Super 20 for Class 12 Tamil Nadu Board 2022 Commerce Stream

44(a) What are the rights of consumers? As a consumer, everyone should know the basic rights as well as about the counts and procedures to be followed. The rights of consumers as per Consumer Protection Act are given below: (i) Right to Protection of Health and Right of Safety: There may be products that cause physical danger to consumers’ health, lives and property. The health hazards which are likely to arise have to be eradicated or reduced altogether. (ii) Right to be Informed: Consumers should be given all the relevant facts about the products. The manufacturer and the dealer should disclose all the material facts relating to the product. (iii) Right to choose: Consumer satisfaction can be increased by giving the consumer the widest choice. From the widest range of products in quality and brand as well as price, the consumer can choose the goods. (iv) Right to be Heard: Consumers have every right to ventilate and register the dissatisfaction, disagreements and get the complaint heard and aired. (v) Right to Seek Redressal: The aggrieved party is to be granted compensation within a reasonable time. (vi) Right to Consumer Education: The consumer has a right to acquire knowledge and stay well-informed all through his life. [OR] (b) Explain the advantages and disadvantages of liberalization. Liberalization means relaxation of various government restrictions in the areas of social and economic policies of the country. Advantages of Liberalization: (i) Increase in foreign investment: If a country liberalizes its trade, it will make the country more attractive for inward investment. (ii) Increase the foreign exchange reserve: Relaxation in the regulations covering foreign investment and foreign exchange has paved way for easy access to foreign capital. (iii) Increase in consumption: Liberalization increases the number of goods available for consumption within a country Disadvantages of Liberalization: (i) Increase in unemployment: Due to liberalization some industries grow, some decline. Therefore, there may be unemployment from certain industries closing. (ii) Increased dependence on foreign nations: Trade liberalization means firms will face greater competition from abroad. (iii) Unbalanced development: Trade liberalization may be damaging for developing economies which cannot compete against free trade. 45(a) Mention the presumptions of Negotiable Instruments. Presumptions of Negotiable Instrument: (i) Every negotiable instrument is presumed to have been drawn and accepted for consideration. (ii) Every negotiable instrument bearing, a date is presumed to have been made or drawn on such a date. C-10    Commerce – XII

(iii) It is presumed to have been accepted within a reasonable time after the date and before its maturity. (iv) The transfer of a negotiable instrument is presumed to have been made before maturity. (v) When a negotiable instrument has been lost, it is presumed to have been duly stamped. (vi) The holder of a negotiable instrument is presumed to be a holder in due course. [OR] (b) Explain the various functions of management. Main Functions: (i) Planning:- Planning is the primary function of management. Planning is a constructive reviewing of future needs so that present actions can be adjusted in view of the established goal. (ii) Organising:- Organising is the process of establishing harmonious relationship among the members of an organisation and the creation of network of relationship among them. (iii) Staffing:- Staffing function comprises the activities of selection and placement of competent personnel. (iv) Directing:- Directing denotes motivating, leading, guiding and communicating with subordinates on an ongoing basis in order to accomplish pre-set goals. (v) Controlling:- Controlling is performed to evaluate the performance of employees and deciding increments and promotion decisions. (vi) Co-ordination:- Co-ordination is the synchronization of the actions of all individuals, working in the enterprise in different capacities. (vii) Motivating:- The goals are achieved with the help of motivation. Motivation includes increasing the speed of performance of a work and developing a willingness on the part of workers. 46(a) Explain any five Government Entrepreneurial schemes. To support and strengthen the Start-up culture in India, the Government has launched various schemes. They are as follows: (i) The Modified Special Incentive Package Scheme (M-SIPS): The M-SIPS scheme provides capital subsidy of 20% in SEZ and 25% subsidy in non-SEZ for business units engaged in manufacturing of electronic goods. (ii) New Gen Innovation and Entrepreneurship Development Centre (New Gen IEDC): It provides a limited one time non-recurring financial assistance to entrepreneurship up to Rs.25 lakhs in the fields of chemicals, technology, health care, defence, etc. (iii) Dairy Entrepreneurship Development Scheme: Dairy Entrepreneurship Development Scheme aims at helping entrepreneurs in the fields of agriculture, pets and animals and dairy farms. (iv) Single Point Registration Scheme: A great scheme for micro and small enterprises which provides an exemption from payment of Earnest Money Deposit. (v) Atal Incubation Centres (AIC): The Government of India has set up the Atal Innovation Mission (AIM) at NITI Aayog in 2016 with the over arching purpose of promoting a culture of innovation and entrepreneurship in the country. [OR] Sample Paper - 1    C-11

(b) Who are the KMP? Companies Act, 2013 has introduced many new concepts and Key Managerial Personnel (KMP) is one of them. KMP covers the traditional roles of managing director and whole time director and also includes some functional heads. Key Managerial Personnel: The definition of the term Key Managerial Personnel is contained in Section 2(51) of the Companies Act, 2013. This Section states: (i) The Chief Executive Officer (ii) The Managing Director or Manager (iii) The Company Secretary (iv) The Whole-time Director (v) The Chief Financial Officer (vi) Such other officer as may be prescribed 47(a) Write the difference between Debentures and Shares. S.No. Debentures Shares 1. Debentures mean a loan. Shares are part of the capital of a company. 2. Debenture holder gets fixed rate of Shareholders gets dividends with a Interest. varying rate. 3. Debentures generally have a charge on Shares do not carry any such charge. the assets of the company. 4. Debentures can be issued at a discount. Shares cannot be issued at a discount. 5. Debenture holders do not have any Shareholders enjoy voting right. voting right. 6. Interest on debentures is payable even Dividend is payable only if there is profit. if there are no profits. 7. Interest paid on debenture is a business Dividend is not a business expense. expense. [OR] (b) Explain the role of business in consumer protection. Business enterprises should do the following towards protecting consumers. (i) Avoidance of Price Hike: Business enterprises should desist from hiking the price in the context of acute shortage of goods. (ii) Avoidance of Hoarding: Business enterprises should not indulge in hoarding and black marketing to earn maximum profit. (iii) Guarantees for Good Quality: Business enterprises should not give false warranty for the products. (iv) Product Information: Business enterprises should disclose correct, complete and accurate information about the product viz. size, quality, quantity, weight etc. (v) Truth in advertising: Business enterprises should not convey false, untrue, bogus information relating to the product through the advertisement. (vi) Money Refund Guarantee: Where the product becomes defective, business enterprises should replace it with new one or refund the purchase price. C-12    Commerce – XII

Time: 3 Hours 4SAMPLE PAPER – Maximum Marks: 90 (UNSOLVED) PART - I Answer all the questions. Choose the correct answer. [20×1 = 20] 1. Primary market is also called as .................... . (a) Secondary market (b) Money market (c) New Issue Market (d) Indirect Market 2. ............................ is included in every managerial function. (a) Co-ordinating (b) Controlling (c) Staffing (d) Organising 3. Dividing the work into small tasks is known as ................... . (a) discipline (b) unity (c) division of work (d) equity 4. Planning is a ................................ function. (a) selective (b) pervasive (c) both (a) and (b) (d) none of the above 5. Selection is usually considered as a .................. process. (a) positive (b) negative (c) natural (d) none of these 6. Stock Exchange Market is also called ......................... . (a) Spot Market (b) Local Market (c) Security Market (d) National Market 7. .................. of every year is declared as a Consumer Protection Day to educate the public about their rights and responsibilities. (a) August 15 (b) April 15 (c) March 15 (d) September 15 8. Which one of the market deals in the purchase and sale of shares and debentures? (a) Stock Exchange Market (b) Manufactured Goods Market (c) Local market (d) Family market 9. Who is the father of Consumer Movement? (a) Mahatma Gandhi (b) Mr. John F Kennedy (c) Ralph Nader (d) Jawaharlal Nehru 10. Which of the below is not a good? (a) Stocks (b) Dividend due (c) Crops (d) Water 11. The final aim of modern marketing is .............................. . (a) maximum profit (b) minimum profit (c) consumer satisfaction (d) service to the society 12. Which of the below is a commercial function? (a) Accounting (b) Co-ordination (c) Discovery of idea (d) Planning 13. Which of the below is a factor of production? (a) Land (b) Labour (c) Entrepreneurship (d) All of the above 14. The shares which are offered to the eixsting shareholders at reduced price is known as ....... . (a) Bonus Share (b) Equity Share (c) Right Share (d) Preference Share C-34

15. The father of Modern Management is ........................ . (a) F.W. Tylor (b) Henry Fayol (c) Peter F. Drucker (d) Louis A Allen 16. Stock exchanges deal in ..................... . (a) Goods (b) Services (c) Financial securities (d) Country’s currency 17. Recruitment acts as a link between ...................... and .......................... . (a) goods provider, goods seeker (b) product, market (c) finance, securities (d) job provider, job seeker 18. A special resolution is required to ................ . (a) redeem the debentures (b) declare dividend (c) appoint directors (d) appoint auditor 19. Sale of Goods Act was passed in the year ............. . (a) 1940 (b) 1997 (c) 1930 (d) 1960 20. ......................... is a global and universal concept. (a) Management (b) Process (c) Art (d) Science PART - II [7×2 = 14] Answer any seven questions. Question No. 25 is compulsory. 21. What do you mean by span of management? 22. How is price determined in a capital market? 23. What do you mean by Auctioning? 24. What is meant by meeting? 25. Mention two characteristics of Human Resource. 26. What do you understand about bio data? 27. What is meant by spot market? 28. What are the four stages of formation of a company? 29. Write a short note on Consumer Protection Act, 1986. 30. What do you understand about “Right to Safety”? PART - III [7×3 = 21] Answer any seven in which question No. 40 is compulsory. 31. List out the main functions of management. 32. What are the features of Treasury Bills? 33. Define the term Human Resource Management. 34. What do you mean by statutory meeting? 35. Which are the three constituent elements of business? 36. What do you mean by Liberalization? 37. Define Entrepreneur. 38. State the minimum number of Directors for a private company. 39. State the meaning of Authority. 40. When are alternative directors appointed? Sample Paper - 4    C-35

PART - IV [7×5 = 35] Answer all the following questions. 4 1 (a) State the Criminal liabilities of Directors. [OR] (b) Explain the management process in detail. 42 (a) What are the functions of financial markets? [OR] (b) Explain the various functions of management. 43 (a) What are the responsibilities of consumers? [OR] (b) Discuss the characteristics of a Capital Market. 44 (a) Differentiate between the money market and capital market. [OR] (b) Explain the impact of LPG on Indian Economy. 4 5 (a) Describe the significance of external source of recruitment. [OR] (b) Explain in detail the various functions of an entrepreneur. 46 (a) Mention the presumptions of Negotiable Instrument. [OR] (b) Explain any five Government Entrepreneurial schemes. 4 7 (a) Who are the KMP? [OR] (b) Explain the role of consumers in Consumer Protection. C-36    Commerce – XII

