CBSE Class 11

Accountancy
Sample Paper 08 (2019-20)

Maximum Marks: 80
Time Allowed: 3 hours

General Instructions:

i. All questions are compulsory.

ii. Marks are given alongwith each question.
iii. There is no overall choice, however internal choice is given in some questions.

Section A

1. Name the qualitative characteristic of accounting information which requires the use
of common unit and common format of reporting.

2. Neeraj sold goods costing Rs.500000 for Rs.700000 in cash and goods costing Rs.250000
for Rs.310000 on credit. What is the amount due from debtors
a. Rs.700000
b. Rs.500000
c. Rs.200000
d. Rs.310000
3. Which stakeholder would be most interested in the earning capacity of a business
firm?
a. Government and other regulators
b. Customers
c. Investors
d. Suppliers

4. Match the following:

(a) Sold goods returned. (i) Goods.

(b) Fall in value of Assets. (ii) Sales return.

 (c) Bank overdraft. (iii) Depreciation.

(d) physical item of trade. (iv) Short -term liability.

5. A firm earns a revenue of Rs. 21,000 and the expenses to earn this revenue are Rs.
15,000. Calculate its income.

6. Match the following:

Column A Column B

(a) Kind of software (i) Payroll processing

(b) Application software (ii) Utility software

(c) Report generated by AIS (iii) Tally

(d) TPS (iv) External reprot

7. Ledger book is popularly known as ______ books of accounts?

8. Match the following. Options are as follows:

a. AIS i. the electronic data processing of information stored in the database

b. ii. an information system that provides the needed information to the

MIS managers to manage the organization

c. iii. an information system based on the accounting database of an

DBMS organization

a. a - (iii), b - (ii), c - (i)

b. a - (iii), b - (i), c - (ii)

c. a - (ii), b - (iii), c -(i)

d. a - (i), b - (ii), c - (iii)

9. Goods destroyed by fire should be credited to:

a. Purchases account
 b. Sales account

c. Loss of goods by fire account

d. Insurance account

10. Is it correct that total of the purchase invoices recorded in the purchase book is posted
to debit side of the purchases account in the ledger and credited to the accounts of
suppliers?

11. Explain utility programmes; as one of the types of software.

12. ______users are the groups outside the business entity who uses the information to
make decisions about the business entity

a. Internal

b. Both

c. None of these

d. External

13. Fill in the blanks:

The natural of capital is a ________.

14. Fill in the blanks:

IFRS are based on ________.

OR

Fill in the blanks:

X Ltd. follows the Written Down Value Method of depreciating machinery year after
year due to ________.

15. Fill in the blanks:

Expenditure of revenue nature that gives benefit for more than one accounting period
 is categorised as ________ Expenditure.

16. Is it correct that individual accounts of customers is debited by the respective amount
and the total of the sales book is posted to the credit side of the sales account in the
general ledger?

17. If payment is made to a creditor, indicate how accounting equation will be affected?

OR

If total assets of the business are Rs 4,50,000 and outside liabilities are Rs 2,00,000,
calculate owner's equity.

18. Use of common unit of measurement and common format of reporting promotes;

a. Reliability

b. Relevance

c. Understandability

d. Comparability

19. Match the following:

(a) Debtors report (i) For review

(b) Routine report (ii) report on supplier

(c) Financial statement (iii) Age of debtors

(d) Creditors report (iv) relating to bank and cash balance

20. Match the followings options are as follows:

a. Assets
b. Liabilities
c. Revenue
d. Expenses
e. Capital
i. Equity Shares
 ii.Purchase, Salary paid
iii. Sale, commission received
iv. Trade Payables, short term loans
v. Cash, Debtor, furniture

a. a(v), b(iv), c(iii), d(i), e(ii)

b. a(v), b(iv), c(ii), d(iii), e(i)

c. a(iv), b(v), c(iii), d(ii), e(i)

d. a(v), b(iv), c(iii), d(ii), e(i)

OR

The company pays its creditors by cheque. What is the effect on assets and liabilities

a. Increase Bank and Increase Capital

b. Reduce Bank and Reduce Liability

c. Increase Bank and Reduce Capital

d. Reduce Bank and Increase Capital

Section B

21. From the following information, prepare trading account for the year ended 31st
March, 2013

Amt (Rs.)

Cost of goods sold 45,00,000

Sales 72,00,000

Closing Stock 2,40,000

OR

Cash sales Rs. 29,000, credit sales Rs. 31,000, cost of goods sold Rs. 52,000, expenses on
 purchases Rs.3,000, expenses on sales Rs.6,700. Find out gross profit and net profit.

