Basic Principle of Accounting

DATE: 06/05/2017 TIME: 09:30 am to 12:00 Noon
NATIONAL LAW UNIVERSITY ODISHA, CUTTACK

End-Semester Examination (Even-Semester)
May, 2017
B.B.A.LL.B
SEMESTER - II (BATCH OF 2016 – 2021)
Full Mark: 45 Duration: 2 hrs 30 mins.

General Instructions
1. No clarifications can be sought on the question paper. In case of any ambiguity in the question paper
students are expected to rely on the question paper as it is and respond to it.
2. Notes, books, other written and printed matter, other examinations aids, and electronic devices, including
but not limited to mobile phones, laptops and digital diaries, are strictly prohibited in the examination
hall. Any candidate found in possession of any of the above during the examinations, either inside or
outside the Examination hall will be treated as unfair means.
3. Start a new page for each question and take care to identify each answer clearly with the
number of the question and, where appropriate, the part you are answering and write your
answers in sequence i.e. number wise.
Material allowed in the Examination hall: Calculators are allowed for computational purposes
BASIC PRINCIPLE OF ACCOUNTING

1. A. Give your comments on why Reducing Balance method is a better method of charging depreciation
compared to the Straight Line method.
B. Define depreciation and state the problems that may arise if depreciation not charged on assets.
(2x3 = 6 Marks)
2. M/S Pravat Bros. started business on 1.1.2014. following information are provided for the year ended 31 st
December 2014, 2015 and 2016:
YEAR 2014 2015 2016
CREDIT SALES 5,00,000 7,00,000 10,00,000
RECEIVED FROM DEBTORS 3,00,000 5,00,000 5,00,000
DISCOUNT ALLOWED 25,000 35,000 30,000
RETUNS INWARD 30,000 20,000 80,000
BAD DEBTS 20,000 60,000 90,000
Provision is to be created for doubt full debts @10% on closing debtors. You are required to prepare sundry
debtor A/c. bad debt a/c and provision for bad debt a/c for the year 2014, 2015 & 2016.
(09 Marks)
Page 1 of 3
2. M/S Partha Bros. purchased machinery by cheque for RS.1, 00,000 on 01/01/0214. At the end of each year,
depreciation is provided @ 10% p.a. by the diminishing balance method. On 01/07/2016 further machinery
worth Rs 2,00,000 purchased by cheque. You are required to show Machinery A/c, Depreciation A/c and
Accumulated depreciation A/c (if applicable) for the year 2014, 2015 & 2016:
A) When no provision for depreciation account is maintained:

B) When provision for depreciation account is maintained
(07 Marks)
3. M/S Prakash Bros. purchased on 01/01/13 certain machinery for RS 58,200 and spent Rs 1,800 0n its
erection. On 01/07/14, another machine for Rs 2,00,000 was acquired. On 01/07/15 the machinery
purchased on 01/01/13 having become obsolete was auctioned for Rs 38600 and on the same date fresh
machinery purchased for Rs 1,00,000. Depreciation was provided for annually on 31 st December @ 10% on
written down value method. On 1st January 2016 it was decided to change method of charging depreciation
from WDV to SLM basis.
You are required to show machinery account from 2013 to 2016.
(08 Marks)
4. Find below the Trial Balance of M/S Aftab & Co as on 31 st March 2017. You are required to prepare Profit &
Loss Account and Balance Sheet after considering the additional information.
Particulars Rs Rs
Capital 2,35,300
Land & Building 1,50,000
Drawings 8,000
Plant & machinery 90,000
Opening stock 20,000
Furniture & fixture 70,000
Carriage Inwards 8,000
Wages 20,000
Salary 40,000
Provision for Bad debt 5,000
Sales 5,00,000
Return Inward 25,000
Page 2 of 3
Income Tax paid 5,000
Bank charges 300
Discount Allowed and Received 2,000 4,000
Purchases 3,00,000
Sundry debtors and creditors 1,00,000 50,000
Cash in hand 15,000
Bank balance 23,000
Bank loan 1,00,000
Bad debt 18,000
8,94,300 8,94,300
Additional Information:
1. Closing stock (31.03.2017) – Rs 50,000

2. Depreciation to be charged on assets @ 10%
3. Bank loan taken on 01.10.2016 @ 12 % Interest p.a.
4. Provision for bad debt to be made on closing debtor balance @ 10%.
5. Salary of Rs 20,000 due but not paid.
(15 Marks)
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Page 3 of 3

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DATE: 06/05/2017 TIME: 09:30 am to 12:00 Noon

NATIONAL LAW UNIVERSITY ODISHA, CUTTACK

Full Mark: 45 Duration: 2 hrs 30 mins.

BASIC PRINCIPLE OF ACCOUNTING

YEAR 2014 2015 2016

CREDIT SALES 5,00,000 7,00,000 10,00,000

RECEIVED FROM DEBTORS 3,00,000 5,00,000 5,00,000

DISCOUNT ALLOWED 25,000 35,000 30,000

RETUNS INWARD 30,000 20,000 80,000

BAD DEBTS 20,000 60,000 90,000

A) When no provision for depreciation account is maintained:

You are required to show machinery account from 2013 to 2016.

Land & Building 1,50,000

Plant & machinery 90,000

Opening stock 20,000

Furniture & fixture 70,000

Carriage Inwards 8,000

Provision for Bad debt 5,000

Return Inward 25,000

Bank charges 300

Discount Allowed and Received 2,000 4,000

Sundry debtors and creditors 1,00,000 50,000

Cash in hand 15,000

Bank balance 23,000

Bank loan 1,00,000

Bad debt 18,000

1. Closing stock (31.03.2017) – Rs 50,000

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