Chapter: Introduction to Accounting

Transcription

1 Chapter: Introduction to Accounting Q1. Giving examples, explain each of the following accounting terms : Fixed assets Gain Profit Revenue Expenses Short-term liability Capital Q2. Medico Plus plans to install a new equipment..which of the following is the relevant data for this decision? a. Similar business acquired the new equipment in the previous year for Rs. 10,00,000 b. Equipment cost details of last two years c. Equipment cost details of last ten years Q3. Many People in today s society think of an accountant as simply a glorified bookkeeper. But the role of an accountant is continually changing. Discuss. Q4. As a senior accountant of Taxman Limited, what three steps would you take to make your company s financial statements understandable and decision useful? Q5. Which stakeholder group Would be most interested in (a) the VAT and other tax liabilities of the firm (b) the potential for pay awards and bouns deals (c) the ethical or environmental activities of the firm (d) whether the firm has a long-term future (e) profitability and share performance. (f) the ability of the firm to carry on providing a service or producing a product. Q6. Aditya started a business for buying and selling of stationery with Rs. 5,00,000 as an initial investment. Of which he paid Rs.1,00,000 for furniture, Rs. 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid Rs.5,000 as their salaries. Out of the stationery bought he sold some stationery for Rs.1,50,000 for cash and some other stationery for Rs.1,00,000 on credit basis to Mr.Rahul. Subsequently, he bought stationery items of Rs.1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost Rs. 30,000 worth of stationery. A part of the machinery, which cost Rs. 40,000, was sold for Rs. 45,000. From the above, answer the following : 1. What is the amount of capital with which Mr. Sunrise started business. 2. What are the fixed assets he bought? 3. What is the value of the goods purchased? 4. Who is the creditor and state the amount payable to him? 5. What are the expenses? 6. What is the gain he earned?

2 7. What is the loss he incurred? 8. Who is the debtor? What is the amount receivable from him? 9. What is the total amount of expenses and losses incurred? Chapter: Theory Base of Accounting Q1. Name the convention that states that same accounting methods should be adopted every year in preparing financial statements. Q2. Fill in the blanks: (i) If a firm believes that some of its debtors may default, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the concept. (ii) The fact that a business is separate and distinguishable from its owner is best exemplified by the concept. (iii) The concept states that if straight line method of depreciation is used in one year, then it should also be used in the next year. (iv) The management of a firm is remarkably incompetent, but the firms accountants can not take this into account while preparing book of accounts because of concept. Q3. Why is it important to adopt a consistent basis for the preparation of financial statements? Explain. Q4. Why is it necessary for accountants to assume that business entity will remain a going concern? Q5. When should revenue be recognised? Are there exceptions to the general rule? Q6. Explain the meaning and significance of the Accrual Assumption. Q7. Sumit is owner of Modern Art, an art gallery. In the process of preparing financial statements, the accountant of the firm fell ill and had to proceed on leave. Sumit was urgently in need of the statements as these had to be submitted to the bank, in pursuance of a loan of Rs. 5 lakh applied for the expansion of the business of the firm. Nisha his friend, volunteered to complete the work. On scrutinising the accounts, the banker found that the value of building bought a few years back for Rs. 27 lakh has been shown in the books at Rs. 80 lakh, which is its present market value. Similarly, as compared to the last year, the method of valuation of stock was changed, resulting in value of goods to be about 15 per cent higher. Also, the whole amount of Rs. 70,000 spent on purchase of personal computer (expected life 5 years) during the year had been charged to the profits of the current year. The banker did not rely on the financial data provided by Nisha. Advise Nisha for the mistakes committed by her in the preparation of financial statements in the context of basic concepts in accounting.

