Question Paper

Financial Accounting (CFA510): January 2008

Answer all 70 questions.
Marks are indicated against each question.
Total Marks : 100
<Answer>

1. Which of the following events/transactions is not recorded in the books of accounts of a business?
(a)
(b)
(c)
(d)
(e)

Withdrawal of goods by the proprietor for his personal consumption

Sale of an asset on credit
Purchase of a new asset in exchange of an old asset
Receipt of interest by proprietor on bank fixed deposit held jointly with his spouse
Loss of stock by fire.
(1 mark)
<Answer>

2. In relation to price, the phrase markdown means

(a)
(b)
(c)
(d)
(e)

The first selling price at which goods are offered

The selling price lowered below the cost
The selling price lowered below the original selling price
The selling price lowered below the previous selling price
The difference between the cost and the original selling price.
(1 mark)
<Answer>

3. Revenue does not include

(a)
(b)
(c)
(d)
(e)

Inflow of cash out of sale of goods

Interest on investment
Rent received
Dividend received
Advance received for supplies.
(1 mark)
<Answer>

4. In which of the following methods, the cost of the asset is spread over in equal proportion during its useful
economic life?
(a)
(b)
(c)
(d)
(e)

Straight line method

Written down value method
Units-of-production method
Sum-of-the-years-digits method
Machine-hour rate method.
(1 mark)
<Answer>

5. At the time of finalization of accounts, entries passed for outstanding expenses, depreciation and interest on capital
are referred to as
(a)
(b)
(c)
(d)
(e)

Opening entries
Journal entries
Adjustment entries
Contra entries
Closing entries.
(1 mark)
<Answer>

6. Which of the following accounts appear(s) in the balance sheet of a business?

I.
II.
III.
IV.
(a)
(b)
(c)
(d)
(e)

Stock at the end of the financial year.

Stock at the beginning of the financial year.
Prepaid rent.
Interest received.
Only (I) above
Only (II) above
Both (I) and (III) above
Both (II) and (III) above
(I), (III) and (IV) above.
(1 mark)
1

<Answer>

7. Balance appearing in the credit column of a trial balance can be

I.
II.
III.
IV.
(a)
(b)
(c)
(d)
(e)

An income.
An outstanding expense.
A Liability.
An income received in advance.
Only (I) above
Only (II) above
Only (III) above
Both (I) and (III) above
All (I), (II), (III) and (IV) above.
(1 mark)
<Answer>

8. The rule applicable to a nominal account is

(a)
(b)
(c)
(d)
(e)

Debit what comes in and credit what goes out

Debit the receiver and credit the giver
Debit all expenses and losses and credit all incomes and gains
Debit the giver and credit the receiver
Debit what goes out and credit what comes in.
(1 mark)
<Answer>

9. Balance Sheet of a business concern is a

(a)
(b)
(c)
(d)
(e)

Statement of revenue and expenses

Statement of cash receipts and cash payments
Cash flow statement
Valuation statement
Statement of assets and liabilities.
(1 mark)
<Answer>

10.Amount received as interest on trade investments held by a company should be transferred to

(a)
(b)
(c)
(d)
(e)

Trading account
Profit and loss account
Profit and loss appropriation account
Trade investments account
Revaluation reserve account.
(1 mark)

11.Retained earnings is the amount of

(a)
Profit after tax less dividends
(b)
Profit before tax less dividends
(c)
Profit before interest and taxes less dividends
(d)
Profit before depreciation and taxes less dividends
(e)
Profit before taxes and after depreciation less dividends.

<Answer>

(1 mark)
<Answer>

12.If the profit is 25% of the cost price then it is

(a)
25% of the sale price
(b)
33% of the sale price
(c)
20% of the sale price
(d)
12.5% of the sale price
(e)
50% of the sale price.
(1 mark)

<Answer>

13.Ledger is also called as

(a)
The principal book
(b)
The book of original entry
(c)
The journal
(d)
The subsidiary books
(e)
The profit and loss account.
(1 mark)

<Answer>

14.Return outward book is maintained by a business to record

(a)
(b)
(c)
(d)
(e)

Return of goods purchased on cash

Return of goods sold on credit
Return of goods purchased on credit
Return of capital goods purchased on credit
Return of capital goods sold on credit.
(1 mark)
<Answer>

15.The liabilities payable over a longer period of time, generally after one year, are called
(a)
Current liabilities
(b)
Provisions
(c)
Non-current liabilities
(d)
Contingent liabilities
(e)
Reserves.
(1 mark)

<Answer>

16.A credit sale of Rs.2,000 was wrongly entered in the purchases book. The impact of the error on gross profit is
that, it
(a)
Decreases the gross profit by Rs.2,000
(b)
Increases the gross profit by Rs.2,000
(c)
Decreases the gross profit by Rs.4,000
(d)
Increases the gross profit by Rs.4,000
(e)
Has no impact.
(1 mark)

<Answer>

17.A person who is carrying on profession is required to get his accounts audited, if his gross receipts exceed
(a)
Rs.40 lakhs in a year
(b)
Rs.50 lakhs in a year
(c)
Rs.10 lakhs in a year
(d)
Rs.15 lakhs in a year
(e)
Rs.25 lakhs in a year.
(1 mark)

<Answer>

18.The system of accounting in which revenue is recognized when it is earned and expenses are recognized when
they are incurred, is called
(a)
Accrual system
(b)
Hybrid system
(c)
Income Tax system
(d)
Cash system
(e)
Deferral system.
(1 mark)

<Answer>

19.The valuation of goodwill is necessary in the case of

I.
Sale of a company.
II. Valuation of shares of a company.
III. Purchase of another company.
(a)
(b)
(c)
(d)
(e)

Only (I) above

Only (II) above
Both (I) and (II) above
Both (II) and (III) above
All (I), (II) and (III) above.
(1 mark)
<Answer>

20.Which of the following items is deducted from total assets of the concern to arrive at its net worth?
(a)
All outside liabilities
(b)
Only current liabilities
(c)
Only long term liabilities
(d)
All reserves and surpluses
(e)
Securities premium.
(1 mark)

<Answer>

21.The systematic allocation of the costs of intangible assets to the periods in which they provide benefits is called
(a)
Amortization
(b)
Depreciation
(c)
Depletion
(d)
Deterioration
(e)
Appropriation.
(1 mark)

<Answer>

22.Errors which can affect both the accounts involved in the transaction are
(a)
(b)
(c)
(d)
(e)

Errors of complete omission

Errors of partial omission
Errors of overcasting
Errors of undercasting
Errors of carry forward.
(1 mark)
<Answer>

23.Gains arising from sources other than normal operations of the business are called
(a)
(b)
(c)
(d)
(e)

Gross profit
Operating profit
Non-operating surplus
Profit before tax
Profit after tax.
(1 mark)
<Answer>

24.Which of the following is not treated as an allowable expense for computing managerial remuneration?
(a)
(b)
(c)
(d)
(e)

Payment of ex-gratia to an employee

Compensation paid in lieu of breach of contract
Bad debts written-off
Directors remuneration
Any tax notified as a tax on abnormal profits.
(1 mark)
<Answer>

25.Which of the following persons can be appointed as an auditor of a company?

