The Most important CBSE Class 12 Accountancy Questions & Answers

Introduction to CBSE Class 12 Accountancy

Latest CBSE Class 12 Accountancy questions and answers are discuss in this post for your upcoming board exam 2023. CBSE class 12 accountancy question and answers help students prepare for the board’s annual exam. This subject helps in succeed in the banking and accounting field. You can learn about the differences between banking and accounting and mathematics. Class 12 CBSE Accountancy has some very important questions which you have to answer and score the maximum marks. The important aspects of this examination are there in every recently published book and all of them have been taken care of by us. 

In today’s era, students who want to get into the best engineering colleges or other institutes in India need to clear the CBSE class 12 exams. But this is not such an easy task as you may think. You need to prepare for these exams with the help of good booklets and study materials. If you are already pursuing your studies and have already cleared your class 12 board exams but still looking for CBSE Class 12 Accountancy Questions & Answers then this article is for you! Aspirants should be encouraged to practice hard in the examination hall and get themselves prepared for the CBSE 12 class accountancy exams. This is because they will face a lot of tough questions that may prove difficult to solve. To help you in your preparation, we have compiled the most important questions to help you in your preparation for these CBSE 12 subject Accountancy.

Why Study CBSE Class 12 Accountancy

Students often ask me “Which is the best book to study” in Accounting? And this is quite a tricky question. There are thousands of books available in market which cover the topics of interest to students these days. But I would say that one can’t learn everything from books alone, rather one has to polish his/her study strategies and techniques. The studying for the Accounting part of the class 12 board exams is not easy. This can be due to the fact that it is a subject that requires deep knowledge of the basic principles and fundamentals of accounting, something which is quite hard to acquire without proper help.

Objective of a subject Accountancy, in which the course of study is designed to train the students in a particular discipline, field of endeavor or act as a stepping stone leading to a multi-faceted career. Subject is broadly divided into two types: Objective Tests and Continuous Tests. Objective Test questions are those which directly asks whether a candidate is good in certain set of skills, competencies like verbal ability, quantitative ability, etc. Some are purely objective while others combine separate sections along with the objective section and devise a question that demands both knowledge and practical proficiency in the same area.

Apart from accountancy, You can check the CBSE board paper of subject Business Studies by click on this link. CBSE sample papers link is given in this link: CBSE Sample Papers

Important Questions and Answers of CBSE Class 12 Accountancy For The Session 2023

Each Question Contains 1 Mark

Question 1

A manager gets 5% commission on net profit after charging such commission. Gross
profit ₹ 5,80,000 and expenses of indirect nature other than manager’s commission
are ₹ 1,60,000. Commission amount will be
a) ₹ 21,000
b) ₹ 20,000
c) ₹ 15,000
d) ₹ 22,000

Ans:- b) ₹ 20,000

Question 2

In case of fixed capitals, partners will have
a) Credit balances in their Capital Accounts
b) Debit balances in their Capital Accounts
c) Credit or debit balances in their Capital Accounts
d) Credit balance or nil balance in their Capital Accounts

Ans:- d) Credit balance or nil balance in their Capital Accounts

Question 3

Which of the following is not the factor affecting the value of goodwill?
a) Cost of an intangible asset
b) Favourable location
c) Efficient location
d) Risk associated with business

Ans:- a) Cost of an intangible asset 

Question 4

ABC took over the assets of ₹ 7,60,000 and liabilities of ₹ 80,000 of Y limited for
purchase consideration of ₹ 5,85,000 payable by the issue of 12% debentures of ₹100
each at a discount of 10%. The number of debentures to be issued is:
a. 6600
b.6500
c.4500
d.5400

Ans:- b) 6500

Question 5

ZeroPoint limited issued 4000,12% debentures of ₹ 100 each at a premium of 5%. The total
amount of interest for one year will be:
a. ₹ 48,000
b. ₹ 58,000
c. ₹ 50,000
d. ₹ 50,400

Ans:- a) 48,000

Question 6

10% debenture issued at ₹ 105 is repayable at ₹ 110, the face value of debenture being
₹ 100. Calculate the amount of loss on redemption of debentures:
a. ₹ 5
b. ₹ 10
c. ₹15
d. ₹ 25.

