B.V. Patel Institute of Business Management, Computer & Information Technology, Uka Tarsadia University : Elements of Accounting

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1 Question Bank Unit: 1 Introduction of Financial Accounting Answer the following. (1 mark) 1. Which concept assumes that business enterprise and its owners are two separate independent entities? 2. What is transaction? 3. Drawing account is which type of account? 4. Which transactions are recorded in Purchase Book? 5. What is an Accounting Equation? 6. At which price are fixed assets shown in the books of account? 7. Find the value of assets, if capital = and liabilities= Which concept states that business will not be dissolved in near future? 9. Define term Capital 10. According to dual aspect concept Capital is =? Briefly answer the following. (2 marks) 1. Write the any two advantages of financial accounting. 2. Define term Creditors 3. What is closing stock? 4. Explain the dual equation concept. 5. Write the function of accounting? Answer the following (limit 250 words). (5 marks) 1. Explain the Money measurement concept. 2. Write short notes: Business entity concept 3. Functions of Accounting 4. Going concern concept. 5. Rules of debit and credit. 6. Convention of consistency 7. Dual aspect concept 8. Convention of full disclosure 1

2 Unit: 2 Book Keeping-I Answer the following. (1 mark) 1. In which account business owner withdraws cash for personal use is debited? 2. Mention the types of owner s personal account. 3. Give the types of impersonal account. 4. What are the goods drawn from business for owner s personal account called? 5. Classify the accounts: Capital account, Purchase account. 6. What is trial balance? 7. Define term journal. 8. Are the following Journal entries correct? If not give correct entry: By Purchased A/c 1800 To Cash A/c (Narration: Purchased goods of Rs.1800 from Chirag) 9. What is the rule of real account? 10. State the nature of following accounts: (liability, assets, income, expenses) Stock of goods, Depreciation, Loan, Rent received Briefly answer the following. (2 marks) 1. From the following transactions state the name of accounts, types of accounts. Find out which account will be debited and which will be credited? (i) Purchased goods of Rs at 5% cash discount from Kiran. (ii) Paid salary Rs.1200 to Devang. 2. Classify the following accounts into Personal, Real and Nominal: Building A/c, Salary A/c, Bank A/c, Mr.Jatin A/c 3. Explain giving reason whether the following are cash or credit transaction: Purchased goods of Rs.1000 from Rahul at 10% cash discount. Received order from Amar for supply goods of Rs Give the format of Trading Account. 5. Explain the rule of nominal account. 6. Post the following journal: (i) By Cash A/c To Sales A/c (Narration: Sold the goods for cash) 7. Give journal entries of the following posting in the ledger accounts: Cash A/c Date Particulars JF Rs. Date Particulars JF Rs. 2

3 Question Bank March:9 To Sales March:12 By Purchase March:9 To Commission 2500 March:12 By salary 500 Total Total Define the term Assets. Answer the following (limit 250 words). (5 marks) 2.1 Journal Ex: 1: Write journal entries from the following transaction of Shri Vipul shah. May 2: Started business with cash Rs : Purchased goods of Rs : Sold the goods of Rs.1000 to Rakesh at cash. 7: Purchased goods of Rs : Withdrawn goods of Rs.1000 for personal use. Ex: 2: Write the following transactions of Mr. Krunal in his journal. Aug 1: Mr.Krunal started business with cash Rs.10000,furniture Rs.500 and stock of goods Rs : As more needed in business a loan of Rs.1500 at 10% taken from Vipul. 8: Open a bank account in SBI bank and paid Rs.5800 in it. 10: Purchased goods of Rs at 10% trade discount from Jay. 11: Sold the goods to Mr.Rakesh at 10% trade discount at cash. 12: Paid for life insurance premium Rs : Sold goods Rs : Withdrawn goods of Rs.3000 for personal use from business. Ex: 3: Write the following transactions of Mr. Rajesh in his journal. Aug:2 Mr.Rajesh Started business with cash Rs.50000,debter Rs and stock Rs : Purchase goods of 10% Trade discount. 4: Open a bank account and paid Rs.4000 in it. 5: Sold the goods of Rs.5ooo at 5% trade discount. 7: As more needed in business a loan of Rs at 5% interest is taken from Jay. 8: Withdrew cash from business for personal use Rs : Receive an order from Rahul for supplying goods Rs.1000 at 10% trade discount and 10% cash discount. 10: Sent goods to Rahul as per order. 11: Paid salary Rs : Given goods worth Rs.500 to flood relief fund. 3

