1
.Seat No.: Enrolment
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA (Integrated) SEMESTER 1 • EXAMINATION WINTER 2018
Subject Code: 2517107 Date: 01/01/2019
Subject Name: Elements of Financial Accounting
Time: 10:30AM TO 1:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1

"Accounting Concepts refers to those basic assumptions or postulates or conditions upon which the science of accounting is based". Justify the statement with respect to GAAP.
07

Write short notes on:
Depreciation
Convention
Purchase book
07
Q.2

Journalize the following transactions in the books of Ajit ltd. for December 2017.
• 1st Dec 2017, Ajit started business with cash Rs.40,000.
• Dec.3, he paid into the bank Rs.20,000.
• Dec.5, he purchased goods for Rs.15,000.
• Dec.8, he sold goods for cash Rs.6000.
• Dec.10, he purchased furniture and paid by cheque Rs.5000.
• Dec.12, he sold goods to Arvind Rs.4000.
• Dec.14, he purchased goods from Amrit Rs.10000.
• Dec.15, he returned goods to Amrit Rs.5000.
07

Explain process of accounting. Who are the users of accounting?
07
OR

What is accounting cycle? Explain needs and functions of accounting?
07
Q.3

What is inventory valuation? Distinguish between LIFO and FIFO method.
07

"A Ledger is a book which contains all the accounts whether personal, real or nominal, which are first entered in Journal." Explain with examples.
07
OR
Q.3

From the following particulars selecting to raw materials, prepare the stock Register of "K T Stores" as per Weightage Average Method.
Date
Particulars
Quantity
(Pieces)
Rate
(Per dozen)
1-1-2018
Opening Stock of Raw materials
72
480
3-1-2018
Goods Received
100
600
10-1-2018
Goods sent on Job
84

15-1-2018
Goods Received
144
720
20-1-2018
Goods sent on Job
72

24-1-2018
Goods Received
120
840
31-1-2018
Return from 20-1-2018
12

07

Difference between Subsidiary books and ledger.
07
Q.4

Write difference between straight line method and written down value method.
07

Explain ratio analysis as a tool of analyze financial statement; Discuss some important ratio which help to analyze financial statement.
07
OR
2
Q.4

On 1st January 2016, X ltd. Purchased a second hand machine for Rs.52,000 and spent Rs.2,000 as shipping and forwarding charges, Rs.5,000 as import duty Rs.500 as carriage inwards, 1,500 as repair charges, Rs.500 as installation charges, Rs.400 as brokerage of the middleman and Rs.100 for an iron pad. It was estimated that the machine will have a scrap value of Rs.2,000 at the end of its useful life which is 20yrs.
On 1st July 2018, this machine was sold for Rs.30,600.
Prepare the machinery Account for the first three years as per SLM Method.
07

Following is the Balance sheet of X and Co. as on 31/03/2018
Liabilities
Rs
Assets
Rs.
Equity Shares of Rs 10 each
Reserves
Profit and loss A/c
Secured Loan
Sundry Creditors
Bank Over draft
Provision for Taxation
1,00,000
25,000
40,000
70,000
50,000
30,000
20,000
3,35,000
Goodwill
Fixed Assets
Stock
Sundry Debtors 50,000
Less Reserve for
Doubtful debts 1000
Advances
Bank Balance
Cash in Hand
50,000
1,50,000
40,000
49,000
10,000
20,000
16,000
3,35,000
Calculate: Current Ratio, ii) Liquid Ratio iii) Absolute Liquid Ratio
Give comments on each ratio.
07
Q.5

What is trial balance? Explain the steps to locate the errors in trial balance.
07

Explain the rational of making a distinction between Capital and Revenue Expenditure.
07
OR
Q.5

The following trial balance was extracted from the books of Balkishan as on 31 /12/2017.
Debit Credit
Particulars
Amount Rs.
Particulars
Amount Rs.
Plant and Machinery
20,000
Capital account
80,000
Manufacturing Wages
34,500
Sundry creditors
44,560
Salaries
15,850
Bank Loan
15,000
Furniture
10,000
Purchase returns
1,740
Freight on Purchase
1,860
Sales
2,50,850
Freight on sales
2,140
Reserve for bad debts
2,000
Building
24,000
Manufacturing expenses
9,500
Insurance and Tax
4,250
Goodwill
25,000
General Expenses
8,200
Factory fuel and power
1,280
Sundry debtors
78,200
Factory lighting
9,50
Stock (1st Jan.2017)
34,200
Motor Car
12,000
Purchases
1,02,000
Sales returns
3,100
Bad debts
1,400
Interest and bank charges
4,00
Cash at bank
4,200
Cash in hand
1,120
3,94,150
3,94,150
14
3
Prepare trading and profit and loss accounts for the year ended 31st Dec.2017 and the balance sheet as on that date taking into consideration the following information:
Stock in hand on 31st Dec 2017was valued at Rs.30, 500.
Depreciation plant and machinery by Furniture by and motorcar by Rs.1, 000.
Create reserve for bad debts at on sundry debtors.
A commission of on the gross profit is to be provided to works Manager.
General Manager is to be allowed a commission on net profit after charging Works Manager's and before charging General Manager's Commission.