Topics: Balance sheet, Inventory, Asset Pages: 27 (1775 words) Published: February 26, 2014
(Three hours)
(Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.)
---------------------------------------------------------------------------------------------------------------Section A - Answer Question 1 (compulsory) from Part I and any other four questions from Part II.

Section B and Section C – Answer two questions from either section B or Section C. The intended marks for questions or parts of questions are given in brackets [ ]. Transactions should be recorded in the answer book.

All calculations should be shown clearly.
All working, including rough work, should be done on the same sheet as, and adjacent to, the rest of the answer.

PART I (20 Marks)
Answer all questions.
Question 1

[10 × 2]

Answer each of the following questions briefly:

Define joint venture.
State the provisions of the Partnership Act, 1932, in the absence of a Partnership Deed regarding (a) Interest on Partner’s Drawing (b) Interest on advances made by a partner to the firm other than capital.

(iii) State the complete accounting treatment of hidden goodwill at the time of admission of a partner.
(iv) Why are assets revalued and liabilities reassessed when there is a change in profit sharing ratio amongst the partners?
State two differences between dissolution of partnership and dissolution of firm. (vi) Why is a memorandum balance sheet prepared at the time of dissolution of a partnership firm?
(vii) State two similarities between calls in arrear account and calls in advance account.
(viii) What is the accounting treatment when shares are issued to promoters for consideration other than cash?
(ix) Differentiate between Joint Venture account and JV with …… account. (x)
Mention the name and explain the part of capital of a company which is called up only on its winding up.
ISC Specimen Question Paper 2014

PART II (40 Marks)
Answer any four questions.
Question 2


Brian and Derek entered into a joint venture agreement sharing profits and losses equally. Brian purchased 10,000 litres of oil @ ` 40 per litre and incurred freight and insurance amounting to `10,000. The goods were sent to Derek to be sold in the market. Derek incurred `5,000 on duty and `3,000 on godown rent. During transit, 100 litres were stolen against which Brian received an insurance claim of `3000. Derek took delivery of the remaining consignment and sold 7,000 litres @ ` 50 per litre. Finally, Derek took over the closing stock for business use. Assume a normal loss of 10 litres due to leakage and evaporation. You are required to prepare the Joint Venture Account and Derek’s account in the books of Brian assuming both coventurers maintain all accounts. Note: All calculations are to be made to the nearest rupee.

Question 3


The capital accounts of Adam and Batty stood at ` 40,000 and ` 30,000 respectively after the necessary adjustments in respect of the drawings and the net profit for the year ended 31st December 2011. It was subsequently ascertained that interest on capital and on drawings @ 5% per annum were not taken into account in arriving at the divisible profits for the year.

The drawings of the partners had been: Adam – ` 1,200 drawn at the end of each quarter and Batty – `1,800 drawn at the end of each half year.
The net profit for the year amounted to ` 20,000. The partners share profits and losses in the ratio of 3:2.
You are required to pass the necessary journal entries to rectify the lapse in accounting and also prepare the adjusted capital accounts of the partner.

ISC Specimen Question Paper 2014

Question 4


Following is the Balance Sheet of John and Jimmy as on 31 December 2010: Liabilities





John’s capital

50,000 Goodwill

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