Practicing Class 12 Accountancy Important Questions will help you to score more marks in your CBSE Board Examinations. These Class 12 Accountancy Important Questions make it easier for students to understudies to read, comprehend, and absorb in a format that is simple for them to learn. 

Here are a few reasons why our Class 12 Accountancy Important Questions will be beneficial for students to thoroughly prepare for their board examinations: 

  • The questions picked in each chapter are painstakingly chosen after a great deal of consultation and research that are as per the latest Class 12 Accountancy Syllabus 2020
  • The answers are immensely detailed and explanatory, making it simple for students to learn and review them on the go.
  • Our Class 12 Accountancy Important Questions spares a great deal of time for students by filtering out the important aspects of each chapter and customized answers to the inquiries that are essential to the syllabus.

Chapter Wise Breakdown Of Accountancy Important Questions

The following covers the chapter-wise breakdown of Class 12 Accountancy Important Questions. Solving Class 12 Accountancy Sample Papers is one of the best preparation strategy suggested by experts. 

PART A

Class 12 Accountancy Important Questions

Class 12 Accountancy Important Questions

  1. Accounting for Partnership: Basic Concepts
  • Concepts of Partnership and Partnership Deed
  • Computation of Appropriation Items and Change Items
  • Maintenance of Capital Accounts of Partner: Fixed and Fluctuating capital
  • Profit and Loss Appropriation Account
  • Past Adjustments and Guarantee of profits to a partner
  • Valuation and Treatment of Goodwill
  1. Reconstitution of a Partnership Firm:
  2. Reconstitution of a Partnership Firm: Admission of a partner
  • Introduction and New profit Sharing Ratio and Sacrificing Ratio
  • Treatment of Goodwill
  • Revaluation of Assets and Re-assessment of liabilities
  • Adjustment of Capital
  1. Reconstitution of a Partnership Firm: Retirement/Death of a partner
  • Introduction and New profit Sharing Ratio/Gaining Ratio
  • Treatment of Goodwill and Revaluation of Assets and Re-assessment of liabilities
  • Settlement of Amount Due to Retiring partner
  • Adjustment of capital
  • Death of a partner
  1. Dissolution of Partnership
  2. Accounting for share capital
  • Introduction
  • Accounting Treatment of Issue Shares
  1. Issue and Redemption of Debentures
  • Introduction, Issue of Debentures and various cases from the point of view of Redemption
  • Redemption of Debentures

PART B

  1. Financial Statements of a company
  2. Financial Statements Analysis
  • Introduction to Financial Statement Analysis
  • Tools of Financial Statements Analysis
  1. Accounting Ratios
  • Introduction
  • Classification of Accounting Ratios

Class 12 Accountancy Important Questions Chapter – 1 

The following are some of Class 12 Accountancy Important Questions from Chapter 1:

QUESTION 1

Define a Non-for-Profit Organization.

Answer: The Non-for-Profit Organization is an organization which does not intend to make any profit and are exempted from paying tax. These organizations are basically formed for religious, educational, cultural, charitable, public service to the public or special cause. The Non-for-Profit organization is also known as a Non-Profit Organization.

QUESTION 2

State funds received by the Not-for-Profit Organization.

Answer: The funds received by the Not-for-Profit Organization are a donation, membership fee or entrance fee, subscription, loans, and government and institutional grants.

QUESTION 3

Explain three features of Not-for-Profit Organization.

Answer: the features of the Not-for-Profit Organization are.

  • The purpose- Its objective is to render service to any individual or a group or work for a cause without any expectation of return or profit.
  • Ownership- The organization is established as a trust or a charitable society. Therefore, it does not have an individual or group of an individual as an owner but belongs to society.
  • Objectives- This organization does not function with the object of earning a profit, but, its motive is to serve society. However, the profit they make is used to upgrade the organization and its operation process and is not distributed among its members.

QUESTION 4

Mention the financial statements of the Not-for-Profit Organization.

Answer: The financial statements of the Not-for-Profit Organization are.

  • Payment and receipt account
  • Expenditure and Income account
  • Balance Sheet

QUESTION 5

Non-for-Profit Organisation prepare

(a) Income and Expenditure account

(b) Trading and Profit & Loss account

(c) Only the trading account

(d) None of the above

Answer: Income and Expenditure account

QUESTION 6

Receipt and payments account is a summary of

(a) Debit & Credit balance of Ledger account

(b) Cash receipts & payment

(c) Income and Expenses

(d) A balance of assets and liabilities

Answer: Cash receipts & payment

QUESTION 7

Subscription received in advance by a club are shown

(a) In the credit side of the income and expenditure account

(b) In the asset side of the balance sheet

(c) In the liabilities side of the balance sheet

(d) None of the above

Answer: In the liabilities side of the balance sheet

QUESTION 8

Donation received for a special purpose is a

(a) Liability

(b) Revenue Receipt

(c) Capital Receipt

(d) None of the above

Answer: Capital Receipt

QUESTION 9

Receipt and Payment account is

(a) Nominal Account

(b) Real Account

(c) Personal Account

(d) None of the above

Answer: Real Account

QUESTION 10

Subscription received in advance during the current year is

(a) An income

(b) An asset

(c) A liability

(d) None of the above

Answer: A liability

Class 12 Accountancy Important Questions Chapter – 2 

The following are some of the Class 12 Accountancy Important Questions from Chapter 2:

QUESTION 1

Define Partnership.

