(Pages 1093
P.T.O.
MAR IVANIOS COLLEGE (AUTONOMOUS)
THIRUVANANTHAPURAM
Reg. No. :.………………… Name :.………………….
Second Semester B.Com. Degree Examination, June 2016
First Degree Programme under CBCSS
Core Course: Commerce IV
AUCO242: Financial Accounting
Time: 3 Hours Max. Marks: 80
SECTION A
Answer ALL questions each in a word or in a sentence.
1. What is going concern concept
2. Give two examples for Fictitious asset
3. What do you mean by Errors of principle
4. What is Contingent asset
5. Give adjusting entry for the following;
Rs.1,000 p.m is paid as salary to an employee but during the year 2014 15 only Rs.10,000 is paid as salary.
6. What do you mean by Deferred revenue expenditure
7. What is Primage
8. What do you mean by Hire purchase system
9. What is Self balancing ledger
10. Define Depreciation.
(10 x 1 10 Marks)
SECTION B
Answer any EIGHT questions, each in a short paragraph not exceeding 50 words.
11. A machine costing Rs.15,000 is estimated to have a life of 10 years and the scrap value estimated is Rs.2,000 at the end of its life. Calculate amount of depreciation charged for the machinery.
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12. State the difference between errors of commission and errors of omission.
13. What do you mean by accrued income and explain its treatment on final accounts
14. Describe the features of hire purchase system.
15. Distinguish between journal and ledger.
16. State the objectives of accounting.
17. Write note on the following;
i). Gross profit ii). Net profit
18. What is suspense account
19. Describe the need of charging depreciation.
20. Calculate gross profit from the following information;
Rs.
Opening stock 15,040
Purchases 85,522
Carriage inwards 1,291
Carriage outwards 800
Sales 1,21,850
Return inwards 285
Closing stock 15,500
21. Explain the following accounting concepts;
i). Separate entity concept
ii). Money measurement concept
22. Pass journal entry for the following transactions;
i). Payment made to Sam Rs.1,000. He allowed a cash discount of Rs50
ii). Goods distributed by way of free sample Rs.500
x 2 16 Marks)
SECTION C
Answer any SIX questions, each in a paragraph not exceeding 120 words.
23. Distinguish between Hire Purchase System and Instalment Purchase System.
24. What are the advantages of Self Balancing System
25. On 1st January 2010, Dobsons Ltd purchased a machine from a Vendor on hire purchase basis. The particulars are given below;
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i). Cash price Rs.10,000.
ii). Rs.4,000 to be paid on signing the contract and the balance in three equal instalments of Rs.2,000 plus interest.
iii). Interest charged on outstanding balance at 5%p.a.
iv). Instalments are to be paid annually from December each year.
v). Depreciation charged at 10% on straight line method.
vi). Give journal entries in the books of purchaser.
26. Pass necessary journal entries to rectify the following errors;
i). A sum of Rs.100 written off as depreciation on furniture was not debited to Depreciation account.
ii). A machine bought for Rs.5,000 has been debited to Purchase account.
iii). A sale of Rs.359 to Ramu has been entered correctly in Sales book but credited to Ramu's account as Rs.395.
iv). Cash received from Joseph Rs.300 was debited to Jose's account.
27. S.S Jalasakti commenced a voyage on 1st March 2014 from Bombay to London and back. The voyage was completed on 30th April 2014. It carried a consignment of tea on its outward journey and of machinery on its return journey. The ship was insured and annual premium was Rs.1,20,000.
Prepare voyage account from the following; Rs.
Freight earned (outward) 5,00,000
Freight earned (inward) 3,50,000
Port dues 25,000
Bunker cost 1,50,000
Wages and salaries 2,50,000
Stores 84,000
Sundry expenses 25,000
Passage money received 50,000
Lighterage charges 33,000
Annual depreciation 4,80,000
Address commission 5%on outward and 4%on inward freight.
Primage is on freight.
Stores and coal on hand were valued Rs.15,000 on 30th April 2014.
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28. Prepare Total Debtors account from the following information;
Rs.
Balance of debtors on 1st January 12,000
Cash sales 12,000
Credit sales 66,000
Returns inward 5,000
Cash received from customers 45,000
Discount allowed 3,000
Bills receivable received from customer 17,000
Bad debts 1,500
Bills receivable dishonoured 3,500
29. On 1st January 2011 a machinery was purchased for Rs.50,000 and a further sum of Rs.2,000 was spent on its installation. You are required to prepare machinery account for three years under the following methods; i). Straight line method ii). Written down value method.
Rate of depreciation is 10% p.a.
30. Explain different methods of charging depreciation.
31. What are the advantages and limitations of financial accounting
x 4 24 Marks)
SECTION D
Answer any TWO questions, not exceeding four pages.
32. The Trial Balance of Asha Traders appeared as follows on 31st December 2012:
Debit
Credit
Capital
Creditors
Bills Payable
Sales
Reserve for doubtful debts
Interest
Buildings
Motor trucks
Furniture






