Solved Papers
Every question from the 2025-26 Final Examination (24 Nov 2025) and the Re-Examination (31 Jan 2026), answered in full the way you would write it on the answer sheet: journals entry by entry, final accounts in inner/outer columns, trial balances line by line, ratios with comments. Each is checked against the official answer key.
Each question shows the wording from the paper, an answer plan, the model answer in exam layout, what the official key expects (including how it splits the marks), and the mistake that loses the question. Every citation opens the original page of the paper or key beside the answer.
The official keys have six slips, all flagged here rather than copied: Final Q2's advertisement debit printed as 1,10,000 (should be 1,00,000) · Final Q5's total printed "1400500" (should be ₹1,40,05,000) · both Q6(b) keys label a financing inflow "cash used" · both Q1(b)s ask for "three machines" when two are given · and Re-Exam Q6(a) prints "tax @ 50%" against figures that are not 50%.
- 7 questions × 10 marks. Q1 is compulsory, plus any 4 of Q2–Q7. Every new question starts on a fresh page. "Assume suitable data if necessary."
- Time budget: 120 minutes ÷ 5 questions = 24 minutes per question.
- The same topic sits in the same slot in both papers, so you can predict each question from its number:
| Slot | Topic (both papers) | Unit | Scope |
|---|---|---|---|
| Q1(a) · 3 | Classify 6 items as capital or revenue, with reasons | 1 | Class Test |
| Q1(b) · 4 | WDV depreciation, 2 machines, 3 years, part-year purchases | 3 | Class Test |
| Q1(c) · 3 | Classify 3 items into cash-flow activities | 9 | TEE |
| Q2 · 10 | Journalise 10 transactions | 2 | Class Test |
| Q3 · 10 | Trading, P&L and Balance Sheet with 4 adjustments | 4 | TEE |
| Q4 · 10 | 4 ratios for 2 years or 2 firms + comments | 7 | TEE |
| Q5 · 10 | Prepare a trial balance from 20 balances | 2 | Class Test |
| Q6(a) · 5 | Common size statement | 8 | TEE |
| Q6(b) · 5 | Cash flow: investing & financing sections | 9 | TEE |
| Q7(a) · 5 | Short notes on two accounting concepts | 1 | Class Test |
| Q7(b) · 5 | Ratio theory: significance or short notes | 7 | TEE |
Choosing your 4: Q2 (journal) and Q5 (trial balance) are the most mechanical 10-markers. With the rules on this site they are close to full marks. Q4 (ratios) is the next safest, because its marking is 1 per figure and 0.5 per comment.
Final Examination 2025-26 — 24 November 2025
Final · Q1(a) — Capital or revenue? Six transactions 3 marks · Unit 1
"Classify the following transactions of the business as Revenue or Capital Nature and provide reasons for such classification. 1. A company purchases a new delivery van for Rs. 50,000 to transport goods · 2. A firm pays Rs. 2,000 for routine maintenance on its office air conditioning system to keep it operational · 3. A business installs new software worth Rs. 10,000 on its computers to improve efficiency in operations · 4. A retailer spends Rs. 1,500 on advertising campaigns to promote seasonal sales · 5. A manufacturing company buys raw materials for Rs. 8,000 to produce goods for sale · 6. A company pays Rs. 3,000 in salaries to its administrative staff for the month."
CO-1 · BL Understand · QP p. 1
Apply one test to every item: does the benefit last beyond this year (a new or improved asset)? Yes → capital. No, it is used up or only maintains → revenue. Write the answer as a table with a reason column. The reason carries half the marks.
| # | Transaction | Nature | Reason |
|---|---|---|---|
| 1 | Delivery van ₹50,000 | Capital | Acquires a fixed asset that will carry goods for several years. |
| 2 | Routine AC maintenance ₹2,000 | Revenue | Keeps an existing asset working. It adds no life or capacity. |
| 3 | New software ₹10,000 | Capital | An intangible fixed asset that improves efficiency over several years. |
| 4 | Seasonal advertising ₹1,500 | Revenue | A short-term promotion whose benefit is used up this season. |
| 5 | Raw materials ₹8,000 | Revenue | Consumed in producing this period's goods. It becomes part of COGS. |
| 6 | Monthly admin salaries ₹3,000 | Revenue | A recurring operating cost that creates no asset. |
Rule used: capital expenditure creates or enlarges a fixed asset and benefits more than one year; revenue expenditure maintains the business and is exhausted within the year.
Revise → Unit 01 · Capital vs Revenue · Unit 01 Solve
Final · Q1(b) — WDV depreciation, two machines, three years 4 marks · Unit 3
"Ashok Ltd. purchased on 1st June, 2022 a machinery for Rs. 23,80,000 and incurred Rs. 20,000 for installation. On 1st October, 2023 another machinery for Rs. 18,00,000 was purchased and the company incurred Rs 2,00,000 on transportation. Depreciation was provided on 31st March each year @ 10 percent p.a. on Written Down Value. You are required to show the computation of depreciation for all three machines for the financial years 2022–23, 2023–24, and 2024–25."