3 Chapter: Recording of Transaction I 1. State different kinds of transactions that increase and decrease capital. 2. Classify the following into assets, liabilities, revenue, expense, gain and losses: (1) Building (2) Wages (3) Credit sales (4) Credit purchases (5) Electricity charges due but not yet paid(outstanding electricity bills) (6) Godown rent paid in advance(prepaid godown rent) (7) Sales (8) Fresh capital introduced (9) Drawings (10) Discount paid 3. Analyse the effect of each transaction on assets and liabilities and show that the both sides of Accounting Equation (A = L + C) remains equal : (i) Introduced Rs. 8,00,000 as cash and Rs. 50,000 by stock. (ii) Purchased plant for Rs. 3,00,000 by paying Rs. 15,000 in cash and balance at a later date. (iii) Deposited Rs. 6,00,000 into the bank. (iv) Purchased office furniture for Rs. 1,00,000 and made payment by cheque. (v) Purchased goods worth Rs. 80,000 for cash and for Rs. 35,000 in credit. (vi) Goods amounting to Rs. 45,000 was sold for Rs. 60,000 on cash basis. (vii) Goods costing to Rs. 80,000 was sold for Rs. 1,25,000 on credit. (viii) Cheque issued to the supplier of goods worth Rs. 35,000. (ix) Cheque received from customer amounting to Rs. 75,000. (x) Withdrawn by owner for personal use Rs. 25, Prepare accounting equation for the following information: Date Details Business started with cash Rs. 1,50, Goods purchased form Manisha Rs. 36, Stationery purchased for cash Rs. 2, Open a bank account with SBI for Rs. 35, Goods sold to Priya for Rs. 16, Received a cheque of Rs. 16,000 from Priya Sold goods to Nidhi Rs. 14, Nidhi pays Rs. 14,000 cash Purchased goods for Rs. 20,000 on credit from Ritu Insurance paid by cheque Rs. 6, Paid rent Rs. 2, Goods costing Rs. 1,500 given as charity Purchased office furniture for Rs. 11, Cash withdrawn for household purposes Rs Interest received cash Rs.1,200.

4 5. Prove that the accounting equation is satisfied in all the following transactions of Sita Ram house by preparing the analysis table. Also record the transactions in Journal. (i) Business commenced with a capital of Rs. 6,00,000. (ii) Rs. 4,50,000 deposited in a bank account. (iii) Rs. 2,30,000 Plant and Machinery Purchased by paying Rs. 30,000 cash immediately. (iv) Purchased goods worth Rs. 40,000 for cash and Rs. 45,000 on account. (v) Paid a cheque of Rs. 2, 00,000 to the supplier for Plant and Machinery. (vi) Rs. 70,000 cash sales (of goods costing Rs. 50,000). (vii) Withdrawn by the proprietor Rs. 35,000 cash for personal use. (viii) Insurance paid by cheque of Rs. 2,500. (ix) Salary of Rs. 5,500 outstanding. (x) Furniture of Rs. 30,000 purchased in cash. 6. Journalise the following: (1) Goods worth Rs were used by proprietor for domestic use (2) Rs. 800 due from Zaid are bad debts. (3)Goods uninsured worth Rs were destroyed by fire Q7. Journalize the following transactions:- 1) Sohan is declared insolvent. Received from his official Receiver a first and final dividend of 6op. In the rupee on a debt of Rs ) Mohan who owed me Rs. 200 has failed. He pays me a composition of 50 p. in the rupee. 3)Received cash for a bad debt written off last year Rs. 70 Q8. Pass Journal Entries for the following:- 1) Received Rs. 4,000 from Manish, which were written off as bad debts in the previous year. 2) Salaries due to clerk Rs. 7,500 3) Out of the rent paid this year, Rs. 2,000 is related to next year. 4) Provide 10% depreciation on furniture costing Rs. 5,000. 5) Provide 10% interest on capital amounting to Rs. 1,00,000 6) Goods used in making of furniture(sales Price Rs 2,000, cost Rs. 1,500) Q9. Record the following transactions in Journal 1. Paid rent in advance Rs 1, Received cash from Ram for a bad debt written off last you Rs Paid Rs to Anil on his account for Rs Bought goods of the list price of Rs. 25,000 from Rohit less 20% trade discount and 2% cash discount and paid 40% by cheque. 5. Sold goods to Rakesh of the list price of Rs. 50,000 less 20% trade discount and 2% trade discount and 2% cash discount and paid 50% by cheque.

5 Q10. State the title of the accounts affected, type of account and the account to be debited and account to be credited : 1. Bhanu commenced business with cash 1,00, Purchased goods on credit from Ramesh 40, Sold goods for cash 30, Paid salaries 3, Furniture purchased for cash 10,000 Q11. Journalise the following transactions of M/s Mallika Fashion House and post the entries to the Ledger. Also prepare the trial balance. Date Details Amount 2005 Rs. June 05 Business started with cash 2,00,000 June 08 Opened a bank account with Syndicate Bank 80,000 June 12 Goods purchased on credit from M/s Gulmohar Fashion House 30,000 June 12 Purchase office machines, paid by cheque 20,000 June 18 Rent paid by cheque 5,000 June 20 Sale of goods on credit to M/s Mohit Bros 10,000 June 22 Cash sales 15,000 June 25 Cash paid to M/s Gulmohar Fashion House 30,000 June 28 Received a cheque from M/s Mohit Bros 10,000 June 30 Salary paid in cash 6,000 Q12. Prepare Journal from the transactions given below : (a) Cash paid for installation of machine Rs. 500 (b) Goods given as charity Rs. 2,000 (c) Interest charge on p.a. when total capital was Rs. 70,000 (d) Received Rs.1,200 of a bad debts written-off last year. (e) Goods destroyed by fire Rs. 2,000 (f) Rent outstanding Rs. 1,000 (g) Interest on drawings Rs. 900 (h) Sudhir Kumar who owed me Rs. 3,000 has failed to pay the amount. He pays me a compensation of 45 paise in a rupee. (i) Commission received in advance Rs. 7,000 Rs

