful Debts A/c 2,500
(Being the decrease in the value of Machinery recorded and reserve for Doubtful Debts made)
Sundry Creditors A/c…….Dr. 2,500
  To Revaluation A/c 2,500
(Being the amount not payable written back)
A’s Capital A/c…….Dr. 4,125
B’s Capital A/c…….Dr. 2,475
C’s Capital A/c…….Dr. 1,650
  To Revaluation A/c 8,250
(Being the loss on Revaluation debited to Partner’s Capital Accounts in their old profit-sharing Ratio)

Revaluation Account



To Provision Bad Debts 1,600 By Building 14,000
To Profit transferred to
X 4.960
Y 4,960
Z 2,480 12,400
14,000 14,000


Y’s Capital Account

Date Particulars Date Particulars

2018 By Bal. b/d 20,000
Mar 31 To P & L A/c


Mar 31 By Revaluation A/c 4,960
Mar 31 To Cash A/c


Mar 31
Mar 31 To Y’s Loan A/c





Y’s Loan A/c

Date Particulars Date Particulars

Mar 31 To Bal. c/d


Mar 31 By Y’s Capital A/c 18,000



Mar 31 To Cash A/c


Mar 31 By Bal. b/d 18,000


Mar 31 By Interest A/c 1,800



Q25. P, Q and R are partners in a business.

BALANCE SHEET as at 31st March 2019

Liabilities Assets
Capital A/cs; Cash at bank 3,00,000
P 3,50,000 Stock 2,50,000
Q 4,55,000 Sundry Debtors 3,50,000
R 2,45,000 Machinery 5,50,000
Sundry Creditors 3,50,000
R’s Loan 50,000
14,50,000 14,50,000

R died on 31st December, 2019 and they are given the following information:
(i) They share profits and losses in the ratio of 6:1:1 respectively.
(ii) The deceased partner’s share of profits will be computed on the basis of average profits of past two years which is ₹ 2,00,000.
(iii) His share of goodwill amounted ₹ 1,87,500.
(iv) R’s Drawing up to the date of death was ₹ 20,000. Interest thereon amounted to ₹ 1,000.

You are required to compute the amount payable to the legal representatives of the deceased partner by preparing the necessary accounts.



Particulars Particulars
To Drawings A/c 20,000 By Balance b/d 2,45,000
To Interest on Drawings A/c 1,000 By R’s Loan A/c 50,000
To R’s Executors’ A/c – Transfer (Balancing Fig.) 4,82,500 By interest on R’s Loan A/c 2,250
By Profit and Loss Suspense A/c – Profit 18,750
By P’s Capital A/c (goodwill) 1,60,714
By Q’s Capital A/c (goodwill) 26,786
5,03,500 5,03,500


