NIOS Free Solved Assignments (2019 - 2020): ACCOUNTANCY 224 ENGLISH MEDIUM

NIOS Free Solved Assignments (2019 - 2020)
Accountancy (224)
Tutor Marked Assignment
Max. Marks: 20

Note: (i) All questions are compulsory. The marks allotted for each question are given at same place.

(ii) Write your name enrollment numbers, AI name subject on the top of the first page of the answer sheet.

1. Answer any one of the following

i. How can you show Prepaid Insurance in the Accounting Equation? If commission worth Rs. 2800/- is received, what will be its effect in the Accounting Equation?        (2 Marks)

Ans: Accounting equation => Assets = Liabilities + Capital

If insurance premium is paid in cash, two aspects involved is prepaid insurance which is an asset and cash which is also an asset. In this transaction, one asset is increased and another assets is decreased with similar amount by the reason of which accounting equation is balance. In this transaction there is no change in value of assets , liabilities and capital.

Again, if commission of Rs. 2,800 is received, two aspects involved is cash which is an asset and commission which is an income and increases capital. In this transaction, assets are increased by Rs. 2,800 and capital is also increased by the same amount. Change on left hand side and right hand side of the accounting equation is same and accounting equation is balanced.

ii. From the following information prepare Credit Voucher of M/s Stanley Leather shoes Ahmedabad. 2015

April 17 Sold leather bags for cash vide Cash Memo No.: 514 Rs. 5800

April 24 Received cash from Tyagi & Co. on account vide Cash receipt No.: 38 Rs. 4200 (Lesson 5)

Credit voucher

M/S Stanley Leather Shoes Ahmadabad

Voucher Number: 514                                                                                                                           Date: 17-04-2015

Credit Account: Sales

Amount: Rs. 5,800

S.N.

Accounts name

Amount (Rs.)

Narration

1.

2.

Cash

Sales

5,800

5,800

Sales of leather bags for cash vide cash memo no.: 514

               

Authorised by:                                                                                                                            Prepared by:

 

 

Credit voucher

M/S Stanley Leather Shoes Ahmadabad

Voucher Number: 38                                                                                                                         Date: 24-04-2015

Credit Account: Tyagi & Co.

Amount: Rs. 4,200

S.N.

Accounts name

Amount (Rs.)

Narration

1.

2.

Cash

Tyagi & Co.

4,200

4,200

 

Received cash from Tyagi & co. on account vide cash receipt no.: 38

               

Authorised by:                                                                                                                            Prepared by:

 

 2. Answer any one of the following

i. What does the Going Concern Concept say? (Lesson 2) (2 marks)

Ans: According to Going concern concept, the reporting entity is normally viewed to be continuing in operation in the foreseeable future, and without there being any intention or necessity for it to either liquidate or curtail materially its scale of business operations.

ii. How can you explain 'Creditors' and 'Proprietors' as users of accounting information? (Lesson 1)

Ans: Creditors as an user of accounting information: Creditors supply goods and services on credit. Before granting credit, Creditors satisfy themselves about the creditworthiness of the business. The financial statement helps them in making such assessment.

Proprietor as an user of accounting information: Proprietor contribute capital in the business and they are always exposed to risk. In view of risk involved, the proprietors are always interested in knowing the profitability and financial strength of the company.

3. Answer any one of the following (2 Marks)

i. Can 'Capital' be considered as External Liability? Why?

Ans: No, capital is an internal liability. Internal Liabilities means the liability of business towards it's owners and External Liabilities means what a business owes to outsiders e.g., creditors, bank loan, overdraft etc. Since, Capital is the money contributed by owners or shareholders to the firm. That is why we considered capital as an internal liability.

ii. Identify the type of accounts in this transaction: Paid for Printing & Stationary Rs. 12,500/-

Ans: Types of accounts involved in the given transaction:

Particulars

Types of Account

Dr/Cr

Transaction: Paid for Printing & Stationary

 

Printing & Stationery: Expenses – Nominal Account

Cash : Assets – Real Account

Debited

Credited

 

4. Answer any one of the following (4 Marks)

i. Mr. Ashil opened a shop. The following are his business transactions:

Jan 8 Purchased goods                                      Rs. 20,000

Jan 10 Sold goods for cash                               Rs. 82,000

Jan 21 Paid Electricity charges                        Rs. 3560

Jan 22 Bought Office furniture                       Rs. 10,500

State the titles of accounts and types of Accounts that is affecting each transaction of Mr. Akhil.

