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Srinivas University, 1st SEMESTER-BBA, Name of the Program: Bachelor of Business Administration (BBA), Course Code: 21BBAHN/LS/PM/HA/PA/CMA/IB21, Name of the Course: BUSINESS ACCOUNTING-1, Course Credits, 4 Credits, , No. of Hours per Week, 4Hrs, , Total No. of Teaching Hours, 45Hrs, , Pedagogy: Class rooms lecture, tutorials, Group discussion, Seminar, Case studies & field, work etc.,, Course Objectives., , , , , To Prepare financial statements in accordance with appropriate standards., Interpreting the business implications of financial statement information, Preparing accounting information for planning and control and for the evaluation of, products, projects and divisions., , , , Analysing transaction data and tax authorities for purposes of tax planning., , , , Applying auditing concepts to evaluate the conformity of financial statements with, appropriate auditing standards., Course Outcomes: On successful completion of the course, the students will be able., CO: 1 To gain knowledge on accounting concepts, CO: 2 Equip themselves with necessary skills from learning these concepts theoretically and, practically., Syllabus:, Hours, Module No.1: Theoretical Framework, 08, Business Accounting: Nature-scope-limitation- Accounting: Concepts and convention,, Accounting standard-significance and importance- IFRS-Needs and procedures, Difference, between IAS and AS., Module No.2: Accounting Process, 08, Accounting process- Classification of Accounting Transactions and Accounts- Rules of Debit, and Credit as Per Double Entry System- Journal Entries- Ledger posting – Subsidiary BooksCash Book., 08, Module No.3: Depreciation, Deprecation Account- Meaning-Causes- Depreciation V/s Fluctuations, Methods of, Depreciation – Problems on Straight line method, written down value method and Annuity, method., Module No. 4: Bank Reconciliation Statement and Rectification of Error, 08, Bank Reconciliation - Meaning, causes of differences, need & importance, preparation &, presentation of BRS, Rectification of errors: Classification of errors- before preparing the trial balance after, preparing the trial balance and before preparing final accounts, Module No 5: Final Accounts of Sole Proprietorship, 08, , Business Accounting-1, , 2

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Srinivas University, , 1st SEMESTER-BBA, , Final Accounts of sole proprietorship- Preparation of Trading, Account, profit and Loss A/C and Balance Sheet (with Basic, Adjustments)., Books for Reference:, 1., 2., 3., 4., 5., 6., 7., , Advanced Accountancy, Advanced Accountancy, Advanced Accountancy, Advanced Accountancy, Accounting – 1, Advanced Accountancy, Advanced Accounting, , Business Accounting-1, , - R.L. Gupta, - S.N. Maheshwari and S.L. Maheshwari, - M.C. Shukla, - B.S. Raman, - B.S. Raman, - Jain and Narang, - Dr B.M Agarwal and Dr. M.P Gupta, , 3

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Srinivas University, , 1st SEMESTER-BBA, , Teaching Plan, , SESSION, , CONTENT, , TIME, 1, , Module No.1, , Theoretical Framework, , Session 1:, , Introduction to Business Accounting, , 1, , Session 2:, , Meaning, definition and features of Business Accounting, , 1, , Session 3:, , Nature, scope and limitation of Business accounting, , 1, , Session 4:, , Accounting: objectives, role or function and terms, , 1, , Session 5:, , Accounting principles, Accounting Concepts and convention, , 1, , Session 6:, , Accounting Standard: list, Significance and, importance of accounting standard, , 1, , Session 7:, , IFRS- meaning, need and procedures, , 1, , Session 8:, , Difference between, IAS and AS, , 1, , Module No.2:, , Accounting Process, , Session 9:, , Classification of Accounting transactions and Accounts, , 1, , Session 10:, , Double entry system: Meaning, objectives, and advantages, , 1, , Session 11:, , Classification of Accounts and rules of debit and credit as per, double Entry system, , 1, , Session 12:, , Journal Entries: Meaning and steps, , 1, , Session 13:, , Journal Entries: Meaning and steps, , 1, , Business Accounting-1, , 4

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Srinivas University, , 1st SEMESTER-BBA, , Session 14:, , Ledger: Meaning. Relationship between journal and Ledger,, advantages, procedure for posting and Problems on ledger, , 1, , Session 15:, , Problems on posting journal into ledger, , 1, , Session 16:, , Subsidiary books and cash book, , 1, , Module No.3:, , Depreciation, , Session 17:, , Meaning, definition and causes of Depreciation, , 1, , Session 18:, , Difference between Depreciation and Fluctuations, Methods of, Depreciation, , 1, , Session 19:, , Problems on Straight line method, , 1, , Session 20:, , Continuation of problems on Straight line method, , 1, , Session 21:, , Problems on written down value, method, , 1, , Session 22:, , Problems on written down value method, , 1, , Session 23:, , Problems on Depreciation fund Method, , 1, , Session 24:, , Continuation of problems on Depreciation fund Method, , 1, , Module No .4:, , Bank Reconciliation Statement and Rectification of Errors, , Session 25:, , Meaning, Definition, Need and importance of BRS, , Session 26:, , Causes of differences between cash book and pass book, , Session 27:, , Preparation and presentation of bank reconciliation statement, , 1, 1, 1, 1, , Session 28 :, , Problems on BRS, , 1, Session 29:, , Rectification of errors: Classification of errors, , Business Accounting-1, , 5

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Srinivas University, , 1st SEMESTER-BBA, , 1, Session 30:, , Problems on Rectification of errors, , Session 31:, , .Continuation of problems on Rectification of errors, , Session 32:, , Continuation of problems on Rectification of errors, , Module No .5:, , Final Accounts of Sole Proprietorship, , Session 33:, , Meaning, definition and objectives, , Session 34:, , Preparation of profit and losses, , Session 35:, , Preparation of balance sheet, , Session 36:, , Problems on profit and losses, , Session 37:, , Problems on profit, losses and balance sheet, , Session 36:, , Continuation on problems on profit, losses and balance sheet, , Session 37:, , Continuation on problems on profit, losses and balance sheet, , Session 38:, , Problems with basic adjustment, , 1, 1, 1, 1, 1, 1, 1, 1, 1, , Business Accounting-1, , 1, 1, , 6

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Srinivas University, , 1st SEMESTER-BBA, CONTENTS, , SL No., , Chapters (Question Bank), , THEORETICAL FRAMEWORK, , 1, , ACCOUNTING PROCESS, , 2, , DEPRECIATION ACCOUNTING, , 3, , 4, , BANK RECONCIALIATION STATEMENT AND RECTIFICATION OF, ERRORS, , 5, , Business Accounting-1, , FINAL ACCOUNTS OF A SOLE TRADER, , 7

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Srinivas University, , 1st SEMESTER-BBA, , UNIT I, THEORETICAL FRAMEWORK, Multiple Choice Questions:, 1. Accounting is emerged by, a. Developed country, , b. Under developed country, , c. Developing country, , d. a & b, , 2. In India in his Arthashastra has emphasized the existence and need of proper accounting and, auditing., a. Chanakya, , b. Northcot, , c. Eric Kohler, , d. None of the above, , 3. "Accountancy is the theory and practice of accounting" is given by, a. Eric Kohler, , b.Chanakya, , c. Northcot, , d. None of the above, , 4. Amount invested by the owner of the business is, a. Asset, , b. Capital, , c. Liability, , d. Income, , 5. Amount receivable or realised from sale of goods, a. Revenue, , b. Income, , c. Income and Revenue, , d. None of the above, , 6. A person who receives a benefit without giving money but liable to pay in future, a. Debtor, , b. Creditor, , c. Bank, , d. Proprietor, , 7. A person who gives a benefit without receiving money or money„s worth immediately but, claim in future, a. Debtor, , b. Creditor, , c. Bank, , d. Proprietor, , 8. Amount of cash or value of goods withdrawn from the business by the proprietor for personal, use, a. Capital, , b. Drawings, , Business Accounting-1, , c. Profit, , d. Dividend, , 8

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Srinivas University, , 1st SEMESTER-BBA, , 9. AS 19 is, a. Leases, , b. Intangible asset, , c. Earnings per share, , d. Segment reporting, , 10. AS 26 is, a. Leases, , b. Intangible asset, , c. Earnings per share, , d. Segment reporting, , 11. AS 10 is, a. Accounting for fixed asset, amalgamations, , b. Accounting for investments, , c. Accounting for, , d. Segment reporting, , 12. AS 13 is, a. Accounting for fixed asset, amalgamations, , b. Accounting for investments, , c. Accounting for, , d. Segment reporting, , 13. IFRS originated in the, a. India, , b. European Country, , c. U.S.A, , d. China, , 14. Abriavation of IFRSa. International financial reporting standard, c. International financial reporting system, , b. Indian financial reporting standard, , d. None of the above, , 15. The IFRS was announced bya. ICAI b. ICA, , c. ICAC, , d. IACA, , 16. Which concept of accounting tells that business is separate from ownera. Business entity concept, , b. Cost concept, , c. Objective evidence concept, , d. Money measurement concept, , 17. The art of recording in the books of account the monetary aspect of commercial and, , Business Accounting-1, , 9

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Srinivas University, , 1st SEMESTER-BBA, , financial transactions is, a. Accounting, , b. Accountancy, , c. Book-keeping, , d. All the above, , 18. Assets those are having physical existence is, a. Tangible asset, , b. Intangible asset, , c. Liabilities, , d. All the above, , 19. When the goods are returned from the customers due to defective quality is, a. Sales return, , b. Purchase return, , c. Return outward, , d. Returns, , 20. An acknowledgement for cash received is, a. Receipt, , b. Invoice, , c. Voucher, , d. Revenue, , 21. Accounting provides information on, a. Cost and income for manager„s, , b. Company„s tax liability for a particular year, , c. Financial conditions of an institution, , d. All of the above, , 22. The principles or rules which provide a rationale for accounting practices, a. Accounting concepts, , b. Accounting conventions, , c. Accounting principles, , d. None of these, , 23. They are the customs, usages or practices followed by accountants a guide in the, preparation of financial statements is, a. Accounting concepts, , b. Accounting conventions, , c. Accounting principles, , d. None of these, , 24. Accounting concepts are, a. Convention of materiality, , b. Convention of conservatism, , c. Legal aspect concept, , d. None of the above., , 25. The fundamental ideas or basic assumptions underlying the theory and practice, Business Accounting-1, , 10

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Srinivas University, , 1st SEMESTER-BBA, , accounting is, a. Accounting concepts, , b. Accounting conventions, , c. Accounting principles, , d. None of these, , 8 Marks Questions:, 1. Define Accounting? Explain the essential aspects of Accounting?, Ans: According to the American Accounting Association (AAA), "Accounting is the process of, identifying, measuring and communicating economic information to permit informed judgments‟, and decisions by users of the information"., The essential aspects of Accounting are as follows,, (i) Identifying, (ii) Measuring, (iii) Recording, (iv)Classifying, (v) Summarizing, (vi) Analyzing, (vii) Interpreting, (viii) Communicating, 2. What is Book-Keeping? Explain the essential aspects or features of Book-Keeping?, Ans: According to Northcot, "Book-Keeping" is the art of recording in the books of account the, monetary aspect of commercial and financial transactions"., The features of Book Keeping are as follows,, i) Book-keeping is the recording of only business transactions., ii) It is the recording of only the monetary or financial aspects of business transactions, iii) It is the recording of business transactions in terms of money., iv)It is the recording of business transactions in a set of books known as books of account or, account books., v) Book-keeping covers certain processes, viz., identifying the business transactions to be, recorded, measuring those business transactions in terms of money, recording the identified and, measured business transactions in the book or books of original entry., 3. Explain the objectives of accounting?, Business Accounting-1, , 11

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Srinivas University, , 1st SEMESTER-BBA, , (i) Maintaining proper records of business transactions, (ii) Ascertaining the profit or loss of the business, (iii) Knowing the sources of revenue and the items of expenses, (iv)Ascertainment of the financial position of the business, (v) Ascertaining the amounts due to the business, and the amounts due from the business, (vi)Ensuring effective control over the performance of the business, (viii) Prevention of errors and frauds, (ix) Satisfying legal requirements, (x) Making financial information available to various groups of persons, 4. Explain the classification of accounting principles?, Traditionally, accounting principles have been classified as:, 1. Accounting concepts, 2. Accounting conventions, Accounting concepts:, a. Business Entity Concept, b. Money Measurement Concept, c. Objective Evidence Concept, d. Historical Record Concept, e. Cost Concept, Accounting conventions:, a. Convention of consistency, b. Convention of conservatism, c. Convention of full disclosure, d. Convention of materiality, 5. What is Accounting Standards? Explain the benefits and limitations of Accounting, Standard?, Accounting standards are the policy documents or written statements issued, from time to time,, by an apex expert accounting body in relation to various aspects of measurement, treatment and, disclosure of accounting transactions or events for ensuring uniformity in accounting practices, and reporting., Benefits of setting accounting standards, Business Accounting-1, , 12

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Srinivas University, , 1st SEMESTER-BBA, , (i) Standardisation of alternative accounting treatments, (ii) Requirements for additional disclosures, (iii) Comparability of financial statements, Limitations of setting of accounting standards:, (i) Difficulties in making choice between different treatments, (ii) Lack of flexibilities, (iii) Restricted scope, 6. What are the importances of accounting standards?, a. Lays down uniform accounting policies & practices which are to be followed by all business, enterprises in respect of particular transactions or events., b. If uniform accounting standards are followed by all business concerns in the preparation of, accounts & in the presentation of financial statements, the financial statements of various, business concerns become comparable., c. Accounting standards would curb the unlimited flexibility in the adoption of accounting, policies & practices., d. Financial statements, prepared in accordance with established accounting standards, would be, useful to investors in judging the yield & risk involved in alternative investments in different, companies & in different countries., e. Financial statements, produced on the basis of established accounting standards, will be, reliable documents for the purpose of analysis & in interpretation by analysis, researchers &, consultants for economic forecasting & planning., f. It improves the credibility & reliability of accounting information., g. It raises the standards of auditing in its task of reporting on the financial statements & make, charted accountants ensure commitment & integrity in their profession., h. Accounting reports produced in accordance with established accounting standards are, regarded by government officials, tax authorities etc...As quite reliable & accept., 8 Marks Questions:, 1. Define Accounting and its objectives?, In the words of Eric Kohler, "Accountancy is the theory and practice of accounting"., From these definitions, it is clear that accountancy is a discipline (i.e., a body of, Business Accounting-1, , 13

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Srinivas University, , 1st SEMESTER-BBA, , knowledge or a subject of study) which explains the art and principles of recoding business, transactions. In other words, accountancy is the science of accounting, which explains, why books of accounts should be maintained, how to maintain the books of accounts,, how to prepare thefinancial statements, how to interpret the financial statements, and how, to communicate theresults of the interpretation to the end-users., OBJECTIVES OF ACCOUNTING, (i) Maintaining proper records of business transactions:, One of the important objectives of accounting is to maintain complete, proper and systematic, records of all the business transactions of the business so that the financial information required, on any matter can be had readily and easily., (ii) Ascertaining the profit or loss of the business:, Another important objective of accounting is to ascertain the profit or loss of the business for an, accounting period by preparing the profit and loss account., (iii) Knowing the sources of revenue and the items of expenses:, Another important objective of accounting is to know how the profit is earned or the loss is, incurred, i.e., to know the various sources of revenue and the various items of expenses which, have resulted in profit or loss., (iv) Ascertainment of the financial position of the business:, Ascertainment of the true financial position (i.e., the assets, liabilities and owner's capital) of the, business at the end of every accounting year by preparing the balance sheet or position statement, is another important objective of accounting., (v) Ascertaining the amounts due to the business, and the amounts due from the business:, Ascertaining the amounts due to the business from its debtors, and the amounts due from the, business to its creditors is another important objective of accounting., (vi) Ensuring effective control over the performance of the business:, , Business Accounting-1, , 14

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Srinivas University, , 1st SEMESTER-BBA, , Accounting reveals the actual performance of a business in terms of cost of production and sale,, profit or loss and book values assets and liabilities. Thus, accounting is intended to ensure, effective control over the performance of the business., (vii) Protection of the properties of the business:, Another important objective of accounting is to protect the properties of the business. By, keeping proper records of the various properties of the business and providing up-to-date, information about the various properties of the business to the management, accounting helps the, management to exercise proper control over the use of the properties of the business., (viii) Prevention of errors and frauds:, Another important objective of accounting is to prevent errors and frauds in the business by, facilitating their quick detection and correction and by introducing suitable measures for their, prevention in future., ix) Satisfying legal requirements:, Various laws like the Companies Act, the Income-tax Act, the Sales Tax Act, etc. require a, business concern to maintain necessary financial records and submit the required financial, statements to the Government. Accounting satisfies the requirements of these laws by, maintaining the necessary accounting records., x) Making financial information available to various groups of persons:, Accounting communicates (i.e., makes available) the financial results (i.e., profit or loss and the financial, position) and other valuable financial information to various groups., , 2. Explain the difference between book-keeping and accounting?, Bookkeeping is the process of systematic recording and classification of financial transactions of, an organisation., Bookkeeping is said to be the basis of accounting, whereas accounting forms a part of the, broader scope in finance., The most important focus of bookkeeping is to maintain an accurate record of all the monetary, transactions of a business. Companies use this information to take major investment decisions., Business Accounting-1, , 15

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Srinivas University, , 1st SEMESTER-BBA, , The bookkeeper maintains bookkeeping records. Accurate bookkeeping is critical for business as, it gives a piece of reliable information on the performance of a company., Bookkeeping process consists of the following steps:, 1. Identifying a financial transaction, 2. Recording a financial transaction, 3. Preparing a ledger account, 4. Preparing trial balance, Accounting is the systematic process of recording, measuring and communicating information, about the financial transaction taking place in a business. Accounting helps in determining the, financial position of a firm and presents the same to stakeholders. It is also known as the, language of business. The purpose of accounting is to provide a clear view of financial, statements to its users, which includes investors, creditors, employees, and government., The most important points of difference between bookkeeping and accounting is listed below:, Book-Keeping, , Accounting, Definition, , Bookkeeping deals with identifying and Accounting, recording financial transactions only., , refers, , to, , the, , process, , of, , summarising, interpreting and communicating, the financial data of an organisation., Decision making, , Data provided by bookkeeping is not Management can take important decisions, sufficient for decision making., , based on the data obtained from accounting, , Preparation of Financial Statement, Not done in the case of bookkeeping, , Financial statements are a part of the, accounting process, Analysis, , No analysis is required in the bookkeeping, , Accounting analyses the data and creates, insights for the business, , Business Accounting-1, , 16

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Srinivas University, , 1st SEMESTER-BBA, Persons Involved, , The person concerned with bookkeeping is The person concerned with bookkeeping is, known as a bookkeeper, , known as an accountant, Determining Financial Position, , Bookkeeping does not show the financial Accounting helps in showing a clear picture of, position of a business, , the financial position of a business, Level of Learning, , No high-level learning required, , High-level learning required for understanding, and analysing accounting concepts, , 3. Explain the various uses of accounting principles?, According to the American Institute of Certified Public Accountants (AICPA), U.S.A., "An, accounting principle is a general law or rule adopted or professed as a guide to action, a settled, ground or basis of conduct or practice"., From the above definitions, it is clear that accounting principles are generally decided rules,, derived from the basic accounting concepts, which are followed by accountants widely in writing, up the accounts and in preparing the financial statements of business concerns. In short,, accounting principles are rules of action or conduct which are adopted by accountants, universally, while recording accounting transactions and preparing financial statements., Uses of accounting principles:, Comparisons:, Firms that use accounting principles can easily compare their statements with other firms in the, industry that use the same principles. This is because they have a common guideline for, preparation of statements. Comparisons are important because they assist companies to gauge, their financial performance with others and rectify where they go wrong. Inter-period, comparisons also show the trend in performance from one period to another., Control:, , Business Accounting-1, , 17

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Srinivas University, , 1st SEMESTER-BBA, , The accounting boards that prepare accounting principles such as the Financial Accounting, Standards Board are able to control preparation of financial statements. Control is essential, because it prevents unethical accountants from preparing statements that do not reflect a true and, fair view of the company‟s financial performance. Incorrect statements may lead the firm into, financial distress and bankruptcy., Ease of Auditing, Companies that use accounting principles can easily be audited since the auditors already have, knowledge of those principles. Auditors use these principles to audit financial statements of, companies to ensure that the principles have been followed to the letter. Auditing is important to, firms because they enable shareholders to ensure that their resources are utilized for the right, purpose. Auditing is able to detect fraud and increases credibility of financial statements., Flexibility, Accounting principles can be used in a variety of situations. For example, matching principle, states that revenues and costs should be matched in the period in which they take place whether, cash is received or not. This principle can be used in any type of business whether it is leasing or, health care or banking because all firms incur expenditure and get revenues. Accounting, principles can thus be used for unexpected transactions., 4. Define accountancy? Explain the difference between the Accounting and Accountancy?, In the words of Eric Kohler, "Accountancy is the theory and practice of accounting"., From these definitions, it is clear that accountancy is a discipline (i.e., a body of knowledge or a, subject of study) which explains the art and principles of recoding business transactions. In other, words, accountancy is the science of accounting, which explains why books of accounts should, be maintained, how to maintain the books of accounts, how to prepare the financial statements,, how to interpret the financial statements, and how to communicate the results of the, interpretation to the end-users., Difference between the Accounting and Accountancy:, Sl, , Accounting, , Business Accounting-1, , Accountancy, , 18

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Srinivas University, , 1st SEMESTER-BBA, , no., 1., , Accounting is a process used to Accountancy is the systematic body of, maintain, , a, , record, , of, , financial knowledge, , that, , specifies, , various, , transactions while complying with all accounting principles, standards, and, the standards, principles, and concepts., , conventions that are used to record the, accounting, , information, , of, , the, , enterprise., 2., , Accounting is a discipline that is Accountancy is the profession of the, concerned with the nature of work accountants., performed by accountants., , 3., , 4., , Accounting is the action that is based Accountancy is the field of knowledge, on the knowledge of accountancy., , that shows the route to accounting., , Scope of accounting is narrow., , Scope of accountancy is wider than, accounting., , 5., , The primary tool of accounting is the Primary tool of accountancy is the, financial statements, i.e. trading and accounting principles, standards, rules,, profit and loss account, balance sheet, concepts, and conventions., and cash flow statement., , 5. Explain Accounting Concepts?, Accounting principles, which are widely accepted by accountants, are known as generally, accepted accounting principles. In other words, generally accepted accounting principles are the, set of guidelines and rules which are widely accepted by accounting practitioners (i.e., chartered, accountants) at a given time., Traditionally, accounting principles have been classified as:, 1. Accounting concepts, 2. Accounting conventions, 1. Accounting concepts, Business Accounting-1, , 19

