CUET UG Accountancy · Paper 1

20 MCQs · Partnership Accounts 8, Company Accounts 6, Analysis of Financial Statements 6

Partnership, company accounts and the analysis of financial statements, on the 2026 syllabus.

Tap an option to answer

Section 1 · Partnership Accounts

Q1Partnership Accounts › Dissolution of a FirmEasy
Asked in CBSE Class 12 board 2024
Aavya, Mitansh and Praveen were partners in a firm. On 31st March, 2023, the firm was dissolved. Creditors took over furniture of book value of ₹50,000 at ₹45,000 in part settlement of their amount of ₹60,000. The balance amount was paid to them through cheque. The amount paid through cheque will be:
Correct option D₹15,000
The creditors accept the furniture at its agreed value of ₹45,000, not its book value.
Their claim of ₹60,000 is reduced by ₹45,000.
Balance paid by cheque = 60,000 − 45,000 = ₹15,000.
The Fast Way
Book value is a decoy: only the agreed value settles the claim.
60,000 − 45,000 = 15,000 by cheque.
Q2Partnership Accounts › Partnership FundamentalsEasy
Assertion: In the absence of a partnership deed, partners are not entitled to any interest on their capitals.
Reason: In the absence of a partnership deed, interest on a partner's loan to the firm is allowed at 10% p.a.
Correct option CThe Assertion is true, but the Reason is false.
Without a deed, the Indian Partnership Act, 1932 applies.
The Act allows no interest on capital, so the Assertion is true.
The Act allows interest on a partner's loan at 6% p.a., not 10%, so the Reason is false.
The Fast Way
Recall the no-deed list: equal profits, no interest on capital, no salary, no interest on drawings, 6% on loans.
The Assertion matches the list; the Reason's 10% does not.
So the Assertion is true and the Reason is false.
Q3Partnership Accounts › GoodwillMedium
The profits of a firm for the last four years were:
Year Profit (₹)
2021-22 1,20,000
2022-23 1,50,000
2023-24 1,10,000
2024-25 1,80,000
The profit of 2022-23 is after charging an abnormal loss of ₹30,000 due to fire. Goodwill is to be valued at 3 years' purchase of the average profit of the last four years. The value of goodwill is:
Correct option A₹4,42,500
An abnormal loss will not recur, so it is added back: 2022-23 profit = 1,50,000 + 30,000 = 1,80,000.
Total adjusted profit = 1,20,000 + 1,80,000 + 1,10,000 + 1,80,000 = 5,90,000.
Average profit = 5,90,000 ÷ 4 = 1,47,500.
Goodwill = 1,47,500 × 3 = ₹4,42,500.
The Fast Way
Add the abnormal loss to the total, then multiply by $\frac{3}{4}$ in one step.
Total = 5,60,000 + 30,000 = 5,90,000.
5,90,000 × 3 ÷ 4 = 4,42,500.
Q4Partnership Accounts › Change in Profit-Sharing RatioEasy
P, Q and R were partners sharing profits and losses in the ratio 3 : 2 : 1. With effect from 1 April 2026, they decided to share future profits and losses in the ratio 2 : 2 : 1. Which of the following is correct?
Correct option BP sacrifices $\frac{1}{10}$ ; Q gains $\frac{1}{15}$ and R gains $\frac{1}{30}$
Sacrifice or gain = old share − new share.
P: $\frac{3}{6} - \frac{2}{5} = \frac{1}{10}$ (sacrifice).
Q: $\frac{2}{6} - \frac{2}{5} = -\frac{1}{15}$ (gain).
R: $\frac{1}{6} - \frac{1}{5} = -\frac{1}{30}$ (gain).
Check: $\frac{1}{15} + \frac{1}{30} = \frac{1}{10}$ , equal to P's sacrifice.
The Fast Way
Put both ratios over 30: old 15 : 10 : 5, new 12 : 12 : 6.
P falls by 3/30, Q rises by 2/30, R rises by 1/30.
So P sacrifices 1/10, Q gains 1/15 and R gains 1/30.
Q5Partnership Accounts › Admission of a PartnerMedium
Arun and Barun were partners sharing profits and losses in the ratio 3 : 2. They admitted Charan into partnership for 20% share. Charan was to bring proportionate capital and he brought ₹3,50,000 (including ₹50,000 for his share of goodwill) in the firm. If the adjusted capital of Arun after revaluation gain/loss, accumulated profits/losses and goodwill treatment was ₹8,40,000, what was Barun's capital after revaluation gain/loss, accumulated profits/losses and goodwill treatment?
Correct option B₹3,60,000
Charan's capital = 3,50,000 − 50,000 (goodwill) = ₹3,00,000 for a 20% share.
Total capital of the new firm = 3,00,000 × 100/20 = ₹15,00,000.
Arun and Barun together hold 80% = ₹12,00,000.
Barun = 12,00,000 − 8,40,000 = ₹3,60,000.
Trap: capitals need not be in the profit ratio, so 8,40,000 × 2/3 is wrong.
The Fast Way
Proportionate capital means the old partners together hold 4 times Charan's capital.
3,00,000 × 4 = 12,00,000 for Arun and Barun.
12,00,000 − 8,40,000 = 3,60,000.

