Accounts Board Question Paper October 2011 with answer


Q. 1     Attempt any FOUR sub-questions of the following:                                                      (20)

A]         Answer in ‘One’ sentence each:                                                                                       (5)

             
             (1)           What is Partnership Deed?

Ans:       A partnership deed is a written agreement duly stamped, signed and registered document containing the terms and conditions of the partnership.

(2)           What is CPU?

Ans:     The central processing unit is that hardware part of a computer that controls the entire working of the computer, processes the commands and data, and outputs the result.

(3)           What do you mean by Scrap Value of an asset?

Ans:     The net amount which is expected to be realised on the final disposal of a fixed asset is called ‘scrap value’.

(4)           What are Noting Charges?

Ans:     Noting charges are the fees charged by the Notary Public for noting the dishonour on the face of the bill and in his official register.

[5]        What is the relationship between the Co-ventures?

Ans:     The relationship between the co-ventures is similar to that of temporary partners i.e., principal and agent.

B]         Write a word / term / phrase which can substitute each of the following statements: (5)

            (1)        An intangible asset which has realisable value:- Goodwill.
(2)        An organisation not having object of earning profit:- Not for Profit Concern / Non-trading organisation.
            (3)        Credit balance on Joint Venture Account:- Profit on Joint Venture.
(4)        A system which have no hard and fast rules for accounting:- Single Entry System.
            (5)        A movable mark on the display screen of computer:- Cursor.

C]         Match the following pairs:   
                                                                                 (5)
Group ‘A’
Answers
(1)       Fixed Asset
(2)       Statement of Affairs
(3)       Co-venturers’ Liabilities
(4)       Dishonour of Bill
(5)       Active Partner
-  Plant & Machinery
-  Single Entry System
-  Unlimited
-  Noting Charges
- Takes Active Part in the Partnership

D]         Select the most appropriate alternative from those given below and rewrite the sentences:  (5)

(1)        Single entry system is Incomplete.

            (a)  Complete               (b)  Scientific               (c)  Incomplete (d)  Accurate

(2)        Credit balance of Trading account shows Gross Profit.

            (a)  Net Profit   (b)  Net loss                 (c)  Gross Profit            (d)  Gross loss

(3)        A person to whom a bill is endorsed is the Endorsee

            (a)  Endorser               (b)  Endorsee               (c)  Drawer                   (d)  Drawee

(4)        Income and expenditure account is Nominal Account.

            (a)  Real A/c                (b)  Nominal A/c     (c)  Personal A/c      (d)  Capital  A/c

(5)        Amount contributed by co-venturer’s is debited to Joint Bank Account.

            (a)  Joint venture account  (b)  Joint Bank account    (c)  Co-venturer’s account (d)  Shares’ account

E]         State with reasons whether the following statements are True / False:       (5)
           
(1)        Public Library is a “Not for Profit” concern.

Ans:     This statement is TRUE.
Public Library is setup not to earn profit but to serve the society. Hence, it is a not for profit concern.
           
(2)        Payment of bill after due date is called “Retirement of Bill”.

Ans:     This statement is FALSE.
Payment of the bill before the due date is called Retirement of Bill.

F]         Preparation a Formate of Bill of Exchange from the following information: (5)
(1)        Drawer:-  Ankur Shah, Anand Park, Borivali (W), Mumbai: 90.
            (2)        Drawee:-  Sharad Shah, Anand Sadan, Bandra (W), Mumbai: 50.
            (3)        Payee:-    Anish Shah, Anand Mahal, Kandiwali (W), Mumbai: 57.
            (4)        Amount:-  Rs. 15,555.
            (5)        Period :     3 months.
            (6)        Date of Bill:-  1st January, 2008.
            (7)        Date of Acceptance:-  3rd January, 2008
            (8)        Accepted for :-   Rs. 12,000.


Q. 2      Shantikunj Company, Rajoli purchased furniture worth Rs. 38,400 and paid Rs.1,600 for installation charges on 1st January, 2004.                                                       (10)
            On 31stMarch every year, the company charged depreciation @ 10% p.a. on original cost.
            On 1stOct.2004 the company purchased an additional furniture costing Rs.24,000.
            The company sold furniture for Rs. 31,500 on 31stDecember 2005, which was purchased on 1st January 2004.
            Company purchased a new furniture worth Rs. 20,000 on 31stMarch, 2006.
            You are required to prepare Furniture account and depreciation account for the years 2003-2004, 2004-2005 and 2005-2006.
In the books of Shantikunj Company
Date
Particulars
JF
Amt Rs.
Date
Particulars
JF
Amt Rs.

