Financial Accounting. (Sem-1) 2017-20

FINANCIAL ACCOUNTING-I
SEMESTER -I
Final Suggestions
For CU 2022
ASUBsCRIBE GOBIND KUMAR JHA

Gobind Kumar Jha GKJ. 9874411552
Financial Accounting: Honours 2017

Group A: 5 Question of 5 Marks Each (out of 8): 25 Marks
Question 1 [Unit 1: Introduction]:
(a) What is ‘Accounting Cycle’? Mention the steps involved in an ‘accounting cycle’ (b)
What do you mean by cash basis of accounting?
Or
State the name of the accounting concept or convention applied in each of the following cases:
(a) Recording of capital contributed by the owner in a sole proprietorship business a liability.
(b) Valuation of inventories at lower of cost or net realizable value.
(c) Omission of paisa and showing the round figures in financial statements.
(d) Assets are classified into fixed assets and current assets. (e) Showing outstanding expenses in the
Balance Sheet.
Question 2 [Unit-2: Concepts for determination of business]: (a)

Define Revenue.
(b) How would you recognize revenue from the sale of goods?
Question 3 [Unit-3: Accounting theory]:

What do you mean by maintenance of Financial Capital? Why is it important to maintain capital for an entity?

State the limitations of ‘Historical Cost Accounting’.
Or
State the need for having a global financial reporting standard.
Question 5 [Unit- 5: Sale on Approval]:

M/s Bose Brothers, a trader sends goods to his customers on ‘Sale of Return’ basis. The following transactions
took place during 2021:
₹
25.9.2021 Sent goods to customers on sale or return basis at cost plus 30% 1,50,000
23.10.2021 Goods returned by customers 40,000
18.11.2021 Received letters of approval from customers confirming purchase 71,000
of goods
31.12.2021 Goods with customers awaiting approval (date of return has not yet 39,000
expired)
M/s Bose Brothers records sale or return transactions as ordinary sales.

You are required to pass necessary journal entries in the books of M/s Bose Brothers assuming that accounting
year closes on 31st December, 2021.
Group B: 4 Questions of 10 Marks Each (out of 6): 40 Marks

Question 6 [Depreciation]
Mr. X is engaged in car rental business. On 1.4.2019 he purchased 3 second-hand motor cars at 3,00,000 each
and paid ₹ 60,000 each for overhauling and reconditioning of each of the car purchased, which was completed
on 30.4.2019. these cars were put to use from 1.5.2019.
He writes off depreciation @ 20% p.a. on original cost from the date cars were put to use and close books on
31st December every year.
On 1.10.2021, one car is completely destroyed in a road accident and a sum of ₹ 1,70,000 is received from
the insurance company in settlement of the claim.
On the same day he purchased 3 new cars at ₹ 6,00,000 each and put to use from that date.
Prepare Motor car account from 2019 to 2021 in the books of Mr. Working notes should form part of the
answer.
Question 7 [Single Entry Question OR Non-trading]:

Mr. D, a trader maintains an incomplete record for his business. However, he keeps a detailed record of cash
and bank transactions and provides you the following summary of receipts and payments for the year ended
31.12.2021.
Receipts ₹ Payments ₹
Cash in hand on 1.1.21 3,600 Payment to Creditors 2,30,000
Cash at bank on 1.1.21 62,000 Purchase of Furniture (on 1.9.21) 12,000
Cash Sales 70,000 Salaries 28,000
Capital Introduced 60,000 General Expenses 8,000
Interest received on Investment 5,000 Rent and Rates 15,000
Collection from Debtors 2,20,000 Drawings 36,000
Cash purchases 47,000
Cash in Hand on 31.12.21 1,600

Cash at Bank on 31.12.21 43,000
4,20,600 4,20,600
Particulars of other assets and liabilities are as follows:
1.1.2021 (₹) 31.12.2021 (₹)
Sundry Debtors 1,45,000 1,66,000
Sundry Creditors 2,90,000 2,23,000
Furniture 48,000 ?
Stock 57,000 70,000
Investment in 10% Bond 50,000 50,000
Debtors and Creditors balances on 31.12.2021 have been arrived at after considering discount allowed and
discount received amounting to ₹ 9,000 and ₹ 7,000 respectively. Furniture is to be depreciated @ 10% p.a.
and a provision for doubtful debts is to be created for 3,300.
Prepare a Trading and Profit & Loss Account for the year ended 31st December, 2021 and a Balance Sheet as
on that date.
OR
The following is the Receipts and Payments Account of Park view club in respect of the year ended 31.3.2021:
Receipts ₹ ₹ Payments ₹
Opening balance 1,02,500 Salaries 2,08,000
Subscription Received Stationery Purchased 40,000
2019-20 4,500 Rent 60,000
2020-21 2,11,000 Telephone Expenses 10,000
2021-22 7,500 2,23,000 investments 1,25,000
Net cash realized from Sundry Expenses 92,500
Sports Meet 1,55,000 Closing Balance 45,000
Income from Investments 1,00,000
5,80,500 5,80,500
Additional Information:
(a) There are 450 members each paying an annual subscription at ₹ 500. On 1.4.2020,
outstanding subscription was ₹ 5,000.
(b) There was an Outstanding Telephone bill of R. 3,500 on 31.3.2021 (c) Outstanding
Sundry Expenses as on 31.3.2020 totaled ₹ 7,000.
(d) Stock of stationery: on 31.3.2020 – ₹ 5,000 and on 31.3.2021 – ₹ 9,000
(e) On 31.3.2020, Building stood in the books at ₹ 10,00,000 and it was subject to Depreciation at 5% p.a.
(f) Investment on 31.3.2020 stood at ₹ 20,00,000.
(g) On 31.3.2020, income accrued on Investments purchased during the year amounted to ₹ 3,750.
Prepare an Income and Expenditure Account for the year ended 31.3.2021 and a Balance Sheet as on that
date.
Question 8 [Consignment Or Self Balancing]:

M/s Poddar & Co. of Kolkata deals with ‘Body Oil’ which is sold in one litre plastic bottle. Poddar & Co.
consigned 2,500 bottles of ‘body oil’ costing ₹ 240 per bottle to Sharma & Co. of Jalandhar, to be sold at ₹
400 per bottle and paid ₹ 50,000 as freight and insurance.
Sharma & Co. took delivery of the remaining goods consigned and paid carriage inward and unloading charges
₹ 32,300. He is entitled to a commission of 10% on sales made by him. Sharma & Co. also incurred other
expenses covered under agreement amounting to ₹ 18,000.
Sharma & Co. reported that 100 bottles were lost due to leakage in the godown (loss due to leakage upto 5%
of goods received by the consignee is considered as normal loss) and 1,700 bottles were sold Sharma & Co.
paid a cheque of 5,50,000 in favour of poddar &Co. You are required to prepare consignment Account in the
books of M/s Poddar & Co.
Note: Working should for part of the answer.
Or
From the following details prepare a General Ledger Adjustment Account in the Creditors Ledger of ABC &
Company:
Particulars ₹ Particulars ₹
Credit Purchases 2,80,000 Bills payable accepted 16,000
Cash Purchases 75,000 Bills payable renewed for two more 2,000
month
Bills Receivable drawn 1,10,000 Payment to creditors 2,52,000
Cash Discount Received 5,000 Return Inward 10,500
Bills Payable Paid 6,500 Return Outward 5,000
Bills Receivable Endorsed to Creditor 10,000 Over Payments refunded by supplies 600
Opening Balance of Sundry Debtors 78,000 Endorsed Bills Receivable discounted 4,000
Sundry Creditors 85,000
Question 9 [Insurance claim]:

On 1.1.2021 there was a fire in the godown of M/s ABC & Co. destroying a part of stock. The entity furnished
the following information:
₹
Stock on 1.4.2019 56,000
Purchases during 2019-20 3,80,000
Sales during 2019-20 5,00,000
Stock on 31.3.20 30,000
Purchases from 1.4.2020 to 1.1.2021 2,00,000
Sale from 1.4.2020 to 1.1.2021 2,00,000
Stock on 31.3.2020 includes abnormal items costing ₹ 15,000 which was written down by ₹ 6,000. Two-third
of the abnormal items were sold on 30.6.2020 at a loss of ₹ 5,000. This amount is included in sales during the
relevant period. Balance of the abnormal items were valued at cost. Value of goods salvaged ₹ 7,000 and
policy value was ₹ 50,000. Compute the insurance claim to be made by M/s ABC & co.
Group C: 1 Question of 15 Marks:
Question 10 [Final A/c]:
The following is the Trial Balance of Mr. H as at 31.3.2021
Debit Balance ₹ Credit Balance ₹
Drawings 10,000 Capital 1,70,000
Other Equipment 1,10,000 Sales 1,65,000
Purchases 84,000 Returns 4,000
Returns 5,000 Bad Debts recovered 26,450
Bad debts 5,000 Discount Received 1,000
Carriage inward 5,000 Creditors 2,02,000
Carriage outward 7,000 Bills Payable 5,600
Discount allowed 2,000 Bank Overdraft 29,000
Sale commission 4,000 Bank Loan (taken on 1.4.20) 30,000
Rent 4,000
Interest 1,500
Office Expenses 16,000
Debtors 2,15,000
Bills Receivables 10,000
Investment 50,000
Opening Stock 54,000
Cash 50,550
6,33,050 6,33,050
a) Closing Stock at market price as on 31.3.2021 was 61,500. (The cost of such stock was ₹ 80,000)
b) Provide for depreciation on office equipment @ 10% p.a.
c) Goods costing ₹ 10,000 was destroyed due to fire on 30.3.2021, the insurance company accepted a
claim to the extent of 60% only and paid the claim money only on 10.4.2021.
d) Of the bill receivables, a bill of ₹ 4,000 is dishonored. No entry has been made in the books of account.
e) Write off ₹ 9,000 as bad debt and maintain a provision for bad debt @ 5%.
f) Manager is entitled to a commission of 5% of net profit before charging his commission.
You are required to prepare a Trading and Profit & Loss Account for the year ended on 31.3.2021 and a
Balance Sheet on that date.
Financial Accounting: General 2017

