CA Foundation Accounts Paper Sep 2025 with Answers
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Table of Contents
CA Foundation Sep 25 Suggested Answer Other Subjects Blogs :
State with reasons, whether the following statements are True or False :
(i) The materiality depends only upon the amount of the item and not upon the size of the business, nature and level of information, level of the person making the decision etc.
Answer: False
As per materiality principle, all the items having significant economic effect on the business of the enterprise should be disclosed in the financial statements.
(ii) While preparing the Income and Expenditure Account as per accrual concept, the income and expenditure is considered in the period in which actual receipts or actual payments are made.
Answer:
(iii) Profit sharing ratio and capital contribution ratio need not be same.
Answer: True
Profit sharing can be different from the that of the capital introduced by each of the partner. Not necessary that partner contributing more capital should have a higher profit sharing ratio and vice versa.
(iv) Depreciation is not provided in the financial year when the entity incurs loss.
Answer:
(v) The concept that helps in keeping business affairs free from the influence of the personal affairs of the owner is known as the matching concept.
Answer:
Explain the generally accepted valuation principles.
There are four generally accepted measurement bases or valuation principles. These are:
(i) Historical Cost: It means acquisition price. According to this base, assets are recorded at an amount of cash or cash equivalent paid at the time of acquisition. Liabilities are recorded at the time of proceeds received in exchange for the obligation.
(ii) Current Cost: Assets are carried out at the amount of cash or cash equivalent that would have to be paid if the same or an equivalent asset was acquired currently. Liabilities are carried at the undiscounted amount of cash or cash equivalents that would be required to settle the obligation currently.
(iii) Realisable Value: As per realisable value, assets are carried at the amount of cash or cash equivalents that could currently be obtained by selling the assets in an orderly disposal and Liabilities are carried at their settlement values. Liabilities are carried out at settlement values.
(iv) Present Value: As per present value, an asset is carried at the present discounted value of the future net cash inflows that the item is expected to generate in the normal course of business. Liabilities are carried at the present discounted value of future net cash outflows that are expected to be required to settle the liabilities in the normal course of business.
Record the following transactions in the purchase book.
|
2nd December, 2024 |
Purchased from Gupta & Co. on credit 100 plates @ ₹150 per plate = ₹15,000 500 small bowls @ ₹50 per bowl = ₹25,000 Less: Trade Discount @ 10% = ₹4,000 Packing charges @ ₹2 per plate and ₹1 per bowl = ₹700 |
|
6th December, 2024 |
Purchased a furniture for shop from M/s Plywood Co. on credit = ₹15,000 |
|
8th December, 2024 |
Purchased on Credit from M/s Ajanta & Co. 50 boxes of spoon @ ₹200 per box = ₹10,000 40 boxes of fork @ ₹250 per box = ₹10,000 Less: Trade Discount @ 8% = ₹1,600 |
|
15th December, 2024 |
Purchased for cash from Steel House 40 big bowls @ ₹70 per bowl = ₹2,800 |
|
27th December, 2024 |
Purchased one dozen cookers @ ₹750 each from M/s Verma & Sons on credit |
The following are the details of machineries held by a firm:
|
Machine |
Purchase Date |
Purchase Value (₹) |
Useful Life |
Scrap Value (₹) |
|
M1 |
01/04/2020 |
11,00,000 |
8 years |
20,000 |
|
M2 |
01/04/2022 |
9,40,000 |
8 years |
40,000 |
|
M3 |
01/04/2024 |
8,10,000 |
5 years |
— |
The firm uses ‘sum of years digits’ method for charging depreciation and maintains a separate account for it.
On 1st April, 2024, the M1 machine has become obsolete and has been sold for ₹1,34,000/-. On the same date, the estimated useful remaining life of M2 machine is reassessed at 3 years with ₹10,000 as scrap value.
You are required to prepare the Machinery Account, Provision for Depreciation Account, and Machinery Disposal Account for the year ending 31st March, 2024 and 31st March, 2025.
