12th Standard Accountancy Final Accounts of Sole Proprietors - II Important Question Paper | QB365

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12th Standard Accountancy Final Accounts of Sole Proprietors - II Important Question Paper

Published on: 01/12/2018

In this question paper, some of the important questions are covers the chapter Final Accounts of Sole Proprietors - II. Questions are prepared from the chapter book back as well as creative questions.

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Questions:

Generic 3

5 x 3 = 15

Pass necessary Adjusting entries for the following adjustments:
a) Interest on loan outstanding Rs.5,000
b) Depreciation @ 5% on furniture Rs.50,000
c) Write off bad and doubtful debts Rs.3,000
d) Provide provision for bad and doubtful debts @ 5% on sundry debtors Rs.4,00,000
f) Provide provision for discount on creditors @ 2% on sundry creditors Rs.3,50,000

What is Credit balance?

Explain the concept of Matching Principle.

Give the adjusting entries for interest on capital and interest on drawings.

Pass adjusting entries for the following on 31st March, 2018.
(i) Charge interest on drawings at Rs. 50
(ii) Write off bad debts by Rs. 500
(iii) Depreciate furniture by Rs. 1,000

Generic 5

3 x 5 = 15

The following is the Trial balance extracted from the books of Mr. Mohan as on 31-12-2017. Prepare Trading and Profit and loss account and Balance sheet on 31-12-2017.

Debit balances	Amount Rs.	Credit balances	Amount Rs.
Buildings	30,000	Capital	40,000
Machinery	31,400	Purchase return	2,000
Furniture	2,000	Sales	2,80,000
Motor Car	16,000	Sundry creditors	9,600
Purchases	1,88,000	Discount received	1,000
Sales returns	1,000	Provision for bad and
Sundry debtors	30,000'	and doubtful debts	600
General expenses	1,600
Cash at bank	9,400
Rates and Taxes	1,200
Bad debts	400
Insurance premium	800
Discount allowed	1,400
Opening stock	20,000
	3,33,200		3,33,200

Adjustments:
(i) Outstanding rates and taxes Rs.1,600
(ii) Insurance premium prepaid Rs.200
(iii) Maintain provision for bad and doubtful debts at 5% on debtors,
(iv) Depreciate Motor Car by 10%. Furniture by 4% and Buildings by 3%.
(v) Stock on 31-12-2017 Rs.20,000.

Following is the trial balance of Brijesh. Prepare final accounts for the year ended on 31^st March, 2016

Particulars	Debit Rs.	Credit Rs.
Stock as on 01-04-2015	2,00,000
Purchases and Sales	22,00,000	33,00,000
Returns	1,00,000	80,000
Carriage inwards	50,000
Salaries	2,60,000
Insurance	1,20,000
Wages	80,000
Bad debts	10,000
Furniture	7,00,000
Capital		7,50,000
Printing and stationery	80,000
Cash at bank	3,15,000
Petty cash	5,000
Commission	10,000
	41,30,000	41,30,000

Adjustments:
(i) Stock on 31^st March, 2016 was valued at Rs. 4,00,000.
(ii) Depreciate furniture @ 10% p.a.
(iii) Insurance of Rs. 60,000 was paid in advance
(iv) Commission receivable Rs. 50,000.

An abstract of the trial balance as on 31^st December, 2016 is as follows:
Particulars Rs. Sundry Debtors 20,000 Bad debts 500 Adjustment: Create a provision for bad and doubtful debts @ 5% on sundry debtors. Pass the adjusting entry and show how these items will appear in final accounts.

Multiple Choice Question

10 x 1 = 10

Wages outstanding is_________.

(a)

an asset

(b)

a liability

(c)

an income

(d)

an expense

10.

Debts which cannot be recovered or irrecoverable are called _________.

(a)

Bad debts

(b)

Depreciation

(c)

Closing stock

(d)

Capital

11.

Trial balance as on 31.12.2017. Shows sundry debtors Rs.55,000. As per given adjustments, if Rs. 5,000 is to be written off as bad debts, the provision for bad and doubtful debts at 2% will be Rs.________.

(a)

1,000

(b)

1,100

(c)

1,200

(d)

1,300

12.

The unsold goods in the business at the end of the accounting period are termed as __________

(a)

Opening stock

(b)

Closing stock

(c)

Average stock

(d)

None of these

13.

The Trial Balance shows bank loan Rs.5,00,000 at 12% on 01-01-2015. Interest paid Rs.40,000. Interest outstanding is ______ as on 31-12-2015.