22. Is accounting an art or a science?

OR

Name the accounting concept or convention associated with the following

i. Assets are recorded at cost, irrespective of the market price.

ii. Life of a business should be divided into smaller periods.
iii. Accounting transactions should be free from bias of accountants and others.
Section C

23. What do you understand by an accounting information system? Discuss the

relationship of accounting information system and marketing information system.

24. Differentiate between bill of exchange and a promissory note.

25. From the following information, prepare a profit and loss account for the year ending
31st March, 2014.

Amt (Rs.)

Gross profit 60,000

Rent 5,000

Salary 15,000

Commission paid 7,000

Interest paid on loan 5,000

Advertising 4,000

Discount received 3,000

Printings and stationary 2,000

Legal charges 5,000

Bad debts 1,000

Depreciation 2,000
 Interest received 4,000

Loss by fire 3,000

26. Record the following transactions in a three column cash book and balance the book
on 31st January, 2013

Amt Amt
Date Particulars Date Particulars
(Rs.) (Rs.)

2013 2013

Jan Bought
Jan 1 Cash balance 1,000 6,000
16 goods

Jan Paid Shyam

Jan 1 Bank balance 14,500 3,700
19 by cheque

Discount
Jan 1 Cash received from sale of shares 60,500 received 300
from him

Jan Drew from

Jan 2 Paid into bank 50,000 3,000
20 bank

Cash drawn
Purchased goods from M/sAgarwal for Jan from bank
Jan 3 2,000
Rs. 13,000 and paid by cheque Rs. 12,000 22 for personal
use

Jan
Jan 4 Paid Wages 2,500 Cash sales 1,700
24

Received
Received from Mohan a cheque for Rs.
Jan from
Jan 5 9,800 against dues of Rs. 10,000 in full 18,000
27 Sharma
settlement of his account

Discount
Jan 8 Mohan's cheque deposited into bank 500
Allowed
 Jan Paid rent by cheque 1,500 Jan Deposited 15,000
14 28 cash into
bank

Gave
Jan cheque for
2,000
28 cash
purchases

Jan

30

27. Pass the journal entries for the following:

i. Proprietor withdrew for his personal use cash Rs 10,000 and goods worth Rs 5,000.
ii. Goods for Rs 25,000 were given away as charity. (sale price Rs 30,000).
iii. Goods worth Rs 12,500 were distributed as free samples.
iv. Goods worth Rs 25,000 and cash Rs 10,000 were stolen by an employee.
v. Goods worth Rs 50,000 were destroyed by fire. Insurance company admitted and
paid claim for 60% amount.
Section D

28. Jatin keeps books under single entry system. His assets and liabilities were as under

Items 31st March, 2012(Rs) 31st March, 2013(Rs)

Cash 2,000 1800

Sundry debtors 78,000 90,000

Stock 68,000 64,000

Plant and machinery 1,20,000 1,60,000

Sundry creditors 30,000 29,800

Bills payable — 10,000

During 2012-13, he introduced Rs 20,000 as new capital. He withdrew Rs 6,000 every

month for his household expenses. Ascertain his profit for the year ended 31st March,
 2013.

29. The following were the balances extracted from the books of Kanta as on March 31,
2013.

Amount Amount
Debit Balance Credit Balance
(Rs.) (Rs.)

Cash in hand 540 Sales 98,780

Cash at bank 2,630 Return Outwards 500

Purchases 40,675 Capital 62,000

Return inwards 680 Sundry Creditors 6,300

Wages 8,480 Rent 9,000

Fuel and Power 4,730

Carriage on sales 3,200

Carriage on purchases 2,040

Opening stock 5,760

Building 32,000

Freehold land 10,000

Machinery 20,000

Salaries 15,000

Patents 7,500

General expenses 3,000

Insurance 600

Drawings 5,245

Sundry Debtors 14,500

1,76,580 1,76,580

======= =======
Taking into account the following adjustments, prepare Trading and Profit and loss
account and Balance Sheet as on March 31, 2013:

a. Stock in hand on March 31, 2013, was Rs. 6,800.

b. Machinery is to be depreciated at the rate of 10% and patents @ 20%.
c. Salaries for the month of March, 2013 amounting to Rs. 1,500 were outstanding.,
d. Insurance includes a premium of Rs. 170 on a policy expiring on September 30,
2013.
e. Rent receivable Rs. 1,000.

OR

From the following balances, as on 31st March, 2018 prepare the Trading Account,
Profit and Loss Account and the Balance Sheet:

Rs.