Pass the Journal entries to record/rectify the following transactions in the books of Mr. Dutt. Suspense account may be used, if required
(i) Sale of goods to Mahesh at the list price of ₹1,80,000/- less 10% trade discount. Out of the amount due 50% is received, out of which two-third is received by cheque and the balance amount is received in cash. CGST and SGST applicable is 6% each.
(ii) One of the debtors, Mr. X has agreed to pay his dues of ₹3,000/- to Mr. C who is a creditor of Mr. Dutt with the same amount being due to him.
(iii) Employees have been given inventory having selling price of ₹1,00,000 (Cost price ₹75,000) on the eve of Deepawali as a gift. CGST and SGST applicable is 6% each.
(iv) Sale of ₹2,500/- made to Mr. Kamal Kumar has been debited to Mrs. Kamla Rani.
(v) A second hand machinery was purchased and its overhauling charges paid are ₹15,000/-. The accountant debited the overhauling charges to Repairs and Maintenance Account. Depreciation on machinery has been charged at 10%.
(vi) A purchase of ₹151 from Mr. X was entered in Purchase Day Book as ₹15 and posted to Mr. X account as ₹51.
(vii) R has been issued a credit note allowing rebate of ₹6,000/- as goods supplied to him was found defective. CGST and SGST charged @6% each.
(viii) S was also given a credit note of ₹ 2,000/- for making prompt payment for outstanding against goods sold to him. CGST and SGST charged on sale was @ 6%.
(ix) An accrual of telephone charges for ₹ 2,538 has been completely omitted.
(x) A cheque of ₹ 25,390 issued to Mr. C. Dass (shown under trade payables) towards his dues has been wrongly debited to the purchases.
From the following particulars furnished by Mr. Wye, prepare his Trading and Profit & Loss Account for the year ended on 31st March, 2025. Also prepare his Balance Sheet as on 31st March, 2025:
|
Particulars |
01.04.2024 (₹) |
31.03.2025 (₹) |
|
Creditors |
6,30,800 |
4,96,000 |
|
Expenses Outstanding |
24,000 |
13,200 |
|
Fixed Assets (including machinery) |
4,64,400 |
4,81,600 |
|
Stock in hand |
3,21,600 |
4,48,000 |
|
Cash in hand |
1,18,400 |
48,000 |
|
Cash at bank |
1,60,000 |
2,75,200 |
|
Sundry Debtors |
6,61,200 |
? |
|
Details of the year's transactions are as follows : |
(₹) |
|
Cash and discount credited to debtors |
25,60,000 |
|
Returns from debtors |
58,000 |
|
Bad debts |
16,800 |
|
Gross Sales (Both cash and credit) |
28,72,400 |
|
Discount allowed by creditors |
28,000 |
|
Capital introduced by cheque |
16,000 |
|
Collection from debtors deposited into bank after receiving cash |
3,40,000 |
|
Cash purchases |
25,00,000 |
|
Expenses paid by cash |
41,200 |
|
Drawings by cheque |
3,82,800 |
|
Machinery acquired by cheque |
17,200 |
|
Cash deposited into bank |
1,27,200 |
|
Cash withdrawn from bank |
2,00,000 |
|
Cash sales |
1,84,000 |
|
Payment to creditors by cheque |
24,10,800 |
Note : No Fixed Asset has been sold during the year.
Mr. P was carrying on a business. On 1st April, 2023, he admitted Q as a partner giving him one-fourth profit. It was agreed that the goodwill of the firm would be ₹24,000. On 1st July, 2023, R was admitted as a partner and it was agreed that the goodwill of the firm be determined at ₹40,000 and the new profit sharing ratio of P, Q and R will be 3:1:1.
On 1st September, 2023, S was also admitted as a partner and at this time, goodwill was valued at ₹72,000/- and they agreed to share profits in the ratio of 3:1:1:1.
On 1st April, 2024, R decided to retire and T was admitted as a partner. Goodwill was agreed at ₹96,000 and the profit sharing ratio amongst P, Q, S and T now agreed to be 5:4:3:4.