CO-2 · BL Apply · QP p. 1
(1) Capitalise installation and transportation into cost. (2) Count the months held in the year of purchase. (3) Apply 10% to the opening WDV each year. (4) Lay it out in a Date / Particulars / Machine 1 / Machine 2 table.
| Date | Particulars | Machine 1 | Machine 2 |
|---|---|---|---|
| 01-Jun-22 | Cost 23,80,000 + Installation 20,000 | 24,00,000 | |
| 31-Mar-23 | Dep. @10% × 10/12 (Jun–Mar) | 2,00,000 | |
| WDV | 22,00,000 | ||
| 01-Oct-23 | Cost 18,00,000 + Transportation 2,00,000 | 20,00,000 | |
| 31-Mar-24 | Dep. @10% (M1 full year · M2 6/12) | 2,20,000 | 1,00,000 |
| WDV | 19,80,000 | 19,00,000 | |
| 31-Mar-25 | Dep. @10% (full year each) | 1,98,000 | 1,90,000 |
| WDV | 17,82,000 | 17,10,000 |
| Year | Total depreciation |
|---|---|
| 2022-23 | ₹2,00,000 |
| 2023-24 | ₹3,20,000 |
| 2024-25 | ₹3,88,000 |
Note to write on the sheet: "The question says three machines. Only two are described, so depreciation is computed for both."
Revise → Unit 03 · SLM vs WDV · months table · Solve U3 · WDV
Final · Q1(c) — Classify into cash-flow activities 3 marks · Unit 9
"Classify the following transactions under appropriate activities as per Cash Flow Statement: (i) Dividend paid (ii) Loans given by Tata Finance Company (iii) Purchase of computer by a bank."
CO-3 · BL Apply · QP p. 1
Ask of each item: is it the main business (operating), long-term assets and investments (investing), or owners and lenders (financing)? Then check whose books you are in. A finance company's lending is its trade.
| Item | Activity | Why |
|---|---|---|
| (i) Dividend paid | Financing | A payment to owners, i.e. to a provider of capital. |
| (ii) Loans given by Tata Finance Company | Operating | Lending is a finance company's principal revenue-producing activity. For an ordinary company the same item would be investing. |
| (iii) Computer bought by a bank | Investing | A fixed asset for the bank's own use. It is not the bank's trade. |
Revise → Unit 9 (Cash Flow) is Term End material and has no unit page on this site yet. Everything needed for these parts is in the answer above.
Final · Q2 — Journalise ten transactions (Neelam Traders) 10 marks · Unit 2
Journalize in the books of Neelam Traders, May 2025: 01 started business with Cash ₹30,00,000, Machinery ₹20,00,000, Furniture ₹10,00,000 · 03 deposited ₹15,00,000 into bank · 06 bought stationery ₹50,000 on credit from Anupam Stationers · 08 purchased goods ₹8,00,000 from Mehta & Co. with 15% trade discount · 10 purchased air conditioners and office chairs ₹2,50,000 from CoolAir Ltd; paid ₹1,50,000 cash, balance payable · 12 spent ₹70,000 on newspaper advertisements and distributed free samples costing ₹30,000 · 15 theft: goods ₹90,000 and cash ₹8,000 · 18 sold goods to Ritu Enterprises ₹5,00,000 allowing 5% cash discount; Ritu paid immediately · 22 received commission ₹1,50,000 · 25 paid Mehta & Co. the balance due by cheque.
CO-2 · BL Understand · QP pp. 1–2
Ten entries, one mark each. For each one: name the accounts → apply the rule → write Dr line, "To" line, narration. Four traps are hidden in this paper: trade discount (8 May), fixed assets that are not purchases (6 and 10 May), goods leaving at cost (12 and 15 May), and cash discount (18 May).
| Cash A/c | Dr. | 30,00,000 | |
| Machinery A/c | Dr. | 20,00,000 | |
| Furniture A/c | Dr. | 10,00,000 | |
| To Capital A/c | 60,00,000 |
| Bank A/c | Dr. | 15,00,000 | |
| To Cash A/c | 15,00,000 |
| Stationery A/c | Dr. | 50,000 | |
| To Anupam Stationers A/c | 50,000 |
| Purchases A/c | Dr. | 6,80,000 | |
| To Mehta & Co. A/c | 6,80,000 |
| Office Equipment & Furniture A/c | Dr. | 2,50,000 | |
| To Cash A/c | 1,50,000 | ||
| To CoolAir Ltd. A/c | 1,00,000 |
| Advertisement A/c | Dr. | 1,00,000 | |
| To Cash A/c | 70,000 | ||
| To Purchases A/c | 30,000 |
| Loss by Theft A/c | Dr. | 98,000 | |
| To Cash A/c | 8,000 | ||
| To Purchases A/c | 90,000 |
| Cash A/c | Dr. | 4,75,000 | |
| Discount Allowed A/c | Dr. | 25,000 | |
| To Sales A/c | 5,00,000 |
| Cash A/c | Dr. | 1,50,000 | |
| To Commission Received A/c | 1,50,000 |
| Mehta & Co. A/c | Dr. | 6,80,000 | |
| To Bank A/c | 6,80,000 |
Journal total: Dr ₹1,00,08,000 = Cr ₹1,00,08,000.
Revise → Trade vs cash discount · Goods leaving the business · Phrase-book · Solve U2 · Journal
Final · Q3 — Trading, P&L and Balance Sheet with 4 adjustments (Jagat Shah) 10 marks · Unit 4
Prepare Trading, Profit and Loss Account and Balance Sheet of Jagat Shah as at 31st March 2025. Trial balance: Capital 36,000 Cr · Machinery 65,000 · Sales 8,20,000 Cr · Sales Return 5,000 · Purchases 4,00,000 · Opening Stock 25,000 · Carriage Inwards 5,000 · Salaries 24,000 · Wages 25,000 · General Expenses 7,000 · Rent 5,000 · Purchase Returns 5,000 Cr · Debtors 3,00,000 · total 8,61,000. Adjustments: (1) closing stock ₹25,000 (2) write off bad debt ₹2,000 (3) rent outstanding ₹2,000 (4) wages paid in advance ₹5,000.