6 Chapter : Recording of Transactions II Q1. The Rough Book of M/s Heeralal & Co. contains the following: 2000 July 1. Purchased form M/S Natraj & co on credit: 5 gross Rs 100 per gross 1 gross Rs 100 per Gross Less: Trade July 2.Purchased for cash from the Laxmi Stationers 10 gross exercise Rs. 60 per dozen July 3.Purchased typewriter for office use from M/s Variety Corner Co.On credit for Rs July 4. Purchased on credit from the Paper Co.5 reams of white Rs.100 per ream 10 reams of ruled Rs. 65 per ream Less: Trade 10% July 5. Purchased one dozen Rs. 10 each from M/s Mehta Bros. On credit Make out the purchase book of M/s Heeralal & Co. Q2. Prepare bank column cash book from the following tansactions of M/s Laser Zone for the month of January 2005 and post them to the related ledger accounts : Date Details Amount Rs. Jan. 01 Cash in hand 4,000 Bank overdraft 3,200 Jan. 04 Wages paid 400 Jan. 05 Cash sales 7,000 Jan. 07 Purchased goods by cheque 2,000 Jan. 09 Purchased furniture for cash 2,200 Jan. 11 Cash paid to Rohit 2,000 Jan. 13 Cash sales 4,500 Jan. 14 Deposited into bank 7,000 Jan. 16 Bank charged interest on overdraft 200 Q3. Enter the following transactions in the Sales and Sales Return book of M/s Vineet Stores: Date Details Dec.01. Sold goods on credit to M/s Rohit Stores as per invoice no.325 : 30 Kids Rs. 60 each. 20 Animal Rs. 50 each Dec. 05 Sold goods on credit to M/s Mera Stores as per invoice no.328 : 100 Greeting Rs.12 each. 50 Musical Rs. 50 each Less 5% trade discount.

7 Dec. 10 Sold Goods on credit to M/s Mega Stationers as per invoice no.329 : 50 Writing Rs. 20 each. 50 Colour Rs. 30 each 20 Ink 16 each Dec. 15 Goods Returned from M/s Rohit Stores as per credit note no.201: 2 Kids Rs. 60 each 1 Animal Rs. 50 each Dec. 19 Sold goods on credit to M/s Abha Traders as per invoice no.355 : 100 Cards Rs. 10 each. 50 Note Rs. 35 each Less 5% trade discount. Dec. 22 Goods returned from M/s Mega Stationers as per credit note no.204: 2 Colour Rs. 30 each Dec. 26 Sold goods on credit to M/s Bharti Stores as per invoice no.325 : 100 Greeting Rs. 20 each. 100 Fancy Rs. 5 each Q4. Prepare double column cash book from the following transactions for the year December 2005: Rs. 01 Cash in hand 17,500 Cash at bank 5, Purchased goods for cash 3, Received cheque from Jasmeet 10, Sold goods for cash 7, Jasmeet s cheque deposited into bank 12 Purchased goods and paid by cheque 20, Cash sales 7, Received commission by cheque 6, Paid Rent 2,000 Withdrew cash for personal use 1,200 Q5. Record the following transactions during the week ending Dec.30, 2005 with a weekly imprest Rs. 500 Rs. 24 Stationery Bus fare Cartage Taxi fare Wages to labour Postage 80

8 Q6. Prepare proper subsidiary books and post them to the ledger from the following transactions for the month of February 2006: Q7 Rs. 01 Goods sold to Sachin 5, Purchase from Kushal Traders 2, Sold goods to Manish Traders 2, Sachin returned goods Returns to Kushal Traders Sold to Mukesh 3, Purchased from Kunal Traders 5, Furniture purchased from Tarun 3, Bought of Naresh 4, Return to Kunal Traders Return inwards from Mukesh Purchased goods from Kirit & Co. for list price of 5,700 less 10% trade discount 25 Sold to Shri Chand goods 6600 less 5% trade discount 26 Sold to Ramesh Brothers 4, Return outwards to Kirit and Co. 1,000 less 10% trade discount 28 Ramesh Brothers returned goods Rs Record the following in a two column cash book: Jan1 Purchased machinery from rajiv for Rs. 5,000 and paid him by means of a bank draft purchased from bank for Rs. 5,005. Jan2 Discounted a bill for Rs. 1,000 at 1% through bank. Jan3 Purchased 100 bonds for Rs. 100 each at Rs. 95 each and paid for them through cheque. Jan4 Honoured our acceptance in favour of Shyam by Cheque Rs Jan5 Received Rs for a B/E from Hari Ram and deposited the same into bank. Jan6 Received payment of a loan by Rs and deposited Rs. 3,000 out of it into the bank