From the following information, ascertain income for the year ended 31.03.21, according to accrual basis of
accounting:
i. Income received in cash for the year ended 31.03.21 ₹
50,000 ii. Accrued Income as on 31.03.21 ₹
25,000 iii. Income received in advance during the year ended 31.03.21 ₹
15,000 iv. Outstanding expenses as on 31.03.21 ₹
20,000 v. Prepaid expenses as on 31.03.21 ₹
10,000
Or
Write Short Notes on:
(a) Going Concern Concept
(b) Entity Concept
Question 2 [Depreciation]:
The book value of plant and machinery of a firm shows ₹ 2,50,000 on 1 st January, 2021. One of the machinery
which was purchased on 1st January, 2020 at ₹ 20,000 is sold for ₹ 10,000 on 30th June, 2021. In place of
this machine, another new machine was purchased at ₹ 40,000 on 30 th September, 2021.
Show Plant & Machinery Account in the ledger for 2021 charging depreciation @ 10% p.a. on diminishing
balance method. (Year ending date 31st December). Question 3 [Rectification of Errors Or P/B/D]:
Rectify the following error before preparation of Trial Balance
(a) Cash withdrawn by proprietor ₹ 2,000 for personal use was debited to trade expenses A/c.
(b) ₹ 2500 spent on installation of wages was debited to Machinery Account.
(c) ₹ 170 Discount allowed was wrongly credited to Discount A/c and Debited to Creditors Account.
Or
The following information has been extracted from the books of Das Enterprise.
Balance of Provision for Bad debts on 01.01.21 2,500 Bad debts
written off during the year 1,800
Sundry Debtors on 31.12.21 34,000
Of the Debtors ₹ 1,000 was bad and hence to be written off. Provision for Bad debts to be made @ 10% on
Debtors.
Question 4 [Capital & Revenue Expenditure OR Inventory]:
State which of the following are Capital Expenditure and which are Revenue Expenditure giving
reasons in each case:
(a) Purchase of Machinery ₹ 50,000
(b) Carriage paid for bringing the machine ₹ 3,000
(c) Wages paid for installation of the machinery ₹ 4,000
(d) Repairing cost for the machinery ₹ 2,000 after installation

(e) Insurance premium paid for machinery ₹ 1,000
Or
A trader prepared his accounts on 31/3/2021. However stock taking was done on 10/04/2021 amounting ₹
40,000. The following transactions took place between 1/4/2021 to 10/04/2021:
a) Sales amounted to ₹ 75,000
b) Purchases during the period ₹ 30,000
c) Purchases Return ₹ 5,000
d) Sales Return ₹ 2,000
e) Rate of Gross profit on sales 20 %.
Determine the value of closing stock as on 31/03/2021.
Question 5 [Sale on Approval]:
A trader sent out goods on approval Basis to customers and included the same in sales account.
On 31.3.2021 the stock in hand amounted to ₹ 1,60,000 and the sundry debtors balance stood on ₹ 3,00,000
which include ₹ 20,000 being invoice value of goods sent on ‘sale of return’ against which no intimation was
received during the year. These goods were sent out at 25% above cost and were sent to Mr. X ₹ 8,000 and
Mr. Y ₹ 12,000. Make necessary adjustment entries as on 31/3/2021.

Question 6 [Accounting Theory & Accounting Standard]
What is Financial Accounting Standard? Discuss the procedures for issuing Accounting Standard in India.
What is IFRS?
Or
Write short notes: (a) GAAP (b) Fair Value Accounting
Question 7 [Consignment or Insurance Claim]:

On 1st April, 2020, K of Kolkata sent 200 packets of rice to D of Delhi to be sold on consignment basis. The
cost price of each packet was ₹ 1,000. K incurred ₹ 1,200 for freight and ₹ 800 for insurance premium.
On 31st March, 2021, K received Account sales from D, which showed that he sold 180 packets @ ₹ 1,400
each out of which ₹ 5,000 was bad debt. D paid ₹ 6,000 as clearing charges, ₹ 1,000 for carriage to godown
and ₹ 2,000 for godown rent. D is entitles to get ordinary commission @ 10% and del-credere commission @
5% on sale proceeds.
Show consignment Account and D Account in the books of K.
Or
A fire occurred at the Godown of Royja Industries (P) Ltd. on 10.03.2021. The stock of the company was
fully insured against fire. From the following details, compute the amount of insurance claim:
₹
st
Stock on 1 January, 2020 50,000
Stock on 31st December, 2020 80,000
Purchases for the year 2020 5,40,000
Sales for the year 2020 6,80,000
Purchase for the period from 01.01.2021 to 10.03.2021 1,80,000
Sales for the period from 01.01.2021 to 10.03.2021 2,40,000
Gross profit rate was uniform and value of stock salvaged ₹ 15,500
Question 8 [Self Balancing]:

From the following particulars, prepare Sales Ledger Adjustment Account in General Ledger and General
Ledger Adjustment Account in Sales Ledger in the books of K. Ray for the year ended 31st December,
2021: ₹
Sales Ledger balances on 01.01.2021 62,620 (Dr.)
Sales Ledger balances on 01.01.2021 620 (Cr.)
Total Sales 1,20,000
Cash Sales 10,000
Bills accepted by Debtor 12,500
Bill received dishonored 500
Cheque received from customers 86,200
Cheque dishonoured 1,200
Return – inward 4,800
Bad debt written off 1,300
Discount allowed 450
Carriage charged to customers 950
Bad debt recovered 600
Transfer from bought Ledger 800
Sales Ledger balances on 31.12.2021 300 (Cr.)
Question 9 [Non-trading]:
The following is the Receipts and Payments Account of a club on 31.12.2021.
To Opening Balance By Books 7,000
In Hand 500 By Salaries 7,000
At Bank 500 By Rent 2,000
To Subscription 15,000 By Newspaper 3,000
To Sale of old newspaper 3,000 By Balance c/d (at Bank) 2,000

To Donation 2,000
21,000 21,000
Other Information:
01.01.21 31.12.21
₹ ₹
Accrued Subscription 800 1100
Pre-received subscription 2500 1500
Outstanding Salary 600 900
Prepaid rent 200 100
Prepare Income and Expenditure Account of the club for the year ended 31 st December, 2021.

Following is the Trial Balance of Mr. R. Roy as on 31st December, 2021. You are required to prepare Trading
and Profit and Loss Account for the year ended 31st December, 2021 and a Balance Sheet as on that date.
Dr. (₹) Cr. (₹)
Capital --- 2,40,000
Plant and Machinery 1,20,000 ---
Furniture 40,000 ---
Stock on 01.01.21 30,000 ---
Debtors and Creditors 80,000 50,000
Drawings 20,000 ---
Purchase and Sales 2,40,000 3,60,000
Bank Overdraft --- 40,000
Wages 30,000 ---
Trade expenses 20,000 ---
Rent 24,000 ---
Salaries 34,000 ---
Bad debt 2,000 ---
Purchase and Sale Return 10,000 6,000
Cash 14,000 ---
Bank 36,000 ---
Provision for Bad debt --- 4,000
7,00,000 7,00,000
(a) Stock on 31.12.21: Cost price ₹ 36,000. Market price ₹ 40,000.
(b) A credit sale of ₹ 10,000 has not been recorded.
(c) Wages paid for installation of machinery included in wages account ₹ 5,000.
(d) Provide depreciation on machinery @ 10% p.a.

(e) Provision for Bad debt to be maintained @ 5% on Debtors.

