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A

Group 'A'

Very short answer questions. Attempt all the questions.

11 questions·1 marks each
1short1 marks

Write any two features of Public Company.

Two features of a public company:

  1. Minimum membership of seven with no upper limit on the maximum number of shareholders.
  2. Free transferability of shares — shares can be freely sold and transferred to the public, and the company can issue shares/debentures to the public through a prospectus.
companypublic-company
2short1 marks

Define authorized capital.

Authorized capital (also called registered or nominal capital) is the maximum amount of share capital, stated in the company's Memorandum of Association, that a company is authorized to raise by issuing shares to the public.

share-capitalauthorized-capital
3short1 marks

Write any two items of assets.

Two items of assets:

  1. Land and building (fixed/non-current asset).
  2. Cash and bank balance (current asset).

Other acceptable items: machinery, furniture, debtors, inventory/stock.

accountingassets
4short1 marks

Write any two importance of Cost Accounting.

Two importances of cost accounting:

  1. Cost control — it helps in ascertaining and controlling the cost of products, thereby reducing wastage.
  2. Price fixation / decision making — it provides cost data that helps management to fix selling prices and make managerial decisions.
cost-accounting
5short1 marks

Classify the overhead on the basis of control.

On the basis of control, overheads are classified into:

  1. Controllable overhead — overheads that can be controlled by the action of management (e.g. indirect material, indirect labour).
  2. Uncontrollable overhead — overheads that cannot be controlled by management action (e.g. rent, depreciation of factory building).
cost-accountingoverhead
6short1 marks

Write the meaning of decentralized store.

A decentralized store is a system of store-keeping in which separate stores are maintained at different departments or locations, each keeping the materials required by its own department, instead of storing all materials at one central place.

materialsstore-keeping
7short1 marks

Write about time card.

A time card is a document maintained for each worker that records the time of arrival and departure (attendance) of the worker. It shows the total time spent by the worker in the factory and is used for the calculation of wages.

labourtime-card
8short1 marks

State any two elements of computer system in accounting.

Two elements of a computer system in accounting:

  1. Hardware — the physical components (CPU, monitor, keyboard, printer, etc.).
  2. Software — the accounting programs/applications used to process accounting data.

Other acceptable elements: data, people (users), procedures.

computer-in-accounting
9short1 marks

Prepare adjustment entry of provision for tax of Rs. 1,00,000.

Adjustment (journal) entry for provision for tax:

ParticularsDr. (Rs.)Cr. (Rs.)
Profit and Loss A/c ............ Dr.1,00,000
    To Provision for Tax A/c1,00,000

(Being provision created for income tax.)

company-accountsprovision-for-tax
10numeric1 marks

From the following information, calculate cash paid to creditors in second year.

ParticularsAmount
Total purchaseRs. 12,00,000
Sundry creditors: Year firstRs. 80,000
Sundry creditors: Year secondRs. 1,20,000

Numeric answer (Rs.)

creditorscash-paid-to-creditors
11numeric1 marks

Annual requirement is 18,000 kg. and Economic Order Quantity is 3,000 kg. Find out number of order.

Numeric answer (orders)

materialseconomic-order-quantity
B

Group 'B'

Short answer questions.

11 questions·5 marks each
12long5 marks

A Company issued 6,000 shares of Rs.100 each payable as follows:

StageAmount
On applicationRs. 30
On allotmentRs. 45
On first and final callRs. 25

Application were received for 9,000 shares. Among them, applicants for 3,000 shares were allotted full, 4,000 applicants were allotted on pro-rata basis and rest applicants were refunded. Excess application money was adjusted on subsequent calls. All money duly received except final call money on 500 shares.

Required:

a) Share application b) Share allotment c) First and final call

[2+1.5+1.5]

Working — distribution of applications (9,000 shares applied for 6,000 issued):

  • Full allotment: 3,000 shares applied → 3,000 allotted.
  • Pro-rata: 4,000 shares applied → 3,000 allotted (ratio 4:3).
  • Refunded: 9,000 − 3,000 − 4,000 = 2,000 shares applied → rejected/refunded.