Answer:

A partnership agreement is an agreement between two or more individuals who sign a contract to start a profitable business together. In the Partnership agreement, the partners are equally responsible for the debt of an organization. Even if one person withdraws his/her partnership, they are liable for an already existing debt, and future liability if they do not provide with proper notice of retirement. Sometimes, a partnership can also exist without signing any scripted agreement, in such cases law that regulates partnership would apply.

QUESTION 2

Partners’ Current Accounts are opened when their capital accounts are

(1) Fixed

(2) Fixed and Fluctuating both

(3) Fluctuating

(4) None of these

Answer: Fixed

QUESTION 3

The interest on capital accounts of partners under the fluctuating capital account method is credited to

(1) Interest Account

(2) Profit and Loss Account

(3) Partners’ Capital Accounts

(4) None of these

Answer: Partners’ Capital Accounts

QUESTION 4

In the absence of an agreement to the contrary, partners share profits and losses in the

(1) Ratio of their capitals at the beginning of the year

(2) Ratio of their capitals at the end of the year

(3) Ratio of average capital

(4) Equal ratio

Answer: Equal ratio

QUESTION 5

In the absence of an agreement to the contrary, the partners are

(1) Entitled for 6% interest on their capitals, only when there are profits

(2) Entitled for 9% interest on their capitals, only when there are profits

(3) Entitled for interest on capital on the bank rate, only when there are profits

(4) Not entitled for any interest in their capitals

Answer: Not entitled for any interest in their capitals

Class 12 Accountancy Important Questions

Class 12 Accountancy Important Questions

QUESTION 6

The current account of a partner

(1) Will always have a credit balance

(2) Will always have a debit balance

(3) May have a debit or credit balance

(4) Can never have a debit balance

Answer: May have a debit or credit balance

QUESTION 7

Interest payable on the capitals of the partners is changed to

(1) Profit and Loss Account

(2) Profit and Loss Adjustment Account

(3) Realization Account

(4) Profit and Loss Appropriation Account

Answer: Profit and Loss Appropriation Account

QUESTION 8

Interest on partner’s drawing under a fluctuating capital account is debited to

(1) Partner’s Capital Account

(2) Profit and Loss Account

(3) Drawing Account

(4) None of the above

Answer: Partner’s Capital Account

QUESTION 9

Explain the importance of partnership agreement

Answer: A partnership agreement is vital to keep away the disagreement, confusion or any changes that might occur in the course of business tenure. Below are a few points that describe why a partnership agreement is essential:

  • To form distinguished roles and responsibilities for each partner.
  • To avoid tax problems, the tax status shows that the partner is dispensing profits to each partner based on accounting practice and acceptable tax
  • To avoid liability and legal issue, if there is any with any of the partners
  • It helps to deal with any life or circumstance changes of any partner. They usually deal with buy-out agreement with individual partners
  • To surpass non-compete agreements and conflict of interest with partners
  • To overrule the state law

QUESTION 10

What is a Partnership Deed?

Answer: A partnership deed, also called as a partnership agreement, is a record that outlines in detail the rights and functionalities of all parties to a business operation. It has the force of law and is designed to guide the partners in the conduct of the business.

Class 12 Accountancy Important Questions Chapter – 3 

The following are some of Class 12 Accountancy Important Questions from Chapter 3:

QUESTION 1

Define Goodwill.

Answer: Goodwill is an intangible asset which places an enterprise at an advantageous position due to which an enterprise is able to earn higher profits without putting extra effort.

QUESTION 2

Give two features of goodwill.

Answer: The two features of goodwill are

  • It is an intangible asset. It does not have any physical existence
  • It helps in earning higher profits

QUESTION 3

What is the need for a valuation of goodwill?

Answer: The need for a valuation of goodwill arises.

  • When there is a change in the profit-sharing ratio
  • When a new partner is admitted
  • When a partner retires or dies
  • When a partnership firm is sold as a going concern
  • When two or more companies amalgamate
  • When a partnership firm is converted into a company

QUESTION 4

What are the methods to evaluate goodwill

Answer: The two methods of evaluating goodwill are.

