Omtex classes | i st PRELIMINARY EXAMINATION | BOOK KEEPING & ACCOUNTANCY | GROUP: b |
TIME: - 3 HRS | DATE: - 16.07.2011 | DAY - tuesday | MARKS: -100 |
Q1. Attempt any four of the following. (20 marks)
- Answer in one sentence each. (5 marks)
1. Which types of expenses are debited to trading account?
Ans. The direct expenses related to purchase of goods are debited to trading account.
2. What is Reserve Fund?
Ans. Reserve fund is the accumulated profit which is kept a side as a reserve to serve the firm for the future needs.
3. Who is an endorser?
Ans. A person who endorses the ownership of the bill he is known as endorser.
4. What is goodwill?
Ans. Goodwill is the monetary value of the business expressed in terms of money.
5. Why is Joint Bank Account opened?
Ans. Joint bank account is opened to record the coventurers bank transaction relation to the joint venture business.
- Write the word/term/phrase which can substitute each of the following statement: (5 marks)
1. A statement showing financial position of the business.
Ans. Balance sheet
2. Making the payment of bill before its due date.
Ans. Retirement of the bill of exchange
3. List of debit and credit balances of the ledger accounts.
Ans. Trial balance
4. The relationship between persons who have agreed to share profit or loss in Joint Venture Business.
Ans. coventurers
5. A Partner who only lends his name to the firm.
Ans. Nominal partner
- Match the following pairs. (5 marks)
Group A | Group B |
1. Partnership deed 2. Fixed capital method. 3. Unexpired expenses 4. Temporary Partnership 5. Pure Single Entry System |
|
- Select the most appropriate alternative from hose given below each statement. (5 marks)
1. Reserve for discount on ______________ has a debit balance.
a. Debtors
b. Creditors
c. Bills Receivable
d. Loan advanced.
2. Income Statements and Balance Sheet are prepared in a systematic and scientific manner under ________________
a. Double Entry System.
b. Single Entry System
c. Partial Entry System.
d. Indian System.
3. Before accepting a bill, it is called a _________
a. Note
b. Draft
c. Hundi
d. Request.
4. Valuation of goodwill depends upon ________ capacity of business.
a. Normal
b. Repaying
c. Earning
d. Capital
5. If two or more persons come together to carry on a business activity for a short period, it is known as ___________
a. Joint venture
b. Consignment
c. Partnership
d. Stock exchange
- State with reason whether the following statements are true of false. (5 marks)
1. Scrap value of asset reduces the amount of annual depreciation.
Ans. The above statement is true because of the following reasons.
i. When we calculate the depreciation amount the expected scrap value of the asset is reduced from the total cost of the assets.
ii. Therefore, the total amount of depreciation per annum will also be get reduced.
2. When the amount of the bill is paid on the due date, it is said to be retired.
Ans. The above statement is false because of the following reasons.
i. When the amount of the bill is paid on the due date, then it is called as honour of the bill of exchange.
ii. When the amount of the bill is paid before the due date, then it is called as retirement of the bill of exchange.
- Prepare bill of exchange from the following details. (5 marks)
Drawer - Shekhar Desai, Shastri Road, Mahad.
Drawee – Sharad Verma, Narayan Peth, Pune.
Amount - Rs. 3500/-
Period - 3 months.
Payee - Mukund Pande, Panvel
Date of Bill Drawn – 21st June, 2007
Date of Acceptance - 23rd June, 2007
Q2. On 1st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On 1st October, 2004 they purchased one more computer for Rs. 40,000. On 1st October, 2006 they sold one of the computers, which was purchased on 1st April, 2004 for Rs. 18780.
Depreciation on computers was provided @ 10% p.a. on Diminishing Balance Method and the financial year closes on 31st March every year.
Prepare: computer A/c and Depreciation A/c for years 2004 – 2005, 2005 – 2006, 2006 – 2007. (September, 2008 board exam question)
Ans.
M/s Saikripa enterprises
Computer Account.
