COM/I/03 Student's Copy
2 0 1 8
Pre-CBCS
1st Semester
COMMERCE
Financial Accounting—I
Full Marks 75
Time 3 hours
PART A—OBJECTIVE
Marks 25
The figures in the margin indicate full marks for the questions
SECTION—A
Marks 10
Indicate whether the following statements are True or False by putting
a Tick mark in the brackets provided 1×10=10
1. Bookkeeping is a part of the accounting.
T F
2. In case of making payment of wages for construction of building, wages will
be debited.
T F
3. Under written down value method, depreciation is charged on the original
cost of the asset.
T F
4. All reserves appear on the liabilities side of the Balance Sheet.
T F
5. Unearned income is the liability of the business.
T F
/184 1 Contd.
6. Liabilities side of the Balance Sheet represents credit balance.
T F
7. In a dispute between two partners, the mutually accepted partnership deed
helps to solve the differences of opinion.
T F
8. When one of the partners does most of the work, he is entitled to a salary
from the firm.
T F
9. In case of death of a partner, reserves and surplus should be distributed
amongst continuing partners in the new ratio.
T F
10. Realization loss should be divided in the capital ratio.
T F
SECTION—B
Marks 15
Write short notes on the following in not more than 5 sentences each 3×5=15
1. Bookkeeping
2. Capital reserve
3. Closing stock
4. Different ways a partner can retire from the firm
5. Types of goodwill
PART B—DESCRIPTIVE
Marks 50
The figures in the margin indicate full marks for the questions
1. What is accounting? Explain the meaning and process of accounting.
3+7=10
OR
2. Explain the following in brief 2½×4=10
Owner's equity
Classification of accounts
Principle of consistency
Accounting period concept
COM/I/03/184 2 Contd.
3. The following balances appear in the book of X Ltd. as on 1st April, 2011
Machinery A/c—R 5,00,000
Provision for Depreciation—R 2,25,000
The machinery is depreciated 10% p.a. on fixed instalment method.
The accounting year being April-March. On 1st October, 2011, a
machinery which was purchased on 1st July, 2008 for R 1,00,000 was
sold for R 42,000 and on the same date afresh machine was purchased
for R 2,00,000
Prepare Machinery A/c for 2 years. 10
OR
4. Explain the terms 'reserve' and 'provision'. What is meant by secret reserve
and what are the purposes of creating secret reserve? 4+6=10
5. From the following Trial Balance of M/s Ram Sons, prepare Trading and
Profit Loss A/c for the year ending 31st March, 2018 and a Balance
Sheet on that date 10
Debit Balances R Credit Balances R
Purchases 21,750 Sales 35,000
Discount Allowed 1,300 Capital 13,000
Wages 6,500 Creditors 2,100
Salaries 2,000
Travelling Expenses 400
Commission 425
Carriage Inward 275
Administrative Expenses 105
Trade Expenses 600
Interest 250
Building 5,000
Furniture 200
Debtors 4,250
Cash 7,045
50,100 50,100
Stock on 31st March, 2018 was R 6,000. Depreciate building by
create a provision for bad debts 10% on debtors and outstanding wages
amount to R 475.
COM/I/03/184 3 Contd.
OR
6. Why is it necessary to create provision for bad and doubtful debts? How is
it treated in final accounts? 5+5=10
7. What is partnership? State the features of partnership and also mention
the contents of partnership deed.
OR
8. A and B share profits and losses as 3 1. Their Balance Sheet as on
30th June, 2018 is as under
Liabilities Amount Assets Amount
R R
Capital 60,000 Land and Building 50,000
Capital 32,000 Furniture 2,000
Creditors 75,000 Debtors 33,000
General Reserve 8,000 Less Provision for Doubtful Debts 1,000 32,000
Bills Receivable 6,000
Stock-in-Trade 40,000
Cash at Bank 45,000
1,75,000 1,75,000
C is admitted on 01.07.2018 on the following terms
C to bring in R 20,000 as his capital and to be entitled to a fifth share
in the profits
Goodwill valued at R 50,000. C was to bring half of his share of
goodwill in cash and other half to be purchased by him from the
existing partners by book adjustment. The necessary amount was
debited to current account. No goodwill account was to be raised in
the books
The value of Stock and Furniture was to be reduced by 10% and the
Reserve for Doubtful Debts was to be brought to 10% of debtors
Value of Land and Building was to be increased by 15%
The capital of partners in the new firm are to be in the profit sharing ratio.
The capital of C being taken as the basic capital. The excess amount of
capital, if any, to be paid off in cash.
You are required to prepare Capital A/cs of the partners and the new
Balance Sheet. 10
COM/I/03/184 4 Contd.
9. B and C are partners sharing profits and losses in the proportion of
3 2 1 and their Balance Sheet on 31st December, 2017 stood as under
Liabilities R Assets R
Bills Payable 7,560 Cash in Hand 250
Creditors 12,300 Bank 960
Reserve 3,000 Debtors 7,450
Capitals Bills Receivable 3,300
A 10,000 Stock 12,470
B 6,000 Investment 10,430
C 4,000 20,000 Buildings 8,000
42,860 42,860
B died on 28th February, 2018 and his executors are entitled to be paid as
under
The capital to his credit at the time of his death and interest upon the
time of his death at p.a.
His proportionate share of reserve
His share of profit for the period based on the figure of the previous
year
Goodwill according to his share of profits to be calculated by taking
twice the amount of the average profits of the last three years. The
profits of the previous years were 2015—R 7,800; 2016—R 9,000 and
2017—R 9,600
The investments were sold for R 16,200 and his executors were paid out.
Write the account of the executors of B and Balance Sheet. 10
OR
10. B and C are equal partners, whose Balance Sheet as on 31st December,
2017 is as follows
Liabilities R Assets R
Sundry Creditors 5,000 Cash in Hand 50
Loan 1,000 Stock 800
Capital A/cs Debtors 1,000
A 800 Plant and Machinery 2,000
B 500 Furniture and Fittings 800
Land and Buildings 2,000
Capital (overdrawn) 650
7,300 7,300
COM/I/03/184 5 Contd.
Due to lack of liquidity and weak financial position of the partners, the firm
is dissolved. A and C are not able to contribute anything and a sum of
R 200 received from B. All of them are declared insolvent. The assets are
realized
R
Stock 500
Plant and Machinery 1,000
Furniture and Fittings 200
Land and Buildings 800
Debtors 550
Realization Expenses 50
Prepare Realization Cash A/c and Partners' Capital A/cs. 10