  • Average Profit Method – (a) Simple average profit method (b) Weighted average profit method
  • Super Profit Method
  • Capitalization Method – (a) Capitalisation of average profit method (b) Capitalization of super profit.

QUESTION 5

What is purchased goodwill?

Answer: Purchased goodwill is that goodwill which is acquired by a firm for a consideration, whether paid in cash or kind.

QUESTION 6

What is self-generated goodwill?

Answer: Self-generated goodwill is the goodwill which is not purchased for consideration but is earned by the efforts of the management or partners.

QUESTION 7

What is a super profit method?

Answer: When a buyer’s advantage lies in the excess of the normal return capital employed. The excess of actual/average profit over normal profit is known as the super profit method.

QUESTION 8

What is a super profit method?

Answer: When a buyer’s advantage lies in the excess of the normal return capital employed. The excess of actual/average profit over normal profit is known as the super profit method.

QUESTION 9

What are the factors that affect the value of goodwill?

Answer: The factors that affect the value of goodwill are.

  • Efficient Management
  • Favorable Location
  • Favorable Contracts
  • Advantage of Patent
  • Market Situation
  • Nature of Business

QUESTION 9

State two features of purchased goodwill.

Answer: The two features of purchased goodwill are.

  • It arises on the purchase of a business
  • It is shown in the Balance Sheet as an asset

QUESTION 10

State two features of self-generated goodwill.

Answer: The two features of self-generate goodwill are.

  • It is generated internally, generally over the years
  • Its valuation is subjected assessment of the valuer, is not based on an evidence

Class 12 Accountancy Important Questions Chapter – 4 

The following are some of the Class 12 Accountancy Important Questions from Chapter 4:

QUESTION 1

X and Y shared profits & loss in the ratio of 2:3. starting 1st April 2019, they agreed to distribute profits equally. The firm goodwill was valued at ₹ 60,000. The adjustment entry will be.

1) Dr. Y and Cr. X with ₹6,000

2) Dr. X and Cr. Y with ₹6,000

3) Dr. X and Cr. Y with ₹6,00

4) Dr. Y and Cr. X with ₹6,00

Answer: Dr. Y and Cr. X with ₹6,000

QUESTION 2

X, Y, and Z are partners sharing profits in the ration of 5:3:2. They decided to share future profits in the ration of 2:3:5 starting 1st April 2019. They also decided to record the effect of the following revaluations without affecting the book values of assets and liabilities, by passing an adjusting entry:

Book Values (₹) Revised Values (₹)
Land and Building Plant and Machinery Trade Creditors Outstanding Rent 3,00,000 4,50,000 1,50,000 1,35,000 4,50,000 4,20,000 1,35,000 1,80,000

The necessary adjustment entry will be:

1) Dr. Z and Cr. X by ₹ 27,000

2) Dr. X and Cr. Z by ₹ 27,000

3) Dr. Y and Cr. X by ₹ 27,000

4) Dr. X and Cr. Y by ₹ 27,000

Answer: Dr. X and Cr. Z by ₹ 27,000

QUESTION 3

Define Sacrificing ratio.

Answer: Sacrificing ratios is the ratio in which one or more partners of a company sacrifice their share of profit in favor of one or more partners of the firm.

QUESTION 4

How sacrificing the share of each partner is calculated.

Answer: The sacrificing share of each partner is calculated as follows:

Sacrificed Share= Old Share – New Share

QUESTION 5

Define the Gaining ratio.

Answer: Gaining ratios is the ratio in which one or more partners gain a share of profit as a result of sacrificed share in profits by one or more partners of a company.

QUESTION 6

How gaining share of each partner is calculated.

Answer: The gaining share of each partner is calculated as follows:

Gaining Share= New Share – Old Share

QUESTION 7

Anu and Bala distributed profits and losses in the ratio 3:2 starting 1st April 2019, they accepted to distribute profits evenly. Goodwill of the business was accounted for at ₹50,000. Prepare the journal for the accounting of goodwill:

(a) When the goodwill is adjusted through Partners’ Capital Account

Answer:

Journal
Date Particulars L.F Dr.(₹) Cr. (₹)
1st April 2019 Bala’s Capital A/c (₹50,000 x 1/10) To Anu’s Capital A/c (Being the goodwill adjusted on a change in profit-sharing ratio) (WN) 5,000 5,000

Working Note: Calculation of share of profit sacrificed/gained

Sacrificed Share/ Gaining Share= Old Share – New Share

Anu= 3/5- 1/2 = 6-5/10 =1/10 i.e. sacrifice made

Bala= 2/5 – 1/2 = 4-5/10 = -1/10 (being negative, it is a gain)

QUESTION 8

A, B, and C are partners sharing profits in the ration of 5:3:2. They decided to share future profits in the ratio of 2:3:5. What will be the accounting treatment of the workmen compensation reserve appearing in the balance sheet on the date when no information is available for the same?