All these agreements about goodwill have not been taken into account. On 1st April, 2024, when R retires and T is admitted, the partners decided to account for the goodwill by making necessary entries in respect of goodwill in the books without keeping the goodwill account in books.
You are required to show working of the goodwill and to pass the required journal entry.
P and Q have been carrying on the business in the name of Bharat Springs in partnership sharing profit and losses in the ratio of 2:3.
Their Balance Sheet as on 31st March, 2024 has been as follows:
|
Liabilities |
(₹) |
Assets |
(₹) |
|
Capital Accounts : |
|
Building |
85,000 |
|
P |
80,000 |
Plant |
55,000 |
|
Q |
1,60,000 |
Furniture |
26,700 |
|
General Reserve |
50,000 |
Debtors |
48,000 |
|
Creditors |
57,800 |
Bills Receivable |
11,600 |
|
Bills Payable |
16,500 |
Stock |
54,800 |
|
|
|
Bank |
83,200 |
|
Total |
3,64,300 |
Total |
3,64,300 |
On 1st April, 2024, they have decided to admit R into the partnership giving him a 1/5th share in future profits on the following terms:
(i) R will bring ₹80,000 as his share of capital but is unable to bring in cash for his share of goodwill. It was decided to calculate goodwill based on R’s share in the profits and the capital contribution made by him to the firm.
(ii) Partners will not withdraw their share of goodwill nor will the goodwill appear in the books of account.
(iii) General Reserve will be transferred to the Partners’ Capital Accounts.
(iv) Provision for doubtful debts is to be made on debtors @2%.
(v) A liability of creditors of ₹1,440 is to be written back as no longer payable.
(vi) Stock shall be written down by 10%.
(vii) Building is to be revalued at ₹1,00,000, Plant at ₹60,000 and Furniture at ₹24,000.
(viii) Partners agreed that the values of the assets and liabilities remain the same and, as such, there should not be any change in their book value because of above-mentioned adjustments. They also agreed that for the purpose of goodwill computation, any effect of revaluation shall be ignored.
You are required to make:
Following is the Receipts and Payments Account of Smart Club for the year ended on 31st March, 2025:
Receipts and Payments Account for the year ended on 31st March, 2025
|
Receipts |
Amount (₹) |
Payments |
Amount (₹) |
|
To Balance b/d |
2,50,000 |
By Salaries and Wages |
1,65,000 |
|
To Subscription |
4,20,000 |
By Office Expenses |
35,000 |
|
To Donation for Match Fund |
55,000 |
By Telephone Charges |
28,000 |
|
To Sale of Match tickets |
20,000 |
By Match Expenses |
1,10,000 |
|
To Entrance Fees |
85,000 |
By Electricity Charges |
32,000 |
|
|
|
By Sports Equipment |
2,50,000 |
|
|
|
By Travelling and Conveyance |
65,000 |
|
|
|
By Balance c/d |
1,45,000 |
|
Total |
8,30,000 |
Total |
8,30,000 |
Additional Information:
(i) The subscriptions include ₹40,000 received for the year ended on 31st March, 2024. On 31st March, 2025, subscriptions due but not received were ₹25,000. Advance subscription received for the year ending on 31st March, 2025 but pertaining to year 2025–2026 amounted to ₹35,000. The subscriptions received in advance for the year ended 31st March, 2024 includes ₹14,000 pertaining to the year 2024–25.
(ii) Opening Balance of Match Fund on 1st April, 2024 is ₹30,000.
(iii) Outstanding Salaries and Wages are ₹40,000 for the year ended on 31st March, 2025.
(iv) Depreciate Sports Equipment by 25% for the year ended on 31st March, 2025.
(v) Capitalize 50% of the Entrance Fees.
Prepare Income and Expenditure Account of the Club from the above particulars for the year ended on 31st March, 2025 and Balance Sheet as on that date.
