CA Foundation Accounts Paper Jan 2026 with Answers
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Table of Contents
CA Foundation Jan 26 Suggested Answer Other Subjects Blogs :
State with reasons, whether the following statements are True or False :
(i) Money spent to reduce working expenses is Revenue Expenditure.
Answer:
(ii) Transactions regarding the purchase of fixed assets on credit are recorded in the purchase book.
Answer:
(iii) A present financial obligation of an uncertain amount, which can be measured reliably by using a substantial degree of estimation, is termed as liability.
Answer:
(iv) Nominal Accounts are kept under Single Entry System.
Answer:
(v) Winding up of a LLP may be initiated by Tribunal if the LLP has failed to submit the Statements of Accounts and Solvency or the LLP Annual Returns for more than three consecutive financial years with the Registrar.
Answer:
(vi) As per Section 52 of the Companies Act, 2013, a company may utilise the Securities Premium Account to write off its preliminary expenses.
Answer:
What are Accounting Standards? Briefly explain the main advantage of setting Accounting Standards and their limitations.
Mr. Vijay has entered into the following transactions during the month of December, 2025. You are required to journalise the same in his books of account.
(i) Purchased goods from Ramsons for ₹ 20,000/- at a trade discount of 10% plus CGST and SGST @ 9% each. ₹ 10,000/- was paid immediately and the balance is payable after 2 months.
(ii) Goods costing ₹ 10,000/- were withdrawn for personal use. Such goods were purchased by paying CGST and SGST @ 9% each.
(iii) Purchased Machinery for ₹ 52,500/- including IGST @ 5% by issuing a cheque to the supplier.
(iv) Goods costing ₹ 3,000/- (before trade discount of 10%) were returned to Vinod. Such goods were purchased by paying CGST and SGST @ 9% each.
Mr. A’s Trial Balance as on 31st March, 2025 did not agree and he wrote off the difference to the Profit and Loss Account for that year. Next year, he engaged the services of an accountant, who after a close scrutiny of the books of account for the previous year, observed the following errors:
(i) Goods worth ₹ 5,000/- were dispatched to a customer before the close of the year but no invoice was made out.
(ii) ₹ 3,000/- due to Mr. X was omitted to be taken to the Trial Balance.
(iii) Wages of ₹ 5,000/- paid for erection of Machinery were debited to Wages Account.
(iv) Purchase of goods from Mr. R for ₹ 20,000/- was omitted to be recorded.
(v) Cash payment of ₹ 5,000/- to Mr. C was posted to the credit of his account.
(vi) Purchase of ₹ 15,390/- was wrongly posted as ₹ 15,930/-.
(vii) Goods worth ₹ 16,000/- were sent on sale or return basis to a customer and entered in the Sales Book. At the close of the year, the customer still had the option to return the goods. Gross Profit Margin was 25% on sales.
(viii) A return to a creditor, ₹ 550/-, was entered in Returns Inward Book. However, the creditor’s account was correctly posted.
Mr. A charges depreciation @ 10% on Machinery.
You are required to pass the necessary rectification entries in the books of Mr. A.
Mehta and Company had the following balance appearing in its books of account as on 1st April, 2024:
|
Particulars |
Amount (₹) |
|
Plant and Machinery A/c |
1,42,50,000 |
Its accounts are made up to 31st March every year and depreciation is charged @ 10% per annum under the Written Down Value Method.
On 1st September, 2024 a new machine was acquired at a cost of ₹ 21,20,000/- and a sum of ₹ 46,900/- was incurred on the same day towards installation charges for erecting the said machine.
On the same date a machine which had cost ₹ 32,80,500/- on 1st April, 2022 was auctioned for ₹ 5,62,500/-.
Another machine which had cost ₹ 32,77,500/- on 1st April, 2023 having become obsolete, was scrapped on 1st September, 2024 and it realized nothing.
You are required to prepare the Plant and Machinery Account in the books of Mehta and Company for the year ended 31st March, 2025. Also show the working for profit/loss on sale and scrapping of the machines. Round off the figures to the nearest multiple of a rupee.
