ASSAM UNIVERSITY
FINANCIAL ACCOUNTING
SOLVED QUESTION PAPERS
TDC (CBCS) Odd Semester Exam, 2018
COMMERCE
(1ST Semester)
Course
No.: COMDSC – 101T
(Financial Accounting)
Full
Marks: 50
Pass
Marks: 20
Time:
3 hours
The
figures in the margin indicate full marks for the questions
UNIT – I:
THEORETICAL FRAMEWORK
1. Write True or False (any three): 1x3=3
a) Assets will be equal to capital if there are no liabilities. True
b) The cash withdrawn by the owner to meet personal expenses will be recorded in the books of business as sundry expenses. False, Recorded as drawings and deducted with capital
c) Accrual concept is one of the consequences of accounting period concept. True
d) Accounting Standards are prepared by the owners of the business. False, By ASB
2. Mention, any two informational needs of external users
of accounting information. 2
Ans: Needs of external users:
(i)
Banks and Financial Institutions: Banks
and Financial Institutions provide loans to the businesses. They watch the
performance of the business to ensure the safety and recovery of the loan
advanced.
(ii)
Investors and Potential Investors: Investors
uses financial statements to assess the earning capacity of the enterprise and
ensure the safety of their investment.
Or
3. What do you mean by Generally Accepted Accounting
Principle? 2
Ans: Generally
Accepted Accounting Principles are the rules and concepts which have been
accepted by accounting community for sound accounting practice. Their
usefulness depends on ‘general acceptability’ rather than ‘individual
acceptability’ of accounting concepts. They (GAAP) have been
formalised on the basis of usage, reason and experience. Simply, Generally
Accepted Accounting Principles (GAAP) comprises a set of rules, concept and Conventions
used in preparing financial accounting reports.
4. Discuss the qualitative characteristics of accounting
information. 5
Ans: Accounting Information is a set of financial data indicating an organization's resources,
revenues, debts or expenses. Accounting information must possess the following qualitative characteristics:
a)
Reliability: Reliability means the users must be able to depend on the
information.
b)
Relevance: To be relevant, information must be available in time, must
help in prediction and feedback.
c)
Understandability: Understandability means decision-makers must
interpret accounting information in the same sense as it is prepared and
conveyed to them.
d)
Comparability: The users of the
accounting information must be able to compare various aspects of an entity over different time period and
with other entities.
e)
Timeliness: Timeliness is how quickly information is
available to users of accounting information. The less timely (thus resulting
in older information), the less useful information is for decision-making.
Timeliness matters for accounting information because it competes with other
information.
Or
5. Discuss the need for Accounting Standards. 5
Ans: Need and
Objectives
of Accounting Standards:
The whole
idea of accounting
standards is centered
around harmonization of
accounting policies and practices
followed by different
business entities so
that the diverse
accounting practices adopted
for various aspects
of accounting can be
standardized. Accounting
standards standardizes diverse
accounting policies with a view to:
a.
To provide information to the users as to the
basis on which the accounts have been prepared and the financial statements
have been presented.
b.
To serve the statutory purpose of eliminating
the impact of diverse accounting policies and practices and to ensure
uniformity in accounting policies & practices, i.e., to harmonize the
diverse accounting policies & practices which are in use the preparation
& presentation of financial statements.
c.
To make the financial statements more
meaningful and comparable and to make people place more reliance on financial
statements prepared in conformity with the accounting standards.
d.
To guide the judgment of professional
accountants in dealing with those items, which are to be followed consistently
from year to year.
e.
To provide
a set of
standard accounting policies, valuation norms
and disclosure requirements.
UNIT – II:
COMPUTERISED ACCOUNTING
6. Answer the following questions in single sentence (any
three): 1x3=3
a) What is Tally?
Ans: Tally is a ready to use computerized accounting software which is used to perform the accounting activity and generates as per the requirement of the users.
b) Write the full meaning of POS.
Ans: POS: Point of Sale
c) What is gateway of Tally?
Ans: Gateway of tally is a window service that is installed and started after activating license.
d) What is the function of shortcut key F5?
Ans: In tally F5 key will open payment voucher.
7. State any two advantages of computerize accounting. 2
Ans: Computerised accounting system offers
various advantages over manual accounting which are stated below:
1)
Speed: The most
important advantage of using the computer is the speed with which we can get
the work of accounting done. Computer can process a large number of
transactions in seconds.
2)
Accuracy: One can
expect accurate results with valid data and instructions. Computers do not
commit errors.
Or
8. State any two important features of Tally Software. 2
Ans: Features of Tally Software:
a) Various types of voucher entry such as receipts voucher, payment voucher etc.
b) Top to bottom billing information is available for the users.