1-1-04


To Cash / Bank A/c





By Depreciation A/c
By Balance c/d



1,000
39,000
40,000
31-3-04
31-3-04

40,000
40,000








1-4-04
1-10-04


To balance b/d
To Cash / Bank A/c



39,000
24,000
31-3-05

31-3-05

By Depreciation A/c
(4000 + 1200)
By Balance c/d


5,200

57,800
63,000
63,000








1-4-05
31-3-06


To balance b/d
To Cash / Bank


57,800
20,000
31-12-05
31-12-05
31-12-05
31-3-06
31-3-06
By Cash / Bank A/c
By Profit & Loss A/c
By Depreciation A/c
By Depreciation A/c
By Balance c/d

31,500
500
3,000
2,400
40,400
77,800
77,800








1-4-06
To balance b/d

40,400







40,400



40,400
Depreciation A/c.
Date
Particulars
JF
Amt Rs.
Date
Particulars
JF
Amt Rs.
31-3-04
To Furniture A/c

1,000
31-3-04
By Profit & Loss A/c

1,000



1,000



1,000
31-3-05
To Furniture A/c

5,200
31-3-05
By Profit & Loss A/c

5,200



5,200



5,200
31-12-05
To Furniture A/c
To Furniture A/c

3,000
2,400
31-3-06
By Profit & Loss A/c

5,400



5,400



5,400
OR

Q. 2 A] Calculate the value of goodwill at 3 times the average profit of last 5 years. The profits were:        
Year
Profit / Loss Amount
2001 – 2002
2002 – 2003
2003 – 2004
2004 – 2005
2005 – 2006
Rs. 14,500    Profit
Rs.   9,000    Loss
Rs. 16,700    Profit
Rs.   9,500    Profit
Rs. 13,300    Profit
Solution:
M/s _______________________
VALUATION OF GOODWILL
AVERAGE PROFIT METHOD
      Average Profit =  Total Profit – Total Losses
                                            No. of years
                                    =  54,000 – 9,000
                                                5
                                    =  45000    = Rs. 9000
                                            5
Goodwill =  Average Profit ´ No. of years Purchase
                =    9,000   ´    3
                = Rs.  27,000


B]         What are the features of Accounting Software Tally?                                       (5)
Ans:       Tally is very popular software package for Financial Accounting and Inventory Management. The salient features of Tally are:
(1)                 It is simple and at the same time can be customized according to the individual needs of the user. It can prepare, compare and consolidate the accounts of different branches of the same company as well as those of different companies under the same management simultaneously.
(2)                 As the accounting information is keyed in, Tally posts them to the respective ledger accounts.
(3)                 In Tally, it is possible to manifest one single transaction in multiple currencies and to view all reports in terms of one or more currency.
(4)                 Tally can record and maintain various ledgers. It can prepare Trial Balance. It can also prepare income statements, i.e. Trading Account and Profit and Loss Account as well as financial statements including Balance Sheet. Cash flow and Fund flow statements can also be generated as and when required.
(5)                 Tally can also prepare Bank Reconciliation Statement.

Q. 3     Bhagyashri sold goods worth Rs. 24,000 to Rupa.                                            (12)
            On the next day Rupa paid Rs. 10,000 in cash and accepted 4 months bill for the balance amount drawn by Bhagyashri.
            Bhagyashri discounted the bill at 10% p.a. after one month with her bank.
            On due date Rupa dishonoured her acceptance and noting charges amounted to Rs. 200.
            Rupa paid half the amount of the bill and full amount of noting charges.
            Rupa accepted a new bill at 2 months for the balance amount plus interest Rs. 100.
            Pass necessary journal entries in the books of Bhagryashri.
In the books of Bhagyashri
Journal Entries
Date
Particulars
LF
Debit (Rs.)
Credit (Rs.)
? 1
Rupa A/c………………………………Dr.
     To Sales A/c
(Being goods sold)

24,000

24,000
2
Cash A/c………………………………Dr.
     To Rupa A/c
(Being cash received from Rupa)

10,000

10,000
3
Bills Receivable A/c…………………Dr.
     To Rupa A/c
(Being bill drawn and accepted due after 4 months)

14,000

14,000
4
Bank A/c………………………………Dr.
Discount A/c…………………………Dr.
     To Bills Receivable A/c
(Being bill discounted with bank @ 10% after one month)

13650
350


14,000
5
Rupa A/c……………………………….Dr.
     To Bank A/c
(Being bill dishonoured and incurred noting charges)

14,200

14,200
6
Cash / Bank A/c……………………..Dr.
     To Rupa A/c
(Being part payment received along with noting charges)

7,200

7,200
7
Rupa A/c………………………………..Dr.
     To Interest A/c
(Being interest received)

100

100
8
Bills Receivable A/c…………………..Dr.
     To Rupa A/c
(Being new bill drawn and accepted due after 2 months along with interest)

7,100

7,100



90,600
90,600
OR
Q. 3     Journalise the following transactions in the books of Kantilal.                         (12)
(a)   Sandhya informed Kantilal that Sawan’s acceptance for Rs. 16,000 endorsed to Sandhya has been dishonoured. Noting charges amounted to Rs. 300.
(b)   Nalini renews her acceptance to Kantilal for Rs. 6,000 by paying Rs. 2,000 in cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3 months.
(c)   Punam’s acceptance to Kantilal Rs. 10,000 retired one month before the due date at a discount of 6% p.a.
(d)   Bank informed Kantilal that the bill of Rs. 8,000 has been dishonoured by Meenakshi which was sent to bank for collection.
In the books of Kantilal
Date
Particulars
LF
Debit (Rs.)
Credit (Rs.)
a
Sawan A/c……………………………..Dr.
     To Sandhya A/c
(Being endorsed bill dishonoured and incurred noting charges)

16,300

16,300
b (i)
Nalini A/c……………………………….Dr.
     To Bills Receivable A/c
(Being bill dishonoured)

6,000

6,000
(ii)
Nalini A/c……………………………….Dr.
     To Interest A/c
(Being interest due)

120

120
(iii)
Cash A/c………………………………..Dr.
     To Nalini A/c
(Being part payment received)