(a)
(b)
(c)
(d)
(e)

A body corporate
A person indebted to the company for Rs.1,500
A person holding the shares of the company as a trustee
A person appointed as a director of the company
An officer of the company.
(1 mark)
<Answer>

26.When fixed assets are sold at book value

(a)
(b)
(c)
(d)
(e)

The total assets will increase

The total liabilities will increase
The total assets will decrease
There is no change in the total assets
The liabilities will decrease.
(1 mark)
<Answer>

27.Advance tax that appears in the trial balance is shown

(a)
(b)
(c)
(d)
(e)

As an expense in the profit and loss account

As an appropriation of profits in the profit and loss appropriation account
As a current liability in the balance sheet
Under the head fixed assets in the balance sheet
Under the head loans and advances in the balance sheet.
(1 mark)
<Answer>

28.Profit on revaluation of fixed assets should be transferred to

(a)
General Reserve a/c
(b)
Capital Reserve a/c
(c)
Suspense a/c
(d)
Profit and loss a/c
(e)
Profit and loss appropriation a/c.
(1 mark)
4

<Answer>

29.If the articles of a company permit, between two annual general meetings the Directors can declare
(a)
(b)
(c)
(d)
(e)

Interim dividend
Bonus issue
Rights issue
Redemption of debentures
Redemption of preference shares.
(1 mark)
<Answer>

30.The value of the goodwill, according to the simple profit method, is

(a)
The product of current years profit and number of years of purchase
(b)
The product of last years profit and the number of years of purchase
(c)
The product of average profit of the given years and number of years of purchase
(d)
The expected average profit for future years
(e)
The product of average profit of last year, current year and coming year and number of years of
purchase.
(1 mark)

<Answer>

31.The three column cash book represents

(a)
Real accounts only
(b)
Both real and nominal accounts
(c)
Personal accounts only
(d)
Both real and personal accounts
(e)
Real, personal and nominal accounts.
(1 mark)

<Answer>

32. On June 10, 2001, Santosh Ltd. had taken a bank loan on which interest at the rate of 8% per annum is payable on
June 30 and December 31, every year. The loan is secured by a charge on the factory building. The interest
accrued and due as on March 31, 2007 was shown in the Balance Sheet of the company under the head
(a)
Current liabilities
(b)
Secured loans
(c)
Miscellaneous expenditure
(d)
Loans and advances
(e)
Unsecured loans.
(1 mark)

<Answer>

33.Which of the following assets appear under the category of current assets in the balance sheet of a company?
(a)
(b)
(c)
(d)
(e)

Stores and spare parts

Discount on issue of securities
Trust securities
Development of property
Live stock.
(1 mark)
<Answer>

34.Which of the following items does not come under the heading Provisions on the balance sheet?
(a)
(b)
(c)
(d)
(e)

Provision for taxation

Proposed dividend
Provision for contingencies
Proposed addition to reserves
Provision for insurance, pension and provident fund.
(1 mark)
<Answer>

35.Auditing begins where _______ ends.

(a)
(b)
(c)
(d)
(e)

Sales
Accounting
Manufacturing
Accounting year
Stock valuation.
(1 mark)

36.Which of the following is optional while submitting the annual reports in the Annual General Meeting?
(a)
Balance sheet
(b)
Profit and loss account
(c)
Funds flow statement
(d)
Directors report
(e)
Auditors report.

<Answer>

(1 mark)
<Answer>

37.Contingent liabilities do not include

(a)
Liability for calls on partly paid shares
(b)
Liability for bills discounted
(c)
Liability for bills accepted
(d)
Liability under guarantee
(e)
Arrears of dividends on cumulative preference shares.
(1 mark)

<Answer>

38.The costs that are incurred for establishing a company and getting it ready to commence business, for which it is
being formed, are called
(a)
Accrued expenses
(b)
Preliminary expenses
(c)
Investments
(d)
Manufacturing expenses
(e)
Administrative expenses.
(1 mark)

<Answer>

39.Assets which are acquired for the purpose of using them in the conduct of the business operations and not for
reselling them in order to earn profit are to be treated as
(a)
Fixed assets
(b)
Current assets
(c)
Liquid assets
(d)
Intangible assets
(e)
Miscellaneous expenditure to the extent not written-off.
(1 mark)

<Answer>

40.Which of the following is an example of a representative personal account?

(a)
Rent
(b)
Stock of stationary
(c)
Outstanding salaries
(d)
Cash in hand
(e)
Repairs to machinery.
(1 mark)
41.Valley Ltd. has issued 20,000, 10% Preference Shares of Rs.100 each, fully paid and 2,60,000 Equity Shares of
Rs.10 each, fully paid, which are issued at a premium of Rs.20. The profit for the year 2006-07 is Rs.21,68,000.
The company has to provide Rs.8,76,000 for taxation of the previous year 2005-06.
The company declared an equity dividend of 10%.
The total amount debited to Profit and Loss Appropriation account on account of the above decisions is
(a)
Rs. 4,60,000
(b)
Rs. 2,86,000
(c)
Rs.13,62,000
(d)
Rs.13,36,000
(e)
Rs.11,36,000.

<Answer>

(2marks)

<Answer>

42.Sarovar Ltd. incurred the following costs during the year 2006-07:
Particulars
Design of tools involving new technology
Modification of the formulation of a process
Troubleshooting in connection with breakdowns during commercial
production
Adaptation of an existing capability to a particular customers need as part
of a continuing commercial activity

Rs.
2,50,000
3,00,000
1,50,000
1,70,000

In its income statement, Sarovar Ltd. should report research and development expense of
(a)
(b)
(c)
(d)
(e)

Rs.5,50,000
Rs.1,60,000
Rs.2,35,000
Rs.2,85,000
Rs.1,70,000.
(2marks)
<Answer>

43.Following is the Balance Sheet of Ravera Enterprises as on March 31, 2007:

Liabilities
Capital
Long term loan
Creditors
Bank overdraft

Rs.
5,00,000
1,50,000
90,000
35,000

Total

7,75,000

Assets
Land and building
Machinery
Fictitious assets
Debtors
Stock
Cash
Total

Rs.
2,50,000
3,00,000
60,000
95,000
60,000
10,000
7,75,000

The profit after tax for the year 2006-07 was Rs.60,000 and has accrued evenly throughout the year. The rate of
return on average capital employed in similar business is 12%. The normal profit of Ravera Enterprises based on
average capital employed should be
(a)
(b)
(c)
(d)
(e)

