1. | (a) | Explain any two of the following | 5each | |
| | (i) | Matching concept | | (0) |
| | (ii) | Del credere commission | | (0) |
| | (iii) | Loss of profit policy | | (0) |
| | (iv) | Joint venture. | | (0) |
| (b) | State, with reasons in brief, whether the following statements are true or false. Attempt any five : | 2each | |
| | (i) | An expenditure intended to benefit the current period is a revenue expenditure. | | (0) |
| | (ii) | The receipts and payments account is a summary of all capital receipts and payments. | | (0) |
| | (iii) | Sale of office furniture should be credited to sales account. | | (0) |
| | (iv) | Goodwill is not a fictitious asset. | | (0) |
| | (v) | Capital = Net Assets. | | (0) |
| | (vi) | Wages paid for erection of machinery are debited to profit and loss account. | | (0) |
| | (vii) | The adjustment entry in respect of outstanding expenses is— Debit – Outstanding expenses account. Credit – Expenses account. | | (0) |
2. | (a) | Comment on any two of the following statements | 4each | |
| | (i) | Sub–division of the journal has made the journal proper useless. | | (0) |
| | (ii) | Trial balance and balance sheet serve the same purpose. | | (0) |
| | (iii) | Single entry system is a defective system of accounting. | | (0) |
| (b) | Re–write any eight of the following sentences after filling–up the blank space with appropriate word(s) so as to convey the correct meaning : | 1each | |
| | (i) | Machinery is a _______________ asset. | | (0) |
| | (ii) | Going concern concept assumes that the business will be carried on for ________________ period. | | (0) |
| | (iii) | ______________ is the excess of assets over liabilities. | | (0) |
| | (iv) | Things of value owned by an economic enterprise are called its ___________. | | (0) |
| | (v) | The expired cost is __________________. | | (0) |
| | (vi) | Withdrawal of money by the owner is not an expense but a reduction of _________________. | | (0) |
| | (vii) | Interest on drawings is _____________ for the business. | | (0) |
| | (viii) | Subscriptions received in advance by a club are shown on the ______________ side of the balance sheet. | | (0) |
| | (ix) | Joint venture account is of the nature of ___________ account. | | (0) |
| | (x) | In case of default in the payment of installment, the balance in the vendor’s account is transferred to ________________ in the books of hire–purchaser. | | (0) |
3. | (a) | What are ‘contra entries’ in columnar cash book? How are these recorded ? | 8 | (0) |
| (b) | What do you understand by ‘hire–purchase system’? How does it differ from installment payment system ? | 8 | (0) |
4. | (a) | From the following particulars, ascertain the balance as would appear in the bank pass book of Ram Prasad on 31st January, 2007. The cash book showed a credit balance of Rs.82,000 on that date : (i) | Cheques issued, but not presented for payment by 31st January, 2007 | 23,000 | (ii) | Cheques paid into bank, but not cleared by 31st January, 2007 | 30,000 | (iii) | Interest charged on overdraft appeared in the pass book only | 500 | (iv) | Bank charges debited by bank, but not recorded in the cash book | 200 | (v) | Interest on debentures collected by bank, but not recorded in the cash book | 6,000 | (vi) | Bank paid insurance premium as per standing instructions, not yet recorded in the cash book | 2,200 | (vii) | A customer paid into the firm’s bank account directly | 10,000 | | 8 | (0) |
| (b) | Leela, Sweta and Shyama are in partnership. They share profits in the ratio of 5:3:2. The following is their balance sheet as at 31st March, 2006 on which date they dissolve partnership : Liabilities | Rs. | Rs. | Assets | Rs. | Creditors Loan account – Leela Capital accounts : | 2,00,000 50,000 | Premises Plant and Machinery | 2,00,000 1,50,000 | Leela Sweta Shyama | 2,50,000 75,000 2,25,000 | 5,50,000 8,00,000 | Furniture Stock Debtors | 68,500 2,04,000 1,77,500 8,00,000 |
It was agreed to repay the amounts due to the partners as and when the assets were realized, viz., : | Rs. | 1st May, 2006 | 1,50,000 | 1st July, 2006 | 3,65,000 | 1st September, 2006 | 2,35,000 |
Prepare a statement showing the distribution of cash using maximum loss method and write up the cash account. | 8 | (0) |
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5. | (a) | On 1st April, 2004, Moon Ltd. purchased a plant for Rs.10,00,000. On 1st October, 2004, an additional plant was purchased costing Rs.5,00,000. On 1st October, 2005, the plant purchased on 1st April, 2004 was sold off for Rs.4,00,000. On 1st October, 2006, a new plant was purchased for Rs.12,00,000 and the plant purchased on 1st October, 2004 was sold for Rs.4,20,000 on the same date. Depreciation is to be provided at 10% per annum on the written down value on 31st March every year. Prepare the plant account for three years ended 31st March, 2007. | 8 | (0) |
