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Questions:

Generic 6

8 x 6 = 48

From the following balances of M/s Jyoti Exports, prepare trading and profit and loss account for the year ended March 31, 2014 and balance sheet as on this date.

Particulars	Amount Rs	Particulars	Amount Rs
Sundry Debtors	9,600	Sundry creditors	2,500
Opening stock	22,800	Sales	72,670
Purchases	34,800	Purchases returns	2,430
Carriage inwards	450	Bill payable	15,600
Wages	1,770	Capital	42,000
Office rent	820
Insurance	1,440
Factory rent	390
Cleaning charges	940
Salary	1,590
Building	24,000
Plant and Machinery	3,600
Cash in hand	2,160
Gas and Water	240
Octroi	60
Furniture	20,540
Patents	10,000
	1,35,200		1,35,200

Closing stock 10,000.
Adjustments:
(i) The provision for bad debts is to be maintained at 5% on sundry debtor
(ii) Wages amounting to 500 and salary amounting to 350 are outstanding.
(iii) Factory rent prepaid 100.
(iv) Depreciation charged on Plant and Machinery @ 5% and Building @ 10%.
(v) Outstanding insurance 100.

The following trial balance extracted from the books of a Merchant Mr. J. Rao on 31.3.2014 :

Particulars	Debit (Rs)	Credit (Rs)
Furniture and Fittings	640	-
Motor Vehicles	6,250	-
Buildings	7,500	-
Capital	-	12,500
Bad Debts	125	-
Provision for Doubtful Debts	-	200
Sundry Debtors and Creditors	3,800	2,500
Stock as at 1.4.2013	3,460	-
Purchases and Sales	5,475	15,450
Bank overdraft	-	2,850
Sales and Purchases returns	200	125
Advertising	450	-
Interest on Bank Overdraft	118	-
Commission	-	375
Cash	650	-
Taxes and Insurance premium	782	-
General Expenses	1,250	-
Salaries	3,300	-
	34,000	34,000

Adjustments :
(i) Stock in hand on 31.03.2014 Rs 3,250.
(ii) Depreciate Buildings @ 5% p.a.; Furniture @ 10% p.a.; Motor Vehicles @ 20% p.a.
(iii) Rs 85 is due for interest on Bank Overdraft.
(iv) Salaries Rs 300 and Taxes Rs 200 are outstanding.
(v) Insurance Premium amounting Rs 100 are prepaid.
(vi) 1/3 of the commission received is in respect of work to be done next year.
(vii) Write off a further sum of Rs 100 as bad debts from Debtors and create Provision for Doubtful Debts @ 5% on debtors.
Prepare a Trading and Profit & Loss Account and the Balance Sheet.

Journalizing the following transactions:

2014		Rs
Dec. 01	Hema started Business with cash	1,00,000
Dec. 02	Open a Batik account with SBI	30,000
Dec. 04	Purchase goods from Ashu	20,000
Dec. 06	Sold goods to Rahul for Cash	15,000
Dec. 10	Bought goods from Tara for cash	40,000
Dec. 13	Sold goods to Suman	20,000
Dec. 16	Received Cheque from Suman	19,500
	Discount allowed	500
Dec. 20.	Cheque given to Ashu on account	10,000
Dec. 22	Rent paid by Cheque	2,000
Dec. 23	Deposited into Bank	16,000
Dec. 25	Machine Purchased from Parigya	10,000
Dec. 26	Trade Expenses	2,000
Dec. 28	Cheque issued to Parigya	10,000
Dec. 29	Paid Telephone Expenses by Cheque	1,200
Dec. 31	Paid Salary	4,500

Describe how account are used to record transactions and about the effects of transaction.

Briefly explain the various components of a Computer Hardware.

Prepare the accounting equation on the basis of the following transactions:
(i) Commenced business with cash Rs.40,000 and building Rs.90,000
(ii) Purchased goods for cash Rs.15,000 and credit Rs.20,000
(iii) Sold goods to Vijay for Rs.50,000 (costing Rs.20,000)
(iv) Bought office furniture Rs.10,000.

Define the term Accounting. Explain in brief any four objectives of Accounting.