CO-2 · BL Apply · QP p. 2
Sort each TB line: direct (opening stock, purchases, wages, carriage inwards, sales) → Trading. Indirect (salaries, rent, general) → P&L. Assets, liabilities, capital → Balance Sheet. Then apply each adjustment in two places. Use inner and outer columns for every "less" or "add".
| Dr. Particulars | Inner | ₹ | Cr. Particulars | Inner | ₹ |
|---|---|---|---|---|---|
| To Opening Stock | 25,000 | By Sales | 8,20,000 | ||
| To Purchases | 4,00,000 | Less: Sales Returns | 5,000 | 8,15,000 | |
| Less: Purchase Returns | 5,000 | 3,95,000 | By Closing Stock (adj. 1) | 25,000 | |
| To Wages | 25,000 | ||||
| Less: Prepaid Wages (adj. 4) | 5,000 | 20,000 | |||
| To Carriage Inwards | 5,000 | ||||
| To Gross Profit c/d | 3,95,000 | ||||
| Total | 8,40,000 | Total | 8,40,000 | ||
| To Salaries | 24,000 | By Gross Profit b/d | 3,95,000 | ||
| To General Expenses | 7,000 | ||||
| To Rent | 5,000 | ||||
| Add: Outstanding (adj. 3) | 2,000 | 7,000 | |||
| To Bad Debts (adj. 2) | 2,000 | ||||
| To Net Profit (transferred to Capital) | 3,55,000 | ||||
| Total | 3,95,000 | Total | 3,95,000 |
| Liabilities | Inner | ₹ | Assets | Inner | ₹ |
|---|---|---|---|---|---|
| Capital | 36,000 | Machinery | 65,000 | ||
| Add: Net Profit | 3,55,000 | 3,91,000 | Debtors | 3,00,000 | |
| Outstanding Rent | 2,000 | Less: Bad Debts | 2,000 | 2,98,000 | |
| Closing Stock | 25,000 | ||||
| Prepaid Wages | 5,000 | ||||
| Total | 3,93,000 | Total | 3,93,000 |
| Adjustment | Effect 1 | Effect 2 |
|---|---|---|
| 1 Closing stock ₹25,000 | Cr side of Trading | Asset in Balance Sheet |
| 2 Bad debts ₹2,000 | Expense in P&L | Deduct from Debtors |
| 3 Rent outstanding ₹2,000 | Add to Rent in P&L | Liability in Balance Sheet |
| 4 Wages prepaid ₹5,000 | Deduct from Wages in Trading | Asset in Balance Sheet |
Every adjustment is written twice. That is what makes the Balance Sheet balance at ₹3,93,000.
Revise → Unit 4 (Final Accounts) is Term End material. Related: outstanding and prepaid · bad debts · formats
Final · Q4 — Four ratios over two years, and analyse (Zenith Ltd) 10 marks · Unit 7
Based on the Income Statement and Balance Sheet of Zenith Ltd., compare the results for the two years. 2022-23 / 2023-24: Sales 4,20,000 / 5,20,000 · COGS 3,20,000 / 3,70,000 · Gross Profit 1,00,000 / 1,50,000 · Operating expenses 68,000 / 72,000 · Net Profit 32,000 / 78,000. Balance Sheet: Share Capital 1,00,000 / 1,00,000 · Reserves 60,000 / 70,000 · Trade Payables 30,000 / 20,000 · Short-term Borrowings 30,000 / 50,000 · Fixed Assets (Net) 50,000 / 60,000 · Receivables 70,000 / 65,000 · Stock 80,000 / 85,000 · Cash at Bank 20,000 / 30,000. Calculate (1) Gross Profit Ratio (2) Current Ratio (3) Fixed Asset Turnover Ratio (4) Receivables Collection Period, and analyse.
CO-4 · BL Analyse · QP pp. 2–3
For each ratio: formula → 2023 figure → 2024 figure → one-line comment. Use closing balances, because each year's balance sheet stands alone. Close with a two-line overall verdict.
| Ratio | 2022-23 | 2023-24 | Comment |
|---|---|---|---|
| GP ratio = GP ÷ Sales × 100 | 1,00,000 ÷ 4,20,000 = 23.81% | 1,50,000 ÷ 5,20,000 = 28.85% | Margin up about 5 points: better pricing or cheaper buying. |
| Current ratio = CA ÷ CL | 1,70,000 ÷ 60,000 = 2.83 : 1 | 1,80,000 ÷ 70,000 = 2.57 : 1 | Slight fall, still above the 2 : 1 norm. |
| FA turnover = Sales ÷ Net FA | 4,20,000 ÷ 50,000 = 8.4 times | 5,20,000 ÷ 60,000 = 8.67 times | Assets used slightly more productively. |
| Collection period = Receivables ÷ (Sales ÷ 365) | 70,000 ÷ 1,150.68 = 61 days | 65,000 ÷ 1,424.66 = 46 days | Collections 15 days faster. |
Overall: 2023-24 is better on profitability, efficiency and credit control. The only weakening, liquidity, is mild and comes from short-term borrowings rising from ₹30,000 to ₹50,000. Net profit more than doubled (NP margin 7.6% → 15%) because operating costs rose 6% while sales rose 24%.
Revise → Ratio Formulas · closing vs average · the same question in Ratios · Solve
Final · Q5 — Prepare a trial balance, 20 balances (Srilekha Enterprises) 10 marks · Unit 2
From the following balances extracted from the ledger of Srilekha Enterprises, prepare a Trial Balance as on 31st March 2025: Capital 75,00,000 · Plant 30,00,000 · Cash in Hand 2,00,000 · Commission Received 1,75,000 · Discount allowed 55,000 · Purchase Return 50,000 · Interest Received 30,000 · Repairing charges 1,25,000 · General expenses 4,72,500 · Wages 5,00,000 · Furniture 1,20,000 · Sales return 90,000 · Office Salaries 6,25,000 · Building 27,50,000 · Purchases 48,00,000 · Sales 62,50,000 · Carriage 62,500 · Drawings 6,00,000 · Cash at Bank 5,75,000 · Rates, Taxes and Insurance 30,000.
