Brief Answer Questions:
[10 × 2 = 20]What is financial accounting?
Define realization concept of accounting?
What is periodic inventory system?
Write down the meaning of contingent liabilities.
What is GAAP?
Following information are provided:
Started business with cash Rs. 300,000 and stock Rs. 100,000.
Paid salary Rs. 195,000 including advance of Rs. 15,000.
Required: Accounting equation
You are provided the following information:
| Sales | Rs. 150,000 | Salary to staff | Rs. 24,000 |
| Dividend received | Rs. 10,000 | Income tax paid | Rs. 2,000 |
| Opening stock | Rs. 20,000 | Closing stock | Rs. 30,000 |
| Purchase | Rs. 80,000 | Depreciation | Rs. 8,000 |
Required: Amount of value added.
Following transactions are given:
June 10: Purchased from R Furniture
6 Sofa Set @ Rs. 20,000 each
10 Chairs for Rs. 5,000
(Trade Discount @ 10%)
June 25: Purchased from S Furniture:
10 Tables @ Rs. 5,000 each
10 Chairs @ Rs 4,000 each with trade discount @ 5%
Required: Purchase Book
On 1st Baishak, A Grocery Shop borrowed Rs. 450,000 from a bank by signing a 3-months, 12% note payable. It paid the principal and interest at due date.
Required: Journal entries for issue and retirement of note.
A Company issued Rs. 300,000 face value bond at discount of Rs. 30,000. The unamortized discount was Rs. 5,000 and the bond contains a call provision of Rs. 102.
Required: Gain or loss on early redemption of bond
Short Answer Questions (Attempt any FIVE Questions)
[5 × 10 = 50]The following information is provided:
| Current ratio | 2 | Current Liabilities | Rs. 200,000 |
| Prepaid expenses | Rs.48,000 | Inventory | Rs. 90,000 |
| Debentures | Rs. 200,000 | Shareholder's equity | Rs. 600,000 |
Operating profit of the year Rs.100,000 being 10% of Sales.
Income tax is 25%
Required:
a. Net profit after tax
b. Amount of sales
c. Quick ratio
d. Inventory turnover ratio
e. Debt to total capital ratio
f. Return on shareholder's equity
g. Net profit margin
A company provides you the following information related to inventories for the month of Chaitra.
Chaitra 1: Beginning inventory 500 units @ Rs.10 each
Chaitra 9: Purchased 1,000 units @ Rs.12 each
Chaitra 14: Sold 1,200 units @ Rs.15 each
Chaitra 18: Purchased 500 units @ Rs.13 each
Chaitra 24: Purchased 200 units @ Rs.11 each
Chaitra 31: Sold 500 units @ Rs.20 each.
Required:
a. Cost of goods sold, ending inventory and gross profit under weighted average costing method.
b. Cost of goods sold, ending inventory and gross profit under LIFO method
(a) Following transactions are related to machinery:
Shrawan 1, 2078 A machinery was purchased for Rs. 400,000.
Chaitra 30, 2078 Second machinery was purchased for Rs. 200,000.
Poush 30, 2080 First machinery became absolute and sold for Rs. 300,000.
Depreciation charged @ 15% p.a. on original cost method.
Required: Machinery account for three years ending 31st Chaitra, 2080.
(a) On Ashad 2081, Bank Statement disclosed a balance of Rs.16,000 and Cash Book showed the balance of Rs.14,800
i) Deposit in transit Rs. 1,900
ii) Outstanding cheques Rs. 1,000.
iii) Notes receivable and interest collected by the bank Rs.4,000 and Rs. 200 respectively.
iv) Cheque of Rs. 7,450 deposited by the company was recorded by the bank as Rs.7,350
v) A customer's cheque for Rs.1,500 was returned by the bank due to insufficient fund.
vi) A cheque for Rs. 7,800 paid by the bank was recorded as Rs. 7,600 by the company.
vii) Bank charge Rs.300 for the service provided by the bank.
Required: Bank Reconciliation Statement
b. Write down the meaning of bad debts. Also explain in brief the methods of estimating bad debts.
“A lease is a legal contract under which one party agrees to pay rent properly owned by the other party.” discuss.
What is value added statement. Explain in brief the advantages of value added statement.
Long Answer Questions (Attempt any TWO Questions)
[2 × 15 = 30]Following are the transaction of a company.
I. Started business with cash Rs. 800,000 in exchange of 8,000 shares of Rs. 100 each.
II. Deposited into bank Rs.300,000.
III. Took a bank loan of Rs. 100,000 @ 10% interest.
IV. Sold merchandise goods for Rs.300,000 on account.
V. Purchased merchandise goods for Rs.180,000 on account
VI. Paid Rs.10,000 for insurance premium.
VII. Received Rs.270,000 after deduction of 10% discount from the customers
VIII. Paid Rs. 170,000 in full settlement of Rs.180,000 by cheque.
IX. Paid electricity bill Rs. 5,000
X. Pre-paid office rent Rs.26,000 by issuing cheque.
Additional Information
a) Closing stock Rs, 20,000.
b) Prepaid rent expired Rs. 24,000.
c) Outstanding interest Rs.10,000
Required:
a. Journal entries for above transactions (6)
b. Accounts receivable and payable account (2)
c. Triple column cash book (4)
d. Adjusted Trial balance (3)
The Balance Sheet and Income Statement of a company have been given below:
| Liabilities | Year I | Year II | Assets | Year I | Year II |
| Equity share capital | 800,000 | 1,000,000 | Land and building | 300,000 | 340,000 |
| Share premium | 80,000 | 100,000 | Plant and machinery | 500,000 | 700,000 |
| Bank loan | - | 200,000 | Inventories | 230,000 | 300,000 |
| Accounts payable | 180,000 | 160,000 | Accounts receivable | 220,000 | 250,000 |
| Provision for taxation | 50,000 | 60,000 | Provision for doubtful debts | (40,000) | (30,000) |
| Profit and loss | 140,000 | 280,000 | Cash at bank | 40,000 | 240,000 |
| 1,250,000 | 1,800,000 | 1,250,000 | 1,800,000 |
| Particulars | Rs. | Rs. |
| Sales | 1,000,000 | |
| Less: Cost of goods sold | 600,000 | |
| Gross profit | 400,000 | |
| Less: Operating expenses | 100,000 | |
| Interest on bank loan | 20,000 | |
| Depreciation on machinery | 40,000 | |
| Provision for taxation | 60,000 | |
| Loss sales of machine (Book value Rs. 60,000) | 40,000 | 260,000 |
| Net income | 140,000 |
Required: Cash flow statement by using direct method (6+3+4+2=15)
a. What is accounting information? Who are the users of accounting information? Explain. (2+5=7)
b. Define source of documents. Write down the objectives of source of documents. (3+5=8)