Capital Account 1,00,000

Returns outward 5,000

Plant and Machinery 40,000

Rent 4,000

Sundry Debtors 24,000

Sales 1,64,000

Sundry Creditors 12,000

Manufacturing Expenses 8,000

Purchases 1,05,000

Life Insurance Premium 12,000

Trade Expenses 7,000

Bad Debts 2,000

Wages 50,000

Carriage 1,500
 Bank 10,000

Bills Payable 7,000

Repairs 500

Returns Inward 4,000

Stock 1-4-2017 20,000

The closing stock (31st March 2018) was valued at Rs.14,500.

30. From the following information supplied by Sanjay, prepare his bank reconciliation
statement as on 31 st December, 2013.

Amt(Rs)

(i) Bank overdraft as per pass book 16,500

(ii) Cheques issued but not presented for payment 8,750

(iii) Cheques deposited with the bank but not collected 10,500

(iv) Cheques recorded in the cash book but not sent to the bank for
2,000
collection

(v) Payment received from customers directly by the bank 3,500

(vi) Bank charges debited in the pass book 200

(vii) Premium on life policy of Sanjay paid by the bank on standing advice 1,980

(viii) A bill for Rs 3,000 (discounted with the bank in November)

100
dishonoured on 31st December, 2013 and noting charges paid by the bank

OR

Prepare a bank reconciliation statement from the following particulars on 30th June,
2013, Bank statement showed a favourable balance of Rs 9,214.

i. On 29th June, 2013 the bank credited the sum of Rs 1,650 in error.
ii. Certain cheques, valued at Rs 4,500 issued before 29th June, 2013 were not cleared.
iii. A hire purchase payment of Rs 950, made by a standing order was not entered in
 the cash book.
iv. A cheque of Rs 600 received, deposited and credited by bank, was accounted as a
receipt in the cash column of the cash book.
v. Other cheques for Rs 8,500 were deposited in June but cheques for Rs 6,000 only
were cleared by the bankers.
Section E

31. You are presented with a trial balance showing a difference, which has been carried
to suspense account and the follow ing errors are revealed

i. Rs 350 paid in cash for a typewriter was charged to office expenses account.
ii. Goods amounting to Rs 660 sold to Arun, were correctly entered in the sales book
but posted to Arun’s Account as Rs 760. The total sales for the month were
overcast by Rs 1,000.
iii. Goods worth Rs 130 returned by Monu, were entered in the sales book and posted
therefrom to the cred it of Monu’s personal account.
iv. Goods sold for Rs 1,240 and debited on 20th December to Naina, were returned by
him on 23rd and taken into stock on 31st December, no entries being made in the
books for return.
v. Sales return book was overcast by Rs 100.

Journalise the necessary corrections and raise suspense account, assuming that there
are no other errors.

OR

On 30th September, 2013 my cash book (bank column of account number 1) showed a
bank overdraft of Rs 98,700. On going through the bank pass book for reconciling the
balance, I found the following

i. Out of cheques drawn on 26th September, those for Rs 7,400 were cashed by the
bankers on 2nd October.
ii. A crossed cheque for Rs 1,500 given to Abdul was returned by him and a bearer
cheque was issued to him in lieu on 1st October.
iii. Cash and cheques amounting to Rs 6,800 were deposited in the bank on 29th
September, but cheques worth Rs 2,600 were cleared by the bank on 1st October
 and one cheque for Rs 500 was returned by them as dishonoured on the latter
date.
iv. According to my standing instructions, the bankers have on 30th September, paid
Rs 640 as interest to my creditors, paid quarterly permium on my policy
amounting to Rs 320 and have paid a second call of Rs 1,200 on shares held by me
and lodged with the bankers for safe custody. They have also received Rs 300 as
dividend on my shares and recovered an insurance claim of Rs 1,600 as their
charges and commission on the above being Rs 30. On receipt of information of
the above transaction, I have passed necessary entries in my cash book on 1st
October.
v. My bankers seem to have given me a wrong credit for Rs 1,000 paid in by me in
account number 2 and a wrong debit in respect of a cheque for Rs 600 drawn
against my account number 2.

Prepare a bank reconciliation statement as on 30th September, 2013.

32. Modem Ltd purchased machinery on 1st August 2015 for Rs.60,000. On 1
October 2016, it purchased another machine for Rs/20,000 plus CGST and SGST © 6%
each. On 30th June 2017, it sold the first machine purchased in 2016 for Rs.38,500
charging IGST @ 12%. Depreciation is provided @ 20% p.a. on the original cost each
year. Accounts are closed on 31st March every year. Prepare the Machinery A/c for
three years.