1) Distributed among the partners in their capital ratio

2) Distributed among the partners in their new profit-sharing ratio

3) Distributed among the partners in their old profit-sharing ratio

4) Carried forward to a new balance sheet

Answer: Distributed among the partners in their old profit-sharing ratio

QUESTION 9

A, B, and C are partners sharing profits in the ratio of 5:3:2. They decided to share the profits in the ratio of 2:3:5. Starting 1st April, they decided to adjust the following accumulated profits, losses and reserves without affecting their book values, bypassing an adjustment entry.

Book Values ₹ -
Profit and Loss Account General Reserve Advertising Suspense Account 15,000 60,000 30,000

The necessary adjustment entry will be:

1) Dr. C and Cr. A with ₹13,500

2) Dr. A and Cr. C with ₹13,500

3) Dr. B and Cr. A with ₹13,500

4) Dr. A and Cr. B with ₹13,500

Answer: Dr. C and Cr. A with ₹13,500

QUESTION 10

Mention the points when a firm reconstitute.

Answer: A firm reconstituted in the event of.

  • Change in the profit- sharing ratio among the existing partners
  • Admission of a partner or partners
  • The retirement of a partner
  • Death of a partner
  • The amalgamation of two or more partnership firms.

Class 12 Accountancy Important Questions Chapter – 5 

The following are some of the Class 12 Accountancy Important Questions from Chapter 5:

QUESTION 1

X and Y shared profits & loss in the ratio of 2:3. starting 1st April 2019, they agreed to distribute profits equally. The firm goodwill was valued at ₹ 60,000. The adjustment entry will be.

1) Dr. Y and Cr. X with ₹6,000

2) Dr. X and Cr. Y with ₹6,000

3) Dr. X and Cr. Y with ₹6,00

4) Dr. Y and Cr. X with ₹6,00

Answer: Dr. Y and Cr. X with ₹6,000

QUESTION 2

X, Y, and Z are partners sharing profits in the ration of 5:3:2. They decided to share future profits in the ration of 2:3:5 starting 1st April 2019. They also decided to record the effect of the following revaluations without affecting the book values of assets and liabilities, bypassing an adjusting entry:

- Book Values (₹) Revised Values (₹)
Land and Building Plant and Machinery Trade Creditors Outstanding Rent 3,00,000 4,50,000 1,50,000 1,35,000 4,50,000 4,20,000 1,35,000 1,80,000

The necessary adjustment entry will be:

1) Dr. Z and Cr. X by ₹ 27,000

2) Dr. X and Cr. Z by ₹ 27,000

3) Dr. Y and Cr. X by ₹ 27,000

4) Dr. X and Cr. Y by ₹ 27,000

Answer: Dr. X and Cr. Z by ₹ 27,000

QUESTION 3

Define Sacrificing ratio.

Answer: Sacrificing ratios is the ratio in which one or more partners of a company sacrifice their share of profit in favor of one or more partners of the firm.

QUESTION 4

How sacrificing the share of each partner is calculated.

Answer: The sacrificing share of each partner is calculated as follows:

Sacrificed Share= Old Share – New Share

QUESTION 5

Define Gaining ratio.

Answer: Gaining ratios is the ratio in which one or more partners gain a share of profit as a result of sacrificed share in profits by one or more partners of a company.

QUESTION 6

How gaining share of each partner is calculated.

Answer: The gaining share of each partner is calculated as follows:

Gaining Share= New Share – Old Share

QUESTION 7

Class 12 Accountancy Important Questions PDF

Class 12 Accountancy Important Questions PDF

Anu and Bala distributed profits and losses in the ratio 3:2 starting 1st April 2019, they accepted to distribute profits evenly. Goodwill of the business was accounted for at ₹50,000. Prepare the journal for the accounting of goodwill:

(a) When the goodwill is adjusted through Partners’ Capital Account

Answer:

Journal
Date Partculars L.F Dr.(₹)
1st April 2019 Bala’s Capital A/c (₹50,000 x 1/10) To Anu’s Capital A/c (Being the goodwill adjusted on a change in profit-sharing ratio) (WN) 5,000 5,000

Working Note: Calculation of share of profit sacrificed/gained

Sacrificed Share/ Gaining Share= Old Share – New Share

Anu= 3/5- 1/2 = 6-5/10 =1/10 i.e. sacrifice made

Bala= 2/5 – 1/2 = 4-5/10 = -1/10 (being negative, it is a gain)

QUESTION 8

A, B, and C are partners sharing profits in the ration of 5:3:2. They decided to share future profits in the ratio of 2:3:5. What will be the accounting treatment of the workmen compensation reserve appearing in the balance sheet on the date when no information is available for the same?