CO-2 · BL Apply · QP p. 3
One rule: assets, expenses, losses and drawings → Debit. Liabilities, capital, incomes and gains → Credit. Returns flip the account they reduce. Add both columns. If they tally, you are done.
| # | Particulars | Debit ₹ | Credit ₹ | Why |
|---|---|---|---|---|
| 1 | Capital | 75,00,000 | Owner's claim, a liability | |
| 2 | Plant | 30,00,000 | Asset | |
| 3 | Cash in Hand | 2,00,000 | Asset | |
| 4 | Commission Received | 1,75,000 | Income | |
| 5 | Discount Allowed | 55,000 | Loss / expense | |
| 6 | Purchase Return | 50,000 | Reduces purchases, so credit | |
| 7 | Interest Received | 30,000 | Income | |
| 8 | Repairing Charges | 1,25,000 | Expense | |
| 9 | General Expenses | 4,72,500 | Expense | |
| 10 | Wages | 5,00,000 | Expense | |
| 11 | Furniture | 1,20,000 | Asset | |
| 12 | Sales Return | 90,000 | Reduces sales, so debit | |
| 13 | Office Salaries | 6,25,000 | Expense | |
| 14 | Building | 27,50,000 | Asset | |
| 15 | Purchases | 48,00,000 | Expense | |
| 16 | Sales | 62,50,000 | Income | |
| 17 | Carriage | 62,500 | Expense | |
| 18 | Drawings | 6,00,000 | Reduces capital, so debit | |
| 19 | Cash at Bank | 5,75,000 | Asset | |
| 20 | Rates, Taxes & Insurance | 30,000 | Expense | |
| Total | 1,40,05,000 | 1,40,05,000 |
Revise → Unit 02 · Trial Balance · Solve U2 · Trial balances · Account Dictionary
Final · Q6(a) — Common size balance sheet (ABC Ltd) 5 marks · Unit 8
Prepare a Common Size Balance Sheet of ABC Ltd as on 31 March 2025 (₹ crore): PPE 11,551 · Investments in subsidiaries, JVs & associates 29,718 · Other non-current assets 9,251 · Total non-current 50,520 · Inventories 3,154 · Trade receivables 2,820 · Cash & cash equivalents 8,926 · Total current 14,900 · Total assets 65,420 · Equity share capital 32,686 · Reserves & surplus 736 · Total equity 33,422 · Non-current liabilities 7,554 · Current liabilities 24,444 · Total 65,420.
CO-4 · BL Analyse · QP p. 4
Every line ÷ total assets (₹65,420) × 100. Add a % column next to the amounts. Check that each side sums to 100%.
| Particulars | ₹ crore | % of total |
|---|---|---|
| Property, Plant & Equipment | 11,551 | 17.66% |
| Investments in subsidiaries, JVs, associates | 29,718 | 45.43% |
| Other non-current assets | 9,251 | 14.14% |
| Total non-current assets | 50,520 | 77.22% |
| Inventories | 3,154 | 4.82% |
| Trade receivables | 2,820 | 4.31% |
| Cash & cash equivalents | 8,926 | 13.64% |
| Total current assets | 14,900 | 22.78% |
| Total assets | 65,420 | 100.00% |
| Equity share capital | 32,686 | 49.96% |
| Reserves & surplus | 736 | 1.13% |
| Total equity | 33,422 | 51.09% |
| Non-current liabilities | 7,554 | 11.55% |
| Current liabilities | 24,444 | 37.36% |
| Total equity & liabilities | 65,420 | 100.00% |
One-line reading (worth adding): 77% of assets are long-term, with 45% in group investments alone. It is a holding-company profile. Current assets (22.8%) are below current liabilities (37.4%), so working capital is negative.
Revise → Unit 8 (Common Size) is Term End material. The method: every line ÷ the base × 100.
Final · Q6(b) — Cash flow from investing and financing 5 marks · Unit 9
Prepare a Cash Flow Statement highlighting cash flows from Investing and Financing Activities: 1. Purchased new machinery ₹50,000 cash · 2. Issued common stock ₹80,000 cash · 3. Paid dividends ₹15,000 · 4. Sold old equipment for ₹20,000 cash (book value ₹25,000) · 5. Borrowed ₹30,000 on a long-term bank loan.
CO-3 · BL Apply · QP p. 4
Put each item under B. Investing or C. Financing. Show outflows in brackets. Record only cash actually moved, so the sale goes in at ₹20,000, not the ₹25,000 book value.
| Particulars | ₹ | ₹ |
|---|---|---|
| B. Cash flow from investing activities | ||
| Purchase of machinery | (50,000) | |
| Sale of old equipment | 20,000 | |
| Net cash used in investing activities | (30,000) | |
| C. Cash flow from financing activities | ||
| Issue of shares | 80,000 | |
| Long-term bank loan raised | 30,000 | |
| Dividends paid | (15,000) | |
| Net cash from financing activities | 95,000 |
The ₹5,000 loss on the equipment is not cash. It belongs in the operating section as an add-back, which this question does not ask for.
Revise → Unit 9 (Cash Flow) is Term End material. See Q1(c) above for the three-activity test.
Final · Q7(a) — Short notes: Accrual Concept · Separate Entity Concept 5 marks · Unit 1
"Write a short note on: a. Accrual Concept b. Separate Entity Concept."