Year	Profit (₹)
2021-22	1,20,000
2022-23	1,50,000
2023-24	1,10,000
2024-25	1,80,000

Q6Partnership Accounts › Retirement & Death of a PartnerEasy

Match List I with List II.

List I	List II
P. Amount due to a retiring partner, not paid immediately	1. Debited to Profit and Loss Suspense A/c
Q. Retiring partner's share of goodwill	2. Transferred to his Executor's A/c
R. Balance due to a deceased partner	3. Debited to continuing partners' capital accounts in gaining ratio
S. Deceased partner's share of profit from the start of the year till his death	4. Transferred to his Loan A/c

Choose the correct answer.

Correct option AP-4, Q-3, R-2, S-1

P: an unpaid retiring partner becomes a lender to the firm, so the amount goes to his Loan A/c (4).

Q: continuing partners who gain his share compensate him in their gaining ratio (3).

R: a deceased partner's dues are payable to his executors, so they go to the Executor's A/c (2).

S: profit till death is credited to him by debiting P&L Suspense A/c (1).

So P-4, Q-3, R-2, S-1.

The Fast Way

Anchor on the surest pair: profit till death goes through P&L Suspense, so S-1.

Goodwill of a retiring partner is borne by the gainers, so Q-3.

A retiring partner's unpaid dues become a Loan A/c and a dead partner's go to the Executor's A/c: P-4, R-2.

Q7Partnership Accounts › Partnership FundamentalsHard
On 1st July, 2024, A, B and C entered into partnership sharing profits and losses in the ratio 5 : 3 : 2. C was guaranteed that his share of profits will not be less than ₹60,000 p.a. Deficiency, if any, will be borne by A and B equally. For the year ended March 31, 2025, the firm incurred a loss of ₹1,25,000. Deficiency to be borne by A and B will be:
Correct option DA ₹35,000 and B ₹35,000
The firm ran only 9 months (1 July 2024 to 31 March 2025), so C's guarantee = 60,000 × 9/12 = ₹45,000.
C's share of the loss = 1,25,000 × 2/10 = ₹25,000 (debit).
Deficiency = 45,000 − (−25,000) = ₹70,000.
Borne equally: A ₹35,000 and B ₹35,000.
The Fast Way
Two traps to dodge: the guarantee is for 9 months, and a loss share widens the gap.
Gap = 45,000 + 25,000 = 70,000.
Split equally: 35,000 each.
Q8Partnership Accounts › Retirement & Death of a PartnerHard
Amit, Bina and Chetan were partners sharing profits in the ratio 2 : 2 : 1. Chetan died on 31 December 2025. The firm closes its books on 31 March every year. The following information is available:
Item ₹
Chetan's capital on 1 April 2025 2,00,000
Chetan's drawings till date of death 30,000
General Reserve in the books 1,50,000
Goodwill of the firm 3,00,000
Profit of the firm for 2024-25 2,40,000
Interest on capital is allowed at 6% p.a. His share of profit till the date of death is to be calculated on the basis of the profit of 2024-25. The amount payable to Chetan's executors is:
Correct option A₹3,05,000
Chetan's share is 1/5, and 1 April to 31 December is 9 months.
Share of General Reserve = 1,50,000 × 1/5 = 30,000; share of goodwill = 3,00,000 × 1/5 = 60,000.
Share of profit = 2,40,000 × 1/5 × 9/12 = 36,000; interest on capital = 2,00,000 × 6% × 9/12 = 9,000.
Amount = 2,00,000 + 30,000 + 60,000 + 36,000 + 9,000 − 30,000 = ₹3,05,000.
The Fast Way
Build the executor's credit in one line: capital + 1/5 of (reserve + goodwill) + 9 months' profit and interest − drawings.
1/5 of 4,50,000 = 90,000; profit 2,40,000 × 1/5 × 9/12 = 36,000; interest 2,00,000 × 6% × 9/12 = 9,000.
2,00,000 + 90,000 + 36,000 + 9,000 − 30,000 = 3,05,000.

