ITL Public School Annual Examination ( ) Accountancy (Set -A)- answer key

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1 ITL Public School Annual Examination (204-5) Accountancy (Set -A)- answer key Date: Class: XI Time: hrs M. M: 90 General Instructions:. All questions are compulsory 2. Marks for each question are indicated against it. Attempt all parts of a question at one place. 4. Do write narrations with journal entries Is cash memo a source document or an accounting voucher? Ans- source document. 2 Real accounts are related with:- (a) Capital (b) Assets (c) Liabilities (d) Income and gains Ans- (b) Jitender purchased goods from Ramesh having list price of Rs. 5,000 on cash basis at 8% trade discount and 5% cash discount. Half the amount was paid by him. The amount of discount account in his books will be: (a) Rs. 400 (b)rs.250 (c) Rs.20 (d)rs.5 Ans- (d) 4 An accountant feels that since sales book is maintained, there is no need to open sales account. Is he correct in his views? Ans- No, as sales book shows only credit transactions and sales shows both credit and cash transactions. 5 A company purchased goods for Rs. 5,00,000 and sold 80% of such goods during the year. The market value of remaining goods was Rs. 90,000.The company valued the closing stock at cost. Is the company correct? Ans- No,it has violated prudence principle. 6 Distinguish between Receipts and payments account and Income and Expenditure account on the basis of nature of items recorded therein. Ans- R&P records cap and revenue items whereas I & E records on revenue items. 7 How will you deal with following items while preparing the final accounts of a club for the year ending st March 204. Stock of stationery Rs. 4,000(on.4.) and Rs.,000(on..4) Creditors for stationery Rs.7,200(on.4.) and Rs. 5,400(on..4) Amount paid for stationery during the year 20-4 Rs.25,000. Ans- B/S asset side- st of stat of Rs., mk Liab side Rs. 5,400 (crs) 0.5mk I & E dr side = 25,000-7, = 24,200 2mk 8 From the following information calculate the amount of subscription to be credited to the Income & Expenditure account for the year 20-4 Subscription received during the year Rs. 80,000 Subscription outstanding on.2. Rs.26,000 Subscription outstanding on.2.4 Rs.6,000 Subscription received in advance on.2. Rs.5,000 Subscription received in advance on.2.4 Rs.0,000 Subscription of Rs.2,000 are still in arrears for the year Ans- 80,000-24,000(mk)+4,000+5,000-0,000=65,000 (rest all 0.5 mk incl ans) 9 (i) From the following information calculate operating profit: 2+

2 Net profit Rs.2,00,000 Rent received Rs.20,000 Gain on sale of machine Rs. 0,000 Interest paid on loans Rs.40,000 Charity Rs.4,000 (ii) G Ltd imported from Germany one machinery for sale in India and another machinery for production purposes. Will you treat them goods or fixed assets? Ans- (i) 2,00,000-20,000-0,000+40,000+4,000=,94,000 (0.5 mk for correct addition & subtraction) (iii)mach pur for sale will be treated as goods and mach pur for prod will be treated as fixed asset ( mk) 0 Shri Avtar establishes a small business and has not maintained regular books and records his transactions through accounting equation. Is his decision correct?what is the effect thereof? Ans- It means s r prepared on double entry system. In effect he will get to know his true assets and liabilities and can take better decisions. had he maintained the complete set of accounts it would time consuming and expensive. Identify the limitations of accounting highlighted in the below mentioned statements:- (i)accounts may be manipulated to conceal vital facts. (ii)estimations are done like provision for bad debts, useful life of an asset. (iii)the amount of cash that a firm may realize by selling its assets is never known. Ans- (i) g leads to window dressing (ii) g is not fully exact (iv) Doesn t indicate the realizable value. mk x = 2 Identify and define the following types of expenditure:- (a) Such expenditures are shown on the assets side of balance sheet (b) Such expenditure are shown on the debit side of Profit and Loss account. Ans- (a) capital (b) revenue 0.5 mk each for identifying and mk each for define. On st Jan 204 the pass book of Mr. Gupta showed a debit balance of Rs. 4,000. Prepare a Bank Reconciliation statement from the following particulars:- (i) Cheques amounting to Rs. 5,600 were drawn on 27 th January,204. Out of which cheques for Rs.,000 were encashed upto st Jan 204. (ii) A wrong debit of Rs.800 has been given by the bank in the pass book. (iii) A cheque for Rs. 200 was credited in the pass book but was not recorded in the cash book. (iv) Cheques amounting to Rs. 2,000 were deposited for collection. But out of these cheques for Rs. 7,400 have been credited in the pass book on 5 th Feb 204. (v) A cheque for Rs.,000 was returned dishonoured by the bank and was debited in the pass book only. (vi) Interest on overdraft amounting to Rs.00 were not entered in the cash book. Ans- Bank reconciliation Statement as on st Jan, Particulars Plus items Minus items Marks Debit balance as per pass book 4, Cheques drawn but not presented for 4, payment Interest on bank overdraft not entered in the cash book Cheques deposited but not credited 7, Chq credited in PB but not recorded in CB Wrong debit in PB Chq dishonoured, , Unfavourable balance as per cash book (i) Pass the opening entry: 2+2