9. Write the steps for creation of a company. 5
Ans: Creating a
company in Tally.ERP 9 is a simple, one-time activity. The company data created
can be modified, exported, and other company data can be imported into your
company at any given point of time. To create a company in Tally.ERP 9
1. Go
to Gateway of Tally > Alt+F3 > Create
Company. Directory: modify the data path, if required.
2. Enter
the following details pertaining to your company:
a)
Primary Mailing and Contact Details
b)
Books and Financial Year Details
c)
Security Control
d)
Base Currency Information
3. Press Enter to
create the company.
Or
10. Discuss the meaning and steps of alteration of
company. 5
Ans: Alternation of company in tally means altering the details of the company such as name, address and other basic which is already entered in while creating a company.
Altering
a Company: To alter details
of an existing company
1. Go to Gateway of
Tally >click F3: Cmp Info. > Alter.
2. Press Enter.
3. Select the company from
the List of Companies.
4. Press Enter to view
the Company Alteration screen.
5. Make necessary changes in the
required fields.
6. Press Enter to save.
UNIT – III:
BUSINESS INCOME AND FINAL ACCOUNTS
11. Fill in the blanks with suitable word/words (any
three): 1x3=3
a) Balance Sheet is also known as Position statement.
b)
GST has been introduced in India on 1st July, 2017.
c) An amount paid for insurance of the building will be treated as revenue expenditure.
d) Arrangement of assets and liabilities in a Balance Sheet is called marshalling of balance sheet.
12. Mention any two features of income. 2
Ans: Features of Income: Following are the main features of business income:
a) Business income is based on the transactions (both external and internal) actually entered into the business enterprise.
b) Business income always pertains to a given accounting period.
Or
13. What is transaction approach to income measurement? 2
Ans: Under transaction approach of income measurement, first of all transactions relating to revenues and expenses are recorded and then total revenue is compared with total expenses to find out the total income of the business enterprises for a particular accounting period.
14. From the following Trial Balance, you are required to prepare a Balance Sheet as at 31st March, 2018 and a Profit & Loss A/c for the year ended 31st March, 2018:
Trial Balance as on 31.03.2018
|
Debit (Dr) |
Rs. |
Credit (Cr) |
Rs. |
|
Closing Stock Rent Repairs Sundry Expenses Cash in hand Furniture Debtors Drawings Tax and Insurance Discount |
7,000 1,800 300 1,000 3,000 8,000 15,600 6,000 1,500 1,000 |
Creditors Capital Bills Payable Sundry Receipts Trading A/c (G/P) |
10,000 8,300 9,000 800 17,100 |
|
|
45,200 |
|
45,200 |
Adjustments:
1) Prepaid Rent – Rs. 300.
2) Outstanding Sundry Expenses – Rs. 500.
3) Furniture to be depreciated by 10% p.a.
Ans: Solution of Practical Problems will be available on
our YouTube
Channel Very Soon.
Or
15. X Ltd. Co. purchased a plant on 1st April, 2014 for Rs. 25,600. Depreciation is to be provided at 25% p.a. on written down value method. The scrap value of the plant as the end of the economic life of 4 years is expected to be Rs. 8,100.
You are required to show the plant A/c and Depreciation A/c for the financial years, 2014 – 15, 2015 – 16, 2016 – 17 and 2017 – 18. 5
Ans: Solution of Practical Problems will be available on
our YouTube
Channel Very Soon.
UNIT – IV:
ACCOUNTING FOR HIRE PURCHASE AND INSTALLMENT SYSTEM
16. Answer any three of the following questions: 1x3=3
a) Give the accounting entry for getting delivery of the asset on the date of agreement under installment purchase system.
Ans: Machinery Account debited and Hire vendor account credited.
b) State the meaning of hire-purchase system.
Ans: Hire Purchase System defers to the system wherein, the seller of goods transfers the goods to the buyer without transferring the ownership of goods. The payment for the goods will be made by the buyer in installments.
c) What is down payment?
Ans: Down Payment: It is an initial payment which is made by the vendee to the vendor on the date of payment.
d) State one feature of hire-purchase system.
Ans: Hire-purchase
is a system of credit sale.
17. Give two points of differences between hire-purchases
system and installment purchase system. 2
Ans: Differences
between Hire Purchase System and Installment Purchase System:
|
Hire-Purchase
System |
Installment
Purchase |
|
It is a contract of hiring. |
It is a contract of sale. |
|
It is transferred by seller to buyer
only after payment of all installments. |
It is transferred by seller to
buyer, immediately on signing the contract. |
Or
18. State any two differences between hire-purchase and
credit purchase. 2
Ans: Difference
between Sale and Hire Purchase
|
Credit
Purchase |
Hire
Purchase |
|
In case of credit purchase, the
ownership of the goods is transferred to the buyer immediately. |
In case of Hire purchase, the
ownership of goods is transferred to buyer on payment of all installments. |
|
In case of credit purchase, the
buyer makes payment in lump sum. |
In case of hire purchase, the
payment is made in installments. |
Ans: Solution of Practical Problems will be available on
our YouTube
Channel Very Soon.