70,000
12,000
1,640
92,000
18,852
6,930
1,21,850
1,320
340



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Debtors
Opening stock
Cash in hand
Cash at bank
Bills receivable
Purchases
Carriage inwards
Carriage outwards
General expenses
Insurance
Bad debts
Audit fees
Travelling expenses
Discount
Sales returns
investment
15,600
15,040
988
14,534
5,844
85,522
1,291
800
6,085
783
613
400
325
620
285
8,922
2,41,292
















2,41,292
Prepare the Trading And Profit And Loss account for the year ending 31st December 2012 and a Balance Sheet as on that date after making the following adjustments;
i). Stock on 31st December 2012 was valued at Rs.15,500.
ii). Depreciation has been provided for motor trucks at 10% and furniture at 5%.
iii). Write off a further Rs.140 as bad debts and maintain reserve at on debtors.
iv). Insurance Rs.150 is still unexpired.
v). Interest on investment outstanding Rs.120.
33. A firm has three ledgers in use viz. Debtors, creditors ledger and nominal ledger. Prepare adjustment accounts under self balancing system:
Rs.
1st January Balance of debtors 16,000
1s January Balance of creditors 18,500
31st January Credit purchases 4,500
Paid to creditors 9,875
Received from debtors 7,800
Returns inward 875
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Bills payable accepted 1,500
Bad debts 450
Allowance to debtors 275
Credit sales 9,800
Discount received 325
Discount allowed 200
Bills receivable received 3,000
Returns outwards 600
Allowance from creditors 150
Bills receivable dishonoured 375
34. Mr. X bought a plant on 1.1.2010 for a sum of Rs.1,00,000 having a useful life of 5 years. It is estimated that the plant will have a scrap value of Rs.16,000 at the end of its useful life. Mr. X decides to charge depreciation according to the depreciation fund method. The depreciation fund investments are expected to earn an interest p.a. The Sinking Fund Table shows that Re.0.180975, if invested yearly at p.a, produces Re.1 at the end of 5 years. The investments are sold at the end of the 5th year for a sum of Rs.65,000. A new plant was purchased for Rs.1,20,000 on 1.1.2015. The scrap of the old plant realises Rs.17,000. You are required to prepare necessary accounts in the books of Mr. X.
35. On 1st January, 2009 A Ltd purchased from B Ltd. five machines under hire purchase system, Rs.50,000 being paid on delivery and the balance in five instalments of Rs.75,000 each payable annually on 31st December. The vendor charges p.a interest on yearly balances. The cash price on five machines was Rs.3,75,000.
Show how this transactions should be recorded in the books of both companies if A Ltd. writes off depreciation at 10% p.a on the written down value method. Also show how the items will appear in the balance sheet as on 31st December 2009.
You may round the interest amount to nearest ten.
x 15 30 Marks)