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Srinivas University, , 1st SEMESTER-BBA, , The term 'concept' means an idea or thought. Basic accounting concepts are the fundamental, ideas or basic assumptions underlying the theory and practice of financial accounting. They are, evolved (and are still evolving) over a period in response to the changing business environment, and the specific needs of the users of accounting information., The concepts guide the identification of events and transactions to be accounted for, their, measurement and recording, and the method of summarising and reporting to interested parties., The concepts, thus, help in bringing about uniformity in the practice accounting., a. Business Entity Concept, Business entity means a unit of organised business activity. From the accounting point of view, every business enterprise is an entity separate and distinct from its proprietor(s)/owner(s). The, accounting system gives information only about the business and not its owner(s). In other words, we record those transactions in the books of account which relate only to the business. The, owner's personal affairs (his expenditure on housing, food, clothing, etc.) will not appear in the, books of account of his business. However, when personal expenditure of the owner is met from, business funds it shall also be recorded in the business books. lt will be recorded as drawings by, the proprietor and not as business expenditure., Another implication of business entity concept is that the owner of business is to be treated as a, creditor who also has a claim over the assets of the business. As such, the amount invested by, him (capital) is regarded as a liability for the business., The business entity concept is applicable to all forms of business organisations. This distinction, can be easily maintained in the case of a limited company because the company has a legal entity, of its own. But such distinction becomes difficult in case of a sole proprietorship or partnership, because in the eyes of the law the partner or the sole proprietors are not considered separate, entities. They are personally liable for all business transactions. But, for accounting purposes, they are to be treated as separate entities. This enables them to ascertain the profit or loss of, business more conveniently and accurately., b. Money Measurement Concept, , Business Accounting-1, , 20

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Srinivas University, , 1st SEMESTER-BBA, , Usually, business deals in a variety of items having different physical units such as kilograms,, quintals, tons, metres, litres, etc. If the sales and purchases of different items are recorded in, terms of their physical units, adding them together will pose problems. But, if these are recorded, in a common denomination, their total becomes homogeneous and meaningful. Therefore, we, need a common unit of measurement. Money does this function. It is adopted as the common, measuring unit for the purpose of accounting. All recording, therefore, is done in terms of the, standard currency of the country where business is set up. For example, in India it is done in, terms of Rupees, in USA it is done in terms of US Dollars, and so on., Another implication of money measurement concept is that only those transactions and events, are to be recorded in the books of account which can be expressed in terms of money such as, purchases, sales, payment of salaries, goods lost in accident, etc., other happenings, (nonmonetary) like death of an efficient manager or the appointment of an accountant,, howsoever important they may be, are not recorded in the books of account. This is because their, effect is not measurable of quantifiable in terms of money., This approach has its own drawbacks. The value of money changes over a period of time. The, value of rupee today is much less than what it was in 1961. Such a change is nowhere reflected, in accounts. This is the reason why the accounting data does not reflect the true and fair view of, the affairs of the business., Hence, now-a-days, it is considered desirable to provide additional data showing the effect of, changes in the price level on the reported income and the assets and liabilities of the business., c. Objective Evidence Concept, The term objectivity refers to being free from bias or free from subjectivity. Accounting, measurements are to be unbiased and verifiable independently. For this purpose, all accounting, transactions should be evidenced and supported by documents such as bills, invoices, receipts,, cash memos, etc. These supporting documents (vouchers) form the basis for making entries in, the books of account and for their verification by auditors afterwards. As for the items like, depreciation and the provision for doubtful debts where no documentary evidence is available, the policy statements made by management are treated as the necessary evidence., , Business Accounting-1, , 21

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Srinivas University, , 1st SEMESTER-BBA, , d. Historical Record Concept:, According to the historical record concept, we record only those transactions which have actually, taken place and not those which may take place (future transactions). It is because accounting, record presupposes that the transactions are to be identified and objectively evidenced. This is, possible only in the case of past (actually happened) transactions. The future transactions can, hardly be identified and measured accurately. You also know that all transactions are to be, recorded in chronological (datewise) order. This leads to the preparation of a historical record of, all transactions. It also implies that we simply record the facts and nothing else., e. Cost Concept, Business activity, in essence, is an exchange of money. The price paid (or agreed to be paid in, case of a credit transaction) at the time of purchase is called cost. According to the cost concept,, all assets are recorded in books at their original purchase price. This cost also forms an, appropriate basis for all subsequent accounting for the assets. For example, if the business buys a, machine for Rs. 80,000 it would be recorded in books at Rs. 80,000. In case its market value, increases later on to Rs. 1,00,000 (or decreases to Rs. 50,000) it will continue to be shown at Rs., 80,000 and not at its market value., 6. Explain the accounting conventions?, Accounting principles, which are widely accepted by accountants, are known as generally, accepted accounting principles. In other words, generally accepted accounting principles are the, set of guidelines and rules which are widely accepted by accounting practitioners (i.e., chartered, accountants) at a given time., Traditionally, accounting principles have been classified as:, 1. Accounting concepts, 2. Accounting conventions, Accounting conventions, Customs, traditions, usages and practices followed in accounting for a long time while, preparing the accounting statements are known as accounting conventions. Following are, Business Accounting-1, , 22

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Srinivas University, , 1st SEMESTER-BBA, , the some of the important accounting conventions:, 1. Convention of consistency: According to this, Accounting practices, rules and, methods should remain unchanged for a fairly long time. However changes may be, made if it is absolutely necessary. Such changes and their effects should be clearly, stated in the financial statements., 2. Convention of conservatism: This convention gives the rule anticipate no profit, but provide for all possible losses‟. It suggests the policy of playing safe. According, to this convention anticipated profit shall not be taken into account. Therefore,, closing stock is valued at cost or market price whichever is lower. However, provisions shall be made forall possible anticipated losses., 3. Convention of full disclosure: According to this convention, accounts and, financialstatements should disclose all important information fully and fairly., 4. Convention of materiality: Material facts are to be reported. Insignificant details may, be ignored while preparing financial statements. This is necessary to reduce unnecessary, minute details. It is also reduces the cost of accounting. Materiality is a subjective term., , 7. What do you mean by Accounting Standard? Explain, Meaning of Accounting Standards:, Accounting standards are the policy documents or written statements issued, from time to time,, by an apex expert accounting body in relation to various aspects of measurement, treatment and, disclosure of accounting transactions or events for ensuring uniformity in accounting practices, and reporting. In other words, accounting standards are the guidelines laid down by an apex, expert accounting body as to how business transactions or events are to be recorded in books of, account, and the manner in which the business transactions are to be exhibited in the financial, statements., LIST OF INDIAN ACCOUNTING STANDARDS, AS 1: Disclosure of accounting policies., AS 2: Valuation of inventories (revised)., AS 3: Cash flow statement (revised)., Business Accounting-1, , 23

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Srinivas University, , 1st SEMESTER-BBA, , AS 4: Contingencies and events occurring after the balance sheet date (revised)., AS 5: Net profit or loss for the period, prior period and extraordinary items and changes in, accounting policies (revised)., AS 6: Depreciation accounting (revised)., AS 7: Accounting for construction contracts (revised)., AS 8: Accounting for Research and Development (withdrawn with effect from 1.4.2003). AS, 9: Revenue recognition., AS 10: Accounting for fixed assets., AS 11: Accounting for the effects of changes in foreign exchange rates (revised)., AS 12: Accounting for Government grants., AS 13: Accounting for investments., AS 14: Accounting for amalgamations., AS 15: Accounting for retirements benefits in the financial statements of employers., AS 16: Borrowing costs., AS 17: Segment reporting., AS 18: Related Party disclosures., AS 19: Leases., AS 20: Earnings per share, AS 21: Consolidated financial statements., AS 22: Accounting for taxes on income., AS 23: Accounting for investments in associates in consolidated financial statement, AS 24: Discontinuing operations., Business Accounting-1, , 24

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Srinivas University, , 1st SEMESTER-BBA, , AS 25: Interim financial reporting., AS 26: Intangible assets., AS 27: Financial reporting of interests in joint ventures., AS 28: Impairment of assets., AS 29: Provisions, contingent liabilities and contingent assets., AS 30: Financial Instruments: Recognition and Measurement., AS 31: Financial Instruments: Presentation., AS 32: Financial Instruments: Disclosure., 8. Explain the Benefits and Limitations of Accounting Standards., Accounting standards seek to describe the accounting principles, the valuation techniques and, the methods of applying the accounting principles in the preparation and presentation of financial, statements so that they may give a true and fair view. By setting the accounting standards the, accountant has following benefits:, (i), , Standardisation of alternative accounting treatments: Standards reduce to a reasonable, , extent or eliminate altogether confusing variations in the accounting treatments used to prepare, financial statements., (ii), , Requirements for additional disclosures: There are certain areas where important, , information is not statutorily required to be disclosed. Standards may call for disclosure beyond, that required by law., (iii) Comparability of financial statements: The application of accounting standards would, to a, limited extent, facilitate comparison of financial statements of companies situated in different, parts of the world and also of different companies situated in the same country. However, it, should be noted in this respect that differences in the institutions, traditions and legal systems, from one country to another give rise to differences in accounting standards adopted in different, countries., , Business Accounting-1, , 25

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Srinivas University, , 1st SEMESTER-BBA, , There are some limitations of setting of accounting standards:, (i), , Difficulties in making choice between different treatments: Alternative solutions to certain, , accounting problems may each have arguments to recommend them. Therefore, the choice, between different alternative accounting treatments may become difficult., (ii), , Lack of flexibilities: There may be a trend towards rigidity and away from flexibility in, , applying the accounting standards., (iii) Restricted scope: Accounting standards cannot override the statute. The standards are, required to be framed within the ambit of prevailing statutes, 9. Write the importance of Accounting Standards, Importance of Accounting Standards:, 1. Lays down uniform accounting policies & practices which are to be followed by all business, enterprises in respect of particular transactions or events., 2. If uniform accounting standards are followed by all business concerns in the preparation of, accounts & in the presentation of financial statements, the financial statements of various, business concerns become comparable., 3. Accounting standards would curb the unlimited flexibility in the adoption of accounting, policies & practices., 4. Financial statements, prepared in accordance with established accounting standards, would be, useful to investors in judging the yield & risk involved in alternative investments in different, companies & in different countries., 5. Financial statements, produced on the basis of established accounting standards, will be, reliable documents for the purpose of analysis & in interpretation by analysis, researchers &, consultants for economic forecasting & planning., 6. It improves the credibility & reliability of accounting information., 7. It raises the standards of auditing in its task of reporting on the financial statements & make, charted accountants ensure commitment & integrity in their profession., Business Accounting-1, , 26

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Srinivas University, , 1st SEMESTER-BBA, , 8. Accounting reports produced in accordance with established accounting standards are, regarded by government officials, tax authorities etc...As quite reliable & acceptable., 10. What is accounting? Explain essential aspect of accounting?, The American Institute of Certified Public Accountants (AICPA) has defined accounting as, “the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the, results thereof”., According to the American Accounting Association (AAA), "Accounting is the process of, identifying, measuring and communicating economic information to permit informed judgements, and decisions by users of the information"., From the above definitions, it is clear that accounting is, (i), , Identifying and measuring business transactions in terms of money,, , (ii), , Recording business transactions of financial character, soon after their occurrence,, in a book or books of original entry, , (iii), , Classifying the entries found in the book or books of original entry into, appropriate accounts in the ledger, the book of final entry, periodically,, , (iv), , Summarising or presenting, at the end of the accounting period, the information, found in the ledger accounts through financial statements,, , (v), , Analysing and interpreting the financial statements (i.e., drawing conclusions from, the financial statements) and, , (vi), , Communicating the results of the interpretation of the financial statements to the, end-users for making sound decisions., , Essential Aspects of Accounting:, (i) Identifying, i.e., determining the business transactions to be recorded in the book or books, of original entry., (ii) Measuring, i.e., expressing the value of business transactions in terms of money., (iii)Recording, i.e., entering, in terms of money, business transactions, as and when they, occur., , Business Accounting-1, , 27

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Srinivas University, , 1st SEMESTER-BBA, , iv) Classifying, i.e., grouping of entries of like nature into appropriate accounts in the ledger, or posting of the entries to the ledger accounts, balancing the ledger accounts and the, preparation of trial balance., v) Summarizing, i.e., presenting the effects of the business transactions classified in the ledger, accounts upon the profit and the financial position of the business at the end of the accounting, period., vi) Analyzing, i.e., rearranging the items in the financial statements in a suitable form and, establishing the relationship between the various items or groups of items in the financial, statements so as to provide the basis for interpretation., vii) Interpreting, i.e., explaining the significance of the relationship established by the, analysis, and drawing meaningful conclusions about the profit, the financial position and the, future prospects of the business., viii) Communicating, i.e., intimating, the results of interpretation of the financial statement to, the end- users of accounting information for decision-making., 11. Define Accounting? Explain its functions?, The American Institute of Certified Public Accountants (AICPA) has defined accounting as, “the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the, results thereof”., According to the American Accounting Association (AAA), "Accounting is the process of, identifying, measuring and communicating economic information to permit informed judgements, and decisions by users of the information"., From the above definitions, it is clear that accounting is,  Identifying and measuring business transactions in terms of money,,  Recording business transactions of financial character, soon after their occurrence, in a, book or books of original entry,  Classifying the entries found in the book or books of original entry into appropriate, Business Accounting-1, , 28

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Srinivas University, , 1st SEMESTER-BBA, , accounts in the ledger, the book of final entry, periodically,,  Summarising or presenting, at the end of the accounting period, the information found in, the ledger accounts through financial statements,,  Analysing and interpreting the financial statements (i.e., drawing conclusions from the, financial statements) and,  Communicating the results of the interpretation of the financial statements to the endusers for making sound decisions., ROLE OR FUNCTIONS OF ACCOUNTING, 1. The basic function of accounting is to keep a systematic record of the financial transactions of, the business., 2. Just as a language is used as a means of communication, accounting is used to communicate, the financial information about the profit or loss and the financial position of the business to the, interested parties., 3. Accounting protects the properties and assets of the business. By maintaining proper records, of the various properties and assets of the business and providing up-to-date information about, the properties and assets of the business to the management., 4. Accounting meets the legal requirements by maintaining proper records., 5. Accounting provides a continuous record of business activities, and thereby, helps the business, enterprise to make a meaningful comparison of its current year's activities with the activities of, the previous years., 6. For the efficient planning of a business for the future, a complete knowledge of its past and, present activities is needed., 12. Explain the Accounting terms:, a. Invoice, , b. Stock, , c. Assets, , d. Capital, , a. Invoice, Invoice is a business document which is prepared when one sell goods to another. The statement, is prepared by the seller of goods. It contains the information relating to name and address of the, Business Accounting-1, , 29

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Srinivas University, , 1st SEMESTER-BBA, , seller and the buyer, the date of sale and the clear description of goods with quantity and price., b. Stock, Stock includes goods unsold on a particular date. Stock may be opening and closing stock. The, term opening stock means goods unsold in the beginning of the accounting period. Whereas the, term closing stock includes goods unsold at the end of the accounting perid. For example, if, 4,000 units purchased @ Rs. 20 per unit remain unsold, the closing stock is Rs.80,000. This will, be opening stock of the subsequent year., c. Assets, Assets are the properties of every description belonging to the business. Cash in hand, plant and, machinery, furniture and fittings, bank balance, debtors, bills receivable, stock of goods,, investments, Goodwill are examples for assets. Assets can be classified into tangible and, intangible., d. Capital, It is the amount invested by the proprietor/s in the business. This amount is increased by the, amount of profits earned and the amount of additional capital introduced. It is decreased by the, amount of losses incurred and the amounts withdrawn. For example, if Mr.Anand starts business, with Rs.5,00,000, his capital would be Rs.5,00,000., , Business Accounting-1, , 30

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Srinivas University, , 1st SEMESTER-BBA, , UNIT – II ACCOUNTING PROCESS, Multiple Choice Questions:, 1. The term 'Journal' is derived from the French word, a. Jour, , b. Juor, , c. Trans, , d. None of the above, , 2. If the capital of a business is Rs.3,00,000 and other liabilities are Rs.2,00,000, calculate, the total assets of the business., a. 5,00,000, , b. 1,00,000, , c. 7,00,000, , d. -1,00,000, , 3. If the total assets of a business are Rs.3,60,000 and capital is Rs.2,00,000, calculate, liabilities, a. 1,60,000, , b. 1,80,000, , c. 5,60,000, , d. -1,60,000, , 4. Accounts of artificial or legal persons are, a. Personal accounts, , b. Real accounts, , c. Nominal Accounts, , d. All the above, , c. Nominal Accounts, , d. All the above, , 5. Accounts of intangible assets are, a. Personal accounts, , b. Real accounts, , 6. Saravanan started business with Rs. 1,00,000, two accounts in the following questions are, a. Personal and nominal account, nominal account, , b. Real and personal account, , c. Real and, , d. None of the above, , 7. Opened bank current account with Rs.10,000, two accounts in the following questions are, a. Personal and nominal account, nominal account, , b. Real and personal account, , c. Real and, , d. None of the above, , 8. Deposited cash in the bank, two accounts in the following questions are, a. Personal and nominal account, account, , Business Accounting-1, , b. Real and personal account, , c. real and nominal, , d. None of the above, , 31

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Srinivas University, , 1st SEMESTER-BBA, , 9. Debit what comes in; Credit what goes out is the rule of, a. Personal account, , b. Real account, , c. Nominal account, , d. Suspense account, , c. Nominal account, , d. None of the above, , 10. Debit the receiver, credit the giver, a. Personal account, , b. Real account, , 11. Debit all expenses and losses, Credit all income and gains, a. Personal account, , b. Real account, , c. Nominal account, , d. None of the above, , 12. The various books of original entry maintained under the modern system of accounting is, a. Subsidiary books, , b. Journal proper, , c. Cash book, , d. Bank reconciliation book, , 13. A special journal used to record all cash receipts and cash payments is, a. Subsidiary books, , b. Journal proper, , c. Cash book, , d. Bank reconciliation book, , 14. The term journal is derived from the word, a. French, , b. Latin, , c. Greek, , d. All the above, , 15. The purchase journal is meant for recording purchase of goods of, a. Debit, , b. Credit, , c. Both debit and credit, , d. All the above, , 16. The Basic accounting equation is, a. Asset=Expense +Income, , b. Assets=Cash+Capital, , c. Assets=Capital+Liabilities, , d. Assets=Expenses+Capital, , 17. Find out the value of assets if: Liabilities=$5000 and Capital=$1000, a. $4000, , b.$6000, , c. $7000, , d. $3000, , 18. Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total, Capital=$5000, Business Accounting-1, , 32

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Srinivas University, a. $6000, , 1st SEMESTER-BBA, b. $10,000, , c. $5000, , d. $1000, , 19. If the capital of a business is Rs.3,00,000 and other liabilities are Rs.2,00,000, calculate, the total assets of the business., a. 5,00,000, , b. 3,00,000, , c. 1,00,000, , d. 6,00,000, , 20. Capital of a business decreases if there is an increase in, a. Drawings, , b. Income, , c. Gains, , d. Fresh capital, , 21. If the total liabilities of a business decrease by $5000 what will be the effect on total, asset? (Assuming the amount of capital remain same), a. Remain constant, , b. Decrease by $5000, , c. Increase by $5000, , d. Increase by, , $10,000, , 22. The term Contra is a ______ word, and it means the other side or opposite or against., a. Spanish, , b. Latin, , c. Greek, , d. French, , 23. Net income equal to Revenues minus, a. Gains, , b. Depreciation, , c. Expenses, , d. Capital expenditures, , 24. Whenever goods are returned by a trader to a supplier, or an allowance is claimed from a, supplier, a statement known as ______ is prepared by the trader., a. Credit note, , b. Debit note, , c. Cash memo, , d. None of the above, , 25. Imprest means ______., a. Money advanced on loan, , b. Money borrowed, , c. Money saved, , d. Money withdrawn, 8 Marks questions:, 1. What is Single Entry System? What are the features of Single Entry System?, , Business Accounting-1, , 33

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Srinivas University, , 1st SEMESTER-BBA, , Eric Kohler defines accounts from incomplete records or single entry system as "a system of, book-keeping in which, as a rule, only records of cash and of personal accounts are maintained;, it is always incomplete double entry, varying with circumstances.", 1. Under the single entry system, all the transactions of a business are not recorded in the books, of account., 2. The single entry system is, sometimes, referred to as the mixture of double entry, single entry, and no entry., 3. There is no uniformity under this system as regards the recording of business transactions by, different concerns, 4. Flexibility in recording is one of the important features of single entry system., 5. Source documents play a very important role in the case of single entry system, 6. Under this system, all accounts are not-maintained. Generally, only cash and bank accounts, (i.e., cash book) and personal accounts of trade debtors and trade creditors are maintained., 7. The cash book, maintained under this system, usually, mixes up the business transactions as, well as the private transactions of the proprietor., 8. As a complete record of each and every transaction is not maintained under this system, this, system gives only partial or incomplete information, and not full information about the business., 9. As only incomplete or partial information about the business is given by this system, this, system is an incomplete, unscientific, unsatisfactory and unreliable system of accounting., 10. It is a simple and economical system of accounting, as it needs less number of books of, account to be maintained., 11. It is, usually, adopted by small business concerns like sole traders and small partnership firms, whose volume of business transactions and financial resources do not warrant the elaborate and, costly double entry system., 2. What is double entry system? What are the objectives of Double-Entry System of, Accounting?, There are numerous transactions in a business concern. Each transaction, when closely analysed,, reveals two aspects. One aspect will be "receiving aspect" or "incoming aspect" or, "expenses/loss aspect". This is termed as the "Debit aspect". The other aspect will be "giving, aspect" or "outgoing aspect" or "income/gain aspect". This is termed as the "Credit aspect"., These two aspects namely "Debit aspect" and "Credit aspect" forms the basis of Double Entry, System. The double entry system is so named since it records both the aspects of a transaction., Business Accounting-1, , 34