Explain any three of the following:
(i) Full Disclosure Principle
(ii) Money Measurement Principle
(iii) Materiality Principle
(iv) Accounting Period Principle

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Answers Key:

Generic 6

8 x 6 = 48

M/s Jyoti Exports Trading And P & L Account
Dr for the year ended March 31, 201 Cr
Particulars		Amount Rs	Particulars	Amount Rs
To Opening Stock		22,800	By Sales	72,670
To Purchases	34,800		By Closing Stock	10,000
Less: Purchases Return	(2,430)	32,370
To Carriage Inwards		450
To Wages	1,770
Add: Outstanding Wages	500	2,270
To Factory Rent	390
Less: Prepaid	100	290
To Gas and Water		240
To Octroi		60
To Cleaning Charges		940
To Gross Profit c/d		23,250
		82,670		82,670
To Office Rent		820	By Gross Profit b/d	23,250
To Insurance	1,440
Add.: Outstanding	100	1,540
To Salary	1,590
Add: O/S	350	1,940
To Provision for Doubtful debts		480
ToDep. on Plant & Machinery		180
To Dep. on Building		2,400
To Net Profit c/d		15,890
		23,250		23,250

Balance Sheet M/s Jyoti Exports as on March 31, 2014
Liabilities		Amount Rs	Assets		Amount Rs
Capital	42,000		Cash in hand		2,160
Add: Net Profit	15,890	57,890	Stock		10,000
Sundry Creditors		2,500	Debtors	9,600
Bills Payable		15,600	Less: PBD	480	9,120
Outstanding Wages		500	Building	2,4000
Outstanding Salary		350	Less: Depreciation	2,400	21,600
outstanding Insurance		100	Plant and Machinery	3,600
			Less: Depreciation	180	3,420
			Prepaid Rent		100
			Furniture		20,540
			Patents		10,000
		76,940			76,940

Dr. In the Books of Mr. J. Rao Trading and Profit and Loss Account for the year ended 31st March, 2014 Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
To Opening Stock		3,460	By Sales	15,450
To Purchases	5,475		Less: Sales Returns	200	15,250
Less: Returns	125	5,350	By Closing Stock		3,250
To Gross Profit v/d		9,690
(Transferred to P & L A/c)
		18,500			18,500
To Bad Debts	125		By Gross Profit b/d
Add: Written off	100		(Transferred from Trading A/c)		9,690
5% Prov. for D. Debts	185		By Commision	375
	410		Less: Received in Advance	125	250
Less: Old Provision for doubtful debts	200	210
To Advertising		450
To Interest on Bank Overdraft	118
Add: Outstanding	85	203
To General Expenses		1,250
To Salaries	3,300
Add: Outstanding	300	3,600
To Taxes & Ins. Premimum	782
Add: Outstanding Taxes	200
	982
Less: Prepaid insurance premium	100	882
To Depreciation:
Buildings @ 5%	375
Furniture @ 10%	64
Motor Vehicles @ 20%	1,250	1,689
To Net Profit transferred to capital A/c		1,656
		9,940			9,940

Balance Sheet of Mr. J. Rao as on 31st March, 2014
Liabilities		Amount (Rs)	Assets		Amount (rs)
Capital:			Fixed Assets :
Opening Balance	12,500		Furniture & Fittings	640
Add: Net Profit	1,656	14,156	Less : Depreciation	64	576
Current Liabilities :			Motor Vehicles	6,250
Sundry Creditors		2,500	Less: Depreciation	1,250	5,000
Bank Overdraft		2,850	Buildings	7,500
Outstanding Expenses:			Less : Depreciation	375	7,125
Salaries	300		Current Assets :
Taxes	200		Sundry debtors	3,800
Int. on Bank overdraft	85	585	Less: Written off	100
Commission in Advance		125		3,700
			Less: 5% Provision for Doubtful Debts	185	3,515
			Cash		650
			Closing Stock		3,250
			Prepaid Insurance Premium		100
		20,216			20,216