Excess application money on pro-rata group = (4,000 − 3,000) × Rs.30 = Rs.30,000 (adjusted on allotment).

a) Share Application:

ParticularsDr. (Rs.)Cr. (Rs.)
Bank A/c ......... Dr. (9,000 × 30)2,70,000
  To Share Application A/c2,70,000
Share Application A/c ......... Dr.2,70,000
  To Share Capital A/c (6,000 × 30)1,80,000
  To Share Allotment A/c (excess)30,000
  To Bank A/c (2,000 × 30 refund)60,000

b) Share Allotment:

Allotment due = 6,000 × 45 = Rs.2,70,000; less excess adjusted Rs.30,000 → received Rs.2,40,000.

ParticularsDr. (Rs.)Cr. (Rs.)
Share Allotment A/c ......... Dr.2,70,000
  To Share Capital A/c2,70,000
Bank A/c ......... Dr.2,40,000
  To Share Allotment A/c2,40,000

c) First and Final Call:

Call due = 6,000 × 25 = Rs.1,50,000; not received on 500 shares = 500 × 25 = Rs.12,500; received = Rs.1,37,500.

ParticularsDr. (Rs.)Cr. (Rs.)
Share First & Final Call A/c ......... Dr.1,50,000
  To Share Capital A/c1,50,000
Bank A/c ......... Dr.1,37,500
Calls in Arrear A/c ......... Dr.12,500
  To Share First & Final Call A/c1,50,000
share-capitalshare-issuepro-rata-allotment
13along2 marks

13.(I) P company issued shares of Rs.100 each at 10% discount to purchase following assets from S Company.

AssetsAmount
Plant and machineryRs. 6,00,000
FurnitureRs. 50,000
InventoryRs. 1,00,000

Required: Journal entries for assets purchased by issuing shares. [1+1]

Total purchase consideration (net assets) = 6,00,000 + 50,000 + 1,00,000 = Rs.7,50,000.

Shares issued at 10% discount → issue price per share = Rs.90.

Number of shares = 7,50,000 / 90 = 8,333.33 ≈ 8,334 shares (or treat as 8,333.33).

Journal entries:

ParticularsDr. (Rs.)Cr. (Rs.)
Plant and Machinery A/c ......... Dr.6,00,000
Furniture A/c ......... Dr.50,000
Inventory A/c ......... Dr.1,00,000
  To S Company (Vendor) A/c7,50,000
(Being assets purchased)
S Company (Vendor) A/c ......... Dr.7,50,000
Discount on Issue of Shares A/c ......... Dr.83,333
  To Share Capital A/c8,33,333
(Being shares issued at 10% discount to vendor)
sharespurchase-of-assetsshares-at-discount
13blong3 marks

13.(II) C Company issued 500, 10% Debentures of Rs.1,000 each at 5% premium, redeemable at 10% discount after 5 years.

Required: Entries for issue and redemption of Debentures. [1+1+1]

Face value = 500 × 1,000 = Rs.5,00,000. Premium on issue = 5% × 5,00,000 = Rs.25,000 → cash received = Rs.5,25,000. Redemption at 10% discount → redeemed at Rs.4,50,000 (i.e. 90% of face value).

1. On issue (receipt of money):

ParticularsDr. (Rs.)Cr. (Rs.)
Bank A/c ......... Dr.5,25,000
  To Debenture Application & Allotment A/c5,25,000

2. On allotment (transfer to debentures with premium):

ParticularsDr. (Rs.)Cr. (Rs.)
Debenture Application & Allotment A/c ......... Dr.5,25,000
  To 10% Debentures A/c5,00,000
  To Premium on Issue of Debentures A/c25,000

