This is one of two PA-1 practice papers for Class 12 Accountancy Chapters 1–3. The questions are completely different in each, so you can attempt both. Try the other one here: Set 1.
This PA 1 (Periodic Assessment) sample paper for CBSE Class 12 Accountancy 2026-27 covers the first three chapters of Part A: Accounting for Not-for-Profit Organisation (Ch 1), Accounting for Partnership Firms — Fundamentals (Ch 2), and Goodwill: Nature and Valuation / Change in Profit-Sharing Ratio (Ch 3). Max Marks: 25. Time: 40 minutes. Periodic Assessment pattern — school pattern se thoda alag ho sakta hai; check your own school’s PA-1 circular for exact chapter coverage. Every question below carries a [Ch N] tag so you can skip questions from a chapter your school hasn’t covered yet.
Paper Structure
Section A — 5 × 1 mark MCQs. Section B — 4 × 2 marks Very Short Answer. Section C — 3 × 3 marks Short Answer. Section D — 1 × 3 marks Case/Application question. Total: 25 marks.
Section A — MCQs (1 mark each)
Q1. [Ch 1] Subscription received in advance by a Not-for-Profit Organisation is shown in the Balance Sheet as:
(a) an asset (b) a liability (c) part of Capital Fund (d) income for the year
Q2. [Ch 1] Unless stated otherwise, Entrance Fees received by a club is treated as a:
(a) capital receipt (b) revenue receipt, credited to Income and Expenditure A/c (c) liability (d) fixed asset
Q3. [Ch 2] In the absence of a partnership deed, partners are entitled to interest on capital at:
(a) 6% p.a. (b) nil (c) 8% p.a. (d) 12% p.a.
Q4. [Ch 2] Interest on a partner’s drawings is:
(a) debited to the Profit and Loss Appropriation Account (b) credited to the Profit and Loss Appropriation Account (c) ignored unless the deed is silent (d) credited to the Profit and Loss Account
Q5. [Ch 3] A firm’s goodwill is valued at 2 years’ purchase of average profits. If the average profit is ₹1,20,000, the value of goodwill is:
(a) ₹1,20,000 (b) ₹2,40,000 (c) ₹60,000 (d) ₹3,60,000
Section B — Very Short Answer (2 marks each)
Q6. [Ch 1] A sports club’s Receipts and Payments Account shows sports material purchased during the year as ₹40,000. The opening stock of sports material was ₹8,000 and the closing stock was ₹12,000. Calculate the amount to be shown as an expense in the Income and Expenditure Account.
Q7. [Ch 1] State any two points of difference between a Receipts and Payments Account and an Income and Expenditure Account.
Q8. [Ch 2] X and Y are partners with fixed capitals of ₹5,00,000 and ₹3,00,000 respectively, sharing profits equally. The deed allows interest on capital @6% p.a. The firm’s profit for the year, before charging interest on capital, is only ₹40,000. Calculate the interest on capital that will actually be credited to each partner’s account.
Q9. [Ch 3] State any two circumstances under which a firm may need to value its goodwill.
Section C — Short Answer (3 marks each)
Q10. [Ch 1] From the following information, calculate the amount of subscription to be credited to the Income and Expenditure Account for the year ended 31 March 2026:
Subscriptions received during the year: ₹1,50,000
Subscriptions outstanding on 31.3.2025: ₹12,000
Subscriptions outstanding on 31.3.2026: ₹18,000
Subscriptions received in advance on 31.3.2025: ₹5,000
Subscriptions received in advance on 31.3.2026: ₹8,000
Q11. [Ch 2] A, B and C are partners with fixed capitals of ₹2,00,000, ₹1,50,000 and ₹1,00,000 respectively, sharing profits equally. As per the partnership deed, partners are entitled to interest on capital @5% p.a., and B is entitled to a monthly salary of ₹2,000. The firm’s profit for the year, before any appropriations, is ₹1,17,000. Show how the profit will be distributed among the partners (interest on capital, salary, and share of remaining profit for each).
Q12. [Ch 3] P and Q are partners sharing profits in the ratio 3:2. With effect from 1st April 2025, they decide to share profits equally. On that date, the goodwill of the firm is valued at ₹1,00,000. Pass the necessary journal entry to record this change, assuming no goodwill account is to be raised in the books.
Section D — Case/Application (3 marks)
Q13. [Ch 1] Sunrise Welfare Club’s Receipts and Payments Account for the year ended 31 March 2026 shows “Payment for Salaries ₹85,000”. Additional information: Salaries outstanding on 31.3.2025 were ₹6,000; salaries outstanding on 31.3.2026 were ₹9,000; salaries paid in advance on 31.3.2026 were ₹2,000.