| (b) | The books of account of Jawahar for the year ended 31st March, 2007 were closed with difference in the trial balance carried forward. Subsequently, the following errors were detected : (i) | Rs. 1,500 being the total of discount column on the credit side of the cash book was not posted in general ledger. | (ii) | Closing stock was overstated by Rs.9,000 being casting error in the schedule of inventory. | (iii) | Returns outward book was undercast by Rs.150. | (iv) | A credit sale of Rs.870 was wrongly posted as 780 to the customer’s account in the sale ledger. | (v) | Rs.6,000 being the cost of purchase of office furniture was entered in the purchase book. |
Pass rectification entries, prepare suspense account and find out the effect of rectification of errors on profit as on 31st March, 2007. | 8 | (0) |
6. | Ajay and Binoy are partners in a firm sharing profits and losses in the ratio of 2:1 respectively. On 31st March, 2006, their balance sheet stood as follows : Liabilities | Rs. | Assets | Rs. | Bills payable Sundry creditors General reserve Ajay’s capital Binoy’s capital | 6,000 90,000 42,000 2,82,000 2,40,000
6,60,000 | Cash at bank Bills receivable Sundry debtors Stock Furniture Machinery | 90,000 20,000 1,00,000 1,60,000 40,000 2,50,000 6,60,000 |
On 1st April, 2006, a new partner Hari was admitted into the partnership on the following terms : (i) | That Hari brings in cash Rs.60,000 as goodwill for his one–third share in future profits. | (ii) | That Hari brings such an amount that his capital will be one–third of total capital of the new firm. | (iii) | That the value of stock to be raised to Rs.1,68,000. | (iv) | That furniture and machinery be depreciated by 5% and 10% respectively. | (v) | That a provision for doubtful debts be created at 5% on sundry debtors. | (vi) | That the capital accounts of the partners be readjusted on the basis of their profit sharing ratio through their current accounts. |
Prepare the necessary ledger accounts and the opening balance sheet of the new firm. | 16 | (0) |
7. | From the following particulars relating to a charitable trust hospital, prepare the receipts and payments account for the year ended 31st March, 2007 and the balance sheet as on that date : Income and Expenditure Account for the year ended 31st March, 2007 | | Rs. | | Rs. | To Medicines used To Honorarium to doctors To Salaries To Printing and stationery To Electricity and water To Rent | 1,49,000 60,000 1,37,500 5,500 2,375 30,000 | By Subscriptions By Donations By Interest on investment @ 11% p.a. By Proceeds from Charity show Less: Expenses |
57,250 3,900 | 2,80,000 47,500 55,000
53,350 | To Electricity and water To Rent To Depreciation Furniture Equipments Surplus |
10,500 16,000
| 2,375 30,000
26,750 23,825 4,35,850 | | 4,35,850 |
Additional information : | 31.3.2006 (Rs.) | 31.3.2007 (Rs.) | (i) | Subscriptions due | 600 | 800 | (ii) | Subscriptions received in advance | 320 | 500 | (iii) | Electricity and water outstanding | 460 | 575 | (iv) | Stock of medicines | 39,100 | 48,750 | (v) | Estimated value of equipments | 58,000 | 69,500 | (vi) | Furniture at cost less depreciation | 1,05,000 | 94,500 | (vii) | Land | – | 50,000 | (viii) | Interest accrued on investments in 11% bonds costing Rs.5,12,500 (face value of Rs.5,00,000) | 13,750 | 13,750 | (ix) | Cash in hand | 1,700 | 800 | (x) | Cash at bank | 45,000 | ? | | 16 | (0) |
8. | The following is the schedule of balances on 31st March, 2007 extracted from the books of Dinesh : Particulars | Debit (Rs.) | Credit (Rs.) | Cash in hand Cash at bank Sundry debtors Stock as on 1st April, 2006 Furniture and fixtures Office equipments Buildings Motor car Sundry creditors Loan Provision for bad debts Purchases Purchases return Sales Sales return Salaries Rent for godown Interest on loan Rates and taxes Discount allowed to debtors Discount received from creditors | 1,400 2,600 86,000 62,000 21,400 16,000 60,000 20,000 — — — 1,40,000 — — 4,200 11,000 5,500 2,700 2,100 2,400 — |
43,000 30,000 3,000 — 2,600 2,30,000 — — — — — — 1,600 |
Particulars | Debit (Rs.) | Credit (Rs.) | Freight on purchases Carriage outwards Drawings Printing and stationery Electric charges Insurance premium General office expenses Bad debts Bank charges Motor car expenses Capital account | 1,200 2,000 12,000 1,800 2,200 5,500 3,000 2,000 1,600 3,600 — 4,72,200 | 1,62,000 4,72,200 |
Prepare the trading and profit and loss account for the year ended 31st March, 2007 and the balance sheet as on that date after making the following adjustments : (i) | Provide depreciation on — (a) Building @ 5%; (b) Furniture and fixture @ 10%; (c) Office equipments @ 15%; and (d) Motor car @ 20%. | (ii) | Value of stock at the close of the year was Rs.44,000. | (iii) | Provision for bad debts is to be maintained at 5% of sundry debtors. | (iv) | Insurance premium includes Rs.4,000 paid towards proprietor’s life insurance policy and the balance of the insurance charges covers the period from 1st July, 2006 to 30th June, 2007. | | 16 | (0) |