3. On redemption (after 5 years, at 10% discount):

ParticularsDr. (Rs.)Cr. (Rs.)
10% Debentures A/c ......... Dr.5,00,000
  To Debenture-holders A/c4,50,000
  To Profit on Redemption of Debentures A/c50,000
Debenture-holders A/c ......... Dr.4,50,000
  To Bank A/c4,50,000

(Redemption at 10% discount yields a profit of Rs.50,000.)

debenturesissue-of-debenturesredemption-of-debentures
14long5 marks

The closing ledger balances of company are given below:

ParticularsRs.
Opening stock40,000
Purchase5,50,000
Wages60,000
Salary80,000
Discount received10,000
Interest expenses12,000
Administrative expenses35,000
Sales9,00,000
Advertisement expenses25,000
Rent expenses15,000
Water & electricity expenses30,000

Additional information:

Rs.
i) Closing stock50,000
ii) Income tax provision25%
iii) Outstanding rent3,000

Required:

a) Trading Account b) Profit & Loss Account

[2+3]

a) Trading Account

Dr. ParticularsRs.Cr. ParticularsRs.
To Opening stock40,000By Sales9,00,000
To Purchase5,50,000By Closing stock50,000
To Wages60,000
To Gross profit c/d3,00,000
Total9,50,000Total9,50,000

b) Profit & Loss Account

Dr. ParticularsRs.Cr. ParticularsRs.
To Salary80,000By Gross profit b/d3,00,000
To Interest expenses12,000By Discount received10,000
To Administrative expenses35,000
To Advertisement expenses25,000
To Rent (15,000 + 3,000 o/s)18,000
To Water & electricity expenses30,000
To Provision for income tax (25% of 1,10,000)27,500
To Net profit82,500
Total3,10,000Total3,10,000

Profit before tax = 3,10,000 − 2,00,000 = Rs.1,10,000; tax @25% = Rs.27,500; Net profit after tax = Rs.82,500.

final-accountstrading-accountprofit-and-loss-account
15long5 marks

The trial balance of a company is given below:

ParticularsDr. (Rs.)Cr. (Rs.)
Purchase2,00,000
Wages50,000
Salary35,000
Prepaid rent20,000
Machinery3,50,000
Furniture1,60,000
Debtors40,000
Cash15,000
Sales4,50,000
Share capital3,50,000
Retained earnings70,000
Total8,70,0008,70,000

Additional information:

i) Prepaid rent expired: Rs. 12,000 ii) Depreciation on machinery: @10%

Required: Work sheet

(You should prepare format of worksheet yourself.)

[5]

Adjustments: (i) Prepaid rent expired Rs.12,000 → Rent expense Dr. 12,000, Prepaid rent reduced to Rs.8,000. (ii) Depreciation on machinery @10% of 3,50,000 = Rs.35,000.

Work Sheet (key columns):

Income Statement (Dr. side expenses): Purchase 2,00,000 + Wages 50,000 + Salary 35,000 + Rent expired 12,000 + Depreciation 35,000 = Rs.3,32,000. Credit side: Sales 4,50,000.

Net profit = 4,50,000 − 3,32,000 = Rs.1,18,000.

Balance Sheet (Assets): Machinery (3,50,000 − 35,000) 3,15,000; Furniture 1,60,000; Debtors 40,000; Cash 15,000; Prepaid rent (20,000 − 12,000) 8,000 = Rs.5,38,000.

Balance Sheet (Liabilities & Equity): Share capital 3,50,000; Retained earnings 70,000; Net profit 1,18,000 = Rs.5,38,000.