CO-1 · BL Understand · QP p. 4
For each concept (2.5 marks): definition → example with numbers → why it matters. The key awards all three parts.
a. Accrual Concept
- Meaning: revenue and expenses are recorded when they are earned or incurred, not when cash is received or paid.
- Example: March rent of ₹20,000 paid in April is still a March expense. It is shown as outstanding rent (a liability) at 31 March.
- Importance: it matches each period's income with that period's costs (the matching concept), so profit is true for the period. It is the reason for outstanding, prepaid and accrued adjustments in final accounts.
b. Separate (Business) Entity Concept
- Meaning: the business is treated as a unit distinct from its owner. Only business transactions are recorded in its books.
- Example: the owner withdraws ₹50,000 for personal use. It is recorded as drawings, not a business expense. Capital the owner brings in is shown as a liability of the business to the owner.
- Importance: it keeps business profit and position free of personal items, and makes the owner accountable like any other claimant.
Revise → Unit 01 · Concepts & Conventions · Why capital is a liability
Final · Q7(b) — Significance of liquidity and profitability ratios 5 marks · Unit 7
"Explain the significance of Liquidity Ratios and Profitability Ratios in assessing the financial performance of a business."
CO-3 · BL Understand · QP p. 4
Two blocks of 2.5 marks: what the family measures → its main ratios with formula and standard → who uses it → what high or low means. End with one line tying the two together.
Liquidity ratios
- Measure the ability to meet short-term obligations as they fall due, using current assets.
- Current ratio = CA ÷ CL (standard 2 : 1). Quick ratio = Quick assets ÷ Quick liabilities (standard 1 : 1).
- Used by suppliers, bankers and short-term creditors. A low ratio signals default risk. A very high one signals idle funds.
Profitability ratios
- Measure how effectively the firm earns profit on sales (GP margin, NP margin, operating ratio) and on investment (ROA, ROCE, ROE).
- They reflect pricing, cost control and management efficiency. Owners use them to judge their return, and management uses them to find cost pressure.
Together: liquidity shows whether the firm can survive the short run, and profitability shows whether it is worth running in the long run.
Revise → Liquidity ratios · Profitability ratios
Re-Examination 2025-26 — 31 January 2026
Same pattern, new numbers. every question slot tests the same topic as in the Final above.
Re-Exam · Q1(a) — Capital or revenue? Six transactions 3 marks · Unit 1
Classify as Revenue or Capital and give reasons: 1. A firm acquires land for Rs. 1,00,000 to build a new factory · 2. Pays Rs. 500 insurance premium on its office building for the current year · 3. Spends Rs. 15,000 to overhaul an old machine, extending its useful life by 3 years and increasing production capacity by 20% · 4. Installs a new security system costing Rs. 12,000 in its factory · 5. ₹10,000 spent repairing an old machine to keep it in working condition · 6. Pays ₹15,000 annual rent for its office premises.
CO-1 · BL Understand · QP p. 1
The same test as the Final. Items 3 and 5 are a deliberate pair: both spend money on an old machine, but only one improves it.
| # | Transaction | Nature | Reason |
|---|---|---|---|
| 1 | Land for a new factory | Capital | A fixed asset with an indefinite life. |
| 2 | Insurance premium for the current year | Revenue | Covers only this year. It is used up. |
| 3 | Overhaul: +3 years' life, +20% capacity | Capital | It extends life and increases capacity, which improves the asset. |
| 4 | New factory security system | Capital | A new fixed asset that benefits several years. |
| 5 | Repairs to keep an old machine working | Revenue | Only maintains existing condition. Nothing is added. |
| 6 | Annual office rent | Revenue | A recurring operating cost. |
Revise → Unit 01 · Capital vs Revenue
Re-Exam · Q1(b) — WDV depreciation, two machines, three years (Camel Ltd) 4 marks · Unit 3
"Camel Ltd. purchased on 1st August, 2022 a machinery for Rs. 35,70,000 and incurred Rs. 30,000 for installation. On 1st January, 2024 another machinery for Rs. 29,00,000 was purchased and the company incurred Rs 1,00,000 on transportation. Depreciation was provided on 31st March each year @ 10 percent p.a. on Written Down Value. Show computation of depreciation for all 3 machines for the years 2022-23, 2023-24 and 2024-25."
CO-2 · BL Apply · QP p. 1
Same shape as the Final. Months held: 1 Aug → 31 Mar = 8; 1 Jan → 31 Mar = 3.
| Date | Particulars | Machine 1 | Machine 2 |
|---|---|---|---|
| 01-Aug-22 | Cost 35,70,000 + Installation 30,000 | 36,00,000 | |
| 31-Mar-23 | Dep. @10% × 8/12 | 2,40,000 | |
| WDV | 33,60,000 | ||
| 01-Jan-24 | Cost 29,00,000 + Transportation 1,00,000 | 30,00,000 | |
| 31-Mar-24 | Dep. @10% (M1 full year · M2 3/12) | 3,36,000 | 75,000 |
| WDV | 30,24,000 | 29,25,000 | |
| 31-Mar-25 | Dep. @10% (full year each) | 3,02,400 | 2,92,500 |
| WDV | 27,21,600 | 26,32,500 |
| Year | Total depreciation |
|---|---|
| 2022-23 | ₹2,40,000 |
| 2023-24 | ₹4,11,000 |
| 2024-25 | ₹5,94,900 |
Revise → Unit 03 · WDV · Solve U3 · WDV
Re-Exam · Q1(c) — Classify into cash-flow activities 3 marks · Unit 9
"Classify under appropriate activities as per Cash Flow Statement: (i) Issue of shares at premium (ii) Loans and advances granted by a company (iii) Bank deposits with maturity of three months or less."