OR

On 1st May 2017, Merchant & Co. sold to AB & Co. valued at Rs.500 and drew upon
them a bill at 3 months for the amount. AB & Co. accepted the draft on presentation.
When the bill was about to mature AB & Co. expressed their inability to meet it and
offered to pay Merchant & Co. Rs.200 in cash and to accept a fresh bill for the balance
plus interest at 6% per annum for 3 months. Merchant & Co. agreed to the proposal
and bill was renewed. On maturity, the bill was duly met. Make the entries in the
books of both the parties to record the above transactions.
 CBSE Class 11
Accountancy
Sample Paper 08 (2019-20)

Solution
Section A

1. It is the comparability characteristic.

2. (d) Rs.310000
Explanation: the amount due on debtors is the amount of goods sold on credit ie the
sale value 310000
3. (c) Investors
Explanation: investors invest money in the business so they are interested in the
return of the business

4. (a) - (ii), (b) - (iii), (c) - (iv), (d) - (i)

5. Income will be calculated in the following manner:

Income = Revenue - Expense = ₹21,000 -₹15,000 =₹ 6,000.

6. (a) - (ii), (b) - (iii), (c) - (iv), (d) - (i)

7. Ledger book is popularly known as principal books of accounts.

8. (a) a - (iii), b - (ii), c - (i)

Explanation: An accounting information system (AIS) is a structure that a business
uses to collect, store, manage, process, retrieve and report its financial data so that it
can be used by accountants, consultants, business analysts, managers, chief financial
officers (CFOs), auditors and regulatory and tax agencies.

Management information system (MIS) refers to the processing of information

through computers and other intelligent devices to manage and support managerial
decisions within an organization.
A database management system (DBMS) is system software for creating and managing
databases. The DBMS provides users and programmers with a systematic way to
create, retrieve, update and manage data.
 9. (a) Purchases account
Explanation: the journal entry for goods loss by fire is

loss by fire a/c dr

to purchases a/c

10. Yes, Purchases account debited following the rule ‘increase in expenses is debited and
decrease credited’. The suppliers account is credited following the rule ‘increase in
liabilities is credited and decrease debited’.

11. These are a set of computer programmes, which are used to perform certain
supporting operations in a computer. It is also known as system utility. Most utility
softwares are highly specialised and designed to perform only a single task.

12. (d) External

Explanation: the various external users are banks,financial institution,government,
creditors etc.

13. Liability

14. Fair value

OR

Consistency

15. Deferred Revenue

16. Yes, following the rule ‘increase in revenue is credited and decrease debited’ sales
account is credited. Debtors is debited following the rule applicable to asset accounts
i.e., ‘increase in assets is debited and decrease credited’.

17. Cash decreases and on liability side creditor's balance also decreases. Based on the
double-entry system, the accounting equation ensures that the balance sheet remains
“balanced,” and each entry made on the debit side should have a corresponding entry
(or coverage) on the credit side.

OR
 Assets = Owner’s Equity + Outside Liabilities

Owner’s Equity = Assets - Outside Liabilities

Owner’s Equity = 4,50,000 - 2,00,000
Owner’s Equity = Rs. 2,50,000

18. (d) Comparability

Explanation: it becomes easier to comapre accounts of one business with the other.

19. (a) - (iii), (b) - (iv), (c) - (i), (d) - (ii)

20. (d) a(v), b(iv), c(iii), d(ii), e(i)

Explanation: Assets are business owned property in its name which is cash, debtor
furniture.
Liability are debt for the business which are trade payables, short term loans.
Income are amount earned by business which are sale or commission received.
Expenses are the amount paid for purchase or any expense which are purchase and
salary.
Capital is amount invested in business which is Equity or owner fund.

OR

(b) Reduce Bank and Reduce Liability

Explanation: Creditors are liability for the entity. When company pays them then it
will reduce the bank and creditors also.
Section B

21. Trading Account

Dr Cr

Particulars Amt (Rs.) Particulars Amt (Rs.)