ParticularsTrial Balance DrTrial Balance CrAdj DrAdj CrIncome Stmt DrIncome Stmt CrBal Sheet DrBal Sheet Cr
Purchase2,00,0002,00,000
Wages50,00050,000
Salary35,00035,000
Prepaid rent20,00012,0008,000
Machinery3,50,00035,0003,15,000
Furniture1,60,0001,60,000
Debtors40,00040,000
Cash15,00015,000
Sales4,50,0004,50,000
Share capital3,50,0003,50,000
Retained earnings70,00070,000
Rent expense12,00012,000
Depreciation35,00035,000
Net profit1,18,0001,18,000
Total8,70,0008,70,00047,00047,0004,50,0004,50,0005,38,0005,38,000
worksheetfinal-accounts
16short5 marks

Write the meaning of cost accounting and explain its any three limitations. [2+3]

Meaning: Cost accounting is the branch of accounting that deals with the recording, classification, allocation and analysis of costs incurred in producing goods or rendering services, in order to ascertain, control and report the cost of products and aid managerial decision making.

Three limitations:

  1. Expensive: Installing and maintaining a cost accounting system requires extra staff, records and forms, which is costly — often not suitable for small concerns.
  2. Based on estimates: It uses estimated/predetermined costs, overhead rates and bases of apportionment, so the results may not be fully accurate.
  3. Complex and not exact: The system involves many forms, procedures and conventions; different methods give different costs, so it lacks uniformity and can be complicated to operate.
cost-accountinglimitations
17ashort2 marks

17.(I) Explain any two advantages of centralized purchase. [2]

Two advantages of centralized purchase:

  1. Bulk purchase economy: Purchasing in large quantities through a single department gives better bargaining power, trade discounts and lower prices.
  2. Better control and uniformity: A single purchasing department ensures uniform purchase policy, specialized staff, better record keeping and effective control over purchases, avoiding duplication.
materialscentralized-purchase
17bnumeric3 marks

17.(II) The following store transactions are provided for the month of Magh:

DateTransactionQuantity & Rate
Magh 1Opening stock500 units @ Rs. 20
Magh 7Purchase600 units @ Rs. 22
Magh 15Purchase800 units @ Rs. 23
Magh 25Sold1,500 units

Required: Value of closing stock and cost of goods sold using First In First Out (FIFO) method under periodic inventory system. [1+2]

Numeric answer (Rs.)

materialsfifoperiodic-inventory
18anumeric2 marks

18.(I) A worker produces 400 units in a week. Normal production per hour will be 10 units. The wage rate per hour is Rs.50.

Required: Earning of worker in a week. [2]

Numeric answer (Rs.)

labourworker-earningswages
18blong3 marks

18.(II) On comparison of cost and financial accounts, the following facts were disclosed:

Rs.
a) Net profit as per cost account25,000
b) Factory overhead over recorded in cost account10,000
c) Over valuation of opening stock in cost account5,000
d) Depreciation under recorded in cost account3,000

Required: Cost reconciliation statement [3]

Cost Reconciliation Statement (starting from profit as per cost accounts):

ParticularsAdd (Rs.)Less (Rs.)
Net profit as per cost account25,000
Add: Factory overhead over-recorded in cost a/c10,000
Add: Over-valuation of opening stock in cost a/c5,000
Less: Depreciation under-recorded in cost a/c3,000
Net profit as per financial account37,000

Calculation: 25,000 + 10,000 + 5,000 − 3,000 = Rs.37,000.

Reasoning: Over-recording of factory overhead in cost a/c understated cost profit, so add back. Over-valued opening stock in cost a/c increased cost, understating profit, so add back. Depreciation under-recorded in cost a/c overstated cost profit, so deduct.

cost-accountingcost-reconciliation
19short4 marks

Explain any five importance of computer system in accounting. [4]

Five importances of computer system in accounting:

  1. Speed: Large volumes of accounting transactions are processed and reports generated very quickly.
  2. Accuracy: Once data is correctly entered, calculations (totals, balances) are performed without arithmetical errors.
  3. Storage and retrieval: Huge amounts of data can be stored compactly and retrieved instantly when required.
  4. Automatic reports: Trial balance, ledgers and financial statements are generated automatically, saving time and effort.
  5. Reliability and security: Data can be protected with passwords/backups, giving reliable and secure records and reducing fraud.
computer-in-accounting
C

Group 'C'

Long answer questions.

