2016
FINANCIAL ACCOUNTING-I
Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. [A] Fill in the blanks: 1x5=5
1) Under Sectional balancing system, a trial balance can be prepared only out of _______ ledger.
2) Each installment including down payment is treated as hire charged by the _______.
3) The minimum rent or the actual royalty shall have to be paid by the lessee, whichever is _______.
4) According to _______ principle, _______ closing stock to be valued at cost price or market price whichever is lower.
5) The buyer’s position till the payment of last installment is the position of _______.
[B] State whether the following statements are true or false: 1x5=5
1) Hire purchase accounting is based on the principle of substance over legal form.
2) As per dual aspect principle, Asset = Liabilities – Capital.
3) The landlord receives a minimum rent as royalty periodically.
4) Accounting principles are generally based on practicability.
5) Shortworking arises even if there is no minimum rent.
2. Answer the following questions briefly: 2x5=10
a) Write any two objectives of accounting standards.
b) Mention any two defects of sectional balancing ledger.
c) What is meant by Hire Purchase Agreement?
d) Write the meaning of ‘recoupment of shortworking’ under Royalty A/c.
e) Explain how general ledger is self balancing.
3. Write the answers of the following questions: 5x4=20
(a) Mention five modifying accounting principles.
Or
State the nature of accounting information.
(b) Give rectification entries under self balancing system for the following transactions: 5
1) Purchase day book under cast by Rs. 1,000.
2) Goods returned by Rina Rs. 700 wrongly posted to Bina A/c.
Or
(c) Nibir purchased a truck on hire purchase system. As per terms he is required to pay Rs. 70,000 down. Rs. 53,000 at the end of first year, Rs. 49,000 at the end of second year and Rs. 55,000 at the end of third year. Interest is charged @ 10% p.a.
Calculate the cash price and the interest paid with each installment.
Or
Write a note on the accounting treatment of Interest
(d) What is the effect of strike and lockout on payment of Royalty?
Or
Mr. Baruah has given a licence to Rani Ltd. for manufacture of a machine tool for which he is the owner of patent. Under the agreement, Rani Ltd. will pay a royalty @ Rs. 50 per unit on all the tools sold during a year, subject to a minimum rent of Rs. 6,00,000. The agreement also provides that is there is a shortworking during the first two years, it can be recouped during the next three years only. The actual sales of the tools are as follows:
Year
|
Sales (in units)
|
1
2
3
4
5
6
|
5,000
8,000
10,000
15,000
14,000
18,000
|
Prepare the statement showing the calculation of Royalty and Shortworking.
4. What is ASB? Mention the functions of the ASB. 3+7=10
Or
Define Accounting Standard. Explain the procedure of setting Accounting Standards in India. 3+7=10
5. From the following particulars for the year 2015, prepare the required adjustment accounts as they would appear in the general ledger as on 31.12.2015 under self balancing system.
1.1.2015 Debtors ledger balance Rs. 1,37,000
1.1.2015 Creditors ledger balance Rs. 1,64,000
Transactions during the year:
Rs.
| |
Credit purchase
Credit sales
Cash received from customers
Cash paid to creditors
Return from customers
Return outward
Discount received
Bad debts written off
Acceptance received from customers
Bills payable accepted
Cash sales
Sundry charges debited to customers
Allowances from creditors
Bills payable dishonoured
Discount allowed to debtors
Cash purchases
Bills receivable dishonoured
Bad debts written off, now recovered
Transfer from Bought Ledger to Sales Ledger
Bills receivable discounted
|
62,500
69,500
77,000
92,000
2,000
2,000
1,800
7,200
25,500
36,000
50,000
500
1,600
9,000
1,300
30,900
2,100
900
1,500
3,000
|
Or
From the following figures, prepare a Total Debtors A/c and Total Creditors A/c for the period ended 31.3.2016: 5+5=10
Rs.
| |
Debtors on 1.10.15
Creditors on 1.10.15
Cash paid to creditors
Cash received from debtors
Purchases
Discount received
Bad debts written off
Sales return
Purchases return
Interest charged to debtors
Debtors cheque dishonoured
Discount allowed
Bills payable accepted (including renewals)
Bills payable withdrawn upon renewal
Interest on bills payable renewed
Sales
|
1,927
1,215
7,613
12,993
8,849
286
56
93
182
5
76
356
891
200
3
13,308
|
6. Raju purchased seven trucks on hire purchase on 1st July, 2014. The cash purchase price of each truck was Rs. 50,000. He was to pay 20% of the cash purchase price at the time of delivery and the balance in five half yearly installment starting from 31st December, 2014 with interest at 5% p.a.
On Raju’s failure to pay the installment due on 30th June, 2015, it was agreed that Raju would return 3 tricks to the vendor and remaining four tricks would be retained by him. The returning price of 3 trucks was Rs. 40,500. Raju charged depreciation @ 20% p.a. The vendor after spending Rs. 1,000 on repairs sold away all three trucks for Rs. 40,000.
Show Truck A/c and Vendor A/c in the books of Raju. 5+5=10
Or
Ajay purchase a car from Amar under installment payment system on 1st January, 2013. It was agreed that Rs. 15,000 was to be paid on signing the agreement and a sum of Rs. 15,000 was to be paid annually for 3 years. The cash price of the car was Rs. 52,300 and the rate of interest was 10%. Depreciation is charged @ 20% p.a. on the straight line method.
Prepare Car A/c and Vendor A/c in the books of the purchaser. 5+5=10
7. Kamrup Ltd. hold a lease of coal mine for a period of ten years, commencing from 1st January, 2009. According to the lease, the company is to pay 75 paisa as royalty per ton with a minimum rent of Rs. 15,000 per year. Shortworking can, however, be recovered out of the royalty in excess of the minimum rent of the next two years only. For the year of a strike, the minimum rent is reduced to 60%.
The output in tons for the 6 years is as under:
Year
|
Output (in tons)
|
2009
2010
2011
2012
2013
2014
|
10,000
12,000
25,000
20,000
50,000
15,000 (Strike)
|
Prepare Shortworking A/c and Landlord A/c in the books of Kamrup Ltd. 5+5=10
Or
Business Text is a small publishing firm. It has commissioned Dr. Roy to write a book. Roy’s contract states that his royalties will be calculated as follows:
1) He will receive a basic payment of Rs. 40for every book sold.
2) The minimum payment during each of the first two years will be Rs. 40,000. The publisher is entitled to recover any short-working from the royalties of the 3rd and 4th years. The maximum amount which can be recovered during any given years is limited to 25% of that year’s royalties.
3) There are no minimum royalties from year 3 onwards.
4) All royalties are paid on 31st December, the last day of accounting year.
5) The book was published during 2012. The number of copies sold in each of the first 4 years were as follows:
Year
|
No. of copies sold
|
2012
2013
2014
2015
|
800
900
1,400
1,800
|
Prepare Shortworking A/c and Dr. Roy’s A/c in the books of Business Text. 5+5=10
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