Income and Expenditure Account of Global Sports Club for the year ended 31st March, 2025, based on the image you shared.
|
Expenditure |
|
₹ |
Income |
|
₹ |
|
To Upkeep of grounds |
|
24,000 |
By Subscription |
|
1,80,000 |
|
To Salary |
|
1,14,000 |
By Entrance Fees |
|
6,000 |
|
To Books and Magazines |
|
12,000 |
By Income from Annual Meet |
|
|
|
To Annual Dinner Expenses |
36,000 |
|
Receipts |
35,450 |
|
|
Less: Contribution |
(24,000) |
12,000 |
Less: Expenses |
(18,000) |
17,450 |
|
To Audit Fees |
|
6,000 |
By Interest on Investment @ 11% |
|
|
|
To Electricity Expenses |
|
10,800 |
(Cost of Investment ₹2,05,000) |
22,550 |
|
|
To Interest & Bank Charges |
|
3,600 |
|
|
|
|
To Depreciation on Sports Equipment |
|
7,200 |
|
|
|
|
To Surplus |
|
36,400 |
|
|
|
|
Total |
|
2,26,000 |
Total |
|
2,26,000 |
This account has been prepared after the following adjustments
|
Particulars |
31st March, 2024 (₹) |
31st March, 2025 (₹) |
|
(1) Subscription Outstanding |
14,400 |
18,000 |
|
(2) Subscription received in advance |
10,800 |
6,480 |
|
(3) Outstanding Salary |
9,600 |
10,800 |
|
(4) Prepaid Electricity Expenses |
Nil |
1,440 |
The club owned a sports ground valued at ₹ 2,40,000. The club had sports equipment on 1st April, 2024 valued at ₹ 62,400. At the end of the year, after depreciation, the value of this equipment amounted to ₹ 64,800.
Audit fees of ₹ 4,800 for the year 2023–24 was paid during the current year. Audit fees for 2024–25 is yet outstanding.
During 2023–24, the club had raised a bank loan of ₹ 48,000. This loan was outstanding throughout the current year.
On 1st April, 2024 cash in hand amounted to ₹ 33,360.
You are required to prepare :
Receipts and Payments Account for the year ended on 31st March, 2025
Balance Sheet as at 31st March, 2025
Ram and Shyam are partners sharing profits and losses in the ratio of 3:2. The Balance Sheet of the firm as at 31st March, 2025 stood as under:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
Capital Accounts: |
|
Fixed Assets |
6,00,000 |
|
Ram |
2,40,000 |
|
|
|
Shyam |
1,60,000 |
|
|
|
|
|
Investments |
1,00,000 |
|
|
|
Inventories |
3,25,000 |
|
Long Term Loan |
4,50,000 |
Trade Receivables |
1,25,000 |
|
Current Liabilities |
5,00,000 |
Loans and Advances |
2,00,000 |
|
Total |
13,50,000 |
Total |
13,50,000 |
Due to financial difficulties, it was decided to admit Mohan as a Partner in the firm from 1st April 2025 on the following terms:
The profits of the previous three years were as follows:
|
Year |
Profit / Loss |
Adjustment Details |
|
2022–23 |
₹ 40,000/- (Profit) |
Includes insurance claim of ₹ 80,000/- |
|
2023–24 |
₹ 20,000/- (Loss) |
Includes Voluntary retirement compensation of ₹ 2,20,000/- |
|
2024–25 |
₹ 1,00,000/- (Profit) |
Includes profit of ₹ 50,000/- on sale of fixed assets |
You are required to prepare the Revaluation Account, Partners' Capital Accounts and Balance Sheet as on 1st April 2025 after the admission of Mohan.
It was decided to revalue the assets on 31 March 2025 as under:
|
Asset |
Value |
|
Fixed Assets |
₹ 8,00,000/- |
|
Investments |
Nil |
|
Inventory |
₹ 2,96,000/- |
Of the Trade Receivables, ₹ 5,000/- are considered as irrecoverable and a further 5% is to be provided for bad and doubtful debts.
You are required to prepare the Revaluation Account, Partners' Capital Accounts and Balance Sheet as on 1April 2025 after the admission of Mohan.