Rs.56,400
Rs.49,200
Rs.67,200
Rs.60,000
Rs.52,800.
(2marks)
<Answer>

44.Following is the data pertaining Venus Ltd. as on March 31, 2007 :

Particulars
Rs.
Authorised share capital 50,000 shares of Rs.100 each
25,00,000
Issued/subscribed/called-up capital
15,05,000
Calls in arrear
5,000
Interim dividend declared
1,05,000
Current year profit
2,37,000
If final dividend of 10% is declared (in addition to interim dividend), the amount that will have to be transferred to
General Reserve in lieu of dividend declared (inclusive of interim dividend) out of current year profit would be
(a)
Rs.23,700
(b)
Rs.15,000
(c)
Rs.25,500
(d)
Rs.19,125
(e)
Rs.17,775.
(2marks)

<Answer>

45.Owners equity at the beginning of the year Rs.22,000. During the year, the owner contributed Rs.12,000
additionally towards capital and withdrew Rs.8,000 for his personal use. If the firm had a net profit of Rs.16,000
for the year, what was the owners equity at the end of the year?
(a)
(b)
(c)
(d)
(e)

Rs.34,000
Rs.58,000
Rs.18,000
Rs.42,000
Rs.30,000.
(2marks)
<Answer>

46.Consider the following data pertaining to Zircon Ltd.

I.
II.
III.
IV.

Average capital employed in the business is Rs.6,00,000.

Rate of interest expected from capital having regard to the risk involved is 10%.
Net trading profits of the company for the past three years were Rs.1,07,600, Rs.90,700 and Rs.1,12,500.
Fair remuneration to the directors for their services is Rs.12,000 per annum.

The value of goodwill on the basis of 3 years purchase of super profits calculated on the average of past three
years profits is
(a)
(b)
(c)
(d)
(e)

Rs.1,30,800
Rs. 43,600
Rs. 94,800
Rs. 55,600
Rs. 59,080.
(2marks)
<Answer>

47.The Managing Director of Avon Ltd. is entitled to a commission of 5% on net profits before charging such
commission. The net profit of the company for the year ended March 31, 2007 was reported to be Rs.76,50,000.
Subsequently, it was noticed that the following transactions were omitted:
Particulars
Payment of Directors remuneration
Sale of a plant (cost price Rs.3,00,000; written down value Rs.2,40,000)
Payment of bonus to Production Executive
Payment of income tax and super tax
Issue of 60,000 equity shares of Rs.10 each at a premium of Rs.2

Rs.
1,50,000
3,30,000
1,50,000
15,000
7,20,000

The commission payable by the company to the managing director for the year 2006-07 was
(a)
(b)
(c)
(d)
(e)

Rs.3,70,500
Rs.3,78,000
Rs.3,85,500
Rs.3,52,860
Rs.4,80,000.
(2marks)
<Answer>

48.Xelon Ltd. proposed a dividend of 15%. The called-up equity share capital of the company is Rs.75,000. Calls-inarrear amounted to Rs.5,000 and calls in advance aggregated to Rs.12,500. The amount of dividend payable is
(a)
(b)
(c)
(d)
(e)

Rs.12,375
Rs.10,500
Rs. 9,750
Rs. 8,750
Rs. 8,625.
(2marks)

<Answer>

49.The reserves and surplus of a company at the beginning of the accounting year were Rs.20,00,000. During the year
the company made profit and appropriated the same as follows:
Rs.
Profit during the year
5,00,000
Less:
Dividend distributed
1,00,000
Transfer to General Reserves
2,00,000
Balance in the profit & loss Account 2,00,000
The reserves and surplus at the end of the year, would be
(a)
(b)
(c)
(d)
(e)

Rs.22,00,000
Rs.24,00,000
Rs.25,00,000
Rs.21,00,000
Rs.24,50,000.

(2marks)
<Answer>

50.Anu Ltd. paid a dividend of Rs.3,60,000 at the end of March 31, 2007. At the beginning of April 01, 2006, there
was Rs.1,20,000 of dividends in arrears. If the companys capital structure was 15,000 9%, cumulative preference
shares of Rs.100 each fully paid-up and 30,000 equity shares of Rs.30 fully paid-up, in the year 2006-07 how
much dividend was paid by Anu Ltd. to its equity shareholders?
(a)
(b)
(c)
(d)
(e)

Rs.1,95,000
Rs.2,25,000
Rs.1,35,000
Rs.1,05,000
Rs.2,40,000.
(2marks)
<Answer>

51.The balance sheet items of Super Ltd. as at March 31, 2007 have increased by the following amounts compared
with those at the end of the previous year:
Assets

Liabilities

Share Capital

Rs.2,32,000
Rs.1,40,000
Rs.1,00,000

The only change to retained earnings during 2006-07 was relating to a dividend payment of Rs.20,000. The net
income for the year 2006-07 amounted to
(a)
(b)
(c)
(d)
(e)

Rs.14,000
Rs.10,000
Rs. 8,000
Rs.12,000
Rs. 4,000.
(2marks)
<Answer>

52.On June 15, 2007 a fire occurred in the godown of Recants Ltd. and part of the stock was destroyed. The value of
the stock salvaged was Rs.16,000. The following transactions took place between April 01, 2007 and June 15,
2007:
Particulars
Purchases
Sales
Wages
Opening stock

Rs.
5,40,000
10,00,000
2,20,000
4,00,000

On an average, the company makes a gross profit of 20% on sales. The value of stock lost by fire was
(a)
(b)
(c)
(d)
(e)

Rs.3,60,000
Rs.3,28,000
Rs.3,44,000
Rs.3,24,000
Rs.2,00,000.
(2marks)

<Answer>

53.The following data is extracted from the books of Fara Ltd.:

Year
2004-2005
2005-2006
2006-2007

Profit (Rs.)
2,20,500
3,22,500
2,40,000

Additional information:
i.
An office expense of Rs.8,250 was omitted to be provided in the year 2004-05.
ii. 10% profits of 2005-06 are of non-recurring nature.
iii. Bad debts provision of Rs.15,750 on sundry debtors in 2006-07 is no longer required.
The simple average of maintainable profit of the company is
(a)
(b)
(c)
(d)
(e)

Rs.2,52,750
Rs.2,61,000
Rs.2,51,500
Rs.2,34,900
Rs.2,46,250.