Solution: Titles of accounts and types of accounts:

Transactions

Aspects

Types of accounts

Dr/Cr

Jan 8: Purchased goods Rs. 20,000

 

Purchases a/c

Cash a/c

Real account

Real account

Comes in: Dr

Goes out: Cr

Jan 10: Sold goods for cash Rs. 82,000

Cash a/c

Sales a/c

Real account

Real account

Comes in: Dr

Goes out: Cr

Jan 21: Paid electricity charges Rs. 3,560

Electricity charges a/c

Cash a/c

Nominal account

Real account

Expenses: Dr

Goes out: Cr

Jan 22: Bought office furniture Rs. 10,500

Office furniture a/c

Cash a/c

Real account

Real account

Comes in: Dr

Goes out: Cr

 

ii. List out the Assets, Liabilities and Capital from the following.

Particulars

Particulars (Solution)

Capital

Bank

Creditors

Prepaid Rent

Akshay (Debtor)

Cash-in-hand

Bank Overdraft

Outstanding Salaries

Capital

Assets

Liabilities

Assets

Assets

Assets

Liabilities

Liabilities

 

5. Answer any one of the following  (4 Marks)

i. From the list given below, classify Revenue and Expense.

Particulars

Sales

Revenue

Telephone rent

Stationary

Salaries

Interest paid

Commission received

Dividend received

Solution: List of revenue and expenses items given above:

Revenue

Expenses

Sales

Revenue

Commission received

Dividend received

Telephone rent

Stationary

Salaries

Interest paid

 

ii. An Accounting Concept assumes that all business transactions must be expressed in monetary terms. What is the significance of this concept?

Ans: Money Measurement Concept: According to this concept, only those events and transactions are recorded in accounts which can be expressed in terms of money. Facts, events and transactions which cannot be expressed in monetary terms are not recorded in accounting. Hence, the accounting does not give a complete picture of all the transactions of a business unit.

The advantage of this concept is that different types of transactions could be recorded as homogenous entries with money as common denominator. A business may own ` 3 Lacs cash, 1500 kg of raw material, 10 vehicles, 3 computers etc. Unless each of these is expressed in terms of money, we cannot find out the assets owned by the business. When expressed in the common measure of money, transactions could be added or subtracted to find out the combined effect. In the above example, we could add values of different assets to find the total assets owned.

6. Answer any one of the following: (6 Marks)

i. Visit any nearby business establishment and prepare a report of how "Dual Aspect Concept" is followed by that concern. Minimum of 8 transactions are to be analysed.

Solution: Dual Aspect Concept, also known as Duality Principle, is a fundamental convention of accounting that necessitates the recognition of all aspects of an accounting transaction. Dual aspect concept is the underlying basis for double entry accounting system.

In a single entry system, only one aspect of a transaction is recognized. For instance, if a sale is made to a customer, only sales revenue will be recorded. However, the other side of the transaction relating to the receipt of cash or the grant of credit to the customer is not recognized.

Single entry accounting system has been superseded by double entry accounting. You may still find limited use of single entry accounting system by individuals and small organizations that keep an informal record of receipts and payments.

Double entry accounting system is based on the duality principle and was devised to account for all aspects of a transaction. Under the system, aspects of transactions are classified under two main types:

a)      Debit is the portion of transaction that accounts for the increase in assets and expenses, and the decrease in liabilities, equity and income.

b)      Credit is the portion of transaction that accounts for the increase in income, liabilities and equity, and the decrease in assets and expenses.