4 Question Bank Ex:4:Write journal entries from the following transactions of Manoj for the month of July,: July 1: Mr.Anil started a new business with stock of goods Rs.12500,debter Rs.5400,furniture Rs.6700 and cash Rs : Purchased goods of Rs at 10% trade discount and 5% cash discount. 3: Sold the goods of Rs.5ooo at 5% trade discount and 10% cash discount at cash. 4: Purchased a table of Rs.200 for shop and chair of Rs.150 for home from A-1 furniture mart for cash. 7: Paid life insurance premium Rs : Paid insurance premium Rs.500 by cheque. 11: Goods costing of Rs.800 are stolen from godown. 12: Goods worth Rs.600 were distributed free among the poor. 14: Purchased goods of Rs.1000 by a cheque and paid Rs.200 carriage by cash. 15: Goods of Rs.400 were damaged by rain and were sold for Rs.100. Ex:5:Write journal entries from the following transactions of Shri Rahul for the month of September, : Sep 2: He started a new business with stock of goods Rs.20000,debter Rs.8000,furniture Rs.10000,creditors 4500 and cash Rs : Purchased goods of Rs.5000 at 10% trade discount and 10% cash discount from Akash and half amount paid by cash. 5: Purchased stationary for shop Rs.100 and payment by cheque. 7: Sold the goods of Rs.8000 at 10% trade and 10% cash discount to Ravi. He paid half amount by cheque. 8: Goods costing Rs.300 were distributed as samples. 10: Goods of Rs.500 were received as samples and were sold for Rs : Goods of the cost of Rs.3000 were completely destroyed by fire. The goods were not insured. 15: Goods of Rs.2400 were damaged by fire. The insurance company accepted a claim for Rs.1600.The goods damaged were sold for Rs.360. Ex:6:Write journal entries from the following transactions of Vardhaman stores for month of November, : Nov 1: Purchased goods of 10% cash discount from Jignesh and ¼ amount paid by cheque. 2: Goods of 2000 were sold to Ketan which we purchased from Jignesh. 4: Ketan return the goods of 1000 which we return to Jignesh. 5: Purchased goods worth 5% trade discount and 10% cash discount from Sunil. Half amount paid in the cash. 4

5 Question Bank Ex: 7: Record following transaction in the journal of Jay Ambe Mart for the month of July July1: Started business with cash Rs.12000,debtors Rs.4000, furniture Rs.6000 and goods Rs : Purchased goods of Rs at 10% trade discount and 5% Cash discount from Vinay and half amount paid by cheque. 6: Sold the goods of Rs.8000 at 5% trade discount and 2% cash discount Nikunj and received 1/2 amount in cash. 8: Goods of Rs.2400 were damaged by fire. The insurance company accepted a claim for Rs.1600.The goods damaged were sold for Rs : Paid Salary Rs.2000 by cheque to Tejash. 2.2 Ledger and Posting Ex:1:Recording the following transactions of Jayesh Desai march, in his journal and post them to ledger accounts: March 1: Started business with cash Rs : Purchased goods of Rs : Sold the goods of Rs.1000 to Rakesh at cash. 6: Purchased goods of Rs.1500 from Rakesh. 7: Withdrawn Rs.1000 cash for personal use from business. Ex:2:Recording the following transactions of Chirag Patel April, in his journal and post them to ledger accounts: March 1: Started business with cash Rs : Purchased goods from Krunal for cash Rs : Sold goods to Nirav Rs : Purchased a cupboard Rs : Paid Rent Rs.800 and salary to the accountant Rs : Paid son Anil s college fee Rs.500. Ex:3:Recording the following transactions of Shri Rohit July, in his journal and post them to ledger accounts: 2: Rohit started business with capital of Rs : Purchased goods from Dipak Rs : Purchased office furniture Rs : Paid insurance premium Rs : Received commission Rs

6 Question Bank Ex: 4: Write the journal and prepare the account of Mr.Amaratbhai from the following Information. (April-09) April 2: Debit balance brought forward Rs : Sold Goods to Mr.Amaratbhai Rs : Mr.Amaratbhai returned goods Rs : Mr.Amaratbhai paid on his Account Rs : Received a cheque from Mr.Amaratbhai and deposited in to bank Rs Ex: 5: Record the following transaction in the journal of Vivekanand and prepare capital and cash Account. March 1: Started business with cash Rs.20000, Furniture Rs.6000, Goods Rs.7000 and a loan of Rs.2000 from Ankur. 4: Purchased goods of from Mehul at 2% trade discount and 5% cash discount. Gave a cheque for half the amount. 5: ¾ of the goods purchased from Mehul is sold to Pooja after adding 10% profit. 2.3 Trial balance Ex: 1.The following balance is taken from the books of Mahesh Joshi as on Prepare a Trial balance. Name of Accounts Balance Rs Name of Accounts Balance Rs Capital A/c 2,00,000 Bad debts 3000 Purchase 1,80,000 Salary Bills payable Creditors 1,30,000 Sales 3,30,000 Outstanding wages 2000 Drawings Wages Debtors % loan 28,700 Furniture Machinery 50,000 Building 50,000 Advertisement Exp Opening stock Discount allowed 6100 Stationery -Printing 4000 Goodwill