A, B and C are partners of M/s ABC LLP sharing profits and losses in the ratio of 3 : 2 : 1. The Balance Sheet of the firm as at 31st March, 2025 stood as under:
|
Liabilities |
Amount (₹) |
|
Assets |
Amount (₹) |
|
Capital Accounts |
|
|
Building |
3,20,000 |
|
A |
4,80,000 |
|
Plant and Machinery |
3,20,000 |
|
B |
3,20,000 |
|
Inventories |
1,60,000 |
|
C |
1,60,000 |
9,60,000 |
Trade Receivables |
3,20,000 |
|
|
|
|
Cash at Bank |
1,60,000 |
|
|
|
|
|
|
|
Trade Payables |
3,20,000 |
|
|
|
|
Total |
12,80,000 |
|
Total |
12,80,000 |
On 1st April, 2025, A desired to retire from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and liabilities on that date on the following basis:
You are required to draw up the following accounts after giving effect to the above transactions:
The following is the schedule of balances as on as on 31st March, 2025 Extracted from the books of mr.radhey.
|
Particulars |
Dr. (₹) |
Cr. (₹) |
|
Advertisement Expenses |
13,400 |
— |
|
Bad Debts |
4,400 |
— |
|
Bad Debts Recovered |
— |
1,800 |
|
Cash at Bank |
12,500 |
— |
|
Bank Overdraft |
— |
3,20,000 |
|
Capital Account |
— |
2,60,000 |
|
Carriage Inwards |
4,500 |
— |
|
Carriage Outwards |
5,400 |
— |
|
Cash in Hand |
5,800 |
— |
|
Drawings |
46,000 |
— |
|
Furniture and Fittings |
41,000 |
— |
|
Interest paid on loan |
12,000 |
— |
|
Administrative Expenses |
40,640 |
— |
|
Opening Stock |
1,29,000 |
— |
|
Plant & Machinery |
80,000 |
— |
|
Prepaid Rent |
1,200 |
— |
|
Printing & Stationery |
5,000 |
— |
|
Provision for discount on Trade Receivables |
— |
5,500 |
|
Provision for Doubtful debts |
— |
12,800 |
|
Purchases |
6,08,800 |
— |
|
Rent, Rates and Taxes |
17,200 |
— |
|
Salaries and Allowances |
90,200 |
— |
|
Salaries Payable |
— |
9,800 |
|
Sales |
— |
8,44,000 |
|
Trade Payables |
— |
1,90,000 |
|
Trade Receivables |
4,80,000 |
— |
|
Wages and Salary |
46,860 |
- |
|
Total |
16,43,900 |
16,43,900 |
Additional Information:
Prepare a Trading and Profit and Loss Account for the year ended 31st March, 2025 and a Balance Sheet as at that date.
Attempt any ONE of the two sub-parts i.e either (i) OR (ii)
(i) On 30th November 2025, the Bank Statement of M/s Rama & Sons showed a Debit balance of ₹ 39,700/- at bank. On comparing it with the Cash Book, the following discrepancies were observed:
(1) A cheque of ₹ 10,000/- was issued to a supplier on 25th November but was not presented for payment till 3rd December.
(2) A cheque of ₹ 3,000/- was received from a customer and deposited on 28th November but was credited by the bank on 2nd December.
(3) The bank had directly collected interest of ₹ 2,400/- on behalf of the firm, which has not yet been recorded in the cash book.
(4) Credit side of the Bank column of Cash book was overcast by ₹ 900/-.
(5) A customer had directly deposited ₹ 8,000/- into the firm’s bank account, but no entry was made in the cash book.
(6) A cheque of ₹ 2,000/- deposited earlier was returned dishonoured and debited in the Bank Statement only.
(7) As per standing instructions to bank, EMI of ₹ 20,000/- was paid by the bank. The same was omitted to be accounted for in the cash book.
(8) An amount of ₹ 5,000/- was wrongly credited by bank to the firm’s account for which details are not available.
(9) The Cashier had wrongly recorded a bank payment of ₹ 12,500/- as ₹ 21,500/- in the Cash Book.
