Financial Accounting Solved Question Papers' 2019 | Assam University Solved Question Papers | B.Com 1st Sem CBCS Pattern

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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b)         The cash withdrawn by the owner to meet personal expenses will be recorded in the books of business as sundry expenses.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.

 19. Capital (PVT.) Ltd. purchased a machine from Modern Machinery Ltd. under installment system on 1st April, 2015. The cash price was Rs. 7,450; Rs. 2,000 was paid on delivery and the balance in three installments of Rs. 2,000 each at the end of each year. The Modern Manufacturing Ltd. charge interest @ 5% p.a. Prepare Purchases A/c in the books of vendor.                     5

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.

 d) Bad Debts, discount under Stock and Debtor System.

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

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