Amity Solved Assignment of Financial Accounting

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FINANCIAL ACCOUNTING

 

1. (a) Explain the nature, uses and limitations of Financial Statements

(b) Prepare a Trading Account of Mr. Anil for the year ending 31st March, 2009

Q2. B and C enter a joint venture to prepare a film for the Government. The Government agrees to pay Rs.1, 00,000.B contributes Rs.10, 000 and C contributes Rs. 15,000.These amounts are paid into a Joint Bank Account. Payments made out of the joint account were:

Qus.3  Write short notes on any three of the following:-

A)        Dual Aspect Concept

B)        Accrued Income and Outstanding expenses

C)        Convention of Conservatism

4. Explain what is Bank Reconciliation statement? Draw a Proforma of a Bank Reconciliation statement with favorable balance as per cash book. Illustrate with the help of an example.

Qus.5   Prepare a Trial   Balance of Mohan& Co. as on March 31 2003 

Q6.  For the following transactions in ABC Ltd, prepare Accounting Equation.  

 

Started Business with Cash Rs 36,000

Purchased goods for cash  Rs 18,000 and credit Rs 12,000

Paid Rent in advance Rs 300

Paid Salary Rs.300 and Salary outstanding is Rs 60.

Bought motorcycle for personal use Rs.3,000

ASSIGNMENT B

 

Case Study 1

 

Q1      X, Y and Z were partners in a firm sharing profits in the proportions of 1/2, 1/3 and 1/6 respectively. The Balance Sheet of the firm on 31st March 2001 was as follows:

 

 

Liabilities	Amt.	Assets	Amt.
Trade Creditors Employees Provident Fund Reserve Fund Capitals X             65,000 Y             30,000 Z              20,000	15,000 6,000 18,000       115000	Cash at bank Debtors                40,000 Less: Provision     2,000 Stock Investments Patents Plant & Machinery Goodwill	5,000   38,000 30,000 15,000 10,000 50,000 6,000
	1,54,000		1,54,000

 

 

Z retired on the above date on the following terms:

a)     Goodwill of the firm was valued at Rs. 30,000

b)    Value of patents was to be reduced by 20% and that of plant & machinery to 90%.

c)     Provision for doubtful debts was to be raised to 6 %.

d)    Z took over the investments at a value of Rs.17,600.

e)     Liability for workmen’s compensation to the extent of Rs. 375 is to be created.

f)     Trade creditors to the extent of 2.5 % are not likely to claim their dues.

g)   Amount due to Z is to be settled on the following basis:

50 % on retirement, 50 % of the balance to be paid in 2 equal half yearly installments carrying interest at 5 % p.a. and the balance by a Bill of Exchange (without interest) at 3 months.

h)     The entire capital of the firm as newly constituted is fixed at Rs.100, 000 and the partners’ capital accounts are to be adjusted in the profit sharing ratio. Any excess is to be transferred to current account and any deficit is to be brought in cash.

 

Question

Prepare Revaluation account, Partners’ Capital accounts and Balance Sheet of X & Y after Z’s retirement. Also prepare Z’s Loan account till it is fully paid.

Case study 2

Qus.1.Anil sent on 1st July,2006 to Rahul goods costing Rs.50,000 and spent Rs.1,000 on packing etc. On 3rd July 2006, Rahul received the goods and sent his acceptance to Anil for Rs.30,000 payable at 3 months. Rahul spent Rs.2,000 on freight  and cartage,Rs 500 on godown rent and Rs.300 on insurance. On 31st December, 2006 he sent his Account Sales (along with the amount due to)Showing that 4/5 of the goods had been sold for Rs.55,000.Rahul is entitled to a commission of 10%.One of the customers turned insolvent and could not pay Rs.600 due from him. Show the necessary ledger accounts

 

Question No.  1

Information that goes into __________ can be used to help prepare __________.      

 

Options              

1. a forecast balance sheet; a forecast income statement
2. forecast financial statements; a cash budget     
3. a cash budget; forecast financial statements     
4. a forecast income statement; a cash budget

 

Question 2

Refers to part of current assets that fluctuates directly with changes in sales level.         

 

Options              

1. Financing           
2. Investment     
3. Permanent assets         
4. Temporary assets          

 

Question 3

Profit and Loss Account is--       

 

Options              

1. Real Account    
2. Nominal Account           
3. Personal Account           
4. None of the above

 

Question 4

According to the accounting profession, which of the following would be considered a cash-flow itemfrom a "financing" activity?             