ONE-MARK & TWO-MARK ANSWERS FOR UNSOLVED SAMPLE PAPERS SAMPLE PAPER - 4 24. A company meeting must be convened and held in perfect compliance with the various PART - I provisions of the Act and the rules framed 1. (c) New Issue Market thereunder. 2. (a) Co-ordinating 3. (c) division of work 25. The unique, peculiar and distinctive features 4. (b) pervasive of human resources are as under: 5. (b) negative 6. (c) Security Market (i) Human resource is the only factor of 7. (c) March 15 production that lives. 8. (a) Stock Exchange Market 9. (c) Ralph Nader (ii) Human resource created all other 10. (b) Dividend due resources. 11. (c) consumer satisfaction 12. (a) Accounting 26. Most of the Public sector undertakings 13. (d) All of the above Recruitment boards supply applications 14. (c) Right Share forms for selection of jobs. In this form, 15. (b) Henry Fayol the candidate fill the details about family 16. (c) Financial securities background, educational qualifications, 17. (d) job provider, job seeker experience, co-curricular activities. 18. (d) appoint auditor 19. (c) 1930 27. In Spot markets, goods are exchanged 20. (a) Management and physical delivery of goods take place immediately. PART - II 21. The Span of Management refers to the 28. Formation of a company has been divided into four stages, they are: number of subordinates who can be managed efficiently by a superior. Simply, the (i) Promotion (ii) Registration (iii) Capital manager having the group of subordinates Subscription (iv) Commencement of who report him directly is called as the span business. of management. 22. T he price of the securities is determined 29. The Central Government enacted a based on the demand and supply prevailing comprehensive law called the Consumer in the capital market for securities. Protection Act in 1986. This Act came into 23. A method of trading whereby merchants bid force with effect from 15.04.1987. This Act against one another and where the securities was further amended in 1993. The Act is are sold to the highest bidder is known as referred in short as ‘COPRA’. ‘auctioning’. 30. There may be few products that are more likely to cause physical danger to consumers’ health, lives and property. The health hazards which are likely to arise have to be eradicated or reduced altogether. In case of food items and drugs both life saving and life sustaining safety is to be guaranteed. C-55

ECONOMICS QUESTION PAPER DESIGN (Strictly based on Reduced Syllabus for 2022 Board Exams) Types of Questions Marks No. of Questions to be Total Marks Answered Objective type 1 20 20 Very short answers: 2 7 14 (Totally 10 questions will be given. Any one question should be answered compulsorily.) Short answers: 3 7 21 (Totally 10 questions will be given. Any one question should be answered compulsorily.) Essay type 57 35 Total 90 Internal Assessment 10 Total Marks 100 S.No. Weightage of Marks Weightage 1. 30% 2. Purpose 40% 3. Knowledge 20% 4. Understanding 10% Application Skill/Creativity D-1

1SAMPLE PAPER – Maximum Marks: 90 Time: 3 Hours (SOLVED) PART - I [20 × 1 = 20] Choose the correct answer. Answer all the questions. [Answers are in Bold] 1. The branches of the subject Economics is ................. . (a) Wealth and welfare (b) production and consumption (c) Demand and supply (d) micro and macro 2. .................... is another name for economics. (a) Political economy (b) Socialist economy (c) Capitalist economy (d) Planned economy 3. Income method is measured by summing up of all forms of ................. . (a) Revenue (b) Taxes (c) expenditure (d) Income 4. Match the following and choose the correct answer by using codes given below: Column I Column II A. Per Capita Income 1. Half of our National Income B. Purchasing power of Income 2. C + I + G + (X – M) C. Service Sector 3. Standard of Living D. Expenditure Method 4. National Income Code: A B C D (a) 1 2 3 4 (b) 4 3 1 2 (c) 2 1 3 4 (d) 3 4 1 2 5. According to classical theory, rate of interest is a reward for ................. . (a) Investment (b) Demand (c) Capital (d) Saving 6. Which of the following is not correctly matched: (a) Say’s law of Market - Classical theory of Employment (b) Adam Smith - Wealth of nations (c) Keynes - The General theory of Employment, Interest and Money (d) A.C. Pigou - French Economist 7. When investment is assumed autonomous the slope of the AD schedule is determined by the ............ . (a) marginal propensity to invest (b) disposable income (c) marginal propensity to consume (d) average propensity to consume 8. Which of the following is correctly matched: (a) J.M. Clark - Ceteris Paribus (b) J.M. Keynes - Psychological law of consumption (c) R.F. Khan - Accelerator model (d) Duesenberry - Laissez-faire D-3

9. The basic distinction between M1 and M2 is with regard to ................. . (a) post office deposits (b) time deposits of banks (c) saving deposits of banks (d) currency 10. Match the following and choose the correct answer by using codes given below: Column I Column II A. Falling prices 1. Black money B. Government securities 2. Business loss C. Bank rate 3. Open Market operation D. Unaccounted money 4. Credit control Code: A B C D (a) 1 2 3 4 (b) 2 3 4 1 (c) 3 4 1 2 (d) 4 1 2 3 11. Repo Rate means ................. . (a) Rate at which the Commercial Banks are willing to lend to RBI (b) Rate at which the RBI is willing to lend to commercial banks (c) Exchange rate of the foreign bank (d) Growth rate of the economy 12. Lowering the Bank rate off sets ................... tendencies. (d) Hyper inflationary (a) Deflationary (b) Inflationary (c) Stagflationary 13. Which of the following is a modern theory of international trade? (a) absolute cost (b) comparative cost (c) Factor endowment theory (d) none of these 14. The headquarters of ASEAN is ................. . (a) Jaharta (b) New Delhi (c) Colombo (d) Tokyo 15. Which of the following is correctly matched (a) Objectives of IMF - To promote textiles (b) Functions of IMF - Exchange stability (c) Facilities offered by IMF - Basic Debit Facility (d) Achievements of IMF - Country discipline and co-operation 16. .......... refers to Government spending incurred by central, state, local government of a country. (a) Public Finance (b) Public Expenditure (c) Public Revenue (d) Social Welfare 17. Which of the following is the anticipated effect of Global warming? (a) Rising sea levels (b) Changing precipitation (c) Expansion of deserts (d) All of the above 18. ................... the state is all powerful in preparation and implementation of the plan. (a) Centralized planning (b) Planning by direction (c) Indicative planning (d) Imperative planning D-4    Economics – XII

19. State whether the statements are true or false. (i) Economic development was redefined in terms of reduction of poverty, inequality and unemployment with in the context of a growing economy. (ii) New welfare oriented approach is “Redistribution with growth”. (a) Both (i) and (ii) are true (b) Both (i) and (ii) are false (c) (i) is true but (ii) is false (d) (i) is false but (ii) is true 20. Assertion (A): Ronald Fisher introduced the concept of Standard Deviation. Reason (R): Standard Deviation is one of the methods of Absolute measure of dispersion. (a) Both ‘A’ and ‘R’ are true and ‘R’ is the correct explanation to ‘A’ (b) Both ‘A’ and ‘R’ are true but ‘R’ is not the correct explanation to ‘A’ (c) ‘A’ is true but ‘R’ is false (d) ‘A’ is false but ‘R’ is true PART - II Answer any seven question in which Question No. 30 is compulsory. [7 × 2 = 14] 21. ‘Circular Flow of Income’ - Define. • The circular flow of income is a model of an economy showing connections between different sectors of an economy. • It shows flows of income, goods and services and factors of production between economic agents such as firms, households, government and nations. • The circular flow analysis is the basis of national accounts and macroeconomics. 22. Define GDP deflator. GDP deflator is an index of price changes of goods and services included in GDP. It is a price index which is calculated by dividing the nominal GDP in a given year by the real GDP for the same year and multiplying it by 100. GDP deflator = Nominal GDP × 100 Real GDP 23. Write the types of unemployment. Types of unemployment: • Cyclical Unemployment • Seasonal Unemployment • Frictional Unemployment • Educated Unemployment • Technical Unemployment • Structural Unemployment • Disguised Unemployment 24. Define “Autonomous consumption”. Autonomous Consumption: Autonomous consumption is the minimum level of consumption or spending that must take place even if a consumer has no disposable income, such as spending for basic necessities. Sample Paper - 1    D-5

25. Mention the functions of agriculture credit department. Functions of Agriculture Credit Department: (a) To maintain an expert staff to study all questions on agricultural credit. (b) To provide expert advice to Central and State Government, State Co-operative Banks and other banking activities. (c) To finance the rural sector through eligible institutions engaged in the business of agricultural credit and to co-ordinate their activities. 26. Define Commercial banks. Commercial bank refers to a bank, or a division of a large bank, which more specifically deals with deposit and loan services provided to corporations or large/middle - sized business as opposed to individual members of the public/small business. 27. When and where was SAARC Secretariat established? South Asian Association For Regional Co-Operation (SAARC): • The South Asian Association for Regional Co-operation (SAARC) is an organisation of South Asian nations, which was established on 8 December 1985 for the promotion of economic and social progress, cultural development within the South Asia region and also for friendship and co-operation with other developing countries. • The SAARC Group (SAARC) comprises of Bangaladesh, Bhutan, India, The Maldives, Nepal, Pakistan and Sri Lanka. • In April 2007, Afghanistan became its eighth member. 28. Specify any two affiliates of World Bank Group. India is a member of four of the five constituents of the World Bank Group. • International Development Association • International Finance Corporation 29. Define “Public debt”. “The debt is the form of promises by the Treasury to pay to the holders of these promises a principal sum and in most instances interest on the principal. Borrowing is resorted to in order to provide funds for financing a current deficit.” - J. Philip E. Taylor 30. Define Global warming. • Global warming is the current increase in temperature of the Earth’s surface (both land and water) as well as its atmosphere. Average temperatures around the world have risen by 0.75ºC (1.4ºF) over the last 100 years. About two thirds of this increase has occurred since 1975. Carbon dioxide, methane, Chlorofluoro Carbon, nitrous oxides are the green house gases warming the earth’s surface. So it is also called green house effect. The CO2 is the most important of the green house gases contributing to 50% of global warming. • Global warming adversely affects agriculture, horticulture and eco system. PART - III Answer any seven question in which Question No. 40 is compulsory. [7 × 3 = 21] 31. Describe Capitalistic Economy. Capitalistic Economy (Capitalism): • Capitalistic economy is also termed as a free economy (Laissez faire, in Latin) or market D-6    Economics – XII

economy where the role of the government is minimum and market determines the economic activities. • The means of production in a capitalistic economy are privately owned. • Manufacturers produce goods and services with profit motive. • The private individual has the freedom to undertake any occupation and develop any skill. • The USA, West Germany, Australia and Japan are the best examples for capitalistic economies. • However, they do undertake large social welfare measures to safeguard the downtrodden people from the market forces. 32. Indicate the demerits of socialism. Demerits of Socialism: • Red Tapism and Bureaucracy: As decision are taken by government agencies, approval of many officials and movement of files from one table to other takes time and leads to red tapism. • Absence of Incentive: The major limitation of socialism is that this system does not provide any incentive for efficiency. Therefore, productivity also suffers. • Limited Freedom of Choice: Consumers do not enjoy freedom of choice over the consumption of goods and services. • Concentration of Power: The State takes all major decisions. The private takes no initiative in making economic decisions. Hence, the State is more powerful and misuse of power can also take place. 33. Give short note on Expenditure method. The Expenditure Method (Outlay method): • The total expenditure incurred by the society in a particular year is added together. • To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on consumption as well as capital goods and net exports. 34. What do you mean by aggregate demand ? Mention its components. • The aggregate demand is the amount of money which entrepreneurs expect to get by selling the output produced by the number of labourers employed. • Therefore, it is the expected income or revenue from the sale of output at different levels of employment. • Aggregate demand has the following four components: 1. Consumption demand 2. Investment demand 3. Government expenditure and 4. Net Export (export – import) 35. Differentiate autonomous and induced investment. S.No. Autonomous Investment Induced Investment 1. Independent Planned 2. Income inelastic Income elastic 3. Welfare motive Profit Motive Sample Paper - 1    D-7