To COGS 45,00,000 By sales 72,00,000

To Gross Profit T/f. to P&L A/c 27,00,000

72,00,000 72,00,000
 OR

Total sales = cash sales + credit sales

= 29000 + 31000 = 60000
Gross Profit = Total Sales - Cost of Goods Sold
= Rs.60000 - Rs. 52,000
Gross profit for the year = Rs. 8,000
Net Profit = Gross Profit - Indirect Expenses
= Rs. 8,000 - Rs. 6,700
Net profit for the year = Rs. 1,300

22.
Accounting is both an art as well as a science. It can be seen in the following points:

Accounting as an Art : As an art it is the technique of achieving some pre-

determined objectives. Accounting is an art of recording, classifying and
summarising financial transactions of the business. It helps us in ascertaining
the net profit and financial position of the business enterprise.
Accounting as Science: Science is an organised body of knowledge based on
certain basic principles. Therefore, accounting is also a science as it is an
organised body of knowledge based on certain accounting principles.

OR

Accounting concepts are a number of conceptual issues that one must understand in
order to develop a firm foundation of how accounting works.

i. Historical cost concept

ii. Accounting period concept
iii. Verifiable objective concept
Section C

23. An accounting information system (AIS) is the collection, storage and processing of
financial and accounting data used by internal users to report information to
investors, creditors and tax authorities. An accounting information system is
generally a computer-based method for tracking accounting activity in conjunction
 with information technology resources. Relationship of accounting information
system and marketing information system:

Accounting Information System (AIS) is the key department within the

organisation as it takes care of the finances.
Marketing Information System (MKIS) is a management information system
designed to support marketing decision making.

24. The difference between a bill of exchange and promissary note are as follows:

Basis Bill of Exchange Promissory Note

Drawer Creditor is the Drawer. Debtor is the Drawer.

It contains a promise to make

Order or It contains an order to make payment.
payment. There are only two
Promise There can be three parties to it viz.
parties to it viz. the drawer
and Parties the drawer, the drawer and the payee.
and the payee.

t requires acceptance by the drawee It does not require any

Acceptance
or someone else on his behalf. acceptance.

Drawer and payee can be the same Drawer cannot be the

Payee
party. payee of it.

In case of foreign bill, three copies are

Only one copy is prepared
Copies made, otherwise only one copy is
whether, it is foreign or local.
prepared.

The liability of the drawer arises only The promisor has the primary
Liability
if the acceptor does not pay. liability to pay.

Stamps are not required to be fixed,

on the bills payable on demand. Stamps have to be fixed in any
Stamps
However, on the other bills, stamps case.
are require to be fixed.

In case of Dishonour, it is better to get In the case of promissory note

Noting
it noted for non-payment. noting is necessary.
25. To prepare the Profit & Loss Account, all the Indirect expenses are charged from the
Gross Profit. thus, the Profit & Loss Account will be prepared in the following manner
:

Profit and Loss Account

for the year ended 31st March, 2014

Dr. Cr.

Amt Amt
Particulars Particulars
(Rs.) (Rs.)

By Gross Profit transferred from

To Rent 5,000 60,000
trading A/c

To Salary 15,000 By Discount Received 3,000

To Commission 7,000 By Interest Received 4,000

To Interest Paid on Loan 5,000

To Advertising 4,000

To Printing and Stationary 2,000

To Legal Charges 5,000

To Bad Debts 1,000

To Depreciation 2,000

To Loss by Fire 3,000

To Net Profit Transferred to the

18,000
capital A/c

67,000 67,000

26. Three Column Cash Book

Cash Bank Discount Cash Bank

Date Particulars V.No. Amount Amount Amount Date Particulars V.No. Amount Amount

(Rs) (Rs) (Rs) (Rs) (Rs)

Jan Jan
To Balance
01, 1,000 14,500 01, By Cash
b/d
2013 2013

Jan Jan
By
01, To Shares 60,500 16, 6,000
Purchase
2013 2013

Jan Jan

02, To Cash C 50,000 19, By Shyam 3,700

2013 2013

Jan Jan

08, To Mohan 9,800 500 02, By Bank 50,000

2013 2013

Jan Jan
By
20, To Bank C 3,000 03, 12,000
purchase
2013 2013

Jan Jan

24, To Sales 1,700 04, By Wages 2,500

2013 2013

Jan Jan

27, To Sharma 18,000 14, By Rent 1,500

2013 2013

Jan Jan

28, To Cash C 15,000 20, By Cash C 3,000

2013 2013

Jan

22, By Drawing 2,000

2013

Jan

28, By Bank C 15,000

2013
 Jan
By
28, 2,000
Purchase
2013

Jan
By Balance
30, 10,700 65,100
c/d
2013

84,200 89,300 500 84,200 89,300

====== ====== ===== ======= ======

Feb
To Balance
01, 10,700 65,100
b/d
2013

27. JOURNAL

Debit Credit
Date Particulars L/F Amount Amount
(Rs) (Rs)