2,000

2,000
(iv)
Bills Receivable A/c…………………..Dr.
     To Nalini A/c
(Being new bill drawn and accepted along with interest due after 3 months)

4,120

4,120
c
Cash / Bank A/c……………………..Dr.
Discount A/c…………………………..Dr.
     To Bills Receivable A/c
(Being bill retired)

9,950
50


10,000
d
Meenakshi A/c…………………………Dr.
     To Bank for collection A/c
(Being bill sent to bank for collection dishonoured)

8,000

8,000



46540
46540
Q. 4     Shrimant and Ramakant of Aurangabad entered into a Joint Venture to sell computers and share the profit or loss in the proportion of 1 : 2.                          (12)
            Shrimant contributed Rs. 7,50,000 and Ramakant contributed Rs. 15,00,000 and the amount was deposited into Joint Bank Account.
            Shrimant bought 60 computers at Rs. 35,000 each and paid for them from Joint Bank Account.
            Ramakant bought 15 computers at Rs. 30,000 each and paid Rs. 15,000 for insurance and Rs. 6,000 for freight from his private cash.
            60 computers were sold for Rs. 38,500 each 15 computer damaged in transit were repaired by Shrimant at a total cost of Rs. 15,000 from his private cash.
            They were finally sold by Shrimant at Rs. 40,000 each.
            The accounts between parties were duly settled.
            Prepare:
            (1)   Joint Venture A/c            (2)  Co-venturer’s A/c (3)  Joint Bank A/c

Joint Venture Account
Particulars

Rs.
Particulars

Rs.
To Joint Bank A/c
(Purchase)
To Ramakant A/c
Purchase   
Insurance
Freight
To Shrimant A/c
(Repairs)
To Profit A/c
Shrimant
Ramakant



450000
15000
  6000



108000
216000
21,00,000




471000
15000



324000
By Joint Bank A/c
By Joint Bank A/c

23,10,000
600000


2910000


2910000
Co-ventures A/c
Particulars
Shrimant
Ramakant
Particulars
Shrimant
Ramakant



To Joint Bank A/c



873000



2187000
By Joint Bank A/c
By Joint Venture A/c
By Joint Venture A/c
By Joint Venture A/c
750000

15000
108000
1500000
471000

216000

873000
2187000

873000
2187000
Joint Bank A/c
Particulars
Rs.
Particulars
Rs.
To Shrimant A/c
To Ramakant A/c
To Joint Venture A/c
To Joint Venture A/c
750000
1500000
2310000
600000
By Joint Venture A/c
By Shrimant A/c
By Ramakant A/c
2100000
873000
2187000

5160000

5160000

Q. 5     Mr. Anand gives you the following information:                                                           (10)
Particulars
31-03-2003 (Rs.)
31-03-2004 (Rs.)
Cash
5,000
6,000
Bank
15,000
18,000
Debtors
10,000
8,000
Stock
8,000
12,000
Furniture
12,000
12,000
Creditors
2,000
6,000
Bills Payable
2,000
-
            During the year Mr. Anand introduced Rs. 4,000 as further capital in the business. He has withdrawn cash Rs. 20,000 out of which he spent Rs. 15,000 on 1-10-2003 for purchase of scooter for business use.
            Adjustments:
(1)           Depreciate furniture @ 10% p.a.
(2)           Depreciate scooter @ 20% p.a.
(3)           Create provision for doubtful debts @ 5% of the debtors as on 31-03-2004.
(4)           Provide interest on capital at 10% p.a.
Prepare:
(1)           Statement of Affairs as on 31-03-2003.
(2)           Statement of Affairs as on 31-03-2004.
(3)           Statement of Profit or loss for the year ended 31-03-2004.
Opening Statement of Affairs as on 31-3-2003

Opening Statement of Affairs as on 31-3-2003
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Capital


Creditors
Bills Payable

46,000


2,000
2,000
Cash
Bank
Debtors
Stock
Furniture

5,000
15,000
10,000
8,000
12,000


50,000


50,000
Closing Statement of Affairs as on 31-3-2003
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Capital


Creditors

61,900


6,000
Cash
Bank
Debtors
Less: New R.D.D.
Stock
Scooters (1-10-03)
Less: Depreciation
Furniture
Less: Depreciation


8,000
  400

15,000
   1,500
12,000
  1,200
6,000
18,000

7,600
12,000

13,500

10,800


67,900


67,900

Statement of Profit or Loss for the year ended 31-3-2004
Particulars
Rs.
Rs.
Closing capital balance as on 31-3-04
Add: Drawings

Less: (1) Further capital introduced
         (2) Interest on capital

Less: Opening capital balance as on 31-3-2003



4,000
   4,600
61900
  20000
81900

8600
73300
46000
Profit

27300

Q. 6     From the following Receipt and Payment account of Patan Sports Association, Patan and the adjustments. You are required to prepare Income and Expenditure Account for the year ended 31st March, 2004 and a Balance sheet as on that date.    (16)
            Receipts and Payments Account for the year ended 31st March 2004.
Receipts
Amt. (Rs.)
Payments
Amt. (Rs.)
To Balance b/d
4,160
By Salaries
5,500
To Subscription:

By Entertainment Exp.
2,580
2003-04                16,000

By Lighting
1,000
2004-05                     412
16,412
By General Expenses
1,536
To Donation
2,000
By Taxes
500
To Receipt from Entertainment
3,644
By Investments
12,000
To Interest on Investment
324
By Printing & Stationery
944
To Entrance Fees
4,500
By Expenses of 2002-03
2,400
To Price Fund
3,000
By Fixed Deposit
4,000


By Bank Balance
3,000


By Balance c/d
580

34,040

34,040

Adjustments:
(1)           There are 450 members paying an annual subscription of Rs. 40 each.
(2)           Salary outstanding on 31st March, 2004 was Rs. 1,000.
(3)           Building stood in books Rs. 60,000 and furniture at Rs. 4,600 on 1st April, 2003. Write off depreciation on these assets @ 2% and 10% respectively.
(4)           Interest on investment @ 5% has accrued for 3 months.
(5)           The capital fund was Rs. 66,360 on 1st April, 2003.
(6)           60% of the entrance fee is to be capitalised.
Income & Expenditure A/c for the years ended 31-3-2004
Expenditure
Rs.
Rs.
Income
Rs.
Rs.
To Entertainment Exp.
To Salaries
Add: Outstanding
To Lighting
To General Expenses
To Taxes
To Printing & Stationery
To Depreciation
     Building
     Furniture

To Surplus

5,500
  1,000





1,200
    460
2,580

6,500
1,000
1,536
500
944


1,660

11198
By Donation
By Receipt from Entertainment
By Interest on Investment
Add: Interest
By Entrance Fees
Less: Capitalised
By Surplus




324
   150
4,500
  2,700
2,000
3,644



474

1,800
18,000



25,918


25,918
Balance Sheet as on 31-3-2004
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Capital Fund
Add: Entrance Fees

Add: Surplus

Price Fund
Outstanding Salary
Subscription paid in advance
66,360
   2,700
69,060
  11198




80258

3000
1000
412
Building
Less: Depreciation
Furniture
Less: Depreciation
Investments
Add: Interest
Fixed Deposit
Bank Balance
Cash
Subscription receivable
60,000
   1,200
4,600
    460
12,000
    150

58,800

4,140

12,150
4,000
3,000
580
2,000


84670


84670

Q. 7     From the following Trial Balance of Kamlesh and Maharajan and given adjustments, prepare a Trading Account, Profit and Loss account for the year ended 31stMarch, 2007 and a Balance Sheet as on that date.                                                                 (20)
Dr.                               Trial Balance as on 31st March 2007                                           Cr.
Particulars
Amt. (Rs.)
Particulars
Amt. (Rs.)
Opening Stock
45,000
Capital A/c

Purchases
2,25,000
    Kamlesh
25,000
Plant and Machinery
75,000
    Mahajan
20,000
Carriage
16,800
Sales
4,50,000
Factory Rent
1,500
Discount Received
750
Insurance
1,050
Sundry Creditors
15,000
Sundry Debtors
60,000
Bad debts Reserve
200
Office Rent
3,000
Bills Payable
2,000
Printing & Stationery
600


Advertisement
15,000


Bills Receivable
3,000


Drawings:  Kamlesh
3,500


                 Mahajan
2,500


Salaries
18,000


Wages
20,000


Furniture
7,500


Royalty
1,000


Cash at Bank
14,500



5,12,950

5,12,950
The following adjustment are required:
(1)           Closing stock was valued at Cost price Rs. 35,000 and Market Price 40,000.
(2)           Plant– Machinery & Furniture are to be depreciated at 6% & 10% p.a respectively.
(3)           Maintain Reserve for Doubtful Debts @ 2 ½ % on Sundry Debtors.
(4)           Outstanding Expenses:  Factory Rent Rs. 300;           Office Rent Rs. 600.
(5)           Interest on capital to be allowed at 6% p.a.
(6)           Prepaid insurance was Rs. 100.
Trading Account for the year ended 31-3-2007
Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Opening Stock
To Purchases
To Carriage
To Factory Rent
Add: Outstanding
To Wages
To Royalty
To Gross Profit c/d



1,500
     300
45,000
2,25,000
16,800

1,800
20,000
1,000
1,75,400
By Sales


By Closing Stock

4,50,000


35,000


4,85,000


4,85,000
Profit and Loss A/c for the year ended 31-3-2007
Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Insurance
Less: Prepaid
To Office Rent
Add: Outstanding
To Printing & Stationery
To Advertisement
To Salaries
To Bad Debts
Add: New Bad Debts

Add: New R.D.D.

Less: Old R.D.D.

To Depreciation
Plant & Machinery
Furniture
To Interest on Capital
Kamlesh
Mahajan
To Net Profit
Kamlesh
Mahajan
1,050
    100
3,000
    600



-
          -
-
   1,500
1,500
     200


4,500
    750

1,500
   1,200

64,375
64,375

950

3,600
600
15,000
18,000





1,300



5,250


2,700


1,28,750
By Gross Profit b/d
By Discount Received

1,75,400
750


1,76,150


1,76,150
Balance Sheet as on 31-3-2007
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Capital
Kamlesh
Mahajan

Sundry Creditors
Bills Payable
Outstanding Expenses
Factory Rent
Office Rent

87,375
  83,075




300
    600


1,70,450

15,000
2,000


900
Plant & Machinery
Less: Depreciation
Sundry Debtors
Less: New R.D.D.
Bills Receivable
Furniture
Less: Depreciation
Cash at Bank
Closing Stock
Prepaid Insurance
75,000
   4,500
60,000
  1,500