36. Explain the Trade cycle Depression. Depression: • During depression the level of economic activity becomes extremely low. • Firms incur losses and closure of business becomes a common feature and the ultimate result is unemployment. • Interest prices, profits and wages are low. • The agricultural class and wage earners would be worst hit. • Banking institutions will be reluctant to advance loans to businessmen. • Depression is the worst phase of the business cycle. • Extreme point of depression is called as “trough”, because it is a deep point in business cycle. • Any person fell down in deeps could not come out from that without other’s help. • Similarly, an economy fell down in trough could not come out from this without external help. • Keynes advocated that autonomous investment of the government alone can help the economy to come out from the depression. 37. Explain the Net Barter Terms of Trade. Net Barter Terms of Trade: This type was developed by Taussig in 1927.The ratio between the prices of exports and of imports is called the “net barter terms of trade”. It is named by Viner as the ‘commodity terms of trade’. It is expressed as: Tn= (Px / Pm) × 100 Where, Tn = Net Barter Terms of Trade Px = Index number of export prices Pm = Index number of import prices This is used to measure the gain from international trade. If ‘Tn’ is greater than 100, then it is a favourable terms of trade which will mean that for a rupee of export, more of imports can be received by a country. 38. What is Multilateral Agreement? • Multilateral trade agreement is a multi national legal or trade agreements between countries. It is an agreement between more than two countries but not many. • The various agreements implemented by the WTO such as TRIPS, TRIMS, GATS, AoA, MFA have been discussed. 39. Point out any three differences between direct tax and indirect tax. S.No. Direct Tax Indirect Tax 1. Progressive. Regressive. 2. Falls on the same person. Falls on different persons. 3. Cannot be shifted. Can be shifted. D-8    Economics – XII

40. Explain different types of air pollution. Types of Air pollution: • Indoor Air Pollution: It refers to toxic contaminants that we encounter in our daily lives in our homes, schools and workplaces. For example, cooking and heating with solid fuels on open fires or traditional stoves results in high levels of indoor air pollution. • Outdoor Air Pollution: It refers to ambient air. The common sources of outdoor air pollution are caused by combustion processes from motor vehicles, solid fuel burning and industry. PART - IV Answer all the questions. [7×5 = 35] 41(a) Compare the features of capitalism and socialism. Features of Capitalistic Economy: • Private Ownership of Property and Law of Inheritance: The basic feature of capitalism is that all resources namely, land, capital, machines, mines etc. are owned by private individuals. The owner has the right to own, keep, sell or use these resources according to his will. The property can be transferred to heirs after death. • Freedom of Choice and Enterprise: Each individual is free to carry out any occupation or trade at any place and produce any commodity. Similarly, consumers are free to buy any commodity as per their choice. • Profit Motive: Profit is the driving force behind all economic activities in a capitalistic economy. Each individual organization produce only those goods which ensure high profit. Advance technology, division of labour, and specialisation are followed. The golden rule for a producer under capitalism is ‘to maximize profit.’ • Free Competition: There is free competition in both product and factor market. The government or any authority cannot prevent firms from buying or selling in the market. There is competition between buyers and sellers. • Price Mechanism: Price mechanism is the heart of any capitalistic economy. All economic activities are regulated through price mechanism i.e., market forces of demand and supply. • Role of Government: As the price mechanism regulates economic activity, the government has a limited role in a capitalistic economy. The government provides basic services such as, defense, public health, education, etc. • Inequalities of Income: A capitalist society is divided into two classes – ‘haves’ that is those who own property and ‘have-nots’ who do not own property and work for their living. The outcome of this situation is that the rich become richer and poor become poorer. Here, economic inequality goes on increasing. Features of Socialism: • Public Ownership of Means of Production: All resources are owned by the government. It means that all the factors of production are nationalized and managed by the public authority. • Central Planning: Planning is an integral part of a socialistic economy. In this system, all decisions are undertaken by the central planning authority. • Maximum Social Benefit: Social welfare is the guiding principle behind all economic Sample Paper - 1    D-9

activities. Investments are planned in such a way that the benefits are distributed to the society at large. • Non-existence of Competition: Under the socialist economic system there is absence of competition in the market. The state has full control over production and distribution of goods and services. The consumers will have a limited choice. • Absence of Price Mechanism: The pricing system works under the control and regulation of the central planning authority. • Equality of Income: Another essential feature of socialism is the removal and reduction of economic inequalities. Under socialism private property and the law of inheritance do not exist. • Equality of Opportunity: Socialism provides equal opportunity for all through free health, education and professional training. • Classless Society: Under socialism, there is a classless society and so no class conflicts. In a true socialist society, everyone is equal as far as economic status is concerned. [OR] (b) Briefly explain circular flow of Income in a Three Sector Economy. Circular Flow of Income in a Three-Sector Economy: • In addition to household and firms, inclusion of the government sector makes this model Purchases of goods and Service a three-sector model. ₹ Taxes Govt Demand • The government levies taxes on households Purchases and firms, purchases goods and services Government Firms from firms, and receive factors of production Households from household sector. Incomes Social Taxes Transfers • On the other hand, the government also ₹ makes social transfers such as pension, relief, subsidies to the households. • Similarly, Government pays the firms for the purchases of goods and services. The Flow Chart illustrates three-sector economy model: • Under three sector model, national income (Y) is obtained by adding Consumption expenditure (C), Investment expenditure (I) and Government expenditure (G). • Therefore: Y = C + I + G 42(a) Critically explain Say’s law of market. Criticisms of Say’s Law: The following are the criticisms against Say’s law: • According to Keynes, supply does not create its demand. It is not applicable where demand does not increase as much as production increases. • Automatic adjustment process will not remove unemployment. Unemployment can be removed by increase in the rate of investment. • Money is not neutral. Individuals hold money for unforeseen contingencies while businessmen keep cash reserve for future activities. D-10    Economics – XII

• Say’s law is based on the proposition that supply creates its own demand and there is no over production. Keynes said that over production is possible. • Keynes regards full employment as a special case because there is under - employment in capitalist economies. • The need for state intervention arises in the case of general over production and mass unemployment. [OR] (b) Explain about aggregate supply with the help of diagram. • Aggregate supply function is an increasing function of the level of employment. • Aggregate supply refers to the value of total output of goods and services produced in an economy in a year. • In other words, aggregate supply is equal to the value of national product, i.e., national income. • Aggregate Supply = C + S + T + Rf = Aggregate income generated in the economy. • The following figure shows the shape of the two aggregate supply curves drawn for the assumption of fixed money wages and variable wages. AGGREGATE SUPPLY CURVE y Z1 • Z curve is linear where money wages Expected Proceeds remains fixed; Z1 curve is non - linear since wage rate increases with employment. • When full employment level of Nf is z reached it is impossible to increase output by employing more men. • So aggregate supply curve becomes inelastic (Vertical straight line). • The slope of the aggregate supply Employment curve depends on the relation between the employment and productivity. 0 Nf x • Based upon this relation, the aggregate supply curve can be expected to slope upwards. • In reality the aggregate supply curve will be like Z1. • Therefore, the aggregate supply depends on the relationship between price and wages. 43(a) Describe the Say’s Law of Market. • Say’s law of markets is the core of the classical theory of employment. • J.B.Say (1776 – 1832) was a French Economist and an industrialist. • He was influenced by the writings of Adam Smith and David Ricardo. • J.B. Say enunciated the proposition that “Supply creates its own demand”. • Hence there cannot be general over production or the problem of unemployment in the economy. Sample Paper - 1    D-11

• According to Say, “When goods are produced by firms in the economy, they pay reward to the factors of production. • The households after receiving rewards of the factors of production spend the amount on the purchase of goods and services produced by them. • Therefore, each product produced in the economy creates demand equal to its value in the market. • In short, this classical theory explains that “A person receives his income from production which is spent on the purchase of goods and services produced by others. • For the economy as a whole, therefore, total production equals total income”. [OR] (b) Explain Marginal Propensity to Consume [MPC] and Multiplier with diagram and Diagrammatic explanation. Marginal propensity to consume and multiplier. The propensity to consume refers Consumption and Investment y c=y to the portion of income spent on c + 110 consumption. 1050 c + 100 1000 c + 100 + 0.8y The MPC refers to the 500 relation between change in 200 consumption (C) and change in income (Y). Symbolically MPC = ΔC/ΔY The value of multiplier depends 100 on MPC 45o GNP Multiplier (K) = 1/1 – MPC 0 500 1000 1050 x The multiplier is the reciprocal of one minus marginal propensity to consume. Since marginal propensity to save is 1 – MPC. (MPC + MPS =1). Multiplier is 1/ MPS. The multiplier is therefore defined as reciprocal of MPS. Multiplier is inversely related to MPS and directly with MPC. Numerically if MPC is 0.75, MPS is 0.25 and k is 4. Using formula k = 1/1 – MPC 1/1 – 0.75 = 1/0.25 = 4 Taking the following values, we can explain the functioning of multiplier. MPC MPS K 0.00 1.00 1 0.10 0.90 0.50 0.50 1.11 0.75 0.25 2.00 0.90 0.10 4.00 1.00 0.00 10.00 α D-12    Economics – XII