Item	₹
Chetan's capital on 1 April 2025	2,00,000
Chetan's drawings till date of death	30,000
General Reserve in the books	1,50,000
Goodwill of the firm	3,00,000
Profit of the firm for 2024-25	2,40,000

Section 2 · Company Accounts

Q9Company Accounts › Issue of SharesEasy
Asked in CBSE Class 12 board 2024
Reserve capital is that part of ______ capital which cannot be called except at the time of winding up of the company.
Correct option CUncalled
A company may resolve that a part of its uncalled capital will be called only if the company is wound up.
That part is reserve capital, so it is a part of uncalled capital.
The Fast Way
Reserve capital is money not yet asked for, saved for winding up.
Money not yet asked for is uncalled capital.
Q10Company Accounts › Issue of DebenturesMedium
On 1 July 2025, Kiran Ltd. issued 5,000, 9% Debentures of ₹100 each at par. Interest is payable on 31 March every year. The interest on debentures for the year ended 31 March 2026 is:
Correct option A₹33,750
Face value of debentures = 5,000 × 100 = ₹5,00,000.
Interest is charged on the face value, from the date of issue: 1 July 2025 to 31 March 2026 is 9 months.
Interest = 5,00,000 × 9% × 9/12 = ₹33,750.
The Fast Way
Interest runs only from the issue date: July to March is 9 months.
A full year is 45,000; 9/12 of it is 33,750.
Q11Company Accounts › Forfeiture & Reissue of SharesMedium
Pali Limited offered 2,00,000 shares of ₹10 each at a premium of ₹2 per share. Applications were received for 1,95,000 shares, which were duly allotted. The amount was payable as ₹3 on application (including ₹1 premium), ₹6 on allotment (including ₹1 premium) and the balance on call. Manoj, holding 6,000 shares, failed to pay the allotment money and his shares were immediately forfeited. Out of the forfeited shares, 4,000 shares were reissued @ ₹11 per share as fully paid up. The amount of Capital Reserve will be:
Correct option C₹8,000
Manoj paid only application money: ₹3, of which ₹1 is premium, so ₹2 per share went to share capital.
Share Forfeiture = 6,000 × 2 = ₹12,000, i.e. ₹2 per share.
Reissue at ₹11 for a ₹10 share is above par: no discount, and ₹1 per share goes to Securities Premium.
Capital Reserve = forfeited amount on reissued shares = 4,000 × 2 = ₹8,000.
The Fast Way
Two rules settle it: premium already received is never forfeited, and only reissued shares move to Capital Reserve.
That kills 18,000 (6,000 × ₹3 counts the premium) and 12,000 (counts the 2,000 shares not yet reissued).
Each share leaves ₹3 less ₹1 premium = ₹2 behind, and ₹11 is above par, so nothing is eaten up.
4,000 × ₹2 = ₹8,000.
Q12Company Accounts › Issue of SharesMedium
Sona Ltd. offered 1,00,000 equity shares of ₹10 each, payable ₹3 on application, ₹4 on allotment and ₹3 on first and final call. Applications were received for 1,50,000 shares, and shares were allotted pro rata to all applicants. Excess application money was adjusted towards allotment. Ravi had applied for 1,800 shares. The amount Ravi must pay on allotment is:
Correct option D₹3,000
Pro rata ratio = 1,50,000 : 1,00,000 = 3 : 2, so Ravi gets 1,800 × 2/3 = 1,200 shares.
Application money paid = 1,800 × 3 = 5,400; needed = 1,200 × 3 = 3,600; excess = 1,800.
Allotment due = 1,200 × 4 = 4,800.
Amount payable = 4,800 − 1,800 = ₹3,000.
The Fast Way
Excess application = unallotted shares × ₹3.
1,800 applied, 1,200 allotted: 600 × 3 = 1,800 excess.
Allotment 1,200 × 4 = 4,800, less 1,800 = 3,000.
Q13Company Accounts › Forfeiture & Reissue of SharesMedium
Consider the following statements about forfeiture and reissue of shares:
I. Share Forfeiture Account is credited with the amount already received towards share capital on the forfeited shares.
II. Forfeited shares may be reissued at a discount, but the discount cannot exceed the amount forfeited on those shares.
III. The gain on reissue of forfeited shares is transferred to Capital Reserve.
IV. Securities Premium already received on the forfeited shares is debited to Securities Premium Account at the time of forfeiture.
Which of the statements are correct?
Correct option BI, II and III only
I is correct: only the amount received towards share capital is forfeited.
II is correct: the discount on reissue is limited to the amount forfeited.
III is correct: the forfeited amount left over on reissued shares is a capital profit, transferred to Capital Reserve.
IV is wrong: premium already received is not reversed; Securities Premium is debited only when the premium is still unpaid.
The Fast Way
Test the rule people misremember: premium already received is never reversed.
That kills IV, and I, II and III are the standard forfeiture rules.
So I, II and III only.
Q14Company Accounts › Issue of DebenturesMedium
Moon Ltd. issued 40,000, 10% Debentures of ₹100 each at a certain rate of discount, and they were to be redeemed at 20% premium. The existing balance of Securities Premium before issuing these debentures was ₹12,00,000 and after writing off the loss on issue of debentures, the balance in Securities Premium was ₹2,00,000. At what rate of discount were these debentures issued?
Correct option B5%
Loss written off from Securities Premium = 12,00,000 − 2,00,000 = ₹10,00,000.
Loss per debenture = 10,00,000 ÷ 40,000 = ₹25.
Loss per debenture = discount + premium on redemption, so discount = 25 − 20 = ₹5 on ₹100, i.e. 5%.
The Fast Way
Work per ₹100 debenture.
Loss = 10,00,000 ÷ 40,000 = ₹25, and ₹20 of it is the redemption premium.
Discount = ₹5, i.e. 5%.