9 Q8 Record the following transactions in a Cash Book with Cash and Bank columns: 1982 June1 Cash in Hand 3,151,.20 Cash at Bank 91, Discounted a Bill Recievable (BR) for Rs. 1,000 at 1% through Bank 5 Bought goods for Rs. 2,000 and paid by cheque, discount allowed 1% 15 Paid trade expenses Paid taxes Paid insurance charges Sold goods for Rs. 12,500, received cheque and allowed discount 1% 27 Cheque received on 25 th deposited into Bank 28 Received cheque from John & Co 6, Purchased 100 National Plan Certificates for Rs. 100 Rs. 95 each and paid for them by cheque Q9. Prepare Return Books of M/s Gupta Brothers from the following transactions : March 7 Returned to Arora & Co. Nai Sarak, Delhi being not according to samples:- 10 Rs. 200 each 1 Table for Rs. 600 Less :10% 10 Subhash Furniture Co, Faridabad returned to us :- 2 Broken Rs. 2,000 each Less : 15% 20 Returned to Fateh Chand & Co, Lajpat Nagar, New Delhi, the following goods for being damaged in transit- 5 Rs. 180 each Less : 12% 25 Ravi Saxena, Jaipur returned to us the following, being not of specified quality:- 1 Dining Table for Rs. 2,000 6 Rs. 200 each Less : 15%

10 Q10 Prepare a Bills Receivable Book from the following transactions : 2002 Jan 5 Received from Shashi Kant his acceptance at 3 months for Rs. 20,000. Jan 12 Acceptance received from V. Kumar for Rs. 30,000 payable after 2 months. Jan 18 Acceptance received from Tushar for Rs. 25,000 for 60 days. Jan 25 Received Sunil s acceptance for Rs. 40,000 payable after 90 days. Chapter : Bank Reconciliation Statement Q1 What is Bank Reconciliation Statement? Why the preparation of Bank Reconciliation Statement is necessary? Q2 Q3 Q4 Q5 Q6 Explain the reasons on account of which the balances as shown by the pass book. What is the purpose of preparing Bank Reconciliation Statement? Give the significance of Bank Reconciliation. What is meant by bank overdraft. On 30 th June, 1994, the bank column of Mohan Kapoor s Cash Book showed a debit balance of Rs. 12,000. On checking the Cash Book with bank statement you find that :- 1. Cheques paid into Bank Rs. 8,000, but out of these only cheques of Rs. 6,500 were cleared and credited by the Bankers upto 30 th June 2. Cheques of Rs. 9,200 were issued but out of these only cheques of Rs. 7,000 were presented to payment upto 30 th June 3. The receipt column of the Cash Book has been undercast by Rs The Pass Book shows a credit of Rs. 330 as interest on investments collected by bankers and debit of Rs. 60 for bank charges. 5. On 29 th June a Customer deposited Rs. 3,000 direct in the bank account but it was entered only in the Pass Book. Prepare Bank Reconciliation Statement Q7 Prepare a Bank Reconciliation Statement from the following particulars as on 30 th June, 1980:- 1. Credit Balance as per Bank column of Cash Book 3, Cheque issued to the creditor but not yet presented for payment Cheques deposited into Bank for collection but not collected by the bank upto this time. 1, Bank charges charged by Bank Interest on overdraft charged by bank A customer deposited into our bank account without informing us. 240