Date | Particulars | J F | Amount | Date | Particulars | J F | Amount |
1.4.2004 | To cash / bank a/c | 40000 | 31.3.2005 | By Depreciation a/c | 10000 | ||
1.4.2004 | To cash/ bank a/c | 40000 | |||||
1.10.2004 | To cash/ bank a/c | 40000 | 31.3.2005 | By Balance c/d | 110000 | ||
120000 | 120000 | ||||||
1.4.2005 | To balance b/d | 110000 | 31.3.2006 | By depreciation a/c | 11000 | ||
31.3.2006 | By balance c/d | 99000 | |||||
110000 | 110000 | ||||||
1.4.2006 | To balance b/d | 99000 | 1.10.2006 | By depreciation a/c | 1620 | ||
1.10.2006 | By cash/ bank a/c [Machinery sold] | 18780 | |||||
1.10.2006 | By profit / loss a/c [ loss on machinery sold] | 12000 | |||||
31.3.2007 | By depreciation a/c | 6660 | |||||
31.3.2007 | 59940 | 49500 | |||||
99000 | 99000 | ||||||
1.4.2007 | To balance b/d | 59940 |
Depreciation account
Date | Particulars | J F | Amount | Date | Particulars | J F | Amount |
31..3.2005 | To machinery a/c | 10000 | 31.3.2005 | By profit / loss a/c | 10000 | ||
10000 | 10000 | ||||||
31.3.2006 | To Machinery a/c | 11000 | 31.3.2006 | By profit/ loss a/c | 11000 | ||
11000 | 11000 | ||||||
1.10.2006 | To Machinery a/c | 1620 | |||||
31.3.2007 | To Machinery a/c | 6660 | 31.3.1999 | By profit / loss a/c (balancing figure) | 8280 | ||
8280 | 8280 |
OR
Q2. (A) For the purpose of valuation of goodwill it was agreed to consider net profits of the last 4 years and goodwill is to be calculated at one year’s purchase of average net profits of last 4 years. The profits were
IST YEAR | IIND YEAR | IIIRD YEAR | IVTH YEAR |
Rs. 80,000 | Rs. 90,000 | Rs. 1,05,000 | Rs. 1,10,000 |
Ans.
&;
Q2. (B) Explain the importance of computer in modern age.
Ans.
Today computers are put to a variety of uses. They have been designed with highly improved performances. Computers can be used to process voluminous data at a high speed. As regards its application in the field of accounting, a computer should be able to deal with routine accounting. It means all normal accounting processes such as financial transactions should be dealt with the use of a computer. All cash and bank transactions, handling of accounts of debtors and creditors and calculation of wages and salaries etc should be handled with the use of computer. In addition, computers can be put to other popular uses such as production, programming and control, flexible budgetary control, variance analysis, sales and forward trends etc.
Following points explain the importance of computer in modern age.
SPEED - In the modern world, the desire of a man to complete tasks within the stipulated time limits has been, to a large extent, fulfilled by using a computer. Computers enable us to do arithmetical computations with a high degree of speed and ease. It has enables us to do things, which would have been almost impossible earlier. The speed which computers functions are measured in Pico seconds (1/1000 of Nano – second). Thus, computers are capable of making millions of computations per second. Hence, a powerful computer is capable of completing the tasks in less than an hour, which could have taken a year for a group of people to compute.
ACCURACY: - Computers are not only fast in completing a job at a great speed, but it is also performed with a high degree of accuracy. Sometimes, it is common to say that there is a “Computer error”. As a matter of fact, it is “Human error” and not a “Computer error” since a computer carries out the instructions efficiently given by the programmer. As such, if the instructions are faulty, the errors creep in the computer’s output.
DILIGENCE: - By doing similar job continuously, human beings get tired which results into some mistakes. As against this, a computer is capable of doing the same job continuously error free. A computer takes the same time to complete the first calculation as well as the 10000th calculation. Thus, the degree of diligence possessed by a computer is impossible in case the same job is done by human beings.
STORAGE: - Another advantage offered by a computer is that of its enormous capability to store data. A computer is capable of storing data along with the instructions given by the programmer in the primary (main) memory. In case, the primary memory is not sufficient it can be stored in its secondary (auxiliary) memory. There are various devices used for storing the secondary memory. Some of the common devices used in secondary memory are Compact Disks, Tapes, Drums, pen Drives etc. Having large capacity to store data.
VERSATILITY: - A computer possesses great versatility, which is capable of performing arithmetic calculations, logic operation of comparison and moving data within different sections of the computer and in input and output operations. Although, a computer lacks a brain of its own, it can be put to a varied uses such as preparation of mark – lists, financial accounting, share analysis etc.
MISCELLANEOUS: - In addition to the above – mentioned advantages, a computer can offer economies in the form of effective managerial control, saving in labour cost because it is fully automatic.