7,500
   750

70,500

58,500
3,000

6,750
14,500
35,000
100


1,88,350


1,88,350
Partner’s Capital A/c
Particulars
Kamlesh
Mahajan
Particulars
Kamlesh
Mahajan
To Drawings

To Balance c/d
3,500

87,375
2,500

83,075
By Balance b/d
By Interest on Capital
By Net Profit b/d
25,000
1,500

64,375
20,000
1,200

64,375

90,875
85,575

90,875
85,575




OMTEX CLASSES
I ST PRELIMINARY EXAMINATION
BOOK KEEPING & ACCOUNTANCY
GROUP: A
TIME: - 3 HRS
DATE: - 16.11.2010
DAY -  TUESDAY
MARKS: -100


Q1. Answer Any four of the following.                                           (20 marks)

A. Answer the following.      (5)

  1. What is Balance Sheet?
Ans. A balance sheet is a statement showing the financial position of the business in the form of its assets and liabilities on a particular date.


  1. Who is co – venture?
Ans. A co – venture is a temporary partner of joint – venture business only.


  1. What is Super Profit?
Ans. Super profit is the profit earned over and above the normal return on the capital employed by the business firm.


  1. What is Endorsement of Bill?
Ans. Endorsement of a bill is the holder’s signing on its back with the intention of transferring its title or ownership to another.


  1. What is Good will of the firm?
Ans. Goodwill is the monetary value of the reputation of a firm as measured in terms of its expected future profits. 

B. Write word/term/phrase which can substitute each of the followings:         (5)

  1. Reputation of a firm expressed in terms of money. 
Ans. Goodwill.

  1. Payment of expenses before they have become due.
Ans. Prepaid Expenses.

  1. Payment of bill of exchange before its due date at rebate.
Ans. Retirement of Bill of Exchange.

  1. The person on whom the bill of exchange is drawn.
Ans. Drawee.

  1. The account that is credited when depreciation is charged.
Ans. Respective Assets Account.


C. Match the pairs.    (5)

A

B (Answers)
1.
2.
3.
4.
5.
Depreciation
Dishonour of bill
Joint Venture
Goodwill
Co – Ventures
1.
2.
3.
4.
5.
Wear and tear
Notary Public
Temporary partnership
Intangible Asset
Temporary Partners



D. Select the most appropriate alternative from those given below:     (5)


  1. Debit Balance in Profit and Loss Account shows _______________
    1. Net profit
    2. Gross profit
    3. Net loss
    4. Gross loss
  2. A bill of exchange must be accepted by ___________________
    1. A drawer
    2. A payee
    3. An endorsee
    4. A drawee
  1. At the end of the financial year balance of Depreciation account is transferred to _______________
    1. Depreciation account
    2. Asset account
    3. Trading account
    4. Profit and loss account.
  1. In the absence of partnership deed the partners share the profit and loss of the firm _____________
    1. In the ratio of capital
    2. Equally
    3. As per rights in management
    4. On the basis of experience.

  1. ____________ has to ultimately bear the noting charges.
    1. Drawer
    2. Drawee
    3. Endorser
    4. Bank


E. State True / False with reasons. (Any Two)        (5)
  1. Under fixed capital method for each partner two accounts are maintained.
Ans. The given statement is true because of the following reasons.
i.                    Under fixed capital method each and every transactions of partners are transferred to their current account and not in their capital account.
ii.                  It becomes compulsory for the partners to maintain two accounts for their transactions. Once is capital account to record additional capital introduced and current account as well.
  1. Under fixed instalment method depreciation is charged on the diminishing value of the asset.
Ans. The above statement is false because of the following reasons.
i.                    Under fixed instalment method depreciation is charged on the original value of the assets and the amount of depreciation will remain constant for each year.
ii.                  Under Diminishing balance method only the depreciation on fixed asset is charged on the written down value of fixed asset every year.
  1. Interest on partner’s drawings is debited to Profit and loss appropriation account.
Ans. The above statement is false because of the following reasons.
i.                    Profit and loss appropriation account is another profit and loss account prepared especially to record the transactions pertaining to the partners.
ii.                  Thus Interest on Partner’s drawings is credited to the profit and loss account (or) profit and loss appropriation account and it will be debited to Partners capital account in the case of fluctuating capital method and to Partners  current account in the case of fixed capital method.


F. Prepare a bill of exchange from the following information:
Drawer: Vilas Patil, 21. M.G. Road, Pune
Drawee: Vikas Pawar, 31. S.V. Road, Nasik.
Payee: Viraj Potade, 41, A.B. Road, Sholapur,
Period: 2 months
Amount: Rs. 7,500/-
Date of Bill: 1st January, 2007.
                        Date of acceptance: 3rd January, 2007. 
ANS. 


Q2.               Ravindra Trading company. Ambajogai Purchased machinery for Rs. 55,000/- on 1st April, 1996 and spent Rs. 5,000/- on its fixation and erection. In the same year on 1st October, additional machinery costing Rs. 40,000/- was purchased. On 1st October, 1998 the machinery purchased on 1st April, 1996 became obsolete and was sold for Rs. 43,000/- On 1st January, 1999, a new machinery was also purchased for Rs. 20,000.
                    Depreciation was provided annually on 31st March at the rate of 10% per annum on Fixed Instalment Method. Prepare Machinery A/c and Depreciation A/c for the years 1996 – 97, 1997-98, 1998-99. (March 2005 Board exam Question).
Ans.