11 Q8. Prepare the Bank Reconciliation Statement from the following particulars for the period ending 31 st December, Overdraft as per Pass Book on Rs. 7, Cheques deposited but not collected by the Bank Rs. 8, Incidental charges not recorded in Cash Book Rs Cheques issued but not presented for payment Rs. 3, Insurance premium paid by bank not recorded in the Cash Book Rs. 4, On 31 st December, 1993 cash was deposited in Bank Rs. 385 but the cashier debited the bank column with Rs. 485 by mistake. Q9. On 31 st January, 1989 the Pass Book of Shri S. N. Sharma shows a debit balance of Rs. 41,000. Prepare a bank reconciliation statement from the following particulars :- 1. Cheques amounting to Rs. 15,600 were drawn on 27 th January, Out of which cheques for Rs. 11,000 were encashed upto A wrong debit of Rs. 800 has been given by the bank in the Pass Book. 3. A Cheque of Rs. 200 was credited in the Pass Book but was not recorded in the Cash Book. 4. Cheques amounting to Rs. 21,000 were deposited for collection. But out of these, cheques of Rs. 7,400 have been credited in the Pass Book on 5 th February A Cheque of Rs. 1,000 was returned dishonoured by the bank and was debited in the Pass Book only. 6. Interest on overdraft and bank charges amounting to Rs. 100 were not entered in the Cash Book. 7. A cheque of Rs. 500 debited in the cash book omitted to be banked. Q10. On 31 st March 1994 the Pass Book shows a credit balance of Rs. 9,000. Prepare a bank reconciliation statement from the following particulars :- 1. Cheques issued but not yet present for payment 7, Cheques issued but omitted to be recorded in the Cash Book 3, Cheques paid into bank but not yet collected by the bank 2, Premium on Life Policy paid by the bank on standing advice Payments received from customers direct by bank 2,000

12 Chapter: Rectification of Errors Q1. Is it right to say that there are no errors if a trial balance agrees? Justify your answer. Q2. Give two examples of errors that will not be disclosed by trial balance. Q3. Give two examples of errors of complete omission. Q4. What is a suspense A/C? Q5. Which of the following would not affect the trial balance and why? a) Purchase of goods from Raj of Rs entered in Rajesh s A/c. b) Payment of trade expenses through cheque entered only in cash book. c) Sale of good to Lalit for Rs.5000 entered in both accounts as Rs.500. d) Salaries A/C added up incorrectly by Rs100 being short totaled. Q6. Give two examples of errors of principle. Q7. Will a trial balance agree when a transaction is posted to the wrong side of an account? Q8. Identify the type of error in the following:- a) Purchase of office furniture worth Rs.1200 posted to Trade Expense A/C. b) Sale of goods to Riya not entered in the books. c) Posting of the total of Sales Book Rs as Rs in the Sales A/C. d) Car expenses wrongly entered in Car A/C. Q9. State four reasons due to which a trial balance may not agree. Q10. Give two examples of one sided errors. Q11. An asset has been purchased by a firm. However the amounts have been posted to Purchases A/C. Identify the type of error and rectify it. Q12. What do you understand by errors of commission? Q13. Give two examples of two sided errors. Q14. In which book are rectification entries recorded? Q15. Give two examples of compensating errors. Q16. Give rectifying entries from the following:- 1. A credit purchase of goods from shyam amounting to Rs. 1,000 has been wrongly passed through the Sales Book. 2. A credit sales of goods to Ram for Rs. 2,500 has been wrongly passed through the Purchases Book 3. A return of goods worth Rs. 500 by a customer were entered in Purchases Return Book 4. A return of goods worth Rs. 1,100 to Mohan was passed through the Sales Return Book. Q17. Pass Journal entries to rectify the following errors :- (a) Sales of Rs. 200 to Manoj were recorded as Rs. 2,000 in the Sales Book. (b) Goods of Rs. 300 taken by the proprietor have not been entered in the books at all. (c) Goods of the value of Rs. 400 returned to Ashok, but no entry was made in the books.

13 (d) A Cheque of Rs. 400 received from Shiv Prasad was dishonoured and debited to Discount Account. (e) An amount of Rs. 600 due from Harish Bros, which has been written off as Bad Debts in previous year, was unexpectedly recovered, and has been Credited to the personal A/C of Harish Bros. (f) Bill for Rs. 820 received from Ramesh for repairs of Machinery was entered in the Purchase Book as Rs Q18. There was difference of Rs. 725 in a Trial Balance. It has been transferred to credit side of Suspense A/c. Later on following errors were discovered. Pass the rectifying entries and prepare suspense A/c :- (i) An amount of Rs. 375 has been posted on the debit side of commission account instead of Rs (ii) Goods of Rs. 200 purchased from Sohan Lal has been posted to his account as Rs (iii) Total of Sales Return Book was overdraft by Rs (iv) A credit amount of Rs. 50 was posted as Rs. 150 to the debit side of a personal account. (v) Goods of Rs. 300 were sold to Mahesh, but it was recorded in Purchase Book. Q19. Give journal entries to rectify the following errors using Suspense Account, where necessary:- (1) A credit purchase of Rs was passed through the Sales Day Book. (2) Goods of the value of Rs. 2,000 returned by Mr. Gupta were entered in the Sales Day Book and posted therefrom to the credit of his account (3) Rs. 2,600 stolen by an ex-employee stood debited to Suspense A/c. (4) Rs. 3,000 received from a customer as an advance against order was credited to Sales A/c. (5) A sum of Rs. 800 written off as depreciation on Machinery, were not posted to Depreciation A/c. (6) Purchase of Scooter was debited to conveyance account Rs. 16,000. Firm charges 10% depreciation on vehicles. (7) Payment of Rs. 500 to Mohan and Rs. 600 to Sohan was made but Mohan was debited with Rs. 600 and Sohan with Rs (8) Sales X Rs. 500 were posted to Y s Account.

