1. | (a) | In each of the following one of them is correct. Indicate the correct answer. | 2x8=16 | |
| | (i) | Subscription received in advance is shown in (a) | Liabilities side of the Balance Sheet | (b) | Assets side of the Balance Sheet | (c) | Receipt Item | (d) | None of the above | | | (0) |
| | (ii) | Non – Recurring Expenses mean (a) | Expenses incurred at regular intervals | (b) | Expenses incurred at irregular intervals | (c) | Expenses not incurred more than once | (d) | Expenses not incurred at all | | | (0) |
| | (iii) | Unexpired license fees is a (a) | Balance Sheet Item | (b) | Expenses | (c) | Income | (d) | Owner’s Capital A/c | | | (0) |
| | (iv) | Opening Stock (+) Purchases (—) Consumption is (a) | Sales | (b) | Purchases Return | (c) | Sales Return | (d) | Closing Stock | | | (0) |
| | (v) | Which of the following will result in disagreement of Trial Balance? (a) | Sales Return treated as Purchases | (b) | Purchases Return treated as sales | (c) | Ram A/c wrongly credited instead on Lakshman | (d) | Under casting Cash Book by Rs. 90. | | | (0) |
| | (vi) | Allotment on Pro rata basis means (a) | Allotment only to those who applied for certain no of shares or more | (b) | Allotment only to the Directors and their relatives | (c) | Allotment of the available shares in proportion to the no. of application received. | (d) | None of the above. | | | (0) |
| | (vii) | Surplus for the year means (a) | Amount of Cash in Hand | (b) | Bank Balance | (c) | Excess of Income over Expenditure | (d) | Excess of Expenditure over Income. | | | (0) |
| | (viii) | Provision for doubtful debts means (a) | Making provision for Bad debt | (b) | Marking provision for the amount not considered as payable. | (c) | Making provision for doubtful debt | (d) | Making provision just to reduce the Profit. | | | (0) |
| (b) | State with reasons whether the following are true or false: | 1x8=8 | |
| | (i) | Furniture for a furniture dealer is stock in trade. | | (0) |
| | (ii) | Revenue Accounts never have Opening Balance. | | (0) |
| | (iii) | Dividend is distribution of Profit among Shareholders. | | (0) |
| | (iv) | Profit is always represented as a Cash or Bank Balance. | | (0) |
| | (v) | Under WDV method of depreciation the value of asset never becomes zero. | | (0) |
| | (vi) | A tallied rather than a correct Trial Balance is the basic requirement to prepare the Financial statements. | | (0) |
| | (vii) | Consignment Sale is not different from normal Sale. | | (0) |
| | (viii) | Dual concept of accounting is not strictly followed in the case of Single entry system. | | (0) |
| (c) | Fill up the blanks: | 2x8=16 | |
| | (i) | A ______ is a temporary Partnership. | | (0) |
| | (ii) | Certificate of protest is issued by a ______ | | (0) |
| | (iii) | Difference in Trial Balance is parked in a ______ A/c. | | (0) |
| | (iv) | A ______ does not have liability to share the loss incurred by a Firm. | | (0) |
| | (v) | ______ and ______ are the two different kinds of capital A/cs in the case of a Firm. | | (0) |
| | (vi) | Balance in Share Forfeiture A/c is transferred to ______ | | (0) |
| | (vii) | ______ is the maximum amount of Capital that can be raised by a company. | | (0) |
| | (viii) | Under casting of the receipts side of the Cash book results in Short ______ in tallying a Trial Balance. | | (0) |
| | (ix) | Calls in arrear is reduced from ______ of the company. | | (0) |
2. | Gouri a Fashion Designer by Profession did not maintain proper books of accounts. However she is in a position to provide you with her Bank statement, summary of cash transactions and few balances which are correct. (1) | Summary of Bank statement: Cash deposited during the year Salary Rent Telephone Electricity Collection from debtors Payment to creditors | 3,20,000 2,88,000 1,80,000 29,995 17,992 8,95,000 4,20,000 | (2) | Summary of Cash transactions: Collection from debtors Drawing Staff Welfare General Expenses | 4,20,000 75,000 24,000 15,000 | (3) | List of Balances | As on | | Sundry Debtors Sundry Creditors Cash Bank | 31.03.2006 2,50,000 1,25,000 45,000 4,28,000 | 31.03.2007 3,20,000 2,50,000 31,000 7,07,013 | | With the details furnished above kindly prepare: | 1. | Profit and Loss A/c for the year ended 31.03.2007 and | 2. | Balance Sheet as at 31.03.2007 of Gouri. | | 6+6 | (0) |