CO-3 · BL Apply · QP p. 1
Two items are activities. The third is a trap: it is not an activity at all.
| Item | Answer | Why |
|---|---|---|
| (i) Issue of shares at premium | Financing | Raises capital from owners. The premium is part of that same inflow. |
| (ii) Loans and advances granted by a (non-financial) company | Investing | Money lent out is an investment of the company's funds. |
| (iii) Bank deposits ≤ 3 months | Cash and cash equivalents | Deposits this short are treated as cash itself, so moving money into them is no cash flow at all. |
Revise → Unit 9 is Term End material. See Final Q1(c) above.
Re-Exam · Q2 — Journalise ten transactions (Raghav Enterprises) 10 marks · Unit 2
Journalize in the books of Raghav Enterprises, July 2025: 01 opening balances: Debit Cash ₹20,00,000, Stock ₹8,00,000, Furniture ₹5,00,000; Credit Creditors ₹5,00,000 · 03 deposited ₹10,00,000 into bank · 05 purchased machinery ₹6,00,000, paid ₹4,00,000 cash and balance by cheque · 06 bought goods from Nisha & Co. ₹7,00,000 subject to 10% trade discount · 08 sold goods to Rohit Traders ₹4,00,000; received ₹3,50,000 immediately by cheque and allowed ₹20,000 cash discount · 10 exchanged old furniture (book value ₹1,20,000) for new worth ₹1,50,000, paying the difference in cash · 12 spent ₹50,000 on publicity and distributed goods costing ₹25,000 as free samples · 15 Mr. Ajay (debtor ₹1,00,000) insolvent, only 40% recovered · 18 paid salaries ₹80,000 and rent ₹40,000 in cash · 22 paid Nisha & Co. the amount due and settled the account.
CO-2 · BL Understand · QP pp. 1–2
Ten entries, one mark each. New traps compared with the Final: an opening entry with capital as the balancing figure, a part-settled sale, an asset exchange, and insolvency.
| Cash A/c | Dr. | 20,00,000 | |
| Stock A/c | Dr. | 8,00,000 | |
| Furniture A/c | Dr. | 5,00,000 | |
| To Creditors A/c | 5,00,000 | ||
| To Capital A/c | 28,00,000 |
| Bank A/c | Dr. | 10,00,000 | |
| To Cash A/c | 10,00,000 |
| Machinery A/c | Dr. | 6,00,000 | |
| To Cash A/c | 4,00,000 | ||
| To Bank A/c | 2,00,000 |
| Purchases A/c | Dr. | 6,30,000 | |
| To Nisha & Co. A/c | 6,30,000 |
| Bank A/c | Dr. | 3,50,000 | |
| Discount Allowed A/c | Dr. | 20,000 | |
| Rohit Traders A/c | Dr. | 30,000 | |
| To Sales A/c | 4,00,000 |
| Furniture (New) A/c | Dr. | 1,50,000 | |
| To Furniture (Old) A/c | 1,20,000 | ||
| To Cash A/c | 30,000 |
| Advertisement A/c | Dr. | 75,000 | |
| To Cash A/c | 50,000 | ||
| To Purchases A/c | 25,000 |
| Cash A/c | Dr. | 40,000 | |
| Bad Debts A/c | Dr. | 60,000 | |
| To Mr. Ajay A/c | 1,00,000 |
| Salaries A/c | Dr. | 80,000 | |
| Rent A/c | Dr. | 40,000 | |
| To Cash A/c | 1,20,000 |
| Nisha & Co. A/c | Dr. | 6,30,000 | |
| To Bank A/c | 6,30,000 |
Journal total: Dr ₹70,05,000 = Cr ₹70,05,000.
Revise → Insolvency, paise in the rupee · Discounts · Solve U2 · Journal
Re-Exam · Q3 — Final accounts with a gross LOSS (Mr. G. Gora) 10 marks · Unit 4
Prepare Trading, Profit and Loss Account and Balance Sheet. Trial balance 31 March 2025 (Dr / Cr): Capital – / 46,650 · Purchases and Sales 1,85,762 / 2,10,000 · Returns 4,250 / 3,120 · Sundry Debtors and Creditors 40,200 / 25,526 · Opening Stock 26,725 · Furniture 6,075 · Postage, Stationery and Insurance 3,226 · Rent, rates and Taxes 3,517 · Wages & Salaries 5,285 · Investments at cost 5,000 · Bills Receivable 5,000 · Cash 256 · total 2,85,296. Adjustments: (1) closing stock ₹5,685 (2) depreciate furniture by 20% (3) prepaid wages ₹120 (4) write off bad debts ₹250.
CO-2 · BL Apply · QP p. 2
Unpack the paired lines first. "Purchases and Sales 1,85,762 / 2,10,000" means Purchases is on the Dr side and Sales on the Cr side. "Returns 4,250 / 3,120": the Dr one is returns inward (sales returns), the Cr one is returns outward. Then Trading → P&L → Balance Sheet, each adjustment twice.