M/s Ravindra Trading Co.
Machinery Account.

Date
Particulars
J
F
Amount
Date
Particulars
J
F
Amount
1.4.1996
To cash / bank a/c
[machinery purchased]

55000
31.3.1997
By Depreciation a/c

8000
1.4.1996
To cash / bank a/c
[fixation and erection]

5000




1.10.1996
To cash / bank a/c
[marhinery purchased]

40000
31.3.1997
By Balance c/d

92000



100000



100000
1.4.1997
To balance b/d

92000
31.3.1998
By depreciation a/c

10000




31.3.1998
By balance c/d

82000



92000



92000
1.4.1998
To balance b/d

82000
1.10.1998
By depreciation a/c

3000




1.10.1998
By cash/ bank a/c
[Machinery sold]

43000




1.10.1998
By profit / loss a/c
[ loss on machinery sold]

2000




31.3.1999
By depreciation a/c

4500




31.3.1999
By balance c/d

49500



102000



102000
1.4.1999
To balance b/d

49500







Depreciation account


Date
Particulars
J
F
Amount
Date
Particulars
J
F
Amount
31.3.1997
To machinery a/c

8000
31.3.1997
By profit & loss a/c

8000



8000



8000








31.3.1998
To Machinery a/c

10000
31.3.1998
By profit & loss a/c

10000



10000



10000
1.10.1998
To Machinery a/c

3000




31.3.1999
To Machinery a/c 

4500
31.3.1999
By profit & loss a/c
(balancing figure)

7500



7500



7500
OR
Q2. (A) The books of a business showed that the capital employed on 31st December, 1992 was Rs.1, 00,000/-. Profits for the last five years are_1988, 1989, 1990, 1991 & 1992 were Rs, 60,000, Rs, 55,000, Rs, 75,000, Rs, 85,000 & Rs, 65,000 respectively. Goodwill is valued at 2 years purchase of the Super profit of the business. NRR is 10%.


Q2. (B) Importance of computer in accounting.  
Ans.

The role of computer in accounting is explained as follows.  

1.       For various reasons, every business organization is required to prepare and maintain various books of account. The computer is used by many business organizations to carry out accounting operations at a greater speed and accuracy.
2.      The computer is useful for classifying, processing, analyzing, tabulating, recording and interpreting the accounting data for various purposes.
3.      It is useful for improving the financial system of the organization.
4.      With the help of the computer, accountants can easily, accurately and speedily prepare the different source documents like voucher, invoice, quotation, receipt, etc.
5.      The computer is useful for recording accounting entries in the journal and posting such entries in the ledger. It is also used to prepare trial balance, final account, accounting statements like Balance sheet, etc. 


Q3. Anil sold goods to Ravindra for Rs. 6000. Ravindra accepted Anil’s bill for Rs. 6000 payable after 3 months. After a month, Anil discounted the bill with his bank at 10% p.a. On the due date, Ravindra dishonoured his acceptance. Ravindra paid Rs. 3000 to Anil and accepted a fresh bill for 3 months for the balance including interest @ 8% p.a. Anil sent the bill to bank for collection. On due date, Ravindra honoured the bill. Pass the journal entries in the books of Anil. (October 2002 board exam questions).

Ans.
Journal of Anil
Date
Particulars
L
F
Debit
Credit
? 1
Ravindra’s A/c………Dr.
  To Sales A/c
(Being the goods are sold)

6000

6000
2
Bills Receivable A/c ……… Dr.
    To Ravindra’s A/c
(Being the bill is drawn)

6000

6000
3
Cash/ Bank A/c ……… Dr.
Discount A/c ………… Dr.
  To Bills Receivable A/c
(being the bill is discounted)

5900
100


6000
4
Ravindra’s A/c ……… Dr
  To Cash/Bank A/c
(being the bill is dishonored)

6000

6000
5
Cash/ bank a/c………… Dr
 To Ravindra’s A/c
(being the part payment is made)

3000

3000
6
Ravindra’s A/c ……… Dr.
  To Interest a/c
(being the interest is charged on balance amount)

60

60
7
Bills Receivable A/c ………… Dr.
  To Ravindra’s A/c
(being the new bill is drawn along with interest)

3060

3060
8
Bank for collection A/c ……… Dr.
  To Bills Receivable a/c
(being the bill is send to bank for collection)

3060

3060
9
Cash/ bank a/c ……… Dr.
 To Bank for collection a/c
(being the sent to bank for collection bill is honored) 

3060

3060

OR

Q3. Journalize the following transactions in the books of Motilal:
a.        Bhavna informed Motila that Jyoti’s acceptance for Rs. 3600 endorsed to Bhavna has been dishonoured and noting charges have been Rs. 150.
b.       Anil renews his acceptance to Motilal for Rs. 3400 by paying Rs. 900 in cash and accepting a new bill for the balance plus interest at 8% p.a. for 3 months.
c.        Prabhakar retired his acceptance to Motilal for Rs. 4000 by paying Rs. 3850 in cash.
d.       Bank informed Motilal that Arun’s acceptance of Rs. 7000 which was discounted with bank has been dishonoured with noting charges Rs. 100. (March 2008 board exam questions)

Ans. 