3 Furniture Rs.50,000; weighing machine Rs.5,000;computers Rs.0,000; security deposit against rent Rs.50,000; debtors Rs.2,000; stock Rs.75,000; bank balance Rs.,0,000; cash in hand Rs. 5,000 ; creditors for goods Rs.,25,000; rent payable Rs.0,000; loan from bank Rs.,50,000. (ii) Open an account for debtor, Gopal in the ledger of Mohan Ltd. and post the following transactions in gopal s (a) Goods sold to Gopal on credit Rs.5,000 (b)goods returned by Gopal Rs. 2,000 (c) Gopal declared insolvent and received Rs. 0,000 as full and final compensation from his official receiver. Ans:- (i) JOURNAL Furniture Dr. 50,000 weighing machine Dr. 5,000 computers Dr. 0,000 security deposit against rent Dr. 50,000 debtors Dr. 2,000 stock Dr. 75,000 bank Dr.,0,000 cash Dr. 5,000 To creditors.,25,000 To rent payable/c.0,000 To loan from bank,50,000 To capital 82,000 (ii)gopal particulars Amt particulars Amt To sales 5,000 By sales return 2000 By cash 0,000 By bad debts,000 5,000 5,000 5 The chief accountant of R Ltd. has taken a decision that adjustments for accrued income and prepaid expenses should not be adjusted while preparing the financial statements. As a result recognition of expenses in the same period as associated revenues could not be done in a fair manner. (i)whether his decision is correct? give reasons (ii)which accounting concepts are not being followed? Identify and explain them. Ans- no, his decision is not correct as this will not show correct financial position and correct profit earned during the year. mk Concept violated- accrual and matching. 0.5mk each for identifying and mk each for explaining. 6 There are certain attributes that makes the accounting information useful to users. List and explain them. Ans- reliability, relevance, understandability, comparability mk x 4 = 4 7 Mr. Kamal started a business with Rs. 2,00,000 as cash and furniture of Rs.8,00,000. He maintains his books of account on Single entry System. His books provide the following information at the year end: Creditors Rs. 2,00,000 Bank(Cr. Bal) Rs.,80,000 Debtors Rs.,60,000 Stock Rs. 4,00,000 Bills receivable Rs.,40,000 machinery- Rs. 25,00,000 During the year he withdrew Rs. 25,000 per month and sold his personal investments of Rs. 50% premium and brought the money into his business. You are required to ascertain the profit or loss made by him during the year. Also prepare the Statement of affairs at the year end also after considering the following adjustments: (i) Furniture is to be depreciated at 25%. (ii) Debtors worth Rs. 20,000 proved bad. Ans- Statement of affairs (drs & fur 0.5 mk each) Liabilities Amt Assets Amt