(a) Mention any two conventions that are followed in accounting.
(b) Shri Sarkar has mentioned his accounts under accrual basis. The profit for the year 2020-21 comes to ₹
88,500. After considering the following information, you are required to determine his profit for the same
period under cash basis:
(i) Office expenses outstanding for the year 2019-20 ₹ 12,500.
(ii) Rent paid in 2020-21 for the year 2021-22 ₹ 13,200
(iii) Interest earned on investment for the year 2020-21, but not yet received ₹ 5,100.
Or
(a) Name two users of Accounting Information. (b) What do you mean by ‘Expense’? (c) Write the
Accounting Equation with an example.
Question 2 [Unit-2: Rectification of Errors]:

The Trial Balance of Mr. Saha did not agrees as on 31.3.2021 and the difference were put to suspense account
and the following mistakes were detected before preparation of final accounts: (a) Purchases Day Book was
over cast by ₹ 2,200.
(b) ₹ 12,000 paid to Sudipta was wrongly debited to Sudipta Account.
(c) ₹ 6,900 paid for replacement of a mother board of a desktop, debited to Repairing Charges Account as
₹ 900.
You are requires to pass necessary journal entries to rectify the above errors

Briefly discuss the Procedure for issuing accounting standard in India.

What is Accounting theory? State the relation between Accounting Theory and Accounting Practice.
Or
(a) Write short note on GAAP.
(b) Write two reasons behind maintenance of Capital.
Question 5 [Unit- 5: Self Balancing or Sale on Approval]:

From the following information, prepare Sales Ledger Adjustment Account in the Nominal Ledger:
₹
01.04.20 Debtors Ledger Balance (Dr.) 45,000
01.04.21 Debtors Ledger Balance (Cr.) 1,000
31.3.21 Sales 4,10,000
Bad Debts 1,650
Miscellaneous charges debited 175
Cash received from Debtors 3,20,000
Return Inward 5,000
Bad debts recovered 450
Bills Received 30,000
Discount Allowed 7,500
Transfer from Bought Ledger 75
Or
On March 01, 2021 Mr. Basu sent goods valuing ₹ 1,50,000 at an invoice price (Cost plus 25%) to few
customers on sale or return basis having two months approval period. He records sale or return transactions
as ordinary sales transaction.
During March, goods having Invoice Price of ₹ 40,000 were returned by a customer and another customer
was willing to accept the goods at a price of ₹ 76,000 which was lower than the Invoice Price by 5%. It was
accepted by Mr. Basu. The other customers could not yet decide anything about the goods sent.
Show the relevant extracts in the final accounts on 31.3.2021, if the balances of the sales Account and Sales
Ledger as on such date were ₹ 15,00,000 and ₹ 7,35,000 respectively.

Question 6 [Depreciation OR P/B/D]
Plant and Machinery Raving value of ₹1,00,000 was bought on 1st January, 2018. On 15th July, 2019 a new
machine was purchased for ₹ 40,000. Installation charges paid for this machine was ₹ 5,000. The machine
(bought on 15th July, 2019) was sold at a profit of ₹ 7000 on 1st September, 2021.
Write up the Plant and Machinery Account for the four years ended 31st December, 2021 providing 10% p.a.
depreciation under Diminishing Balance Method.
Or
Saha Bros. has commenced a bakery business on 01.04.2019. During 2019-20 the firm was unable to recover
a considerable amount from its customer and subsequently at the end of the year; the firm has decided to
create Provision for Bad Debt@ 10 % to cope up with the future bad debt losses. The following information
was further obtained from its records:
₹
31.03.2020 Debtors balance 2,20,000
Bad debts written-off during the year 46,000
31.03.2021 Debtors balance 5,60,000
Bad debt to be written off 32,000
Recovery of Bad debts 6,000
You are required to prepare Bad Debt A/c and Provision for Bad Debt A/c for two consecutive years 201920
and 2020-21.

Swati, a small trader, maintains her books under Single Entry system. From the following information you
are asked to prepare Trading Account, Profit & Loss Account and Balance Sheet as on 31st December, 2021
1st January, 2021 31st December, 2021
(₹) (₹)
Debtors 20,000 25,200
Creditors 15,000 14,100
Sewing Machine 15,000 14,200
Furniture 12,000 11,800
Bills Receivable 7,000 6,000
Bills Payable 3,000 5,000
Stock 4,000 3,000
Bank Summary
₹ ₹
Opening Balance 21,000 Payment to Creditors 42,000

Collection from Debtor 75,200 Bills Payable 2,800
Bills Receivable 5,600 Rent 2,000
Capital 13,000 Wages 2,000
Printing 2,000
Drawings 24,000
Salaries 12,000
Closing Balance 28,000
1,14,800 1,14,800
She allowed discount to debtors ₹ 2,400 and received discount from creditors for ₹ 3,900. She endorsed bill
receivable of ₹ 1,200 to her creditors.
Or
From the following information prepare Income and Expenditure Account of Hugli Club for the year ended
31st December, 2021 and a Balance Sheet as on that date.
a) Subscriptions in arrear for 2021 ₹ 900 and received in advance for 2021 ₹ 350.
b) Insurance Premium due ₹ 40.
c) Miscellaneous expenses prepaid ₹ 90.
d) 50% of the donation to be capitalized.
e) 75% of entrance fees are to be capitalized.
f) 8% interest is accrued on investment for five months.
g) Tennis Table was purchased in 2021 for ₹ 30,000. Only ₹ 22,000 was paid for it till 31 st December
2021.
Receipt and Payment A/c for the year ended 31.12.2021

Cash in Hand 4,000 Salary 2,000
Cash at Bank 10,000 Repairs 500
Donation 5,000 Furniture 6,000
Subscription 12,000 Misc. Expenses 500
Entrance fees 1,000 Investment 6,000
Interest on Investment 100 Insurance Premium 200
Interest received from Bank 400 Tennis Table 8,000
Sale of old Newspaper 150 Stationeries 150
Sale of Drama tickets 1,050 Drama Expenses 500
Cash in Hand 2,650
Cash at Bank 7,200
Question 8 [Consignment]:
Ganga consigned 5,000 kg of rice costing ₹ 32 per kg to Yamuna on February 01, 2021 by paying ₹ 5,000 as
freight. During transit 200 kg of rice were destroyed by an accident. Yamuna paid clearing charges ₹ 6,100,
Godown Rent ₹ 300 and Salesman’s salary ₹ 900. Yamuna is entitled to 6% ordinary commission and 4%
Del Credere Commission on sales.
Yamuna reported on June 30 that 4,000 kg were sold at ₹ 1,65,000 and 100 were lost due to some unavoidable
cause. Entire amount due was received except in case of a customer who bought rice for ₹ 1,500 could pay
only 40% of his amount. Yamuna sent a cheque for final settlement to Ganga along with the Account Sales.
Show Consignment Account and Yamuna Account in the books of Ganga.
On 09.11.21, the godown of ABC Ltd. Was destroyed by fire. The organization is insured for loss of stock
policy of ₹ 75,000 with an average clause. From the following information, prepare a Statement showing
claim to be lodged with the insurance company.
Stock on 01.04.20 72,000
Wages for the year 20-21 16,000
Purchase for the year 20-21 2,84,000
Sales for the year 20-21 4,06,800
Stock on 31.3.21 64,000
Purchase from 01.04.21 to 09.11.21 1,40,000
Wages from 01.04.21 to 09.11.21 8,000
Sales from 01.04.21 to 09.11.21 1,65,200
An items of stock purchased during 19-20 at a cost of ₹ 20,000 was valued at ₹ 12,000 on 31.3.20. half of
these goods were sold during 20-21 for Rs 6,800 and remaining stock was valued at ₹ 4,000 on to be worth
40% of original cost. Stock valued ₹ 18,000 was salvaged.
The following Trial Balance has been extracted from the books of Mr. Das as on 31st March, 2021:
Opening Stock 2,400 Capital 46,200
Building 2,10,000 Creditors 25,000
Bad debts 3,500 10% Loan (Taken on 01.10.20) 24,000

Closing stock 24,000 Commission Received 200
Furniture 10,000 Sales 3,28,700
Drawings 4,500 Outstanding Salaries 3,000
Wages 1,800 Provision for Bad Debts 2,100
Purchases (Less Closing Stock) 1,18,000
Advertisement 1,400
Debtors 9,000
Cash 3,200
Interest on Loan 400
Commission Paid 600
Office Equipment 18,000
Miscellaneous Expenses 700
Insurance Premium 800
Salaries 10,000
Patent 7,200
Rent 2,400
Carriage Inward 1,300
4,29,200 4,29,200
Prepare Trading Account and Profit & Loss Account and a Balance Sheet as on date
(a) Furniture costing ₹ 12,000 purchased on 01.10.2020 on credit was recorded as credit purchase of goods.
(b) Mrs.. Samanta, Debtor for ₹ 2,000 was declared insolvent, only 40 paise in the rupee was expected to
realize from his estate. Create Provision for Doubtful Debts at 5% and Provision for Discount at 2% on
Debtors.
(c) Patent (acquired on 01.04.2019) having a useful life of ten years, is to be amortised in 10 equal
installments over the years.
(d) Depreciate relevant fixed assets at 10% p.a.