1) Distributed among the partners in their capital ratio

2) Distributed among the partners in their new profit-sharing ratio

3) Distributed among the partners in their old profit-sharing ratio

4) Carried forward to a new balance sheet

Answer: Distributed among the partners in their old profit-sharing ratio

QUESTION 9

A, B, and C are partners sharing profits in the ratio of 5:3:2. They decided to share the profits in the ratio of 2:3:5. Starting 1st April, they decided to adjust the following accumulated profits, losses and reserves without affecting their book values, bypassing an adjustment entry.

- Book Values ₹
Profit and Loss Account General Reserve Advertising Suspense Account 15,000 60,000 30,000

The necessary adjustment entry will be:

1) Dr. C and Cr. A with ₹13,500

2) Dr. A and Cr. C with ₹13,500

3) Dr. B and Cr. A with ₹13,500

4) Dr. A and Cr. B with ₹13,500

Answer: Dr. C and Cr. A with ₹13,500

QUESTION 10

Mention the points when a firm reconstitute.

Answer: A firm reconstituted in the event of.

  • Change in the profit- sharing ratio among the existing partners
  • Admission of a partner or partners
  • The retirement of a partner
  • Death of a partner
  • The amalgamation of two or more partnership firms.

Class 12 Accountancy Important Questions Chapter – 6 

The following are some of the Class 12 Accountancy Important Questions from Chapter 6:

Question 1

Explain Retirement of a partner.

Answer: Retirement of partner refers to retiring from the partnership, i.e., ceasing to be a partner of the enterprise. A partner may retire from the firm anytime in the following scenarios:

  • If there exists an agreement to that effect
  • If all the partners agree to his retirement

Question 2

During the retirement of a partner, if goodwill appears in the Balance Sheet, it must be written off and the capital a/c of all the partners are debited in,

  • The old profit sharing ratio
  • The new profit sharing ratio
  • The capital ratio
  • None of the above

Answer: The old profit sharing ratio

Question 3

X, Y and Z are partners sharing profits in the ratio of 2:2:1. Z retired. The new profit sharing ratio between X and Y will be,

  • 2:1
  • 1:1
  • 3:1

Answer: 1:1

Question 4

The share of the goodwill of a retiring partner is debited to remaining partners in their,

  • Capital Ratio
  • New Ratio
  • Gaining Ratio

Answer: Gaining Ratio

Question 5

When a partner dies, the amount of general reserve is transferred to the partners’ capital a/c in,

  • New profit sharing ratio
  • Old profit sharing ratio
  • The capital ratio

Answer: Old profit sharing ratio

Question 6

What is Gaining Ratio?

Answer: Gaining Ratio is such type of ratio where the continuing partners take the outgoing (either deceased or retired) partner’s share. This ratio is computed by deducting old share in profits from the new share in profits.

Question 7

Define the new profit sharing ratio.

Answer: New profit sharing ratio is the ratio on the retirement of a partner is the ratio in which the continuing partners will share future profits and losses.

Question 8

Explain the meaning of Sacrificing Ratio.

Answer: Sacrificing Ratio is the ratio in which the old partners have agreed to sacrifice their respective shares in profits in favour of new or an incoming partner.

Question 9

Define Intangible assets.

Answer: An intangible asset is an asset that is not physical in nature. Brand recognition, Goodwill and intellectual property, such as patents, copyrights and trademarks are classified under intangible assets.

Question 10

Pass the necessary journal entry when the Goodwill does not appear in the books.

Answer: The journal entry passed is,

Gaining a partner’s capital a/c Dr.

To Retired/deceased partner’s capital a/c

Class 12 Accountancy Important Questions Chapter – 7

The following are some of the Class 12 Accountancy Important Questions from Chapter 7:

Question 1

What does Dissolution of Partnership Firm mean?

Answer: Dissolution of Partnership Firm means the change in the association among the partners; however, the enterprise perpetuates.

Question 2

What does Dissolution of Firm mean?

Answer: Dissolution of Firm means closure of the enterprise and end of the business association among all the partners.

Question 3

What are the modes of Dissolution of Firm?

Answer: The modes by which a Firm can be dissolved are:

  • Mutual agreement
  • Compulsory dissolution
  • By notice
  • The occurrence of an event
  • Dissolution by court

Question 4

Mention the accounting treatment on the dissolution of the firm.

Answer: Dissolution process begins by preparing the following accounts in the enterprise’s books:

  • Realisation a/c
  • Partner’s loan a/c
  • Partner’s capital a/c
  • Bank or cash a/c

Question 5

Pass the necessary journal entry ‘for closing the asset a/c’.

Answer: The journal entry passed is,

Realisation a/c Dr.

To Various assets a/c

Question 6

Pass the necessary journal entry when realisation expenses are borne and paid by the enterprise.

Answer: The journal entry passed is,

Realisation a/c Dr.