From the following information supplied by Mr. D, prepare a Bank Reconciliation Statement as on 31st March, 2025 after amending the cash book on that date:
P owed ₹ 2,00,000 to Q. On 1st October, 2024, P accepted a bill drawn by Q for the due amount for 3 months. Q got the bill discounted with his bank for ₹ 1,98,000 on 3rd October, 2024. On 31st December, 2024, before the due date, P approached Q for renewal of the bill. Q agreed on the conditions that ₹ 1,00,000 along with interest at 12% per annum for 3 months on the amount of ₹ 1,00,000/- will be paid and P would accept a new bill for three months for the balance amount. These arrangements were carried out on 2nd January, 2025. However, on 2nd April,2025, before the due date, P became insolvent and only 40% of the amount of the bill could be recovered from his estate.
Pass the necessary journal entries (with narration) in the books of Q.
Mr. Sahil runs a factory which produces sugar. Following details are available in respect of his manufacturing activities for the year ended on 31st March, 2025:
|
Opening Work in Progress (15 tonnes) |
4,50,000 |
|
Closing Work in Progress (12 tonnes) |
3,60,000 |
|
Raw Materials consumed |
32,00,000 |
|
Closing inventory of Raw Materials |
7,60,000 |
|
Hire charges of machine @ ₹ 200 per ton produced |
|
|
Direct Wages - Contracted @ ₹ 400 per ton manufactured and @ ₹ 200 per ton of closing WIP |
|
|
Factory Rent |
2,40,000 |
|
Repairs & Maintenance of plant |
1,50,000 |
|
Sugar produced - 500 Tons |
|
|
Sale of Scrap |
84,000 |
Prepare the Manufacturing Account of Mr. Sahil for the year ended on 31st March, 2025.
Alpha Limited has an Authorized Equity Share Capital of ₹20 lakhs divided into equity shares of ₹100 each and 10% Redeemable Cumulative Preference Shares of ₹5.00 lakhs divided into ₹100/- per share. The paid-up equity capital is of ₹13,50,000/- and 10% Redeemable Cumulative Preference Shares of ₹3,00,000/- of ₹100 each.
Balances in other accounts are:
The Company has investments of the face value of ₹40,000/- being carried in the books at a cost of ₹45,000/-.
The Company has decided to redeem the Cumulative Preference Shares at 10% premium, partly by making an issue of equity shares of the face value of ₹1,50,000/- at a premium of 10%. Investments are sold at 110% of their face value. All preference shareholders have been paid off except 2 holders holding 500 shares.
You are required to pass the necessary Journal Entries for effecting the above transactions. Working should form part of your answer.
ABC Limited has issued 1,20,000 Equity shares of ₹10 each at a premium of ₹2 per share for public subscription payable as follows:
Application has been received for 1,80,000 shares. Allotment has been made pro rata to the applicants for 1,44,000 shares, the remaining applications being refused. T, to whom 4,800 shares have been allotted, failed to pay the allotment and first call money and his shares have been forfeited .After the second and final call has been made, N, to whom 6,000 shares have been allotted, has also failed to pay the two calls. His shares have also been forfeited. Subsequently, out of these forfeited shares, 7,800 shares (including all shares of T) were re-issued to P as fully paid-up at ₹8 per share.
Show the necessary Journal Entries and entries in Cash Book.
From the following particulars, ascertain the value of inventories as on 31st March, 2025:
|
Inventory as on 1st April, 2024 |
1,76,900 |
|
Purchases |
9,64,000 |
|
Manufacturing Expenses |
1,90,000 |
|
Selling Expenses |
78,500 |
|
Administrative Expenses |
25,000 |
|
Financial Expenses |
24,900 |
|
Sales |
15,37,000 |
(i) At the time of valuing inventory as on 31st March, 2024, a sum of ₹7,500 was written off on a particular item remaining in the balance, which was originally purchased for ₹70,000 and was sold during the year for ₹65,000. Barring the transaction relating to this item, the gross profit earned during the year was 20% on sales.
(ii) On 15th March, 2025, the goods of the sale value of ₹20,000 (included in above sales) were sent on sale or return basis to a customer, the period of approval being four weeks. He returned 40% of the goods on 10th April, 2025, approving the rest.
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