(a) Mention any two users of accounting information.
(b) Using accounting equation, calculate total assets if
(i) Capital ₹ 6,00,000 ;
(ii) Creditors ₹ 4,00,000 ;
(iii) Revenue during the period ₹ 5,00,000;
(iv) Expenses during the period ₹ 4,00,000.
Or
From the following information, ascertain income for the year ended 31.12.21, according to Cash basis of
accounting:
₹
(a) Income received in cash for the year ended 31.12.21 50,000
(b) Accrued income of 2020, received in 2021 6,000
(c) Income received in advance during 2021 8,000
(d) Accrued income as on 31.12.21 6,000
Question 2 [Inventory]:
Calculate the value of closing stock as on 31.12.21 from the following information:
i. Value of physical stock taken on 06.01.22 (for the year ended 31.12.17) was ₹ 25,600. ii.
Purchased during the period from 01.01.22 to 06.01.22 was ₹ 2,500
iii. Goods sold during the period from 01.01.22 to 06.01.22 was ₹ 3,800
iv. Goods were sold at a profit of 25% on cost.
Question 3 [Depreciation or Rectification of Errors]:

On 01.01.2019 Mr. A Purchased Machinery worth ₹ 1,50,000. On 01.07.2020 Mr. A Purchased another
Machinery worth ₹ 30,00. On 01.01.2021 Machinery Worth ₹ 24,000 purchased on 1.1.2019 was sold for ₹
18,000. Depreciation to be charged @ 10% under Straight line Method. Prepare Machinery Account For
2019, 2020 and 2021. (year ending for this enterprise is 31st December.)
Or
Rectify the following error after preparation of Trial Balance but before preparing Final Accounts by passing
necessary journals entries:
(a) Cash taken by proprietor ₹ 3000, were not recorded at all.
(b) ₹ 5,000 received from Bimal against debts previously written off as bad debts have been credited to his
personal account.
(c) A cheque received from Amal, a debtor, for ₹ 4,000 was directly received by the proprietor who
deposited it into his personal bank account.
Question 4 [P/B/D or Revenue Recognisition]:

The following is the extract from the Trial Balance of Mr. M. Roy as on 31st December 2021.
Dr. Cr.
₹ ₹
Bad debts 8,000 ---
Sundry Debtors 3,00,000
Provision for Bad and Doubtful debts --- 12,000
It is desired to maintain a provision of 5% for Bad and Doubtful Debts.
Prepare Bad debts Account and Provision for Bad and Doubtful Debts Account.
Or
What do you mean by Revenue? How is it recognized it accounts?
Sen Traders sends out its gas containers to dealers on ‘Sale or Return’. All such transactions are, however,
treated as actual sales and are passed through the Day Book. Just before the end of the financial year, 100 gas
Containers, which cost them ₹ 900 each, have been sent to a dealer on ‘Sale or Return’ and have been debited
to his account at ₹ 1200 each. Out of this only 20 gas containers are sold at ₹ 1500 each. Give the necessary
adjustment entries in the books of Sen Traders.

Question 6 [Accounting Theory & Accounting Standard] (a)
What is accounting theory?
(b) What are the limitations of Historic cost accounting?
Or
(a) What are the benefits of Financial Accounting Standard? (b)
What are the needs for a global standard?
Question 7 [Consignment or Insurance Claim]:

On 01.04.2021 G & Co. of Kolkata sent 300 packets of a product to D & Co. of Delhi on consignment basis.
The cost of each packet was ₹ 1,500 only. G & Co. incurred the following expenses on consignment:
₹
Railways freight 1,500
Insurance Premium 900
Loading Charges 600
D & Co. incurred the following expenses:
Carriage to godown 400
Godown Rent 1,000
Selling expenses 600
Others 300
D & Co. sold 200 packets of the product at 2,400 per packet. While sending goods to D & Co. of Delhi, 20
packets were damaged in transit and insurance company settled a claim of ₹ 26,500. Commission payable to
D & Co. @ 10% on sales.
Show the following accounts in the books of G & Co.:
(a) Consignment Account
(b) D & Co. Account
(c) Loss in transit Account
Or
A fire occurred in the premises of A & Co. on 01.09.2021 but the stock of the company was insured. All the
goods were completely destroyed by fire except goods worth ₹ 50,500 (Salvaged). Determine the amount of
insurance claim on the basis of the following information:
₹
Purchases for the year ended 31.03.2021 3,50,000
Sales for the year ended 31.03.2021 5,50,000
Purchase from 01.04.2021 to 01.09.2021 1,20,000
Sales from 01.04.2021 to 01.09.2021 1,80,000
Stock on 31.03.2020 1,95,000
Stock on 31.03.2021 1,60,000
All the purchases and sales were made evenly throughout the year and gross profit rate remained uniform.

The following details were extracted from the books of Mr. Sen for the period ended 31st December, 2021:
Jan.1, 2021 ₹
Sales ledger Balances 12,400
Provision for Doubtful Debts 1,000
Dec. 31, 2021
Sales (including Cash Sales ₹ 4,000) 23,000
Cash received from Customers 18,500
Bills Receivable received 3,000
Return from Customers 380
Bills endorsed 480

Bills dishonoured 120
Cheque dishonoured 100
Bills receivable as endorsed, dishonoured 120
Bills receivable discounted 500
Bad debt written off 50
Interest charged to customers 10
Bad debts previously written off, recovered 60
Transfer from Bought Ledger 150
Sundry Charges debited to customers 20
Prepare the Sales Ledger Adjustment Account in the General Ledger. Question
9 [Single Entry]:
Mr. T. R. Sen keeps his books on single entry system. His capital on 01.04.20 was ₹ 1,70,000. An abstract of
his Cash transactions for the year ended 31.03.21 was as follows:
To Balance b/d 8,000 By Creditors 35,000
To Collection from Debtors 82,000 By Cash Purchases 18,000
To Cash Sales 18,000 By Wages 7,000
By Salaries 5,000
By Drawings 12,000
By Plant 10,000
By General Expenses 14,000
By Balance c/d 7,000
1,08,000 1,08,000
Following information in relation to Assets and Liabilities are available:
01.04.2020 (₹) 31.03.2021 (₹)
Sundry Debtors 35,000 42,000
Sundry Creditors 22,000 25,000
Stock 25,000 35,000
Plant 30,000 40,000
Furniture 15,000 15,000
Building 80,000 80,000
Prepare a Trading and Profit and Loss Account for the year ended 31.03.21 and a Balance Sheet as on that
date after providing depreciation @ 10% on Plant, @ 5% on Furniture and Building. Provision for Doubtful
Debt to be created @ 5% on Sundry Debtors.
From the following Trial Balance prepare Trading and Profit & Loss Account for the year ended 31.03.2021
and a Balance Sheet as on that date:
₹ ₹
Drawings 3,600 Capital 40,000

Plant and Machinery 10,000 Purchases Return 1,240
Stock (01.04.20) 13,750 Discount Received 680
Purchases 1,09,600 Sundry Creditors 15,000
Sales Return 1,800 Provision for Doubtful Debts 1,050
Carriage outward 2,300 Sales 1,30,450
General Expenses 1,100
Advertising 1,350
Wages 2,600
Rent taxes 3,000
Bad debts 970
Sundry Debtors 35,500
Cash at Bank 2,500
Cash in hand 350
1,88,420 1,88,420
Adjustments:
(a) Depreciation to be charged @ 5% on Plant and Machinery.
(b) Outstanding expenses ₹ 250.
(c) Advance Rent and Taxes paid ₹ 100.
(d) Further bad debts of ₹ 500 to be written off.
(e) Provision for Doubtful Debts to be raised @ 5% on Debtors. (f) Closing stock 31.03.21 ₹ 19,500.

(a) Mention the names of accounting concept or convention being followed in the following instances:
(i) Unsold stock is valued at lower of cost or net realizable value.
(ii) A business will continue its operation for an indefinite period and will not be dissolved in the
near future.
(b) Using accounting equation, calculate total assets if – Capital – ₹ 5,00,000
Creditors – ₹ 2,00,000
Revenue during the period – ₹ 5,00,000 Expenses
during the period – ₹ 3,00,000.
(c) What do you mean by Revenue?

Or
From the following information, ascertain income for the year ended 31.03.2021 according to accrual
basis of accounting:
₹
(a) Income received in cash for the year ended 31.03.2021 2,00,000
(b) Accrued Income as on 31.03.2021 35,000
(c) Income received in advance during the year ended 31.03.2021 20,000
(d) Outstanding Expenses as on 31.03.2021 40,000
(e) Prepaid Expenses as on 31.03.2021 30,000
Question 2 [Unit-2: Rectification of Errors]:

Rectify the following errors after preparation of Trial Balance but before preparing Final Accounts by
passing necessary Journal Entries:
(a) Goods taken by proprietor of ₹ 5,000 for gift to his son were not recorded at all.
(b) ₹ 5,000 received from Bablu against debts previously written off as bad debts have been credited
to his personal account.
(c) A cheque received from Ashis, a debtor for ₹ 4,000 was directly received by the proprietor who
deposited it into his personal bank account.