Section 3 · Analysis of Financial Statements

Q15Financial Statement Analysis › Comparative & Common-Size StatementsEasy
When an analyst analyses the financial statements of an enterprise over a number of years, the analysis is called ______ analysis.
Correct option CHorizontal
Comparing the same items across several years shows the trend over time.
This is horizontal (dynamic) analysis; comparative statements are its tool.
Vertical analysis studies one year's statement against a base item.
The Fast Way
Many years side by side = across the page = horizontal.
One year against a base total = vertical.
Q16Financial Statement Analysis › Cash Flow StatementEasy
For a manufacturing company, which of the following is a cash flow from investing activities?
Correct option APurchase of patents
Investing activities are the purchase and sale of long-term assets and investments.
Patents are a long-term intangible asset, so their purchase is an investing outflow.
Interest paid on debentures and issue of shares are financing; payment to suppliers is operating.
The Fast Way
Investing means buying or selling long-term assets.
Patents are the only long-term asset in the list.
So purchase of patents is the investing flow.
Q17Financial Statement Analysis › Accounting RatiosMedium
The Inventory Turnover Ratio of a company was 5 times. The firm had Revenue from Operations of ₹5,00,000 and Gross Profit was 25% of Cost of Revenue from Operations. Determine the amount of Opening Inventory if Closing Inventory was ₹60,000.
Correct option C₹1,00,000
Gross profit is 25% on cost, so revenue = 125% of cost.
Cost of revenue from operations = 5,00,000 × 100/125 = ₹4,00,000.
Average inventory = 4,00,000 ÷ 5 = ₹80,000.
Opening inventory = 2 × 80,000 − 60,000 = ₹1,00,000.
The Fast Way
Mirror trick: the average sits midway, so opening is as far above it as closing is below.
A 1/4 markup on cost is a 1/5 margin on sales, so COGS = 4/5 of 5,00,000 = 4,00,000; divide by 5 for an average of 80,000.
Closing is 20,000 under that, so opening is 20,000 over: ₹1,00,000, the only option above 80,000.