You are required to ascertain the balance appearing in the Cash Book of M/s Rama and Sons as on 30th November, 2025.
(ii) T draws on J a bill of exchange for ₹ 1,80,000/- on 1st April, 2025 for 3 months. J accepts the bill and sends it to T, who gets it discounted from his banker for ₹ 1,72,800/-. T immediately remits ₹ 57,600/- to J. On the due date, T, being unable to remit the amount due, accepts a bill for ₹ 2,52,000/- for three months, which is discounted by J from his banker for ₹ 2,40,660/-. J sends ₹ 40,440/- to T. Before the maturity of the bill, T becomes bankrupt and his estate paying fifty paise in a rupee. Pass the necessary journal entries in the books of T.
Sumitra is engaged in the business of trading in detergents. She does not maintain proper records of her business. From the following details furnished by her, you are required to compute the amount of Total Purchases and Sales for the year ended 31st March, 2025:
|
Particulars |
Amount (₹) |
|
Opening Balance (1st April, 2024) |
|
|
Inventory |
2,00,000 |
|
Sundry Creditors |
1,23,000 |
|
Sundry Debtors |
1,50,000 |
|
Closing Balance (31st March, 2025) |
|
|
Inventory |
1,50,000 |
|
Sundry Creditors |
1,38,000 |
|
Sundry Debtors |
2,56,000 |
|
Cash paid to Creditors |
2,63,700 |
|
Cash received from Debtors |
4,56,000 |
|
Cash Sales |
83,400 |
|
Cash Purchases |
30,000 |
|
Discount received during the year |
11,300 |
|
Discount allowed during the year |
18,700 |
Ajanta Limited issued 50,000 equity shares of ₹ 10/- each payable as ₹ 3/- per share on application, ₹ 5/- per share (including ₹ 2/- as premium) on allotment and ₹ 4/- per share on call. All these shares were subscribed. Money due on all shares was fully received except from X, holding 1,000 shares who failed to pay the Allotment and Call money and Y, holding 2,000 shares, failed to pay the Call money. All those 3,000 shares were forfeited. Out of forfeited shares, 2,500 shares (including whole of X’s shares) were subsequently re-issued to Z as fully paid up at a discount of ₹ 2 per share.
Pass the necessary journal entries in the books of Ajanta Limited to record the forfeiture and re-issue of the shares. Also prepare the extracts of the Balance Sheet and Notes to accounts of the company.
The Balance Sheet of Dynamic Limited as at 31st March, 2024, inter-alia, includes the following information :
|
Particulars |
Amount (₹) |
|
10,00,000 Equity Shares of ₹ 10/- each fully paid up |
1,00,00,000 |
|
10,00,000 9% Preference Shares of ₹ 100/- each, ₹ 70/- paid up |
70,00,000 |
|
Capital Redemption Reserve |
40,00,000 |
|
Securities Premium Reserve |
10,00,000 |
|
General Reserve |
1,00,00,000 |
|
Balance with Banks |
30,00,000 |
Under the terms of their issue, the Preference Shares are redeemable on 31st March, 2025 at a premium of 5%.
Preference Shareholders having 4,000 shares fail to make the payment for the Final Call made under Section 55 of the Companies Act, 2013. Their shares are forfeited after giving proper notices.
In order to finance the redemption, the company makes a rights issue of 10,00,000 Equity Shares of ₹ 10/- each at ₹ 11/- per share, ₹ 2/- being payable on application, ₹ 4/- (including ₹ 2/- as premium) on allotment and the balance on 1st June, 2025.
The issue was fully subscribed and allotment made on 31st March, 2025. The money due on allotment was received on 31st March, 2025. The preference shares were redeemed after fulfilling the necessary conditions of Section 55 of the Companies Act, 2013.
You are required to pass the necessary Journal Entries (with narrations) in the books of Dynamic Limited for the above.
What do you mean by principal books of account? What are the rules of posting of Journal Entries into the Ledger?
Ledger is known as principal books of accounts and it provides full information regarding all the transactions pertaining to any individual account. Ledger contains all set of accounts (viz. personal, real and nominal accounts).
Rules regarding posting of entries in the ledger
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