Drawings A/c 15,000

To Cash A/c Dr 15,000

To Purchases A/c
(Being cash and goods taken away by 5,000
proprietor for personal use)

Charity A/c
To Purchases A/c Dr 25,000 25,000
(Being goods given away as charity)

Advertisement Expenses A/c

Dr 12,500 12,500
To Purchases A/c
(Being goods distributed as free samples)

Loss by Theft A/c 25,000

To Purchases A/c Dr 35,000

 To Cash A/c 10,000
(Being goods and cash stolen by an employee)

Loss by Fire A/c

To Purchases A/c Dr 50,000 50,000
(Being goods destroyed by fire)

Insurance Company A/c

To Loss by Fire A/c
Dr 50,000 50,000
(Being insurance claim lodged with the
insurance company)

Bank A/c Dr 30,000

Profit and Loss A/c 50,000

To Insurance Company
(Being insurance claim of Rs 50,000, accepted Dr 20,000
and received at Rs 30,000)

2,37,500 2,37,500
Total
====== ======

Section D

28. Statement of Affairs

(as on 31st March, 2012)

Liabilities Amt(Rs) Assets Amt(Rs)

Sundry Creditors 30,000 Cash 2,000

Capital(Balancing figures) 2,38,000 Sundry Debtors 78,000

Stock 68,000

Plant and Machinery 1,20,000

2,68,000 2,68,000

Statement of Affairs
(as on 31st March, 2013)
 Liabilities Amt(Rs) Assets Amt(Rs)

Sundry Creditors 29,800 Cash 1,800

Bills Payable 10,000 Sundry Debtors 90,000

Capital(Balancing figures) 2,76,000 Stock 64,000

Plant and Machinery 1,60,000

3,15,800 3,15,800

Statement of Profit or Loss

(for the year ended 31st March, 2013)

Particulars Amt(Rs)

Capital at 31st March, 2013 2,76,000

(+) Drawings Made During 2102-13(6000 12) 72,000

3,48,000

(-) Fresh Capital Introduced During the year 20,000

Adjusted capital on 31st March, 2013 3,28,000

(-) Capital at 31st March, 2012 2,38,000

Profit Made During 2012-13 90,000

Notes :

Drawings are made per month so amount is multiplied by 12.

Above is a Net Worth Method or Statement of Affairs Method of ascertaining
Profit/ Loss.
Statement of Affairs is prepared to ascertain the capital in same manner in
which a Balance Sheet is prepared.

29. Books of Kanta

Trading and Profit and Loss Account
for the year ended March 31, 2013
 Particulars Amount Particulars Amount
(Rs) (Rs)

Opening Stock 5,760 Sales 98,780

Less Return
Purchases 40,675 680 98,100
Inwards

Less Return outwards (500) 40,175 Closing Stock 6,800

Wages 8,480

Fuel and Power 4,730

Carriage on purchase 2,040

Gross profit c/d 43,715

1,04,900 1,04,900

======== =======

Salaries 15,000 Gross Profit b/d 43,715

Add Outstanding 1,500 16,500 Rent 9,000

Carriage 3,200 Add Accrued Rent 1,000 10,000

General Expenses 3,000

Insurance 600

Less Prepaid 85 515

Depreciation:
2,000
Machinery

Patent 1,500 3,500

Net Profit 27,000

53,715 53,715

====== =====

Balance Sheet
as on March 31, 2013
 Amount Amount
Liabilities Assets
Rs. Rs

Sundry creditors 6,300 Cash in Hand 540

Salary Outstanding 1,500 Cash at Bank 2,630

Capital 62,000 Sundry Debtors 14,500

Add Net Profit 27,000 Insurance Prepaid 85

89,000 Stock 6,800

Less Drawings 5,245 83,755 Rent Accrued 1,000

Freehold Land 10,000

Building 32,000

Machinery 20,000

Less Depreciation 2,000 18,000

Patents 7,500

Less Depreciation 1,500 6,000

91,555 91,555

======= ======

OR

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March, 2018

Particulars Rs. Particulars Rs.

To Opening Stock 20,000 By Sales 1,64,000

To purchases 1,.05,000 Less : Returns 4,000 1,60,000

By Closing
Less : Returns 5,000 1,00,000 14,500
Stock

By Gross Loss
To Wages 50,000 5,000
 c/d

To Carriage 1,500

To
Manufacturing 8,000
Expenses

Total 1,79,500 Total 1,79,500

To Gross Loss b/d 5,000 By Net Loss c/d 18,500

To Repairs 500

To Trade
7,000
Expenses

To Rent 4,000

To Bad Debts 2,000

Total 18,500 Total 18,500

BALANCE SHEET
AS AT 31ST MARCH, 2018

Liabilities Rs. Assets Rs.