Q3. Anjali of Nagpur sold goods worth Rs. 25,000 to Rupali of Amaravati. On next day Ruapali paid Rs. 10,000 in cash and accepted two months bill for the balance drawn by Anjali. Anjali discounted the bill at 12% p.a. with her bank. Before due date, Rupali finds herself unable to make payment of the bill; and requests Anjali to renew it. Anjali accepts the proposal on the condition that Rupali should pay Rs. 5,000 in cash and accept new bill for one month along with interest Rs. 200 for the balance. These arrangements were carried through. The new bill was met on due date. Give journal entries in the books of Anjali.
Journal of Anjali
Date | Particulars | L F | Debit | Credit |
? 1 | Rupali’s A/c………Dr. To Sales A/c (Being the goods are sold) | 25000 | 25000 | |
2 | Cash / bank a/c ………Dr Bills Receivable A/c ……… Dr. To Rupali’s A/c (Being the part payment is made and bill is drawn) | 10000 15000 | 25000 | |
3 | Cash/ Bank A/c ……… Dr. Discount A/c ………… Dr. To Bills Receivable A/c (being the bill is discounted) | 14700 300 | 15000 | |
4 | Rupali’s A/c ……… Dr To Cash/Bank A/c (being the bill is dishonored) | 15000 | 15000 | |
5 | Cash/ bank a/c………… Dr To Rupali’s A/c (being the part payment is made) | 5000 | 5000 | |
6 | Rupali’s A/c ……… Dr. To Interest a/c (being the interest is charged on balance amount) | 200 | 200 | |
7 | Bills Receivable A/c ………… Dr. To Rupali’s A/c (being the new bill is drawn along with interest) | 10200 | 10200 | |
8 | Cash/ bank a/c ……… Dr. To Bills receivable a/c (being the new bill is honored) | 10200 | 10200 |
OR
Q3. Journalize the following transactions in the books of M/s Tirupati:
1. Kailas informed Tirupati that Ameet’s acceptance for Rs. 1,000/- endorsed to him, has been dishonoured. Noting Charged amounted Rs. 40/-.
2. Vilas renews his acceptance to Tirupati for Rs. 800/- by paying Rs. 400/- in cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3 months.
3. Kalpana’s acceptance to tirupati for Rs. 6,000 retired one month before due date at a discount of 10% p.a.
4. Bank informs Tirupati the dishonor of Kavita’s acceptance of Rs. 2,500 discounted with Bank. Noting charges Rs. 50/-.
Journal entries in the books of Tirupati
Date | Particulars | L F | Debit | Credit |
a | Amit’s’s A/c ……… Dr. To Kailas’s’s (being the endorsed bill is dishonored along with noting charges) | 1040 | 1040 | |
b i. | Vila’s A/c ……… Dr. To Bills Receivable a/c (being the bill is dishonored) | 800 | 800 | |
ii. | Cash / bank a/c ……… Dr. To Vila’s a/c (being the part payment is made) | 400 | 400 | |
iii. | Vila’s A/c ……… Dr. To Interest A/c (being the interest is charged on balance amount) | 12 | 12 | |
iv. | Bills receivable a/c ……… Dr. To Vila’s A/c (being the new bill is drawn along with interest) | 412 | 412 | |
c | Cash/ bank a/c ……… Dr. Rebate’s A/c ……… Dr. To Bill’s Receivable A/c (being the bill is retired) | 5950 50 | 6000 | |
d | Kavita’s A/c ………… Dr. To Cash/ bank A/c (bein the discounted bill is dishonored along with noting charges) | 2550 | 2550 |
Q4. Harsha and Varsha entered into a joint venture to buy and sell computers and share the profit or loss in the proportion of 2:1 respectively. Harsha purchased 10 computers @ Rs. 40000 each and paid Rs. 12,000 for transport charges, insurance charges, etc. Varsha bought 8 computers @ 42000 each and spent Rs. 10000 on freight and insurance. Harsha sold 8 computers @ 48,000 each and paid selling expenses Rs. 2000 and took over one computer at an agreed price of Rs. 32000 for personal use. Remaining computer were sold by varsha @ Rs. 45000 each and spent Rs. 2500 on miscellaneous expenses. The co – ventures closed their venture and settled their accounts. Prepare the Joint venture A/c and the co – venture’s account in the books of Harsha.