7 Ex: 2.From the following balances of accounts prepare trail balance as on Use suspense account if needed. Name of Accounts Balance Rs Name of Accounts Balance Rs Capital A/c Sales Drawings 5000 Goods return credit 1500 Purchase Goods return debit 1000 Railway Freight 1000 Discount Received 800 Bad Debts Reserve 900 Bad debts 200 Opening Stock 4000 Investment 8000 Interest on investment 560 Carriage outward 6200 Discount allowed 560 Building 1,00,000 Goodwill 8200 Debtors Creditors Cash balance 7240 Bank overdraft 8000 Advertisement Exp Ex: 3.From the following balances of accounts, prepare trial balance as on Use suspense accounts if needed. Name of Accounts Balance Rs Name of Accounts Balance Rs Capital A/c 2,00,000 Bad debts 3000 Purchase 1,80,000 Discount Received Bills payable (C.L) Creditors 1,30,000 Goods return (cr) Opening stock 92,000 Goods return(dr) Salary Sales 3,30,000 Outstanding wages 2000 Drawings Wages Bad debts reserve % loan 28,700 Furniture Machinery 50,000 Building 50,000 Advertisement Exp Cash and Bank balance 1980 Discount allowed 6100 Bills receivable 40,000 Freight and Octroi 8000 Investments 8000 Debtors 1,51,000 Stationery -Printing

8 Question Bank Ex: 4.From the following balances of accounts prepare trail balance as on Use suspense account if needed. Name of Accounts Balance Rs Name of Accounts Balance Rs Capital A/c Cash in hand 7000 Drawings Rent 2750 Purchase Bad Debts 3650 Opening Stock % Loan Sales Interest 600 Debtors Bad Debts Reserve 750 Building Bank balance 2500 Plant & Machinery 5000 Bills Receivable 4000 Bills Payable 5000 Carriage outward 100 Stationery 1000 Goodwill 6500 Ex: 5.From the following balances of accounts prepare trail balance as on Use suspense account if needed. Name of Accounts Balance Rs Name of Accounts Balance Rs Drawings Outstanding wages 250 Capital A/c Cash balance 1400 Land And Building Bank Balance 6400 Furniture 5000 Discount 3500 Stock Salary 2550 Sundry Debtors Outstanding Salary 550 Sundry Creditors 9600 Bills Payable 1950 Carriage inward 2800 Bills Receivable 2980 Carriage outward 4200 Travelling Expense 400 Wages 4500 Advertisement Exp 600 8

9 2.4 Final Accounts Ex:1 From the undernoted Trial Balance of a trader as on prepare a Trading and Profit account for the year ended and a Balance sheet as on that date: Trial Balance Particulars Rs Particulars Rs. Cash in hand Purchase Opening stock Sundry Debtors Plant Furniture Bills Receivable Rent and Taxes 1,200 1,20,000 35,000 50,000 60,000 15,000 20,000 10,000 Capital 4% bank loan Bills payable Sundry Creditors Sales Bad Debts reserve Wages Salaries 80,000 20,000 22,000 24,000 2,00,000 1,200 16,000 20,000 Additional Information (i) Closing stock Rs. 40,000 (ii) Provide outstanding liabilities: Rent and Taxes Rs. 2000; wage Rs. 3,000; Salaries Rs. 4,000 (iii)depreciation; on plant 5%; on Furniture 10% (iv) Write off Rs. 500 as bad debts (v) Create bad debts reserve 2.5% on Sundry Debtors Ex: 2 From the following balances prepare the trading and profit and loss account and balance sheet as on March 31, Debit Balances Amount Rs. Credit Balances Amount Rs. Drawings 6,300 Capital 1,50,000 Cash at bank 13,870 Discount received 2,980 Bills receivable 1,860 Loans 15,000 Land and Building 42,580 Purchases return 1,450 Furniture 5,130 Sales 2,81,500 Discount allowed 3,960 Reserve for bad 4,650 9

10 debts Bank charges 100 Creditors 18,670 Salaries 6,420 Purchases 1,99,080 Stock (opening) 60,220 Sales return 1,870 Carriage Inward 5,170 Rent and Taxes 7,680 General expenses 3,630 Plant and Machinery 31,640 Debtors 82,740 Bad debts 1,250 Insurance 750 Total 4,74,250 4,74,250 Adjustments: 1. Closing stock Rs. 70, Create a reserve for doubtful 10% on debtors. 3. Insurance prepaid Rs Rent outstanding Rs Interest on loan is 6% p.a. Ex:3 The trial balance of Mr. Ajay as on 31 st Dec was as follows Particulars Debit Credit Purchases Sales Reserve for doubtful debts Sundry Debtors Sundry Creditors Bills Payable Opening Stock Wages Salaries Furniture Postage Power and fuel Trade expenses

