Page 195 - AAAXII

Model Test Papers M.185

Answers

PART A
1. Prize Fund represents an amount received as specific donation and accumulation of
income from Prize Fund Investment. It is used for meeting prize expenses.
Or
It being a specific donation, is accounted as Capital receipt and shown in the liabilities
side of the Balance Sheet.
2. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
General Reserve A/c ...Dr. 20,000
To Workmen Compensation Reserve A/c 5,000
To X’s Capital A/c 7,500
To Y’s Capital A/c 7,500
(Being 25% of General Reserve appropriated towards Workmen Compensation
Reserve and balance transferred to Old Partners in their old ratio, i.e., 1 : 1)

3. If the amount due to the Retiring Partner or Legal Heir of the Deceased Partner
is not paid, the Retiring Partner or Legal Heir of a Deceased Partner at his option,
is entitled to receive either interest @ 6% p.a. on the balance amount or share in the
profit earned by using the amount due to him, till the amount is paid (Section 37 of
Indian Partnership Act, 1932).
Or
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Debtor’s A/c ...Dr. 10,000
To Bank A/c 10,000
(Being the dishonoured discounted bill accounted)

4. Revaluation Account is prepared:
(a) to determine the gain (Profit) or Loss on Revaluation of Assets and Reassessment
of Liabilities.
(b) to record the effect of Revaluation of Assets and Reassessment of liabilities so as
to show the Assets and Liabilities at their revalued values.
5. Employees Stock Option Plan is a scheme under which a company grants options to its
employee directors and employees to apply for shares at a price that is less than
its fair market price.
Or
When a company purchases assets and makes payment to the vendor not in cash but
by issuing debentures, it is termed as Issue of Debentures as Purchase Consideration.