| Dr. Particulars | Inner | ₹ | Cr. Particulars | Inner | ₹ |
|---|---|---|---|---|---|
| To Opening Stock | 26,725 | By Sales | 2,10,000 | ||
| To Purchases | 1,85,762 | Less: Returns inward | 4,250 | 2,05,750 | |
| Less: Returns outward | 3,120 | 1,82,642 | By Closing Stock (adj. 1) | 5,685 | |
| To Wages & Salaries | 5,285 | By Gross Loss c/d | 3,097 | ||
| Less: Prepaid (adj. 3) | 120 | 5,165 | |||
| Total | 2,14,532 | Total | 2,14,532 | ||
| To Gross Loss b/d | 3,097 | By Net Loss (transferred to Capital) | 11,305 | ||
| To Depreciation on Furniture (20% × 6,075) (adj. 2) | 1,215 | ||||
| To Postage, Stationery & Insurance | 3,226 | ||||
| To Rent, Rates & Taxes | 3,517 | ||||
| To Bad Debts (adj. 4) | 250 | ||||
| Total | 11,305 | Total | 11,305 |
| Liabilities | Inner | ₹ | Assets | Inner | ₹ |
|---|---|---|---|---|---|
| Capital | 46,650 | Furniture | 6,075 | ||
| Less: Net Loss | 11,305 | 35,345 | Less: Depreciation | 1,215 | 4,860 |
| Sundry Creditors | 25,526 | Investments at cost | 5,000 | ||
| Sundry Debtors | 40,200 | ||||
| Less: Bad Debts | 250 | 39,950 | |||
| Bills Receivable | 5,000 | ||||
| Prepaid Wages | 120 | ||||
| Cash | 256 | ||||
| Closing Stock | 5,685 | ||||
| Total | 60,871 | Total | 60,871 |
The Trading A/c's debit side (₹2,14,532) exceeds its credit side (₹2,11,435), so the balancing figure goes on the credit side as a gross loss of ₹3,097. It is then carried to the debit of the P&L. The net loss reduces capital.
Revise → Unit 4 is Term End material. Related: depreciation presentation · prepaid · formats
Re-Exam · Q4 — Compare two companies on four ratios (Alpha vs Beta) 10 marks · Unit 7
Alpha Traders: Share Capital 2,50,000 · R&S 30,000 · 10% Debentures 80,000 · Term Loan 60,000 · Creditors 90,000 · Outstanding Expenses 20,000 ‖ Fixed Assets (Net) 2,00,000 · LT Investments 50,000 · Inventory 1,00,000 · Receivables 1,40,000 · Bills Receivable 20,000 · Cash & Bank 20,000 · Credit Sales 10,00,000 · Net Profit 1,50,000. Beta Manufacturing: Share Capital 3,00,000 · R&S 40,000 · LT Borrowings 1,00,000 · Bills Payable 70,000 · Creditors 1,10,000 · Provision for Tax 30,000 ‖ Fixed Assets (Net) 2,00,000 · Goodwill 1,60,000 · Inventory 1,20,000 · Receivables 1,00,000 · Prepaid 10,000 · Cash & Bank 60,000 · Credit Sales 14,00,000 · Net Profit 2,00,000. Compute (1) Quick Ratio (2) Net Profit Margin (3) Total Debt-Equity Ratio (4) Fixed Asset Turnover for both, with a brief comparative comment.
CO-4 · BL Analyse · QP pp. 2–3
Build CA, CL and equity for each company first. Read "Total" in Total Debt-Equity: it means every outside liability. Then one comparative line per ratio.
| Ratio | Alpha | Beta | Comment |
|---|---|---|---|
| Quick ratio = (CA − Inventory − Prepaid) ÷ CL | 1,80,000 ÷ 1,10,000 = 1.64 : 1 | 1,60,000 ÷ 2,10,000 = 0.76 : 1 | Alpha is liquid without its stock; Beta is not. |
| NP margin = NP ÷ Sales × 100 | 15.00% | 14.29% | Almost equal. Alpha is slightly better. |
| Total Debt ÷ Equity | 2,50,000 ÷ 2,80,000 = 0.89 : 1 | 3,10,000 ÷ 3,40,000 = 0.91 : 1 | Both balanced. Beta is marginally more geared. |
| FA turnover = Sales ÷ FA (net) | 5 times | 7 times | Beta uses its fixed assets harder. |
Verdict: Alpha is the safer business (liquidity), Beta the more efficient one (asset use). Profitability and gearing are nearly identical.
Revise → Quick liabilities · Long-term vs total debt · worked in Ratios · Solve
Re-Exam · Q5 — Prepare a trial balance, 20 balances (Shri Shakti Enterprises) 10 marks · Unit 2
Prepare a Trial Balance as on 31st March 2025: Stock 1 Apr 2024 1,02,600 · Purchases 3,00,000 · Capital 1,70,600 · Sales 4,20,000 · Cash at bank 1,35,000 · Carriage inward 18,000 · Return Inward 9,000 · Trade expenses 18,000 · Debtors 45,000 · Salaries 36,000 · Creditors 84,000 · Rent Received 9,000 · Discount Allowed 6,000 · Bills Payable 60,000 · Machinery 54,000 · Building 60,000 · Carriage Outward 15,000 · Return Outward 48,000 · Insurance Claim received 12,000 · Cash in hand 5,000.
CO-2 · BL Apply · QP p. 3
The same rule as Final Q5. The new items here: insurance claim received (a gain → Cr), rent received (income → Cr), and opening stock (Dr).