14 Chapter: DEPRECIATION Ql. What is Depreciation? What is the need for providing Depreciation? Describe the two methods of providing depreciation. Also explain the effects of Depreciation on (a) Profit and Loss Account (b) Balance Sheet Q2. Distinguish between Fixed Instalment Method and Diminishing Balance Method. Q3. State four causes of providing Depreciation on Asset. Q4. Why is it necessary to provide Depreciation before arising at the Net Profit of a Business? Q5. On 1" January, 1990, X Ltd., purchased a Plant and Machinery for Rs.43,000. It was estimated that the effective life of the Plant and Machinery will be 10 years and after 10 years its scrap value will De Rs.3,000. On First January, 1991, the Company purchased additional machine for Rs.25,000/- of which the effective life will be 15 years and scrap value Rs.2,500. On 1s' July, 1992, a new machine was purchased for Rs.12,000, of which the scrap value will be Rs.2,000 and effective life 20 years. Show the Plant and Machinery A/c from 1990 to 1993, if depreciation is provided on Straight Line Method. The accounts are closed on 31 *' December every year. (Ans. C/d 27,000, 20500, 11250). Q6. On 1 st January, 1990, a Company purchased a plant for Rs.60,000. On 1 July in the same year, it purchased additional plant worth Rs.18,000 and spends Rs on its erection. On 1" July, t992, the plant purchased on Jan., 1990 having become obsolete, Is sold off. For Rs On 1 st October, 1993, fresh plant was purchased for Re.64,000 and on the same date the plant purchased on 1»' July, 1990 was sold for Rs.10,000. Depreciation is provided- at 10% per annum on Original cost on 31 st Dec every year Show the Plant Account from 1990 to (Ans. Bal C/d 62400, Lose on Plant (1992), 3500 (1993) Q7. A Company whose accounting year is the calendar year, purchased on 1 st April, 1980, machinery costing Rs. 30,000. It purchased further machinery on 1 st October, 1980, costing Rs. 20,000 and on 1 st July, 1981 costing Rs. 10,000. On 1 st January, 1982, one-third cf the machinery which was installed on 1 st April, 1980 became obsolete and was sold for Rs. 3,000. Show how the machinery account would appear in the books of the company, it being given that machinery was depreciated by Fixed Instalrment at 10 per cent p.a. (Loss on plant 5250, Bal C/d 38,500/-.) Q8. The book value of Plant and Machinery on was Rs. 2,00,000. New Machinery for Rs. 10,000 was purchased on and for Rs. 20,000 on On a machinery whose book value had been Rs. 30,000 on was sold for Rs. 16,000/- and the entire amount was credited to Plant & Machinery Account. Depreciation had been charged at 10% per annum on straight-line method. Show the Plant and Machinery Account from to

15 Chapter: BILLS OF EXCHANGE Q1 Define Bills of Exchange. What are advantages of Bills of Exchange? Q2 Define Promissory Notes. Distinguish between Bills of exchange and a Promissory Notes. Q3 Define Accommodation of Bill? Distinguish between Trade Bill and Accommodation of Bill? Q4 Who is the Holder in Due Course? Q5 What is meant by Dishonor of a bill of exchange? Q6 Explain the following terms: (i) Terns of Bill (ii) Date of Maturity and (iii) Negotiation Q7. Calculate the due dates of the bills in the following cases:- (1) 23 rd November Months (2) 27 th November Months (3) 29 th May Months (4) 23 rd May days (5) 13 th July days (6) 31 st May, Month Emergency Holiday : 25 th July Q8 On 1 st January 1994, X sold goods to Y for Rs. 5,000. On the same date X draws a bill on Y for Rs. 5,000 due after three months. Y accepted the bill and returned to X. X retained the bill till the due date and Y meets the bill on the due date. Pass Journal Entries and prepare necessary ledger accounts in the books of both the parties. Q9. X sold goods to Y for Rs. 10,000 on 15 th March On the same day, Y accepted a bill drawn upon him by X at four months for Rs 10,000. X discounted the bill on 15 th April 1994 at 18% p.a. at his bank and Y met the bill on maturity. Make journal entries in the books of both the parties. Q10 Y owed Rs. 2,600 to X. On 5 th March, 1994 he accepted a bill for Rs. 2,500 for one month drawn by X in full settlement of debt. X allowed Rs. 100 as discount. X endorsed the bill to his creditor Z immediately. The bill was duly met on the due date. Pass journal entries in the books of all the three parties.