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Srinivas University, , 1st SEMESTER-BBA, , The double-entry system of accounting has certain objectives. They are:, (i) To record both the aspects (i.e., the debit and the credit aspects) of each and every transaction, in the books of account., (ii) To keep a complete record of all the transactions of a business in a systematic manner so that, the information required on any matter relating to business can be obtained quickly and easily., (iii) To maintain all the three types of accounts, viz., the personal accounts, real accounts and, nominal accounts in the books of account., iv) To provide reliable information through the maintenance of required accounts supported by, source documents or business documents., (v) To check the arithmetical accuracy of the entries in the books of account through the, preparation of trial balance., (vi) To help in the detection of errors in the books of account in time and to reduce the chances, of errors and frauds., (vii) To ascertain the true profit or loss of the business through the preparation of the trading and, profit and loss account., (viii) To ascertain the true financial position of the business through the preparation of the, balance sheet., ix) To know the progress of the business from year to year by facilitating the comparison of the, current year‟s figures with the figures of previous years in respect of stocks, purchases, sales,, incomes and expenses., 3. What are the advantages of Double-Entry System of Accounting?, a) It provides a complete or full record of all the business transactions, as it records both the, aspects of each and every transaction., b) As the transactions are recorded in a scientific and systematic manner, it provides not only, complete, but also authentic (i.e., reliable) record of all the transactions of a concern., c) As both the aspects of every transaction are recorded, it is possible to prepare a trial balance, (i.e., a list of balances of ledger accounts) and Check the arithmetical accuracy of books of, accounts., d) As the arithmetical accuracy of books of accounts can be checked by preparing a trial balance,, the opportunities for misappropriation and fraud are reduced to the minimum., , Business Accounting-1, , 35

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Srinivas University, , 1st SEMESTER-BBA, , e) As nominal accounts are maintained under this system, it is possible to prepare a profit and, loss account and find out the true net profit or net loss for a particular year., f) As correct information about assets, liabilities and capital are available under this system, it is, possible to prepare a balance sheet (i.e., a statement of assets, liabilities and owner's capital) and, ascertain the true financial position of the business on any particular date., (g) When books of accounts are maintained on the double-entry system, it becomes easy for a, business concern to satisfy the income-tax and sales tax authorities about the accuracy of the, business transactions., , Illustration Problems on Journal entries and Ledger accounts:, 4. Journalise the following transactions in the books of Suresh:, 2017 November,, • 1 Suresh Commenced business with cash Rs 10,000 and Goods 5000, • 5 Purchased goods from Kishore Rs 4000, • 8 Sold goods to Raman for cash Rs 6000, • 10 Paid into Bank Rs 5000, • 15 Purchased machine from Hindusthan Tools limited Rs 3000, • 18 Advanced to Govind Rs 1000 as loan, • 22 Drew for office use Rs 500, • 25 Paid rent to landlord Rs 300, • 27 Received from Raman on account Rs 1500, • 30 Paid Kishore on account Rs 2000, Solution:, In the books of Suresh, Journal entries, Date, , Particulars, , 2011, Nov.1., , Cash A/c., Stock A/c., , 5, , 8, , L., F., Dr., , To Capital A/c., (Being the business commenced with cash and goods), Purchases A/c., Dr., To Kishore„s A/c., (Being the goods purchased from Kishore on credit), Cash A/c., Dr., To Sales A/c., (Being the goods sold for cash), , Business Accounting-1, , Dr., , Cr., , 10,000, 5,000, 15,000, 4,000, 4,000, 6,000, 6,000, , 36

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Srinivas University, 10, , 15, , 18, , 22, , 25, , 27, , 30, , Bank A/c, , 1st SEMESTER-BBA, Dr., , To Cash A/c., (Being the cash paid into bank), Machinery A/c., Dr., To Hindusthan Tools Limited„s A/c., (Being the machinery purchased from Hindusthan, Tools Ltd. on credit), Advance to Govind A/c., Dr., (or Govind„s Loan A/c.), To Cash A/c., (Being the advance or loan given to Govind), Cash A/c., Dr., To Bank A/c., (Being the cash withdrawn from bank for office use), Rent A/c., Dr., To Cash A/c., (Being the rent paid in cash), CashA/c., Dr., To Raman„s A/c., (Being the cash received from Raman on account), Kishore„sA/c., Dr., To Cash A/c., (Being cash paid to Kishore on account), , 5,000, 5,000, 3,000, 3,000, , 1,000, 1,000, , 500, 500, 300, 300, 1,500, 1,500, 2,000, 2,000, 38300, , 38300, , 5. Journalise the following transactions in the Books of Sudhama;, a. Opened Account in a Bank with Rs 10,000., b. Withdrew from Bank for office use Rs 2000., c. Withdrew from Bank for personal use Rs 500, d. Paid Sunil on Account by cheque Rs 400, e. Deposited cash in the Bank Rs 600, f. Received a cheque from Radha on account Rs 500, g. Deposited Radha„s cheque into Bank for collection Rs 500., h. Bought goods from Amar and paid by cheque Rs 1000., i. Paid Rent by cheque Rs 500., j. Bank paid Insurance premium on our behalf Rs 100., k. Cash sales deposited into Bank Rs 1000., l. Bank collected Interest on Securities as per our instructions Rs 50., m. Loan taken from Bank Rs 2000., Business Accounting-1, , 37

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Srinivas University, , 1st SEMESTER-BBA, , n. Part of Loan repaid in Cash Rs 1000., Solution:, In the books of Sudhama, Journal entries, Date, , Particulars, , A, , Bank A/c., Dr., To Cash A/c., (Being the account opened in the bank), Cash A/c., Dr., To Bank A/c., (Being the cash withdrawn from bank for office use), Drawings A/c., Dr., To Bank A/c., (Being the cash withdrawn from bank for personal use), Sunil„s A/c., Dr., To Bank A/c., (Being the payment made to Sunil on account by, cheque), Bank A/c., Dr., To Cash A/c., (Being the cash deposited in to bank), Cash A/c., Dr., To Radha„s A/c., (Being the cheque received from Radha on account), Bank A/c., Dr., To Cash A/c., (Being Radha„s cheque paid into bank for collection), Purchase A/c., Dr., To Bank A/c., (Being the purchase by cheque), Rent A/c., Dr., To Bank A/c., (Being the rent paid by cheque), Insurance Premium A/c., Dr., To Bank A/c., (Being the insurance premium paid by bank), , B, , C, , D, , E, , F, , G, , H, , I, , J, , Business Accounting-1, , L., F., , Dr., , Cr., , 10,000, 10,000, 2,000, 2,000, 500, 500, 400, 400, , 600, 600, 500, 500, 500, 500, 1000, 1000, 500, 500, 100, 100, , 38

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Srinivas University, K, , l, , M, , N, , 1st SEMESTER-BBA, , Bank A/c., Dr., To Sales A/c., (Being the cash sales deposited into bank), Bank A/c, Dr., To Interest on Securities A/c., (Being the interest on securities collected by the bank), Bank A/c., Dr., To Bank Loan A/c., (Being the loan taken from bank and retailed in bank), Bank Loan A/c., Dr., To Cash A/c., (Being part of the bank loan paid in cash), , 1,000, 1,000, 50, 50, 2,000, 2,000, 1,000, 1,000, 20150, , 20150, , 6. Journalize the following transactions in the books of Sharma:, 2018, April 1, April 2, April 4, April 7, April 10, April 13, April 16, April 18, April 20, April 22, , Commenced business with cash Rs. 50,000 and machinery Rs. 10,000, Deposited cash into bank Rs. 20000, Purchased goods worth Rs. 8000 less 10% trade discount and 2% cash discount., Purchased goods from Roy & Sons for Rs 5000 less 20% trade discount and 5%, cash discount, half the amount was paid in cash., Withdrew from bank for office use Rs. 2000., Sold goods to Ashok for Rs. 3000 less 5% trade discount., Appointed Mr. Manu as cashier at a salary of Rs. 10000 per month and received Rs., 20000 from him as security deposit., Received cash from Ashok Rs. 2840 in full settlement of his account., Withdrew from business for personal use Rs. 1000, Purchased goods for Rs. 2000 from Petal and invoiced the same to Sahil for Rs., 2400., , Solution:, In the Books of Sharma, Journal Entries, Date, Particulars, L.F. Dr., 2018 Apr Cash A/c., Dr., 50,000, 1, Machinery A/c., Dr., 10,000, To Capital A/c., (Being business commenced with cash and machinery, bank), Business Accounting-1, , Cr., , 60,000, , 39

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Srinivas University, Apr. 2, , Apr. 4, , Apr. 7, , Apr. 10, , Apr. 13, , Apr. 16, , Apr. 18, , Apr, 20, Apr 22, , Bank A/c., Dr., To Cash A/c., (Being cash deposited into bank), Purchases A/c. (Net Price) (8,000-800), Dr., To Cash A/c., (Net price Rs. 7200 less cash discount of 2%), (7200-144), To Discount Received A/c., (Being the goods worth Rs. 8000 purchased at trade, discount of 10% and cash discount of 2%), Purchases A/c. (Price less trade discount), Dr., (5000-1000), To Cash A/c. (3800 x ½), To Roy& Sons A/c. (3800 x ½), To Discount Received A/c. (4000x5/100), (Being goods purchased from Roy&Sons, at 20%, trade discount, and 5% cash discount, half the amount, paid in cash and half the amount due to Roy & Sons), Cash A/c., Dr., To Bank A/c., (Being cash withdrawn from bank for office use), Ashok„s A/c. (3000-150), Dr., To Sales A/c., (Being goods sold to Ashok at a trade discount of 5%), Cash A/c., Dr., To Security Deposit A/c., (Being security deposit received), Cash A/c., Dr., Discount Allowed A/c, Dr., To Ashok„s A/c., (Being cash received from Ashok in full settlement of, his account and discount allowed), Drawings A/c., Dr., To Cash A/c., (Being cash withdrawn for personal use), Purchases A/c., Dr., Sahil„s A/c., Dr., To Petal„s A/c., To Sales A/c., (Being goods purchased for Rs. 2000 from Patel and, the same sold to Sahil on credit for Rs.2400), , 1st SEMESTER-BBA, 20,000, 20,000, 7,200, 7056, 144, , 4000, 1900, 1900, 200, , 2000, 2000, 2850, 2850, 20000, 20000, 2840, 10, 2850, , 1000, 1000, 2000, 2400, 2000, 2400, , 124300, , Business Accounting-1, , 124300, , 40

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Srinivas University, , 1st SEMESTER-BBA, , 7. Post them to the various ledger accounts., 2008, , Rs., , June 1, June 2, June 3, June 4, June 5, June 7, June 8, , Ram commenced business with, Bought goods for cash, Bought office furniture for cash, Paid for postage, Purchased goods from Rajkumar, Sold goods for cash, Bought goods from Rahim, , 5,000, 2500, 500, 100, 2000, 150, 400, , June 9, June 10, June 11, June 12, June 15, June 17, June 20, June 22, June 25, June 26, June 27, June 28, June 31, , Sold goods to Suresh, Sold goods to Natarajan, Purchased goods for cash, Received cash from Natarajan, Paid cash to Rahim, Returned goods to Rajkumar, Suresh returned goods, Paid salaries, Sold goods for cash, Ram withdrew for personal use, Paid by stationery, Paid rent, Received commission, , 300, 350, 250, 400, 400, 200, 50, 150, 500, 800, 100, 225, 50, , Solution:, Journal Entries, Date, , Particulars, , 2018, June 1, , Cash Account, To Capital Account, (Being the capital brought in by Ram), , Dr., , June 2, , Purchase Account, To Cash Account, (Being the goods bought for cash), , Dr., , June 3, , Office Furniture Account, To Cash Account, (Being the goods bought for cash), , Business Accounting-1, , L.F. Dr., , Cr., , 5000, 5000, 2500, 2500, , Dr., , 500, 500, , 41

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Srinivas University, June 4, , June 5, , June 7, , June 8, , June 9, , June 10, , June 11, , June 12, , June 15, , June 17, , June 20, , June 22, , June 25, , Postage Account, To Cash Account, (Being the cash paid for postage), , 1st SEMESTER-BBA, Dr, , 100, 100, , Purchases Account, Dr., To Rajkumar„s Account, (Being the goods bought from Rajkumar on credit), , 2000, , Cash Account, To Sales Account, (Being the goods sold for cash), , 150, , Purchases Account, To Rahim„s Account, (Being the goods bought from Rahim on credit), , Dr., , 2000, , 150, Dr., , 400, 400, , Suresh„s Account, To Sales Account, (Being the goods sold to Suresh on credit), , Dr., , Natarajan„s Account, To Sales Account, (Being the goods sold to Natarajan on credit), , Dr., , Purchases Account, To Cash Account, (Being the goods purchased for cash), , Dr., , 300, 300, 350, 350, 250, 250, , Cash Account, Dr., To Natarajan„s Account, (Being the cash received from Natarajan on account), , 400, , Rahim„s Account, To Cash Account, (Being the cash paid to Rahim), , Dr., , 400, , Rajkumar„s Account, To Purchases Returns Account, (Being the goods returned to Rajkumar), , Dr., , Sales Returns Account, To Suresh„s Account, (Being the goods returned by Suresh), , Dr., , Salaries Account, To Cash Account, (Being the cash paid for salaries), , Dr., , Cash Account, , Dr., , Business Accounting-1, , 400, , 400, 200, 200, 50, 50, 150, 150, 500, 42

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Srinivas University, , 1st SEMESTER-BBA, , To Sales Account, (Being the goods sold for cash), June 26, , June 27, , June 28, , June 30, , 500, , Drawings Account, Dr., To Cash Account, (Being the cash withdrawn by Ram for his personal, use), , 800, , Stationery Account, To Cash Account, (Being the cash paid for stationery), , Dr., , 100, , Rent Account, To Cash Account, (Being the cash paid for rent), , Dr., , 800, , 100, 225, 225, , Cash Account, To Commission Account, (Being the cash received for commission), , Dr., , 50, 50, 14425, , Dr., Date, , Cash A/C, Particulars, , J., F, , Date, , Particulars, , 5000, , To Natarajan‟s A/C, , 400, , June 4, , By, Purchase, Account, By Office Furniture, Account, By Postage Account, , 2500, , 150, , 2018, June 2, June 3, , To Sales A/C, , 500, , June 11, , 250, , To Commission A/C, , 50, , June 15, , By, Purchase, Account, By, Rahim„s, Account, By Salaries Account, By, Drawings, Account, By, Stationery, Account, By Rent Account, By balance c/d, , June 22, June 26, June 27, June 28, June 30, July 1, , Cr., , Amount, , 2018, To Capital A/C, June 1, June 7 To Sales A/C, June, 25, June, 25, June, 31, , 14425, , To balance b/d, , Business Accounting-1, , 6100, 825, , J., F, , Amount, , 500, 100, , 400, 150, 800, 100, 225, 1075, 6100, , 43

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Srinivas University, , 1st SEMESTER-BBA, , Dr., Date, June, 30, , Capital Account, Particulars, , J., F, , To Balance c/d., , Cr., , Amount, , Date, , Particulars, , J., F, , 5,000, , 2018, June 1, , By Cash A/c., , 5,000, , July 1, , By Balance b/d, , 5,000, 5,000, , 5,000, , Dr., , Drawings Account, , Date, , Particulars, , 2018, June 2, July 1, , J., F, , 2, 5, 8, 11, July 1, , Date, , Particulars, , To Cash A/c., , 800, , June 30, , By Balance c/d., , To Balance b/d., , 800, 800, , 31, , J., F, , Particulars, , J., F, , To Cash A/c., To Rajkumar„s A/c., To Rahim„s A/c., To Cash A/c., , 800, , Amount, 2,500, 2,000, 400, 250, 5,150, 5,150, , To Balance b/d., , Date, June 30, , Cr., Particulars, , J., F, , By Balance c/d, , J., F, , To Balance c/d., , 5,150, , Amount, 1,300, , Cr., , Date, , Particulars, , 7, 9, 10, 25, , By Cash A/c., By Suresh„s A/c., By Natarajan„s A/c., By Cash A/c., , 1, , By Balance b/d, , J., F, , Date, , Sales Returns Account, Particulars, , Business Accounting-1, , J., , Amount, , Date, , Amount, 150, 300, 350, 500, 1,300, 1,300, , 1,300, , Dr., , Amount, 5,150, , Sales Account, Particulars, , Amount, 800, , Purchases Account, , Dr., Date, , Cr., , Amount, , Dr., Date, , Amount, , Cr., Particulars, , J., , Amount, 44

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Srinivas University, , 1st SEMESTER-BBA, F, , 20, , To Suresh„s A/c., , 1, , To balance b/d., , 50, 50, , Dr., Date, , Particulars, To Cash A/c., , 1, , To Balance b/d., , J., F, , 15, , Date, 31, , Particulars, , J., F, , To Cash A/c., , Amount, 400, 400, , 10, 31, , Particulars, , J., F, , 8, , Amount, , To Sales A/C., , 300, , To Balance b/d., , 300, 250, , Cr., J., F, , By Balance c/d., , Amount, 500, 500, , Particulars, , Cr., J., F, , By Purchases A/c., , Amount, 400, 400, Cr., , Date, 8, , Particulars, , J., F, , By Sales Returns, A/c., By Balance c/d., , Amount, 50, 250, 300, , Natarajan’s Account, Particulars, , J., F, , To Sales A/c., Balance c/d., , Amount, 350, 50, 400, , Dr., Date, , 50, 50, , Suresh’s Account, , Dr., Date, , Particulars, , Date, , 31, 1, , By Balance c/d., , Rahim’s Account Account, , Dr., Date, , Amount, 500, 500, 500, , Dr., , 15, , 31, , Office Furniture Account, , 3, , Date, , F, , Date, , Cr., Particulars, , 13, , By Cash A/c., , 1, , Balance b/d., , J., F, , 400, 400, , Salaries Account Account, Particulars, , Business Accounting-1, , J., , Amount, , Amount, , Date, , Particulars, , Cr., J., , Amount, 45

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Srinivas University, , 1st SEMESTER-BBA, F, , 22, , To Cash, , 1, , To Balance b/d., , 150, 150, 150, , Dr., Date, , F, , Particulars, To Cash A/c., , 1, , To Balance b/d., , J., F, , Amount, 100, 100, 100, , Dr., Particulars, To Cash A/c., , 1, , To Balance b/d., , J., F, , Date, 31, , Amount, 225, 225, 225, , Dr., , 31, , 150, 150, , Cr., Particulars, , J., F, , By Balance c/d., , Amount, 100, 100, , Rent Account, , 28, , Date, , By Balance c/d., , Stationery Account, , 27, , Date, , 31, , Cr., , Date, 31, , Particulars, , J., F, , By Balance c/d., , Amount, 225, 225, , Commission Account, Particulars, To Balance c/d., , J., F, , Amount, 50, 50, , Date, , Cr., Particulars, , 31, , By Cash A/c., , 1, , By Balance b/d, , J., F, , Amount, 50, 50, 50, , 8. Write out the account of B. Black from the following transactions:, 2012, Jan. 1, Jan. 5, Jan. 7, Jan. 8, Jan12, Jan15, Jan18, Jan20, Jan26, , Sold him goods worth Rs.900, Received from him Rs.350 on account Allowed him discount Rs.10, Purchased from him goods worth Rs.300, Returned to him goods worth Rs.25, Received from him further cash Rs.100, Sold him goods worth Rs.100, He returned goods worth Rs. 25, Sent him cash Rs.125, Purchased from him goods worth Rs.125, , Business Accounting-1, , 46

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Srinivas University, , 1st SEMESTER-BBA, , Solution:, Dr., , Black‟s Account, , Date, 2012, Jan.1, Jan. 8, Jan.15, Jan.20, , Particulars, , J., F, , To Sales A/c., To, Purchases, Returns A/c., To Sales A/c., To Cash A/c., , Amount, , 900, 25, 100, 125, , Date, Jan. 5, Jan. 5, Jan.12, Jan18, Jan26, Jan31, Jan31, , 1, , Cr., Particulars, , J., F, , By Cash A/c., By, Discount, Allowed A/c, By Purchases A/c., By Cash A/c., By Sales Returns, A/c., By Purchases A/c., By Balance c/d., , 350, 10, 300, 100, 25, 125, 240, 1,150, , 1,150, 240, , To Balance b/d., , Amount, , 9. Post them into ledger, 2001, Nov 1 Commenced business with goods Rs 20,000 and cash Rs. 50,000, 2, Opened bank current account with Rs.10,000, 4, Received cash from Swathi Rs. 4,900, 6, Cash Purchases( paid by cheque) Rs. 37,600, 7, Cash sales to Avinash Rs.1,900, 9, Purchased goods from Reddy Rs.2000, 10, Purchased goods from Rama Rao for Rs. 20,000 and paid cash Rs. 10,000, 12, Sold goods to Lalitha Rs. 1,800, 15, Paid Reddy cash Rs 1,900 and was allowed a discount of Rs.100, 16, Goods returned by Rama Rao Rs.500, Solution:, , Dr., Date, , Cash Account, Particulars, , J., F, , Amount, , Date, 2, 10, 15, 30, , 2001,, Nov 1, 4, 7, , To Capital A/C, , 50000, , To Swathi‟s A/C, To Sales A/C, , 1 Dec, , To balance b/d, , 4900, 1900, 56800, 34900, , Business Accounting-1, , Cr., Particulars, By Bank A/C, By Purchases A/C, By Reddy‟s A/C, By Balance c/d, , J., F, , Amount, 10000, 10000, 1900, 34900, 56800, , 47

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Srinivas University, , 1st SEMESTER-BBA, , Dr., Date, 6, 9, 10, 10, 1 Dec, , Purchases Account, Particulars, , J., F, , To Bank A/C, To Reddy‟s A/C, To Ram Rao‟s A/C, To cash A/C, To balance b/d, , Dr., Date, 30, , Amount, , Date, , 37600, 2000, 10000, 10000, 59600, 59600, , 30, , Cr., Particulars, , J., F, , By balance c/d, , 59600, , 59600, , Sales Account, Particulars, , J., F, , To balance c/d, , Amount, , Date, , 3700, , 7, 12, , Cr., Particulars, , J., F, , By Cash A/C, By Lalitha‟s A/C, , 1 Dec, , Date, 16, , To Rama Rao‟s A/C, , 1 Dec, , To balance b/d, , J., F, , Dr., Date, , Particulars, To Capital A/C, , 1 Dec, , To balance b/d, , J., F, , Dr., , 1, , Amount, , Date, , 500, 500, 500, , 30, , Cr., Particulars, , J., F, , By balance c/d, , Amount, , Date, , 20000, 20000, 20000, , 30, , Cr., Particulars, , J., F, , By balance c/d, , To Stock A/C, To Cash A/C, , Business Accounting-1, , J., F, , Amount, , Date, , 20000, 50000, , 30, , Amount, 20000, 20000, , Capital Account, Particulars, , Amount, 500, 500, , Stock Account, , 1, , Date, , By balance b/d, , Sales Returns Account, Particulars, , Amount, 1900, 1800, 3700, 3700, , 3700, , Dr., , Amount, , Cr., Particulars, By Balance c/d, , J., F, , Amount, 70000, , 48