Capital 1,00,000 Plant & Machinery 40,000

Less : L.I.P. 12,000 Closing Stock 14,500

Less : Net Loss 18,500 69,500 sundry Debtors 24,000

Sundry Creditors 12,000 Bank 10,000

Bills Payable 7,000

Total 88,500 Total 88,500

Profit & Loss account is prepared on the last day of the accounting year in order to
determine the net result of the business. Only indirect expense and indirect revenue
are shown in it.
Trading account is prepared by entities to know the profit of the business by the
 operating activities.
Balance sheet shows the financial position of the entity at a point of time.

30. Bank Reconciliation Statement

as on 31st December, 2013

Amount Amount
Particulars
(Rs) (Rs)

Overdraft/Debit/Unfavourable Balance as per Pass Book 16,500

Add: Cheques deposited with the bank but not yet collected 10,500

Cheques recorded in the cash book but not sent to the bank
2,000
for collection

Bank charges debited in the pass book 200

Premium on life policy paid by the bank 1,980

Dishonoured bill (including noting charges) 3,100 17,780

Less: Cheques issued but not yet presented for payment 8,750

Payments received from customers directly by the bank 3,500 12,250

Overdraft/Credit/Unfavourable Balance as per Cash Book 10,970

Bank Reconciliation Statement compares general ledger against the bank statement to
check for any irregularities, such as overcharges, and provides helpful financial
oversight from month to month.

OR

Bank Reconciliation Statement

as on 30th June, 2013

Amount Amount
Particulars
(Rs) (Rs)

Credit/Favourable/Balance as per Pass Book 9,214

Add: A hire purchase payment of Rs 950, made by a standing

 order was not entered in the cash book 950

Cheques deposited but not cleared (8,500 - 6,000) 2,500 3,450

Less: Bank credited the sum of Rs 1,650 in error 1,650

Cheques issued but not cleared 4,500

Cheque deposited into the bank was accounted as receipt

600 6,750
in the cash column of the cash book

5,914
Debit/Favourable/Balance as per Cash Book
======

When banks send companies a bank statement that contains the company’s beginning
cash balance, transactions during the period, and ending cash balance, almost always,
the bank’s ending cash balance and the company’s ending cash balance will never be
the same.

Section E

31. When an error is committed in the books of accounts the same should be corrected to
show true numbers in financial statements. If the error is immediately identified it
may be fixed by striking out the wrong entry and replacing it with a correct one.
However, if the error is identified at a later stage, the correction should be made by
passing a suitable journal entry, such entries used to fix an accounting error are
called rectification entries.

Nowadays with software packages if a journal entry has been posted to the ledger it
usually requires rectification entry, however, if it is still at a preliminary stage of
validation it may still be corrected without the need of an additional entry. Errors are
required to be rectified before finalization of books of account.

Journal Entries to Rectify the Errors

Debit Credit
Date Particulars LF
Amount(Rs.) Amount(Rs.)

1. 350
 Office Equipments A/c Dr.

To Office Expenses A/c 350

(Being cash paid for a typewriter, wrongly

charged to Office expenses, now rectified)

2. Suspense A/c Dr. 100

To Arun A/c 100

(Being Sale of Rs.660 to Arun wrongly

entered in Arun's Account as Rs.770, now
rectified)

Sales A/c Dr. 1,000

To Suspense A/c 1,000

(Being Sales book overcast by Rs.1,000, now

rectified)

3. Sales Return A/c Dr. 130

Sales A/c Dr. 130

To Suspense A/c 260

(Being goods returned from Monu, wrongly

entered in sales book and entered to the
credit side of Monu, now rectified)

4. Sales Return A/c Dr. 1,240

To Naina A/c 1,240

(Being Goods returned by Naina omitted,

now entered in the books of accounts)

5. Suspense A/c Dr. 100

To Sales Return A/c 100

(Being sales return book overcast by Rs.100,

now rectified)
A suspense account is a general ledger account in which amounts are temporarily
recorded. The suspense account is used because the appropriate general ledger
account could not be determined at the time that the transaction was recorded.

As soon as possible, the amount(s) in the suspense account should be moved to the
proper account(s).
An accountant was instructed to record a significant number of journal
entries written by the controller of a large company. Unfortunately, there was one
amount that did not have an account designated. In order to complete the assignment
by the deadline, the accountant recorded the "mystery" amount in the general ledger
Suspense account. When the controller is available, the accountant will get
clarification and will move the amount from the Suspense account to the appropriate
account.