C = 100 + 0.8 y; I = 100 I = 10 Y=C+I Y= 100 + 0.8y + 100 0.2y= 200 Y= 1000 Here, C = 100 + 0.8y = 100 + (1000) = 900; S= 100 = I After I is raised by 10, now I = 110, Y= 100 + 0.8y + 110 0.2y = 210 Y= 210 = 1050 0.2 Here C = 100 = 0.8 (1050) = 940; S = 110 = I Diagrammatic Explanation. At 45° line y = C + S It implies the variables in axis and axis are equal. The MPC is assumed to be at 0.8 (C = 100 + 0.8y) The aggregate demand (C + I) curve intersects 45° line at point E. The original national income is 500. (C = 100 + 0.8y = 100 + 0.8 (500) = 500) When I is 100, y = 1000, C = 900; S = 100 = I The new aggregate demand curve is C+I’ = 100 + 0.8y + 100 +10 Y= 210 = 1050 0.2 C = 940; S = 110 = I 44(a) Write the types of inflation. The four types of inflation are (i) Creeping Inflation: Creeping inflation is slow-moving and very mild. The rise in prices will not be perceptible but spread over a long period. This type of inflation is in no way dangerous to the economy. This is also known as mild inflation or moderate inflation. (ii) Walking Inflation: When prices rise moderately and the annual inflation rate is a single digit (3% - 9%), it is called walking or trolling inflation. (iii) Running Inflation: When prices rise rapidly like the running of a horse at a rate of speed of 10% - 20% per annum, it is called running inflation. (iv) Galloping inflation: Galloping inflation or hyper inflation points out to unmanageably high inflation rates that run into two or three digits. By high inflation the percentage of the same is almost 20% to 100% from an overall perspective. Sample Paper - 1    D-13

Other types of inflation (on the basis of inducement): (i) Currency inflation: The excess supply of money in circulation causes rise in price level. (ii) Credit inflation: When banks are liberal in lending credit, the money supply increases and thereby rising prices. (iii) Deficit induced inflation: The deficit budget is generally financed through printing of currency by the Central Bank. As a result, prices rise. (iv) Profit induced inflation: When the firms aim at higher profit, they fix the price with higher margin. So prices go up. (v) Scarcity induced inflation: Scarcity of goods happens either due to fall in production (e.g. farm goods) or due to hoarding and black marketing. This also pushes up the price. (This has happened is Venezula in the year 2018). (vi) Tax induced inflation: Increase in indirect taxes like excise duty, custom duty and sales tax may lead to rise in price (e.g. petrol and diesel). This is also called taxflation. [OR] (b) What are the functions of NABARD? Functions of NABARD: NABARD has inherited its apex role from RBI i.e, it is performing all the functions performed by RBI with regard to agricultural credit. (i) NABARD acts as a refinancing institution for all kinds of production and investment credit to agriculture, small-scale industries, cottage and village industries, handicrafts and rural crafts and real artisans and other allied economic activities with a view to promoting integrated rural development. (ii) NABARD gives long-term loans (upto 20 Years) to State Government to enable them to subscribe to the share capital of co-operative credit societies. (iii) NABARD gives long-term loans to any institution approved by the Central Government or contribute to the share capital or invests in securities of any institution concerned with agriculture and rural development. (iv) NABARD has the responsibility of co-ordinating the activities of Central and State Governments, the Planning Commission (now NITI Aayog) and other all India and State level institutions entrusted with the development of small scale industries, village and cottage industries, rural crafts, industries in the tiny and decentralized sectors, etc. (v) It maintains a Research and Development Fund to promote research in agriculture and rural development 45(a) Briefly explain facilities offered by IMF. Facilities offered by IMF: • The Fund has created several new credit facilities for its members. Chief among them are: (i) Basic Credit Facility: • The IMF provides financial assistance to its member nations to overcome their temporary difficulties relating to balance of payments. D-14    Economics – XII

• A member nation can purchase from the Fund other currencies or SDRs, in exchange for its own currency, to finance payment deficits. • The loan is repaid when the member repurchases its own currency with other currencies or SDRs. • A member can unconditionally borrow from the Fund in a year equal to 25% of its quota. • This unconditional borrowing right is called the reserve tranche. (ii) Extended Fund Facility: • Under this arrangement, the IMF provides additional borrowing facility up to 140% of the member’s quota, over and above the basic credit facility. • The extended facility is limited for a period up to 3 years and the rate of interest is low. (iii) Compensatory Financing Facility: • In 1963, IMF established compensatory financing facility to provide additional financial assistance to the member countries, particularly primary producing countries facing shortfall in export earnings. • In 1981, the coverage of the compensatory financing facility was extended to payment problem caused by the fluctuations in the cost of cereal inputs. (iv) Buffer Stock Facility: • The buffer stock financing facility was started in 1969. • The purpose of this scheme was to help the primary goods (food grains) producing countries to finance contributions to buffer stock arrangements for the stabilisation of primary product prices. (v) Supplementary Financing Facility: • Under the supplementary financing facility, the IMF makes temporary arrangements to provide supplementary financial assistance to member countries facing payments problems relating to their present quota sizes. (vi) Structural Adjustment Facility: • The IMF established Structural Adjustment Facility (SAF) in March 1986 to provide additional balance of payments assistance on concessional terms to the poorer member countries. • In December 1987, the Enhanced Structural Adjustment Facility (ESAF) was set up to augment the availability of concessional resources to low income countries. • The purpose of SAF and ESAF is to force the poor countries to undertake strong macroeconomic and structural programmes to improve their balance of payments positions and promote economic growth. [OR] (b) Briefly explain effects of Noise pollution. Effects of Noise Pollution: (a) Hearing Loss: • Chronic exposure to noise may cause noise-induced hearing loss. • Older people are exposed to significant occupational noise and thereby reduced hearing sensitivity. Sample Paper - 1    D-15

(b) Damage Physiological and Psychological health: • Unwanted noise can damage physiological and psychological health. • For example, annoyance and aggression, hypertension, and high stress levels. (c) Cardiovascular effects: • High noise levels can contribute to cardiovascular problems and exposure to blood pressure. (d) Detrimental effect on animals and aquatic life: • Noise can have a detrimental effect on animals, increasing the risk of death. (e) Effects on wildlife and aquatic animals: • It creates hormone imbalance, chronic stress, panic and escape behavior and injury. 4 6(a) Explain different sources of e-waste. Sources of E-Waste Home: Hospitals: Government: Private Sectors • PC • Television • PC • PC (Restaurants, • Radio • Monitors • FAX machine Industries) • Cell phones • ECG device • Xerox machine • PC • Washing machine • Microscope • Scanner • Boilers • Microwave oven • Incubator • Fan • Mixer • CD player • Tube lights • Signal Generators • Fan • Air conditions • Incubator • Electric Iron [OR] (b) Explain the effects of Air pollution. 1. Respiratory and heart problems: It creates several respiratory and heart ailments along with cancer. Children are highly vulnerable and exposed to air pollutants and commonly suffer from pneumonia and asthma. 2. Global warming: Increasing temperature in the atmosphere leads to global warming and thereby to increase sea level rise and melting of polar icebergs, displacement and loss of habitat. 3. Acid rain: Harmful gases like nitrogen oxides and sulfur oxides are released into the atmosphere during the burning of fossil fuels. Acid rain causes grate damage to human beings, animals and crops. 4. Eutrophication: Eutrophication is a condition where high amount of nitrogen present in some pollutants which adversely affects fish, plants and animal species. 5. Effect on Wildlife: Toxic chemical present in the air can force wildlife species to move to new place and change their habitat. 6. Depletion of Ozone layer: Ozone exists in earth’s atmosphere and is responsible for protecting humans from harmful ultraviolet (UV) rays. Earth’s Ozone layer is depleting D-16    Economics – XII

due to presence of chlorofluorocarbons and hydro chlorofluorocarbons in the atmosphere. 7. Human Health: Outdoor air pollution is a major cause of death and disease globally. The health effects range from increased hospital admissions and emergency room visits, to increase risk of premature death. An estimated 4.2 billion premature deaths globally are linked to ambient air pollution. 47(a) What are the types of Public Debt? 1. Internal Public debt An internal public debt is a loan taken by Government from the citizens or from different institutions within the country. An internal public debt only involves transfer of wealth. The main sources of internal public debt are as follows: • Individuals, who purchase government bonds and securities; • Banks, both private and public, buy bonds from the Government. • Non-financial institutions like UTI, LIC, GIC etc. also buy the Government bonds. • Central Bank can lend the Government in the form of money supply. The Central Bank can also issue money to meet the expenditure of the Government. 2. External public debt When a loan is taken from abroad or from an international organization it is called external public debt. The main sources of External public debt are IMF, World Bank, IDA and ADB etc. Loan from other countries and the Governments. [OR] (b) Write the State Financial Corporations (SFCs) Act. State Financial Corporation (SFCs) The government of India passed in 1951 the State Financial Corporation Act and SFCs were set up in many states. The SFCs are mainly intended for the development of small and medium industrial units within their respective states. However, in some cases they extend to neighboring states as well. The SFCs provide loans and underwriting assistance to industrial units having paid - up capital and reserves not exceeeding `1 crore. The maximum amount that can be sanctioned to an industrial concern by SFC is `60 lakhs. SFCs depend upon the IDBI for refinance in respect of the term loans granted by them. Apart from these, the SFCs can also make temporary borrowings from the RBI and borrowings from IDBI and by the sale of bonds. Sample Paper - 1    D-17

Time: 3 Hours 4SAMPLE PAPER – Maximum Marks: 90 (UNSOLVED) PART - I Choose the correct answer. Answer all the questions:  [20 × 1 = 20] 1. Macro economics is a study of ............... . (a) individuals (b) firms (c) a nation (d) aggregates 2. State whether the statements are true or false. (i) Profit Motive of Capitalist Economy. (ii) Basic problems are solved by customs and traditions. (a) Both (i) and (ii) are true (b) Both (i) and (ii) are false (c) (i) is true but (ii) is false (d) (i) is false but (ii) is true 3. ................... is also known as Disposable Personal Income. (a) Personal Income (b) Disposable Income (c) Consumer Income (d) Product Income 4. Assertion (A): National Income is a measure of the total value of the goods and services produced in an economy for a year. Reason (R): GNP - is the total value of output produced and income received in a year by domestic residence of a country. (a) Both ‘A’ and ‘R’ are true and ‘R’ is the correct explanation to ‘A’ (b) Both ‘A’ and ‘R’ are true but ‘R’ is not the correct explanation to ‘A’ (c) ‘A’ is true but ‘R’ is false (d) ‘A’ is false but ‘R’ is true 5. The basic concept used in Keynes Theory of Employment and Income is ............... . (a) Aggregate demand (b) Aggregate supply (c) Effective demand (d) Marginal Propensity Consume 6. State whether the statements are true or false. (i) Keynesian theory is – Aggregate demand – Aggregate supply approach. Saving – Investment approach. (ii) This approach explained the determination level of Income and employment. (a) Both (i) and (ii) are true (b) Both (i) and (ii) are false (c) (i) is true but (ii) is false (d) (i) is false but (ii) is true 7. It the MPC is 0.5, the multiplier is ............. . (a) 2 (b) 1/2 (c) 0.2 (d) 20 8. Which of the following is correctly matched: (a) Aftalion - 1909 (b) Hawtrey - 1914 (c) Bickerdike - 1915 (d) J.M. Clark - 1916 D-54