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Srinivas University, , 1 Dec, , 1st SEMESTER-BBA, , To balance b/d, , Dr., Date, 2, 30, , Particulars, , J., F, , To Cash A/c, To balance c/d, , Dr., , 70000, 70000, , 70000, , Bank Account, , Cr., , Amount, , Date, , Particulars, , J., F, , 10000, 27600, 37600, , 6, , By Purchases, , 37600, , 1 Dec, , By balance b/d, , 37600, 27600, , Reddy’s Account, , Date, , Particulars, , 15, , To Cash A/C, To, Discount, received A/C, , J., F, , Amount, , Date, , 1900, 100, , 9, , Amount, , Cr., Particulars, By Purchases, , 2000, , J., F, , Amount, 2000, , 2000, , 10. Journalising the following transactions in the books of Raveesh, 2018,April, 1-Commenced business with cash Rs 20,000, 2- Purchased goods from Ravi Rs 5,000, 3-Bought office furniture for cash Rs 8,000, 5- Sold goods to Karthik Rs 7,500, 8- Returned to goods to Ashok Rs 500, 9-Paid salaries Rs 1,500, 12- Prashanth returned goods Rs 950, 13- Amar withdrew for personal use Rs 1,450, 16- Received commission Rs 150, 17- Cash withdrawn for personal use Rs 1,450, 21- Received from Ananth on account Rs 2,500, 23- Drew a cheque for personal use Rs 800, 24- Paid wages Rs 2,300, Solution:, In the books of Raveesh, Journal entries, Date, , Particulars, , L.F. Dr., , Cr., , 2018, April,, Business Accounting-1, , 49

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Srinivas University, 1, , 2, , 3, , 5, , 8, , 9, , 12, , 13, , 16, , 17, , 21, , 23, , 24, , Cash A/C, To Capital A/C, (Being Commenced business with cash), Purchases A/C, To Ravi‟s A/C, (Being Purchased goods from Ravi), Office furniture A/C, To Cash A/C, (Being Bought office furniture for cash), Karthik‟s A/C, To Sales A/C, (Being Sold goods to Karthik), Ashok‟s A/C, To Purchase return A/C, (Being Returned goods to Ashok), Salaries A/C, To Cash A/C, (Being Paid salaries), Sales return A/C, To Prashanth‟s A/C, (Being Prashanth returned goods), Drawings A/C, To Cash A/C, (Being Amar withdrew for personal use), Cash A/C, To Commission Received A/C, (Being Received commission), Drawings A/C, To Cash A/C, (Being Cash withdrawn for personal use), Cash A/C, To Ananth‟s A/C, (Being Received from Ananth on account), Drawings A/C, To bank A/C, (Being Drew a cheque for personal use), Wages A/C, To Cash A/C, (Being Paid wages), , 1st SEMESTER-BBA, Dr., , 20000, 20000, , Dr., , 5000, 5000, , Dr., , 8,000, 8,000, , Dr., , 7,500, 7,500, , Dr., , 500, 500, , Dr., , 1,500, 1,500, , Dr., , 950, 950, , Dr., , 1,450, 1,450, , Dr., , 150, 150, , Dr., , 1,450, 1,450, , Dr., , 2,500, 2,500, , Dr., , 800, 800, , Dr., , 2,300, 2,300, 52100, , 52100, , 11. What are the differences between a Debit Note and a Credit Note?, There are a number of differences between a debit note and a credit note. The main differences, between the two are:, Business Accounting-1, , 50

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Srinivas University, , 1st SEMESTER-BBA, , (i) A debit note is prepared by the person who returns the goods (i.e., by the buyer of goods), and, is sent to the seller of goods. On the other hand, a credit note is prepared by the person who, receives the goods returned (i.e, by the seller of goods), and is sent to the buyer of goods., (ii) A debit note serves as intimation for the goods returned, whereas a credit note serve as, intimation for the receipt of the goods returned., (iii) A debit note indicates that the account of the person to whom the goods are returned in, debited. But a credit note indicates that the account of the person by whom the goods and, returned is credited., (iv) Usually, a debit note is prepared first, whereas a credit note is prepared after the recipe of the, debit note., (v) Generally, a debit note is printed in black colour, whereas a credit note is printed in red, colour., (vi) Debit notes serves as the basis for the entries in the purchases returns books of the sender of, goods. But credit notes serve as the basis for the entries in the sales returns book of the receiver, of goods., Illustration Problems on Subsidiary Book:, 12. Entered the following transactions in the Purchases Book:, 2012, Jan1 Bought from B of Bangalore, 100 bags of rice at Rs.80 per bag., Jan8 Bought from Erode Sugar Mills Ltd. 20 bags of sugar at Rs.200 per bag, Jan10 Bought from Ram Flour Mill, Coimbatore, 10 bags of wheat flour at Rs.100 per bag., Jan15 Bought from Nilgiri Tea Co., Nilgiris, 10 cases of tea at Rs.100 per case., Jan25 Bought from Arasu Coffee Works Ltd., Salem, 100kgs. Of coffee at Rs.10 per kg., Solution:, Purchases Book, Date, , Particulars, , 2012, Jan 1, Jan 8, Jan 10, Jan 15, Jan 25, , B, Bangalore, Erode Sugar Mills Ltd., Erode, Ram Flour Mill, Coimbatore, Nilgiri Tea Co., Nilgiris, Arasu Coffee Works Ltd., Salem, , Business Accounting-1, , Inward, Invoice, No., , L.F. Amount, , 1, 2, 3, 4, 5, , Rs., 8000, 4000, 1000, 1000, 1000, 15000, 51

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Srinivas University, , 1st SEMESTER-BBA, , 13. Enter the following transactions in the Purchases Book., 2012, April 1 Bought from Canara Stores, Mangalore :, 100 bags of rice at Rs.100 per bag, 50 bags of sugar at Rs.400 per bag, 200 bags of wheat at Rs.200 per bag, Less Trade Discount 10%, April 15 Bought from Coimbatore Stores, Coimbatore :, 100 bags of rice at Rs.90 per bag, 100 bags of sugar at Rs.300 per bag, April 30 Bought from Bhadravathi Stores, Shimoga :, 200 bags of rice of Rs.100 per bag, Less : Trade Discount 10%, Solution:, Purchases Book, Date, , 2012, April 1, , April, 15, April, 30, , Particulars, , Canara Stores, Mangalore, 100 bags of rice at Rs.100 per bag, 50 bags of sugar at Rs.400 per bag, 200 bags of wheat at Rs.200 per bag, Less : Trade Discount 10%, Coimbatore Stores, Coimbatore ;, 100 bags of rice at Rs.90 per bag, 100 bags of sugar at Rs. 300 per bag, Bhadravathi Stores, Shimoga :, 200 bags of rice at Rs.100 per bag, Less : Trade Discount at 10%, , Inward, Invoice, No., , L.F. Detains, , Amount, , Rs., , Rs., , 10000, 20000, 40000, 70000, 7000, , 63000, , 9000, 30000, , 39000, , 20000, 2000, , 18000, 120000, , 14. Enter the following transactions in the Sales Book of Sri Kannan, a provision merchant, 2012, Feb 1, Sold to Anand & Co. Ooaty 10 bags of rice at Rs.120 per bag., Feb 8, Sold to ganesh, Tiptur, 10 bags of sugar at Rs.250 per bag, less trade discount 2%, Feb 10 Sold to Navinchand, Nanjangud 10 bags of wheat at Rs.50 per bag., Feb 18 Sold to Avinash & Co. Coonoor, 10 bags groundnut at Rs.100 per bag, less trade, discount 5%, Business Accounting-1, , 52

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Srinivas University, , 1st SEMESTER-BBA, , Feb 29 Sold to Bright Hotel Ltd., Bangalore, 10 bags of wheat flour at Rs.100 per bag., Solution:, Sales Book, Date, , 2012, Feb 1, Feb 8, Feb 10, Feb 18, Feb 29, , Particulars, , Outward, Invoice, No., , L.F. Amount, , Rs., 1200, 2450, , Anand & Co. Ooty (10x120), Ganesh, Tiptur, (Net sale price, 10x250=2500-50), Navinchand, Nanjangud (10 x 50), Avinash & Co. Coonoor, (Net sale price) (10x100=1000-50), Bright Hotel Ltd., Bangalore (10x100), , 500, 950, 1000, 6100, , 15. Enter the following transaction in the Purchases Returns Book, 2012, Feb 1 Returned goods worth Rs.100 to Dev and Co., Cochin, Feb 10 Returned goods worth Rs.50 to Binod, Chennai, Feb 29 Allowance claimed from Rajesh, Trichy for storage Rs. 30, Solution:, Purchase Returns Book, Date, , Particulars, , 2012, Feb 1, Feb 10, Feb 29, , Dev and Co. Cochin, Binod, Chennai, Rajesh, Trichy, , Debit, Note No., , L.F. Amount, , 1, 2, 3, , 100, 50, 30, 180, , 16. Enter the following transactions in the purchase returns book, 2012, Jan 2 Returned goods worth Rs.100 to Dev and Co., Mangalore, Jan 15 Returned goods worth Rs.50 to Sharma & Co. Mumbai, Jan 20 Allowance claimed from Rahul, Kalyanpur for shortage Rs.30, Jan 24 Returned goods worth Rs. 15 to Khan & Bros., Mangalore, Solution:, Purchase Returns Book, Date, , Particulars, , Business Accounting-1, , Debit, , L.F. Amount, 53

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Srinivas University, , 1st SEMESTER-BBA, Note No., , 2012, Jan 2, Jan 15, Jan 20, Jan 24, , Dev & Co., Mangalore (Returns), Sharma & Co., Mumbai (Returns), Rahul, Kalyanpur (Allowance claimed), Khan & Bros., Mangalore (Returns), , 100, 50, 30, 15, 195, , 17. Enter the following transactions in the Purchases Returns Book., 2012, Jan 1 Returned goods worth Rs. 250 to Ram & Co. Kolkata., Jan 15 Returned goods worth Rs. 100 to Varm & Co. Delhi, Jan 25 Allowance claimed from Krishna & Co. Mumbai for shortage Rs. 50, Jan 28 Returned goods worth Rs.35 to Dev. & Bros. Chennai, Solution:, Purchase Returns Book, Date, , Particulars, , 2006, Jan 1, Jan 15, Jan 25, Jan 28, , Ram & Co., Kolkata, Varma & Co. Delhi, Krishna & Co., Mumbai, Dev & Bros., Chennai, , Debit, Note No., , L.F. Amount, Rs., 250, 100, 50, 35, 435, , 18. Enter the following transactions in the Sales Returns Book:, 2012, June 1 Ramesh & Co. returned us goods worth Rs.100, June10 Allowance granted to Mohan for breakage Rs. 50, June 18 Allowance granted to Chandra for overcharge Rs.30, June 25 Suresh & Co. returned us goods worth Rs.20., Solution:, Sales Returns Book, Date, , Particulars, , 2012, June 1, June 10, June 18, June 25, , Ramesh & Co., Mohan, Chandra, Resh & Co., , Business Accounting-1, , Debit, Note No., , L.F. Amount, , 1, 2, 3, 4, , 100, 50, 30, 20, 54

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Srinivas University, , 1st SEMESTER-BBA, 200, , 19. Explain the differences between Trade Discount and Cash Discount?, Trade Discount, , Cash Discount, , 1. Trade discount is a reduction in the, catalogue price or invoice price of the goods, sold., 2. Trade discount is allowed first or initially, (i.e., at the time of sale purchase), 3. As regards the sequence of calculation, trade, discount is considered first., 4. Trade discount is allowed irrespective of the, fact that the goods are sold or purchased for, cash or on credit., 5. Trade discount is allowed by the, manufacturers or the wholesalers to the, retailers., 6. The object of trade discount is to enable the, wholesalers or retailers to sell the goods at the, published or fixed prices and at the same time, to have a fair margin of profits for themselves, or to induce the wholesalers, , 1. Cash discount is a reduction in the amount, due from a debtor., 2. Cash discount is, generally, allowed later, (i.e., at the time of settlement of the account), 3. Cash discount is calculated after trade, discount is deducted., 4. Cash discount is, generally, allowed in, respect of the receipt of cash in connection, with goods sold or purchased on credit., 5. Cash discount is allowed by the creditors to, the debtors., 6. The object of cash discount is to induce the, debtors to pay their dues promptly., , Illustration Problems on cash book:, 20. Two Column Cash Book, Prepare a Two Column Cash Book :−, 2013, Jan. 1., 2., 3., 4., 5., 6., 7., 8., , (₹), Cash in hand, 5,000, Bank Overdraft, 1,000, Paid Wages, 1,500, Deposited into Bank, 2,000, Cash sales, 7,500, Sold goods for cheque which was deposited in bank on the same, day, 5,000, Purchased goods from Hari on credit, 4,000, Drew from Bank for personal use, 1,000, Paid to Hari in full settlement, 3,500, , Business Accounting-1, , 55

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Srinivas University, , 1st SEMESTER-BBA, , Received from Ram,who owes ₹5,000, ₹2,000 only on account., , 9., , Solution:, Cash Book, Dr., Cr., Dat, e, 201, 3, Jan., 01, Jan., 03, Jan., 04, Jan., 05, Jan., 09, , Particulars, , L.F Cash, (Rs), , Balance b/d, Cash A/c, Sales A/c, Sales A/c, Ram, , Feb. Balance b/d, 01, , 5,000, C, , Bank, (Rs), , Date Particulars, 2013, , Jan., 01, 2,000 Jan., 02, 7,500, Jan., 03, 5,000 Jan., 07, 2,000, Jan., 08, Jan., 31, 14,500 7,000, 7,500 5,000, , L.F Cash, (Rs), , Balance b/d, , 1,000, , Wages A/c, Bank A/c, , Bank, (Rs), , 1,500, C, , 2,000, , Drawing A/c, , 1,000, , Hari, , 3,500, , Balance c/d, , 7,500, , 5,000, , 14,500 7,000, , Note: Transaction dated January 06, 2013, will not be recorded in Cash Book because credit, transactions will not affect the cash/bank balance., 21. Write up a two-column cash book of Mr. Joseph from the following particulars and balance, the same at the end of the month., 2018, May 1 Balance in shop cash Rs. 750 in Bank Rs. 1300, May 3 Bought goods for cash Rs. 330., May7, Received from Nair repayment of his loan in cash Rs. 290, May 12 Bought goods on credit from Menon Rs. 720., May 14 Gave cheque for Rs. 525 to Chandran for goods supplied in April, 2012., May 16 Gave his wife Rs. 150 for household expenses., May 20 Cashed National Savings Certificate Rs. 500, kept Rs. 100 for self and paid the balance, into shop cash., May 25 Paid into Bank Rs. 600, May 26 Gave David a cheque for Rs. 450 in repayment of some liabilities., Business Accounting-1, , 56

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Srinivas University, , 1st SEMESTER-BBA, , May 27 Cashed Rs. 120 from George and paid into Bank., May 28 Gave charity Rs. 100, May 29 Gave a cheque to Menon for goods bought during the month, deduction Rs. 10 for, discount., May 30 Received a bearer cheque from Suman Rs. 1000, May 31 Cashed the cheque received from Suman at the counter of the paying banker., May 31 Transferred to Savings Bank Account from Current Account Rs. 200., Solution:, Cash Book:, Dr., Date, , Particulars, , 2012, May, 1, , To Balance b/d., , May, 7, , To Nair„s Loan, A/C, (Repayment of, loan received), , May2, 0, , To National, Savings, Certificate A/c., (Cash received, Savings, Certificate), , Cr., R., No., , To Cash A/c., (Cash received), May2, 5, May2, 7, , L., F., , Cash, , Bank, , Date, , Rs., 750, , Rs., 1300, , 2012, May, 3, , 290, May, 14, , 500, 500, , C, , May, 16, , 600, May, 60600 20, 0, May2, 120, 5, , To George„s A/c., (Cash received, from, George by bank), , 120, May, 26, , May, 30, , To Suman„s A/c., (Cheque from, Suman, and cashed), , Business Accounting-1, , 1000, , May, 28, , Particulars, , V. L., No F., , By Purchases A/c., (Paid cash for, purchases), , Cash, , Bank, , Rs., 330, , Rs., , ByChandran„s A/c., (Paid Chandran by, cheque), , 525, , By Drawings A/c., (cash paid to wife, for, household, expenses)expenses, ), , 150, 150, , By Drawing A/c., (Cash kept for, self)), By Bank A/c., (Cash paid into, bank), , 100, , C, , 600, 600, , By David„s A/c., (Paid David by, cheque), By Charity A/c. or, Sundry, , 450, , 100, 100, 57

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Srinivas University, , 1st SEMESTER-BBA, Expenses A/c., (Cash paid for, charity), May, 29, , May, 31, , May, 31, , June, 1, , 2540, 1260, , To balance b/d, , By Menon„s A/c., (Paid Menon by, cheque), , 710, , By Savings Bank, A/c., (Transfer to S.B., A/c.), , 200., , By Balance c/d, 1260, 2540, , 2020, 135, , 135, 2020, , 22. From the following particulars, write an Analytical Petty Cash Book on the imprest system, and show how it will appear in the ledger., 2016, Jan 1 Received Rs 500 for petty cash, Jan 3 Spent for postage Rs 45, Jan 6 Taxi hire for secretary Rs 50, Jan 8 Paid X & Co. Rs. 35., Jan 10 Ink and Stationery Rs. 85, Jan 11 Sent a telegram Rs. 10, Jan 15 Entertainment expenses for visitors Rs 62, Jan 20 Paid for carriage Rs 85, Jan 26 Tips paid to peons on Republic Day Rs 55, Jan 30 Paid telephone bill Rs 40, Jan 31 Paid to Y & Co. Rs 20, Feb 1 Imprest amount received from the cashier, Solution:, Analytical Petty Cash Book:, Amou C Date, nt, B, receiv F, ed, , Particulars, , Business Accounting-1, , V, ., N Total, o paym, . ents, , Analysis of Payment, Posta, ge &, Tele, gram, s, , Tra, veli, ng, exp, ense, , Printi, ng &, statio, neries, , Sund, ry, expe, nses, , carria, ge, , Ledge, r folio, , Ledger, Accou, nts., , 58

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Srinivas University, , 1st SEMESTER-BBA, s, , Rs., 500, , 2006, Jan 1 To Cash, “ 3 By postage, “ 6 By Taxi hire for, secretary, “ 8 By X & Co., “ 10 By Ink &, Stationery, “ 11 By Telegrams, “ 15 By Entertainment, “ 20 expenses for, visitors, By Carriage, “ 26 By Tips to peons, “ 30 By Telephones bill, “ 31 By Y & Co., “, 31, , By balance c/d, , 500, 13, 487, , 45, , 45, , 50, 35, 85, 10, , 62, 85, 55, 40, 20, 487, 13, , 50, 35, 85, 10, , 62, 85, 55, 40, 95, , 50, , 85, , 117, , 85, , 20, 55, , 500, Feb 1 To Balance b/d, “ 1 To Cash, , Business Accounting-1, , 59

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Srinivas University, , 1st SEMESTER-BBA, , UNIT III, DEPRECIATION ACCOUNTING, Multiple Choice Questions:, 1. The term “deprecation” is derived from the word, a. Greek, , b. Arabian, , 2. Depreciation means, a. Increase, , c. French, , d. Latin, , in the value of asset., , b. Decrease, , c. Appreciation, , d. None of the above, , 3. Depreciation is “the permanent and continuing diminution in the quality, quantity or the, value of an asset” is said by, a. Pickles, , b. R.G.Williamms, , c. L.C. Cropper, , d. R.N. Carter, , 4. Causes of Depreciation is, a. Wear and tear, , b. Exhaustion c. Obsolescence, , d. All the above, , 5. The main object of providing depreciation is, a. To calculate true profit, , b. To show true financial position, , c. To reduce tax, , d. To provide funds for replacement, , 6. Depreciation arises because of, a. Fall in the market value of an asset, , b. Physical wear and tear, , c. Fall in the value of money, , d. None of the above, , 7. Depreciation is a process of, a. Valuation, , b. Allocation, , c. Both allocation and valuation, , d. None of the above, , 8. Under the diminishing balance method of providing depreciation it, a. Increase every year, , b. Constant every year, , c. Decrease every year, , d. None of the above, , 9. Under the straight line method of providing depreciation it, a. Increase every year, , b. Constant every year, , c. Decrease every year, , d. None of the above, , 10. Under the fixed instalment method of providing depreciation it is calculated on, a. original cost b. on balance amount, , c. on scrap value, , d. none of the above, , 11. Under the diminishing balance method of providing depreciation it is calculated on, , Business Accounting-1, , 60

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Srinivas University, a. original cost, , 1st SEMESTER-BBA, b. on balance amount, , c. on scrap value, , d. none of the above, , 12. The amount of depreciation charged on machinery will be debited to, a. Machinery account, , b. Depreciation account, , c. cash account d. Repair account, , 13. Loss on sale of plant and machinery should be written off against, a. Share premium, , b. Depreciation fund account, , c. Sale account, , d. Profit and loss account, 14. Loss on sale of machinery will be, a. Debited on machinery account, , b. Credited on machinery account, , c. Credit to profit and loss account, , d. None of the above, , 15. Assets which have a limited useful life are termed as, a. Limited assets, , b. Depreciable assets, , c. Unlimited assets, , d. None of these, , 16. Process of becoming out of date is termed as, a. Physical deterioration, , b. Depletion, , c. Obsolescence, , d. Amortization, , 17. Which of the term is used to write off in reference to tangible fixed assets?, a. Depreciation, , b. Depletion, , c. Amortization, , d. Both b and c, , 18. The economic factors causing depreciation, a. Time factor b. Obsolescence and inadequacy c. Wear and tear d. Money valuation, 19. Total depreciation cannot exceed its, a. Scrap value, , b. Cost value c. Market value, , d. Depreciable value, , 20. Depreciation value of asset is equal to, a. Cost +scrap value, , c. Cost –Scrap value, , b. Cost +market value, , d. None of these, 21. Depreciation does not depend on fluctuations as, a. Market value of asset, , b. Cost price of asset, , c. Scarp value of asset, , d. None of these, , 22. Depreciation is, a. An income, , b. An asset, , c. A loss, , d. A liability, , 23. The book value of an asset is obtained by deducting depreciation from its, a. Market value, , b. Scrap value, , c. Market +cost price, , d. Cost - depreciation, , Business Accounting-1, , 61