Particulars Amoun(Rs.) Particulars Amount(Rs.)

To Arun A/c 100 By Sales A/c 1,000

To Balance c/d 1,260 By Sales Return A/c 130

By Sales A/c 130

By Sales Return A/c 100

Total 1,360 Total 1,360

OR

BANK RECONCILIATION STATEMENT

as on 30th September, 2013

Debit Credit
Particulars
(Rs.) (Rs.)

Overdraft as per Cash Book 98,700

Add: Cheques issued but not yet presented 7,400

Crossed cheque issued to Abdul not presented for payment 1,500

Amounts collected by the bank on our behalf but not entered in

 the cash book;

Dividend 300

Insurance claim 1,600

Amount paid in account number 2 credited by the bank wrongly

1,000
to this account

Less: Cheques deposited but not yet collected (2,600 + 500) 3,100

Payments made by the bank on our behalf but not entered in the

cash book;

Interest 640

Premium 320

Second call 1,200

Bank charged commission on collection of dividend and

30
insurance claim

Cheques issued against account number 2 but wrongly debited

600
by the bank to this account

Overdraft as per Pass Book 92,790

1,04,560 1,04,590

32. MACHINERY ACCOUNT

Dr. Cr.

Date Particulars J.F. Rs. Date Particulars J.F. Rs.

01.08.15 To Bank A/c 60,000 31.03.16 By Depreciation 8,000

By Balance c/d 52,000

60,000 60,000

To Balance b/d By Depreciation

01.04.16 52,000 31.03.17 14,240
A/c
 01.10.16 To Bank A/c 22,400 31.03.17 By Balance c/d 60,160

74,400 74,400

By Bank A/c -
01.04.17 To Balance b/d 60,160 30.06.17 34,375
Sale

30.06.17 By Dep. A/c (I) 3,000

30.06.17 By P & L A/c 2,625

31.03.18 By Dep. A/c (II) 4,480

31.03.18 By Balance c/d 15,680

60,160 60,160

01.04.18 To Balance b/d 15,680

Working Note:

Machine I Machine II Total

Cost 60,000 60,000

Less : depreciation for 2015-16 @ 20% for 8

8,000 8,000
months

Balance 52,000 22,400 74,400

Less : depreciation for 2016-17 @ 20% of cost 12,000 2,240 14,240

Balance 40,000 20,160 60,160

Less : depreciation for 2017-18 @ 20% for 3

3,000 4,480 7,480
months

Balance 37,000 15,680 52,680

- Sale value 34,375

Loss on sale 2,625

In Fixed instalment method of providing depreciation amount of depreciation will

always calculate on cost of the asset.
 OR

BOOKS OF MERCHANT & CO.

JOURNAL ENTRIES

Dr. Cr.
Date Particulars L.F.
(Rs.) (Rs.)

1.5.17 AB & Co. Dr. 500

To Sales A/c
500
(Being goods sold.)

1.5.17 B/R A/c Dr. 500

To AB & Co.
500
(Being bill receivable drawn.)

4.8.17 AB & Co. Dr. 500

To B/R A/c
(Being bill receivable 500
dishonoured)

4.8.17 Cash A/c Dr. 200

To AB & Co.
200
(Being cash received.)

4.8.17 B/R A/c Dr. 304.50

To AB & Co. 300

To Interest A/c (300 x 6% x 3/12)

(Being new bill receivable 4.50
drawn.)

7.11.17 Cash A/c Dr. 304.50

To B/R A/c
(Being amount of new bill 304.50
receivable receive)
 BOOKS OF AB & CO.
JOURNAL ENTRIES

Date Particulars L/F (Rs.) (Rs.)

1.5.17 Purchases A/c Dr. 500

To Merchant & Co.

500
(Being goods purchased.)

1.5.17 Merchant & Co. Dr. 500

To B/P A/c
500
(Being bill payable accepted)

4.8.17 B/P A/c Dr. 500

To Merchant & Co.

500
(Being bill payable dishonoured)

4.8.17 Merchant & Co. Dr. 200

To Cash A/c
200
(Being cash paid)

4.8.17 Merchant & Co. Dr. 300.00

Interest A/c Dr. 4.50

To B/P A/c
304.50
(Being new bill payable accepted)

7.11.17 B/P A/c Dr. 304.50

To Cash A/c
(Being amount of new bill payable 304.50
paid)