Particulars Particulars
By Balance c/d 4,82,500 By R’s Capital A/c 4,82,500


Working Notes: R’s share of profit till the date of death, i.e., for 9 months = ₹  2,00,000  x  1 8  ×  9 12 = ₹  18,750. 1.R’s Share of Goodwill;   1,87,500, which is contributed by P and Q in their gaining ratio, i.e., 6;1. Thus, P’s contribution = ₹  1,87,500 ×  6 7 = ₹1,60,714 and Q’s contribution = ₹1,87,500× 1 7 = ₹26,786.  MathType@MTEF@5@5@+= feaahqart1ev3aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKf MBHbqedmvETj2BSbqefm0B1jxALjhiov2DaerbuLwBLnhiov2DGi1B TfMBaebbnrfifHhDYfgasaacH8srps0lbbf9q8WrFfeuY=Hhbbf9v8 qqaqFr0xc9pk0xbba9q8WqFfea0=yr0RYxir=Jbba9q8aq0=yq=He9 q8qqQ8frFve9Fve9Ff0dmeaabaqaaiaacaGaaeqabaWaaqaafeaakq aabeqaaabaaaaaaaaapeGaae4vaiaab+gacaqGYbGaae4AaiaabMga caqGUbGaae4zaiaabccacaqGobGaae4BaiaabshacaqGLbGaae4Cai aabQdaaeaacaqGsbGaaeygGiaabohacaqGGaGaae4CaiaabIgacaqG HbGaaeOCaiaabwgacaqGGaGaae4BaiaabAgacaqGGaGaaeiCaiaabk hacaqGVbGaaeOzaiaabMgacaqG0bGaaeiiaiaabshacaqGPbGaaeiB aiaabYgacaqGGaGaaeiDaiaabIgacaqGLbGaaeiiaiaabsgacaqGHb GaaeiDaiaabwgacaqGGaGaae4BaiaabAgacaqGGaGaaeizaiaabwga caqGHbGaaeiDaiaabIgacaqGSaGaaeiiaiaabMgacaqGUaGaaeyzai aab6cacaqGSaGaaeiiaiaabAgacaqGVbGaaeOCaiaabccacaqG5aGa aeiiaiaab2gacaqGVbGaaeOBaiaabshacaqGObGaae4Caaqaaiaab2 dacaqGGaGaaeOuaiaabohacaqGUaGaaeiiaiaabkdacaqGSaGaaeim aiaabcdacaqGSaGaaeimaiaabcdacaqGWaGaaeiiaiaabIhacaqGGa WaaSaaaeaacaqGXaaabaGaaeioaaaacaqGGaGaae41aiaabccadaWc aaqaaiaabMdaaeaacaqGXaGaaeOmaaaacaaMe8Uaaeypaiaabccaca qGsbGaae4Caiaab6cacaqGGaGaaeymaiaabIdacaqGSaGaae4naiaa bwdacaqGWaGaaeOlaaqaaiaabgdacaqGUaGaaGjbVlaabkfacaqGza Iaae4CaiaabccacaqGtbGaaeiAaiaabggacaqGYbGaaeyzaiaabcca caqGVbGaaeOzaiaabccacaqGhbGaae4Baiaab+gacaqGKbGaae4Dai aabMgacaqGSbGaaeiBaiaabUdaaeaacaqGsbGaae4Caiaab6cacaqG XaGaaeilaiaabIdacaqG3aGaaeilaiaabwdacaqGWaGaaeimaiaabY cacaqGGaGaae4DaiaabIgacaqGPbGaae4yaiaabIgacaqGGaGaaeyA aiaabohacaqGGaGaae4yaiaab+gacaqGUbGaaeiDaiaabkhacaqGPb GaaeOyaiaabwhacaqG0bGaaeyzaiaabsgacaqGGaGaaeOyaiaabMha caqGGaGaaeiuaiaabccacaqGHbGaaeOBaiaabsgacaqGGaGaaeyuai aabccacaqGPbGaaeOBaiaabccacaqG0bGaaeiAaiaabwgacaqGPbGa aeOCaiaabccacaqGNbGaaeyyaiaabMgacaqGUbGaaeyAaiaab6gaca qGNbGaaeiiaiaabkhacaqGHbGaaeiDaiaabMgacaqGVbGaaeilaiaa bccacaqGPbGaaeOlaiaabwgacaqGUaGaaeilaiaabccacaqG2aGaae 4oaiaabgdacaqGUaGaaeiiaiaabsfacaqGObGaaeyDaiaabohacaqG SaaabaGaaeiuaiaabMbicaqGZbGaaeiiaiaabogacaqGVbGaaeOBai aabshacaqGYbGaaeyAaiaabkgacaqG1bGaaeiDaiaabMgacaqGVbGa aeOBaiaabccacaqG9aGaaeiiaiaabkfacaqGZbGaaeOlaiaabgdaca qGSaGaaeioaiaabEdacaqGSaGaaeynaiaabcdacaqGWaGaaeiiaiaa bEnacaqGGaWaaSaaaeaacaqG2aaabaGaae4naaaacaqG9aGaaeiiai aabkfacaqGZbGaaGjbVlaabgdacaqGSaGaaeOnaiaabcdacaqGSaGa ae4naiaabgdacaqG0aGaaeiiaiaabggacaqGUbGaaeizaiaabccaca qGrbGaaeygGiaabohaaeaacaqGJbGaae4Baiaab6gacaqG0bGaaeOC aiaabMgacaqGIbGaaeyDaiaabshacaqGPbGaae4Baiaab6gacaqGGa GaaeypaiaabccacaqGsbGaae4CaiaaysW7caqGXaGaaeilaiaabIda caqG3aGaaeilaiaabwdacaqGWaGaaeimaiaaysW7caqGxdGaaGjbVp aalaaabaGaaeymaaqaaiaabEdaaaGaaGjbVlaab2dacaqGGaGaaeOu aiaabohacaaMe8UaaeOmaiaabAdacaqGSaGaae4naiaabIdacaqG2a GaaeOlaaqaaaaaaa@48FC@