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Srinivas University, , 1st SEMESTER-BBA, , 24. Cost of the asset is Rs 48,000, scarp value is 8,000 and estimated life 8 years. Amount of, depreciation is, a. Rs 5,000, , b. Rs 10,000 c. Rs 15,000, , d. Rs 5,500, , 25.Annual depreciation is 5,000, cost of the asset Rs 20,000. Depreciation rate is, a.25, , b.20, , c.15, , d.10, , 8 Marks Questions:, Illustration Problems on Straight Line Method Depreciation:, , 1. On 1st January, 2009, a firm bought furniture for Rs 5000. The firm writes off depreciation at, 10% on the original cost every year. Show the necessary accounts in the books of the firm for, three years. (Prepare furniture A/C & Depreciation.), Solution:, Depreciation =Cost of the asset * Rate of depreciation, = 5000 *10%, = 500, Dr., Date, 2009, Jan 1, , Particulars, To Bank A/c, (Cost of Furniture, Purchased), , Furniture A/c, Amount, Date, 5,000, Dec 31, Dec 31, , Particulars, By Depreciation A/c, (5000 x 10/100), By Balance C/d, , 5,000, 2010, Jan 1, , To Balance B/d, , 4,500, , To Balance B/d, , 4,000, , 2010, Dec 31, , By Depreciation A/c, (5000 x 10/100), By Balance C/d, , 2011, Dec 31, , By Depreciation A/c, (5000 x 10/100), By Balance C/d, , 4,000, 2012, Jan 1, Dr., 2009, Dec31, , To Balance B/d, , To Furniture b/d, , Business Accounting-1, , 4,500, 5,000, , 4,500, 2011, Jan 1, , Cr., Amount, 500, , 3,500, Depreciation A/c, 2009, 500, Dec31, , 500, 4,000, 4,500, 500, 3,500, 4,000, , Cr., By Profit & Loss A/c, , 500, 62

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Srinivas University, , 1st SEMESTER-BBA, 500, , 2010, Dec31, , To Furniture b/d, , 500, 500, , 2011, Dec31, , To Furniture b/d, , 500, 500, , 500, 2010, Dec31, , By Profit & Loss A/c, , 500, 500, , 2011, Dec31, , By Profit & Loss A/c, , 500, 500, , 2. From the following particulars relating to a business, prepare machinery account for 4 years, from 2015 to 2018, closing the account every year on 31 December., 1.4.2015: Machinery bought for Rs. 45,000 and installed at a cost of Rs. 5,000, 30.06.2017: Second machinery bought for Rs. 30,000, 31.12.2017: The first machinery purchased on 1.4.2000 was sold for Rs. 35,000 1.1.2018: Third, machinery was purchased at a cost of Rs. 75,000, Depreciation is charged at the rate of 10% p.a. on original cost method., Solution:, 1/1/2015 – 31/12/2015 -, , 1st year, , 1/1/2016 – 31/12/2016 -, , 2nd year, , 1/1/2017 – 31/12/2017 -, , 3rd year, , 1/1/2018 – 31/12/2018 -, , 4th year, , Dr., , Machinery Account, , Date, Particulars, 2015, To Bank A/c, April 1 Installation, , 45,000, 5,000, , Amount, 50,000, , Date, 2015, Dec.31, , Cr., Particulars, By Depreciation A/c, (50000*10%*9/12), Balance C/d, , Amount, 3,750, , 2016, Dec. 31, , By Depreciation A/c, Balance c/d, , 5,000, 41,250, 46,250, , 2017, Dec. 31, , By Depreciation A/c:, I machine, 5,000, II machine, 1,500, By Bank (sale of, machine), , 6,500, , 50,000, 2016, Jan. 1, , To Balance b/d, , 46,250, 46,250, , 2017, Jan. 1, , To Balance b/d, , 41,250, , June, 30, , ToBank A/c, (purchase of new machine), , 30,000, , Business Accounting-1, , 46,250, 50,000, , 35,000, , 63

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Srinivas University, , 1st SEMESTER-BBA, By P & L A/c (loss on, sale), By Balance c/d, , 1,250, 28,500, 71,250, , 71,250, 2018, Jan. 1, , To Balance b/d, To Bank A/c, (purchase of new machine), , 28,500, 75,000, , 2018, Dec. 31, , By depreciation A/c:, II machine, 3,000, III machine, 7,500, Balance c/d, , 10,500, 93,000, 1,03,500, , 1,03,500, 2019, Jan. 1, , To Balance b/d, , 93,000, , Working Note: 1. Profit/Loss on sale of machinery:, Purchase price as on 1-4-2015, Add: installation cost, Less: Depreciation : 2000 (for 9 months @ 10%), 2016 & 2017 (for two years @ 10%), Book value as on the date of sale (31-12-2017), Less: Sales, Loss on sale of machinery, , Rs., 45,000, 5,000, 3,750, 10,000, , On the first machine – for one year (50,000 x 10%), , 5,000, , On the new machine – for 6 months 30,000x6½x10%), , 1,500, , Rs., 50,000, 13,750, 36,250, 35,000, 1,250, , 6,500, (from 30-06-2016 to 31-12-17) 2003:, On the second machine of one year (30,000x10%), , 3,000, , On the third machine Purchased on 1-1-2016, for one year 75,000 x 10%) 7,500, 10,500, 3., A firm purchased a machine on 1.1.2009 for Rs. 30,000. Depreciation is to be provided, on the machine annually on straight line method. The useful life of the machine is 10 years. The, scarp value of the machine at the end of life is Rs. 3,000., Find out:, (1) The amount of depreciation to be charged every year and, (2) The rate of depreciation per annum., Business Accounting-1, , 64

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Srinivas University, , 1st SEMESTER-BBA, , Solution:, (1) The amount of depreciation to be charged every year., Depreciation = Cost of asset - Scrap value of the asset, Number of years the asset is estimated to last, Depreciation = 30000 - 3000, 10, = Rs. 2,700, (2) Rate of depreciation per annum, Rate of Depreciation = Annual Depreciation * 100, Cost of the asset, = 2700 * 100, 30000, = 9%, 4., On 1 January, 2004, plant and machinery was purchased for a sum of Rs 25,000., Additions to the extent of Rs 5,000 on 1 July, 2005 and to the extent of Rs 10,000 on 1 October, 2006 were made. Prepare the ledger accounts of the plant and machinery for 3 calendar years, providing depreciation at 10% on the original value of the asset., Solution:, Dr., Date, 2004, Jan. 1, , 2005, Jan. 1, July 1, , Plant and machinery Account, Particulars, To Bank A/c, , Amount, 25,000, , To Balance b/d, , 25,000, 22,500, , To Bank A/c, (purchase of new machine))), , Business Accounting-1, , 5,000, , Date, 2004, Dec.31, , 2005, Dec.31, , Particulars, By Depreciation A/c, (25000*10%), By Balance c/d, (25000-2500), , Cr., Amount, 2,500, , 22,500, 25,000, , By Depreciation A/c:, Old machine, (25000*10%), 2,500 2,750, New machine, 250, (5,000x10%x6/12), By Balance c/d, 24,750, (27500-2750), 65

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Srinivas University, , 2006, Jan.1, Oct.1, , 2007, Jan.1, , To Balance b/d, To Bank A/c, (purchase of new machine), , To Balance b/d, , 1st SEMESTER-BBA, 27,500, 24,750, , 27,500, 2006, Dec 31, , 10,000, , By Depreciation A/c:, Old machine, 2,500, I New machine, 500, (5,000x10%), II new machine, 250, (10,000x10%x3/12), By Balance c/d, (34750-3250), , 34,750, 31,500, , 3,250, 31,500, 34,750, , Illustration Problem on Diminishing Balance Method Depreciation:, 5., A company whose accounting year is the calendar year purchased on 1st April, 2008, machinery costing Rs 30000. In further purchased machinery on 1st October 2008 costing Rs, 20000 and on 1st July 2009, costing Rs 10000., On 1st January, 2010, one third of the machinery which was installed on 1 st April, 2008 became, obsolete and was sold for Rs. 3000, Show how the machinery account and depreciation would appear in the books of the company., The depreciation to be charged is at 10% p.a. on written down value method for 3 years., Solution:, Dr., , Machinery Account, , Date, Particulars, 2008, To Bank A/C, April 1 (Cost of machinery, Purchased), Oct. 1 To Bank A/C, (Cost of machinery, Purchased), , Amount, 30000, , 20000, , 2009, Jan1, July1, , To Balance b/d., , 50000, 47250, , To Bank A/C, , 10000, , 2010, Jan1, , To Balance b/d., , 57250, 52025, , Business Accounting-1, , Date, 2008, Dec 31, , 2009, Dec 31, , 2010, Jan1, , Cr., Particulars, By Depreciation A/c, 1 (30000*10%*9/12) =, 2250, 2 (20000*10%*3/12) =, 500, By balance c/d, , Amount, 2750, , 47250, 50000, , By depreciation a/c, Machine 1 & 2, (47250*10%), 4725, Machine 3, (10000*10%*6/12) 500 5225, By balance c/d, 52025, 57250, By bank A/C, 3000, 66

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Srinivas University, , 1st SEMESTER-BBA, Jan 1, 31 Dec, 31 Dec, , 2011, Jan1, , To balance b/d, , By profit and loss A/c, By depreciation a/c, By balance c/d, , 5325, 4370, 39330, 52025, , 52025, 39330, , Working Note: 1. Profit/Loss on sale of machinery:, Cost of 1/3rd of the asset (1/4/2018), (30000*1/3), Less: Depreciation, On 31/12/2018 (10000*10%*9/12), On 31/12/2019 (10000-750) = 9250 (9250*10%), Book value as on the date of sale (1/1/2010), Less: Sales, Loss on sale of machinery, , Rs., , Working Note: 2. Calculation of depreciation for the year 2010:, Total written down value as on January 1, 2010, Less : Written down value of 1/3rd of plant sold:, (10000- 1675), , Rs., , Rs., 10000, , 750, 925, , 1675, 8325, 3000, (5325), Rs., 52025, 8325, 43700, , Depreciation = 43700 * 10%, = 4370, 6., A firm purchased machinery on 1 July 2007 for Rs 90,000 and incurred expenses Rs, 10,000 on its erection. On 30 June 2010, a part of the plant purchased on 1July 2007 for Rs, 50,000 was sold for Rs 32,000. A new plant was bought on the same day for Rs 60,000., Show the plant account for 2007 to 2010, charging 20% depreciation under reducing balance, method., Solution:, Dr., Date, 1/07/07, , Plant Account, Particulars, To Bank a/c, (90000+10000), , Amount, 100000, , 100000, Business Accounting-1, , Date, 31/12/07, , Cr., Particulars, By depreciation a/c, (100000 * 20%*6/12), By balance c/d, , Amount, 10000, 90000, 100000, 67

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Srinivas University, 1/1/08, , 1st SEMESTER-BBA, , To balance b/d, , 90000, , To balance b/d, , 90000, 72000, , 1/1/10, To balance b/d, 30/06/10 To P&L a/c, 30/06/10 To bank a/c, , 72000, 57600, 6080, 60000, , 1/1/11, , 123680, 76464, , 1/1/09, , To balance b/d, , 31/12/08, , 31/12/09, , 30/06/10, 30/06/10, 31/12/10, , By depreciation a/c, Machine 1, (90000*20%), By balance c/d, By depreciation a/c, (72000*20%), By balance c/d, By depreciation a/c, By Bank a/c, By depreciation a/c, 1-6336, 2-(60000*20%*6/12), 6000, By balance c/d, , Working Note: 1. Profit/Loss on sale of machinery:, Cost of part of the asset (1/07/2007), Less: Depreciation, On 31/12/2007 (50000*20%*6/12), On 31/12/2008 (50000-5000) = 45000 (45000*20%), On 31/12/2009 (45000-9000) = 36000 (36000*20%), On 30/06/2010 (36000-7200) = 28800 (28800*20%*6/12), Book value as on the date of sale (30/06/2010), Less: Sales, Profit on sale of machinery, , Rs., , Working Note: 2. Calculation of depreciation for the year 2010:, Total written down value as on January 1, 2010, Less : Written down value of part of machinery sold:, (50000-24080), , Rs., , 5000, 9000, 7200, 2880, , 18000, , 72000, 90000, 14400, 57600, 72000, 2880, 32000, 12336, , 76464, 123680, , Rs., 50000, , 24080, 25920, 32000, 6080, Rs., 57600, 25920, 31680, , Depreciation = 31680 * 20%, = 6336, 7., On 1.1.2010, a company purchased a machine for Rs. 30,000. Depreciation at the rate of, 10% was written off for the first two years under fixed instalment method, for the next two years, , Business Accounting-1, , 68

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Srinivas University, , 1st SEMESTER-BBA, , at 15% was written off on the diminishing balance method. The machinery was then sold on, 31.12.2013 for Rs. 15,000. Write up Machinery A/c for four years and close the same., Dr., , Machinery Account, , Date, Particulars, 1.1.2010 To Bank A/C, , Amount, 30,000, , 1.1.2011 To Balance b/d., , 30000, 27000, , 1.1.2012 To Balance b/d., , 27000, 24000, , 1.1.2013 To balance b/d, , 24000, 20400, , Cr., , Date, Particulars, 31/12/2010 By Depreciation A/c, (30000*10%), By balance c/d, 31/12/2011 By Depreciation A/c, (30000*10%), By balance c/d, 31.12.2012 By Depreciation A/c, (24000*15%), By balance c/d, 31.12.2013 By Depreciation A/c, (20400*15%), By Bank A/C, By profit and loss A/c, , 20400, , Working Note: 1. Profit/Loss on sale of machinery:, Cost of the asset (1/1/2010), Less: Depreciation, On 31/12/2010, On 31/12/2011, On 31/12/2012, On 31/12/2013, Book value as on the date of sale (31/12/2013), Less: Sales, Loss on sale of machinery, , Rs., , 3000, 3000, 3600, 3060, , Amount, 3000, 27000, 30000, 3000, 24000, 27000, 3600, 20400, 24000, 3060, 15000, 2340, 20400, Rs., 30000, , 12660, 17340, 15000, (2340), , 8. On 01.01.2003, a firm bought a machinery costing Rs. 90,000 and spent Rs. 10,000 for its, carriage and installation. On 01.01.2005, they bought additional machinery costing Rs. 50,000., On 01.07.2005, they sold the machinery which was brought on 01.01.2003 for Rs. 80,000. On, 01.01.2006, they bought another machinery for Rs. 50,000. Depreciation is to be charged at 10%, p.a. under diminishing balance method. Show machinery account for 4years., Dr., Date, , Machinery Account, Particulars, , Business Accounting-1, , Amount, , Date, , Cr., Particulars, , Amount, 69

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Srinivas University, 1.01.2003 To Bank a/c, (90000+10000), , 1.1.2004, , To balance b/d, , 1st SEMESTER-BBA, 100000, , 100000, 90000, , 1.1.2005 To balance b/d, 1.1.2005 To Bank a/c, 1.07.2005 To P&L a/c, , 90000, 81000, 50000, 3050, , 1.01.06, 1.01.06, , 134050, 45000, 50000, , 31.12.03, , 31.12.04, , 1.07.05, 1.07.05, 31.12.05, 31.12.05, , 1.01.07, , To balance b/d, To Bank a/c, , To balance b/d, , 31.12.06, , By depreciation a/c, (100000*10%), By balance c/d, By depreciation a/c, (90000*10%), By balance c/d, By depreciation a/c, (81000*10%*6/12), By Bank a/c, By depreciation a/c, (50000*10%), By balance c/d, By depreciation a/c, 2- (45000*10%) =, 4500, 3- (50000*10%) =, 5000, By balance c/d, , 95000, 85500, , Working Note: 1. Profit/Loss on sale of machinery:, Cost of the asset (1/1/2003), Less: Depreciation, On 31/12/2003, On 31/12/2004, On 1/07/2005, Book value as on the date of sale (1/07/2005), Less: Sales, Profit on sale of machinery, , Rs., , 10000, 9000, 4,050, , 10000, 90000, 100000, 9000, 81000, 90000, 4,050, 80000, 5000, 45000, 134050, 9500, , 85500, 95000, , Rs., 100000, , 23050, 76950, 80000, 3050, , Illustration Problems on Annuity Method Depreciation:, 9., A firm acquires a lease costing Rs. 20000 on 1st January, 2015 for a term of 4 years. You, find from the Annuity Tables that in order to write off the lease on annuity method at 5% interest, per annum, the amount to be written off annually as depreciation amounts to Rs. 5640.24. Show, the Lease Account, Interest Account and Depreciation Account for 4 years., Solution:, Dr., Business Accounting-1, , Lease Account, , Cr., 70

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Srinivas University, Date, 2015, Jan.1, Dec 31, , 1st SEMESTER-BBA, , Particulars, , Amount, , To Bank a/c, To interest a/c, (20000*5%), , 20000, 1000, , Date, 2015, Dec.31, Dec.31, , Particulars, , Amount, , By Depreciation A/c., By Balance c/d., , 5640.24, 15359.76, , 21000.00, 2016, Jan.1, Dec.31, , To Balance b/d., To Interest A/c., (15359.76x5/100), , 15359.76, 767.99, , 21000.00, 2016, Dec.31, Dec.31, , By Depreciation A/c., By Balance c/d., , 16127.75, 2017, Jan.1, Dec.31, , 2018, Jan.1, Dec.31, , To Balance b/d., To Interest A/c., (5371.65x5/10), To Balance b/d., To Interest A/c., (5371.65x5/100), , 16127.75, , 10487.51, 524.38, , 2017, Dec.31, Dec.31, , 11011.89, 5371.65, 268.59, , 2018, Dec.31, , By Depreciation A/c., By Balance c/d., , 5640.24, 5371.65, , By Depreciation A/c., , 11011.89, 5640.24, , 5640.24, Dr., Date, 2015, Dec.31, 2016, Dec.31, , Amount, , To Profit and Loss A/c., , 1000.00, 1000.00, , To Profit and Loss A/c., , 767.99, 767.99, , 2017, Dec.31, , To Profit and Loss A/c., , 524.38, 524.38, , 2018, Dec.31, , To Profit and Loss A/c., , 268.59, 268.59, , Dr., Date, 2007, Dec.31, , 5640.24, , Interest Account, Particulars, , Date, 2015, Dec.31, , Cr., Particulars, , Amount, , By Lease A/c., , 1000.00, 1000.00, , 2016, Dec.31, , By Lease A/c., , 767.99, 767.99, , 2017, Dec.31, , By Lease A/c., , 524.38, 524.38, , 2018, Dec.31, , By Lease A/c., , 268.59, 268.59, , Depreciation Account, Particulars, , Amount, , To Lease A/c., , 5640.24, 5640.24, , 2008, Business Accounting-1, , 5640.24, 10487.51, , Date, 2007, Dec.31, , Cr., Particulars, , Amount, , By Profit and Loss A/c, , 5640.24, 5640.24, , 2008, 71

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Srinivas University, Dec.31, 2009, Dec.31, 2010, Dec.31, , 1st SEMESTER-BBA, , To Lease A/c., , 5640.24, 5640.24, , To Lease A/c., , 5640.24, 5640.24, , To Lease A/c., , 5640.24, , Dec.31, , By Profit and Loss A/c, , 5640.24, 5640.24, , 2009, Dec.31, , By Profit and Loss A/c, , 5640.24, 5640.24, , 2010, Dec.31, , By Profit and Loss A/c, , 5640.24, , 10., A firm acquires lease for Rs.20000 for 5 years from 01.01.2009. Prepare Lease Account, for the first two years calculating interest at 5% per annum, under the Annuity Method., Depreciation required annually is Re.0.230975 to write off Re. 1 over a period of 5 years., Solution:, Note: The amount of depreciation to be charged can be calculated as follows:, As per the annuity tables, to write off Re.1, the amount required is Re.0.230975. To write off, Rs.20000, i.e., the cost of Rs.20000, the amount of depreciation required is:, Annual depreciation = Annuity value * Cost of the asset, 0.230975 x 20000 = Rs. 4619.50, Dr., Date, 2009, Jan.1, Dec.31, , Lease Account, Particulars, To Bank A/c., (Cost of lease), To Interest A/c., (20000x5/100), , Amount, 20000.00, 1000.00, , Date, 2009, Dec.31, Dec.31, , Cr., Particulars, , Amount, , By Depreciation A/c., By Balance c/d., , 4619.50, 16380.50, , 21000.00, 2010, Jan.1, Dec.31, , To Balance b/d., To Interest A/c., (16380.50x5/100), , 16380.50, 819.02, 17199.52, , 2011, Jan.1, , To Balance b/d., , 21000.00, 2010, Dec.31, Dec.31, , By Depreciation A/c., By Balance c/d., , 4619.50, 12580.02, 17199.52, , 12580.02, , 11., Vijaya Co. Ltd. Acpuires a lease costing Rs 2,00,000 on 1.1.2006 for a term of 4 years., You find from annuity tables that in order to write off lease on the annuity method at 6% p.a., interest, the amount to be written off annually workout to be Rs 0.288591 for every rupee., Prepare lease account for four years., Business Accounting-1, , 72