(2marks)
<Answer>

54.The balance in the creditors account of a company as on December 1, 2007 was Rs.1,70,000. During the month a
sum of Rs.92,500 was paid to the creditors and goods purchased on credit from them amounted to Rs.1,23,500.
Purchase returns were Rs.4,000. They allowed a sum of Rs.2,400 as cash discount. A bill for Rs.4,000 accepted
earlier by the company in favour of a creditor was dishonoured on December 20, 2007. The balance of creditors
account as on December 31, 2007 was
(a)
(b)
(c)
(d)
(e)

Rs.2,01,000
Rs.1,97,100
Rs.1,98,600
Rs.2,02,600
Rs.2,01,600.
(2marks)
<Answer>

55.The following balances are extracted from the books of Ambica Ltd. as on March 31, 2007:
Particulars
Called-up share capital
Secured loans
Loans to employees
Cash
Sundry debtors
Stock
Bank balance

Rs.
5,00,000
4,00,000
51,200
4,000
1,10,000
96,000
40,000

Particulars
Fixed assets
Calls in arrears
Capital reserve
Profit and loss account (credit balance)
Sundry creditors
Preliminary expenses

Rs.
7,70,000
30,000
90,000
50,000
91,200
30,000

The total of the liabilities side of the balance sheet of Ambica Ltd. as on March 31, 2007 was
(a)
(b)
(c)
(d)
(e)

Rs.11,01,200
Rs.11,00,200
Rs.11,31,200
Rs.11,41,200
Rs.11,01,900.
(2marks)
<Answer>

56.In the books of Brenda Ltd., the balance in the furniture and fixtures account as on March 31, 2006 was
Rs.3,10,000. The following additional information is given:
I.

Sales of the company during the year 2006-07 include Rs.17,000 in respect of sale of an old furniture on
March 31, 2007. The book value of the furniture on April 01, 2006 was Rs.20,000.
II. Depreciation @ 5% is provided on furniture and fixtures.
The amount at which the furniture and fixtures is shown in the balance sheet of Brenda Ltd. as on March 31, 2007
was
(a)
(b)
(c)
(d)
(e)

Rs.3,10,000
Rs.2,74,500
Rs.2,75,500
Rs.2,77,500
Rs.2,78,350.
(2marks)
10

<Answer>

57.The following is the Balance Sheet of Pioneer Ltd. as on March 31, 2007:
Balance Sheet as on March 31, 2007
Assets
Rs.
Goodwill
75,000 equity shares of Rs.10
each, fully paid
7,50,000 Plant and Machinery
General reserve
3,30,000 Other current assets
Bank loan
1,50,000 Sundry debtors
Sundry creditors
4,20,000 Preliminary expenses
Total
Total
16,50,000
Liabilities

Rs.
60,000
8,50,000
2,00,000
4,00,000
1,40,000
16,50,000

Additional Information:
I.

Sundry debtors include a debt of Rs.90,000 of which only Rs.60,000 is likely to be recovered. A provision
has to be made for the balance.
II. The average profit earned by the company during the last four years was Rs.1,20,000.
III. The average rate of dividend paid by the company during the last four years was 12%.
The value of goodwill of the company by using the capitalization method is
(a)
(b)
(c)
(d)
(e)

Rs. 60,080
Rs. 1,50,000
Rs. 1,20,000
Rs. 8,50,000
Rs.10,00,000.
(2marks)
<Answer>

58.The opening balance in the Reserve for discount on creditors of a firm is Rs.4,400 and discount received during
the year is Rs.3,200. If the business wants to keep its Reserve for discount on creditors at the rate of 2% on its
sundry creditors of Rs.3,25,000, the profit and loss account will be
(a)
(b)
(c)
(d)
(e)

Credited with Rs.3,300

Debited with Rs.3,300
Credited with Rs.7,700
Credited with Rs.5,300
Credited with Rs.9,700.
(2marks)
<Answer>

59.Consider the following data pertaining to ABC Ltd. for the year 2006-07:
Partciulars
Opening balance of debtors
Closing balance of debtors
Collection from debtors during the year
Discount allowed to debtors

Rs.
90,000
80,000
1,80,000
8,000

The amount of credit sales during the year 2006-07 were

(a)
(b)
(c)
(d)
(e)

Rs.2,68,000
Rs.1,78,000
Rs.1,88,000
Rs.1,98,000
Rs.1,62,000.
(2marks)

11

60.Consider the following data pertaining to Band Ltd.:

i.
Average profits of the last three years
ii.
Remuneration to Directors
iii.
Capital employed
iv.
Normal rate of return
The amount of super profit for calculation of goodwill is
(a)
(b)
(c)
(d)
(e)

<Answer>

Rs. 7,29,000
Rs. 1,29,000
Rs.36,00,000
12%

Rs.7,29,000
Rs.6,00,000
Rs.2,97,000
Rs.4,32,000
Rs.1,68,000.
(2marks)
<Answer>

61.Pivotal Limited depreciates its machinery which was bought on April 1, 2004 for Rs.3,50,000 at 10% using the
written down value method. On April 1, 2007 the company decided to change the method of depreciation to the
straight line method with retrospective effect. Excess depreciation of Rs.10,850 on account of change in the
method of depreciation was credited to the profit and loss account by the company. The depreciation percentage as
per the straight line method would be
(a)
(b)
(c)
(d)
(e)

10.50%
10.00%
8.00%
6.00%
4.00%.
(2marks)
<Answer>

62.Consider the following data pertaining to M/s. Ramu Enterprises as on March 31, 2007:
Particulars
Net sales
Total purchases
Wages paid
Carriage inward
Carriage outward
Gas, water and fuel
Raw materials destroyed by fire
Opening stock
Gross profit on sales @ 20%

Rs.
8,00,000
5,00,000
50,000
20,000
15,000
20,000
10,000
1,50,000

The value of closing stock of M/s. Ramu Enterprises for the year ended March 31, 2007 was
(a)
(b)
(c)
(d)
(e)

Rs.73,800
Rs.90,000
Rs.74,800
Rs.76,200
Rs.75,200.
(2marks)

12

<Answer>
63.Consider the following data pertaining to Joy Ltd. for the year ended March 31, 2007:
Particulars
Rs.
Sales
4,00,000
Excess of opening stock over closing stock
40,000
Plant & Machinery
1,70,000
Rent received
55,000
Purchases
2,85,000
Sales commission paid
12,000
Additional information:

Rent received in advance amounted to Rs.2,500.

A credit purchase of Rs.15,000 was wrongly recorded in sales day book as Rs.51,000.

The company has the practice of depreciating the Plant and Machinery at the rate of 15% per annum on
straight line method. The original cost of the Plant and Machinery was Rs.2,00,000.