11 Question Bank Bad debts Loan to 10% (1-9-03) Cash in Hand Trade Expenses accrued but unpaid Drawing Capital Outstanding Wages Prepare trading account and profit and loss account for the year ended Dec and Balance sheet as on that date after taking into consideration the following information: (i) Depreciation on furniture is to be 10% (ii) Sundry debtors include an item of Rs 500 due form a customer who has become insolvent (iii) Reserve for bad debts is to be 5% on sundry debtors (iv) Goods of the value of Rs 1500 have been destroyed by fire and insurance company admitted a claim for Rs 1000 (v) Stock on 31 st Dec was Rs Ex: 4 Prepare the trading profit and loss account of M/s Mohit Traders as on 31 March 2012 and Balance sheet. Debit Balances Amount Rs. Credit Balances Amount Rs. Opening stock 24,000 Sales 4,00,000 Purchases 1,60,000 Return outwards 2,000 Cash in hand 16,000 Capital 1,50,000 Cash at bank 32,000 Creditors 64,000 Return inwards 4,000 Bills payable 20,000 Wages 22,000 Commission received 4,000 Fuel and Power 18,000 Carriage inwards 6,000 Insurance 8,000 Buildings 1,00,000 Plant 80,000 Patents 30,000 Salaries 28,000 Furniture 12,000 Drawings 18,000 Rent 2,000 11

12 Debtors 80,000 6,40,000 6,40,000 Adjustments: a) Salaries outstanding 12,000 b) Wages outstanding 6,000 c) Commission is accrued 2,400 d) Depreciation on building 5% and plant 3% e) Insurance paid in advance 700 f) Closing stock Ex: 5 From the following Trail balance of M/s Jalaram & Co. Prepare final accounts for the year ending on 31 st, March. Debit balances Amount Rs. Credit balances Amount Rs. Purchases 70,000 Capital account 56,000 Sales returns 5,000 Sales 1,50,000 Opening stock 20,000 Purchase returns 4,000 Discount allowed 2,000 Discount received 1,000 Bank charges 500 Sundry creditors 30,000 Salaries 4,500 Wages 5,000 Freight inwards 4,000 Freight outwards 1,000 Rent, rates and taxes 5,000 Advertising 6,000 Cash in hand 1,000 Plant and machinery 50,000 Sundry debtors 60,000 Cash at bank 7,000 Total 2,41,000 Total 2,41,000 Adjustment : 1. Closing stock on 31 st March was Rs Depreciation on plant and machinery 20%. 3. Bad debt of 10% is required to be provided on debtors. 12

13 Unit: 3Book Keeping-II Answer the following. (1 mark) 1. In which book transaction of credit purchase recorded? 2. When some goods are returned to supplier, which note is sent along with it? 3. Which transactions are recorded in the Sales book? 4. What is contra transaction? 5. Who prepares bank reconciliation statement? 6. Debit balance in the pass book shows which balance? 7. What are the various types of subsidiary books? 8. What is cash discount? 9. Credit balance in the pass book shows which balance? 10. Write an objective of preparing bank reconciliation statement. 11. Bank reconciliation statement is a? 12. Which transactions recorded in the purchase book? Briefly answer the following. (2 marks) 1. Write any four transactions which reduce bank balance. 2. Find the amount recorded in Sales book: Sold goods of Rs.8000 at 2% Trade discount and 5% cash discount to Ketul. 3. Why is the preparation of Bank Reconciliation Statement necessary? 4. List any four subsidiary books. 5. Give any two reasons for the difference between bank balance as per cash book and bank balance as per pass book. 6. Find the amount recorded in purchase book: Purchased goods of Rs at 5% Trade discount and 2% cash discount from jay. 7. In which book transaction of returns outwards recorded? 8. Sales return book is also called? 9. What is debit note? 10. Give specimen ruling of sales book. 11. What is credit note? 12. What is meant by cash book? 13. How is two column cash book written? 14. What is a Bank Book? 15. Cash account always shows which balance? 16. What is a Bank Reconciliation Statement? 13

14 Answer the following (limit 250 words). (5 marks) 3.1 Subsidiary Books Ex: 1. Enter the following transactions in the Purchases book, sales book and returns books of Shri Manish. March.1: Purchased goods from Kapil at a trade discount of 20% Rs : Of these,half the goods are sold to Gautam at a profit of 20% 2: Purchased furniture from Abhilash on credit Rs : Gautam returned defective goods at Rs.240, which we returned to Kapil. 4: Purchased goods of Rs.2000 from Ganesh at 20% trade discount and 5% cash discount. Paid half the amount in cash. 5: Sold to Dipak goods for cash Rs : Mayank placed an order to supply goods Rs : Sent goods to Mayank as per his order and paid Rs.10 for carriage on his behalf. 8: Returned defective furniture to Abhilash Rs.100. Ex: 2. Enter the following transactions in the Purchases book, sales book and returns books. April.2: Purchased goods of Rs 5000 at 10% trade discount from Jigar. 3: Furniture of Rs 500 purchased on credit from Navin. 4: Purchased goods of Rs : Goods of Rs.6000 were sold to Chirag. 8: Goods of Rs.1000 were sold to Yatin at 10% trade and 10% cash discount. 10: Purchased goods from Dharmesh Rs at 10% trade discount and one half of the goods purchased were sold to Sagar after charging 10% profit on cost. 11: Chirag returned the defective goods of Rs.2000 to us, which we have returned to Jigar with debit note no: 189. Ex: 3. Enter the following transactions in the Purchases book, sales book and purchases return and sales return book. March.1: Purchased goods of 6000 from Kapil at 10% trade discount and 5% cash discount. Half amount paid by cash. 2: Sold all the goods purchased from Kapil to Deval at 10% profit on sales price. 3: Deval returned goods of Rs.600 being defective which we have returned to Kapil. 10: Purchased goods of Rs 2000 from Ruchita at 10% trade discount. 18: Sold goods of Rs 4000 to Pinal at 10% trade discount. 20: Sent goods of Rs.3000 to Mitul. 25: Sold goods of Rs.1500 to Komal at 5% cash discount and received ¾ amounts in cash. 30: An order for goods of Rs.1000 is received from Manish. Ex.4:Prepare purchase book,sales book,purchase return book and sales return book in the books of Ganesh from the following transactions: Jan.1: Sold the goods Rs to Narad at 10% trade discount. 14