(a)

Rs.60,000

(b)

Rs.40,000

(c)

Rs.27,600

(d)

Rs.20,000

14.

_______ is a loss for the business and should be adjusted against profit.

(a)

Interest on Capital

(b)

Depreciation

(c)

Debtors

(d)

Bad debts

15.

______ is treated asbusiness expense.

(a)

Interest on capital

(b)

Interest on drawings

(c)

Both 'a' and 'b"

(d)

None of these

16.

_____ principle requires that generally the revenue should be recognised in the period in which sale is deemed to have occurred.

(a)

Accounting

(b)

Revenue recognition

(c)

Matching

(d)

None of these

17.

If there is no existing provision for doubtful debts, provision created for doubtful debts is ______.

(a)

Debited to bad debts account

(b)

Debited to sundry debtors account

(c)

Credited to bad debts account

(d)

Debited to profit and loss account

18.

A prepayment of insurance premium will appear in ______.

(a)

The trading account on the debit side

(b)

The profit and loss account on the credit side

(c)

The balance sheet on the assets side

(d)

The balance sheet on the liabilities side

Generic 2

5 x 2 = 10

19.

If unearned income is credited to the profit and loss account would it be correct?

20.

How will the following adjustment appear in the balance sheet as on 31-12-2010?
Sundry Debtors Rs.21,000
Bad debts to be written off Rs.1,000
Provide 5% provision for bad and doubtful debts and 2% provision for discount on debtors.

21.

What is Interest on loan?

22.

What are accrued incomes?

23.

What is outstanding expense?

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Answers Key:

Generic 3

5 x 3 = 15

Adjusting Entries
Date	Particulars		Debit Rs.	Credit Rs.
(a)	Interest on loan A/c	Dr.	5,000
	To Interest on loan outstanding A/c (Interest on loan outstanding)			5,000
(b)	Depreciation A/c	Dr.	2,500
	To Furniture A/c (Depreciation on furniture 50,000 x 5/100)			2,500
(c)	Bad debts A/c	Dr.	3,000
	To Sundry debtors A/c (Being write off Bad debts)			3,000
(d)	Profit and Loss A/c	Dr.	20,000
	To Provision for bad and doubtful debts A/c (Provision for Bad and doubtful debts 49,000 x 5/100)			20,000
(e)	Provision for discount on creditor A/c	Dr.	7,000
	To Profit 'and loss A/c (Provision for discount on creditors 3,50,000 x 2/100)			7,000

(i) The excess of credit total over the debit total is called the Credit balance.
(ii) When there is only Credit Entries in an Account, the amount itself is the balance of that Account, i.e., the Credit balance.

(i) Matching Principle demands that expenses incurred to earn the revenue should be properly matched.
(ii) The expenses and incomes for the current accounting period whether they have been paid or not received or not must be included.
(iii) Similarly, expenses and incomes which do not pertain to current accounting period must be excluded.

**Interest on capital**
Particulars		Debit Rs	Credit Rs
Iriterest on capital A/c	Dr	xxxxxx
To Capital A/c			xxxxxx
(Interest on capital due)

**Interest on drawings**
Particulars		Debit Rs	Credit Rs
capital A/c	Dr	xxxxxx
To Interest on drawings A/c			xxxxxx
(Interest on drawings)

Adjusting entry
Date	Particulars	Debit Rs	Credit Rs
2018	Capital A/c Dr.	50
March 31	To Interest on drawings A/c		50
	(Interest on drawings provided)
March 31	Bad debts A/c Dr .	500
	To Sundry debtors A/c		500
	(Bad debts written off)
March 31	Depreciation A/c Dr.	1,000
	To Furniture A/c		1,000
	(Depreciation provided on furniture)

Generic 5

3 x 5 = 15

Dr. Trading and profit ad loss account for the year ended 31^st December 2017 Cr.
Particulars	Amount Rs.	Amount Rs.	Particulars	Amount Rs.	Amount Rs.
To Opening stock		20,000	By Sales	2,80,000
To Purchases	1,88,000		Less: Sales returns	1,000	2,79,000
Less: Purchase returns	2,000	1,86,000	By Closing stock		20,000
To Gross profit c/d (Transferred to profit and loss account)		93,000
		2,99,000			2,99,000
To General expenses		1,600	By Gross profit b/d		93,000
To Rates and taxes	1,200		(Transferred from trading
Add: Outstanding	1,600	2,800	account A/c
To Bad debts	400		By Discount received		1,000
Add: New provision for bad and doubtful debt \(\left[ 30,000\times \frac { 5 }{ 100 } \right] \)	1,500
	1,900
Less: Old provision for bad and doubtful debts	600	1,300
To Insurance premium	800
Less: prepaid	200	600
To Discount allowed		1,400
To Depreciation on Motor Carby 10%	1,600
Furniture by 4%	80
Buildings by 3%	900	2,580
To Net profit (To be transferred to capital account)		83,720
		94,000			94,000