Sales commission was paid only to the extent of two thirds of the amount payable.
The net profit of the company for the period ended March 31, 2007 was
(a)
Rs.18,000
(b)
Rs.19,500
(c)
Rs.13,500
(d)
Rs.28,000
(e)
Rs.18,500.
(2marks)
<Answer>
64.Rosy Ltd. is following weighted average cost method for valuing its inventory. The details of purchase and issue
of its raw-materials during the 1st week of December, 2007 are as follows:

1.12.2007 Opening stock 50 units value Rs.2,200.

2.12.2007 Purchased 100 units @ Rs.47.

4.12.2007 Issued 50 units.

5.12.2007 Purchased 200 units @ Rs.48.

The value of inventory at the end of the 1st week December, 2007 was
(a)
Rs.14,200
(b)
Rs.14,300
(c)
Rs.14,000
(d)
Rs.14,400
(e)
Rs.14,600.
(2marks)
<Answer>
65.The total of debit column of trial balance of a company is Rs.2,45,000 and that of the credit column is
Rs.2,72,900. Subsequently the following mistakes are discovered:
Correct Amount
Amount which appears in
Particulars
(Rs.)
trial balance (Rs.)
Opening stock
40,500
40,600
Advertisement expenses
15,000
15,000 (credit column)
Interest from investments
36,000
30,000
Sundry creditors
76,000
80,000
The total of the corrected trial balance is
(a)
Rs.2,74,900
(b)
Rs.2,59,900
(c)
Rs.2,75,100
(d)
Rs.2,84,900
(e)
Rs.2,82,800.
(2marks)

13

<Answer>

66.The balance in the accumulated provision for depreciation account of a company as on April 1, 2006 was
Rs.1,00,000 when the original cost of the assets amounted to Rs.5,00,000. The company charges 10% depreciation
on a straight line basis for all the assets. One such asset costing Rs.2,50,000 with an accumulated depreciation of
Rs.40,000 was disposed off on April 1, 2006. The closing balance of the accumulated depreciation account on
March 31, 2007 was
(a)
(b)
(c)
(d)
(e)

Rs.1,10,000
Rs. 85,000
Rs. 60,000
Rs.1,25,000
Rs.1,07,750.
(2marks)
<Answer>

67.Consider the following Balance Sheet of Penguin Ltd. as on March 31, 2007:
Liabilities
Share capital
Profit and loss account
Provision for depreciation:
Buildings
Plant and machinery
Furniture and fittings
Short-term loan
Sundry creditors
Total

Rs.
20,00,000
1,00,000
2,00,000
5,00,000
20,000
6,00,000
50,000
34,70,000

Assets
Land
Buildings
Plant and machinery
Furniture and fittings
Investments
Sundry debtors
Closing stock
Cash and bank
Total

Rs.
2,00,000
10,00,000
15,00,000
1,00,000
4,45,000
1,50,000
50,000
25,000
34,70,000

The company charges depreciation on all fixed assets (except land) at the rate of 10% on written down value
method. The amount to be charged to profit and loss account for the year ended March 31, 2007 on account of
depreciation was
(a)
(b)
(c)
(d)
(e)

Rs.2,60,000
Rs.1,88,000
Rs.2,80,000
Rs.2,08,000
Rs.9,08,000.
(2marks)

14

<Answer>

68.An inexperienced book-keeper of Volga Ltd. has drawn up the following trial balance of the firm for the year
ended March 31, 2007:
Trial Balance as on March 31, 2007
Particulars
Debit (Rs.)
Particulars
Provision for doubtful debts
4,000 Capital
Bank overdraft
33,080 Sundry creditors
Sundry debtors
59,660 Discount allowed
Discount received
5,040 General expenses
Drawings
24,000 Returns inward
Office furniture
43,100 Cash sales
Purchases
2,18,460 Credit sales
Rent and rates
6,280
Salaries
50,400
Opening stock
48,360
Provision for depreciation on office
7,280
furniture
4,99,660
Total
Total
The amount debited/credited to suspense account in corrected trial balance was
(a)
Rs. 380 (Debit)
(b)
Rs. 1,060 (Credit)
(c)
Rs.23,500 (Debit)
(d)
Rs. 8,340 (Debit)
(e)
Rs.23,500 (Credit).

Credit (Rs.)
91,820
32,740
14,660
16,580
6,600
1,21,600
2,16,040

5,00,040

(2marks)
<Answer>

69.On April 01, 2006, Chitra Lekha Limited showed a balance of Rs.5,600 to the credit of Provision for bad and
doubtful debts. On March 31, 2007 the Sundry Debtors showed a balance of Rs.2,50,400. Out of the total debtors,
the status of the following debtors is as follows:

Sinha
Rs.3,800 identified as bad debt and is to be written off.

Gupta
Rs.9,000 expected to realize only 80%.

Patel
Rs.8,000 expected to realize only 60%.

Iyer
Rs.5,500 likely to file insolvency petition and the percentage of recovery is not known.
All other debts as on the date of finalization of accounts are estimated to be good. The closing balance of provision
for bad and doubtful debts for the year ended as on March 31, 2007 was
(a)
Rs.14,300
(b)
Rs. 8,700
(c)
Rs.15,700
(d)
Rs.10,500
(e)
Rs. 4,900.
(2marks)

<Answer>

70.In the books of Pannalal Kunnalal Ltd. the machinery account shows a debit balance of Rs.30,000 as on April 1,
2005.The machinery was sold on September 30, 2006 for Rs.15,000. If the company charges depreciation @20%
p.a. on diminishing balance method, the amount of depreciation and the profit/loss on sale of machinery reflected
in the profit and loss account of the company for the period ended March 31, 2007 was
(a)
(b)
(c)
(d)
(e)

Depreciation of Rs.6,000 and loss on sale of machinery Rs.3,000

Depreciation of Rs.4,800 and loss on sale of machinery Rs.4,200
Depreciation of Rs.2,400 and loss on sale of machinery Rs.6,600
No depreciation and loss on sale of machinery Rs.9,000
Depreciation of machinery Rs.4,800 and profit on sale of machinery Rs.4,200.
(2marks)
E
N
D
O
F

15

Q
U
E
S
T
I
O
N
P
A
P
E
R

16

Suggested Answers
Financial Accounting (CFA510): January 2008
Answer

Reason

1.

The receipt of interest by proprietor on bank fixed deposit held jointly with his spouse cannot be
entered in the books of account of the business. The other items i.e. withdrawal of goods by the
proprietor for personal consumption, sale of an asset on credit, purchase of new asset in exchange of
old asset and loss of stock by fire are all recorded in the books of account of a firm.

< TOP >

2.

< TOP >

3.

4.

The phrase markdown means the selling price lowered below the original selling price.
Inflow of cash or receivables out of sales, interest on investment, royalty and dividends are revenue
items. Where as advance received for supplies is not a revenue item.
Under straight line method of depreciation, the depreciable asset whether tangible or intangible is
depreciated over its useful life with an equal amount of depreciation in each period. This is the widely
used approach of recognizing an equal amount of depreciation expense in each period of a depreciable
assets useful life. Thus, alternative (a) is the correct answer.

5.

At the time of finalization of accounts entries passed for outstanding expenses, depreciation and
interest on capital are known as adjusting entries. Hence, (c) is the correct answer

< TOP >

6.