State the objectives of issuing Accounting Standards.

(a) Discuss the concept of capital maintenance.
(b) What do you mean by GAAP?
Or
(a) What is fair value accounting?
(b) What is IFRS?
Question 5 [Unit- 5: Self Balancing or Sale on Approval]:

A trader has credited certain items of sales on approval aggregating ₹ 10,000 to sales accounting. Of these,
goods to the value of ₹ 3,000 have been returned and taken in stock at ₹ 1,500 though record of return was
committed in accounts; and in respect of another parcel of ₹ 1,000 (cost being ₹ 500), the period of approval
did not expire on the closing date.
Show adjustment and correcting entries in the books of the trader.
Or
The following details were extracted from the books of ABC Ltd. for the year ended 30.06.2021:
₹
July 1, 2020
Sales Ledger balance total 40,000
July 30, 2021
Sales 90,000
Return from Customers 8,000
Cheque received from Customers 80,000
Cheque Dishonoured 300
Bills accepted by Customers 2,700
Bills dishonoured 400
Noting charges on the dishonoured bill 10
Interest on Customers overdue account 100
Carriage charged to Customers 200
Cash discount allowed 1,800
Show the General Ledger Adjustment Account as it will appear in the Sales ledger.

Question 6 [Depreciation OR P/B/D] ABC
Ltd. purchased of the following machines:
₹
On 1st January, 2020 40,000
On 1st July, 2020 20,000
On 1st October, 2021 10,000
Depreciation was provided @ 10% p.a. under the diminishing balance method. The machine purchased on 1st
July, 2020 was sold on 31st March, 2021 at ₹ 15,000.
Show the Machinery accounts in the books of ABC Ltd. for the year 2020 and 2021 assuming that accounts
are closed on 31st December every year.
Or
On 31st December, 2020 Sundry Debtors and Provisions for Bad debts stood at ₹ 90,000 and ₹ 6,750
respectively. During the year 2021 Bad Debts amounting to ₹ 4,560 were written off. On 30th June, 2021 an
amount of ₹ 580 was received on account of a debt written off as bad last year. The Debtors list on 31st
December, 2021 was verified and it was found that amongst Sundry Debtors amounting to ₹ 65,940, an
amount of ₹ 940 was to be written off as bad. It was decided to maintain the provision for bad debts at the
same percentage as it was on 31st December, 2020. Prepare Provision for Bad debts Accounts.
Subal keeps his books on single entry method. On 1st January, 2021 his assets and liabilities were as follows:
Capital ₹ 61,000, Sundry Debtors ₹ 20,000, Plant and Machinery ₹ 31,000, Furniture and Fittings ₹ 3,000,
Stock ₹ 10,000 and Sundry Creditors ₹ 15,000.
The following are the analysis of his Cash Book for the year 2021:
Cash in Hand 12,000 Payment to Creditors 20,000
Receipt from Debtors 15,000 Wages 5,000
Cash Sales 20,000 Sundry Expenses 10,000
Drawings 5,000
Cash in hand 7,000
47,000 47,000
On 31st December, 2021 his assets and liabilities were as follows:
Sundry Debtors ₹ 25,000, Sundry Creditors ₹ 10,000, Plant and Machinery ₹ 31,000, Furniture and fittings ₹
3,000, Stock ₹ 22,000.
You are required to prepare a Trading and Profit & Loss Account for the year ended 31 st December, 2021
after providing:
(a) Depreciation on Plant and Machinery @ 5% p.a. and Furniture and Fittings @ 2% p.a. (b)
Provision for Bad and doubtful debts @ 5% on Sundry Debtors.
Or
The following is the Receipt and Payments Accounts of Calcutta Football Club for the year ended 31.12.2021:
Cash in hand 2,500 Remuneration to Coach 6,000
Cash at bank 22,300 Ground man’s salary 2,500
Bank Interest 500 Purchase of equipments 15,500
Entrance Fees 5,000 Bar room expenses 2,000
Subscription 25,000 Ground Rent 4,500
Bar room receipts 4,000 Night Club exp. 4,800
Sale of equipments 800 Printing and Stationery 2,500
Proceeds of Night Club 10,800 Repairs to equipments 4,500
Cash at Bank 25,600
Cash in hand 3,000
70,900 70,900
Additional information:
01.01.2021 (₹) 31.12.2021 (₹)
Subscription due 1,500 1,000
Outstanding exp. For Printing & Stationery 1,000 800

Equipments 8,000 17,500
You are required to prepare:
(a) An Income and Expenditure Account for the year ended 31.12.2021 (b)
A Balance Sheet as on that date.
On 7th June, 2021 the godown of a company was destroyed by fire. From the records following particulars
were extracted:
₹
Stock as on 01.01.2020 45,000
Stock as on 31.12.2020 60,000
Purchases less returns as per 31.12.2020 3,00,000
Sales less returns as per 31.12.2020 3,73,000
Purchases less returns from 01.01.2021 to 07.06.2021 1,25,000
Sales less returns from 01.01.2021 to 07.06.2021 1,80,000

Poor selling goods worth ₹ 5,000 were written off while valuing closing stock as on 31.12.2020. The original
cost of goods was ₹ 8,000. A portion of this stock (original cost of which was ₹ 4,000) was sold during March
2021 at a loss of ₹ 1,000. The balance of this stock is worth the original cost. Value of salvage goods was ₹
10,000. Gross profit remained at an uniform rate throughout. Compute the amout of claim to be lodged.
Shri Das of Kolkata sent on Consignment 1000 bottles of medicine costing ₹ 70 each to Shri Sen of Burdwan
and incurred ₹ 1000 for carriage and ₹ 600 for insurance.
Account sales from Shri Sen revealed the following:
(₹) (₹)
Sale proceeds of 600 bottles 60,000
Less: Carriage to godown 10,500
Rent of godown 500
Insurance 500
Commission 3,000 14,500

45,500
It is also revealed that 100 bottles were destroyed in godown and Shri Sen collected ₹ 6,000 from Insurance
Company. Prepare Consignment Account in the books of Shri Das.

The following is the Trial Balance of Mr. S.K. Sen as on 31 st December, 2021:
Debit Balances ₹ Credit Balance ₹
Drawings 5,800 Capital 60,000
Stock 28,000 Returns 3,200
Returns 4,200 Sales 2,10,000

Purchases 1,75,000 Sundry Creditors 25,500
Freight and Carriage 9,700 Bank Loan @ 6% p.a. 20,000

Rent and Taxes 3,600 Misc. Income 500
Salaries and Wages 15,300 Discounts 1,600

Interest on Bank Loan 1,000
Printing and Advertisement 7,800
Cash at Bank 6,000
Discounts 1,200
Furniture and Fittings 6,000
General Expenses 8,600
Insurance 2,800
Cash in hand 2,000
Postage and Telegram 480
Travelling Expenses 320
Machinery 8,000
3,20,800 3,20,800
(i) Included amongst the Debtors is ₹ 4,000 due from R.Das and included among the Creditors ₹ 3,000
due to him.
(ii) Provision for doubtful debts be created @ 10% and provision for discount @ 5% on Debtors.
(iii) Personal purchases amounting ₹ 2,000 had been included in the purchase day book.
(iv) Depreciate furniture & fittings and machinery @ 10% and 15% p.a. respectively.
(v) Interest on bank loan is outstanding for 2 months.
(vi) Stock on 31.12.2021 was ₹ 65,000.

Prepare Trading, Profit & Loss Account & Balance Sheet as on 31.12.2021.

(a) Mention two qualitative characteristics of accounting information.
(b) What is ‘Accounting Cycle’?
(c) Which accounting concept or convention is applicable in the following case?
“Closing stock is valued at lower of cost price or market price”.
Or
Fill in the blanks selecting the correct one out of words given in the bracket:
(a) Business goodwill is ………………(tangible / intangible fixed asset)
(b) Lenders are example of ……………. (external / internal) users of accounting information
(c) Purchase Day Book is a ……………..(Journal / Ledger)
(d) Depreciation is an example of …………………….(Expenses / Losses) (e) Profit under accrual
basis will be ……………..(₹ 10,000 / ₹ 20,000).
Question 2 [Unit-2: Rectification of Errors Or Depreciation]:

What factor should be considered for charging depreciation of Final Accounts:
Or
Pass journal entries to rectify the following errors detected after preparation of Trial Balance but before
preparation of Final Accounts:
(a) Purchase of Furniture for ₹ 10,000 passed through Purchase Day Book.
(b) Rent paid ₹ 5,000 to Landlord debited to the personal account of landlord. (c) Sales Day
Book Cast short by ₹ 1,000.
Question 3 [Unit-2: P/B/D Or Capital & Revenue Expenditure]:

Sri Dulal Chatterjee maintains provision for doubtful debt @ 5% and Provision for discount on debtors @
2%. On 01.01.21 he had balances in these accounts ₹ 3,000 and ₹ 1,140 respectively. The following particulars
are available from his trial balances as on 31.12.2021.
₹
Bad Debt written off 3,600
Prepare Bad Debt Account and Provision for Bad Debt Account for the year 2021.
Or
Mention which of the following transactions is a capital expenditure and which one is revenue expenditure:
(a) Purchase of machinery worth ₹ 50,000
(b) Paid customs duty of ₹ 10,000 for importing machinery from foreign country. (c) Paid office
rent for ₹ 5,000
(d) Spent ₹ 30,000 for repairing of building.
(e) Paid ₹ 10,000 as registration fees for registering Patent Right.
Question 4 [Unit- 5: Sale on Approval]:

B.B.S. Electronics sends goods to their customers on Sale or Return basis. The following transactions took
place during 2021:
2021 ₹
Sept. 10 sent goods to customers on Sale or Return basic at cost plus 25% 1,25,000
Oct. 20 goods returned by customers Nov. 25 Received Letters of approval 40,000
from customers
Nov.25 Received Letters of approval from customers 60,000
Dec. 31 Goods with customers neither sold nor returned 20,000
B.B.S. Electronics records sale or return transactions as ordinary sales. You are required to pass the
necessary journal entries in the books of B.B.S. Electronics assuming that accounting year closes on
31.12.2021.
Question 5 [Unit-2: Inventory]:

From the following data, calculate the value of closing inventory on 31 st July, 2021 using FIFO method:
2021
July 1 Opening Stock 100 kg @ ₹ 10 per kg
July 6 Purchase 600 kg @ ₹ 11 per kg
July 15 Issued 450 kg
July 21 Purchases 800 kg @ ₹ 12 per kg
July 28 Issued 650 kg

Question 6 [Accounting theory]
(a) What do you mean by ‘Generally Accepted accounting principles?
(b) What is ‘Capital Maintenance in accounting?
(c) How Capital is maintained in accounting?
Or
(a) What is financial accounting standard?
(b) What is the procedure of issuing accounting standard in India? (c) What do you
mean by ‘IFRS’?
Question 7 [Consignment or Insurance claim]:

On 25th March, 2021 X & Co. of Kolkata sends 100 saree costing ₹ 1,500 each to Y & Co. of Mumbai to be
sold by the latter on consignment basis. Invoice price of the above saree has been arrived at after adding 33%
on cost. X & Co. spends railway freight ₹ 7,500, insurance ₹ 1,000 and loading charges ₹ 500 to send the
consignment. Y & Co. is entitled to a commission of 5% on gross sales. 5 sarees were lost – in –transit to
Mumbai for which a claim of ₹ 7,000 was received from the insurance company. On 31 st December, 2021 X
& Co. received an account sale from Y & Co. which shows the following:
₹ ₹
Gross Sale proceeds of 80 sarees 1,60,000

Less: Clearing charges 1,900
Godown expenses 3,100
Commission 8,000 13,000
1,47,000
Show the following accounts in the books of X & Co.

(i) Consignment Account
(ii) Y & Co. Account
(iii) Ascertain the quantum of loss in respect of saree lost – in – transit
OR
The godown of U. Ltd. caught fire on 01.02.2021 and business was partially disorganized up to 30.06.2021.
From the books of accounts, the following information was extracted.
₹
(a) Actual turnover from 01.02.21 to 30.06.21 1,50,000
(b) Turnover from 01.02.20 to 30.06.20 4,20,000
(c) Turnover from 01.02.20 to 31.01.21 9,00,000
(d) Net profit for the last financial year 1,40,000

(e) Insured standing charges for the last financial year 1,12,000
(f) Total standing charges for the last financial year 1,28,000
(g) Turnover for the last financial year 8,40,000
Additional information besides above are as follows:
(a)Saving in insured standing charges – ₹ 5,000
(b) Loss of profit policy with an indemnity period of 6 months – ₹ – 2,50,000 (c)
There is an upward trend in turnover by 15%. Compute claim for loss of profit under the
policy.

Following information have been extracted from the books of Bose & Co. for the year ended 31.12.2021 –
₹
01.01.21 Opening balance (Dr.) 3,000
(Cr.) 1,20,000
Transaction during the year 2021:
Total Purchase (including credit purchases ₹ 1,80,000) 2,00,000
Return to creditors 4,000
Cash & Cheque paid to creditors 1,75,000
Discount received 8,000
Allowances received 3,000
Bills payable accepted 5,000
Bills payable dishonoured 500
Out of cheque paid to creditors, cheque dishonoured 5,000
Interest charged by creditors 400
Transfer to sales ledger 500

Closing Balance (Dr.) on 31.12.21 1,000
Prepare Creditors Ledger Adjustment Account in General Ledger.
Question 9 Non-trading]:
The following Receipts and Payments Accounts has been prepared for the year ended 31.12.2021 by Burdwan
Cricket Club.
Receipts and Payments account for the year ended 31.12.2021
₹ ₹
To Balance b/d 7,600 By Sports Equipment 20,000
(purchased on 01.09.21)
To Subscription for: 2021 37,000 By Salary and wages 6,000
2020 2,000 By Printing and Stationery 600
2022 2,500 By Electricity Charges 1,000
To Interest of Govt. Securities @ 5% 1,000 By Tournament Expenses 13,000
To Entrance fees 5,000 By Balance c/d 14,500
55,100 55,100
Sports equipment ₹ 35,000, club Ground ₹ 15,000, Furniture ₹ 5,000, Capital Fund ₹ 84,600. Considering
the following information prepare an Income and Expenditure Account for the year ended 31.12.21 and a
Balance Sheet as on that date:
(i) Subscription for 2021 outstanding ₹ 1,000
(ii) Depreciation to be provided @ 20% p.a. on sports equipment and @ 5% p.a. on furniture.

From the following Trial Balance and additional information of Adhunika Stores, prepare a Trading and
Profit and Loss Account for the year ended 31.12.21 and a balance sheet as on that date:
Dr. (₹) Cr. (₹)
Purchases 1,44,000 Capital 1,20,000
Machinery 1,44,000 Sales 3,22,000
Wages 18,000 Provision for Doubtful Debts 6,000
Trade Expenses 8,800 Interest received on loan 400
Freight 7,200 Discount received 3,600
Opening Stock 16,000 Creditors 72,000
Rent 6,000 Bad debts recovery 2,400
Sundry Debtors 96,000 Bank interest 3,600
Stationery 6,000 Bills Payable 28,000
Repair and Maintenance 5,000 Miscellaneous Receipts 7,600
Bad debts 3,600
12% Loan to Arun (01.01.21) 20,000
Salary 22,000
Sales return 6,000

Cash at Bank 54,000
Cash in Hand 10,000
5,65,000 5,65,000
Additional information:
(a) Closing Stock values at ₹ 30,000
(b) Goods destroyed by fire ₹ 8,000, insurance claim received ₹ 6,000 (c) Salary for the
month of December, 2021 became due.
(d) Depreciate fixed assets by 10% p.a.
(e) Provide 10% as provision for Doubtful debts on Debtors.
Financial Accounting: Honours 2020 Group A:

Answer any 4 Questions (4 x 10 = 40 Marks)
Dr. R. K. Das started his profession on 1st January, 2021 as medical practitioner. His incomes and expenses
for the year 2021 relating to his profession were as under :
Amount (₹)
Fees received in cash 24,000
Fees accrued but not received 6,000
Rent paid for the Chamber 6,000
Outstanding Rent 2,000
Salary paid to Staff 6,000
Salary paid in advance to Staff (included 1,000
in the above)
Miscellaneous expenses paid 200
You are required to compute the net income of Dr. R. K. Das from his profession for the year ended 31.12.
2021 under (a) Cash Basis; (b) Accrual Basis.
ABC Industries depreciates its machines @10% p.a. on straight line basis. On 1st April, 2020 the balance in
Machinery Account was ₹ 17,00,000 (original cost ₹ 24,00,000). On 1st July, 2020 a new machine was
purchased for ₹ 50,000. On 31st December, 2020 an old machine having w.d.v of ₹ 80,000 on 01 04.2020
(original cost ₹ 1,20,000) was sold for ₹ 60,000. Show the Machinery Account for the year ended 31st March,
2021.

(a) What is GAAP?
(b) Explain Fair Value Accounting.
Sri Mehta of Bombay consigns 1,000 cases of goods costing ₹ 100 each to Sri Sundaram of Madras. Sri Mehta
pays the following expenses in connection with the consignment : carriage ₹ 1,000; freight ₹ 3,000 and
loading charges ₹ 1,000. Sri Sundaram sells 700 cases at ₹ 140 per case and incur the following expenses :
clearing charges ₹ 850; warehousing and storage ₹ 1,700; and packing and selling expenses ₹ 600. It is
found that 50 cases have been lost in transit and 100 cases are still in transit. Sri Sundaram is entitled to a
commission of 10% on gross sales.
Draw up Consignment Account and Sri Sundaram Account in the books of Sri Mehta.