Balance Sheet as on 31^st December 2017
Liabilities	Amount	Amoun	Assets	Amount Rs.	Amount Rs.
Capital	40,000		Buildings	30,000
Add: Net profit	83,720	1,23,720	Less: Depreciation on @ 3%	900	29,100
Sundry creditors		9,600	Machinery		31,400
Outstanding			Furniture	2,000
rates and taxes		1,600	Less: Depreciation 4%	80	1,920
			Motor Car	16,000
			Less: Depreciation	1,600	14,400
			Cash at bank		9,400
			Sundry debtors	30,000
			Less: 5% new provision for doubtful debtors	1,500	28,500
			Prepaid Insurance		200
			Closing stock		20,000
		1,34,920			1,34,920

In the books of Brijesh
Dr. Trading and Profit and Loss Account for the year ended 31^stMarch, **2016 Cr.**
Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
To Opening Stock		2,00,000	By Sales	33,00,000
To Purchases	22,00,000		Less: Returns	1,00,000	32,00,000
Less: Returns	80,000	21,20,000	By Closing stock		4,00,000
To Carriage inwards		50,000
To Wages		80,000
To Gross profit c/d		11,50,000
		36,00,000			36,00,000
To Salaries		2,60,000	By Gross profit b/d		11,50,000
To Insurance	1,20,000		By Commission receivable		50,000
Less: Prepaid	60,000	60,000
To Bad debts		10,000
To Printing and stationery		80,000
To Depreciation on furniture		70,000
(7,00,000 x 10/100)
To Commission		10,000
To Net profit (transferred to capital A/c)		7,10,000
		12,00,000			12,00,000

**Balance Sheet as on 31^st March, 2016**
Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital	7,50,000		Furniture	7,00,000
Add: Net profit	7,10,000	14,60,000	Less: Depreciation	70,000	6,30,000
			Stock in trade		4,00,000
			Commission receivable		50,000
			Insurance prepaid		60,000
			Cash at bank		3,15,000
			Petty cash		5,000
		14,60,000			14,60,000

Provision for bad and doubtful debts = Rs. 20,000 \(\times\) 5/100 = Rs. 1,000
Date Particulars l.F. Debit Rs. Credit Rs. 2016 Profit and loss A/c Dr. 1,000 Dec. 31 To Provision for bad and doubtful debts A/c 1,000 (Provision for bad and doubtful debts created) Dr. Profit and loss account for the year ended 31^st December, 2016 Cr.
Particulars Rs. Rs. Particulars Rs. Rs. To Bad debt 500 Add: Provision for bad and doubtful debts 1000 Balance Sheet as on 31^st December, 2016 Liabilities Rs. Rs. Assets Rs. Rs. Sundry debtors 20,000 Less: Provision for bad and 19,000 doubtful debts 1,000

Multiple Choice Question

10 x 1 = 10

(b)
a liability

10.

(a)
Bad debts

11.

(a)
1,000

12.

(b)
Closing stock

13.

(a)
Rs.60,000

14.

(d)
Bad debts

15.

(a)
Interest on capital

16.

(b)
Revenue recognition

17.

(d)
Debited to profit and loss account

18.

Generic 2

5 x 2 = 10

19.

No, because unearned income represents the amount that has been received against which goods or services will be sold in the next year.

20.

Balance Sheet as on 3pt December 2010
Assets	Amount Rs	Amount Rs
Sundry debtors	21,000
Less: Bad debts written off	1,000
	20,000

Less: Provision for bad and doubtful debts	1,000

[20,000 x 5 / 100]	19,000
Less: Provision for Discount on debtors	380

[19,000 x 2/100]		18,620

21.

(i) Interest payable on money borrowed from banks, financial institutions or outsiders in the form of loan is called outstanding interest on loan.
(ii) It should be treated as outstanding expense.

22.

(i) The income which has been earned during the current accounting year but not received till the end of that accounting year is called as accrued income.
(ii) It generally happens in case of amount to be received on account of commission, interest, dividend, etc

23.

(i) Expenses like wages, salaries, rent, etc. which have been incurred in the accounting period but not paid at the end of the accounting year are called outstanding expenses.
(ii) Outstanding expense account is a representative personal account.