(a) Calculate the salaries expense to be shown in the Income and Expenditure Account. (2 marks)
(b) State whether the outstanding salary on 31.3.2026 will appear as an asset or a liability in the club’s Balance Sheet, and why. (1 mark)
Answer Key
Show the Full Answer Key
Section A
Q1 — (b) a liability — it is money received for a future year and has not yet been earned.
Q2 — (b) revenue receipt, credited to Income and Expenditure A/c.
Q3 — (b) nil — interest on capital is allowed only if the partnership deed provides for it.
Q4 — (b) credited to the Profit and Loss Appropriation Account (and debited to the partner’s capital/current account).
Q5 — (b) ₹2,40,000 (2 × ₹1,20,000).
Section B
Q6 — Sports material consumed = Opening stock + Purchases − Closing stock = ₹8,000 + ₹40,000 − ₹12,000 = ₹36,000.
Q7 — Any two: (i) Receipts and Payments A/c is a summary of cash/bank transactions only, while Income and Expenditure A/c records only revenue items on accrual basis. (ii) Receipts and Payments A/c has an opening and closing cash/bank balance, while Income and Expenditure A/c has no such balance and instead shows a surplus or deficit. (iii) Receipts and Payments A/c includes capital receipts/payments; Income and Expenditure A/c excludes them.
Q8 — Interest due: X = 6% × ₹5,00,000 = ₹30,000; Y = 6% × ₹3,00,000 = ₹18,000; total due = ₹48,000. Since available profit is only ₹40,000 (less than total interest due), the profit is distributed between X and Y in the ratio of their interest entitlement, i.e. 30,000 : 18,000 = 5:3. X gets ₹40,000 × 5/8 = ₹25,000; Y gets ₹40,000 × 3/8 = ₹15,000. No profit remains for further appropriation.
Q9 — Any two: (i) admission of a new partner, (ii) retirement or death of a partner, (iii) change in the profit-sharing ratio among existing partners, (iv) dissolution of the firm when business is sold as a going concern, (v) amalgamation of firms.
Section C
Q10 — Subscription for the year = Received during the year + Outstanding at end − Outstanding at beginning + Advance at beginning − Advance at end
= ₹1,50,000 + ₹18,000 − ₹12,000 + ₹5,000 − ₹8,000 = ₹1,53,000.
Q11 — Interest on capital: A = 5% × ₹2,00,000 = ₹10,000; B = 5% × ₹1,50,000 = ₹7,500; C = 5% × ₹1,00,000 = ₹5,000 (total ₹22,500). B’s salary = ₹2,000 × 12 = ₹24,000. Total appropriations = ₹22,500 + ₹24,000 = ₹46,500. Remaining profit = ₹1,17,000 − ₹46,500 = ₹70,500, shared equally = ₹23,500 each.
Final amounts: A = ₹10,000 + ₹23,500 = ₹33,500; B = ₹7,500 + ₹24,000 + ₹23,500 = ₹55,000; C = ₹5,000 + ₹23,500 = ₹28,500. (Total ₹1,17,000 — tallies with the profit given.)
Q12 — Old ratio P:Q = 3:2 (P = 3/5, Q = 2/5). New ratio = 1:1 (P = 1/2, Q = 1/2). P’s share falls from 3/5 to 1/2, a sacrifice of 1/10; Q’s share rises from 2/5 to 1/2, a gain of 1/10. Q must compensate P for this gain: 1/10 × ₹1,00,000 = ₹10,000.
Journal entry: Q’s Capital A/c Dr. ₹10,000; To P’s Capital A/c ₹10,000 (Being adjustment for goodwill on change in profit-sharing ratio).
Section D
Q13(a) — Salary expense for the year = Paid during the year − Outstanding at beginning + Outstanding at end − Prepaid at end = ₹85,000 − ₹6,000 + ₹9,000 − ₹2,000 = ₹86,000.
Q13(b) — Outstanding salary on 31.3.2026 is a liability — it is an expense that belongs to the current year but has not yet been paid, so the club still owes it.
Keep Practising
For chapter-level depth before your PA-1, revise Goodwill and Change in Profit-Sharing Ratio and Admission of a Partner notes. Once your school covers the later chapters, these Class 12 Accountancy notes will help too: Analysis of Financial Statements and Accounting Ratios.
Kaizen tip: redo Q10 and Q13 without looking at the key — the subscription/salary adjustment formula is the single most repeated PA-1 and half-yearly question type in Not-for-Profit accounting. Get comfortable with it now and it stops being a trap in the board exam.