3. | ASHA,REKHA and ASHOK are partners sharing Profits and Losses in the ratio of 5:3:2 respectively. On March 31, 2007 they decided to dissolve the partnership firm and on that date their Balance Sheet was on follows: Balance Sheet as on March 31, 2007 | Liabilities | Rs. | Assets | Rs. | Capital: Asha Ashok General Reserve Creditors Bills Payable Mrs. Ashok's loan Investment Fluctuation Fund | 96,000 84,000 |
1,80,000 24,000 72,000 24,000 12,000 6,000 | Cash at Bank Debtors Less: Provision Rekha's Capital Land & Building Stock Furniture Bills Receivable Investments | 50,400 2,400 | 12,000
48,000 12,000 96,000 54,000 36,000 30,000 30,000 | | 3,18,000 | | 3,18,000 |
The terms of dissolution are as follows: (a) | Rs. 22,800 were paid to a Creditor as against only Rs. 15,600 provided for in the books of Accounts. | (b) | There was bad debts of Rs. 8,400 and discount of 10% was allowed to Debtors. | (c) | Bills payable were due on an average after 3 months were paid immediately at a discount of 12% p.a. | (d) | investment realized Rs. 26,400; Land and Building was sold for Rs. 1,20,000, Stock realized 20% less. | (e) | Ashok agreed to pay Mrs. Ashok's loan and took over furniture at Rs. 33,600. | (f) | A rebate of 1,200 was given to Bills Receivable and Expenses of dissolution were Rs. 3,600 which were paid by Rekha. | Prepare Realisation Account, Bank Account and Partners’ Capital Accounts to close the books of firm. | 5+2+5=12 | (0) |
4. | The Profit and Loss Account of Tapan for the year ended 31st March, 2007 showed a Net Profit of Rs. 2,500/- after taking into account the Closing Stock of Rs. 4,720/-. On a scrutiny of books the following information could be obtained: (i) | Purchases of the year included Rs. 500/- spent on acquisition of a ceiling fan for his shop. | (ii) | Tapan has taken goods valued at Rs. 1,800/- for his personal use without making entry in the books. | (iii) | Invoices for goods amounting to Rs. 4,000 has been entered on 29th March, 2007 but such goods were not included in stock. | (iv) | Sale of goods amounting to Rs. 700/- made and delivered in March, 2007 had been entered in April, 2007 sales. | (v) | Rs. 500/- had been included in closing stock in respect of goods purchased and invoiced on 28th March, 2007 but included in purchase for April, 2007. |
You are required to ascertain correct amount of Closing Stock as on 31st March, 2007 and the adjusted Net Profit for the year ended on that date. | 4+8=12 | (0) |
|
5. | (a) | Ruhit and Rahul enter into a Joint Venture to take a building contract for Rs. 28,80,000. They provide the following information regarding the expenditure incurred by them: | Ruhit (Rs.) | Rahul (Rs.) | Materials Cement Wages Architect's fee License fees Plant | 8,16,000 1,56,000 — 1,20,000 — — | 6,00,000 2,04,000 3,24,000 — 60,000 2,40,000 |
Plant was valued at Rs. 1,20,000 at the end of the contract and Rahul agreed to take it at that value. Contract amount of Rs. 28,80,000 was received by Ruhit. Profit or Loss to be shared equally. You are asked to show: (i) Joint Venture Account and (ii) Rahul's Account in the books of Ruhit. | 4+2=6 | (0) |
| (b) | On November 30, 2007 the Pass–Book of Mr. ANIT KUMAR, a trader showed a Debit Balance of Rs. 20,000, but the Pass–Book balance was different for the following reasons from the Cash Book Balance: (i) | Mr. ANIT KUMAR deposited a cheque for collection of Rs. 1,000 on 5.10.2007 and made entry in Cash Book, appears in the Pass–Book on 6.12.2007 at Rs. 990. | (ii) | Cheques issued to parties but not presented for payment till 30.11.2007 are of Rs. 525 Rs. 835 and Rs. 900. | (iii) | Cheques deposited for collection but not collected by the bankers till 30.11.2007, Rs. 8,760 and Rs. 410. | (iv) | Interest on Investments collected by bankers on 30.11.2007 Rs. 955 entered in Cash Book on 4.12.2007 on receipt of bank intimation. | (v) | Bank charges Rs. 90 (dated 27.11.2007 not entered in Cash Book. | (vi) | Bankers have made mistake in balancing by showing Debit balance in excess by Rs. 1,000 on 30.11.2007 which was rectified in Bank Pass–Book on 7.12.2007 when notified. |