Ans: b. 10

Question 7

Collateral security means ___________security:
a. primary
b. valuable
c. government

d. secondary

Ans: d. secondary

Question 8

When debentures are issued at discount and redeemable at a premium which one of
the following account is debited at the time of issue?
a. Debentures account
b. Premium on redemption of debentures account
c. Loss on issue of debentures account
d. None of these.

Ans: c. Loss on issue of debentures account

Question 9

Debentures that do not carry any charge or security on assets of the company are known as:
a. secured debentures
b. unsecured debentures
c. convertible debentures
d. registered debentures.

Ans: b. unsecured debentures

Question 10

Debentures are shown in the balance sheet of the company under the head of
a. Non-current liabilities
b. Current liabilities
c. Share capital
d. None of the these

Ans: a. Non-current liabilities

Question 11

When 100 debenture issued at 5 % discount @ ₹ 100 each but redeemable at premium
of 8%. How much amount will be credited as premium on redemption of debentures
account:
a. ₹ 5000
b. ₹ 4000
c. ₹ 8000
d. ₹ 6000

Ans: c. ₹ 8000

Question 12

X Ltd. took over Building of ₹ 20,00,000 and Machinery of ₹ 5,00,000 and liabilities of ₹
6,00,000 of Y Ltd. X Ltd. paid the purchase consideration by issuing 10,000 Debentures
of ₹100 each at a premium of 10% and ₹11,00,000 by Bank Draft. Purchase
Consideration will be:
a. ₹22,00,000
b. ₹25,00,000
c. ₹19,00,000
d. ₹21,00,000

Ans: a. ₹22,00,000

Question 13

The reserve which is created for a particular (specific) purpose and which is a charge
against revenue is called:
(a) Capital Reserve
(b) General Reserve
(c) Secret Reserve
(d) Specific Reserve

Ans: (d) Specific Reserve

Question 14

Equity ₹ 90,000 Liabilities ₹ 60,000 Profit of the year ₹ 20,000. Then total assets will
be :
(a) ₹ 1,70,000
(b) ₹ 1,50,000
(c) ₹ 1,10,000
(d) ₹ 80,000

Ans: (a) ₹ 1,70,000

Question 15

Contingent Liabilities are exhibited under the heading:
(a) Fixed Liabilities
(b) Current Liabilities
(c) As a footnote
(d) None of these

Ans: (c) As a footnote

Question 16

Profit earned before the issuance of a certificate entitling the company to commence
business is shown as a ……….. in the balance sheet.

Ans: Capital Reserve

Question 17

When net income is transferred to retained earnings, the expenses and revenue
summary is ……….

Ans: Debited

Question 18

Accounts payable is reported as a ———– on the balance sheet

Ans: Headings

Question 19

_______________ ratios show how efficiently a company’s resources are used?

Ans: Activity

Question 20

Debt equity ratio is 1:2. Impact of conversion of debentures into equity
on ratio will ____ the ratio.

Ans: Reduce

3 MARKS QUESTIONS

Q1. State any three limitations of Ratio Analysis.

1. Ignores qualitative factors
2. Price level changes are not considered
3. Ratios may be affected by window dressing.

Q2. State any three forms in which ratios are expressed.

1. Pure ratio form e.g. 2:1
2. Percentage e.g. 25%
3. Times e.g. especially turnover/activity ratios in no. of times

Q3. State any three objectives of Ratio Analysis.

1. To judge short term liquidity & Long term solvency of business
2. Assess the operational efficiency of business
3. Comparative Analysis ( inter firm & intra firm)

Q4. Distinguish between Realisation account and Revaluation account

Q5. Mahek Ltd purchased furniture costing ₹ 2,20,000 from Krishna Ltd. The payment was to be made by issue of 9% Preference Shares of ₹ 100 each at a premium of ₹ 10 per share . Pass necessary Journal entries in the books of Z Ltd.

Q6. National Packaging Company purchased assets of the value of ₹ 1,90,000 from another company and agreed to make the payment of purchase consideration by issuing 2,000, 10% debentures of ₹ 100 each at a discount of 5%. Record necessary journal entries.

Q7. BGP Ltd. invited applications for issuing 15,000, 11% debentures of ₹100 each at a premium of ₹ 50 per debenture. The full amount was payable on application. Applications were received for 25,000 debentures. Applications for 5,000 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants on pro-rata basis. Pass the necessary journal entries for the above transactions in the books of BGP Ltd.