15 3: Purchased from Akash goods of Rs at 10% trade discount. 4: Out of goods purchased from Akash sold half of the goods (before deducting discount) to Dharti adding 20% profit on cost. 8: Sold goods of Rs.8000 to Hawa for cash at 2% cash discount. 11: Purchased goods of Rs from Vinod. 14: Dharti returned half of the goods sold to him. This was returns to Akash. 18: Purchased a machine from Patel for Rs : Sold to Sangeeta goods of Rs.8000 at 10% trade discount. 23: Sangeeta returned entire goods sent other goods sent other goods of rs.3000 to Sangeeta for which she made payments immediately by cheque. 25: Placed an order with Dipika for supply of goods of Rs at 5%trade discount. 26: Bhaskar placed an order for supply of goods of Rs at 5% trade discount. 30: All the goods for which order was placed with Dipika were sent by Dipika directly to Bhaskar as per our instruction to supply goods to Bhaskar as per his order. Ex: 5. Prepare columnar Subsidiary book Viz. purchase book, sales book, purchase return book and sales return book in book of Sanjay from following transaction 2009 March-1: March-3: Purchased from Raj 150 balls at Rs.14 per ball and 75 bats at Rs.300 per bat on credit at 10% trade discount and 5% cash discount. Sold following goods to Rajesh at 5% cash discount: Balls:45 Nos. at Rs.50 each Bats:25 Nos. at Rs.350 each March-8: Purchased following goods from Dimple at 10% trade discount: Balls:75 Nos.at Rs.90 each Bats:15 Nos. at Rs.600 each March-10: Sold following goods to Ajay at 5% trade discount: Balls:40 Nos. at Rs.100 each Bats:25 Nos. at Rs.350 each March-14: March-15: Ajay returned half of the goods and sent credit note No.30 to him Returned following goods to Raj: 15

16 Question Bank Balls: 25 Nos. Bats:25 Nos. March-17: Goods purchased from Dimpal were sold to Deep at following price: Balls: at Rs.100 each Bats: at Rs.650 each March-19: March-22: Deep returned half of the goods which were returned to Dimpal Cash purchased: Balls:75 Nos. at Rs.90 each Bats:15 Nos. at Rs.600 each Ex: 6. From the following transaction, prepare various subsidiary books in the books of Shri Krunal Trader with the columns of sales tax, Mahajan Lago, Packing expense and railway freight. April 1: Purchased goods of Rs at 10% trade discount from Sanam sent the bill by adding sales tax at 4% Mahajan Lago Rs.200 and packing expenses Rs.200 5: Sold goods of Rs to Mamata at 10% trade discount and sent the bill by adding 2% sales tax Mahajan Lago Rs.120 Packing expense of Rs.75 and Railway freight Rs.55. 6: We returned goods to Sanam of Rs.3000 and sent debit note with sales tax Rs.75 and Railway freight Rs.40 7: Mamata returned goods of Rs.1000 and we have given credit of Rs.20 for sales tax and Rs.20 Railway freight to her. 8: Purchased goods of Rs.5000 from Uva with sales tax 5% and Mahajan Lago 2% paid half of the amount by cash. 14: Sold goods of Rs.5000 to Daya. Sales tax Rs.180 and Mahajan Lago Rs : Daya returned goods of Rs.800 for which given a credit to her Rs.50 for sales tax and Rs.30 for Mahajan Lago. 25: Returned goods of Rs.1500 to Uva and sent a debit note with Sales tax. Ex: 7. From the following transactions, prepare various subsidiary books in the books of Shri Nitin showing columns for various expenses: May.1: Purchased from Priya Corporation goods of Rs at 10% trade discount. Sales tax 5%, railway freight Rs.150, Mahajan Lago Rs.30 Invoice No : Purchased goods of Rs.8000 from Paresh Traders,sales tax 5%,railway freight Rs.100 and carriage Rs.50. 5: Sold goods of Rs.6000 to Mala corporation at 10% trade discount.sales tax at 10%, carriage Rs.30, railway freight Rs 30.Bill No