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Srinivas University, , 1st SEMESTER-BBA, , Depreciation = Annuity value * Cost of the asset, 0.288591 X 200000, = 57,718.2, Vijaya Co. Ltd., Dr., Date, 2006, Jan. 1, Dec.31, , Lease Account, Particulars, , Amount, , To Bank A/c, To Interest A/c, (2,00,000x6%), , 2,00,000, 12000, , Date, 2006, Dec.31, Dec.31, , Cr., Particulars, , Amount, , By Depreciation A/c, By Balance c/d, , 57,718.20, 1,54,281.80, , 2,12,000.00, 2007, Jan.1, Dec.31, , To Balance b/d, To Interest A/c, (1,54,281.80x6%), , 2,12,000.00, , 2007, 1,54,281.80 Dec.31, 9,256.91, Dec.31, , By Depreciation A/c, By Balance c/d, , 1,63,538.71, 2008, Jan.1, Dec.31, , To Balance b/d, To Interest A/c, (1,05,820.51x6%), , 1,63,538.71, , 2008, 1,05,820.51 Dec.31, 6,349.23, Dec.31, , By Depreciation A/c, By Balance c/d, , 1,12,169.74, 2009, Jan.1, Dec.31, , To Balance b/d, To Interest A/c, (Balancing figure), , 54,451.54, 3,266.66, , 57,718.20, 1,05,820.51, , 57,718.20, 54,451.54, 1,12,169.74, , 2009, Dec.31, , By Depreciation A/c, , 57,718.20, , 57,718.20, , 57,718.20, , 12., On January 1, 2000, a company purchased a lease for five years at a cost of Rs. 15,000. It, is proposed to depreciate the lease by annuity method charging 6% interest. Annuity table, indicates that Rs. 1 can be depreciated by charging annuity Rs. 0.237396. Show the lease account, for 5 years., Solution:, Depreciation = 0.237396 X 15000, = 3,560.94, Dr., Date, , Lease Account, Particulars, , Business Accounting-1, , Amount, , Date, , Cr., Particulars, , Amount, 73

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Srinivas University, 2000, Jan. 1, Dec.31, , To Bank A/c, To Interest A/c, (15,000 x 6%), , 1st SEMESTER-BBA, 2000, 15,000.00 Dec. 31, 900.00, Dec 31, , By Depreciation A/c, (0.237396 x 15,000), By Balance c/d, , 15,900.00, 2001, Jan 1, Dec.31, , To Balance b/d, To Interest A/c, (12,339.06 x 6% ), , To Balance b/d, To Interest A/c, (9,518.46 x 6%), , 9,518.46, 571.11, , By Depreciation A/c, By Balance c/d, , To Balance b/d, To Interest A/c, (6,528.67 x 6%), , 6,528.67, 391.72, , 2002, Dec. 31, Dec. 31, , By Depreciation A/c, By Balance c/d, , To Balance b/d, To Interest A/c, (balancing Fig), , 3,359.41, 201.53, , 3,560.94, 6,528.67, 10,089.57, , 2003, Dec. 31, Dec. 31, , By Depreciation A/c, By Balance c/d, , 6,920.35, 2004, Jan. 1, Dec.31, , 3,560.94, 9,518.46, 13,079.40, , 10,089.57, 2003, Jan. 1, Dec.31, , 12,339.06, 15,900.00, , 2001, 12,339.06 Dec. 31, 740.34, Dec. 31, 13,079.40, , 2002, Jan. 1, Dec.31, , 3,560.94, , 3,560.94, 3,359.41, 6,920.35, , 2003, Dec. 31, , By Depreciation A/c, , 3,560.94, , 3,560.94, , 3,560.94, , 13., A firm purchased a lease for Rs. 10,000 to be depreciated over a period of 4 years under, annuity system. The rate of interest is 5% per annum. The annuity table shows that the annual, amount required to write off rupee one in 4 years at 5% per annum is Rs. 0.282012., Prepare the interest A/c and lease account for 4 years ending on 31 March 2011., Solution :, Working Note: Calculation of Depreciation:, = Rs. 0.282012 x Rs. 10,000 = Rs. 2820.12, Dr., Date, 2007, Apr.1, 2008, Mar.31, , Lease Account, Particulars, To Bank A/c, , Date, 2008, 10,000.00 Mar. 31, , To Interest A/c, , 500.00, , Business Accounting-1, , Amount, , Cr., Particulars, , Amount, , By Depreciation A/c, By Balance c/d, , 2,820.12, 7,679.88, 74

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Srinivas University, , 1st SEMESTER-BBA, , (10,000 x 5%), 10,500.00, 2008, Ap. 1, 2009, Mar.31, , To Balance b/d, , 7,679.88, , To Interest A/c, (7,679.88x 5%), , 384.00, , 10,500.00, 2009, Mar. 31, , By Depreciation A/c, By Balance c/d, , 8,063.88, 2009, Ap. 1, 2010, Mar.31, , To balance b/d, , 5,243.76, , To Interest A/C, (5,243.76 x 5%), , 262.19, , 8,063.88, 2010, Mar.31, , By Depreciation A/c, By Balance c/d, , 5505.95, 2010, Ap. 1, 2011, Mar.31, , To Balance b/d, , 2,685.83, , To Interest A/c, , 134.29, 2,820.12, , Dr., Date, 2008, Mar.31, , Amount, , To Profit & Loss A/c, , 500.00, 500.00, , 2009, Mar.31, , To Profit & Loss A/c, , 384.00, 384.00, , 2010, Mar.31, , To Profit & Loss A/c, , 262.19, 262.19, , 2011, Mar.31, , To Profit & Loss A/c, , 134.29, 134.29, , 2,820.12, 2685.83, , 5505.95, 2011, Mar. 31, , By Depreciation A/c, , 2,820.12, , 2,820.12, , Interest Account, Particulars, , 2,820.12, 5,243.76, , Date, 2008, Mar. 31, , Cr., Particulars, , Amount, , By Lease A/c, , 500.00, 500.00, , 2009, Mar. 31, , By Lease A/c, , 384.00, 384.00, , 2010, Mar. 31, , By Lease A/c, , 262.19, 262.19, , 2011, Mar. 31, , By Lease A/c, , 134.29, 134.29, , OTHER PROBLEMS:, 15., X purchased machinery on 1.1.2012 for Rs. 30,000 and spent Rs. 3,000 for its erection, and Rs. 2,000 for its repairs. The scrap value of the machine at the end of 5 years of its life was, estimated to be 5,000. If depreciation is charged equally every year, what is the amount of, depreciation to be charged every year?, Solution:, Business Accounting-1, , 75

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Srinivas University, , 1st SEMESTER-BBA, , Depreciation = Cost of asset - Scrap value of the asset, Number of years the asset is estimated to last, Cost of the asset = (30000+3000+2000), = 35000, Depreciation = 35000 - 5000, 5, = 6000, 16., A machine was purchased for Rs. 25,600 on 1/1/2017. It was estimated that the expected, life is 4 years. Its scrap value is Rs.8,100., Calculate the rate of depreciation to be charged under the diminishing balance method. Also, prepare the machinery account for 4 years., Solution:, Depreciation = Cost of asset - Scrap value of the asset, Number of years the asset is estimated to last, Depreciation = 25600 - 8100, 4, = 4375, Rate of Depreciation = Annual Depreciation * 100, Cost of the asset, = 4375 * 100, 25600, = 17.09%, , Dr., Date, Particulars, 1/1/2017 To Bank a/c, , Business Accounting-1, , Machinery Account, Amount, 25,600, , Date, Particulars, 31/12/2017 By depreciation, (25600*17.09%), , Cr., Amount, 4375, , 76

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Srinivas University, , 1st SEMESTER-BBA, 31/12/2017 By balance c/d, , 1/1/2018 To balance b/d, , 1/1/2019 To balance b/d, , 1/1/2020 To balance b/d, , 25600, 21225, , 21225, 17598, , 17598, 14591, , 31/12/2018 By depreciation a/c, (21225*17.09%)c, By balance c/d, 31/12/2019 By depreciation a/c, (17598*17.09%), 31/12/2019 By balance c/d, 31/12/2020 By depreciation a/c, (14591*17.09%), 31/12/2020 By bank a/c, By P/L A/C, , 1/1/2021 To balance b/d, , 14591, 3997, , Working Note: 1. Profit/Loss on sale of machinery:, Cost of the asset (1/01/2017), Less: Depreciation, On 31/12/2017, On 31/12/2018, On 31/12/2019, On 31/12/2020, Book value as on the date of sale (31/12/2020), Less: Sales, Loss on sale of machinery, , Rs., , 4375, 3627, 3007, 2494, , 21225, 25600, 3627, 17598, 21225, 3007, 14591, 17598, 2494, 8100, 3997, 14591, , Rs., 25600, , 13503, 12097, 8100, 3997, , 17., On 1.1.2010, a company purchased a machine for Rs. 30,000. Depreciation at the rate of, 10% was written off for the first two years under fixed instalment method, for the next two years, at 15% was written off on the diminishing balance method. The machinery was then sold on, 31.12.2013 for Rs. 15,000. Write up Machinery A/c for four years and close the same., Dr., , Machinery Account, , Date, Particulars, 1.1.2010 To Bank a/c, , Amount, 30,000, , 1/1/2011 To balance b/d, , 30000, 27000, 27000, , Business Accounting-1, , Date, Particulars, 31/12/2010 By depreciation, (30000x10%), By balance c/d, 31/12/2011 By depreciation, By balance c/d, , Cr., Amount, 3000, 27000, 30000, 3000, 24000, 27000, 77

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Srinivas University, 1/1/2012 To balance b/d, , 1/1/2013 To balance b/d, , 1st SEMESTER-BBA, 24000, , 24000, 20400, , 31/12/2012 By depreciation, (24000x15%), By balance c/d, , 3600, 20400, 24000, 3060, , 31/12/2013 By depreciation, (20400x15%), 31/12/2013 By bank a/c, 31/12/2013 By P/L A/C, , 15000, 2340, 20400, , 20400, , 19., A firm acquires a lease for Rs. 20,000 for 5 years from 1.1.2009. Prepare lease a/c for the, first two years, calculating interest at 5% per annum, under the annuity method., Depreciation required annually is Re. 0.231975 to write off Re. 1 over a period of 5 years., Solution:, Note: The amount of depreciation to be charged can be calculated as follows:, As per the annuity tables, to write off Re.1, the amount required is Re.0.231975. To write off, Rs.20000, i.e., the cost of Rs.20000, the amount of depreciation required is:, 0.231975 x 20000 = Rs. 4639.50, Dr., Date, 2009, Jan.1, Dec.31, , Lease Account, Particulars, To Bank A/c., (Cost of lease), To Interest A/c., (20000x5/100), , Amount, 20000.00, 1000.00, , Date, 2009, Dec.31, Dec.31, , Cr., Particulars, , Amount, , By Depreciation A/c., By Balance c/d., , 4639.50, 16360.50, , 21000.00, 2010, Jan.1, Dec.31, , To Balance b/d., To Interest A/c., (16360.50x5/100), , 16360.50, 818.03, 17178.53, , 2011, Jan.1, , To Balance b/d., , 21000.00, 2010, Dec.31, Dec.31, , By Depreciation A/c., By Balance c/d., , 4639.50, 12539.03, 17178.53, , 12539.03, , 21. On 1st January 2016, a firm purchased furniture at a cost of Rs 30,000. Its life was estimated, to be 3 years with a residual value of Rs 3,000. Assuming that the furniture was sold for Rs 3,000, at the end of 3 years. Show the furniture account for 3 years allowing depreciation as per fixed, installment method., Business Accounting-1, , 78

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Srinivas University, , 1st SEMESTER-BBA, , Solution:, Depreciation = Cost of asset - Scrap value of the asset, Number of years the asset is estimated to last, = 30,000 – 3000, 3, = 9000, Dr., , Furniture Account, , Date, Particulars, 1/1/2016 To Bank A/C, , Amount, 30000, , 1/1/2017 To Balance b/d, , 30000, 21000, , 1/1/2018 To Balance b/d, , 21000, 12000, , Date, Particulars, 31/12/2016 By Depreciation A/C, 31/12/2016 By Balance c/d, 31/12/2017 By Depreciation a/c, 31/12/2017 By Balance c/d, 31/12/2018 By Depreciation a/c, 31/12/2018 By Bank a/c, , 12000, , Cr., Amount, 9000, 21000, 30000, 9000, 12000, 21000, 9000, 3000, 12000, , Working note: Calculation of profit or loss on sale of asset:, Cost of the asset (1/1/2016), , -, , 30000, , Less: Depreciation, 31/12/2016, 31/12/2017, , 9000, 9000, , 31/12/2018, 9000, 27000, Book value of furniture on (31/12/2018), 3000, Sale of furniture, 3000, Profit/ loss, 22. B) An asset is purchased for Rs 55,000 on 1/1/2019. Depreciation is to be charged annually, according to the straight line method. The useful life of the asset is 10 years and its scrap value is, Rs 5,000. Ascertain the balance of the asset at the end of three years., C) The cost of an asset is Rs 25,000. Depreciation is to be charged annually according to the, straight line method. The useful life of the asset is 10 years, and its residual value is Rs 5,000, , Business Accounting-1, , 79

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Srinivas University, , 1st SEMESTER-BBA, , Solution:, B) Depreciation = Cost of asset - Scrap value of the asset, Number of years the asset is estimated to last, = 55,000 - 5,000, 10, = 5000, Dr., , Asset Account, , Date, Particulars, 1/1/2019 To Bank A/C, , Amount, 55000, , 1/1/2020 To Balance b/d, , 50000, , 1/1/2021 To Balance b/d, , 50000, 45000, , 1/1/2022 To Balance b/d, , 45000, 40000, , Date, 31/12/2019, 31/12/2019, 31/12/2020, 31/12/2020, , Cr., Particulars, By Depreciation A/C, By Balance c/d, By Depreciation A/C, By Balance c/d, , 31/12/2021 By Depreciation A/C, 31/12/2021 By Balance c/d, , Amount, 5000, 50000, 5000, 45000, 50000, 5000, 40000, 45000, , C) Depreciation = Cost of asset - Scrap value of the asset, Number of years the asset is estimated to last, = 25,000 - 5,000, 10, = 2000, , Business Accounting-1, , 80

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Srinivas University, , 1st SEMESTER-BBA, , UNIT-IV, BANK RECONCIALIATION STATEMENT AND, RECTIFICATION OF ERRORS, Multiple Choice Questions:, 1. On the debit side of the cash book in Bank reconciliation Statements, the bank column, represents, a. Cheques issued for payment, b. Cash withdrawn from bank for office use and personal use, c. Cash paid into bank, d. None of these, 2. On the credit side of the cash book in Bank reconciliation Statements, the bank column, represents, a. Cheques issued for payment, b. Cheques deposited into bank for collection, c. Cash paid into bank, d. None of these, 3. A bank reconciliation statement is a, a. Part of cash book, b. Part of bank accounts, c. Part of financial statements, d. None of the above, 4. A favourable balance of cash book implies that, a. Credit balance of cash book, b. Debit balance of cash book, c. Bank overdraft, d. Adjusted balance of cash book, 5. A cash deposit made by the business appears on the bank statement as balance of, a. Debit, b. Credit, c. Expenses, d. Liability, Business Accounting-1, , 81

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Srinivas University, , 1st SEMESTER-BBA, , 6. Bank reconciliation statement is the comparison of a bank statement (sent by bank), with the, , (prepared by business), , a. Cash receipt journal, b. Cash payment journal, c. Cash book, d. Financial statements, 7. A check returned by bank marked “NSF” means that, a. Bank can‟t verify your identity, b. There are not sufficient funds in your account, c. Check has been forged, d. Check can‟t be cashed being illegal, 8. In the Bank reconciliation statement “Deposit in transit” is usually, a. Subtracted from bank balance, b. Added to bank balance, c. Added to cash book balance, d. Subtracted from cash book balance, 9. Which of the following error results in unadjusted cash book balance(U), a. Outstanding checks, b. Unpresented checks, c. Deposit in transit, d. Omission of bank charges, 10. Bank reconciliation statement is prepared by, a. Accountant of the business, b. Manager of the business, c. Controller of the bank, d. Accountant of the bank, 11. Bank charges amounting to Rs 5,000 was not entered in the cash book, identify the, correct adjustment in cash book, a. Bank charges will be debited in cash book, b. Bank charges will be added to cash book balance, c. Bank charges will be credited in cash book, Business Accounting-1, , 82

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Srinivas University, , 1st SEMESTER-BBA, , d. Bank charges need no adjustment in, 12. Unpresented cheque also referred as, a. Uncollected checks, b. Uncredited checks, c. Outstanding checks, d. Bounced checks, 13.Uncollected checks also referred as, a. Unpresented checks, b. Uncredited checks, c. Outstanding checks, d. Bounded checks, 14.Rs 5,000 deposited in bank account was entered twice in the cash book, identify the, correct adjustment in cash book, a. Rs 5,000 will be debited, b. Rs5,000 will be credited, c. Rs 10,000 will be credited, d. Rs 10,000 will be debited, 15.Bank sent debit advice of Rs 500 to company being interest on overdraft. It wasn‟t, entered in cash book. Identify the correct adjustment in cash book, a. Rs 500 will be debited, b. Rs 500 will be credited, c. Non-adjustable, d. Rs 100 will be subtracted, 16. Errors may be, a. Errors of omission, b. Errors of commission, c. Errors of principle, d. All the above, 17. The errors which are committed due to wrong posting of transactions, wrong totalling, are, a. Errors of omission, Business Accounting-1, , 83

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Srinivas University, , 1st SEMESTER-BBA, , b.Errors of commission, c. Errors of principle, d.All the above, 18. The errors may be committed at the time of recording the transaction in the books of, original entry, a. Errors of omission, b. Errors of commission, c. Errors of principle, d. All the above, 19. Mistakes committed in the process of recording and presentations of accounting, information are, a. Mistakes, b. Errors, c. Mistakes and errors, d. All the above, 20. The errors affect only one aspect of the transaction is, a. Two sided errors, b. One sided errors, c. Debit error, d. Credit error, 21. Whether error of omission – complete will affect the agreement of the trial balance, a. Yes, b. No, c. Partially, d. Completely, 22. Whether error of commission – complete will affect the agreement of the trial balance, a. Yes, b. No, c. Partially, d. Completely, 23. Whether error of principle– complete will affect the agreement of the trial balance, Business Accounting-1, , 84

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Srinivas University, , 1st SEMESTER-BBA, , a. Yes, b. No, c. Partially, d. Completely, 24. A sale of old machinery for Rs 1,600 was credited to sales account was errored as cash, a/c dr to sales a/c-rectification entry is, a. Cash a/c to machinery account, b. Sales to machinery a/c, c. Machinery a/c to cash, d. None of these, 25. A purchase of Rs 1,800 from Modi Brothers ltd was not entered in the purchases bookrectify the error, a. Modi‟s a/c dr to purchase, b. Purchase a/c dr to Modis a/c, c. No entry, d. It as to be entered in sales account, Illustration Problems on Bank Reconciliation Statement:, 1. From the following particulars of Mr. Rajesh, ascertain the balance as per pass Book as on 31st, December 2017:, , , , , , , , , Bank balance as per cash book Rs. 5000, A cheque deposited into bank, but not collected by the bank Rs. 500., Cheque issued, but not presented for payment Rs. 600, Bank charges debited in the pass book only Rs. 40, Dividends on shares collected by the bank and credited in the pass book R s. 800, Insurance premium paid directly by the bank as per standing advice Rs.100, Interest credited in the pass book only Rs. 50, , Solution:, Bank Reconciliation Statement as on 31st December 2017., Particulars, Bank balance as per cash book, Add:,  Cheque issued, but not presented for payment, Business Accounting-1, , Rs., , Rs., 5000, , 600, 85

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Srinivas University, , , , 1st SEMESTER-BBA, , Dividends on shares collected by the bank and credited in the pass 800, book., 50, Interest credited in the pass book only., , 1450, 6450, , Less:, 500,  A cheque deposited into bank, but not collected by the bank, 40,  Bank charges debited in the pass book only, 100,  Insurance premium paid directly by the bank as per standing, advice., Bank balance as per pass book., , 640, 5810, , 2. From the following particulars of Mr. Suresh, ascertain the balance as per pass Book as on 31st, June 2018:, , , , , , , , , Bank balance as per cash book Rs. 90000, Bank charges debited in the pass book only Rs. 500., Out of cheques issued for Rs. 12000, cheques for Rs. 4000 cashed before June 30, 2018., There was a wrong credit in the pass book for Rs. 7000., Payment received from a customer directly by the bank Rs. 3000, Out of cheque amounting to Rs. 10000 deposited into bank, 5000 only collected before, June 30, 2018., Bills discounted dishonoured Rs. 6000., , Solution:, Bank Reconciliation Statement as on 31st June 2018:., Particulars, Bank balance as per cash book, Add:,  Cheques issued, but not cashed fully before June 30 (12000-4000),  Wrong credit in the pass book,  Payment received from a customer directly by the bank, , Rs., , 8000, 7000, 3000, , Rs., 90000, , 18000, 108000, , Less:,  Bank charges debited in the pass book only.,  Cheque deposited into bank but not collected fully. (10000-5000),  Bills discounted dishonoured, Bank balance as per pass book., , Business Accounting-1, , 500, 5000, 6000, , 11500, 96500, , 86

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Srinivas University, , 1st SEMESTER-BBA, , 3. From the following particulars, ascertain the balance that would appear in the pass Book of, Rajashekar as at 31st December 2011:,  The bank overdraft as per Cash Book as on 31st December 2011 was Rs 18500.,  Interest on overdraft Rs 1200 is debited only in the pass book.,  Bank charges debited in the Pass Book only amounted to Rs. 100,  Cheques issued but not cashed prior to 31st December 2011 amounted to Rs 1500,  Interest on investments collected by bankers and credited in the Pass Book only, amounted to Rs. 1000,  Cheques paid into the Bank, but not cleared before 31st December, 2011 were Rs 2000,  Rs. 1000 in respect of a dishonoured cheque appears only in the Pass Book., Solution:, Bank Reconciliation Statement as on 31st December 2011., Particulars, Bank overdraft as per cash book, Add:,  Interest on overdraft is debited only in the pass book.,  Bank charges debited in the Pass Book only.,  Cheques paid into the Bank, but not cleared.,  Dishonoured cheque appears only in the Pass Book., , Rs., , 1200, 100, 2000, 1000, , Rs., 18500, , 4300, 22800, , Less:, 1500,  Cheques issued but not cashed.,  Interest on investments collected by bankers and credited in the, 1000, Pass Book only., Bank overdraft as per pass book, , 2500, 20300, , 4. From the following particulars of Azgar, prepare Bank Reconciliation Statement as on 31st, December, 2019 and ascertain bank balance as it would appear in cash book:, , , , , , , , , Balance as per pass book Rs. 30000., Cheque issued, but not encashed prior to 31st December, amounted to Rs. 1500., Bank charges of Rs. 250 has been debited in the pass book, but not been entered in the, cash book., There was a wrong debit in the pass book for Rs. 1000., Payment by a cheque Rs. 1900 entered in cash book (bank column) as Rs. 2900., Cheque sent to bank for collection, but remained uncollected Rs. 2500., Dividend on shares collected by the bank and credited in the pass book Rs. 1800., , Solution:, Business Accounting-1, , 87