Stock at the end of the financial year is the closing stock, and prepaid rent is the amount of rent which
is paid in advance. Interest received is an income appearing in profit and loss account. Similarly, stock
at the beginning is the opening value of stock which appears on the debit side of the trading account.
Hence item (I) and (III) are appearing in balance sheet and option (c) is the right answer.

< TOP >

7.

Balance appearing on the credit side of a trial balance can be an income or Profit or Gain, an
Outstanding expense, a liability or an income received in advance.

< TOP >

8.

The rule applicable to nominal account is debit all expenses and losses and credit all incomes and
gains.

< TOP >

9.

Balance sheet is a statement of assets and liabilities of a business organization at any particular date.

< TOP >

10.

Amount of income from investment should be transferred to the profit and loss account, distinguishing
between trade investments and other investments. Therefore, amount received as interest on trade
investments held by a company should be transferred to its Profit and loss account.

< TOP >

11.

Retained earnings is profit after tax less dividends.

< TOP >

12.

If the profit is 25% of the cost price then it is 20% of the sales price.

< TOP >

Particulars
Assume cost price
Add: Profit 25%
Selling price
Percentage of profit on selling price

< TOP >

< TOP >

Rs.
100
25
125
25/125x 100 = 20%

13.

The ledger is also called as principal book as the final information pertaining to the financial position
of the business emerges only from the accounts. Hence, (a) is the correct answer.

< TOP >

14.

Return outward book is maintained by a business to record return of goods purchased on credit.

< TOP >

15.

The liabilities payable over a longer period of time, generally after one year are called non-current
liabilities.

< TOP >

16.

A credit sale of Rs.2,000 was wrongly entered in the purchases book. The impact of the mistake is that
purchases increased by Rs.2,000 and sales decreased by Rs.2,000, with this the gross profit will
decrease by Rs.4,000.

< TOP >

17.

A person who is carrying on profession required to get his accounts audited, if his gross receipts
exceed Rs.10 lakhs in a year

< TOP >

18.

The system of accounting in which revenue is recognized when earned and expenses are recognized
when incurred, is called accrual system.

< TOP >

19.

The valuation of goodwill is necessary whenever a business is sold or purchased and also for valuation
of shares. Thus (e) is the correct answer.

< TOP >

17

20.

Net worth is arrived after deducting all outside liabilities both current and non-current from total assets
of the concern.

< TOP >

21.

The systematic allocation of the costs of intangible assets to the periods in which they provide
benefits is called amortization.

< TOP >

22.

Errors which can affect both the accounts are errors of complete omission. For instance, if a
transaction is omitted to be recorded in the purchase book, both purchases a/c and creditors a/c will be
affected. Errors of partial omission, errors of overcasting, errors of undercasting and errors of carry
forward may affect only one account.

< TOP >

23.

a.
b.
c.

The difference between net sales and cost of goods sold is called gross profit.
The difference between gross profit and operating expenses is called operating profit.
Gains arising from sources other than normal operations of the business is called non-operating
surplus.
d. The difference between profit before interest and taxes and interest is called profit before tax.
e. The difference between profit before tax and tax for the year.
Hence (c) is correct answer.

< TOP >

24.

Payment of ex-gratia to an employee is not treated as an allowable expense for computing managerial
remuneration. Thus, alternative (a) is the correct answer.

< TOP >

25.

According to Section 226(3) of the Companies Act, 1956, a body corporate, an officer of the company,
a person indebted to the company for an amount exceeding Rs.1,000, a person disqualified to be
appointed as an auditor of its subsidiary company, a person holding any security of the company are
disqualified to be appointed as an auditor. However, a person holding the shares of the company as a
nominee or a trustee for any third person and in which the holder has no beneficial interest shall not be
disqualified. Hence the answer is (c).

< TOP >

26.

When fixed assets are sold for book value, there will be no change in the total assets. Hence, (d) is
correct answer.

< TOP >

27.

Advance tax that appears in the trial balance is shown under the head loans and advances in the
balance sheet.

< TOP >

28.

When a company revalues its fixed assets and if there is a profit on revaluation, it should be
transferred to Capital Reserve a/c.

< TOP >

29.

If the articles of a company permits the directors can declare an interim dividend between two annual
general meetings.

< TOP >

30.

The value of the goodwill, according to the simple profit method, is the product of average profit of
the given years and number of years.

< TOP >

31.

The three column cash book is a refinement over single column cash book and double column cash
book. Under three column cash book an additional column for discount is included on either side.
Thus, it represents cash column-real account, Bank column-personal account and discount columnnominal account. The three-column cash book represents real, personal and nominal accounts.

< TOP >

32.

Schedule VI of the Companies Act, 1956 clearly specifies that the interest accrued on secured loans
but not paid should be shown under the head Secured Loans.

< TOP >

33.

The Companies Act, 1956 specifies both the form and contents of the balance sheet of a company.
Stores and Spare parts (a) are shown under the category of current assets. Discount on issue of
securities is shown under the head Misc. expenditure; Development of property (d) and Live stock (e)
are shown under fixed assets; Trust securities (c) are investments

< TOP >

34.

Proposed additions to reserve does not come under the head provision, it should be listed under
Reserves and surplus.

< TOP >

35.

Auditing begins where -- Accounting ends. The auditing begins as soon as the accounting process is
completed. (b) is the correct answer.

< TOP >

36.

In an Annual General Meeting, submission of funds flow statement is not mandatory. But submission
of Balance Sheet, Profit & Loss account, Directors report and Auditors report are mandatory. Hence,
(c) is correct answer.

< TOP >

37.

Liability for bills accepted is a current liability and it is not a contingent liability.

< TOP >

18

38.

The costs/expenses that are incurred for establishing a company are called preliminary expenses.

< TOP >

39.

The assets which are acquired for the purpose of using them in the conduct of business operations and
not for reselling to earn profit are to be treated as fixed assets.

< TOP >

40.

< TOP >

Outstanding salaries is an example of representative personal account.

Rent is an example of nominal account

Stock of stationery is an example of real account
Cash in hand is an example of real account

41.

42.

43.

Repairs to machinery is an example of nominal account. Hence, (c) is correct answer.

Provision for taxation of the previous year =
Rs. 8,76,000
Dividend on 10% 20,000 Preference Shares of Rs.100 =
Rs. 2,00,000
10% Dividend on 2,60,000 equity shares of Rs.10 each =
Rs. 2,60,000
The total amount debited to Profit and Loss appropriation account = Rs.13,36,000
R &D costs include design of tools and modification of the formulation of a process, totaling to
Rs.5,50,000. R &D costs does not include trouble shooting breakdowns during production and
adaptation of existing capability for a specific customer.
Particulars
Total assets
Less: Fictitious assets
Long term loan
Creditors
Bank overdraft
Capital employed at the end
Less: of the profit during the year 2006-2007
Average capital employed

Rs.
7,75,000
60,000
1,50,000
90,000
35,000
4,40,000
30,000
4,10,000

< TOP >

< TOP >

< TOP >

Normal profit = Average capital employed Normal rate of return

= Rs.4,10,000 12% = Rs.49,200.
44.