17 8: Sold entire goods purchased from Paresh traders to Mita traders at 25% profit on cost,on two months credit.charged sales tax 5%,Mahajan Lago Rs 20,railway freight Rs.150 and carriage Rs : Mala corporation returned 50% of goods and they were given credit for sales tax Rs 270, railway freight Rs 50 and carriage Rs.10 credit note No : Sold goods of Rs to Chandra Traders at 10% trade discount, sales tax 2%, carriage Rs 50 and railway freight Rs 100.Bill No : Purchase furniture of Rs 5000 from Vinod.Received bill with 10% sales tax. 25: Mita Traders returned half of the goods. Gave credit of sales tax Rs.250, railway freight Rs 50 and carriage Rs 20. Credit note No : Goods returned by Mita Traders were returned to Paresh Traders Debt note no. 10. Rebate for sales tax of Rs 200, railway freight of Rs.50 and carriage of Rs 20 will be received in is to be allowed by Paresh Cash Books Ex: 1.Enter the following transaction in the cash book of Shri Sharad Parikh and find out the cash balance. June 1: Started business with cash Rs : Purchased furniture Rs.1000 and stationary Rs : Purchased goods of 1500 for cash and paid carriage : Sold goods for cash Rs : Paid salaries Rs : Received commission Rs Ex:2.Enter the following transaction in the two column cash book of Vardhman stores having cash and Bank columns: July 1: Cash balance Rs.11000,bank balance Rs : Cash purchases Rs.1000,cash sales Rs : Rs.5000 paid into bank. 8: Received a cheque for Rs.1000 from Mihir. 10: Paid salary by cheque Rs : Sold goods Rs.4000 and received cheque which was paid in the bank. 20: A cheque which was received from Mihir was paid into bank. 22: Withdrawn Rs.4000 for office expenses and Rs.5000 for personal use from the bank. 24: The cheque given by Mihir and paid into the bank was dishonored. 26: A dividend of Rs.1500 collected by the bank was credited and Rs.10 bank charges were debited. 28: Purchased goods worth Rs.2000 from Vinit on credit. Paid carriage Rs.100 in cash. 17

18 Ex:3.Enter the following transaction in the three column cash book of Shri Rahul having cash and Bank columns: Nov 1: Cash on hand Rs and bank balance Rs : Paid petty cashier Rs : Cash sales Rs and cash purchase Rs : Cash sales to Rohan Rs.2000 and received a cheque which was immediately deposited in the bank. 7: Cash sales Rs.2000 at 10% cash discount. 8: Withdrew from bank for shop expense Rs.4000 and for household expense Rs : Purchase furniture of Rs.2000 and payment by cheque. 15: Paid rent of Rs.1500 by a cheque. 18: Paid salary Rs Ex: 4. From following transaction prepare three column cash book of Ajanta Stores March 1: Opening cash balance Rs.6000 and bank balance Rs : Goods of Rs.6000 sold to keyur at 10% trade and cheque received from Keyur which was paid into bank. 4: Goods of Rs sold for cash to Ronak at 10% cash discount. 5: Rs.5000 deposited into the bank. 6: Paid 3000 for salary and Rs.1000 for wages. 8: Rs.300 withdrawn from the bank for personal use. 10: Life insurance premium Rs.800 paid by cheque. 11: Cash purchase Rs : Cash sales Rs : Shop rent Rs.1500 paid by cheque. 20: Bank has credited of Rs.200 for dividend and 100 debits for commission. Ex: 5.Record the following transactions in the three columns book of Mr.Jayesh for the month of July,. July 1: Cash balance Rs.10000, Bank overdraft Rs : Deposited into the bank Rs : Cash sales Rs.6500 at 2% cash discount. 15: Cash purchases Rs.5000 at 5% cash discount. 18: Received from Mr.Ankur Rs.7500 in full settlement of Rs.7600 by cheque. 19: Deposited Mr.Ankur cheque into the bank. 24: Bank informed that Mr.Ankur cheque is returned dishonored. 27: Paid sundry expenses Rs.500 in cash and paid salaries Rs.1500 by cheque. 28: Bank debited our account by Rs.750 for payment of insurance premium and credited in our account for receipt of dividend Rs : Withdraw from bank cash Rs.2000 for office use and Rs.600 for personal use. 18