To Cash/bank a/c

Question 7

Pass the necessary journal entry when realisation expenses were to be borne by the enterprise but are paid by a partner.

Answer: The journal entry passed is,

Realisation a/c Dr.

To Concerned partner’s capital a/c

Question 8

During the dissolution of a firm, if goodwill appears in the balance sheet, it is transferred to,

Answer: Realisation a/c

Question 9

An unrecorded asset when realised is credited to,

  • Realisation a/c
  • Partners’ capital a/c
  • None of the above

Answer: Realisation a/c

Question 10

An unrecorded liabilities when paid is debited to,

  • Realisation a/c
  • Partners’ capital a/c
  • None of the above

Answer: Realisation a/c

Class 12 Accountancy Important Questions Chapter – 8

The following are some of the Class 12 Accountancy Important Questions from Chapter 8:

Question 1

What is the meaning of a company?

Answer: A company (joint-stock company) is an entity that is incorporated by a group of people via the process of law for undertaking business. A company is an artificial person as is certainly separate from its shareholders.

Question 2

Mention the kinds of companies.

Answer: There exist three kinds of companies. Namely,

  • One person company
  • Private company
  • Public company

Question 3

Explain the Incorporation of a company.

Answer: The procedure for incorporating a company can be classified into four chief stages. Namely,

  • Promotion
  • Incorporation or Registration of a company
  • Capital Subscription
  • Commencement of Business

Question 4

What is share capital of a company?

Answer: Share capital is the amount that an enterprise receives towards the share capital from the issue of shares, both Equity and Preference shares.

Question 5

Mention the kinds or classes of shares.

Answer: Section 43 of the Companies Act, 2013 prescribes that the share capital of an enterprise broadly can be two types or classes. Namely,

  • Preference shares
  • Equity shares

Question 6

Provide the format of a company’s balance sheet.

Answer:

Balance Sheet at at…. (Main Heads only)

Particulars
  1. EQUITY AND LIABILITIES
  • Shareholder’s Funds
  • Share Capital
  • Reserves and Surplus
  • Money received against share warrants
  • Share application money pending allotment
  • Non – Current Liabilities
  • Long – term borrowings
  • Deferred tax liabilities (Net)
  • Other Long-term Liabilities
  • Long – term provisions
  • Current Liabilities
  • Short – term borrowings
  • Trade payables
  • Other Current Liabilities
  • Short – term provisions
TOTAL
II. ASSETS
  • Non – Current Assets
  • Fixed Assets
  • Tangible Assets
  • Intangible Assets
  • Capital Work-in-Progress
  • Intangible assets under development
  • Non – Current Assets
  • Deferred Tax Assets (Net)
  • Long – Term Loans and Advances
  • Other Non – Current Assets
  • Current Assets
  • Current Investments
  • Inventories
  • Trade receivables
  • Cash and Cash Equivalents
  • Short terms loans and advances
  • Other current assets
TOTAL

Question 7

What is the Issue of shares?

Answer: An enterprise raises its capital by issue of shares. However, a public company can issue the shares only after it has met the prescribed legal compliance’s.

Question 8

Define the oversubscription of shares.

Answer: Shares are said to be oversubscribed when the number of shares that is applied for is more than the number of shares that are proffered for the subscription. In the case of oversubscription, shares can be allocated by the enterprise.

Question 9

Define the under-subscription of shares.

Answer: Under subscription refers to the number of shares subscribed by the public is lower than the number of shares proffered by the company.

Question 10

What are calls in advance?

Answer: An enterprise may, if its Articles of Association allow, accept the amount against the call or calls that are not yet made. The amount received in advance is known as Calls in Advance.

Class 12 Accountancy Important Questions Chapter – 9

The following are some of Class 12 Accountancy Important Questions from Chapter 9:

Question 1

Define Debentures.

Answer: Debenture is a written document or an instrument that is issued by the enterprise acknowledging a debt. It comprises of the terms of repayment of principal and also payment of interest.

Question 2

Mention the types of Debentures.

Answer: An enterprise may issue different types of debentures which can be categorized as follows:

  • From the security point of view
  • From redemption point of view
  • From records point of view
  • From a priority point of view
  • From the point of view of coupon rate
  • From convertibility point of view

Question 3

What is the Issue of Debentures?

Answer: An enterprise issues the prospectus inviting people to subscribe debentures of an enterprise. The enterprise can also make some private placement of the debentures following the prescribed procedure.

Question 4

Give the meaning of interest on debentures.

Answer: Interest on debentures is computed at a fixed rate on its nominal or face value payable quarterly, half-yearly or annually with accordance to the terms of the issue.