4 Creditors 2,00,000 Stock 4,00,000 Bank OD,80,000 B/R,40,000 Closing capital (b/f)(0.5 2,00,000 Debtors,60,000,40,000 mk) (-)baddebts (20,000) fur 8,00,000 (-)Dep (2,00,000) 6,00,000 Mach 25,00,000 7,80,000 7,80,000 Statement of profit and loss drawing,add cap,op cap 0.5 mk each Particulars Amount Closing capital 2,00,000 (-)Opening capital (20,00,000) (+)drawings,00,000 (-)additional capital (9,00,000) Profit ( mk) 6,00,000 8 Computer software can be divided into three categories. Name and explain them. Ans- (i) Operating software- a set of prog, active all the time in the memory of the computer, to manage the resources of the computer for their better and effective use. eg- windows software. OR It is a no. of prog put together that are used for controlling the resources and the devices attached to the computer so that they can work under one central control for their better and effective use. (ii)utility software- a set of comp prog used to perform supporting operations in a comp. It is usually focuses on how the comp infrastructure operates. Most utility software are highly specialised and designed to perform only a single task or a small range of task. (iii)application software- user-oriented prog which is designed and developed for performing certain jobs,such as accounting word processing and designing. Eg- tally,busy. 2mk x =6 9 Ladoo Ltd purchased a machinery for Rs. 6,000 and spent Rs. 4,000 on its overhauling on st October Depreciation is p.a. on Diminishing Balance Method. On st January 202, one fourth of machinery was found unsuitable and disposed off for Rs.6,000. On the same date a new machinery at a cost of Rs.5,000 was purchased. Write machinery for years. The accounts are closed on st march every year. Ans- Machinery Date Particulars Amt Date Particulars Amt.0.09 To bank 40, By depreciation 2,000 - I -I By bal c/d - I 8,000 40,000 40, By bal c/d - I ,000.. By depreciation I By bal c/d I , To bal b/d-i To bank - II , By depreciation I(/4 of 4200 =8550; 0% 0f 8550 for 9 months) By bank By P & L ( ) By depreciation 64 6,

5 ..2 I (/4 of 4200=25650; 0% of 25650) II (5000 for months) By bal c/d mk for first year, 0.5mk for 2 nd year ; mk each for dep on asset sold, pft, dep at rd year end, 0.5 mk each for both bank entries in rd year & bal c/d 20 Rectify the following transactions (i) Furniture purchased for Rs.0,000 wrongly debited to purchase account as Rs. 4,000 (ii) Credit purchases from S & Co. for Rs. 6,000 were recorded in sales book. However, S&Co. was correctly credited. (iii)a discount of Rs.58 allowed to a customer has been credited to him as Rs.562 (iv) Sales return book overcast by Rs.00 (v) A sum of Rs. 800 written off as depreciation on machinery, were not posted to depreciation. (vi) Goods of Rs.850 were returned to Bhardwaj. It was recorded in purchase book as Rs.580. Ans- JOURNAL (deduct mark if no format or no narration) Date Particulars L.F. Dr. Amt Cr. Amt Marks i Furniture Dr. To pur To suspense (being fur purchased ) ii purchases Dr sales Dr. To Suspense (being pur treated as sales). iii Suspense Dr. To customer (being less amt cr to customer) Iv Suspense Dr. To sales return (being sales return overcast) V Depreciation Dr. To suspense vi Bhardwaj Dr. To pur To pur ret 0, ,40 4,000 6,000 2,000 2 Journalise the following transactions in books of R:- (i)d s promissory note for Rs.,000 which we had endorsed in favour of M dishonoured. M paid Rs. 20 as noting charges. We paid M by cheque. D pays Rs. 400 immediately and requests to draw a new bill for months, for the balance amount along with p.a. (ii) Our acceptance to M for Rs.,000 retired before due date, rebate allowed Rs.45. (iii) L s acceptance to us for Rs. 0,000 which was sent to bank for collection was returned by the bank dishonoured. Noting charges paid by bank Rs.50. Ans:- JOURNAL (deduct mark if no format or no narration) Date Particulars L.F. Dr. Amt Cr. Amt Marks i D Dr. To M (being bill dishonoured ) M Dr To bank

6 (being M paid). Cash Dr To D 400 (being cash recd) D Dr. 5.5 To interest 5.5 (being int due) B/R Dr To D 65.5 (being bill drawn) Ii B/P Dr. 000 To cash To rebate (being bill paid) Iii L Dr. 0,050 To bill sent for collection 0,000 To bank 50 (being bill dishonoured) 22 Enter the following transactions in a Three Columns Cash Book Date Particulars Amt st apr 4 Cash in hand Bank overdraft 6,000 5,200 2 Purchased goods for cash 9,600 Deposited into bank 0,000 5 Paid Kavita Rs. 250 in full settlement of 00 4 Received cheque from Naresh in full settlement 6,700 of Rs. 7,000 6 Cash sales Rs.4,700 out of which Rs.2,700 deposited in bank 20 Withdrew from bank for personal use Bank charges 80 0 Naresh s cheque deposited into bank Ans:- Three Columns Cash Book Date Particulars L. F. disc Cash Bank Date Particulars L. F. disc cash Bank.4 2 To bal b/d 6, By bal b/d 5200 To cash C 0,000 2 By pur 9,600 6 To sales 2,000 2,700 By bank C 0,000 0 To chq in hand 6,700 5 By Kavita By 800 drawings 24 By bank 80 Charges By bal c/d , , Chq in hand Dr Disc allowed Dr. 00 To Naresh