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Srinivas University, , 1st SEMESTER-BBA, , Bank Reconciliation Statement as on 31st December 2019., Particulars, Balance as per pass book, Add:,  A bank charge has been debited in the pass book.,  Wrong debit in the pass book.,  Cheque sent to bank for collection, but remained uncollected, , Rs., , Rs., 30000, , 250, 1000, 2500, 3750, 33750, , Less:, 1500,  Cheque issued, but not encashed.,  Payment by a cheque Rs. 1900 entered in cash book (bank column), 1000, as Rs. 2900. (2900 – 1900),  Dividend on shares collected by the bank and credited in the pass, 1800, book, Balance as per cash book, , 4300, 29450, , 5. Prepare bank reconciliation statement from the following particulars of Wilson as on 31, August, 2019:, , , , , , , , , , Overdraft as per pass book Rs. 25000, Subscription money paid by the bank Rs 300, Cheque issued but not presented for payment Rs. 7500., Insurance premium paid by the bank Rs. 300, Cheque deposited but not yet cleared Rs. 7000, Interest on overdraft debited in the pass book only Rs. 2500., The receipt side of the cash book (bank column) was under-cast by Rs. 200, Wrongly debited by the bank Rs. 500., , Solution:, Bank Reconciliation Statement as on 31 August, 2019:., Particulars, Bank overdraft as per pass book, Add:,  Cheque issued but not presented for payment.,  The receipt side of the cash book (bank column) was under-cast., , Rs., , 7500, 200, , Rs., 25000, , 7700, 32700, , Less:, Business Accounting-1, , 88

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Srinivas University,  Subscription money paid by the bank,  Insurance premium paid by the bank.,  Cheque deposited but not yet cleared.,  Interest on overdraft debited in the pass book only.,  Wrongly debited by the bank., Bank overdraft as per cash book., , 1st SEMESTER-BBA, 300, 300, 7000, 2500, 500, , 10600, 22100, , 6. Prepare Bank Reconciliation Statement from the particulars of Subhashchandra as on March, 2020:, , , , , , , , , Balance as per pass book Rs. 10000., Interest on bank balance credited in the pass book only Rs. 200., Bank commission debited in the pass book only Rs. 100., The payment side of the cash book (bank column) was overcast by Rs. 1000., Cheque issued but not presented for payment Rs. 2000., Club bill paid by the bank as per standing order Rs. 900., Cheque of Rs. 4000 deposited into bank of which Rs. 3000 only collected in March., , Solution:, Bank Reconciliation Statement as on 31st December 2017., Particulars, Balance as per pass book, Add:,  Bank commission debited in the pass book only,  Club bill paid by the bank as per standing order,  Cheque deposited into bank partially.(4000-3000), , Rs., , 100, 900, 1000, , Rs., 10000, , 2000, 12000, , Less:,  Interest on bank balance credited in the pass book only.,  The payment side of the cash book (bank column) was overcast.,  Cheque issued but not presented for payment, , 200, 1000, 2000, , 3200, 8800, , Illustration Problems on Rectification of Errors:, 7. Rectify the following error:, a. A credit purchase of Rs 925 from Shankar has been entered as Rs 295, b. Sales returns of Rs 200 from Jahangir has been entered in the sales book, Business Accounting-1, , 89

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Srinivas University, , 1st SEMESTER-BBA, , c. A credit sales of Rs 1,000 to Shyam has been omitted to be entered in the sales book, d. Purchase of goods for Rs 100 for private use of the proprietor has been debited to, purchases account., e. Cash sales of Rs 150 to Abdul has been wrongly credited to his A/C., f. Rs 25 paid for Commission has been wrongly treated as receipt of Commission., g. Rs 400 paid for purchases of goods was wrongly debited to furniture account, h. A credit sale of Rs 300 to Savitri was wrongly debited to Gayatri., Solution:, Date, , Particulars, , a., , Purchases Account (925-295), , L.F, Dr, , Dr (Rs), , Cr (Rs), , 630, , To Shankar‟s Account, , 630, , (Being the credit purchases of Rs 925 from, Shankar recorded in the purchases book as Rs 295, Rectified), b., , Sales Returns Account, , Dr, , 200, , Sales Account, , Dr, , 200, , To Jahangir‟s Account, , 400, , (Being the sales returns of Rs 200 from Jahangir, entered in the sales book rectified), c., , Shyam‟s Account, , Dr, , 1,000, , To Sales Account, , 1,000, , (Being the credit sale of Rs 1,000 to Shyam, omitted to recorded in the sales book rectified), d., , Drawings Account, , Dr, , 100, , To Purchases Account, , 100, , (Being the purchases of goods of rs 100 for the, private use of the proprietor debited to purchases, account rectified), e., , Abdul‟s Account, , Dr, , To Sales Account, , 150, 150, , (Being the wrong credit given to Abdul‟s account, Business Accounting-1, , 90

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Srinivas University, , 1st SEMESTER-BBA, , instead of to sales account rectified), f., , The error in this transaction is one-sid, i.e.., affects, only one account viz.., commission account. So,, no journal entry need be passed for the, rectification of this error. This error can be, rectified by debiting commission account with Rs, (25+25)50, , g., , Purchases Account, , Dr, , 400, , To Furniture Account, , 400, , (Being the purchase of goods wrongly debited to, furniture account rectified), Savitri‟s Account, , h., , Dr, , 300, , To Gayatri‟s Account, , 300, , (Being the wrong debit given to Gayatri‟s Account, instead of to Savitri‟s account rectified), , 8. An accountant and could not tally his Trail Balance and placed the difference to a Suspense, Account. Late, the following errors were detected. Pass rectification entries., 1. Rs. 2,080 for the sale of old machinery has been posted to sales account., 2. Rs. 42 the price of goods purchased from Ram Ratan had been shown on the credit side, of his account as Rs. 420., 3. Rs. 18, discount allowed by Chopra has been shown in his account but not posted to, Discount account., 4. A sum of Rs. 480 owed by Naresh had not been included in the list of debtors., 5. Account of Sharma had been debited with Rs. 85 on account of goods returned by him., Solution:, Journal Entries, Date, , Particulars, , 1., , Sales A/c., To Machinery A/c., (Being the sale of old machinery credited to sales account, , Business Accounting-1, , Dr., , Dr., , Cr., , Rs., , Rs., , 2,080, 2,080, 91

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Srinivas University, , 1st SEMESTER-BBA, , instead of machinery account rectified), Ram Ratan‟s A/c (420-42), , 2., , Dr., , 378, , To Suspense A/c., , 378, , (Being the excess credit given to Ram Ratan rectified), 3., , Suspense A/c., , Dr., , 18, , To Discount Received A/c, , 18, , (Being the discount received from Chopra not posted to, discount account rectified), 4., , Debtors (Nagesh) A/c., , Dr., , 480, , To Suspense A/c., , 480, , (Being the amount due from Nagesh not included in the list of, debtors rectified), 5., , Suspense A/c. (85 + 85), , Dr., , 170, , To Sharma‟s A/c., , 170, , (Being the goods returned by Sharma debited to his account, instead of being credited to his account rectified), , 9. Rectify the following errors:, 1. An amount of Rs. 500 withdrawn by the proprietor for his personal use has been debited, to Rent A/c., 2. A purchase of Rs. 250 has been wrongly entered though sales book., 3. A credit sale of Rs. 200 to Shyram has been wrongly passed through purchases book., 4. Salary paid to Office Manager Rs. 2,500/- has been debited to has personal account., 5. Repairs to machinery Rs. 500 is debited to machinery A/c., Solution:, Journal Entries, Date, , Particulars, , L.F., , (a), Drawings A/c., To Rent A/c., , Dr., , Dr., , Cr., , Rs., , Rs., , 500, 500, , (Being the amount withdrawn by the proprietor for his, Business Accounting-1, , 92

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Srinivas University, , 1st SEMESTER-BBA, , personal use debited to rent account rectified), (b), , Purchases A/c., , Dr., , 250, , Sales A/c., , Dr., , 250, , Dr., , 400, , 500, , To Concerned Party‟s A/c., (Being the purchase from the party wrongly entered, through the sales book rectified), (c), , Shyam A/c. (200 + 200), To Sales A/c., , 200, , “ Purchases A/c., , 200, , (Being the credit sale to Shyam wrongly passed through, the Purchases book rectified), (d), , Salary A/c., , Dr., , 2500, , To Manager‟s Personal A/c., , 2500, , (Being the salary paid to Manager wrongly debited to, his personal account rectified), (e), , Repairs A/c., , Dr., , 500, , To Machinery A/c., , 500, , (Being the repairs to machinery debited to machinery, account instead of to machinery repairs account, rectified), , 10. Rectify the following errors observed before the closure of the Books of Account., i. An amount of Rs. 100 spent on repairs to machinery has been wrongly debited to, Machinery A/c., ii. Sales book has been undercast by Rs. 100., iii. Furniture purchased for Rs.500 has been wrongly debited to purchases account., iv. An amount of Rs. 1000 received on the sale of old Furniture has been credited to, sales account., v. A bill receivable of Rs. 500 received from Khan has been entered in the Bills Payable, Book., , Business Accounting-1, , 93

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Srinivas University, , 1st SEMESTER-BBA, , vi. A credit sale of Rs. 2000 to Jairam has been wrongly passed through the returns, outwards book., vii. Goods worth Rs. 1000 purchased on credit from Ramanath have been wrongly, entered in the sales book., viii., , A sale of goods worth Rs. 100 to Kumar has been credited to his account., , ix. Salary Rs. 300 paid to the Cashier, Gopal has been debited to his personal account., x. A sum of Rs. 100 received from Sharma has been credited to Varma., , Solution:, Journal Entries, Date Particulars, , 1., , L.F., , Repairs to Machinery A/c. Dr., , Dr., , Cr., , Rs., , Rs., , 100, , To Machinery A/c., , 100, , (Being the repairs to machinery debited, to machinery account instead of repairs, account rectified), 2., , It is one sided errors. So, this error can be, rectified by crediting sales account with, Rs.100, the under-credit given to it., , 3., , Furniture A/c., , Dr., , 500, , To Purchases A/c., , 500, , (Being the sale of old furniture credited, to sales account instead of furniture, account rectified), 4., , Sales A/c., , Dr., , 1000, , To Furniture A/c., , 1000, , (Being the sale of old furniture credited, to sales account instead of furniture, account rectified), 5., , Bills Payable A/c., , Business Accounting-1, , Dr., , 500, 94

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Srinivas University, , 1st SEMESTER-BBA, , Bills Receivable A/c., , Dr., , 500, , To Khan‟s A/c., , 1000, , (Being the Bills Receivable received, from entered in the Bills payable Book, rectified), 6., , Returns Outwards A/c., , Dr., , 2000, , To Sales A/c., , 2000, , (Being the credit sale to Jairam wrongly, passed through the returns outwards, book rectified), 7., , Sales A/c., Purchases A/c., , Dr., Dr., , 1000, 1000, , To Ramanath‟s A/c., , 2000, , (Being the credit purchase from, Ramanath entered in the sales book, rectified), 8., , Here, the mistake is one – sided. So, this, error can be rectified by debiting, Kumar‟s account with Rs., (100+100)200., , 9., , Salaries A/c., , Dr., , 300, , To Gopal‟s A/c., , 300, , (Being the salaries paid debited to, Gopal‟s account instead of salaries, account rectified), 10., , Varna‟s A/c., , Dr., , To Sharma‟s A/c., , 100, 100, , (Being the amount received from Sharma, credited to Varma‟s Account rectified), , Business Accounting-1, , 95

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Srinivas University, , 1st SEMESTER-BBA, , 11. A book-keeper found that there was Rs. 325 difference in the trial balance, being excess, credit. Unable to locate the errors in time, he decided to place the amount in a suspense account., Subsequently, the following errors were found out. Pass the journal entries for rectifying them, and prepare the suspense account., , i., , A credit sale of Rs. 100 to Latha has been credited to her account., , ii., , A sum of Rs. 50 received from Balu has been credited to his account as Rs. 15, , iii., , The total of the purchases returns A/C has been overcast by Rs. 50., , iv., , The discount column on the credit side of the cash book has been overcast by Rs. 10., , v., , Rent of Rs. 80 paid to landlord has been debited to landlord‟s account., , vi., , A sum of Rs. 50 paid for commission has been credited to commission account., , Solution:, Journal Entries, Date, , i., , Particulars, Latha‟s Account(100+100), , L.F., , Dr., , Dr., , Cr., , Rs., , Rs., , 200, , To Suspense Account, , 200, , (Being the rectification of wrong credit, instead of, debit, given to Latha‟s account), ii., , Suspense Account, , Dr., , 35, , To Balu‟s Account (50-15), , 35, , (Being the rectification of under-credit given to, Balu‟s account), iii., , Purchase Returns Account, , Dr., , 50, , To Suspense Account, , 50, , (Being the rectification of over-credit given to, purchases returns account), iv., , Discount Account, To Suspense Account, , Dr., , 10, 10, , (Being the rectification of over-credit given to, Business Accounting-1, , 96

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Srinivas University, , 1st SEMESTER-BBA, , discount account), v., , Rent Account, , Dr., , 80, , To Landlord‟s Account, , 80, , (Being the rectification of wrong debit given to, landlord‟s account), vi., , Commission Account, , Dr., , 100, , To Suspense Account(50+50), , 100, , (Being the rectification wrong credit, instead of, debit, given to commission account), , Dr., , Suspense Account, , Cr., , Rs., To Difference in Trial Balance(b/f), Balu‟s Account, , Rs., , 325, , By Latha‟s Account, , 200, , 35, , By Purchases Account, , 50, , By Discount Account, , 10, , By Commission Account, , 100, , 360, , 360, , 12. Rectify the following errors;, a. Rs 5,000 from a customer was credited to the capital account, b. A machine bought for Rs 3,000 was debited to furniture account, c. Salary of Rs 200 paid to the cashier Sri Gopal was debited to his personal account., d. A sum of Rs 500 paid to workers for erecting a new machine was debited to wages, account., Journal Entries, Date, , Particulars, , a., , Capital A/c., , Dr., , To Customers A/c., , Dr., , Cr., , Rs., , Rs., , 5000, , (Being the amount received from customers wrongly credited, , 5000, , to capital a/c rectified), b., , Machinery A/c, , Business Accounting-1, , Dr., , 3000, 97

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Srinivas University, , 1st SEMESTER-BBA, , To purchases A/c., , 3000, , (Being the rectification of machinery bought wrongly debited, to furniture A/c)), c., , Salary A/c., , Dr., , 200, , To Gopal‟s A/c, , 200, , (Being the salary paid to the cashier Gopal wrongly debited, to gopal‟s a/c rectified), 5., , Machinery A/c., To wages A/c., , Dr., , 500, 500, , (Being the rectification of wages paid to workers for erecting, a new machine wrongly debited to wages A/c)), , Business Accounting-1, , 98

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Srinivas University, , 1st SEMESTER-BBA, , UNIT V, FINAL ACCOUNTS OF A SOLE TRADER, Multiple Choice Questions:, 1. Goodwill is, a. Current asset, b. An intangible fixed asset, c. Tangible fixed asset, d. An investment, 2. A trading account shows merely the result of trading called, a. Net profit, b. Net loss, c. Gross profit, d. None of the above, 3. The profit and loss account which shows, a. Net profit, b. Gross profit, c. Net profit and gross profit, d. All the above, 4. The sheet containing the balances of assets and liabilities of a business, a. Trading account, b. Balance sheet, c. Profit and loss account, d. None of the above, 5. Return inwards falls under, a. Trading account, b. Balance sheet, c. Profit and loss account, d. None of the above, 6. Wages falls under, a. Trading account, Business Accounting-1, , 99

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Srinivas University, , 1st SEMESTER-BBA, , b. Balance sheet, c. Profit and loss account, d. None of the above, 7. Sales return is deducted from, a. Sales, b. Purchases, c. Opening stock, d. Closing stock, 8. A decrease in the provision for doubtful debts would result in:, a. An increase in liabilities., b. A decrease in working capital, c. A decrease in net profit., d. An increase in net profit., 9. Account which prepared at the end and they show the final results of Accounting is, a. Profit and loss b. Balance sheet c. Trading d. Final account, 10. Manufacturing expenses falls under, a. Trading account, b. Balance sheet, c. Profit and loss account, d. None of the above, 11. Rent received (shown in adjustments) is an item of, a. Balance sheet, b. Profit and loss account, c. Trading account, d. Both balance sheet and profit and loss account, 12. Bad debt recovered comes under, a. Debit side of trading account, b. Credit side of trading account, c. Debit side of profit and loss account, d. Credit side of profit and loss account, 13. Excess of asset over liabilities is, Business Accounting-1, , 100

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Srinivas University, , 1st SEMESTER-BBA, , a. Capital b. Assets c. Liability d. All the above, 14. Excess of liability over assets is, a. Capital b. Assets c. Liability d. All the above, 15. General office expenses are charged to which of the following head, a. Administrative expenses b. Marketing Expenses, c. Selling expenses d. Financial Expenses, 16. The stock of goods remaining unsold at the end of the trading period is, a. Closing stock b. Opening stock c. Remained stock d. All the above, 17. Expenses paid during the current period but relate to the next period are, a. Prepaid expenses, , b. Expenses paid in advance, , c. Unexpired expenses, , d. All the above, , 18. The incomes received during the current period but relate to the next period are, a. Incomes received in advance, b. Incomes received but not earned, c. Pre-paid incomes, d. All the above, 19. Debts which are definitely proved to be irrecoverable are called, a. Bad debt, , b. Doubtful debt, , c. Provision debt d. Loss, 20. In the course of manufacturing some waste material emerges is, a. Srap, , b. Residue, , c. Waste, , d. All the above, , 21. Consider the following data and identify the amount which will be deducted from Sundry, debtors in balance sheet, Particulars, , Rs, , Bad debts (from trial balance), , 1,600, , Provision for doubtful debts(old), , 2,000, , Current year„s provision (new), , 800, , a. $400 b. $ 800 c. $2,000 d.$ 2,400, , Business Accounting-1, , 101

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Srinivas University, , 1st SEMESTER-BBA, , 22. Which of the following account is affected from the drawings of cash in sole-proprietorship, business, a. Capital account, , b. Shareholder account, , c. Liability account, , d. Expense account, , 23. Which of the following shows summary of a company„s financial position at a specific date, a. Balance sheet, b. Profit and loss account, c. Trading account, d. Both balance sheet and profit and loss account, 24. When the cost of goods sold exceeds the net sales the differences is, a. Net profit, b. Gross profit, c. Net profit and gross profit, d. All the above, 25. Sales=, a. Opening stock + purchases – closing stock, b. Purchases – closing stock + opening stock, c. Closing stock+ purchases- opening stock, d. Closing stock +purchases+ opening stock, 8 Marks questions:, Illustration Problems:, 1. The following trial balance extracted from the books of Murugan, prepare trading, profit and, loss a/c for the year ended 31st Dec. 2001 and balance sheet as on that date., Dr., Cr., Rs., , Drawings, , 20,000, , Capital, , 1,89,000, , Plant & machinery, , 80,000, , Sundry debtors, , 70,000, , Business Accounting-1, , Rs., , 102

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Srinivas University, , 1st SEMESTER-BBA, , Sundry creditors, , 50,000, , Purchases, , 1,03,000, , Sales, , 2,20,000, , Sales returns, , 10,000, , Wages, , 40,000, , Cash in hand, , 5,000, , Cash at bank, , 10,000, , Salaries, , 38,000, , Stock, , 45,000, , Rent, , 10,000, , Manufacturing expenses, , 7,000, , Bills receivable, , 12,000, , Bills payable, , 20,000, , Bad debts, , 5,000, , Carriage inwards, , 9,000, , Furniture, , 15,000, 4,79,000, , 4,79,000, , Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2011, Particulars, Rs., To opening stock, To Purchases, To Wages, To, Manufacturing, expenses, To Carriage inwards, To Gross profit c/d., , Rs., 45,000, 1,03,000, 40,000, , To Salaries, To Rent, , 7,000, 9,000, 6000, 210000, 38,000, 10,000, , To Bad debts, , 5,000, 53000, , Business Accounting-1, , Particulars, By Sales, Less : Returns inwards, By Closing stock, , By Gross profit b/d., By net loss transferred to, capital, , Rs., Rs., 2,20,000, 10,000, 210000, -, , 210000, 6000, 47000, , 53000, , 103

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Srinivas University, Balance sheet, Liabilities, Capital, Less: net loss, Less: Drawings, Sundry creditors, Bills payable, , 1st SEMESTER-BBA, , Rs., 1,89,000, 47000, 20,000, , 122000, 50,000, 20,000, 192000, , Assets, Plant & machinery, Sundry debtors, Cash in hand, Cash at bank, Bills receivable, Furniture, , Rs., 80,000, 70,000, 5,000, 10,000, 12,000, 15,000, 192000, , 2. From the following Trial Balance of Rajkumar, prepare a Trading and Profit and Loss, Account for the year ended 31st December, 2011, Dr., Cr., Rs., Rs., Rajkumar‟s Capital, 85000, Rajkumar‟s Drawings, 7500, Stock on 1st January 2011, 12000, Purchases and Sales, 86000, 170000, Returns, 2000, 1000, Discounts, 500, 700, Commission Received, 1000, Income Tax paid, 700, Office Salaries, 17300, Office Rent, 2000, Advertising, 1700, Sundry Debtors and Creditors, 85000, 30000, Reserve for Doubtful Debts, 3000, Manufacturing Wages, 8600, Bills Receivable and payable, 5000, 5000, Carriage, 600, Machinery, 40000, Motor Vans, 7000, Land and Building, 10000, Office expenses, 1500, Cash at bank, 6000, Cash in hand, 2300, 295700, 295700, Adjustments:, 1) Stock on 31st December, 2011 was Rs 10000, 2) Debts worth Rs. 2000 should be written off as a bad., 3) Depreciate machinery by 5% and motor vans by 15%, 4) Reserve for bad and doubtful debts should be increased by Rs. 600, 5) Commission accrued and not received Rs. 500, 6) Goods worth Rs 500 were used by the proprietor for his personal use., 7) On 20th December 2011 a fire broke out in the shop and goods worth Rs. 2000 were, Business Accounting-1, , 104