Question 5

Debentures are shown in the balance sheet of an enterprise of a company under the head of,

  • Non-current liabilities
  • Current liabilities
  • Share capital
  • None of these

Answer: Non-current liabilities

Question 6

Debenture holders are,

  • Owners of a company
  • Lenders of the company
  • Vendors of the company
  • Customers of the company

Answer: Lenders of the company

Question 7

Debenture interest is paid,

  • At a predetermined rate
  • At variable rate
  • At a rate based on the net profit of the company
  • At a rate as determined by the company from time to time

Answer: At a predetermined rate

Question 8

What is the minimum subscription?

Answer: According to Section 39 (1) of the Companies Act, 2013, an enterprise cannot allot securities until and unless the minimum subscription given in the prospectus is received. Hence, the Act does not specify the minimum subscription but has to be decided by the company itself.

Question 9

What is the oversubscription of Debentures?

Answer: The oversubscription of debentures refers to, the company has received applications for more number of debentures that it has actually issued. In such a scenario, the enterprise may make allotment by any of the following 3 options mentioned below:

  • First alternative – Rejecting excess applications
  • Second alternative – Partial or pro-rata allotment
  • Third alternative – A combination of the above mentioned 2 alternatives

Question 10

What is the under-subscription of Debentures?

Answer: The under-subscription of debentures refers to, that the applications have been received for a lesser number of debentures than offered for subscription.

Class 12 Accountancy Important Questions Chapter – 10

The following are some of the Class 12 Accountancy Important Questions from Chapter 10:

Question 1

Provide the meaning of Redemption of Debentures.

Answer: Redemption of Debentures means, discharging the liability on a/c of the debentures issued by an enterprise executing the repayment to the debenture holders.

Question 2

Premium payable on redemption of debentures is in the nature of,

  • Liability a/c
  • Asset a/c
  • Expense a/c
  • None of these

Answer: Liability a/c

Question 3

What are the methods that are followed while redeeming a debenture?

Answer: Methods that are followed while redeeming a debenture are,

  • Redemption of Debentures in a Lump sum on maturity
  • Redemption of Debentures out of the capital
  • Redemption of Debentures out of cash

Question 4

Expand DRI.

Answer: DRI refers to – Debentures Redemption Investment

Question 5

Expand DRR.

Answer: DRR refers to – Debentures Redemption Reserve

Question 6

The provisions of the Companies Act, 2013 in respect of redemption of debentures are to protect the interest of,

  • Debenture holders
  • Creditors
  • Shareholders
  • Bankers

Answer: Debenture holders

Question 7

Mention 3 points that are to be kept redeeming the debentures.

Answer: 3 points that are to be kept redeeming the debentures are,

  • Time of Redemption of Debentures
  • Amount of Redemption of Debentures
  • Sources of Redemption of Debentures

Question 8

What are the 2 specified securities for DRI?

Answer: Specified securities for DRI are,

  • In deposit with any Scheduled Bank, which is free from any charge
  • In the unencumbered securities of the Central Government or any State Government

Question 9

A Bank Ltd. is to redeem ₹. 10,000/-; 10% debentures of ₹. 100/- each on 30th June 2017. How much amount must be transferred to DRR by it?

  • ₹. 2,50,000/-
  • ₹. 1,00,000/-
  • ₹. 5,00,000/-
  • Nil

Answer: Nil

Accountancy Important Questions Viva Questions

The following are some of Class 12 Accountancy Important Questions for Viva Preparation:

Question 1

What is book-keeping? How is it different from accounting?

Answer: Bookkeeping is a part of accounting. In fact, it is the basics of accounting and includes passing a journal entry, preparing a cash book, and posting into the ledger. Accounting is broader in nature and deals with the preparation of financial statements and analysis part too.

Question 2

What is double entry system of book keeping?

Answer: The double entry system is a complete and scientific system of recording business transactions. It helps in finding out profit earned in course of the business and also to find out the capital on a given date.

Question 3

What is single entry system?

Answer: The single entry system is an incomplete system. Some accountants prefer to record cash transactions and the other non-cash transactions are not recorded. Hence, it is prone to errors and frauds. It suits small business only.

Question 4

What are the objectives of preparing accounts?

Answer: Maintaining Accounting Records in a systematic manner.
Determining Profit or Loss by preparing a profit and loss account.
Determining financial position by preparing a balance sheet.
Providing accounting information to users both internal and external.

Question 5

What are the limitations of accounting?

Answer: Accounting is not Fully Exact: For example, some estimates are also made for ascertaining profit or loss, estimating the useful life of an asset, providing for doubtful debts, net realisable value of closing stocks etc.
Accounting Ignores the Qualitative Elements: Qualitative aspects like quality or skills of management and staff, industrial relations etc. are not taken into consideration.
Accounting Ignores the Effect of Price Level Changes: Accounting, however, presumes that value of money remains stable which, in fact, is not true.
Accounting May Lead to Window Dressing: The term window dressing means manipulation of accounts in a way so as to conceal vital facts and present the financial statements to show a better position than what it actually is.