9. MV stands for ................. . (a) demand for money (b) supply of legal tender money (c) supply of bank money (d) total supply of money 10. The modern economy is described as ........ (a) Demand Economy (b) Supply Economy (c) Money Economy (d) Wage Economy 11. EXIM bank was established in ................. . (a) June 1982 (b) April 1982 (c) May 1982 (d) March 1982 12. Match the following and choose the correct answer by using codes given below: Column I Column II A. NBFI 1. Monetary policy B. Per Capita Income 2. Minimum amount of fund C. Inflation 3. Economic growth D. RTGS 4. Non-bank Financial Institution Code: A B C D (a) 3 2 4 1 (b) 4 3 1 2 (c) 2 1 3 4 (d) 1 4 2 3 13. Balance of Trade means ................... . (a) Import and export of invisible items only (b) Import and export of both visible and invisible items (c) Import of visible items only (d) Import and export of visible items only 14. Which of the following is correctly matched: (a) SDR - Special Drawing Rights (b) IMF - India Monetary Fund (c) BOP - Balance of Price (d) BOT - Balance of Technology 15. The word budget has been derived from the French word “bougette” which means ............ . (a) A small bag (b) An empty box (c) A box with papers (d) None of the above 16. Assertion (A): Canons of Taxation are Economical, Equitable, Convenient, Certain Efficient and Flexible. Reason (R): Adam Smiths four canons of taxation are Canon of Ability, Canon of Certainty, Canon of Convenience, Canon of Economy. (a) Both ‘A’ and ‘R’ are true and ‘R’ is the correct explanation to ‘A’ (b) Both ‘A’ and ‘R’ are true but ‘R’ is not the correct explanation to ‘A’ (c) ‘A’ is true but ‘R’ is false (d) ‘A’ is false but ‘R’ is true Sample Paper - 4    D-55

17. Which one of the following causes of global warming? (a) Earth gravitation force (b) Oxygen (c) Centripetal force (d) Increasing temperature 18. Heavy machineries located inside big factories and industrial plants also emit pollutants into the ................... . (a) land (b) soil (c) air (d) water 19. Match the following and choose the correct answer by using codes given below: Column I Column II A. UDC 1. Economic terms B. Traditional approach 2. Low Per Capita Income C. Economic Development 3. Higher level of living D. GNP 4. Economic growth Code: A B C D (a) 2 1 4 3 (b) 1 2 3 4 (c) 3 4 2 1 (d) 4 3 1 2 20. Econometrics is the amalgamation of .................. . (a) 3 subjects (b) 4 subjects (c) 2 subjects (d) 5 subjects PART - II Answer any seven question in which Question No. 30 is compulsory. [7 × 2 = 14] 21. Define World Trade Organisation. 22. Give short note on frictional unemployment. 23. Define “Marginal propensity to consume”. 24. Define Multiplier. 25. What is money supply? 26. Define Central bank. 27. Define RBI Rural credit. 28. What is public revenue? 29. Write some of the tax revenue sources. 30. Mention the countries where per capita carbon dioxide emission is the highest in the world. PART - III [7 × 3 = 21] Answer any seven question in which Question No. 40 is compulsory. 31. Describe the socialistic economy. 32. Enumerate the features of mixed economy. 33. Give short note on Expenditure method. 34. Define Marginal Propensity to Save (MPS). 35. Differentiate autonomous and induced investment. D-56    Economics – XII

36. What are the determinants of money supply? 37. Distinguish between money market and capital market. 38. State briefly the functions of SAARC. 39. Give two examples for direct tax. 40. Define economic planning. PART - IV Answer all the questions. [7×5 = 35] 4 1.(a) Briefly explain the two sector circular flow model. [OR] (b) Write short note on the implications of Say’s law. 4 2. (a) Mention the differences between accelerator and multiplier effect. [OR] (b) Specify the limitations of the multiplier. 4 3.( a) Explain the operation of the Accelerator. [OR] (b) What are the causes and effects of inflation on the economy? 44. (a) Illustrate Fisher’s Quantity theory of money. [OR] (b) Briefly explain the Monetary Economics and money. 45.( a) Explain the types of exchange rate systems and types of exchange rates? [OR] (b) Bring out the functions of IBRD (or) World Bank. 46. (a) Describe canons of Taxation. [OR] (b) What is land pollution? Mention the causes of land pollution. 4 7. (a) Elucidate major causes of vicious circle of poverty with diagram. [OR] (b) State and explain the different kinds of Correlation. Sample Paper - 4    D-57

ONE-MARK & TWO-MARK ANSWERS FOR UNSOLVED SAMPLE PAPERS Sample Paper - 4 imbalance between supply of labour and demand for labour. PART - I 1. (d) aggregates • This is because of immobility of labour, 2. (c) (i) is true but (ii) is false lack of necessary skills, break down of 3. (b) Disposable Income machinery, shortage of raw materials etc. 4. (a) Both ‘A’ and ‘R’ are true and ‘R’ is the • The persons who lose jobs and in search correct explanation to ‘A’ of jobs are also included under frictional 5. (c) Effective demand unemployment. 6. (a) Both (i) and (ii) are true 7. (a) 2 23. Marginal Propensity to Consume is the 8. (a) Aftalion - 1909 additional consumption due to an additional 9. (b) supply of legal tender money unit of income. 10. (c) Money Economy 11. (d) March 1982 24. • The multiplier is defined as the ratio of 12. (b) 4, 3, 1, 2 the change in national income to change 13. (d) Import and export of visible items only in investment. 14. (a) SDR - Special Drawing Rights 15. (a) A small bag • If ΔI stands for increase in investment 16. (a) Both ‘A’ and ‘R’ are true and ‘R’ is the and ΔY stands for resultant increase in income, the multiplier K =ΔY/ΔI. correct explanation to ‘A’ 17. (d) Increasing temperature • Since ΔY results from ΔI, the multiplier is 18. (c) air called investment multiplier. 19. (a) 2, 1, 4, 3 20. (a) 3 subjects 25. • Money supply means the total amount of money in an economy. PART - II 21. • World Trade Centre (WTC) headquarters • It refers to the amount of money which is in circulation in an economy at any given time. located at New York, USA. • It featured the landmark Twin Towers • Money supply plays a crucial role in the determination of price level and interest which was established on 4th April 1973. rates. • Later it was destroyed on 11th September • Money supply viewed at a given point of 2001 by the craft attack. time is a stock and over a period of time it • It brings together businesses involved in is a flow. international trade from around the globe. 26. • A central bank, reserve bank, or monetary 22. Frictional Unemployment (Temporary authority is an institution that manages a state’s currency, money supply, and Unemployment) : interest rates. • Frictional unemployment arises due to • Central banks also usually oversee the commercial banking system of their respective countries. D-82

27. Reserve Bank of India and Rural Credit: In a developing economy like India, the Central bank of the country cannot confine itself to the monetary regulation only, and it is expected that it should take part in development function in all sectors especially in the agriculture and industry. 28. Public Revenue: Public revenue deals with the methods of raising public revenue such as tax and non-tax, the principles of taxation, rates of taxation, impact, incidence and shifting of taxes and their effects. 29. Some of the tax revenue sources are • Income tax • Corporate tax • Sales tax • Surcharge and • Cess 30. 1. United States of America - (USA) 2. European Union - (EU) 3. Japan 4. Russian Federation 5. United Arab Emirates (UAE) 6. Saudi Arabia 7. China Answers  D-83

ACCOUNTANCY QUESTION PAPER DESIGN (Strictly based on Reduced Syllabus for 2022 Board Exams) Types of Questions Marks No. of Questions to be Total Marks Answered Objective type 1 20 20 Very short answers: 2 7 14 (Totally 10 questions will be given. Any one question should be answered compulsorily.) Short answers: 3 7 21 (Totally 10 questions will be given. Any one question should be answered compulsorily.) Essay type 57 35 Total 90 Internal Assessment 10 Total Marks 100 S.No. Weightage of Marks Weightage 1. 30% 2. Purpose 40% 3. Knowledge 20% 4. Understanding 10% Application Skill/Creativity E-1

1SAMPLE PAPER – Time: 2 ½ Hours (SOLVED) Maximum Marks: 90 PART - I [20 × 1 = 20] Answer all the questions. Choose the correct answer. [Answers are in bold] 1. Incomplete records are generally maintained by .................... . (a) A company (b) Government (c) Small sized sole trader business (d) Multinational enterprises 2. Opening balance of debtors ` 30,000 Cash received ` 1,00,000, credit sales ` 90,000; closing balance of debtors is ......................... . (a) ` 30,000 (b) ` 1,30,000 (c) ` 40,000 (d) ` 20,000 3. Donations received for a specific purpose is ......................... . (a) Revenue receipt (b) Capital receipt (c) Revenue expenditure (d) Capital expenditure 4. There are 500 members in a club paying ` 100 as annual subscription due but not received for the current year each is ` 200. Subscription received in advance ` 300. Find out the amount of subscription to be shown in income and expenditure account. (a) ` 50,000 (b) ` 50,200 (c) ` 49,900 (d) ` 49,800 5. Pick the odd one out. (a) Partners share profits and losses equally (b) Interest on partners capital is allowed at 7% P.a (c) No salary or remuneration is allowed (d) Interest an loan from partners is allowed at 6% P.a 6. Profit after interest on drawings interest on capital and remuneration is ` 10,500. Geetha a partner is entitled to receive commission @ 5% on profits after changing such commission find out commission. (a) ` 50 (b) ` 150 (c) ` 550 (d) ` 500 7. Which of these is an asset which is not fictitious but intangible in nature having realisable value? (a) Furniture (b) Machinery (c) Building (d) Goodwill 8. Goodwill is an asset that represents ......................... . (a) Fictitious asset (b) The market value of the company’s trade name (c) The value of reputation of a firm (d) None of these 9. James and Kamal are sharing profits and losses ratio 5:3. They admit Sunil as a partner giving him 1/5 share of profits. Find out the sacrificing ratio. (a) 1:3 (b) 3:1 (c) 5:3 (d) 3:5 E-3