 

Options              

1. A cash outflow to the government for taxes.    
2. A cash outflow to repurchase the firm's own common stock.    
3. A cash outflow to lenders as interest.   
4. A cash outflow to purchase bonds issued by another company

 

Question No.  5

Which of these items would be accounted for as an expense? 

 

Options              

1. Repayment of a bank loan.        
2. Dividends to stockholders          
3. The purchase of land.  
4. Payment of the current period's rent.

 

Question No.  6

Which of the following would not be included on a balance sheet?         

 

Options              

1. Accounts receivable.    
2. Accounts payable          
3. Sales.  
4. Cash.

 

Question No.  7

The requirement that only transaction data capable of being expressed in terms of money be included in the accounting records relates to the --              

 

Options              

1. Cost principle   
2. Monetary unit assumption        
3. Economic entity assumption     
4. Both a & b

 

Question No.  8

Revenue is generally recognized at the point of sales .Which principle is applied herein--             

 

Options              

1. Consistency principle   
2. Matching principle         
3. Revenue recognition principle 
4. Cost principle

 

Question No.  9

Petty cash fund is--       

 

Options              

1. Used to pay relatively small amounts    
2. Reimbursed when the amount of money in the fund is reduced to a predetermined minimum amount
3. Established by estimating the amount of cash needed for disbursement of relatively small amounts during a specified period 
4. All of the above

 

Question No.  10            

Which of the following errors will be disclosed in the preparation of a trial balance?       

 

Options              

1. Recording transactions in the wrong account.   
2. Duplication of a transaction in the accounting records   
3. Posting only the debit portion of a particular journal entry         
4. Recording the wrong amount for a transaction to both the account debited and the account credited.

 

Question No.  11            

Book Value is--

 

Options              

1. The amount that is due at the maturity or due date of a note.  
2. The process of transferring the cost of natural resources to an expense account.            
3. The cost of a fixed asset minus accumulated depreciation on the asset
4. The estimated value of a fixed asset at the end of its useful life.              

 

 

Question No.  12            

An examination of the sources and uses of funds is part of--     

 

Options              

1. a forecasting technique              
2. A funds flow analysis    
3. a ratio analysis 
4. calculations for preparing the balance sheet

 

Question No.  13            

Which of the following is not a cash outflow for the firm?

 

Options              

1. Depreciation.   
2. Dividends          
3. Interest payments        
4. Taxes

 

Question No.  14            

What must be known or estimated in order to calculate depreciation? 

 

Options              

1. The estimated useful life of the asset to the company  
2. The acquisition cost of the asset.            
3. The estimated residual value of the asset.         
4. All of the above

 

Question No.  15

Information that goes into __________ can be used to help prepare __________.      

 

Options              

1. a forecast balance sheet; a forecast income statement
2. forecast financial statements; a cash budget     
3. a cash budget; forecast financial statements     
4. a forecast income statement; a cash budget

 

 

Question No.  16            

Which of the following terms best relates to natural resources?              

 

Options              

1. Depreciation.   
2. Depletion.         
3. Amortization.  
4. Accrual

 

Question No.  17            

A debit may signify--    

 

Options              

1. An increase in an asset account
2. A decrease in an asset account
3. An increase in a liability account              
4. An increase in the owner's capital Account         

 

Question No.  18            

When a partnership firm is to be dissolved, the following account is opened in the ledger--

 

Options              

1. Revaluation Account    
2. Profit and Loss Adjustment Account     
3. Realisation Account      
4. Profit and Loss Appropriation Account 

 

Question No.  19            

Settlement of accounts on the dissolution of a partnership firm is governed by the following section of the

Indian Partnership Act, 1932   

 

Options              

1. 2            
2. 49
3. 48         
4. 10

 

Question No.  20            

A new partner brings in cash as his share of goodwill, this amount will be distributed among the old

Partners--

 

Options              

1. In the old profit sharing ratio    
2. In the ratio of their capital          
3. Equally
4. In the ratio of sacrifice of profit by them             

 

Question No.  21

In the absence of an agreement to the contrary, on drawings--

 

Options              

1. No interest is to be charged      
2. Interest @5% per annum is to be charged          
3. Interest @6% per annum is to be charged          
4. Interest @12% per annum is to be charged

 

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Question No.  22            

For a charitable institution, subscriptions by its member constitute its-----.         