Question 6

What are assets? What are liabilities?

Answer::Assets are the properties (tangible assets and intangible assets) owned by an entity or enterprise. Anything which will enable the firm to get economic benefit in the future, is an asset.

Liabilities:
Liabilities mean amount owed (payable) by the business. Liability towards the owners (proprietor or partners) of the business is termed as internal liability. On the other hand, liability towards the outsiders, i.e., other than the owners (proprietor or partners) is termed as external liability.

Question 7

What is a provision? How does it differ from a liability?

Answer: A provision is a charge against profit for the purpose of providing for any liability or loss. Provision differs from liability to the extent that provision is an estimated amount while liability is determined amount (exact amount).

Question 8

What are Current Assets?

Answer: Current assets are those assets which are:
Expected to be realised in or intended for sale or consumption in the company’s normal operating cycle; or
Held primarily for the purpose of trading; or
Expected to be realised within 12 months from the reporting date, i.e., Balance Sheet date; or
Cash and Cash equivalents unless they are restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date, i.e., Balance Sheet date.

Question 9

What is operating cycle?

Answer: Operating cycle is the time between acquisition of an asset for processing and is realisation into cash and cash equivalents. Where operating cycle cannot be identified, it is assumed to be of 12 months.

Question 10

What are Current Liabilities?

Answer: Current liability is that liability which is:
Expected to be settled in company’s normal operating cycle; or
Due to be settled within 12 months after the reporting date, i.e., Balance Sheet date; or
Held primarily for the purpose of being traded; or
There is no unconditional right to defer settlement for at least 12 months after the reporting date.

Question 11

Give examples of Non-Current Liabilities?

Answer: Non-current liabilities are those which are not current liabilities. For example, long-term borrowings, other long-term liabilities; and long-term provisions.

Question 12

What are commitments?

Answer: Commitments mean financial commitments due to activities agreed to by the company to be undertaken by it in future. They are to be classified into:
Estimated amounts of contracts remaining to be executed on Capital Account and not provided for;
Uncalled liability on shares and other investments partly paid; and
Other commitments (Nature to be specified).

Question 13

Why do we create a provision?

Answer: Provision is made following the Prudence Concept of accounting which holds “provide for all anticipated expenses and losses but do not provide for anticipated incomes.” By making a provision, a part of the profits and corresponding assets are retained, which otherwise could have been distributed as profits.


 

Question 14

What is a reserve?

Answer: Reserves are the amounts set aside out of profits. It is an appropriation of profits or accumulated profits to strengthen the financial position of the business.

Question 15

What is a general reserve?

Answer: General reserve is the amount set aside out of profits not for any specific purpose. It is available for any future contingency or expansion of business.

Question 16

What is deferred revenue expenditure?

Answer: Deferred Revenue Expenditure is a revenue expenditure in nature but is written off (charged) in more than one accounting period because it is estimated that benefit of such expenditure will accrue in more than one financial year. For example, large advertising expenditure that will give benefit for more than one accounting period is a Deferred Revenue Expenditure.

Question 17

What is opening entry?

Answer: All assets are debited and all liabilities and capital are credited at the start of a business and also at the time of starting the accounting transactions at the beginning of the year. The journal entry, so made, is called opening entry.

Question 18

What are compound entries? Give 3 examples.

Answer: When two or more journal entries are combined to form one journal entry, it is called a compound entry.

For example, the journal entry for discount allowed and cash received from debtor, the journal entry for transfer of share application money to share capital and share allotment and the journal entry for forfeiture of shares.

Question 19

What are compound entries? Give 3 examples.

Answer: When two or more journal entries are combined to form one journal entry, it is called a compound entry.

For example, the journal entry for discount allowed and cash received from debtor, the journal entry for transfer of share application money to share capital and share allotment and the journal entry for forfeiture of shares.

Question 20

What is unique about the cash book?

The cash book is the book of prime entry/journal (because cash transactions are first entered here) as well as part of ledger (because it is in the form of an account).

FAQ's

What is the marking scheme for Class 12 Accountancy? 

The CBSE class 12 Accountancy's theory paper is of 80 marks and 20 marks are allotted for project work/internal assessment. The CBSE class 12 Accountancy theory examination is of three hours duration. The question paper comprises of two sections - A and B. 

Where can I find solutions to Accountancy Sample Papers for Class 12? 

The solutions to Accountancy Sample Papers for Class 12 can be found on our website for a more detailed learning experience.

Are these Accountancy Class 12 Questions commonly asked in Board Exams? 

Yes. These are some of the questions that have repeated consistently throughout the years in CBSE Board examinations. 

Is there any Book for Accountancy Class 12 Important Questions? 

NCERT books contain all the important questions that will help students to score well in the exam.