Since there is no information of rate of interest on R’s loan, the Provision of Indian partnership Act, 1932 will apply and R will be paid interest in loan @ 6% p.a. R’s Loan Account (₹ 50,000) and Interest on R’s Loan Account (₹.2,250).

Q26. A, B, C and D are debenture holders of PQR Ltd. Each of them is holding 9%,1000 debentures of ₹ 100 each. A needs some money urgently as his wife is hospitalised. He contacts a stockbroker to dispose off his debentures. B also needs the money from the company to pay off his housing loan. For this, he wants to sell debentures at end of each year, till all the debentures are paid off. C got back his money (invested in debentures) from the company when the company held lottery for the debenture holders. (6 marks)

  1. How would the stockbroker help A to get money urgently for him?
  2. What option is available to B to pay off his housing loan with the help of money invested in debentures?
  3. Which method did the company adopt to return the money to C?


  1. Stock broker will sell the debentures in the stock market. For this service, he will charge some money which is known as brokerage. This way A will get instant money for the treatment for his wife.
  2. B will choose the method of redemption of debentures on fixed instalment basis because he needs money to pay off his instalments regularly.
  3. The Company adopted the redemption of debentures by lottery draw and paid the money to C. Under lottery system, the company redeems the shares by selecting some names randomly through lucky draw and makes the payment to the winners.

Q27. Financial statements are expressed in terms of

a. quantity

b. money

c. Quality and quantity both

d. quality


Details Details
Equity Share Capital 8,50,000 Accumulated Reserves 1,50,000
Current Assets 9,50,000 Non-Current Assets 20,50,000

You are required to compute the Proprietary Ratio.

a. 28.33%

b. 33.33%

c. 41.46%

d. 66.66%

Ans: The financial statements are expressed in monetary terms. Thus, option b is correct.


Proprietary Ratio = Proprietors’ Funds/Total Assets × 100 = ₹10,00,000/₹ 30,00,000 × 100 = 33.33%


Shareholders’ Fund = Equity Share Capital + Accumulated Reserves

= ₹ 8,50,000 + ₹ 1,50,000 = ₹ 10,00,000.

Total Assets = Non-current Assets + Current Assets

= ₹ 20,50,000 + ₹ 9,50,000 = ₹ 30,00,000

Thus, option b is correct.


Revenue from Operations (sales) 4,00,000
Inventory (Average) 60,000
Rate of gross profit on sales 25%

Compute Inventory Turnover Ratio.


4 times

5 times

6.66 times

1.66 times

Ans: 5 times

Q29. Operating profit before working capital changes are ₹ 2,65,000.





Trade Receivables 20,000 25,000
Trade Payables 25,000 40,000
Goodwill 2,500 7,500

You are required to calculate Cash flow from Operating Activities.

a. ₹ 2,75,000

b. ₹ 2,85,000

c. ₹ 2,45,000

d. ₹ 2,55,000


Conversion of debentures into share capital is not recorded into cash flow statement because

a. this activity involves cash flows.

b. this activity does not involve cash flow.

c. this is a financing activity.

d. this relates to debentures.


2,65,000 + 5,000 (Decrease in current assets) – 15,000 (Decrease in current liabilities) = ₹ 2,55,000

Thus, option d is correct.


Conversion of debentures into share capital is not recorded into cash flow statement because this activity does not involve cash flow. Thus, option b is correct.

Q30. Which of the following is the part of Cash and cash equivalent, in the cash flow statement?


Discount allowed to customers.

Increase in balance of Cash Credit.

Short term deposits in Bank.