A trader sends out goods on approval to some customers and includes the same in the sales account. On
31.12.21, the Sundry Debtors balance (₹ 2,50,000) includes ₹ 14,000 regarding goods sent on approval against
which no intimation was received as on 31.12.21. These goods were sent out at 25% above cost price and
were sent to A – ₹ 8,000 and B – ₹ 6,000. Stock in trade in godown was valued at ₹ 50,000 on 31.12.21. A
sent intimation of acceptance on 31.01.22 and B returned the goods on 15.01.22. Pass adjustment entries on
31.12.21. Show also the entries to be made during January, 22.

From the following information you are required to prepare the Sales Ledger Adjustment Account as on
31.03.21.
(₹)
Debtors as on 01.03.21 55,842
Transaction during the month were as follows :
Sales (including cash sales ₹ 10,000) 1,08,606
Cash received from Debtors 88,753
Discount allowed to Debtors 480
Acceptances received from Debtors 7,120
Return from Debtors 5,430
Bills receivable from Debtors 1,120
Sundry charges debited to customer 378
Transfer to bought ledger 100
Provision for doubtful debts 2,500
Bill endorsed 100

From the following particulars, prepare a claim for loss of profit under the consequential loss policy :
Date of fire 30.06.21
Period of indemnity 6 months

Sum insured ₹ 80,000
Turnover for the year ended June 30, 2021 ₹ 4,00,000
Net profit for the accounting year ending March 31, 2021 ₹ 25,000
Standing charges for the accounting year ending March 31, 2021 ₹ 57,000
Turnover for the year ending March 31, 2021 ₹ 4,10,000
Turnover for the period from 01.07.21 to 31.12.21 ₹ 1,12,000
Turnover for the period from 01.07.20 to 31.12.20 ₹ 2,20,000
Saving in standing charges because of fire ₹ 6,000
Increased cost of working during dislocation period ₹ 12,000

Question 8 [Provision for Bad debts]:
Trial Balance as on 31.12.2021 of Mr. R. Sen contains the following items :
Provision for doubtful debts ₹ 15,000
Bad debt ₹ 10,000
Sundry Debtors ₹ 1,40,000
On enquiry it was ascertained that Debtors include :
(i) ₹ 20,000 due from S. Roy and Creditors include ₹ 15,000 due to S. Roy.
(ii) ₹ 8,000 due on account of sale of furniture.
(iii) Bad debts ₹ 8,000.
Prepare Provision for doubtful debt Account and Bad debt Account. Provision for doubtful debts is to be
created at 5% on trade Debtors.
Group B:
Question 9 [Single Entry]:
Mr. T. S. Gupta kept no books of accounts for his business. An analysis of his rough Cash Book for the
calender year 2021 shows the following particulars :
Receipts Amount Payments Amount
₹ ₹ ₹
Received from Debtors 80,000 Overdraft (on. 01.01.2021) 5,000
Further Capital introduced 10,000 Paid to Creditors 42,000

Business expenses 12,000
wages paid 17,500
Proprietor’s drawings 5,000
Balance at bank (31.12.2021) 6,500
Cash in hand (31.12.2021) 2,000
90,000 90,000
The following particulars are also available :
31.12.20 31.12.21
₹ ₹
Debtors 60,000 90,000
Creditors 20,000 22,500

Stock in trade 16,000 18,000
Plant and Machinery 30,000 30,000
Furniture 2,000 2,000
All his sales and purchase were on credit.
From the above particulars, prepare Trading and Profit & Loss Account for the year ended 31 st December,
2021 and a Balance Sheet as on that date. Provide depreciation on plant and machinery @10% p.a. and on
furniture @5% p.a.
A summary of receipts and payments of Medical Aid Society for the year ended 31.12.2021 is given below :
To, Balance (01.01.2021) 7,000 By, Payment for medicines 30,000
To, Subscription 50,000 By, Honorarium to doctor 10,000
To, Donations 14,500 By, Salaries 27,500
To, Interest on Investments 7,000 By, Sundry expenses 500
@7% p.a.
To, Charity show proceeds 10,000 By, Equipment purchased 15,000
By, Charity show expenses 1,000
By, Balance (31.12.2021) 4,500
88,500 88,500
Additional information (in ₹) :

01.01.2021 31.12.2021
Subscriptions due 500 1,000
Subscriptions received in advance 1,000 500

Stock of medicines 10,000 15,000
Amount due to medicine suppliers 8,000 12,000
Value of equipments 21,000 30,000
Value of Buildings 40,000 38,000
You are required to prepare Income and Expenditure Account for the year ended on 31st December, 2021
and the Balance Sheet as on that date.
Question 11 [Final Accounts]:

The following is the Trial Balance of Mr. Roy as on 31st March, 2021:
Debit Balance ₹ Credit Balance ₹
Plant & Machinery 3,10,000 Capital 4,20,000
Opening Stock 30,000 Sundry Creditors 20,000

Sundry Debtors 40,000 Sales 2,10,000
Wages 10,000 Return Outward 20,000
Salaries 15,000 Provision for Doubtful debt 1,000
Rent (April 2020 to June 2021) 18,000 Interest 4,000
Purchases 1,50,000
Return Inward 10,000
Bad debt 9,000
Insurance 3,000
Office Expenses 5,000
Cash in hand 30,000
Cash at Bank 45,000
6,75,000 6,75,000
Additional information :
(a) Stock on 31st March, 2021 was valued at ₹ 35,000.
(b) Further bad-debt of ₹ 1,000 is to be written off and a provision for doubtful debts @5% on Sundry
Debtors is to be maintained.
(c) Goods costing ₹ 5,000 have been distributed as free sample.
(d) Purchase of machinery worth ₹ 20,000 on 01.10.2020 has been wrongly included in Purchases
Account. Depreciation @10% p.a. is to be charged on machinery.
(e) Office expenses outstanding ₹ 500.
Prepare Trading Account, Profit & Loss Account for the year ended on 31.03.2021 and Balance Sheet of Mr.
Roy as on that date.
Question 12 [Theory]:
(a) What are the qualitative characteristics of accounting information?
(b) What are the limitations of Historical Cost Accounting?
(c) What is the procedure for issuing accounting standards in India?
Financial Accounting: General 2020 Group A:

Question 1 [Theory]: (a)
Define :
(i) Assets
(ii) Liabilities.
(b) Write the Accounting Equation.
(c) The financial year of M/s. A.B. Trading ends on 31 March, 2021 but actual stock is not taken until 5
April, 2021 when it is ascertained at ₹ 54,000. You find that :
(i) Sales between 1 April and 5 April are ₹ 3,000.
(ii) Purchases between 1 April and 5 April are ₹ 1,400. (iii) Sales return
between 1 April and 5 April are ₹ 200.
(iv) Purchases return between 1 April and 5 April are ₹ 300. All sales are made at 25% gross profit
on cost.
You are required to calculate the value of stock on 31 March, 2021.
A trader purchased a machine on 01.04.2018 at a cost of ₹ 2,00,000 and installed it at a cost of ₹ 20,000. The
scrap value of the machine was estimated at ₹ 20,000 and its effective life at 5 years. On 01.04.2020 the
machine was sold for ₹ 1,20,000 and another machine of the same type was purchased at a cost of ₹ 1,00,000
on that date. Installation cost of the machine is ₹ 4,000. The scrap value of this machine was estimated at ₹
14,000 and its life at 10 years. Show Machinery Account for the years 2018-19, 2019-20 and 2020-21 in the
books of the trader.
A & Co. of Kolkata sent goods of the invoice value of ₹ 80,000 on consignment basis to B. & Co. of
Kanpur. Invoice value was made by adding 331/3% on cost. A & Co. paid ₹ 1,800 for Railway Freight, ₹
360 for Carriage and ₹ 1,200 for Insurance for sending the goods. B & Co. sold ½ of the goods at ₹ 50,000,
incurring a bad debt of ₹ 8,400. B & Co. paid Landing Charges ₹ 600, Godown Rent ₹ 750 and Selling
expenses ₹ 840. B & Co. is entitled to an ordinary commission @5% and a Del Credere commission @2½%
on sales.
Show following accounts in the books of A & Co. – (a)

Consignment Account
(b) B & Co. Account.

The following transactions have been extracted from the books of M/S. B. & Co :
₹
Debtors balance on 01.04.2020 (Dr.) 1,00,000
Transactions during the year were :
Sales (including Cash Sales of ₹ 40,000) 2,56,000
Cash received from Debtors 1,80,000
Bills Receivable drawn 16,000
Bills Receivable endorsed 5,000
Returns from Debtors 12,000
Bills Receivable as endorsed dishonoured 2,000
Bill Receivable discounted (discount charges ₹ 200) 3,000
Bad Debts written off (after deducting bad debts recovery ₹ 2,000) 4,000
Sundry Charges debited to customers 1,200
Transfer from Creditors Ledger 600
Debtors Balance as on 31.03.2021 (Cr.) 2,000

Prepare a Sales Ledger Adjustment Account for the year ending on 31.03.2021.