Q18Financial Statement Analysis › Cash Flow StatementMedium

From the following information, calculate Cash Flow from Operating Activities:

Particulars	₹
Net profit before tax	5,00,000
Depreciation	60,000
Loss on sale of machinery	10,000
Increase in trade receivables	40,000
Decrease in inventories	25,000
Decrease in trade payables	15,000
Income tax paid	1,20,000

Correct option D₹4,20,000

Operating profit before working capital changes = 5,00,000 + 60,000 (depreciation) + 10,000 (loss on sale) = 5,70,000.

Working capital: − 40,000 (receivables up) + 25,000 (inventories down) − 15,000 (payables down) = − 30,000.

Cash generated from operations = 5,40,000.

Less income tax paid 1,20,000: Cash flow from operating activities = ₹4,20,000.

The Fast Way

Net all adjustments first: +60,000 + 10,000 − 40,000 + 25,000 − 15,000 = +40,000.

5,00,000 + 40,000 = 5,40,000 before tax.

Less tax paid 1,20,000 = 4,20,000.

Q19Financial Statement Analysis › Accounting RatiosEasy
From the following information, calculate the Debt-Equity Ratio:
Particulars ₹
Equity share capital 5,00,000
Reserves and surplus 1,00,000
10% Debentures 3,00,000
Long-term loan from bank 1,50,000
Current liabilities 1,00,000
Correct option B0.75 : 1
Debt means long-term borrowings only: 3,00,000 + 1,50,000 = ₹4,50,000.
Equity means shareholders' funds: 5,00,000 + 1,00,000 = ₹6,00,000.
Debt-Equity Ratio = 4,50,000 ÷ 6,00,000 = 0.75 : 1.
Current liabilities are not part of debt.
The Fast Way
Debt = long-term only; equity = capital + reserves.
4,50,000 : 6,00,000 = 3 : 4.
So 0.75 : 1.
Q20Financial Statement Analysis › Company Financial StatementsMedium
A company had the following balances in its books of accounts:
Item 31 March 2025 (₹) 31 March 2024 (₹)
Raw Material 40,000 30,000
Work in Progress 1,00,000 1,40,000
Finished Goods 70,000 1,00,000
Stock in Trade 2,00,000 1,20,000
Determine the amount of Change in Inventories to be shown in the Statement of Profit and Loss.
Correct option C₹(10,000)
Changes in inventories covers only finished goods, work in progress and stock in trade; raw material goes into cost of materials consumed.
Opening = 1,40,000 + 1,00,000 + 1,20,000 = 3,60,000.
Closing = 1,00,000 + 70,000 + 2,00,000 = 3,70,000.
Change = opening − closing = 3,60,000 − 3,70,000 = ₹(10,000), a negative figure that reduces expenses.
The Fast Way
Drop raw material first, then take opening minus closing.
Net movement: WIP −40,000, FG −30,000, stock in trade +80,000, so closing is 10,000 higher.
Inventories rose, so the change is shown as (10,000).

Particulars	₹
Equity share capital	5,00,000
Reserves and surplus	1,00,000
10% Debentures	3,00,000
Long-term loan from bank	1,50,000
Current liabilities	1,00,000

Item	31 March 2025 (₹)	31 March 2024 (₹)
Raw Material	40,000	30,000
Work in Progress	1,00,000	1,40,000
Finished Goods	70,000	1,00,000
Stock in Trade	2,00,000	1,20,000