Repayment of Short-term Loan.


Short term deposits in Bank.

Q31. Under what headings will you show the following items in a Company’s Balance Sheet:a) Public Deposits
b) Forfeited Shares Account
c) Interest Accrued and Due on Debentures
d) Acceptances
e) Sundry Creditors
f) Calls in Arrears


Item Major Heading Sub Heading(if any)
Public Deposits Non-Current Liabilities Long Term Borrowings
Forfeited Shares Account Shareholders’ Funds Subscribed Capital (added to)
Interest Accrued and Due on Debentures Current Liabilities Other Current Liabilities
Acceptances Current Liabilities Trade Payables
Sundry Creditors Current Liabilities Trade Payables
Calls in Arrears Shareholders’ Funds Subscribed Capital(Shown by way of deduction)

Q32. Calculate Quick Ratio from the following information:

Inventory 50,000
Trade receivables 50,000
Advance Tax 4,000
Cash 30,000
Trade payables 1,00,000
Bank Overdraft 4,000


Quick Ratio = Quick Assets / Current Liabilities

Quick Assets =

(₹ 50,000 + ₹ 30,000)

= ₹ 80,000

Current Liabilities = ( ₹ 1,00,000 + ₹ 4,000)

= ₹ 1,04,000

Thus Quick Ratio = ₹ 80,000 / ₹ 1,04,000 = 0.77:1

Q33. ​Which of the following formulas, if entered into the cell, will calculate the total number of payments or months that the loan will be paid off over?

a) =PMT(B2,B3,B5)

b) =PV(B2,B3,B5)

c) =NPER(B3,B2,B5)

d) =PMT(B3, B2,B5)


​Segregating numbers into relevant groups, taking ratios, plotting and making tables are examples of

(a) Reporting System

(b) Back-end Database

(c) Front end Interface

(d) Data Processing​​

Ans: The NPER function allows you to calculate the number of periods for a payment based on variables for PMT, RATE and PV. Thus, option c is correct.


Data processing actions are taken to transform data into information. An example of data processing is: – Segregating numbers into relevant groups, taking ratios, plotting and making tables. Thus, option d is correct.​

Q34. Which formulae would result in TRUE if C4 is less than 10 and D4 is less than 100?

(A) =AND(C4>10, D4>10)
(B) =AND(C4>10, C4<100)
(C) =AND(C4>10, D4<10)
(D) =AND (C4<10, D4,100)


d) =AND (C4<10, D4,100)

Explanation: If C4 is less than 10 and D4 is less than 100, then formula =AND(C4<10, D4<100) would result in TRUE. In the formula, C4<10 indicates that C4 is less than 10, and D4<100 indicates that D4 is less than 100, which satisfies the given condition and therefore, the result is TRUE.

Q35. To login into the control center for account management, the shortcut key is:

a) Alt + K

b) CTRL + K

c) Alt + L

d) CTRL + L


Match the following-

Column A Column B
i. DBMS a. output device
ii. Pen drive b. internal memory
iii. RAM c. system software
iv. Monitor d. external memory

a) i-c, ii-d, iii-b, iv-a

b) i-b, ii-a, iii-d, iv-c

c) i-a, ii-c, iii-d, iv-b

d) i-d, ii-b, iii-a, iv- c

Ans: ​Support Centre button is available on the Horizontal Button Bar, which has the shortcut key CTRL+ K. This is to login control centre for account management. Thus, option b is correct.



Column A

Column B

i. DBMS c. system software
ii. Pen drive d. external memory
iii. RAM b. internal memory
iv. Monitor a. output device

Thus, option a is correct.

Q36. The need for accounting software arises in:
a) When the computerised accounting system is implemented to replace the manual system.
b) When the manual accounting system is implemented to replace the computerised accounting system.
c) When a single-entry system is implemented to replace the double entry system.
d) When double entry system is implemented to replace the single-entry system.


a) When the computerized accounting system is implemented to replace the manual system.

Explanation: The need for accounting software arises in that situation when the computerized accounting system is implemented to replace the manual system.

Q37. Discuss the various steps involved in designing an accounting report from accounting data.