10. Balaji and Kamalesh are partners sharing profits and losses ratio 2:1. They admit Yogesh into partnership. The new profit sharing ratio between Balaji, Kamalesh and Yogesh is agreed to 3:1:1. Find the sacrificing ratio between Balaji and Kamalesh. (a) 1:3 (b) 3:1 (c) 2:1 (d) 1:2 11. A, B and C are partners sharing profits in the ratio of 4:2:3 C retires. The new profit sharing ratio between A and B will be ................... . (a) 4:3 (b) 3:4 (c) 2:1 (d) 1:2 12. X, Y and Z were partners, sharing profit and losses equally. X died on 1st April 2019. Find out the share of X in the profit of 2019 based on the profit of 2018 which showed ` 36000. (a) ` 1,000 (b) ` 3,000 (c) ` 12,000 (d) ` 36,000 13. If a share of ` 10 on which ` 8 has been paid up is forfeited. Minimum reissue price is ......................... . (c) ` 5 per share (d) ` 2 per share (a) ` 10 per share (b) ` 8 per share 14. That part of share capital which can be called up only on the winding up of a company is called ......................... . (a) Authorised capital (b) Called up capital (c) Capital reserve (d) Reserve capital 15. In a common size balance sheet, if the percentage of non-current assets is 75. What would be the percentage of current assets? (a) 175 (b) 125 (c) 25 (d) 100 16. Expenses of a business for the first year were ` 80,000. In the second year it was increased, to ` 88,000. What is the trend % in the second year? (a) 10% (b) 110% (c) 90% (d) 11% 17. Current liabilities ` 40,000; Current assets ` 1,00,000. Inventory ` 20,000. Quick ratio is ................... . (a) 1:1 (b) 2:5:1 (c) 2:1 (d) 1:2 18. Cost of revenue from operations ` 3,00,000; Inventory in the beginning of the year ` 60,000; Inventory at the close of the year ` 40,000. Inventory turnover ratio is ............. . (a) 2 times (b) 3 times (c) 6 times (d) 8 times 19. ` 50,000 withdrawn from bank for office use. In which voucher type, this transaction will be recorded? (a) Contra voucher (b) Receipt voucher (c) Payment voucher (d) Sales voucher 20. In which voucher type credit purchase of furniture is recorded in Tally? (a) Receipt voucher (b) Journal voucher (c) Purchase voucher (d) Payment voucher PART - II Answer any seven questions in which question No. 30 is compulsory. [7×2 = 14] 21. Define single entry system. Ans. According to Kolher, “Single entry system is a system of book-keeping in which as a rule, E-4    Accountancy – XII

only records of cash and personal accounts are maintained. It is always incomplete double entry system varying with circumstances’’. 22. From the following receipts and payments and the additional information given, Calculate amount of subscription to be shown in income and expenditure a/c for year ended 31.12.18. Receipts ` Payments To subscription 2017 28,000 2018 1,72,000 2019 12,000 2,12,000 Additional information: Cr. Subscription outstanding for 2018 ` 8,000. Ans. Dr. Income and expenditure account for the year end 31. 12. 18 Expenditure ` Income By subscription 1,72,000 Add: Outstanding 8,000 1,80,000 subscription 23. Define partnership. Ans. According to section 4 of the Indian Partnership Act 1932, partnership is defined as, “the relation between persons who have agreed to share the profits of a business carried by all or any of them acting for all”. 24. The Profits and losses of a firm for the last four years were as follows: 2015 ‒ ` 20,000 2016 ‒ ` 25,000 2017 ‒ ` 3,000 (Loss) 2018 ‒ ` 18,000 you are required to calculate goodwill on the basis of 5 years purchase of average profit of last 4 years. Ans. Goodwill = Average profit × No. of years of purchase Total profit Average profit = No.of years = 20000 + 25000 +18000 − 3000 4 60000 = 4 = ` 15,000 Goodwill = Average profit × No. of years purchase = ` 15,000 × 5 = ` 75,000 25. A and B are partners of a firm sharing profits and losses in the ratio 5:3. They admit C on 1. 1. 2018. On that date, balance sheet showed accumulated profit of ` 80,000 on the liabilities side. Give the journal entry. Sample Paper - 1    E-5

Ans. Journal Entry Date Particulars L.F. Dr. Cr. Profit and loss A/c Dr. 80,000 To A’s Capital (80,000 × 5/8) To B’s Capital A/c (80,000 × 3/8) 50,000 (Accumulated profit distributed to old 30,000 partners in old profit ratio) 26. What is the journal entry to be passed to transfer the amount due to the deceased partner to the executor of the deceased partner? Ans. To transfer the amount due to the deceased partner to the executor or legal representative of the deceased partner. Date Particulars L.F. Dr. Cr. ............. Deceased partner’s capital A/c Dr. ........... To Deceased partners executive A/c 27. What is a share? Ans. The capital of a company is divided into small units of fixed amount. These units are called shares. There are two types (i) Preference shares and (ii) Equity shares. 28. Calculate gross profit ratio from the following: revenue from operations ` 5,00,000; cost of revenue from operations ` 4,20,000; and purchases ` 3,60,000. Gross profit Ans. Gross profit Ratio = Revenuefrom operations × 100 Gross profit = Revenue from operation ‒ cost of revenue from operation = ` 5,00,000 ‒ ` 4,20,000 = ` 80,000 80000 Gross profit ratio = 500000 × 100 = 16% 29. Calculate Quick Ratio from the following information: Current assets - 8,00,000; Current liabilities- ` 4,00,000; Inventories ` 1,40,000; and prepaid expenses ` 60,000. Quick Assets Ans. Quick Ratio = Current liabilities Quick assets = Current assets ‒ Inventories ‒ Prepaid expenses = ` 8,00,000 ‒ (1,40,000 ‒ 60,000) = ` 6,00,000 600000 ∴ Quick Ratio = 400000 = 6:4 = 3:2 = 1.5:1 30. What is computerised accounting system? Ans. (i) Computerised accounting system refers to the system of accounting maintenance using computer. E-6    Accountancy – XII

(ii) It involves the processing of accounting transactions through the use of computer in order to maintain and produce accounting records and reports. PART - III [7 × 3 = 21] Answer any seven questions in which question No. 40 is compulsory. 31. From the following details find out total sales made during the year. Particulars ` Debtors on 1st April 2018 Cash received from debtors during the year 50,000 Returns inward 1,50,000 Bad debts Debtors on 31st March 2019 15,000 Cash Sales 5,000 70,000 1,40,000 Sol. Dr. Total debtors account Cr ` Particulars ` Particulars 1,50,000 15,000 To Balance b/d 50,000 By Cash A/c 5,000 70,000 To Sales A/c (credit) 1,90,000 By Returns inward A/c 2,40,000 (balancing figure) By Bad debts A/c By Balance c/d 2,40,000 Total Sales = Cash Sales + Credit Sales  = ` 1,40,000 + ` 1,90,000  = ` 3,30,000 32. Compute income from subscription for the 2018 from the following particulars relating to a club. Particulars 1.1.2018 31.12.2018 Outstanding Subscription 10,000 7,000 Subscription received in advance 3,000 5,000 Ans. Subscription received during the year 2018 ` 1,50,000 Calculation of incomes from subscription for 2018 Particulars ` ` Subscription received during the year 2018 1,50,000 Add: Subscription received for 2018 in 2017 3,000 Subscription outstanding for 2018 7,000 10,000 1,60,000 Less: Subscription outstanding in 2017 10,000 Subscription received in advance in 2018 5,000 15,000 Incomes from subscription for the year 2018 1,45,000 Sample Paper - 1    E-7

33. The capital account of Arivazhagan and Srinivasan on 1st January 2017 showed a balance of ` 15,000 and ` 10,000, respectively. On 1st July 2017, Arivazhagan introduced an additional capital of ` 5,000 and on 1st September 2017 Srinivasan introduced an additional capital of ` 10,000. Calculate interest on capital at 6% p.a. for the year ending 31st December 2017. Sol. Calculation of interest on capital: Arivazhagan: = 15,000 × 6 = ` 900 On opening capital for 1 year 100 = ` 150 On additional capital for 6 months = 5,000 × 6 × 6 ` 1,050 100 12 Interest on capital Srinivasan: = 10,000 × 6 = ` 600 On opening capital for 1 year 100 = ` 200 On additional capital for 4 months = 10,000 × 6 × 4 ` 800 Total interest on capital 100 12 34. From the following information relating to Sridevi Enterprises, calculate the value of goodwill on the basis of 4 years purchase of the average profit of 3 years. a) Profits for the year ending 31st December 2016, 2017 and 2018 were ` 1,75,000, 1,50,000 and ` 2,00,000 respectively. b) A non - recuring income of ` 45,000 is included in the profits of the year 2016. c) The closing stock of the year 2017 was overvalued by Rs. 30,000 Ans. Calculation of adjusted profit Particulars 2016 2017 2018 Profit 1,75,000 1,50,000 2,00,000 Less Non-recuring income 45,000 ‒ ‒ 1,30,000 1,50,000 2,00,000 Less Over valuation of closing stock ‒ 30,000 ‒ 1,30,000 1,20,000 2,00,000 Add Overvaluation of opening stock ‒ ‒ 30,000 1,30,000 1,20,000 2,30,000 Total profit Average profits = Number of years = 1,30,000 +1, 20,000 + 2,30,000 3 4, 80, 000 = 3 = ` 1,60,000 Goodwill = Average profit × Number of years of purchase E-8    Accountancy – XII

= 1,60,000 × 4 = ` 6,40,000 35. A, B and C were partners. Sharing profits and losses in the ratio of 5:3:2. D is admitted into a partnership. The following adjustments are to be made. (a) Increase the value of premises by ` 60,000 (b) Depreciate stock by ` 5,000; Furniture by ` 2,000 and Machinery by ` 2,500. (c) Provide for an outstanding liabilities of ` 500. Pass the journal entries. Ans. Journal Entries Date Particulars L.F. Debit Credit 1.4.17 Premises A/c Dr. 60,000 To Revaluation A/c 60,000 (Appreciation in value of premises recorded) 1.4.17 Revaluation A/c Dr. 10,000 To Stock A/c 5,000 To Furniture A/c 2,000 To Machinery A/c 2,500 To Outstanding liability A/c 500 (Decrease in assets recorded) 1.4.17 Revaluation A/c Dr. 50,000 To Hari’s capital A/c 25,000 To Madhavan’s capital A/c 15,000 To Kesavan’s capital A/c 10,000 (Profit on revaluation transferred) 36. Rahul, Ravi and Rohit are partners sharing profits and losses in the ratio of 5:3:2. Rohit retires and the share is taken by Rahul and Ravi in the ratio of 3:2. Find out the new profit sharing ratio and gaining ratio. Sol. Rohit’s share Share gained = Retiring partner’s share × Proportion of share gained Rahul = Ravi = Gaining ratio = that is, 3:2 Sample Paper - 1    E-9