19 Ex: 6.From the following transaction prepare three columnar cash books of Shri Narmad. April 1: Opening cash balance Rs.2500,opening bank overdraft Rs : Goods of Rs.2000 sold for cash at 10% cash discount. 5: Goods of Rs.4000 purchased at 10% trade discount and 5% cash discount and the amount is paid by cheque. 7: Goods of Rs.7000 sold to Keshav are deposited in the bank. 9: Cheque issued by Keshav is deposited in the bank. 13: Tapi issued a cheque of Rs.6000 towards payment of his old desktop of Rs : Rs.2000 for salary and Rs.1500 for railway freight are paid by cheque. 17: Rs.3100 deposited into the bank. 20: Rs.2500 withdrawn from the bank for payment of shop rent. 21: Rs.3000 paid for shop rent. 26: As more money required in the business personal vehicle of Rs is sold for Rs.8000 and Rs.7000 brought in the business. 28: Rs.5000 deposited in the bank. Ex: 7.Record the following transactions in the three columns book of Mahavir for the month of June,. June 1: Cash balance Rs.4200, bank overdraft Rs : Issued a cheque of Rs.2200 to Vipin in full payments of his due of Rs : Sold goods of Rs.4000 to Rekha at 10% trade discount. Paid half the amount by cheque. 4: Deposited Rekha s cheque into bank. 5: Sold goods of Rs.3000 to Ajit at 5% cash discount. He issued a cheque of 2/3 amount which is immediately deposited in the bank. 6: Purchased goods of Rs.5000 from Bhathawala at 10% trade discount and 5% cash discount if the payment is made within 10 days. 7: The cheque received from Rekha is dishonoured. 10: Issued a cheque in full settlement to Bhathawala. 12: Purchased stationary of Rs.200 by cheque. 14: Purchased goods of Rs.2000 from Mehata at 10% trade discount and 5% cash discount. Paid Rs.410 in cash and remaining amount by cheque. 20: Against the dues of Mr Jammandas he gave a cheque of Rs.1350 after deducting 10% cash discount. 21: Cheque received from Jamnadas was endorsed to Kevat. 25: Withdrew from bank for office exp.rs.1000 and for household to Rs : Keeping Rs.1000 on hand, excess cash was deposited in the bank. 3.2Bank Reconciliation Statement Ex: 1.From following information given bellow, find out the bank balance as per pass book on 31 March. Bank balance as per cash book Rs Prepare Bank reconciliation statements. 19

20 March 1: A cheque of Rs.5000 is deposited in to bank, but not credited by bank. 2: A cheque of Rs.4000 is issued but not debited by bank. 3: A cheque of Rs.2000 is directly deposited in bank by Manoj. 4: Dividend of Rs.1000 is collected and credited by bank. 5: Bank interest of Rs.100 is credited by bank, which is not recorded in cash book. 6: The cheque of Rs.1000 gives the Prashant which is not recorded in cash book. Ex: 2.From following information,prepare Bank reconciliation statements as on of Vivek.Balance as per cash Rs : The bank had collected interest Rs 1500 on the investment and had credited it In the pass book, but not recorded in cash book. 2: Interest on bank old Rs.250 and bank changes Rs.50, were debited in the pass book, but not entered in the cash book. 3: Cheques amounting to Rs.5000 were paid into bank of which cheques amounting only Rs 4500 could be credited. 4: Cheque of amounting 6400 were given to suppliers but only 5400 were presented. 5: A customer had paid Rs.500 directly to bank account which was not recorded in cash book. Ex: 3.Shri Ashok cash book shows the bank balance of Rs.9000 on It did not tally with balance in the Pass book., prepare the Bank Reconciliation Statement on A cheque of Shri Rajesh zaveri for Rs.600 which was paid into the bank on was not yet credited. 2: A cheque for Rs.800 given to Shri Nalin Bhatt has not been entered in the passbook. 3: The bank had credited interest of Rs.100, for which no entry appears in the cashbook. 4: Bank charges of Rs.40 debited in the Pass Book were not entered in the cashbook. 5: A customer, Shri Bharat Barot had paid a cheque of Rs.600 on directly into the bank; this was entered in the cashbook on Ex: 4. On 30 th, June, 2004 the passbook of Shri Shailesh showed a balance of Rs.7500 to his credit. On comparing the Passbook with the cashbook, the following discrepancies are found: Prepare a bank Reconciliation statement and find out the bank balance as per Cashbook. 1: Cheques of Rs.500 were deposited in the bank but were not collected. 2: Cheques amounting to Rs.4000 were issued during the month of June. Out of which cheques of Rs 2500 were paid by the bank up to : The bank had debited Rs.10 as commission and credited Rs.45 as interest on current Account but no corresponding effect was given in cash Book. 20

21 Ex:5.On the cash Book of Shri Deepak Desai showed bank balance of Rs which did not tally with the balance as shown by his pass book on comprise the following discrepancies were found: 1: A cheque of 2500 was deposited into bank on but the amount was collected by the bank on : Out of the cheques amounting to Rs.2000 drawn and issued, cheque ofrs.1200 was not presented to the bank. 3: The bank debited Rs.20 for commission and credited Rs.160 for interest on his Current Account, but they have not been entered in the cash book. 4: According to the standing instructions, the bank has paid insurance premium of Rs : The debit side of the bank column of the Cash Book was overcast by Rs A debtor had directly deposited Rs.400 in to Dipak s Bank Account on This has not been entered in the cash Book. From above information prepare the bank reconciliation statements. Ex: 6.On 31 st January 2004, the bank balance of a trader of Rs.500 as per his cash Book, but the following differences were found on comparing his cash Book with Pass Book. 1: Out of the cheques paid into the bank during January cheques of rs.2500 have not been credited by the bank. 2: The bank has debited Rs.25 for interest and Rs.5 for bank charge in the pass book but they have not been recorded in Cash book. 3: A bill receivable of Rs.600 discounted with the bank was debited by the bank along with noting charges of Rs.15.but it was not entered in the Cash Book. 4: A cheque of Rs.500 drawn on was debited by the bank on : The receipts side of the Cash Book was overcast by Rs.40. 6: A cheque of Rs.215 issued to a creditor was duly paid by the bank, but was entered in the cash book as Rs : An outstation cheque of Rs.150 was paid by the bank on and was credited by the bank but it was written in the cash column of the Cash Book. From above information prepare the bank reconciliation statements and find out balance as per Passbook. Ex: 7.The Pass book of Shri Ramakant shows bank overdraft of Rs.2650 on On comparing the entries in the bank column of Cash book with those of pass Book,the following discrepancies were found: 1: Cheque of Rs.8000 was paid into the bank, of which cheques of Rs.5700 are only credited in pass book. 2: Bank has credited Rs.150 for interest and debited Rs.100 for bank charges. 3: A customer Hariprasad has directly credited a cheque of Rs.2000 into the bank account of Ramakant. 4: A cheque of Rs.800 deposited into the bank was omitted to be recorded on Cash Book. 5: A bill receivable of Rs.1200 earlier discounted with the bank was dishonoured and bank has debited Ramakants account with Rs.1230 including bank charges. 21