Q8. Explain briefly any four objectives of ‘Analysis of Financial Statements’.

1. To assess the current profitability and operational efficiency of the firm as a
   whole as well its different departments so as to judge the financial health of
   firm.
2. To ascertain the financial position of firm.
3. To identify the reasons for change in the profitability and financial position of
   the firm.
4. To Judge the ability of the firm to repay its debt and assessing the short-term
   as well as the long-term liquidity position of the firm.

Q9. List the major heads under which the ‘Equity and Liabilities’ are presented in the balance sheet of a company as per Schedule III Part I of the Companies Act, 2013.

The major heads under which ‘Equity and Liabilities’ are presented:

1. Shareholders Fund.
2. Share Application Money Pending allotment.
3. Non-Current liabilities.
4. Current Liabilities.

Q10. Explain the importance of financial analysis for (i) Labour Unions, and (ii) Creditors.

(i) Importance for Labour Unions: Labour unions analyse the financial statements to assess whether it can presently afford a wage increase and whether it can absorb a
wage increase through increased productivity or by raising the prices.
(ii) Importance for Creditors: Creditors through an analysis of Financial Statements
appraises not only the ‘ability of the company to meet its short-term obligations but
also judges the probability of its continued ability to meet its financial obligations in
future.

4 MARKS QUESTIONS

Q1. Rajiv and Sanjeev were partners in a firm. Their partnership deed provided that the profits shall be divided as follows: First ₹ 20,000 to Rajeev and the balance in the ratio of 4 : 1. The profits for the year ended 31st March, 2022 were ₹ 60,000 which had been distributed among the partners On 1-4-2021 their capitals were Rajeev ₹ 90,000 and Sanjeev ₹ 80,000. Interest on capital was to be provided @ 6% p.a. While preparing the profit and loss appropriation interest on capital was omitted. Pass necessary rectifying entry for the same. Show your workings clearly.

Q2. G and S are partners sharing profits and losses in the ratio of 2: 5. They admit C on the condition that he will bring ₹ 14,000 as his share of goodwill to be distributed between G and S. C’s share in the future profits or losses will be 1/4th. What amount of goodwill brought in by C will be received by G and S?

C’s share of Goodwill will be distributed in sacrificing ratio between G and S i.e. 2: 5.
C’s share of Goodwill = ₹ 14,000
G will get =14,000×2/7=₹ 4,000
S will get =14,000×5/7= ₹ 10,000

Q3. Average profit earned by a firm is ₹ 3,50,000 which includes overvaluation of stock of ₹ 25,000 on average basis. Capital invested in the firm is ₹ 15,00,000 and NRR is 20% calculate goodwill of the firm on the basis of 4 times the super profit.

Actual average profit = 3,50,000 – 25,000 = 3,25,000
Normal profit = capital employed x NRR/100
Normal profit= 15,00,000 x 20/100 =3,00,000
Super profit = actual profit – normal profit
= 3,25,000 – 3,00,000 = 25,000
Goodwill = super profit x no. of years purchased
= 25,000 x 4 = ₹1,00,000

Q4. Mudra Ltd. is in the process of preparing its Balance Sheet as per Schedule III, Part I of the Companies Act, 2013 and provides its true and fair view of the financial position. (a) Under which head and sub-head will the company show ‘Stores and Spares’ in its Balance Sheet (b) What is the accounting treatment of ‘Stores and Spares’ when the Company will calculate its Inventory Turnover Ratio? (c) The management of Mudra Ltd. wants to analyses its Financial Statements. State any two objectives of such analysis.

(a) Head: Current Assets Sub head; Inventories
(b) While calculating Inventory Turnover Ratio it is not included in Inventories
(c) Objectives – Assessing the ability of the enterprise to meet its short term and
long-term commitments, Assessing the earning capacity of the enterprise

Q5. Ram, Mohan and Sohan were partners sharing profits in the ratio of 2 : 1 : 1. Ram withdrew ₹ 3,000 every month and Mohan withdrew ₹ 4,000 every month. Interest on drawings @ 6% p.a. was charged, whereas the partnership deed was silent about interest on drawings. Showing your working clearly, pass the necessary adjustment entry to rectify the error.