In the books of Harsha
Joint venture account
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Goods a/c To cash / bank account To Varsha’s account To Varsha’s Account To Cash/ Bank account To Varsha’s Account To profit on joint venture transferred to Profit / loss A/c Varsha’s account | 39000 19500 | 400000 12000 336000 10000 2000 2500 58500 | By Cash / bank a/c By varsha’s a/c By cash /bank a/c | 384000 405000 32000 | |
821000 | 821000 |
Varsha’s Account
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Joint venture a/c | 405000 | By Joint venture a/c By Joint venture a/c By Joint venture a/c By Joint venture a/c (profit) By cash/ bank a/c (balancing figure) | 336000 10000 2500 19500 37000 | ||
46000 | 46000 |
Q5. Following is the records of Mr. Raj were kept on single entry system. ( March 2009 board exam questions)
Particulars | 31.3.2006 | 31.3.2007 |
Stock Furniture Plant and machinery Loan taken Bank balance Debtors Creditors | 15000 53500 42500 21000 1900 43000 18000 | 14000 44000 55500 21000 2100 35000 14900 |
Mr. Raj invested Rs. 4000 in the business. Also he had withdrawn Rs. 15000 for his private expenses from business. Rs. 500 to be provided for bad debts. Depreciate plant and machinery @5% and furniture @ 5%.
Prepare : (1) statement of affairs as on 31.3.2006. (2) statement of affairs as on 31.3.2007. (3) statement of profit and loss for the year ended on 31.3.2007.
In the books of Mr. Raj
Statement of affairs as on 31st March, 2006
Liabilities | Amount | Assets | Amount |
Loan taken Creditors Capital at the beginning of the year | 21000 18000 116900 | Stock Furniture Plant and machinery Bank balance Debtors | 15000 53500 42500 1900 43000 |
155900 | 155900 |
Statement of affairs as on 31st March, 2007
Liabilities | Amount | Assets | Amount |
Loan taken Creditors Capital at the end of the year | 21000 14900 114700 | Stock Furniture Plant and machinery Bank balance Debtors | 14000 44000 55500 2100 35000 |
150600 | 150600 |
Statement of profit or loss for the year ended 31st March, 2007
Particulars | Amount |
Capital at the end of the year | 114700 |
Add: Drawings | 15000 |
Less: Additional capital introduced | 129700 (4000) |
Less: Capital at the beginning of the year | 125700 (116900) |
Gross profit Less: Depreciation On Machinery = (55000)(5/100)(12/12) = 2775 On Furniture = (44000)(5/100)(12/12) = 2200 | 8800 (4975) |
less: Bad debts | 3825 (500) |
Net Profit | 3325 |
Q6. Ashok, kishor and Anup undertook the construction of office building at a contract price of Rs. 10,00,000. The contract price is to be received in cash Rs. 6,00,000 and Rs. 4,00,000 in shares of that company.
They opened a Joint bank account and contributed the following amounts: Ashok – Rs. 3,00,000, Kishor – Rs. 3,00,000 and Anup Rs. 2,00,000. Ashok pays Rs. 10,000 towards an Architect’s fee, Kishor brings into the venture mixer of Rs. 25,000. Anup brings into venture a truck worth Rs. 55,000.
The following transactions were made from the joint bank account
1. Purchase of material Rs. 4,50,000.
2. Payment of wages Rs. 1,50,000.
3. Purchase of plant Rs. 30,000.
At the close of the venture. Ashok took over the unused material worth Rs. 8,000. Kishor took back the mixer worth Rs. 15,000. Anup took back truck worth Rs. 35,000. The scrap value of plant realised Rs. 6,000.
The contract price was received as agreed and Kishor took over shares at a value of Rs. 4,10,000.
