Kerala Plus Two Accountancy AFS Question Paper March 2021 with Answers

Reviewing Kerala Syllabus Plus Two Accountancy AFS Previous Year Question Papers and Answers Pdf March 2021 helps in understanding answer patterns.

Kerala Plus Two Accountancy AFS Previous Year Question Paper March 2021

Time: 2 Hours
Maximum Score: 60

Part – B
Analysis of Financial Statements

VII. Questions from 23 to 26 carry 1 score each. (4 × 1 = 4)

Question 23.
Debenture holders are:
(a) Owners of the company
(b) Creditors of the company
(c) Employees of the company
(d) Customers of the company
Answer:
(b) Creditors of the company

Question 24.
In a company’s Balance Sheet, Bills payable is shown under the head
(a) Current Liabilities
(b) Shareholders Fund
(c) Non-Current Liabilities
(d) Current Assets
Answer:
(a) Current Liabilities

Question 25.
The process of comparing various financial factors of a company over some time is known as
(a) Inter-firm comparison
(b) Ratio Analysis
(c) Intra-firm comparison
(d) Intra-industry comparison
Answer:
(c) Intra-firm comparison

Question 26.
Quick ratio is also known as
(a) Solvency Ratio
(b) Acid Test Ratio
(c) Working Capital Ratio
(d) Liquid Ratio
Answer:
(b) Acid Test Ratio

VIII. Questions from 27 to 29 carry 2 scores each. (3 × 2 = 6)

Question 27.
Write any two items that will appear under the head shareholder fund in a company’s Balance Sheet, as per Schedule III.
Answer:

• Share Capital
• Reserves and Surplus

Question 28.
A company issued 5,000 equity shares of Rs. 10 each with application money of Rs. 3. Application received for 6,000 shares. Excess apiplication money were refunded. Give Journal Entry for refund of excess application money.
Answer:

Question 29.
List any two objectives of Analysis of Financial Statements.
Answer:
Objectives of Analysis of Financial Statements
(a) To estimate the earning capacity of the firm.
(b) To estimate the financial position of the firm.

IX. Questions from 30 to 32 carry 3 scores each. (3 × 3 = 9)

Question 30.
Galaxy Ltd. purchased machinery costing Rs. 1,00,000 from Fair Deals Ltd. The company paid the price, by issue of equity shares of Rs.10 each at a premium of 25%. Pass necessary Journal Entries for above transactions in the books of Galaxy Ltd.
Answer:
Journal Entries in the book of Galaxy Ltd.

Question 31.
Fill the series with items taken from the bracket.
(Zero Coupon Bonds, Redeemable Debentures, Convertible Debenture)
(i) Debentures which are repayable on the expiry of a specified period ___________________
(ii) Debentures which are convertible into equity shares ___________________
(iii) Debentures do not carry a specific rate of interest ___________________
Answer:
(i) Redeemable debentures
(ii) Convertible debentures
(iii) Zero coupon bonds

Question 32.
List the 3 Objectives of Financial Statements.
Answer:
Objectives of Financial Statements:

• To provide information about the earning capacity of the business.
• To evaluate the effectiveness of management.
• To provide information about cash flows.
• To assist the users to make decisions.

X. Questions from 33 to 37 carry 4 scores each. (5 × 4 = 20)

Question 33.
Write any four uses of the share premium account.
Answer:

• To issue fully paid bonus shares to the Existing shareholders.
• To write off preliminary expenses of the company.
• To write off the expenses of, or commission paid on the issue of shares or debentures of the company.
• To pay the premium payable on the redemption of preference shares or debentures of the company.

Question 34.
Write a short note about any two of the following:
(i) Reserve Capital
(ii) Preference Share
(iii) Under Subscription
Answer:
(i) Reserve Capital: It is that portion of the uncalled capital which is kept in reserve and which will be called up only on the winding up of the company.
(ii) Preference Shares: These are shares with preferential right as to the payment of dividend and as to the repayment of capital at the time of winding up of the company.
(iii) Under Subscription: If the number of shares applied for is less than the number of shares offered to pthe ublic for issue, it is a case of under subscription.

Question 35.
List the main tools of Financial Statement Analysis and explain about one tool.
Answer:
Tools of Financial Statement Analysis

• Comparative statements
• Common size statements
• Trend analysis
• Ratio Analysis
• Cash flow Analysis

1. Comparative Statements:
Statements prepared in a form that reflect financial data for two or more periods or firms are known as comparative statements. It can be prepared for the balance sheet as well as the profit and loss account. Comparative statements have two parts:

• Comparative Statement of Profit or Loss
• Comparative Balance Sheet

Question 36.
From the following information, calculate inventory turnover ratio:
Revenue from operations – Rs. 1,00,000
Cost of revenue from operation – Rs. 80,000
Inventory at the beginning – Rs. 40,000
Inventory at the end – Rs. 30,000
Answer:
Inventory Turnover Ratio = \(\frac{Cost of revenue from operation}{Average Inventory}\)
Average Inventory = \(\frac{\text { Opening inventory }+ \text { Closing inventory }}{2}\)
= \(\frac{40000+30000}{2}\)
= 35,000
Inventory turn over ratio = \(\frac{80,000}{35,000}\) = 2.285 times