On September 1, 2021, the godown of D. & Co. was destroyed by fire and stock of the value of ₹ 60,000
was salvaged. D. & Co. has a fire insurance policy of ₹ 1,50,000. Following information have been extracted
from the books of the company :
₹
Purchases for the year ended 31.03.2021 17,50,000
Sales for the year ended 31.03.2021 27,50,000
Purchases from 01.03.2021 to 01.09.2021 7,20,000

Sales from 01.03.2021 to 01.09.2021 10,80,000
Stock on 31 March, 2020 7,50,000
Stock on 31 March, 2021 3,00,000
You may assume that purchases and sales occur evenly over the months for last few years. Rate of Gross
Profit is to be based on the year ended on 31.03.2021.
Calculate the amount of claim to be presented to the Insurance Company in respect of Loss of Stock.
Question 6 [Introduction]:
Mr. Samir Roy, a sole proprietor of a small trading house determines profit under cash basis. The profit for
the year ended March, 31, 2021 was determined at ₹ 2,40,000. He provides the following additional
information for 2020-21.
₹
Credit Sales 41,000
Credit Purchases 24,000
Outstanding expenses 10,000
Income earned but not received 8,400
Rent paid in advance 5,000
Determine profit earned by Mr. Roy under ‘accrual basis’.
Question 5 [Capital & Revenue Expenditure]:

(a) What do you mean by Capital Expenditure and Revenue Expenditure?
(b) Distinguish between Capital Expenditure and Revenue Expenditure.
Question 8 [Rectification of errors]:

Pass journal entries to rectify the following errors detected after preparation of Trial Balance but before
preparation of Final Accounts :
(a) Return Inward Book was undercast by ₹ 800.
(b) ₹ 1,000 received from P was debited to the account of Q in the Sales Ledger.
(c) A purchase of ₹ 1,342 had been debited to supplier at ₹ 1,324.
(d) Salary paid ₹ 2,500 wrongly debited as Rent paid.
An amount of ₹ 2,000 withdrawn by the proprietor for his personal use had been debited to travelling expenses
account.
Group B:
The following Receipts and Payments Account of the Tala Football Club for the year ended 31.12.2021
:
Receipts Payments
₹ ₹
01.01.2021 31.12.2021
Cash in hand 5,000 12,000

Remuneration to Coach
Cash at Bank 44,600 5,000
Groundman’s Salary
31.12.2021 31,000
Purchase of Equipment
Bank Interest 1,000 4,000
Bar Room Expenses
Entrance Fees 10,000 9,000
Ground Rent
Subscription 50,000 Night Club Expenses 9,600
Bar Room Receipts 8,000 Printing and Stationery 5,000
Sale of Equipments 1,600 Repairs to equipments 9,000
Proceeds of Night Club 21,600 Cash at Bank 51,200
Cash in hand 6,000
1,41,800 1,41,800
Additional information :
01.01.2021 31.12.2021
(₹) (₹)
Subscription due 3,000 2,000
Amount due for Printing and Stationery 2,000 1,600
Estimated value of Equipments 16,000 34,000
You are required to prepare :

(a) An Income and Expenditure A/c for the year ended 31.12.2021 (b) A
Balance Sheet as on that date.
Question 10 [Theory]:
(a) Briefly discuss the limitations of historical cost accounting.
(b) Mention the usefulness of applying accounting standards.
(c) State the main functions of Accounting Standard Board (ASB).
Question 11 [Single Entry]:
Mr. Souvik keeps his books of accounts under single entry system. The following details are obtained from
his books of account.
Furniture Debtors Creditors Cash Stock-in-Trade
31.03.2020 (₹) 50,000 30,000 20,000 84,600 32,000
31.03.2021 (₹) 45,000 ? 24,000 ? 28,000

The transactions during the year :
₹ ₹
Goods purchased for cash 24,000 Received from debtors 1,40,000
Total Sales during the year 2,28,600 Payment to creditors 85,000
[including Cash sales 35,800] Cash withdrawn for personal use 4,800
Expenses paid [including salary] 65,000
Mr. Souvik wants to maintain Provisions for Bad Debts @ 5% on closing Debtors.
Prepare :
(a) A Trading and Profit and Loss A/c for the year ended 31.03.2021 and (b)
A Balance Sheet as on that date.
Question 12 [Final Accounts]:

Following is the trial balance of Mr. X for the year ended 31.12.2021
Particulars ₹ Particulars ₹
Opening Stock 60,000 Sales 3,82,000
Purchases 1,70,000 Purchase Return 3,200
Sales Return 3,000 Discount 800
Carriage on Purchases 2,000 Sundry Creditors 51,000
Wages 30,000 Bills Payable 15,000
Bills Receivable 21,000 Capital 1,30,000
Discount 1,600
Salary 18,800
Insurance 2,400
Rent 3,600
Income Tax 1,800
Cash at Bank 13,400
Furniture 24,000
Plant and Machinery 1,30,000
Bad Debts 1,000
Freight and duty 3,400
Drawings 10,000
5,82,000 5,82,000
The following adjustments are to be made before preparing the final accounts :
(a) A credit sale of ₹ 2,000 has not been recorded in the books.
(b) Goods costing ₹ 1,000 has been taken by the proprietor for his personal use.
(c) Goods worth ₹ 500 distributed as free sample has not been recorded.
(d) Wages includes ₹ 3,000 for the year 2020 and Rent paid is for 9 months’ rent.
(e) Depreciate Plant & Machinery and Furniture at 10% and 5% respectively. (f) Bad Debts to be written
off ₹ 6,000 and a provision @ 5% to be made for Doubtful Debts.

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FINANCIAL ACCOUNTING-I

ASUBsCRIBE GOBIND KUMAR JHA

Financial Accounting: Honours 2017

Question 2 [Unit-2: Concepts for determination of business]: (a)

Question 3 [Unit-3: Accounting theory]:

Question 4 [Unit-3: Accounting theory]:

Question 5 [Unit- 5: Sale on Approval]:

M/s Bose Brothers records sale or return transactions as ordinary sales.

Group B: 4 Questions of 10 Marks Each (out of 6): 40 Marks

Question 7 [Single Entry Question OR Non-trading]:

Cash in Hand on 31.12.21 1,600

Question 8 [Consignment Or Self Balancing]:

Question 9 [Insurance claim]:

Financial Accounting: General 2017

(d) Repairing cost for the machinery ₹ 2,000 after installation

Group B: 4 Questions of 10 Marks Each (out of 6): 40 Marks

Question 7 [Consignment or Insurance Claim]:

Question 8 [Self Balancing]:

To Sale of old newspaper 3,000 By Balance c/d (at Bank) 2,000

Group C: 1 Question of 15 Marks:

(d) Provide depreciation on machinery @ 10% p.a.

Financial Accounting: Honours 2018

Question 2 [Unit-2: Rectification of Errors]:

Question 3 [Unit-3: Accounting theory]:

Question 4 [Unit-3: Accounting theory]:

Question 5 [Unit- 5: Self Balancing or Sale on Approval]:

Group B: 4 Questions of 10 Marks Each (out of 6): 40 Marks

Question 7 [Single Entry Question OR Non-trading]:

Opening Balance 21,000 Payment to Creditors 42,000

Receipt and Payment A/c for the year ended 31.12.2021

Bad debts 3,500 10% Loan (Taken on 01.10.20) 24,000

Financial Accounting: General 2018

Question 3 [Depreciation or Rectification of Errors]:

Question 4 [P/B/D or Revenue Recognisition]:

Group B: 4 Questions of 10 Marks Each (out of 6): 40 Marks

Question 7 [Consignment or Insurance Claim]:

Question 8 [Self Balancing]:

Bills endorsed 480

Drawings 3,600 Capital 40,000

Financial Accounting: Honours 2019

(c) What do you mean by Revenue?

Question 2 [Unit-2: Rectification of Errors]:

Question 3 [Unit-3: Accounting theory]:

Question 4 [Unit-3: Accounting theory]:

Question 5 [Unit- 5: Self Balancing or Sale on Approval]:

Group B: 4 Questions of 10 Marks Each (out of 6): 40 Marks

Outstanding exp. For Printing & Stationery 1,000 800

Purchases less returns as per 31.12.2020 3,00,000

Sales less returns as per 31.12.2020 3,73,000

Purchases less returns from 01.01.2021 to 07.06.2021 1,25,000

Sales less returns from 01.01.2021 to 07.06.2021 1,80,000

Less: Carriage to godown 10,500

Rent of godown 500

Commission 3,000 14,500

Group C: 1 Question of 15 Marks:

Returns 4,200 Sales 2,10,000

Freight and Carriage 9,700 Bank Loan @ 6% p.a. 20,000

Salaries and Wages 15,300 Discounts 1,600

Sundry Debtors 35,000

(vi) Stock on 31.12.2021 was ₹ 65,000.