Journal
Date	Particulars		Amount Dr(Rs)	Amount Cr(Rs)
Dec. 01	Cash A/c	Dr	1,00,000
	To Capital A/c			1,00,000
	(Being business started)
Dee. 02	Bank A/c	Dr	30,000
	To Cash A/c			30,000
	(Being cash deposited into bank by opening A/c)
Dec. 04	Goods (Purchase) A/c	Dr	20,000
	To Ashu			20,000
	(Being goods purchased)
Dec. 06	Cash A/c	Dr	15,000
	To Sales A/c			15,000
	(Being goods sold in cash to Rahul)
Dec. 10	Goods (Purchase) A/c	Dr	40,000
	To Cash A/c			40,000
	(Being goods purchased in cash)
Dec. 13	Suman	Dr	20,000
	To Sales A/c			20,000
	(Being goods sold)
Dec. 16	Cash A/c	Dr	19,500
	Discount Allowed A/c	Dr	500
	To Suman			20,000
	(Being cheque received and Discount allowed cheque not banked on the same day)
Dec. 20	Ashu	Dr	10,000
	To Bank A/c			10,000
	(Being cheque issued to Ashu for goods purchases)
Dec. 22	Rent A/c	Dr	2,000
	To Bank A/c			2,000
	(Being rent paid by cheque)
Dec. 23	Bank A/c	Dr	16,000
	To Cash A/c			16,000
	(Being cash deposited into Bank)
Dec. 25	Machine A/c	Dr	10,000
	To Parigya A/c			10,000
	(Being machine purchased)
Dec. 26	Trade Expenses A/c	Dr	2,000
	To Cash A/c			2,000
	(Being Trade Expenses paid)
Dec. 28	Parigya A/c	Dr	10,000
	To Bank A/c			10,000
	(Being cheque issued to Parigya)
Dec. 29	Telephone Expenses A/c	Dr	1,200
	To Bank A/c			1,200
	(Being Telephone ex.popaid)
Dee. 31	Salary A/c	Dr	4,500
	To Cash Nc			4,500
	(Being Salary paid)

The process of analysing transactions and recording their effects directly into the accounts is helpful as a learning exercise. However, real accounting system do not record transactions directly in accounts. Firstly, every transaction is recorded in a journal known as books of original entry. This practice provides a complete record of each transaction in one place and links the debits and credits for each transaction. After the debits and credits for each transaction are entered in journal book, they are transferred to the individual accounts, known as ledger posting. When this process is completed, it provides a complete and useful interpretation of the transaction or event's effect in the organisation

Computer Hardware is a physical part of a computer. It has following components:
(i) Mother board: Motherboard is a main board of a computer. It is also called logic board. It allows communication between many crucial electronic components of a system.
(ii) Keyboard: Keyboard is an Input device and it is used to input text into the computer. All the keys in keyboard are arranged in specific order.
(iii) Speaker: Speaker in computer produce electrical signal produced with the help of amplifier and turn these into sound waves.
(vi) Monitor: It is a computer screen. The Operator can see the result. In present time LCD Monitors are used instead of CRT monitors which were used in old days.

No	Transactions	Assets(Rs)	Liabilities = (Rs) +	Capital(Rs)
(i)	Started with Cash	40,000	= - +	40,000
	Started with Building	(+) 90,000	= - +	(+) 90,000
	New Equation	1,30,00	= - +	1,30,000
(ii)	Purchase goods for cash	(+ 15,000)	= - +	-
		(-15,000)	= - +	-
	New Equation	1,30,000	= - +	1,30,000
(iii)	Purchase goods on Credit	(+) 20,000	= (+) 20,000 +	-
	New Equation	1,50,000	= 20,000 +	1,30,000
(iv)	Sold Goods	(+ 50,000)	= - +	(+ 30,000)
		(-20,000)	= - +	-
	New Equation	1,80,000	= 20,000 +	1,60,000
(v)	Bought office furniture	(+ 10,000)	= - +	-
		(-10,000)	= - +	-
	New Equation	1,80,000	= 20,000 +	1,60,000

Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a period, and the value of assets, liabilities and owner's equity.
The objectives of accounting are follows:
(i) To keep systematic records.
(ii) To protect business properties.
(iii) To ascertain the operational profit or loss.
(iv) To ascertain the financial position of business.

(i) Materiality: This is a reception to the full disclosure principle. Financial statements should disclose all items that are material enough to influence decision making. Items are accounted on the basis of significance rather than accurate adherence to principles. We do classify expenses into revenue expenses and capital expenses (assets) on the basis of this principle. Purchase of a pencil is treated as an expense, not as an asset, but purchase of machine is treated as purchase of asset not as expense.
(ii) Accounting Period Principle: As per the going concern assumption the life of the business is indefinite. To assess the performance of a business, it is illogical to wait for the life of the business to come to an end and then calculate the profit or loss. To overcome this problem and for the purpose of calculation of profits, the life of the business is divided in smaller parts called 'accounting period'. An Accounting period is a segment of one year in the indefinite life of a business. This assumption helps us to : (a) Measure the progress of business accurately and on a consistent basis; (b) Facilitates comparison; (c) Match periodic revenues with expenses for getting correct business results; (d) Calculate income tax and other government dues. In India we practice two types of accounting years:
(i) Calendar Year (1Jan. - 31 Dec.)
(ii) Fiscal or Financial Year (1 Apr. - 31 Mar.)