3 questions·8 marks each
20long8 marks

Following Trial Balance as on 31st Asar 2081:

ParticularsDr. (Rs.)Cr. (Rs.)
Opening stock40,000
Purchase3,30,000
Machine2,00,000
Furniture1,00,000
Debtors80,000
Carriage on Purchase20,000
Carriage on Sales10,000
Returns15,00028,000
8% Bank loan2,00,000
10% Investment1,00,000
Interest12,0007,000
Wages60,000
Discount80,000
Salary20,000
Sales7,80,000
Share capital2,00,000
Creditors80,000
Cash & Bank3,88,000
Total13,75,00013,75,000

Additional information:

i) Closing stock: Rs.90,000 ii) Depreciation on machinery: 10% iii) Provision for bad debts: 5% iv) Outstanding salary for two months

Required:

a) NFRS अन्तर्गत नाफा नोक्सान विवरण (Statement of Profit or Loss under NFRS) b) NFRS अन्तर्गत वित्तीय अवस्थाको विवरण (Statement of Financial Position under NFRS)

OR / अथवा

a) बहुस्तरीय आय विवरण (Multi step income statement) b) वित्तीय अवस्थाको विवरण (Statement of financial position)

[4+4]

Workings:

  • Net purchases = 3,30,000 − 28,000 (purchase return) = 3,02,000; Net sales = 7,80,000 − 15,000 (sales return) = 7,65,000.
  • Depreciation on machine @10% of 2,00,000 = Rs.20,000.
  • Provision for bad debts @5% of 80,000 = Rs.4,000.
  • Outstanding salary: monthly salary = 20,000/10 ≈ assume given salary is for 10 months → 2 months outstanding = Rs.4,000 (i.e. 20,000 × 2/10). Adjusted salary = Rs.24,000.
  • Interest on bank loan and investment shown as given.

a) Statement of Profit or Loss (multi-step):

ParticularsRs.Rs.
Revenue (Net Sales)7,65,000
Less: Cost of goods sold
  Opening stock40,000
  Add: Net purchases3,02,000
  Add: Carriage on purchase20,000
  Add: Wages60,000
  Less: Closing stock(90,000)(3,32,000)
Gross Profit4,33,000
Add: Other income (Discount 80,000 + Interest received 7,000)87,000
Less: Operating/other expenses:
  Carriage on sales10,000
  Salary (20,000 + 4,000 o/s)24,000
  Depreciation on machine20,000
  Provision for bad debts4,000
  Interest expense (8% bank loan)12,000(70,000)
Net Profit4,50,000

b) Statement of Financial Position (as on 31st Asar 2081):

AssetsRs.Equity & LiabilitiesRs.
Machine (2,00,000 − 20,000)1,80,000Share capital2,00,000
Furniture1,00,000Add: Net profit4,50,000
10% Investment1,00,0008% Bank loan2,00,000
Debtors (80,000 − 4,000)76,000Creditors80,000
Closing stock90,000Outstanding salary4,000
Cash & Bank3,88,000
Total9,34,000Total9,34,000
final-accountstrading-accountprofit-and-loss-accountbalance-sheet
21long8 marks

Following Balance Sheets given as:

Liabilities2080 (Rs.)2081 (Rs.)Assets2080 (Rs.)2081 (Rs.)
Share Capital4,00,0006,00,000Land2,00,0003,00,000
Debenture2,00,0001,50,000Plant3,00,0005,00,000
Creditors60,00040,000Stock20,00018,000
Overdraft50,00080,000Debtors80,00032,000
Retained Earning40,00090,000Cash1,50,0001,10,000
Total7,50,0009,60,000Total7,50,0009,60,000

Income statement for 2081:

ParticularsRs.Rs.
Sales9,00,000
Less: Cost of goods sold5,00,000
Gross profit4,00,000
Less: Expenses
  Selling & administrative2,20,000
  Depreciation on plant80,000
  Premium on redemption of Debenture30,0003,30,000
Net profit70,000
Less: Dividend paid20,000
Retaining Earning50,000

Additional information: Plant was sold at book value of Rs.40,000 and purchase a new plant for Rs.3,20,000.