Date
Particulars
L
F
Debit
Credit
a
Jyoti’s A/c ……… Dr.
  To Bhavna’s
(being the endorsed bill is dishonored along with noting charges)

3750

3750
b  i. 
Anil’s A/c ……… Dr.
  To Bills Receivable a/c
(being the bill is dishonored)

3400

3400
ii.
Cash / bank a/c ……… Dr.
 To Anil’s a/c
(being the part payment is made)

900


900
iii.
Anil’s A/c ……… Dr.
To Interest A/c
(being the interest is charged on balance amount)

50

50
iv.
Bills receivable a/c ……… Dr.
To Anil’s A/c
(being the new bill is drawn along with interest)

2550

2550
c
Cash/ bank a/c ……… Dr.
Rebate’s A/c ……… Dr.
  To Bill’s Receivable A/c
(being the bill is retired)

3850
150


4000
d
Arun’s A/c ………… Dr.
 To Cash/ bank A/c
(bein the discounted bill is dishonored along with noting charges)

7100

7100


Q4. Ajay and Abhijeet were partners in a Joint Venture sharing profits and losses in the proportion of 4/5 and 1/5 respectively. Ajay supplied goods to the value of Rs. 25000 and incurred expenses amounting to Rs. 2700. Abhijeet also supplied goods to the value of Rs. 7000 and his expenses amounted to Rs. 400. Abhijeet sold all the goods for Rs. 46000. Abhijeet is entitled to a commission at 5% on sales. Abhijeet settled Ajay’s account by bank draft. Prepare Joint venture account and Abhijeet account in the books of Ajay. (March 2006 board exam questions.)  
In the books of Ajay
Joint venture account
Particulars
Amount
Amount
Particulars
Amount
Amount
To Goods a/c
To cash/bank a/c
To Abhijeet’s a/c
To Abhijeet’s a/c
To Abhijeet’s a/c
To profit on joint venture transferred to 
 Profit / loss A/c
Abhijeet’s A/c






6880
1720
25000
2700
7000
400
2300


8600
By Abhijeet’s A/c 

46000


46000


46000

Abhijeet’s Account
Particulars
Amount
Amount
Particulars
Amount
Amount
To Joint venture a/c

46000
By Joint venture a/c
By Joint venture a/c
By Joint venture a/c
By Joint venture a/c
(profit)
By cash/ bank a/c
(balancing figure)

7000
400
2300
1720

34580


46000


46000



Q5. Mrs. Archana keeps her books on single entry system and gives the following information: (March 2008 board exam question)
Particulars
31.3.2006
31.3.2007
Cash at bank
Sundry debtors
Stock in trade
Furniture
Machinery
Bills payable
Sundry creditors
5000
25000
30000
20000
50000
5000
15000
32000
40000
50000
20000
50000
5000
20000

Further information:
1.      Mrs. Archana withdrew from business Rs. 15000 for personal use.
2.      She further introduced fresh capital of Rs. 25000.
3.      Depreciation is to be charged @ 10% p.a. on Furniture and Machinery.
Prepare : (1) statement of affairs as on 31.3.2006. (2) statement of affairs as on 31.3.2007. (3) statement of profit and loss for the year ended on 31.3.2007.
ANS.
In the books of Mrs. Archana
Statement of affairs as on 31st March, 2006
Liabilities
Amount
Assets
Amount
Bills payable
Sundry creditors
Capital at the beginning of the year
5000
15000
110000
Machinery
Furniture
Stock in trade
Sundry debtors
Cash at bank
50000
20000
30000
25000
5000

130000

130000
Statement of affairs as on 31st March, 2007
Liabilities
Amount
Assets
Amount
Bills payable
Sundry creditors
Capital at the end of the year
5000
20000
167000
Machinery
Furniture
Stock in trade
Sundry debtors
Cash at bank
50000
20000
50000
40000
32000

192000

192000
Statement of profit or loss for the year ended 31st March, 2007
Particulars
Amount
Capital at the end of the year
167000
Add: Drawings
15000

Less: Additional capital introduced
182000
25000

Less: Capital at the beginning of the year
157000
110000
GROSS PROFIT

Less: Depreciation
On Machinery = (50000)(10/100)(12/12) = 5000
On Furniture  = (20000)(10/100)(12/12)=2000
47000



7000
NET PROFIT          
40000

Q6. Sanjay, Ajay and Vijay undertook the construction of building at a contract price of Rs. 6,00,000 payable in cash Rs. 4,00,000 and in the form of debentures of company Rs. 2,00,000. They shared profits and losses in the ration of 3:2:1 respectively. They opened a Joint Bank account wherein they deposited the following amounts. Sanjay Rs. 3,00,000, Ajay Rs. 2,00,000 and Vijay Rs. 1,00,000.
The following payments are made out through Joint bank account.
1.      Purchase of materials Rs. 2,50,000.
2.      Payment of wages Rs. 77,000.
3.      Purchase of plant Rs. 45,000 and
4.      Other charges Rs. 11,000.
Sanjay bring the truck of Rs. 40,000. Ajay brings in the material of Rs. 55,000. Vijay brings mixer worth Rs. 10,000. At the close of venture the unused materials were taken by Sanjay for Rs. 5,000. Ajay took over the mixer and plant for Rs. 27,000. The truck was sold in the market for Rs. 22,000. The contract price was received as per ther agreement and Vijay agreed to take over the debentures at Rs. 1,90,000.
Prepare : Joint venture account, Joint Bank account and Co – ventureres account. (March 2008 board exam questions)
In the books of Joint venture
Joint venture account
Particulars
Amount
Amount
Particulars
Amount
Amount
To Join bank a/c
Materials
Wages
Plant
Other charges
To Sanjay’s A/c
(Truck)
To Ajay’s A/c
(materials)
To Vijay’s A/c
(mixture)
To Debentures A/c
(discount on debenture)
To profit on joint venture transferred to
Sanjay
Ajay
Vijay