The classification of debit and credit effects is structured in such a way that for each debit there is a corresponding credit and vice versa. Hence, every transaction will have 'dual' effects (i.e. debit effects and credit effects). The application of duality principle therefore ensures that all aspects of a transaction are accounted for in the financial statements.

Mr. A, who owns and operates a bookstore in my locality, has identified the following transactions for the month of January that need to be accounted for in the monthly financial statements:

Transactions

Aspects

Types of accounts

Dr/Cr

1. Purchased books Rs. 20,000

 

Purchases a/c

Cash a/c

Real account

Real account

Comes in: Dr

Goes out: Cr

2. Sold books for cash Rs. 82,000

Cash a/c

Sales a/c

Real account

Real account

Comes in: Dr

Goes out: Cr

3. Paid electricity charges Rs. 3,560

Electricity charges a/c

Cash a/c

Nominal account

Real account

Expenses: Dr

Goes out: Cr

4. Bought office furniture Rs. 10,500

Office furniture a/c

Cash a/c

Real account

Real account

Comes in: Dr

Goes out: Cr

5. Rent received Rs. 10,000

Cash a/c

Rent a/c

Real account

Nominal account

Comes in: Dr

Incomes: Cr

6. Withdraw for personal use Rs. 1,000

Drawings a/c

Cash a/c

Personal account

Real account

Receiver: Dr

Nominal: Cr

7. Sale machinery for Rs. 5,000

Cash a/c

Machinery a/c

Real account

Real account

Comes in: Dr

Goes out: Cr

8. Donation of goods Rs.1,000

Donation a/c

Purchases a/c

Nominal account

Real account

Losses: Dr

Goes out: Cr

 

ii. Go to any shop. Prepare a Project of how Accounting helps that organization in different ways. (Details of six advantages are needed)

Ans: Accounting is the analysis and interpretation of book-keeping records. It includes not only maintains of accounting records but also the preparation of financial and economic information Which involves the measurement of transaction and other events pertaining to a business.

According to the American institute of certified public accounts” The arts of recordings, classifying and summarizing in a significant manner and in terms of money transaction and events which in parts, at least of a financial charter and interpreting the result there of”.

Accounting is important for its various users which are stated below:

i) Owners: The owners provide funds or capital for the organization. They possess curiosity in knowing whether the business is being conducted on sound lines or not and whether the capital is being employed properly or not. Owners, being businessmen, always keep an eye on the returns from the investment. Comparing the accounts of various years helps in getting good pieces of information.

ii) Management: The management of the business is greatly interested in knowing the position of the firm. The accounts are the basis, the management can study the merits and demerits of the business activity. Thus, the management is interested in financial accounting to find whether the business carried on is profitable or not. The financial accounting is the “eyes and ears of management and facilitates in drawing future course of action, further expansion etc.”

iii) Creditors: Creditors are the persons who supply goods on credit, or bankers or lenders of money. It is usual that these groups are interested to know the financial soundness before granting credit. The progress and prosperity of the firm, two which credits are extended, are largely watched by creditors from the point of view of security and further credit. Profit and Loss Account and Balance Sheet are nerve centres to know the soundness of the firm.

iv) Employees: Payment of bonus depends upon the size of profit earned by the firm. The more important point is that the workers expect regular income for the bread. The demand for wage rise, bonus, better working conditions etc. depend upon the profitability of the firm and in turn depends upon financial position. For these reasons, this group is interested in accounting.

v) Investors: The prospective investors, who want to invest their money in a firm, of course wish to see the progress and prosperity of the firm, before investing their amount, by going through the financial statements of the firm. This is to safeguard the investment. For this, this group is eager to go through the accounting which enables them to know the safety of investment.

vi) Government: Government keeps a close watch on the firms which yield good amount of profits. The state and central Governments are interested in the financial statements to know the earnings for the purpose of taxation. To compile national accounting is essential.

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