Or
Give the specimen journal entries in the books of hire
vendor under hire-purchase system. 5
Ans: JOURNAL ENTRIES IN THE BOOKS OF
HIRE-VENDOR
|
Sl. No. |
Circumstances |
Outright property |
Asset accrual |
Interest suspense |
|
01 |
When the asset is sold |
Hire-purchaser a/c Dr To sales a/c |
No entry |
Purchaser a/c Dr To sales a/c To interest suspense a/c |
|
02 |
When the down payment is
received |
Bank a/c Dr To hire-purchaser
a/c |
Asset a/c Dr To bank a/c |
Bank a/c Dr To purchaser
a/c |
|
At the
end of every year. |
||||
|
03 |
When the installment interest
becomes due |
Hire-purchaser a/c Dr To Interest a/c |
Asset a/c Dr Interest a/c Dr To hire vendor a/c |
interest suspense a/c Dr To Interest a/c |
|
04 |
When the installment is received |
Bank a/c Dr To hire-purchaser
a/c |
Hire vendor a/c Dr To bank a/c |
Bank a/c Dr To purchaser a/c |
|
05 |
When the interest is transferred to
p/l a/c |
Interest a/c Dr To Profit / loss
a/c |
Profit / loss a/c Dr To interest a/c To depn
a/c |
Interest a/c Dr To Profit / loss
a/c |
UNIT – V:
ACCOUNTING FOR INLAND BRANCHES
21. State the accounting treatment of the following
transactions (any three): 1x3=3
a) Goods in transit under debtor system.
Ans: It is either shown on both sides of Branch Account or totally ignored from branch account.
b) Credit sale under stock and debtor system.
Ans: Credit sale is not shown in Branch Account but is debited to branch debtors’ account and credited to branch stock account.
c) Pilferage of goods at branch under debtor system.
Ans: Losses of materials due to pilferage are ignored from branch debtors’ account.
Ans: Bad debts, discount is credited to branch debtors account and debited to branch profit and loss account.
22. What are the different systems of accounts which can
be adopted for dependent branch accounting? 2
Ans: In case of a dependent branch, the following accounting systems are
followed:
1)
Debtors
System
2)
Stock and
Debtors system
3)
Wholesale
System
4)
Final
Account system
Or
23. What do you understand to inter-branch transactions? 2
Ans: Where there are numbers of branches, one branch may transfer goods or cash to another branch. This is called inter-branch transactions e.g., cash or goods sent by one branch to another or expenses incurred by one branch on behalf of another. Such transactions are usually adjusted assuming that they were entered into under the instructions from the H.O.
24. A firm at Silchar has got a retail branch at Karimgang, selling mainly goods received from HO. Every week the cash received is remitted to HO after making all payments and keeping a balance not more than Rs. 500. Given below are the particulars relating to the branch:
|
|
Rs. |
|
Bank balances on 01.01.2018 Debtors on 01.01.2018 Stock on 01.01.2018 Local creditors on 01.01.2018 Local purchases Local return outwards Payment in local merchants Credit sales Return inwards Cash received on Ledger A/c Cash sales Goods received from HO Rent and other expenses Wages Bad debts Allowance to debtors Cash remitted to HO Stock on 31.12.2018 |
490 12,270 7,200 500 1,000 200 950 23,870 200 23,840 12,140 21,780 3,750 3,960 250 350 27,350 11,210 |
Prepare Karimgang Branch A/c in the books of HO at Silchar. 5
Ans: Solution of Practical Problems will be available on
our YouTube
Channel Very Soon.
Or
25. Briefly explain the invoice price method of branch
and pass journal entries in the books of HO for eliminating the loading. 5
Ans: Head office send goods to its branch either at cost price or invoice price. Invoice price is equal to cost price plus certain percentage of profit which head office is expecting to earn by selling the goods. If goods are sent by head office at invoice price, then the branch manager is required to sell the goods at invoice price only. The percentage of price charged by the head office is included in opening stock, goods sent by head office and closing stock and is considered to be unrealised till the goods are unsold. So, in order to calculate the true profit or loss made by the branch, it is necessary to adjust the profit included in stocks and goods sent by head office. The following journal entries are required to be passed to eliminate the amount of profit included in stocks and goods sent by head office:
a) For adjustment of loading (profit) included in opening stock at branch or in transit:
Stock reserve Account Dr
To Branch Account
b) For adjustment of loading (profit) included in goods sent to branch less return:
Goods sent to branch account Dr
To Branch Account
c) For adjustment of loading (profit) included in closing stock at branch or in transit:
Branch Account Dr
To Stock reserve Account
Post a Comment
Kindly give your valuable feedback to improve this website.