< TOP >

Calculation of Transfer to General Reserve :

Final dividend declared Rs.15,05,000 Rs.5,000 10% = Rs.1,50,000
Total of dividend declared and proposed during the year
=
Rs.(1,05,000 + 1,50,000) = Rs.2,55,000
Dividends as a percent of paid-up capital = (2,55,000/15,00,000) 100 = 17%
Since this rate of dividend falls in the slab greater than 15% but less than 20% the transfer to
reserves should be 7.5% of the current profits.
Transfer to reserves = (7.5/100) 2,37,000 = Rs.17,775.

45.

The owners equity at the beginning of the year = Rs.22,000

Add: additional capital
= Rs.12,000
Net Profit
= Rs.16,000
Total
= Rs.50,000
Less: Drawings during the year
= Rs. 8,000
Owners equity at the at the end of the year
= Rs.42,000.

19

< TOP >

46.

< TOP >

Trading profits for the last three years :

Particulars
Year 1
Year 2
Year 3
Total
Average Profit (3,10,800 / 3)
Less :
Remuneration of the directors
Average Maintainable Profits

Rs.
1,07,600
90,700
1,12,500
3,10,800
1,03,600
12,000
91600

Less: Normal Profit expected @ 10% on average capital

10

6, 00, 000

100
employed
Super Profit
Goodwill at 3 years purchase (31,600 3)
47.

60,000

31,600
94,800
< TOP >

A
Particulars
Net Profit as calculated
Add: Revenue Profit on sale of plant
Less: Directors remuneration
Bonus paid to production executive
Net Profit

Rs.

1,50,000
1,50,000

Rs.
76,50,000
60,000
77,10,000
3,00,000
74,10,000

Where the amount for which the fixed asset is sold exceed the written-down value, credit shall be
given for so much of the excess as is not higher than the difference between the original cost of the
fixed asset and its written down value. Hence only Rs.60,000 (Rs.3,00,000 Rs.2,40,000) should be
added
The directors remuneration and the bonus paid to any member of companys staff should be deducted
whereas Income tax and super tax should not be deducted.
Credit should not be given to profits by way of premium on shares
Managing Directors Commission = 74,10,000 5% = Rs.3,70,500.
48.

< TOP >

Dividend is payable on paid up capital;

Rate of dividend = 15%
Called-up capital
Rs.75,000
Less: Calls in arrears
Rs. 5,000
Paid up capital
Rs.70,000
15 Rs.70,000
Rs.10, 500
100
Dividend payable =

49.

50.

Reserves & Surplus (opening balance)

Add : Transfer to General Reserve
Balance in Profit & Loss A/c
Reserves & Surplus (at year end)

(Rs.)
20,00,000
2,00,000
2,00,000
24,00,000

Of the Rs.3,60,000 paid, Rs.1,20,000 was paid toward dividends in arrears and Rs 2,40,000 was paid
toward dividends for 2006-07. Of the Rs.2,40,000, Rs.1,35,000 was paid to preferred shareholders
(15,000 shares x Rs 100 per share x .09), leaving Rs.1,05,000 to be paid to equity shareholders
(Rs.2,40,000 Rs.1,35,000).

20

< TOP >

< TOP >

51.

< TOP >

D
Particulars
Assets increased by
Add: Dividend paid during the year
Less: Liabilities increased by
Share capital increased by
Net income for the year

Rs.

Rs.
2,32,000
20,000
2,52,000

1,40,000
1,00,000

2,40,000
12,000

52.

Trading account in the books of Recants Ltd. for the period April 1, 2007 to June 15, 2007
Dr.
Cr.
Particulars
Rs.
Particulars
Rs.
To Opening stock
4,00,000 By Sales
10,00,000
To Purchases
5,40,000 By Stock lost by fire
3,44,000
(Bal. fig.)
To Wages
2,20,000 By Closing stock
16,000
(stock salvaged)
To Gross profit
2,00,000
(Rs.10,00,000 x 20/100)
13,60,000
13,60,000

< TOP >

53.

The average maintenance profits of the company are

< TOP >

Year
2004-2005
2005-2006
2006-2007

Profit
Less : Omission of office expenses
Profit
Less : 10% non-recurring
Profit
Add : Provision for bad debts
Total profits

Rs.
2,20,500
8,250
3,22,500
32,250
2,40,000
15,750

Rs.
2,12,250
2,90,250
2,55,750
7,58,250

The simple average maintainable profits of the company

= Rs.7,58,250 3 = Rs.2,52,750.
54.

Dr.

Creditors a/c

Particulars
To Cash
To Purchases Returns
To Discount received
To Balance c/d

55.

Rs.
92,500
4,000
2,400
1,98,600
2,97,500

< TOP >

Cr.

Particulars
By Balance b/d
By Purchases
By Bills Payable

Rs.
1,70,000
1,23,500
4,000

By Balance b/d

2,97,500
1,98,600
< TOP >

Balance Sheet of Ambica Ltd. as on March 31, 2007

Liabilities
Share capital
Less call in arrears
Capital reserve
P & L A/c
Secured loans
Sundry creditors

Rs.
5,00,000
30,000

4,70,000
90,000
50,000
4,00,000
91,200
11,01,200

21

Assets
Fixed assets
Sundry debtors
Stock
Loans to employees
Cash
Bank
Preliminary expenses

Rs.
7,70,000
1,10,000
96,000
51,200
4,000
40,000
30,000
11,01,200

56.

Dr.

Furniture and fixtures account

Cr.

Rs. Particulars
3,10,000 By Bank (sale)
By Profit and loss account
By Depreciation (Rs.3,10,000 x 5%)
By Balance c/d
3,10,000

Particulars
To Balance b/d

Particulars
Written down value of machinery sold as on April 01, 2006
Less : Depreciation (Rs.20,000 x 5%)
Value of machine on March 31, 2007
Less : Sale consideration
Loss on sale of machine
57.

Rs.
17,000
2,000
15,500
2,75,500
3,10,000
Rs.
20,000
1,000
19,000
17,000
2,000

Computation of net tangible assets of Pioneer Ltd.

Particulars
Plant & machinery
Other current assets
Sundry debtors

Rs.

Less: Liabilities:
Bank loan
Sundry creditors
Provision for bad debts
Net tangible assets
=

Total value of the business=

1,50,000
4,20,000
30,000

< TOP >

< TOP >

Rs.
8,50,000
2,00,000
4,00,000
14,50,000

6,00,000
8,50,000

Average ma int ainable profit

Normal rate of return
x 100

Rs.1, 20, 000

12%
=
= Rs.10,00,000
Goodwill = Total value of the business Net tangible assets
=
Rs.10,00,000 8,50,000 = Rs.1,50,000.