The various steps involved in designing accounting reports from accounting data are as follows:-
Step I Defining the Objectives: The objectives of the report must be clearly defined, who are the users of the report and the decision to be taken on the basis of the report so it should define all the accounting data in a simple manner.
Step II Structure of the Report: It includes the information to be contained therein and the style of presentation.
Step III Querying with the Database: The accounting information queries must be clearly defined and the methodology to be adopted while interacting with the database must be defined.
Step IV Finalizing the Report: The report should be complete and should end with proper analysis and suggestions related to the accounting data so that decisions can be made easily and quickly.

Q38. The processing of data is accomplished either through batch processing or real time processing.
In the light of the above statement, explain batch processing and real time processing.


Batch Processing: It applies to large and voluminous data that is accumulated offline from various units i.e., branches or departments. The entire accumulated data is processed in one shot to generate the desired reports according to decision requirements. Batch processing requires separate programs for input, process and output. An example is Payroll and billing system.
Real-time Processing: It provides the online outcome in the form of information and reports without time lag between the transaction and its processing. The accounting reports are generated by query language popularly called Structured Query Language (SQL). It allows the user to retrieve report-relevant information that is capable of being laid out in a pre-designed accounting report. Real – Time Data Processing is also known as Stream Processing. Example: ATMs, Radar systems.

Q39. When can a Computerised Accounting System be used?


State the four basic requirements of database applications.


A Computerised Accounting System can be used under the following conditions:

1. High Speed Required: When accounts are to be processed at high speed. For example, in case of accounting for Credit Card, Debit Card, ATM Card.

2. Large Volume of Transactions: When the volume of transaction is very large.

3. Accuracy Required: When accounts are to be maintained error free.

4. Storage Required: When a large amount of accounting data is required to be stored.

5. Modification Required: When accounting data are to be updated, added or deleted on consistent basis.

6. Data Sharing Required: When accounting data are to be shared by several persons for several function at the same time.


A modern computerised accounting system is based on the concept of the database. A database is implemented using a database management system, which is defined as a set of computer programs that manages and organises data effectively and provide access to stored data by the means of application programs. Every computerised accounting system has two basic requirements:

  • Accounting framework
  • Operating procedure

The use of computers in any database-oriented application has four basic requirements:

  • Front-end database: It is an interactive link or a dialog between a user and database-oriented software through which the user communicates with the back-end database.
  • Back-end database: It is a data storage system that is hidden from a user and responds to the requirement of the user.
  • Data-processing: These are actions done on data to get information.
  • Reporting system: It is an interface to generate reports, for example, application software like Visual Basic.

Q40. What are the Generic Considerations before Sourcing an Accounting Software?


Generic Consideration before Sourcing Accounting software:

a) Flexibility: An important consideration before sourcing accounting software is flexibility, viz. data entry and the availability and design of various reports expected from it. It should offer some flexibility between the user of the software, the switch over between the accountants, operating systems and the hardware.

b) Cost of installation and maintenance: The choice of the software obviously requires consideration of organisation ability to afford the hardware and software. A simple guideline to take such a decision is the cost-benefit analysis of the available options and the financing opportunities available to the firm.

c) Size of Organisation: The size of the Organisation and the volume of business transactions do affect the software choices. A large organisation requires supplicated software to meet the multi-user requirements, geographically scattered and connected through a complex network.

d) Ease of Adaptation and Training needs: Some accounting software is user-friendly requiring simple training to the users. However, some other complex software packages linked to other information systems require intensive training on a continuous basis.

e) Utilities/MIS Reports: The MIS reports and the degree to which they are used in the organisation also determine the acquisition of software.

f)  Expected Level of Secrecy (Software and Data): Another consideration before buying accounting software is the security features, which prevent unauthorised personnel from accessing and manipulating data in the accounting system.

g) Exporting/Importing Data Facility: The transfer of database to other systems or software is sometimes expected from the accounting software.

h) Vendors Reputation and Capability: Another important consideration is the reputation and capability of the vendor. This depends upon how long has been the vendor is in the business of software development, whether there are other users of the software and extent of the availability of support mechanisms outside the premises of the vendor.

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