22 6: A cheque of Rs.1450 issued to a creditor Ramanlal and cleared by bank, which was not recorded in cash book. 7: Bank has paid Rs.1100 for insurance premium and Rs.600 for call on shares on behalf of Ramakant but the transitions are not found in cash book. 8: Bank has collected Rs.1800 for dividend on his behalf and credited in to his account, but it is not recorded in cash book. 9: A cheque of Rs.1550 issued to a creditor Rajnikant is entered in cash book as Rs.550. (1) Prepare bank reconciliation statement as on (2) Find out correct bank balance as per cash book on Ex:8.Prepare Shree Bakul s Reconciliation statement as on from the following particulars: (1) Cheque deposited Cheque realised on Rs , , ,225 (2) Cheques drawn in April, 2004 but presented in May, 2004: Kavasji Rs.1, 225: Sorabji Rs.1, 525. (3) Bank had debited rs.125 for commission and credited rs.625 for interest in the pass book, but recorded in the Cash book. (4) A cheque for Rs.250 received from a customer on was recorded in cash book bank column but it was deposited in bank on (5) On cash book showed a bank balance (debit) of Rs.45,

23 Unit: 4 Stock Inventory Valuation Answer the following. (1 mark) 1. In which method stock is valued at a price which is almost near to current market price? 2. Which inventory control method does the stock consists first? 3. Which Method stock consists of first purchase? 4. Give the full name of LIFO. 5. In which method, goods remain in the stock of last purchase? 6. In LIFO system, the goods which are purchased will remain in stock Briefly answer the following. (2 marks) 1. What is FIFO Method? 2. Write the two advantages of LIFO method. 3. State the difference between FIFO and LIFO Methods of stock valuation 4. What is LIFO Method? 5. Weighted average price of 100 units is Rs 28, if the purchase price of 40 units is Rs 25, then the purchase price of the remaining units would be Rs.. Answer the following (limit 250 words). (5 marks) Ex:1 The following information relates to material M used in a factory: Date Particulars Units Per unit Amount Receipts Receipts Receipts Issues Receipts Issues Receipts Issues The issues dated and are priced on LIFO and FIFO methods respectively. From it was decided to use Weighted Average Method for pricing issues. Prepare 23

24 Question Bank stock Register for Material M Ex:2 The following are the transactions receipt and issues of an item of raw material: Date Units Price per unit Rs. 2008, March 1 March 4 March 6 March 10 March 15 March 20 March 23 Purchase Purchase Issued Purchase Issued Purchase Issued 600 1,200 1,000 1,400 1, Ascertain the quality of closing as on March 31 and state what will be its value in each case, if the issues are made under the following methods: (i)first in First Out (ii) Last in, First out Ex: 3 The following is a summary of one basic raw-material item used in a chemical product. The Following data relate to the month of March Opening balance 100 Rs 4.9 per kg Received 50 Rs 5 per kg Issued 50 Kgs Material from the above issue returned from the process 10Kgs Received 100 Rs 5.20 per kg Issued 150 Kgs Received 80 Rs 5.25 per kg On 31 st March, 2008 the stock verifier detected a shortage of 5 kgs. Prepare a stock register under FIFO Method and find the value of closing stock on

25 Question Bank Ex: 4 In the beginning of Octber, 2008, a brush company had a stock of 10,000 brushes valued at Rs 10 per unit. Other purchases during the month were as follows: Purchases: October 7 4,000 Brushes at Rs per brush October 14 6,000 Brushes at Rs per brush October 25 8,000 Brushes at Rs per brush Issues: October 16 16,000 Brushes October 28 10,000 Brushes If the issues prices are calculated by (i) FIFO method and by (ii) Weighted average price method, what would be value of closing stock at the end of the month? Ex:5 The following is a summary of receipt and issues of material Z in a factory during January, 2008 Receipt Issues Date Unit Rate per unit Date Units Rs The issue on and are priced on LIFO and FIFO basis respectively. It was decided to price the issues of on Weighted Average Method. Prepare Stock register for material 25

26 Question Bank 26