Question 37.
Classify the following into cash from Operating Activities, Investing Activities, Financing Activities.
(i) Cash payment to suppliers.
(ii) Cash proceedings from issue of debentures.
(iii) Cash proceedings from disposal of assets.
(iv) Salaries paid to employees.
Answer:

Operating Activities	Investing Activities	Financing Activities
1. Cash payment to suppliers	1. Cash proceedings from issue of debentures	1. Cash proceedings from disposal of assets
2. Salaries paid to employees

XI. Questions from 38 to 42 carry 5 scores each. (5 × 5 = 25)

Question 38.
Match the following:

A	B
A. Issue of shares above the face value.	1. Forfeiture of shares
B. Issue of shares below the face value.	2. Value
C. Cancellation of shares.	3. Reserve Capital.
D. Demand for payment.	4. Issue of shares at premium.
E. Uncalled capital.	5. Issue of shares at discount.

Answer:

A	B
Issue of shares above the face value.	Issue of shares at premium.
Issue of shares below the face value.	Issue of shares at discount.
Cancellation of Shares.	Forfeiture of Shares.
Demand for Payment.	Value
Uncalled Capital	Reserve Capital

Question 39.
Explain briefly the different classifications of Share Capital.
Answer:
Share capital of a company means the capital contributed by the issue of shares by a company.
Different kinds of share capital are the following.

• Authorised, Registered or Nominal Capital: It is the maximum amount of capital for which a company is authorised to issue shares. It is the maximum amount that can be raised by a company by issuing shares.
• Issued Capital: Issued capital is the amount of capital for which shares are issued by the company.
• Subscribed Capital: Subscribed capital is that part of issued capital for which shares are subscribed or taken by the public.
• Called-up Capital: It is that part of subscribed capital demanded by the company from the shareholders. That portion of subscribed capital which is not called (demanded) by the company is known as uncalled capital.
• Paid-up Capital: It is that portion of called-up capital which is actually paid by the share holders. The unpaid part of called-up capital is known as calls in arrears.
• Reserve Capital: That portion of uncalled capital, which is reserved by the company to be called only at the time of its winding up is termed as reserve capital. It is reserved to win confidence among the creditors.
• Unreserved Capital: It is that portion of uncalled capital which can be called by the company at any time.

Question 40.
The following information related to Star Ltd. for the year 2019 and 2020. Prepare Comparative Statement.

Particulars	2019	2020
Revenue from operations	1,60,000	2,00,000
Expenses	80,000	1,00,000
Other Income	20,000	10,000
Income tax	50%	50%

Answer:
Comparative Statement of Profit and Loss for the year ended 2019 and 2020

Question 41.
From the following information calculate:
(a) Current Ratio
(b) Quick Ratio
Total CurrentAssets – Rs. 35,000
Total Current Liabilities – Rs. 17,500
Inventories – Rs. 10,000
Answer:
(a) Current Ratio = \(\frac{Current Assets}{Current Liabilities}\)
= \(\frac{35,000}{17,500}\)
= 2 times or 2 : 1

(b) Quick Ratio = \(\frac{Quick Assets}{Current Liabilities}\)
Quick Assets = Current Assets – Inventory
= 35,000 – 10,000
= 25,000
Quick Ratio = \(\frac{25,000}{17,500}\)
= 1.43 times or 1.43 : 1

Question 42.
Write any five features of a Joint Stock Company.
Answer:
Features of Joint Stock Company

• Separate Legal Entity
• Limited Liability
• Perpetual Succession
• Common Seal
• Body Corporate
• Artificial Person

XII. Questions from 43 to 44 carry 8 scores each. (5 × 4 = 20)

Question 43.
Resmi Mills Ltd. invited application for 20,000 equity shares of Rs. 10 each, payable as
Rs. 4 per share on application
Rs. 3 per share on allotment
Rs. 2 per share on first call
Rs. 1 per share on second and final call
Applications were received for 25,000 equity shares. Excess applications were rejected. Company made all the calls and the money due was collected. Give Journal Entries in the books of the company.
Answer:
Journal Entries

Question 44.
Write the difference between Shares and Debentures.
Answer:

Shares	Debentures
1. Share is a part of owned capital.	1. Debenture is a part of loan or borrowed capital.
2. Dividend is paid on a share.	2. Interest is paid on debentures.
3. Shareholder is a proprietor.	3. Debenture holder is a creditor.
4. A share is unsecured.	4. Debentures are generally secured.
5. Shareholder enjoys voting right.	5. Debenture holder does not enjoy voting right.
6. Shareholder gets dividend only if there is a profit.	6. The debenture holder gets interest whether the company makes profit or not.