250000
77000
45000
11000










78000
52000
26000




383000
40000

55000

10000

10000





156000
By Joint Bank a/c
(contract price)
By Debentures a/c
(contract price)
By joint bank a/c
(truck sold)
By Sanjay’s A/c
(Materials taken over)
By Ajay’s A/c
(Mixer and plant)


400000

200000

22000

5000


27000

654000


654000



CO – VENTURERS’ ACCOUNT
Particulars
Sanjay
Ajay
Vijay
Particulars
Sanjay
Ajay
Vijay
To Joint venture a/c
To debenture a/c
To joint bank a/c
5000

413000
27000

280000

190000
By joint bank a/c
By joint venture A/c
By joint venture A/c
By joint Bank A/c
300000
40000
78000

200000
55000
52000
100000
10000
26000
54000
418000
307000
190000
418000
307000
190000

Joint Bank A/c
Particulars
Amount
Particulars
Amount
To Sanjay’s A/c
To Ajay’s A/c
To Vijay’s A/c
To joint venture A/c
To Joint Venture A/c
To Vijay’s A/c
300000
200000
100000
400000
22000
54000
By joint venture a/c
By Sanjay’s A/c
By Ajay’s A/c
383000
413000
280000
1076000
1076000
Debentures A/c
Particulars
Amount
Particulars
Amount
To Joint venture A/c
200000
By Vijay’s A/c
By Joint Venture A/c
(balancing figure)
190000
10000
200000
200000



Q7.  Following is the Trial Balance of Premlal and Sundarlal as on 31st March 2006.
Trial balance as on 31st March, 2006.
Particulars
Amount
Particulars
Amount
Stock on 1-4-2005
Purchases
Drawings: Premlal
Sundarlal
Sales return
Wages : productive
Unproductive
Salaries
Rent, rates and insurance
Bad debts
Discount allowed
Machinery
Building
Sundry debtors
Cash
Government bonds
90000
225000
33000
30000
7200
10500
1800
18600
10200
1200
3900
45000
108600
153000
1000
2000
Sales
Purchase returns
Discount received
Sundry creditors
Capital : Premlal
Sundarlal
Bank overdraft
375000
3000
3000
90000
105000
135000
30000

741000

741000
1.      Closing stock was valued on 31.3.2006 at market price Rs. 60,000 which was 20% above its cost price.
2.      Outstanding productive wages Rs. 600
3.      Rent, Rates and insurance include insurance Rs. 1600 paid for one year ending on 30th June 2006.
4.      Maintain Reserve for doubtful debts at 5% on debtors.
5.      Depreciate buildings by 5% and machinery at 10% p.a.
6.      Goods costing Rs. 2500 were distributed as free samples for which no record has been made in the books.
7.      Six months interest is due on Bank Overdraft at 10% p.a.
Prepare trading and profit and loss account for the year ended 31st March 2006 and Balance Sheet as on that date. (September 2008 board exam questions)
In the books of Premlal and Sunderlal
Trading account for the year ended 31st March, 2006.
Particulars
Amount
Amount
Particulars
Amount
Amount
To opening stock
To purchases
(-)return
To productive wages
(+) outstanding
To Gross profit c/d

225000
(3000)
10500
600

90000

222000

11100
97200
By sales
(-) return
By goods distributed as free samples
By closing stock
375000
(7200)

367800
2500
50000


420300


420300
Profit and loss account for the year ended 31st March, 2006
Particulars
Amount
Amount
Particulars
Amount
Amount
To Salaries
To unproductive wages
To rent, rates and insurance
(-) prepaid insurance
To bad debts
(+) FBD
(+)NRDD
(-) ORDD
To discount allowed
To advertisement
To depreciation:
Buildings
Machinery
To interest on bank over draft
To net profit c/d
Premlal
Sundarlal


10200
(400)
1200
NIL
7650
NIL



5430
4500


21660
21660
18600
1800

9800



8850
3900
2500


9930
1500


43320
By gross profit b/d
By discount received

97200
3000


100200


100200

Partners’ capital accounts
Particulars
Premlal
Sunderlal
Particulars
Premlal
Sunderlal
To drawings
To balance c/d
33000
93660
30000
126660
By balance b/d
By Net profit b/d
105000
21660

135000
21660
126660
156660
126660
156660

Balance sheet as on 31st March, 2006
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Capital account
Premlal
Sunderlal
Sundry creditors
Bank overdraft
Add: interest
Outstanding productive wages

93660
126660

30000
1500



220320
90000

31500
600
Buildings
(-) Deprn@5%
Machinery
(-) Deprn@10%
Sundry Debtors
(-) N.R.D.D. @5%
Closing stock
Cash
Prepaid insurance
Government Bonds
108600
5430
45000
4500
153000
7650

103170

40500

145350
50000
1000
400
2000

342420

342420