16 Q11 A bill for Rs. 10,000 is drawn by A on B which is duly accepted by the latter. The bill is duly met by B on its due date. Show what entries would be passed in the books of A and B under each of the following circumstances : i. If A retires the bill till the due date. ii. If he discounts it with his banker of Rs. 9,750. iii. If he endorses it to his creditor. C in full settlement of his debt of Rs. 10,000 iv. If he sends it to his bankers for collection. Q12 On 1 st July 1993, Chander sold goods to Dinesh of the list price of Rs. 5,000 at 20% trade discount and on the same day drew a bill on Dinesh for the amount payable after three months. Dinesh accepted the bill. On 4 th Septemeber 1993 Dinesh retires his acceptance, receiving rebate of 15% p.a. Pass entries in books of both the parties. Q13 On 1 st January 1994, X sold goods to Y for Rs. 15,000 and immediately received from Y Rs. 5,000 in cash and on the same date drew a bill on Y at three months for the balance. The bill is duly receipted by Y. Bill was dishonoured on the due date and X paid Rs. 25 as noting charges. Ten days later Y pay the amount due to X. Pass journal entries in the books of both the parties. Q14 On 1 st August 1993, A sold goods of the value of Rs. 20,000 to B and drew upon him a bill at two months for the amount. B accepted the draft. On the due date of expressed his inability to meet the bill and offered to pay Rs. 8,000 in cash and accepted a new bill for the balance plus interest at 15% p.a. for three months. A agreed to this proposal. On maturity this bill was duly met by B. Pass entries in the books of A and B. Q15 Y purchased goods for Rs. 6,000 on 1 st June 1993 from X and on the same date accepted a bill payable after three months. 3 days later, X endorsed the Bill to Z. On maturity, the bill was dishonoured for non-payment and Z to pay Rs. 50 as noting charges. Three days after the dishonour of the bill X made full settlement payment to Z. 15days after the dishonour of the bill, Y paid to X and requested to draw a second bill for the balance amount plus Rs. 90 for the amount of interest, payable after two months. X accepted the proposal and drew the bill on Y, which was accepted by Y was duly met on maturity. Record the transactions in the books of all the three parties.

17 Q16 Journalise the following in the books of Neelam : 1. Neelam s acceptance to Dinesh for Rs. 2,000 renewed at 3 months together with 18% 2. Ranjaa requests Neelarm to renew his acceptance for Rs. 1,500 for two months. Neelam agrees to it provided interest is paid at 20% in cash. 3. Neelam s acceptance in favour of Guddi for Rs. 15,000 dishonoured and Noting charges paid by Guddi Rs. 20, which was paid by cheque later on. Q17. A sold goods to B for Rs. 4,000 and drew a bill at any two months for the amount. A discounted the bill at 15% p.a. with his bank. On maturity the bill was returned by the bank dishonoured with Rs. 50 as noting charges. B paid Rs. 1,000 and the noting charges in cash and gave another bill at three months for Rs together with 15% p.a. interest before maturity. B became insolvent and ultimately paid to his creditors 40 paise in the Rupee. Pass journal entries in the books of A and B and prepare B s account.

18 (a)capital expenditure (b) Revenue expenditure (c) Expenditure for assets (d) None Chapter: Final Accounts Q1. If the benefit of expenditure extends up to one accounting period it is termed as: Q2. A second hand machinery is purchased for Rs. 1,00,000 and Rs. 20,000 are spent on its overhauling. Rs. 20,000 will be treated as (a) Revenue expenditure (b) Added to the cost of car and shown as assets in the balance sheet. (c) Either 1) or 2) it depends (d) None of the above Q3. Marshalling of assets and liabilities can be done in order of:- (a) Liquidity (b) Permanence (c) Both a and b (d) None Q4. Which is the example of deferred revenue expenditure? (a) Heavy expenditure on advertisement (b) Purchase of office furniture (c) Purchase of air condioner (d) Payment of salaries Q5. Opening Stock Rs.15,000, sales Rs.48,000, Carriage Inward Rs.3,000, Sales Return Rs.3,000, Gross Profit Rs.18,000, Purchases Rs.30,000, Purchases Returns Rs.2,700. Calculate closing Stock and the cost of goods sold. Q6. Preparing A Trading Account for the year ending March 31, 2007 From the following balance as at March 31,2007: Stock 10,000 Purchases 1,00,000 Wages 5,000 Carriage Inwards 1,000 Sales (inclusive of sales tax) 1,70,000 Return Inwards 5,000 Returns Outward 8,000 Sales Tax Paid 15,000 Freight 500 Octroi Duty 2,500 Closing Stock as on March 31,2007 was valued at Rs.20,000