 

Options              

1. Asset   
2. Income
3. Expenditure     
4. Liability

 

Question No.  23            

The most suitable method for providing depreciation on mines, oil wells and quarries--

 

Options              

1. Straight line method     
2. Depletion method         
3. Annuity method             
4. Machine hour rate method       

 

Question No.  24            

In income and expenditure account, the excess of income over expenditure is called--

 

Options              

1. Surplus
2. Deficit 
3. Gross Profit      
4. Net Profit

 

Question No.  25            

In consignment   the risk of loss is borne by--    

 

Options               

1. The consignor only        
2. The consignee only       
3. The consignor as well as the consignee
4. Neither the consignor nor the consignee            

 

Question No.  26            

Carriage Outward Account will appear on the--

 

Options               

1. Debit side of the Trading Account           
2. Debit side of the Profit and Loss Account            
3. Credit side of the Trading Account         
4. Credit side of the Profit and Loss Account

 

Question No.  27            

At the end of an accounting year, trade debtors total Rs.50, 000. Provisions for bad debts and discount on debtors are made @5% and @% respectively. Provisions on discount on debtors will be made for--

 

Options              

1. Rs.1000
2. Rs.2,500              
3. Rs.950 
4. Rs.975

 

Question No.  28            

The primary record of a credit purchase of a fixed asset is made in--

 

Options              

1. Cash Book         
2. Sales Book        
3. Purchases Book              
4. Journal Proper

 

Question No.  29             

Which one of the following assets could be described as a current asset?            

 

Options              

1. Machinery to manufacture goods for resale      
2. Stock of goods for resale            
3. Buildings to house the machinery           
4. Land on which the buildings stand

 

Question No.  30            

Which of the following equations properly represents a derivation of the fundamental accounting equation?   

 

Options              

1. Assets + Liabilities = Capital       
2. Assets + Capital = Liabilities       
3. Assets = Liabilities + Capital       
4. Assets = Capital – Liabilities

 

Question No.  31            

If we take goods for own use we should --         

 

Options              

1. Debit Drawings Account: Credit Stock Account 
2. Debit Purchases Account: Credit Drawings Account        
3. Debit Sales Account: Credit Stock Account          
4. Debit Drawings Account: Credit Purchases Account        

 

Question No.  32            

Forfeited Shares Account is finally closed by the transfer of its balance to--        

 

Options              

1. Securities Premium Account     
2. General Reserve Account          
3. Debenture Sinking Fund Account           
4. Capital Reserve Account

 

Question No.  33

Capital Expenditure is--

 

Options              

1. The costs of running the business on a day-to-day         
2. Money spent on selling fixed assets      
3. The extra capital paid in by the proprietor          
4. Money spent on buying fixed assets or adding value to them   

 

Question No.  34

If it is required to maintain fixed capitals then the partners’ shares of profits must be--

 

Options              

1. Credited to capital accounts      
2. Debited to partners’ current accounts  
3. Debited to capital accounts       
4. Credited to partners’ current accounts

 

Question No.  35

According to the money measurement concept, the following will be recorded in the books of accounts

of the business--              

 

Options              

1. Health of the managing director of the company             
2. Quality of the company’ goods
3. Value of plant and machinery   
4. Dedicated and trusted employees

 

Question No.  36            

Sales made to Mahesh for cash should be debited to--

 

Options               

1. Cash account   
2. Mahesh account            
3. Sales account   
4. Purchase account

 

Question No.  37            

A bank reconciliation is prepared so that the difference in the under-mentioned balance is reconciled  

 

Options              

1. The difference in the balance of the bank and cash balances     
2. The difference in the balance in the Pass Book in the beginning and at the end
3. The difference in the Pass Book and Cash Book balance
4. None of the above                        

 

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Question No.  38            

In the absence of any provisions in the partnership agreement, profits and losses are shared by the partners--

 

Options              

1. In the ratio of their capitals        
2. Equally
3. In the ratio of loans given by them to the partnership firm         
4. None of the above

 

Question No.  39            

Under the Written down value method, the amount of depreciation goes on _________ from year to year      

 

Options              

1. Decreasing        
2. Increasing         
3. Fluctuating        
4. None of the above

 

Question No.  40            

How will the purchase of an asset on credit affect the accounting equation?      

 

Options              

1. It will decrease the assets and decrease the capital        
2. It will decrease the assets and decrease the liabilities   
3. It will increase the assets and decrease another asset  
4. It will increase the assets and increase the liabilities

 

40. Which of the following is the activity which finance people are involved?        

 

Options          

1. Investing decisions    
2. Operation decisions   
3. Promotion decisions   
4. Marketing decisions

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