Prepare Bank Reconciliation Statement as on November 30, 2007. | 6 | (0) |
6. | CEC LTD offered for public subscription 2000 equity shares of Rs. 100 each at a premium of Rs. 20 per share on the following terms: (a) | Application money to be paid before June 30, 2007; Rs. 40 per share. | (b) | Allotment money to be paid before September, 30 2007; Rs. 50 per share including Rs. 20 premium. | (c) | First and Final Call money to be paid before December 31, 2007; Rs. 30 per share. |
Applications for 4000 shares were received, the company decided to: (i) | Allot in full 200 shares to 4 applicants who had applied for the same. | (ii) | Reject the application for 1400 shares applied for by persons suspected to be agents of a rival company. | (iii) | Allot the balance number of shares proportionately, to the remaining applicants, and to apply the excess money paid towards the allotment money dues. |
ARUP who had applied for 100 shares and who was allotted all the shares applied for could not pay allotment money. ARUNDHATI who was allotted 60 shares on the proportion basis could not pay the first and final call. After due notices all such shares were forfeited and re–issued at a discount of 20% of the face value of the share to Mr. REDDY. Pass the necessary Journal entries to record the above transactions in the books of CEC LTD. | 12 | (0) |
7. | Hari Krishnan has got his Trial Balance Tallied as on 31.03.2007 with a difference of Rs. 41,016/- On proper analysis you have found the following errors: 1. Pass Journal entries; 2. Prepare a rectified Trial Balance. | Trial Balance as on 31.03.2007 | Particulars | Dr Amount | Cr Amount | Capital Plant and Machinery Furniture Car Building Cash Bank Depreciation Opening Stock Purchases Wages Manufacturing Expenses Salary Rent Postage and Telephone Electricity General Expenses Sales Interest Fixed Deposit Outstanding Expenses Sundry Debtors Sundry Creditors Unsecured Loan Suspense | 250,000 26,500 485,000 620,000 69,000 72,000 46,500 45,800 690,000 190,000 206,000 120,000 240,000 89,000 94,000 12,500
250,00
96,000
41,016 | 1,000,256
1,025,000 4,500
63,500
200,060 1,350,000 | | 3,643,316 | 3,643,316 |
Your observations: 1. 2. 3. 4. 5. 6. 7. 8 | Sales return considered as Purchases Purchases returns considered as Sales Ramu who is a creditor considered as Debtor Sales register’s total actually was Receipts side of the Bank book for the month of March undercast by Salary advance wrongly considered as outstanding expenses Discount received not considered in Trial Balance Sundry Debtors under cast by | Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. | 2,693 4,923 22,500 1,052,000 80,000 12,000 984 10,000 | | 12 | (0) |
8. | (a) | Choose the odd one: | 1x5=5 | |
| | (i) | (a) | Outstanding Liability | (b) | Sundry Creditors | (c) | Bills Payable | (d) | Capital | | | (0) |
| | (ii) | (a) | Carriage inward | (b) | Carriage outward | (c) | Factory Rent | (d) | Direct Wages | | | (0) |
| | (iii) | (a) | Base Stock | (b) | LIFO | (c) | FIFO | (d) | SLM | | | (0) |
| | (iv) | (a) | Motor car | (b) | Building | (c) | Land | (d) | Furniture | | | (0) |
| | (v) | (a) | Associations of two or more persons | (b) | Sharing of profit | (c) | Perpetual Existence | (d) | Unlimited Liability | | | (0) |
| (b) | Answer in one word: | 1x5=5 | |
| | (i) | A person who owes something. | | (0) |
| | (ii) | King of all Books. | | (0) |
| | (iii) | The process of adding up a given column of figures. | | (0) |
| | (iv) | A special cheque drawn by a Bank on one of its Branches directing it to pay a certain sum of money to a certain person, for the value already received, | | (0) |
| | (v) | The debit balance in the profit & Loss A/c indicates | | (0) |
| (c) | Write note on: Overriding Commission. | 2 | (0) |