| # | Particulars | Debit ₹ | Credit ₹ | Why |
|---|---|---|---|---|
| 1 | Stock (1 Apr 2024) | 1,02,600 | Asset (opening stock) | |
| 2 | Purchases | 3,00,000 | Expense | |
| 3 | Capital | 1,70,600 | Owner's claim | |
| 4 | Sales | 4,20,000 | Income | |
| 5 | Cash at bank | 1,35,000 | Asset | |
| 6 | Carriage inward | 18,000 | Expense | |
| 7 | Return inward | 9,000 | Reduces sales, so debit | |
| 8 | Trade expenses | 18,000 | Expense | |
| 9 | Debtors | 45,000 | Asset | |
| 10 | Salaries | 36,000 | Expense | |
| 11 | Creditors | 84,000 | Liability | |
| 12 | Rent received | 9,000 | Income | |
| 13 | Discount allowed | 6,000 | Loss | |
| 14 | Bills payable | 60,000 | Liability | |
| 15 | Machinery | 54,000 | Asset | |
| 16 | Building | 60,000 | Asset | |
| 17 | Carriage outward | 15,000 | Expense | |
| 18 | Return outward | 48,000 | Reduces purchases, so credit | |
| 19 | Insurance claim received | 12,000 | Gain / income | |
| 20 | Cash in hand | 5,000 | Asset | |
| Total | 8,03,600 | 8,03,600 |
Revise → Unit 02 · Trial Balance · Solve U2 · Trial balances
Re-Exam · Q6(a) — Common size income statement (XYZ Ltd) 5 marks · Unit 8
Prepare a Common Size Income Statement of XYZ Ltd for the year ending 31st March 2025: Sales 16,000 · Less COGS: Raw materials consumed 7,800, Direct labour 750 · Gross Profit 7,450 · Less operating expenses 1,460 · Profit before interest and tax 5,990 · Less interest 1,440 · Net profit before tax 4,550 · Less income tax @ 50% 1,285 · Net profit after tax 3,265.
CO-4 · BL Analyse · QP p. 4
Every line ÷ net sales (16,000) × 100. Sales = 100%.
| Particulars | ₹ | % of sales |
|---|---|---|
| Sales | 16,000 | 100.00% |
| Raw materials consumed | 7,800 | 48.75% |
| Direct labour | 750 | 4.69% |
| Cost of goods sold | 8,550 | 53.44% |
| Gross profit | 7,450 | 46.56% |
| Operating expenses | 1,460 | 9.13% |
| PBIT | 5,990 | 37.44% |
| Interest | 1,440 | 9.00% |
| Net profit before tax | 4,550 | 28.44% |
| Income tax | 1,285 | 8.03% |
| Net profit after tax | 3,265 | 20.41% |
Reading: materials take nearly half of every sales rupee. The firm still keeps 20 paise of every rupee as net profit.
Revise → Unit 8 is Term End material. Compare with Final Q6(a), which is the balance-sheet version.
Re-Exam · Q6(b) — Cash flow from investing and financing (Soham Ltd) 5 marks · Unit 9
Prepare a Cash Flow Statement showing Investing and Financing Activities: 1. Acquired a patent for Rs. 40,000 cash · 2. Repaid Rs. 25,000 of a long-term bank loan · 3. Purchased long-term investment in bonds ₹35,000 cash · 4. Issued bonds payable Rs. 60,000 cash · 5. Sold land for Rs. 45,000 cash (original cost Rs. 30,000).
CO-3 · BL Apply · QP p. 4
Buying bonds (an investment) is investing. Issuing bonds (borrowing) is financing. Land goes in at the cash received.
| Particulars | ₹ | ₹ |
|---|---|---|
| B. Cash flow from investing activities | ||
| Acquisition of patent | (40,000) | |
| Purchase of long-term investment (bonds) | (35,000) | |
| Sale of land | 45,000 | |
| Net cash used in investing activities | (30,000) | |
| C. Cash flow from financing activities | ||
| Issue of bonds | 60,000 | |
| Repayment of long-term loan | (25,000) | |
| Net cash from financing activities | 35,000 |
The ₹15,000 gain on land (45,000 − 30,000) is not a separate cash flow. It is deducted in the operating section, which is not asked here.
Revise → Unit 9 is Term End material. See Final Q6(b) for the same format.
Re-Exam · Q7(a) — Short notes: Cost Concept · Materiality 5 marks · Unit 1
"Write a short note on: a. Accounting Cost Concept b. Materiality Concept."
CO-1 · BL Understand · QP p. 4
Definition → numerical example → importance, for each (2.5 marks).
a. Cost Concept
- Meaning: assets are recorded at their original (historical) cost, including all costs to make them usable, not at market value.
- Example: machinery bought for ₹5,00,000 stays at ₹5,00,000 in the books even if its market value rises to ₹6,50,000. Depreciation then reduces it from that cost.
- Importance: cost is objective and verifiable (backed by a voucher), so records are reliable and uniform.
b. Materiality Concept
- Meaning: only items significant enough to affect a user's decision need separate recording and disclosure. Trivial items can be merged or simply expensed.
- Example: a stapler or pens that last a few years are written off as stationery expense, not capitalised and depreciated.
- Importance: it saves effort and keeps statements readable without misleading anyone.
Revise → Unit 01 · Concepts & Conventions
Re-Exam · Q7(b) — Short notes: Stock Turnover Ratio · Debt-Equity Ratio 5 marks · Unit 7
"Write a short note on 1. Stock Turnover ratio 2. Debt to Equity Ratio."
CO-3 · BL Understand · QP p. 4
For each ratio: formula with unit → what it measures → what high and low mean. A one-line numerical illustration earns goodwill.
1. Stock Turnover Ratio
- = COGS ÷ Average inventory (times), where average = (opening + closing) ÷ 2.
- Measures how quickly stock is sold, i.e. the efficiency of inventory management. 365 ÷ STR gives the average holding period in days.
- High → fast-moving stock and efficient control. Low → overstocking, or slow or obsolete goods. COGS is used rather than sales because stock is valued at cost.
2. Debt-Equity Ratio
- = Long-term debt ÷ Shareholders' equity (x : 1), where equity = share capital + reserves − fictitious assets.
- Shows the mix of borrowed and owned funds, i.e. long-term solvency.
- Low → financially stable, with a wide safety margin for lenders. High → greater risk and fixed interest burden, but it can lift the owners' return when the firm earns more than the interest rate.
Revise → Stock turnover · Debt-equity