Required: Cash flow statement using indirect method [4+2+1+1]

Workings:

  • Plant: Opening 3,00,000 − depreciation 80,000 − sold (BV) 40,000 + purchase 3,20,000 = 5,00,000 (= closing). Sale of plant = Rs.40,000 (no gain/loss).
  • Debenture redeemed = 2,00,000 − 1,50,000 = 50,000 redeemed, plus premium on redemption Rs.30,000 → cash outflow Rs.80,000.
  • Share capital issued = 6,00,000 − 4,00,000 = Rs.2,00,000 (inflow).
  • Land purchased = 3,00,000 − 2,00,000 = Rs.1,00,000 (outflow).

Cash Flow Statement (Indirect Method) for 2081:

A. Operating Activities

ParticularsRs.Rs.
Net profit before tax70,000
Add: Depreciation on plant80,000
Add: Premium on redemption of debenture30,0001,10,000
Operating profit before working capital changes1,80,000
Add: Decrease in stock (20,000→18,000)2,000
Add: Decrease in debtors (80,000→32,000)48,000
Less: Decrease in creditors (60,000→40,000)(20,000)30,000
Net cash from operating activities (A)2,10,000

B. Investing Activities

ParticularsRs.
Purchase of land(1,00,000)
Purchase of plant(3,20,000)
Sale of plant40,000
Net cash used in investing (B)(3,80,000)

C. Financing Activities

ParticularsRs.
Issue of share capital2,00,000
Redemption of debenture (50,000 + 30,000 premium)(80,000)
Increase in bank overdraft (50,000→80,000)30,000
Dividend paid(20,000)
Net cash from financing (C)1,30,000

Net change in cash (A+B+C) = 2,10,000 − 3,80,000 + 1,30,000 = (40,000).

Opening cash 1,50,000 − 40,000 = Closing cash Rs.1,10,000 (agrees with balance sheet).

cash-flow-statementindirect-method
22long8 marks

A factory provides the following information:

ItemsRs.
Material purchase4,00,000
Carriage on purchase20,000
Direct wages2,00,000
Chargeable expenses80,000
Custom Duty10,000
Indirect material20,000
Factory rent40,000
Depreciation on Factory machinery20,000
Depreciation on Office furniture30,000
Depreciation on Delivery van10,000
Carriage outward20,000
Legal fee25,000
Audit fee18,000

Stock of goods:

ItemOpening (Rs.)Closing (Rs.)
Material40,00060,000
Semi finished goods80,00020,000
Finished goods1,00,00070,000

Profit policy: 20% on cost

Required: Cost Sheet [8]

Cost Sheet

ParticularsRs.Rs.
Opening stock of material40,000
Add: Material purchase4,00,000
Add: Carriage on purchase20,000
Add: Custom duty10,000
Less: Closing stock of material(60,000)
Material consumed4,10,000
Add: Direct wages2,00,000
Add: Chargeable (direct) expenses80,000
Prime Cost6,90,000
Add: Factory overheads:
  Indirect material20,000
  Factory rent40,000
  Depreciation on factory machinery20,00080,000
7,70,000
Add: Opening semi-finished (WIP)80,000
Less: Closing semi-finished (WIP)(20,000)60,000
Factory / Works Cost8,30,000
Add: Office & administrative overheads:
  Depreciation on office furniture30,000
  Legal fee25,000
  Audit fee18,00073,000
Cost of Production9,03,000
Add: Opening finished goods1,00,000
Less: Closing finished goods(70,000)30,000
Cost of Goods Sold9,33,000
Add: Selling & distribution overheads:
  Depreciation on delivery van10,000
  Carriage outward20,00030,000
Cost of Sales / Total Cost9,63,000
Add: Profit (20% on cost)1,92,600
Sales11,55,600
cost-accountingcost-sheet

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