Prepare : (1) Joint venture account (2) Joint bank account (3) Co – venturer’s account. (October 2006 , board exam questions)
In the books of Joint venture
Joint venture account
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Join bank a/c Materials Wages Plant To Ashok’s A/c (architect fees) To Kishor’s A/c (venture mixture) To Anup’s A/c (truck) To profit on joint venture transferred to Ashok Kishor Anup | 450000 150000 30000 118000 118000 118000 | 630000 10000 25000 55000 354000 | By Joint Bank a/c (contract price) By Shares a/c (contract price) By joint bank a/c (plant sold) By Ashok’s A/c (Materials taken over) By Kishor’s A/c (Mixer taken over) By Anup’s A/c (truck taken over)( | 600000 400000 6000 8000 15000 35000 | |
1074000 | 1074000 |
CO – VENTURERS’ ACCOUNT
Particulars | Ashok | Kishor | Anup | Particulars | Ashok | Kishor | Anup |
To Joint venture a/c To shares a/c To joint bank a/c | 8000 420000 | 15000 410000 18000 | 35000 338000 | By joint bank a/c By joint venture A/c By joint venture A/c | 300000 10000 118000 | 300000 25000 118000 | 200000 55000 118000 |
428000 | 443000 | 373000 | 428000 | 443000 | 373000 |
Joint Bank A/c
Particulars | Amount | Particulars | Amount |
To Ashok’s A/c To Kishor’s A/c To Anup’s A/c To joint venture A/c To Joint Venture A/c | 300000 300000 200000 6000 600000 | By joint venture a/c By Ashok’s A/c By Kishor’s A/c By Anup’s A/c | 630000 420000 18000 338000 |
1406000 | 1406000 |
Shares A/c
Particulars | Amount | Particulars | Amount |
To Joint venture A/c To Joint venture a/c (Bal. Fig.) | 400000 10000 | By Kishor’s A/c | 410000 |
410000 | 410000 |
Q7. Following is the Trial Balance of Kalavati and Lilavati as on 31st March, 2005 who share profits and losses in the ration of 3:2. Interest on capital was allowed @5% p.a.
Trial balance as on 31st March, 2005
Particulars | Amount | Particulars | Amount |
Opening stock Sundry debtors Purchases Wages Salaries Office expenses Discount Rent, rates and taxes Plant and machinery Return inwards Land and buildings Cash at bank Current account :Kalavati Lilavati Government bonds | 10000 14100 20000 4250 1350 1223 650 900 15000 1750 32000 4327 2100 600 3000 | Return outwards Sundry creditors Sales R.D.D. Capital accounts : Kalavati Lilavati Loan @ 9% p.a. (taken on 1-10-2004) Bills payable | 1250 15800 35000 200 35000 10000 2000 12000 |
1,11,250 | 1,11,250 |
Additional information:
1. Closing stock was valued at Rs. 20,500.
2. Unpaid wages Rs. 750; outstanding salary Rs. 657.
3. Write off Rs. 100 as bad debts and provide R.D.D. at 5% on debtors.
4. Provide depreciation and plant and machinery at 10% p.a. and on Land and building at 5% p.a.
5. Rent, Rates & Taxes were prepaid Rs. 100.
6. Bills payable included a dishonoured bill of Rs. 3000.
Prepare Trading account and profit and loss account for the year ending 31st March, 2005 and a balance sheet as on that date. (October 2006 board exam questions.)
In the books of Kalavati & Lilavati
Trading account for the year ended 31st March, 2005.
Particulars | Amount | Amount | Particulars | Amount | Amount |
To opening stock To purchases (-)return To wages (+) outstanding To Gross profit c/d | 20000 (1250) 4250 750 | 10000 18750 5000 20000 | By sales (-) return By closing stock | 35000 (1750) | 33250 20500 |
53750 | 53750 |
Profit and loss account for the year ended 31st March, 2005
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Salaries (+) outstanding To Office expenses To discount To rent, rates & taxes (-) prepaid To Bad debts (+) FBD (+) NRDD (-) ORDD TO Depreciation Plant & machinery Land & buildings To interest on loan To interest on capital Kalavati Lilavati To current a/c Kalavati Lilavati | 1350 657 900 100 ----- 100 700 200 1500 1600 1750 500 5568 3712 | 2007 1223 650 800 600 3100 90 2250 9280 | By gross profit b/d | 20000 | |
20000 | 20000 |
Partners’ current accounts
Particulars | Kalavati | Lilavati | Particulars | Kalavati | Lilavati |
To balance b/d To balance c/d | 2100 5218 | 600 3612 | By interest on capital | 1750 5568 | 500 3712 |
7318 | 4212 | 7318 | 4212 |
Balance sheet as on 31st March, 2005
Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
Capital account Kalavati Lilavati Current account Kalavati Lilavati Sundry creditors (+) bills payable dishonoured Bills payable (-) bills payable dishonoured Outstanding Salaries Wages Load @ 9% (+) interest | 35000 10000 5218 3612 15800 3000 12000 3000 657 750 2000 90 | 45000 8830 18800 9000 1407 2090 | Land & building (-) depreciation@5% Plan & Machinery (-) depreciation @10% Sundry debtors (-) F.B.D. (-) N.R.D.D. Closing stock Prepaid rent, rates, & tax Cash at bank Government bonds | 32000 1600 15000 1500 14100 100 14000 700 | 30400 13500 13300 20500 100 4327 3000 |
85127 | 85127 |