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Srinivas University, , 1st SEMESTER-BBA, , completely destroyed. The insurance company accepted the claim for Rs. 1500 only and paid the, amount on 1st January 2012, Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2011, Particulars, To opening stock, To purchases, Less: returns (cr), Less: Drawings, Less: Stock of goods, destroyed by fire, To carriage, To manufacturing wages, To gross profit c/d, To office salaries, To office expenses, To office rent, To Advertising, To bad debt in the, adjustment, Add: Additional Reserve, for Bad debts created, during the year, To Discount (dr), To Depreciation on, machinery, (40,000X5%), motor vans(7,000X15%), To loss on goods, destroyed by fire, Less: Claim admitted by, the insurance company, To net profit transferred, to capital account, , Balance sheet, Liabilities, Creditors, Bills payable, Capital, Add: Net profit, Less: Drawings, Business Accounting-1, , Rs., , Rs., 12,000, , 86,000, 1,000, 500, 2,000, , 82,500, 600, 8,600, 74,300, 1,78,000, 17,300, 1,500, 2,000, 1,700, , Particulars, By Sales, Less: returns, By closing stock, , Rs., Rs., 1,70,000, 2,000, 1,68,000, 10,000, , By gross profit b/d, By, commission, received 1,000, Add: accrued (o/s) 500, By discount (cr), , 1,78,000, 74,300, 1,500, , 700, , 2,000, , 600, , 2,600, 500, , 2,000, 1,050, 2,000, 1,500, , 500, 47,350, 76,500, , Rs., 30,000, 5,000, 85,000, 47,350, 7,500, , 76,500, , Assets, Cash in hand, Cash at bank, Bills receivable, Debtors, Less: bad debt (adj), , Rs., 2,300, 6,000, 5,000, 85,000, 2,000, 105

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Srinivas University, , 1st SEMESTER-BBA, , Less: Goods taken for personal, use, 500, Less: Income tax, 700, 123650, , Less: NRBD, (3,000+600), 3,600, Amount of fire claim due from, insurance company, Closing stock, Accrued (o/s) Commission to be, received, Motor vans, 7,000, Less: Dep, 1,050, Machinery, 40,000, Less: Dep, 2,000, Land and building, , 1,58,650, , 79,400, 1,500, 10,000, 500, 5,950, 38,000, 10,000, 1,58,650, , 3. From the following balances Extracted from the books of Mr.Prasad, prepare Trading and, profit and loss account and balance Sheet as on 31st December, 2011., Dr(Rs), Cr(Rs), Capital and drawings, 10,000, 60,000, Bank overdraft, 8,400, Furniture and fittings, 5,200, Business premises, 40,000, Debtors and Creditors, 36,000, 26,000, Stock on 1-1-2011, 44,000, Rent, 2,000, Purchases and sales, 2,20,000, 3,00,000, Returns, 4,000, Discount, 3,200, 4,000, Taxes and insurance, 4,000, General expenses, 8,000, Salaries, 18,000, Commission, 4,400, Carriage on purchases, 3,600, Reserve for doubtful debts, 1,000, Bad debts, 1,000, 4,01,400, 4,01,400, Adjustments:, a. Stock on hand on 31-12-2011Rs 40,120, b. Depreciate business premises by Rs 600 and furniture and fittings by 10%, c. Make a reserve for doubtful debts at 5% on debtors, d. Allow interest on capital at 5% and, e. Carry forward Rs 1,400 for unexpired insurance, , Business Accounting-1, , 106

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Srinivas University, , 1st SEMESTER-BBA, , Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2011, Particulars, Rs., To opening stock, To purchases, To carriage on purchases, To gross profit c/d, To general expenses, To Salaries, To Commission, To Discount, To Depreciation on, business premises, To Depreciation on, Furniture and Fittings, 5,200X10%, To taxes and insurance, Less:, unexpired, or, prepaid insurance, To Bad debts, Add: New Reserve for, doubtful debts, Less: Old reserve for, doubtful debts, To int on capital, To net profit transferred, to capital account, , Rs., 44,000, 2,20,000, 3,600, 68520, 3,36,120, 8,000, 18,000, 4,400, 3200, , Particulars, By sales, Less: Returns, By Closing stock, , Rs., Rs., 3,00,000, 4,000, 2,96,000, 40,120, 3,36,120, 68,520, 2,000, 4,000, , By Gross profit C/d, By rent received, By discount, , 600, , 520, 4,000, 1,400, 1,000, , 2,600, , 1,800, 1,000, , 1,800, 3,000, 32,400, 74,520, , 74,520, , Balance Sheet as on 31st December 2011, Liabilities, Creditors, Bank overdraft, Capital, Add: interest, Add: Net profit, Less: Drawings, , Rs., 26,000, 8,400, 60,000, 3,000, 32,400, 10,000, , 85,400, , 1,19,800, , Business Accounting-1, , Assets, Debtors, Less: New RBD, Closing stock, Prepaid insurance, Furniture and fittings, Less: Dep, Premises, Less: Dep, , Rs., 36,000, 1,800, , 5,200, 520, 40,000, 600, , 34,200, 40,120, 1,400, 4680, 39400, 1,19,800, , 107

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Srinivas University, , 1st SEMESTER-BBA, , 4. The following trial balances are taken from the books of Mr.Ambarish, Prepare trading, profit, and loss and balance sheet for the year ended 31st March, Dr(Rs), Cr(Rs), Capital account, 1,00,000, Plant and Machinery, 78,000, Furniture, 2,000, Sales, 1,27,000, Purchases, 60,000, Returns, 1,000, 750, Opening stock, 30,000, Discount, 425, 800, Sundry Debtors and Creditors, 45,000, 25,000, Salaries, 7,550, Wages, 10,000, Carriage outwards, 1,200, Provision for bad debts, 525, Rent and rates, 10,000, Advertising, 2,000, Cash, 6,900, 2,54,075, , 2,54,075, , Adjustments:, a. Closing stock was valued at Rs 34,220, b. Provision for bad debt is to be kept at Rs 500, c. Allow interest on capital at 10%, d. Depreciate plant and Machinery by 10% and furniture by 5%, e. Outstanding Salary Rs 550 and prepaid rent Rs 1,000, f. Goods worth Rs 1,000, distributed as samples., Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2011, Particulars, To Opening stock, To Purchases, Less: Returns, Less:, distributed, samples, Wages, To gross profit c/d, To discount allowed, Business Accounting-1, , Rs., , Rs., 30,000, , 60,000, 750, 59250, , Particulars, By Sales, Less: Returns, By Closing stock, , Rs., Rs., 1,27,000, 1,000, 126000, 34,220, , as, 1000, , 58250, 10,000, 61970, 160220, 425, , By Gross profit b/d, , 160220, 61970, 108

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Srinivas University, To Salaries, Add: Outstanding Salary, To Carriage outwards, To Rent and rates, Less: prepaid rent, To Advertising, Add:, distributed, as, samples, To interest on capital, (100000x10%), To Depreciation on plant, and Machinery, (78,000x10%), To, Depreciation, on, furniture, (2,000x5%), To net profit transferred, to capital account, , 1st SEMESTER-BBA, 7,550, 550, , 8100, 1,200, , 10,000, 1,000, 2,000, , 9000, , 1000, , By discount received, By old provision for bad, debts, 525, Less: New provision for, bad debts, 500, , 800, , 25, , 3000, 10000, , 7800, , 100, , 23170, 62795, , 62795, , Balance Sheet as on 31st December 2011, Liabilities, Capital, 1,00,000, Add: net profit, 23170, Add: interest on capital, 10000, Outstanding Salary, Creditors, , Rs., , 133170, 550, 25,000, , Assets, Plant and Machinery, Less: Dep, Furniture, Less: Dep, Sundry Debtors, Less: New provision, Cash, Closing stock, prepaid rent, , Rs., 78,000, 7800, 2,000, 100, 45,000, 500, , 158720, , 70200, 1900, 44500, 6,900, 34,220, 1,000, 158720, , 5. Prepare Profit and Loss Account and balance sheet for the year ending 31.12.2017., Trial balance as on 31st December,2017, , Drawings, Plant and machinery, Freehold land, Loose tools, Bills receivable, Stock, Purchases, Business Accounting-1, , Dr(Rs), 15,000, 40,000, 90,000, 3,000, 3,000, 40,000, 51,000, , Capital, Bills payable, Sundry creditors, Purchases return, Sales, , Cr(Rs), 2,03,000, 3,800, 40,000, 2,650, 1,15,000, , 109

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Srinivas University, , 1st SEMESTER-BBA, , Wages, Carriage inwards, Carriage outwards, Coal and Coke, Salaries, Rent and Rates, Discount, Cash at bank, Cash in hand, Sundry debtors, Repairs, Works expansion, Bad Debts, Advertisement, Sales returns, Gas and water, Oil and Grease, Furniture and fixtures, General expenses, Printing and stationary, , 20,000, 1,000, 500, 5,000, 5,000, 2,800, 1,500, 25,000, 400, 45,000, 1,800, 7,500, 1,200, 500, 2,000, 200, 600, 1,200, 800, 450, , 3,64,450, 3,64,450, Write off Depreciation on plant and machinery at 5%, loose tools at 15% and furniture and, fixtures at 5%. Stock in hand on 31st December, 2011 amounted to Rs60,000. Provide on sundry, debtors at 5% for doubtful debts. Wages outstanding Rs1,500 and salaries outstanding Rs 450., Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2017, Particulars, To opening stock, To purchases, Less: returns (cr), To carriage inwards, To wages, Add: Outstanding wages, To coal and coke, To gas and water, To Oil and grease, To gross profit c/d, , Rs., , To salaries, , 5,000, , Business Accounting-1, , 51,000, 2,650, 20,000, 1,500, , Rs., 40,000, 48,350, 1,000, , Particulars, By Sales, Less: returns, By closing stock, , 21,500, 5,000, 200, 600, 56,350, 1,73,000, By gross profit b/d, , Rs., Rs., 1,15,000, 2,000, 1,13,000, 60,000, , 1,73,000, 56,350, 110

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Srinivas University, , 1st SEMESTER-BBA, , Add: o/s salaries, 450, To rent and rates, To, printing, and, stationary, To general xpenses, To Repairs, To carriage outwards, To Discount (dr), To Advertisement, To bad debts, 1,200, Add: NRBD, 2,250, (45,000X5%), To Depreiation:, Plant and machinery, (40,000X5%), Loose, tools, (3,000X15%), Furniture(1,200 X 5%), To net profit transferred, to capital account, , 5,450, 2,800, 450, 800, 1,800, 500, 1,500, 500, 3,450, , 2,000, , 450, 60, 36,590, 56,350, , 56,350, , Balance Sheet as on 31st December 2011, Liabilities, Bills payable, Sundry creditors, Outstanding wages, Outstanding salaries, Capital, Add: Net profit, Less: Drawings, , Rs., 3,800, 40,000, 1,500, 450, 2,03,000, 36,590, 15,000, , 2,24,590, , 2,70,340, , Assets, Cash in hand, Cash at bank, Bills receivable, Sundry Debtors, 45,000, Less: NRBD, 2,250, Closing stock, Loose tools, 3,000, Less: depreciation, 450, Furniture and fixtures, 1,200, Less: depreciation, 60, Plant and machinery 40,000, Less: depreciation, 2,000, Works expansion, Freehold Land, , Rs., 400, 25,000, 3,000, 42,750, 60,000, 2,550, 1,140, 38,000, 7,500, 90,000, 2,70,340, , 6. From the following Trial Balance of M/s. Ram & Sons, prepare trading and profit and loss, account and balance sheet for the year ending on 31st March 2002 and the balance sheet as on, the date:, Business Accounting-1, , 111

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Srinivas University, , 1st SEMESTER-BBA, , Particulars, Opening Stock (1.4.2001), Purchases, Discount allowed, Wages, Sales, Salaries, Travelling expenses, Commission, Carriage inward, Administration expenses, Trade expenses, Interest, Building, Furniture, Debtors, Creditors, Capital, Cash, , Dr(Rs), 5,000, 16,750, 1,300, 6,500, , Cr(Rs), , 30,000, 2,000, 400, 425, 275, 105, 600, 250, 5,000, 200, 4,250, 2,100, 13,000, 2,045, 45,100, , 45,100, , Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2001, Particulars, To Opening Stock, To Purchases, To Wages, To Carriage inward, To gross profit c/d, To Trade expenses, To Discount allowed, To Salaries, To Travelling expenses, To Commission, To, Administration, expenses, To Interest, , Business Accounting-1, , Rs., , Rs., 5,000, 16,750, 6,500, 275, 1475, 30000, 600, 1,300, 2,000, 400, 425, 105, 250, 5080, , Particulars, By Sales, By closing stock, , By gross profit b/d, By net profit transferred, to capital account, , Rs., , Rs., 30,000, -, , 30000, 1475, 3605, , 5080, , 112

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Srinivas University, , 1st SEMESTER-BBA, , Balance Sheet as on 31st December 2011, Liabilities, Creditors, Capital, Less: net loss, , Rs., 2,100, 13,000, 3605, , 9395, , Assets, Building, Furniture, Debtors, Cash, , Rs., 5,000, 200, 4,250, 2,045, 11495, , 11495, , 7. From the following balances taken from the books of Kripakar prepare a trading and profit, and loss account for the year ending 31st December 2017., (Rs), , (Rs), , Sales, Returns inward, Carriage inward, Wages, Insurance, , 2,96,500, 6,500, 8,000, 46,000, 800, , Purchases, Returns outward, Carriage outward, Interest on investment, Rates and taxes, , 81,000, 1,000, 5,500, 2,500, 1,300, , Trade expenses, Stationary, Miscellaneous receipts, Stock on 1st January 2017, Manufacturing Expenses, Showroom expenses, Discount, Insurance, , 700, 400, 1,200, 22,000, 32,000, 5,000, 1,100, 750, , Sundry expenses, Sales commission, Repairs and renewals, Salaries, Maintenance expenses, Power and fuel, Office expenses, , 150, 850, 450, 19,500, 3,500, 12,000, 6,400, , Stock on 31st December 2017 was valued at Rs 12,500, Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2017, Particulars, Rs., To opening Stock, To Purchases, 81,000, Less: Returns outward, 1,000, To Carriage inward, To Wages, To, Manufacturing, Expenses, Business Accounting-1, , Rs., 22,000, , Particulars, Sales, Less: Returns inward, , 80,000, 46,000, , By closing Stock, , Rs., Rs., 2,96,500, 6,500 290000, 12,500, , 32,000, 113

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Srinivas University, , 1st SEMESTER-BBA, , To Power and fuel, To gross profit, , 12,000, 110500, 302500, 800, 700, 400, 5,000, 1,100, 750, 5,500, 1,300, 150, 850, 450, 19500, 3,500, 6,400, , To Insurance, To Trade expenses, To Stationary, To Showroom expenses, To Discount, To Insurance, To Carriage outward, To Rates and taxes, To Sundry expenses, To Sales commission, To Repairs and renewals, To Salaries, To Maintenance expenses, To Office expenses, To net profit transferred, to capital account, , 302500, 110500, 1,200, 2,500, , By gross profit b/d, By Miscellaneous receipts, By Interest on investment, , 68100, 114200, , 114200, , 8. Prepare Profit and Loss Account, from the following balances of Mr. Kandan for the year, ending 31.12.2003., Rs., 30,000, 2,000, 4,000, 36,000, 2,50,000, 80,000, 3,000, 6,000, 26,000, 4,000, , Office rent, Printing expenses, Tax, Insurance, Advertisement, Gross Profit, Salaries, Stationeries, Discount allowed, Travelling Expenses, Discount received, Solution:, Profit and Loss Account for the year ended 31st December, 2017, Particulars, To Office rent, To Printing expenses, To Tax, Insurance, Business Accounting-1, , Rs., , Rs., 30,000, 2,000, 4,000, , Particulars, By Gross Profit, By Discount received, , Rs., , Rs., 2,50,000, 4,000, 114

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Srinivas University, , 1st SEMESTER-BBA, , To advertisement, To Salaries, To Stationeries, To Discount allowed, To Travelling Expenses, To net profit transferred, to capital account, , 36000, 80,000, 3,000, 6,000, 26,000, 67000, 254000, , 254000, , 9. Prepare Trading and Profit Loss Account for the year ending 31st March 2002 from the books, of Mr. Siva Subramanian., Rs., 15,000, 1,65,000, 10,000, 3,000, 4,000, 30,000, 5,000, 20,000, 200000, , Stock (31.3.2002), Purchases, Purchases return, Postage, Carriage outwards, Wages, Sales return, Salaries, Sales, Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2017, Particulars, To opening Stock, To Purchases, Less: Purchases return, To Wages, To gross profit, To Postage, To Carriage outwards, To Salaries, , Rs., 1,65,000, 10,000, , Rs., 155000, 30,000, 25000, 210000, 3,000, 4,000, 20,000, 27000, , Particulars, By Sales, Less: sales return, By closing stock, , By gross profit b/d, By net loss transferred to, capital a/c, , Rs., 200000, 5000, , Rs., 195000, 15000, , 210000, 25000, 2000, 27000, , 10. From the following trial balance, prepare trading and profit and loss account for the year, 31.12.2009, , Business Accounting-1, , 115

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Srinivas University, , 1st SEMESTER-BBA, , Particulars, , Dr(Rs), , Particulars, , Cr(Rs), , Purchases, Salaries & wages, Office expenses, Trading expenses, Factory expenses, Carriage inwards, Returns inward, Discount allowed, Stock, Income tax, Cash in hand, , 5,40,000, 3,50,000, 4,000, 8,000, 11,000, 8,000, 12,000, 4,000, 60,000, 40,000, 2,00,000, 12,39,000, , Sales, Returns outward, Discount received, Interest received, Capital, , 10,40,000, 12,000, 6,000, 3,000, 1,78,000, , 12,39,000, , Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2017, Particulars, To opening Stock, To Purchases, Less: Returns outward, To Factory expenses, To Carriage inwards, To gross profit, To Salaries & wages, To Office expenses, To Trading expenses, To Discount allowed, To net profit transferred, to capital account, , Rs., 5,40,000, 12,000, , Rs., 60,000, 528000, 11,000, 8,000, 421000, 1028000, 3,50,000, 4,000, 8,000, 4,000, , Particulars, Sales, Less: Returns inward, , Rs., Rs., 10,40,000, 12,000, 1028000, , By gross profit, By Discount received, By Interest received, , 1028000, 421000, 6,000, 3,000, , 64000, 430000, , 430000, , 11. The following balances are taken from the books of M/s. RSP Ltd. Prepare profit and loss, account for the year ended 31st March, Gross profit, Rent, Business Accounting-1, , Rs., 5,25,000, 10,000, 116

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Srinivas University, , 1st SEMESTER-BBA, , Interest on loan, Distribution charges, Bad debts, Commission received, Interest received, Taxes and insurance, Salaries & wages, Depreciation, Office expenses, Salesman salary, Stationery and printing, Discount received, Advertising, , 5,000, 2,500, 2,200, 3,000, 5,000, 2,000, 1,00,000, 5,000, 1,500, 8,000, 500, 2,000, 9,000, , Solution:, Profit and Loss Account for the year ended 31st December, 2017, Particulars, Rs., To Rent, To Interest on loan, To Distribution charges, To Bad debts, To Taxes and insurance, To Salaries & wages, To Depreciation, To Office expenses, To Salesman salary, To, Stationery, and, printing, To Advertising, To net profit transferred, to capital account, , Rs., 10,000, 5,000, 2,500, 2,200, 2,000, 1,00,000, 5,000, 1,500, 8,000, 500, , Particulars, By gross profit, By Commission received, By Interest received, By Discount received, , Rs., , Rs., 5,25,000, 3,000, 5,000, 2,000, , 9,000, 389300, 535000, , 535000, , 12. The following information was extracted from the books of M/s.Sudha Ltd. Prepare final, accounts on 31.3.2002., Particulars, , Dr(Rs), , Particulars, , Cr(Rs), , Opening stock, Depreciation, Carriage inwards, Furniture, , 12,500, 7,000, 700, 8,000, , Sales, Commission, Capital, Creditors, , 1,89,000, 2,000, 1,71,300, 17,500, , Business Accounting-1, , 117

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Srinivas University, , 1st SEMESTER-BBA, , Carriage outwards, Plant & machinery, Cash, Salaries, Debtors, Discount, Bills receivable, Wages, Sales returns, Purchase, , 500, 2,00,000, 8,900, 7,500, 19,000, 1,500, 17,000, 16,000, 14,000, 86,000, 3,98,600, Closing stock on 31.12.2002 Rs.45,000., , Bills payable, Return outwards, , 5,000, 13,800, , 3,98,600, , Solution:, Trading and Profit and Loss Account for the year ended 31st December, 2017, Particulars, To Opening stock, To Purchase, Less: Return outwards, To Carriage inwards, To Wages, To gross profit c/d, , Rs., 86,000, 13,800, , To Depreciation, To Carriage outwards, To Salaries, To Discount, To net profit transferred, to capital account, , Rs., 12,500, 72200, 700, 16,000, 118600, 220000, 7,000, 500, 7,500, 1,500, , Particulars, By Sales, Less: Sales returns, By closing stock, , Rs., Rs., 1,89,000, 14,000, 175000, 45,000, , By gross profit b/d, By Commission, , 220000, 118600, 2,000, , 104100, 120600, , 120600, , Balance Sheet as on 31st December 2011, Liabilities, Creditors, Bills payable, Capital, Add: net profit, , Rs., 17,500, 5,000, 1,71,300, 104100, , 275400, , 297900, , Business Accounting-1, , Assets, Furniture, Plant & machinery, Cash, Debtors, Bills receivable, Closing stock, , Rs., 8,000, 2,00,000, 8,900, 19,000, 17,000, 45,000, 297900, , 118

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Srinivas University, , 1st SEMESTER-BBA, BLUEPRINT, , Class: FIRST YEAR, Exam: I Semester Examination 2021, Subject: BUSINESS ACCOUNTING - 1, Subject Code: 21BBAHN/LS/PM/HA/PA/CM/IB21, Maximum Marks: 50, Maximum Time: 2 Hours, Application/, Objectives/, Knowledge, Understanding, Contents, Skill, O, SA, E O, SA E, O, SA E, 1(8) 1(1), 1(1), Unit 1, 1(8) 1(1), 1(1), Unit 2, 1(8), Unit 3, 1(1), 1(1), 1(1), 1(1), 1(8), Unit 4, 1(8), 1(1), 1(1), Unit 5, 4(1), 1(8) 4(1), 2(8) 2(1), 2(8), , Business Accounting-1, , Total number of Total, Questions & Marks marks, O, SA E, 2(1), 1(8), 10, 2(1), 1(8), 10, 2(1), 1(8), 10, 2(1), 1(8), 10, 2(1), 1(8), 10, 5(8), 10(1), 50, , 119