New share of continuing partner = Old share + Share gained Rahul = Ravi = The new profit sharing ratio of Rahul and Ravi is that is 31 : 19. 37. What are the process of issue of equity shares Ans. Process of issue of equity shares A company can issue shares as per the provisions of the Indian Companies Act and as per the guidelines issued by Securities and Exchange Board of India (SEBI). (i) Inviting subscription: A public company has to issue a prospectus and invite the general public to subscribe for its shares. (ii) Receipt of application: On the basis of the prospectus, applications are deposited in a scheduled bank by the applicants along with application money within the time specified. Application money must be at least 5 per cent of the nominal value of the shares. (iii) Allotment of shares: When the minimum subscription stated in the prospectus has been subscribed for by the public, a company can allot shares. For those to whom shares could not be allotted, their application money will be refunded. If the minimum subscription is not received, all the application money received has to be refunded to the applicants. 38. From the following particulars prepare comparative income statement of Mary Co. Ltd. Particulars 2015 ‒ 16 2016 - 17 (`) (`) Revenue from operations 4,00,000 5,00,000 Operating expenses 2,00,000 1,80,000 Income tax (% of the profit before tax) 20 50 Ans. Comparative income statement of Mary Co. Ltd. for the year ended 31st March 2016 and 31st March 2017 Particulars 2015 ‒ 16 2016 - 17 Absolute amount of Percentage (`) (`) increase (+) (or) of increase decrease (‒) (+) (or) decrease (‒) Revenue from operations 4,00,000 5,00,000 + 1,00,000 + 25 Less: Operating 2,00,000 1,80,000 ‒ 20,000 ‒10 expenses Profit before tax 2,00,000 3,20,000 + 1,20,000 + 60 Less: Income tax 40,000 1,60,000 + 1,20,000 + 300 1,60,000 1,60,000 Note: Calculation of income tax For 2015-16 = 2,00,000 × 20% = ` 40,000; For 2016-17 = 3,20,000 × 50% = ` 1,60,000 E-10    Accountancy – XII

39. From the following details of a business concern calculate net profit ratio. Particulars ` Revenue from operations 3,50,000 Cost of revenue from operations 1,50,000 Administration expenses 50,000 Selling expenses 10,000 Sol. Net profit ratio = Net profit after tax × 100 = 1,40,000 × 100 = 40% Revenue from operations 3,50,000 Net profit = R evenue from operations – Cost of revenue from operations – Administration expenses – Selling expenses  = 3,50,000 – 1,50,000 – 50,000 – 10,000 = ` 1,40,000 40. Mention the commonly used voucher types in Tally ERP.9. Following are some of the major accounting vouchers used in an organisation. Ans. (i) Receipt voucher (ii) Payment voucher (iii) Contra voucher (iv) Purchase voucher (v) Sales voucher (vi) Journal voucher PART - IV Answer all the questions. [7×5 = 35] 41.(a) From the following particulars, calculate total sales. ` 1,50,000 Particulars 40,000 Debtors on 1st April 2017 3,90,000 Bills receivable on 1st April 2017 90,000 Cash received from debtors 10,000 40,000 Cash received for bills receivable 30,000 1,30,000 Bills receivable dishonoured 2,00,000 Sales return Bills receivable on 31st March, 2018 Sundry debtors on 31st March, 2018 Cash sales Sol. Dr. Bills receivable account Cr. ` Particulars ` Particulars To Balance b/d 40,000 By Cash A/c 90,000 To Debtors A/c* 90,000 By Debtors A/c 10,000 (Bills received during the (Bills receivable dishonoured) 30,000 year – balancing figure) By Balance c/d 1,30,000 1,30,000 Sample Paper - 1    E-11

Dr. Total debtors account Cr. Particulars ` Particulars ` To Balance b/d 1,50,000 By Cash A/c 3,90,000 To Bills receivable A/c 10,000 By Sales returns A/c 40,000 (dishonoured) 90,000 To Sales A/c(credit) 4,90,000 By Bills receivable A/c* (balancing figure) (bills received) 1,30,000 6,50,000 By Balance c/d 6,50,000 Total Sales = Cash Sales + Credit Sales = ` 2,00,000 + ` 4,90,000 = ` 6,90,000. [OR] (b) From the following particulars, calculate total sales Particulars ` Particulars ` Debtors on 1.4.2018 2,50,000 Bills receivable dishonour 15,000 60,000 Return inward 50,000 Bills receivable (1.4.2018) 90,000 7,25,000 Bills receivable 31.3.19 Cash received from 2,40,000 debtors 1,60,000 Sundry Debitors 31.3.19 Cash received for bills 3,15,000 receivable 30,000 Cash sales Bad debtors Ans. Bills Receivable Account Particulars ` Particulars ` To Balance b/d 60,000 By Cash 1,60,000 2,05,000 To Debtors A/c (Bills By debtors (Bills 15,000 received during the year) 2,65,000 receivable dishonour) 90,000 2,65,000 By Balance c/d Total Debtors Account Particulars ` Particulars ` To Balance b/d 2,50,000 By Cash 7,25,000 To Bills Receivable (dishonour) 15,000 By return inward 50,000 To credit sales By Bills receivable 9,85,000 By Bad debtors 2,05,000 By Balance c/d 30,000 10,10,000 2,40,000 10,10,000 = Cash sales + Credit sales Total sales = ` 3,15,000 + ` 9,85,000 = ` 13,00,000 E-12    Accountancy – XII

42(a) From the following receipts and payments account information given below of Madurai sports club, prepare income and expenditure account for the year ended 31.12.18. Dr. Receipts and payments for the year ended 31. 12. 18 Cr. Receipts `` Payments `` To Balance b/d By Rent 11,000 Cash in hand 5,000 By entertainment expenses 11,200 Cash at bank 10,000 15,000 By furniture 10,000 To Subsription By sports materials 13,000 purchased 2017 12,000 By match expenses 12,000 2018 33,000 By investments made 28,000 2019 16,000 61,000 By balance c/d To entrance fees 6,000 Cash in hand 1,300 To general donation 7,000 Cash at bank 4,000 5,300 To sale of old sports 1,000 materials To misc. receipts 500 90,500 90,500 Additional informations: (i) Capital fund as on 1st January 2018, ` 30,000 (ii) Opening stock of sports materials ` 3,000 and closing stock of sports material ` 5,000 Ans. In the Books of Madurai sports club Dr. Income and expenditure Account for the year ended 31.12.18 Cr. Expenditure `` Income ` To Rent 11,000 By subscription 33,000 To entertainment expenses 11,200 By entrance fees 6,000 To match expenses 1,200 By general donation 7,000 To sports material (op) 3,000 By sale of old sports materials 1,000 Add: Purchased 13,000 By misc. receipts 500 16,000 Less: closing stock 5,000 11,000 To surplus (Excess income 2,300 over expenses) 47,500 47,500 [OR] Sample Paper - 1    E-13

(b) Following is the receipts and payments A/c of Salem recreation club for the year ended 31st March 2019. In the Books of Salem Recreation club Receipts and payments account for the year ended 31.03.19 Receipts `` Payments ` To Balance b/d By Furniture 15,000 Cash in hand 9,000 By stationery 2,400 To Subscription By investment 12,500 2018 - 19 12,500 By postage 1,000 2019 - 20 400 12,900 By balance c/d To proceeds for 12,000 Cash in hand 3,500 entertainment To sundry receipts 500 34,400 34,400 Additional Information: (i) There are 450 members each paying annual subscription of ` 30 (ii) Stock of stationery on 31st March 2018, ` 300 and 31st March 2019, ` 500 (iii) Capital fund as on 1st April 2018 was ` 9,300 Prepare income and expenditure A/c for the year ended 31st March 2019 and balance sheet as on that date. Ans. In the books of Salem recreation club Expenditure `` Income `` To stationery 2,400 By subscription 12,500 Add: opening stock 300 Add: Outstanding for 2018-19 (450 × 30) 1,000 13,500 Less: Closing stock 2,700 By proceeds from 12,000 500 entertainment 500 2,200 By sundry receipts To postage 1,000 22,800 To excess of income over (exp surplus) 26,000 26,000 43(a) Santhosh is a partner in a partnership firm. As per deed, interest on drawing is charged at 6% p.a. During the year ended 31st Dec 2018, he withdrew as follows: Date Amount Feb - 1 2,000 May - 1 10,000 July - 1 4,000 Oct - 1 6,000 Calculate the amount of interest on drawing by using product method. E-14    Accountancy – XII

Ans. Calculation of interest on drawings under product method. Product Date of drawings Amount drawn Period upto Dec 31st (Month) Feb 1 2,000 11 22,000 May 1 10,000 8 80,000 July 1 4,000 6 24,000 October 1 6,000 3 18,000 1,44,000 Interest on drawings = Sum of product × Rate of interest × 1 1 6 12 100 × 12 = ` 1,44,000 × = ` 720 [OR] (b) Calculate the value of goodwill at 5 years purchase of super profits from the following information: (a) Capital employed: ` 60,000 (b) Normal rate of profit: 20% (c) Net profit for 5 years: 2014 - 1,00,000; 2015 - 50,000; 2016 - 70,000; 2017 - 54,000; 2018 - 10,000. (d) Fair remuneration to the partners ` 3,600 p. a. Total profit Ans. Average Profit = Number of years 100000 + 50000 + 70000 + 54000 +10000 =5 Average profit = 284000 = ` 56,800 5 Average profit before fair remuneration to the partners ` 56,800 Less: Fair remuneration to the partners ` 3,600 Average profit ` 53,200 Normal profit = Capital employed × Normal rate of returns = ` 60,000 × 20 = ` 12,000 100 Super profit = Average profit ‒ Normal profit = ` 53,200 ‒ 12,000 = ` 41,200 Goodwill = Super profit × Number of years of purchase = ` 41,200 × 5 = ` 2,06,000 Sample Paper - 1    E-15