7 All entries carry 0.5 marks 2 Prepare Trading and Profit and Loss Account and Balance Sheet from the following Trial Balance and information as on st March 204. Particulars Dr. Amt Cr. Amt Machinery,6,200 Capital,25,000 Bad Debts,500 Provision for doubtful debts,500 Debtors and Creditors 5,000 65,000 Opening Stock 40,000 Wages 20,000 Purchases and Sales,69,000 2,80,200 Return inwards and outwards,500 8,000 Carriage inwards,500 Commission 4,500 Cash 24,500 Taxes and Insurance 0,000 Rent 6,000 Salaries 22,000 4,86,200 4,86,200 Adjustments:- (i) Closing stock was valued at Rs.2,500 (ii) Commission include Rs.,500 for work to be performed next year. (iii)salaries have been paid for months. (iv) Maintain provision for doubtful 5% on debtors. (v) 0% of the wages paid are for installation of machinery. (vi) Out of the rent paid, / rd of the premises is used by the owner for residential purpose. (vii) Goods worth Rs. 2,500 are lost due to fire in the godown on..4. Insurance company admitted only 40% of the claim. Ans- Trading and Profit Loss account for the year ending st March Particulars Amt Particulars Amt To opening stock 40,000 By Sales 2,80,200 2,68,700 (-) Returns,500 To purchases,69,000,6,000 By closing stock 2,500 (-) returns 8,000 To carriage inwards,500 By loss by fire 2,500 To wages (20, ) 8,000 To gross profit 70,200 2,92,700 2,92,700 To rent 4,000 By gross profit 70,200 To salaries 22,000 By commission 4,500,000 (+) O/S 2,000 24,000 (-) Recd in adv,500 To taxes and ins 0,000 By prov for dd,500,250 (-) new prov 750 (-) bad debts,500 To loss by fire,500 To net profit 4, Balance Sheet as on st March 204. Liabilities Amt Assets Amt Capital,25,000,57950 machinery,6,200,65,200

8 (+) net profit wages 2,000 (-) drawings (2,000) Creditors 65,000 Debtors 5,000 4,250 (-) prov (750) Commission recd in adv,500 Cash 24,500 Salaries O/S 2,000 Insurance claim,000 Closing stock 2,500 2,26,450 2,26,450 Trading 2.5 marks P & L marks and B/S 2.5 marks 24 Following is the Receipts and Payment account of Rajdhani Club for the year ended st Dec. 204: 8 Receipts Amt Payments Amt To balance b/d 0,000 By salary 5,000 To subscription 52,000 By office expenses 6,000 To entrance fees 5,000 By Tournament expenses,000 To Tournament fund 26,000 By Insurance 2,000 To sale of old newspaper,000 By expenses for new year s,200 party To legacy 7,000 By sports equipment 40,000 purchased To donations 9,000 By 2% investments 0,000 purchased(on st Sept 4) To new year s party,500 By balance c/d 8,00 collection To furniture sold(book value Rs.2,000),800,4,00,4,00 Other information: (i) Salary outstanding on.2.4 is Rs. Rs.,500. Also salary outstanding on.2. is Rs.,000. (ii) On..4 the club had building Rs.75,000 and sports equipment Rs.0,000. Depreciation charged on these items including purchases was 0%. (iii)20% of the entrance fees is to be capitalized. (iv) The club has 000 members each paying Rs.55 as subscription for the entire year. Prepare Income and Expenditure account of the club for the year ended.2.4 Ans;- Income and Expenditure account of the club for the year ended.2.4 Expenditure Amt Income Amt To Salaries (000) By subscription 55, ,500 To office expenses 6,000 By new yr pty profit (200) 00 To Tournament exp 5,000 By entrance fees 4,000 To loss on sale of fur 200 By old newspaper,000 To depreciation By interest on investment 200 Building Sports equip 7,500 7,000 To insurance 2,000 By donations 9,000 To surplus

9 Sal, surplus, tou exp, dep, int on invt, ent fees= x 6= 6mk Loss, sub, don, = 0.5 x =.5mk Off exp & old n p= 0.25 x 2= 0.5 mk