58.

59.

60.

The formula for calculating the amount of adjusting entry in respect of reserve for discount on
accounts payable is, discount received during the period plus the required reserve minus the old
reserve. Discount received during the year is 3,200, required reserve at the rate of 2% is 6,500 and old
reserve is 4,400. So the net amount that can be credited to Profit & Los A/c is 3,200 plus 6,500 =
9,700 minus 4,400 = 5,300. Discount receivable being an income, it is credited to P&L A/c.
Dr.
Particulars
To Balance b/d

Sundry Debtors account

Cr.
Rs. Particulars
Rs.
90,000 By Bank (collection
1,80,000
from debtors)
To Credit sales (Bal. fig.)
1,78,000 By Discount allowed
8,000
By Balance c/d
80,000
2,68,000
2,68,000

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< TOP >

Particulars
Average profits:
Less: Remuneration from alternative employment
Less: Normal profit @ 12% on capital employed
(12% of Rs.36,00,000)
Super Profit

22

(Rs.)
7,29,000
1,29,000
6,00,000
4,32,000
1,68,000

61.

Amount (Rs.)
Cost of the machinery on 1.4.2004
3,50,000
Less :Depreciation for 2004-05 at 10%
35,000
W.D.V. on 1.4.2005
3,15,000
Less : Depreciation for 2005-06
31,500
W.D.V. on 1.4.2006
2,83,500
Less : Depreciation for 2006-07
28,350
W.D.V. on 1.4.2007
2,55,150
Total depreciation provided Rs. (3,50,000 2,55,150)
94,850
Less : excess depreciation provided credited
10,850
Total depreciation provided
84,000
Depreciation per annum (84,000/3) = 28,000

< TOP >

Annual depreciation
x100
Cost
Rate of depreciation =

28, 000
x 100
= 3, 50, 000
= 8%
62.

63.

Books of Ramu Enterprises

Dr.
Trading Account for the period ending March 31, 2007
Particulars
Rs.
Particulars
To Opening stock
1,50,000 By Net Sales
To Purchases
5,00,000 By Stock lost by fire
To Wages
50,000 By Closing stock
To Carriage inward
20,000
To Gas, water, fuel
20,000
To Gross Profit
1,60,000
(Rs.8,00,000 x 20%)
9,00,000

To Sales Commission
+ Accrued

9,00,000

9,000
3,49,000
12,000
6,000

To Depreciation
To Net Profit

Cr.
Rs.
8,00,000
10,000
90,000

Net Profit of Joy Ltd. for the year ending March 31, 2007
Dr.
Cr.
Particulars Rs.
Rs. Particulars
To Purchases
2,85,000
By Sales
4,00,000
Add: Omitted to be recorded 15,000 3,00,000 Less Wrong Credit 51,000
To Excess of opening stock over
closing stock
40,000
To Gross Profit

64.

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By Gross Profit
18,000 By Rent received
55,000
Less :received in advance
30,000
2,500
13,500
61,500

< TOP >

Rs.
3,49,000

3,49,000
9,000

52,500
61,500

The net profit is Rs.13,500

Stores Ledger in the books of Rosy Ltd. for the 1st week of December, 2007
Date
1.12.07
2.12.07
4.12.07
5.12.07

Purchases
Quantity Rate
Rs.
(units)
Rs.
100
47
4,700
200
48
9,600

Quantity
(units)
50
23

Issues
Rate
Rs.
46
-

Rs.
2,300
-

Quantity
(units)
50
150
100
300

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Balance
Rate
Rs.
Rs.
44
2,200
46
6,900
46
4,600
47.33 14,200

65.

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B
Particulars
Total of debit side of trial balance
Add :
Advertisement expenses
Less :
Opening stock (excess taken)
Total of trial balance (Debit side)

Rs.
2,45,000
15,000
100
2,59,900

Particulars
Total of credit side of trial balance
Add :
Interest on investments (less taken)
Less :
Sundry creditors (excess taken)
Less :
Advertisement expenses (wrongly taken)
Total of trial balance (credit side)
66.

Rs.
2,72,900
6,000
4,000
15,000
2,59,900
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B
Particulars
The opening balance in the accumulated depreciation a/c =
Less : Accumulated depreciation of the asset disposed =
Add : Current years depreciation
(5,00,000 2,50,000) (10/100)
The balance of the accumulated depreciation account =

67.

85,000
< TOP >

B
Particulars
Depreciation:
Buildings (Rs.10,00,000 Rs.2,00,000) 10%
Machinery (Rs.15,00,000 Rs.5,00,000) 10%
Furniture (Rs.1,00,000 Rs.20,000) 10%
Total depreciation

68.

Rs.
1,00,000
40,000
60,000
25,000

Rs.
80,000
1,00,000
8,000
1,88,000
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Corrected Trial Balance

Particulars
Provision for doubtful debts
Bank overdraft
Sundry debtors
Discount received
Drawings
Office furniture
Purchases
Rent and rates
Salaries
Opening stock
Provision for depreciation on office furniture
Capital
Sundry creditors
Discount allowed
General expenses
Returns inward
Cash sales
Credit sales
Suspense account
Total
Suspense (Debit) = Rs.23,500.

24

Debit (Rs.)

Credit (Rs.)
4,000
33,080

59,660
5,040
24,000
43,100
2,18,460
6,280
50,400
48,360
7,280
91,820
32,740
14,660
16,580
6,600
1,21,600
2,16,040
23,500
5,11,600

5,11,600

69.

The amount debited to profit and loss account in respect of provision for doubtful debts is Rs.8,700
and the closing provision is Rs.10,500.
Provision for bad and doubtful debts
Dr.
Cr.
Particulars

Rs.

To Bad debts (Sinha)

Particulars

Rs.

3,800 By Balance b/d

To Provision
Gupta 20% of Rs.9,000

1,800

Patel 40% of Rs.8,000

Iyer 100% of Rs.5,500

3,200
5,500

To Balance c/d

Rs.

By Profit and loss account

5,600
8,700

10,500
14,300

70.

< TOP >

14,300
< TOP >

Machinery Account
Date
April 1, 05

Particulars
To Balance b/f

Rs.
30,000
______
30,000

April 1, 06

To Balance b/f

24,000
______
24,000

Date
March 31, 06
March 31, 06

Particulars
By Depreciation
By Balance c/d

Sept.30, 06

March 31, 07

By Depreciation
By Bank
By P&L a/c

< TOP OF THE DOCUMENT >

25

Rs.
6,000
24,000
30,000
2,400
15,000
6,600
24,000