44(a) Find out the value of goodwill by capitalising super profit a) Normal rate of return 10% b) Profits for the last four years are ` 30,000; ` 40,000; ` 50,000 and ` 45,000 c) A non-recurring income of ` 3,000 is included in the above mentioned profit of ` 30,000 d) Average capital employed is ` 3,00,000. Ans. Average Profit = Total profit Number of years = 30000 + 40000 + 50000 + 45000 − 3000 4 Average profit = 162000 = ` 40,500 4 Normal profit = Capital employed × Normal rate of return = ` 3,00,000 × 10 = ` 30,000 100 Super profit = Average profit ‒ Normal profit = ` 40,500 ‒ 30,000 = ` 10,500 Super profit Goodwill = Normal rate of return ×100 = 10500 × 100 = 1,05,000 10 [OR] (b) Sundar and Suresh are partners sharing profit ratio of 3:2. Their balance sheet as on 1st January 2017 was as follows: Liabilities `` Assets ` Capital Accounts Building 40,000 Sundar 30,000 Furniture 13,000 Suresh 20,000 50,000 Stock 25,000 Creditors 50,000 Debtors 15,000 General Reserve 10,000 Bills receivable 14,000 Workmen compensation fund 15,000 Bank 18,000 1,25,000 1,25,000 They decided to admit Sugumar into partnership for 1/4th share in the profit on the following terms: (a) Sugumar has to bring in ` 30,000 as capital. His share of goodwill is valued at ` 5,000. He could not bring cash toward goodwill (b) That the stock be valued at ` 20,000 (c) That the furniture be depreciated by ` 2,000. (d) That the value of building be depreciated by 20%. Prepare the necessary ledger accounts and the balance sheet. E-16    Accountancy – XII

Ans. Dr. Revaluation Account Cr. Particulars ` Particulars `` To stock A/c 5,000 By loss on revaluation To Furniture A/c 2,000 Sundar capital A/c 9,000 15,000 To Building A/c 6,000 15,000 8,000 Suresh capital A/c Dr. 15,000 Cr. Capital Account Particulars Sundar Suresh Sugumar Particulars Sundar Suresh Sugumar 9,000 6,000 ‒ By Balance b/d 30,000 20,000 ‒ To ‒ ‒ 5,000 Revaluation By Bank A/c ‒ ‒ 30,000 A/c 41,000 24,000 25,000 By General 6,000 4,000 To sundar’s Reserve 9,000 6,000 ‒ capital A/c 50,000 30,000 30,000 By workmen 30,000 To Balance compensation 5,000 ‒ 25,000 c/d fund 50,000 30,000 By Sugumar 41,000 24,000 captial (share of goodwill) By Balance b/d Balance sheet as on 1st January 2017 Liabilities `` Assets ` ` 40,000 Capital Account 41,000 Buildings 8,000 32,000 Sundar 24,000 (‒) Depreciation 20% 13,000 Suresh 25,000 Furniture 2,000 11,000 Sugumar 90,000 Less: Depreciation 25,000 Creditors 50,000 Stock 5,000 20,000 Less: Depreciation 15,000 Debtors 18,000 14,000 Bills Receivable 30,000 Bank 48,000 (+) Sugumar captial A/c 1,40,000 1,40,000 Sample Paper - 1    E-17

45 (a) The balance sheet of Rekha and Mary on 31st March 2018. Liabilities `` Assets ` Capital Accounts Buildings 50,000 Rekha 50,000 Stock 8,000 Mary 30,000 80,000 Sundry Debtors 60,000 General Reserve 40,000 Cash at bank 32,000 Work men 10,000 Compensation fund Sundry creditors 20,000 1,50,000 1,50,000 Their profit sharing ratio is 3:1. They agreed to admit kavitha into the partnership firm for 1/4th share of profits which she entirely gets from Rekha. (i) Kavitha has to bring ` 20,000 as capital. Her share of goodwill is valued at 4,000. She could not bring cash towards goodwill. (ii) Depreciate building by 10% (iii) Stock to be valued at ` 6,000 (iv) Create provision for doubtful debts @ 5% on debtors Prepare necessary ledger accounts and balance sheet after admission. Ans. Dr. Revaluation Account Cr. Particulars ` Particulars `` To Buildings A/c 5,000 By loss on revaluation 7,500 To stock A/c 2,000 Transferred to, 2,500 To provision for bad debts 3,000 Rekha’s capital A/c Mary’s capital A/c 10,000 10,000 10,000 Dr. Capital Account Cr. Particulars Rekha Mary Kavitha Particulars Rekha Mary Kavitha To Revaluation A/c 7,500 ‒ By Balance b/d To Rekha’s capital 84,000 2,500 ‒ 50,000 30,000 ‒ Share of good will 91,500 ‒ 4,000 By Bank A/c ‒ ‒ 20,000 To Balance c/d By general 30,000 10,000 20,000 Reserve 16,000 40,000 16,000 By workmen 7,500 2,500 compensation fund By Kavitha 4,000 ‒ capital 42,500 20,000 91,500 42,500 By Balance c/d 84,000 40,000 E-18    Accountancy – XII

Balance sheet as on 1st April 2018 Liabilities `` Assets `` Capital Accounts: 84,000 1,40,000 Buildings 50,000 45,000 Rekha 40,000 20,000 Less: Depreciation 5,000 6,000 Mary 16,000 Stock 8,000 Kavitha 1,60,000 (‒) Decrease 2,000 Sundry creditors Sundry debtors 60,000 (‒) Provision for doubtful debtors 3,000 57,000 Bank (32000 + 20000) 52,000 1,60,000 [OR] (b) Charles, Muthu and Sekar are partners sharing profits in the ratio 3:4:2. Their balance sheet as on 31st December 2018 is as under. Liabilities `` Assets ` Capital Accounts: Furniture 20,000 Charles 30,000 Stock 40,000 Muthu 40,000 Debtors 30,000 Sekar 20,000 90,000 Cash at bank 42,000 Workmen Profit and loss A/c 18,000 compensation fund 27,000 (loss) Sundry creditors 33,000 1,50,000 1,50,000 On 1. 1. 2019 Charles retired from the partnership firm on the following arrangements. (i) Stock to be appreciated by 10% (ii) Furniture to be depreciated by 5% (iii) To provide ` 1,000 for bad debtors. (iv) There is an outstanding repair of ` 11,000 not yet recorded (v) The final amount due to charles was paid. Prepare revaluation account, capital account and the balance sheet of a firm after retirement. Ans. Dr. Revaluation Account Cr. Particulars `` Particulars `` To Furniture 1,000 By Stock 4,000 To debtors A/c 1,000 By loss on revaluation To outstanding repair 11,000 Charles capital A/c 3,000 Muthu’s capital A/c 4,000 13,000 Sekar’s capital A/c 2,000 9,000 13,000 Sample Paper - 1    E-19

Dr. Capital Account Cr. Particulars Charles Muthu Sekar Particulars Charles Muthu Sekar To Profit and 6,000 8,000 4,000 By Balance b/d 30,000 40,000 20,000 loss A/c 3,000 4,000 2,000 9,000 12,000 6,000 To revaluation By workmen (loss) compenstation fund To Bank A/c To Balance 30,000 20,000 c/d ‒ 40,000 39,000 52,000 26,000 39,000 52,000 26,000 By Balance b/d ‒ 40,000 20,000 Balance sheet as on 1st January 2018 Liabilities `` Assets `` Capital Accounts: Furniture 20,000 Muthu 40,000 (‒) Depreciation 1,000 19,000 Sekar 20,000 60,000 Stock 40,000 Sundry creditors 33,000 Add: Appreciation 4,000 44,000 Outstanding repair 11,000 Debtors A/c 30,000 (‒) Bad debts 1,000 29,000 Cash at bank 42,000 (‒) Paid to charles 30,000 12,000 1,04,000 1,04,000 46( a) Prabu, Ragu and Siva are partners sharing profits and losses in the ratio of 3:2:1. Prabu retires from partnership on 1st April 2017. The following adjustments are to be made: (i) Increase the value of building by ` 12,000 (ii) Reduce the value of furniture by ` 8,500 (iii) A provision would also be made for outstanding salary for ` 6,500. Give journal entries and prepare revaluation account. Ans. Journal entries L.F. Debit ` Credit ` Date Particulars 2017 Building A/c Dr. 12,000   April 1 To Revaluation A/c   12,000 (Increase in the value of building accounted)     ,, Revaluation A/c Dr. 15,000   To Furniture A/c 8,500 To Outstanding salary A/c 6,500 (Reduction in the value of furniture and   outstanding salary accounted) E-20    Accountancy – XII

,, Prabu’s capital A/c Dr. 1,500   1,000 3,000 Ragu’s capital A/c Dr. 500 Siva’s capital A/c Dr. To Revaluation A/c   (Loss on revaluation transferred to capital   ccounts) Dr. Revaluation Account Cr. Particulars ` Particulars `  To Furniture A/c 8,500 By Building A/c 12,000 To Outstanding salary A/c 6,500 By Loss on revaluation   transferred to Prabu’s capital A/c (3/6) 1,500 Ragu’s capital A/c (2/6) 1,000   Siva’s capital A/c (1/6) 500 3,000   15,000   15,000 [OR] (b) A company issued 10,000 shares of ` 20 each a premium of ` 5 per share payable ` 10/- on application. ` 10 on Allotment (including premium) ` 5/- on first and final call. The company received 11,000 shares, excess application money was rejected. All money due were received except the final call money on 500 shares. Pass journal entries. Ans. Journal Entries in the Books of... Date Particulars L.F. Debit credit Bank A/c Dr. 1,10,000 To Share Application A/c 1,10,000 (Application money on 11000 shares) Share Application A/c Dr. 1,00,000 To share capital A/c 1,00,000 (Transfer of Application money to share capital) Share Application A/c Dr. 10,000 To Bank A/c 10,000 (Excess application money on 1000 shares rejected) Share Allotment A/c Dr. 1,00,000 To share capital A/c premium To securities premium A/c 50,000 (Allotment money due and 50,000 money) Sample Paper - 1    E-21

Bank A/c Dr. 1,00,000 To Share Allotment A/c (Allotment money received) 1,00,000 Share first and final call A/c Dr. 50,000 To share capital A/c (First and final call money due) 50,000 Bank A/c Dr. 47,500 2,500 Calls-in-arrears A/c Dr. To share first and final call A/c 50,000 (First and final call money received on 9500 shares) 47 (a) Prepare common size statement of financial position for the following particulars. Particulars 31st March 2016 31st March 2017 I EQUITY AND LIABILITIES Share holders fund 5,40,000 6,40,000 Non-current liabilities 2,70,000 2,50,000 Current liabilities 90,000 1,50,000 Total 9,00,000 10,00,000 II ASSETS Non-current assets 7,20,000 8,00,000 Current assets 1,80,000 2,00,000 Total 9,00,000 10,00,000 Ans. Common size balance sheet of Rani Ltd for the year ended 31st March 2016 and 31st March 2017 Particulars Absolute % of total Absolute % of total Amount assets amount Assets 2015 - 16 2016 - 17 I Equity and liabilities Share holders fund 5,40,000 60 6,00,000 60 Non-current liabilities 2,70,000 30 2,50,000 25 Current liabilities 90,000 10 1,50,000 15 Total 9,00,000 100 10,00,000 100 II ASSETS Non current assets 720000 80 8,00,000 80 Current assets 180000 20 2,00,000 20 Total 900000 100 10,00,000 100 E-22    Accountancy – XII