19 Q7. What is the difference between Balance Sheet and Trial Balance? Q8. Give the journal entries for the following adjustments : (a) Outstanding salary Rs. 3,500. (b) Rent unpaid for one month at Rs. 6,000 per annum. (c) Insurance prepaid for a quarter at Rs. 16,000 per annum. (d) Purchase of furniture costing Rs. 7,000 entered in the purchases book. Q9. Stock loss by fire Rs. 20,000, insurance claim received Rs. 18,000 how will you treat it in trading and P&L a/c? Q10. Prepare the trading and profit and loss account and a balance sheet of M/s Shine Ltd. from the following particulars. Adjustments 1. Closing stock was valued Rs. 35, Depreciation charged on furniture and 5%. 3. Further bad debts Rs. 1,000. Make a provision for bad 5% on debtors. 4. Depreciation charged on motor 10%. 5. Interest on 6%. 6. Rent, rates and taxes was outstanding Rs Discount on debtors 2%. (Ans.: Gross loss Rs,17,050 ; Net loss Rs.27,344 ; Total balance sheet Rs. 3,19,032).

20 Q11. The following balances apperead in the trial balance of M/s Kapil Traders as on March 31, 2006 Rs. Sundry debtors 30,500 Bad debts 500 Provision for bad debts 2,000 The partners of the firm agreed to records the following adjustments in the books of the Firm: Further bad debts Rs.300. Maintain provision for bad debts 10%. Show the following adjustments in the bad debts account, provision account, debtors account, profit and loss account and balance sheet. (Ans ; Dr. Profit and Loss account Rs.1,820) Q12. Prepare the bad debts account, provision for account, profit and loss account and balance sheet from the following information as on December 31, 2005 Rs. Debtors 80,000 Bad debts 2,000 Provision for bad debts 5,000 Adjustments : Bad debts Rs.500 Provision on 3%. (Ans : Credit Profit and Loss account Rs.115) Chapter: Accounts from Incomplete Records Q1. Mahesh Chandra, the owner of a shop of general merchandise, maintains incomplete records of his business. He wants to know the result of his business on 31 st Dec., 1980 and for that, following informations are available : 1 st Jan., st Dec., 1980 Rs. Rs. Cash in hand Bank Balance Furniture Stock Creditors Debtors During the year he had withdrawn Rs. 500 for his personal use and invested Rs. 250 as additional capital. Calculate his profit on 31 st Dec., 1980.

21 Q2. Kapil who keeps his books on single entry, tells you that his capital on was Rs. 18,700 and his capital on was Rs. 19,200. He further informs you that during the year he withdrew for his household purposes Rs. 8,420. He once sold his investments of Rs. 2,000 at 2% premium and brought that money into the business. You are required to prepare a statement of Profit & Loss. Kaushik maintains his books of Accounts on Single Entry System. His books provide the following information: Particulars April 1, 1995 March 31, 1996 Furniture Stock 2,800 3,800 Debtors 2,100 3,400 Cash Creditors 1,750 1,900 Bill Receivables Loan Given Investment ,000 His drawing during the year were Rs Prepare the Statement showing profit for the year. Q3. Mr. Ramesh Chand Gupta keeps his books by Single Entry Method. His position on 31 st December, 1996 was as follows : Cash in hand Rs. 500, Cash at Bank Rs. 6,000. Stock Rs. 5,000, Debtors Rs. 3,300 furniture Rs. 1,200, Creditors Rs. 4,000. During the year he introduced Rs. 4,000 as further capital in the Business, and withdrew Rs. 9,000 out of which he purchased a Machine for Rs. 6,000 for the business. On 31 st Dec his position was as follows : Cash in hand Rs. 500, Cash at Bank Rs. 5,000, Stock Rs. 6,000, Debtors Rs. 4,600, Furniture Rs. 1,500 and Creditors Rs. 6,000. Prepare necessary statements showing the Profit or Loss made by Mr. Gupta during the year and a Balance Sheet as at 31 st December, 1997 after making the following adjustments : Depreciate Furniture and Machine at 10% (on closing balances) write off bad debts Rs. 200 and provide 5% for doubtful debts.

22 Q4. Following information is given below. Prepare the statement of profit or loss. Capital at the end of the year 5,00,000 Capital in the beginning of the year 7,50,000 Drawings made during the period 3,75,000 Additional capital introduced 50,000