BBA (First Semester) 2018

BASIC ACCOUNING
Section – A ( Short Answer Questions)
1. Explain the following
(A) Distinguish between Book-keeping and Accountancy.
(B) Who are various users of Accounting Information?
(C) Define double entry system of Accounting.
(D) Explain the rules of debit and credit reluted to Personal Accounts,
Real Accounts, Nominal Accounts
(E) Distinguish between outstanding expenses and prepaid
expenses.
(F) What do you mean by accured incomes and unearned incomes?
Explain.
(G) Which types of Accounts are Capital Account Drawings Account
Outstanding Wages Account and Interest Accured Account?
(H) Distinguish between fixed assets and current assets giving four
examples of each.
(I) Mr. Dinesh purchased goods costing for 10,000 from Mr. Manohar
which he sold to Mr Jabbar for 13,000 Mr. Jabbar returned goods worth
3,900 which were again returned to Mr. Manohar by mr. Dinesh. Give
journal entries in the books of Mr. Dinesh for these transactions.
(J) Distinguish between shares and debentures.
Section – B (Long Answer)
2. Define journal and ledger give pro forma of journal with eight
imaginary journal entries imaginary journal entries giving narration etc.
3. Explain the following concepts and convention of accounting
(a) Separate entity concept
(b) Conservatism concept
(c) Going Concern Concept
(d) Convention of materiality
4. Enter the following transactions In a suitable cash Book with Cash
Bank Columns for the month of March 2018
Balance in Hand 5,000
Balance at Bank 15,500
Issued a cheque to Mr.D for Salary 1,000
Received a cheque from Mr.P 500
Issued a cheque for office use 1,000
Issued a cheque for private use 500
Received three cheque from Mr.A Mr.B and Mr.C for 500
1,000 and 1,250 respectively
The first cheque was deposited into Bank:
The second cheque was endorsed to Mr. T for goods purchased
The third cheque was endorsed to Mr. Y for purchase of furniture
Received a bearer cheque from Mr. R for 300
The above cheque was cashed at Bank Counter
Received another ‘bearer’ cheque from Mr. Z 500
The above cheque was dishonored at the Bank Counter
Received another ‘bearer’ cheque from Mr. P and endorsed the same
to Mr. K 700
Received a ‘crossed’ cheque from a customer and deposited into bank
800
Received a cheque from Mr. S for 300
Deposited the cheque into the Bank
Mr. S cheque returned dishonoured
Issued a cheque to Mr. L for 1,000
‘Stop Payment’ order was served to the Bank as the same was pick-
pocketed
Received a cheque from Mr. B for 1,000
The cheque received fro Mr. B returned dishonoured at the counter and
he paid cash in lie of the cheque on next day
Received cheque from Mr. Kar 500
Mr. Kar’s cheque was endorsed to Mr.Das
Mr. Kar’s cheque was returned dishonoured
Mr. Kar paid cash for the same
Issued a cheque to Mr C our creditors 750
Cheque issued to Mr C returned dishonoured on technical grounds
Sold goods and received cash 300 and cheque 700
5. what are the causes of difference between bank balance as per cash
book and bank balance as per pass book? Give pro forma of Bank
Reconcilliation Statement.
Or
The following is a summary of a Cash Book as presented to you for the
month of December 2017:

Receipts 1,500 Balance b/d 800

Balance c/d 500 Payments 1,200
2,000 2,000
All receipts are banked and payments made by cheque.
On investigation you discover:
(1) Bank charges of 200 entered on the bank statement had not been
entered in Cash Book.
(2) Cheques drawn amounting to 2,000 had not been presented to the
bank for payment.
(3) Cheques received totalling 1,000 had been entered in the Cash Book
paid into bank but had not been credited by the bank until January
2018.
(4) A cheque for 50 had been entered as a receipted in the Cash Book
instead of as a payment.
(5) A cheque for 300 had been debited by the bank in error.
(6) A cheque drawn for 60 had been incorrectly entered in the cash
Book as 660
(7) The balance bought forward should have been 700
You are required to:
(i) Show the adjustments required in thr Cash Book.
(ii) Prepare a Bank Reconciliation Statement as on 31-12-2017
Section – C (Long Answer Questions)
6. Distinguish between Bill of exchange and Promissory Notes. Explain
accommodations bills and show journal entries in the books of drawer
and drawee in case of accommodation bills.
7. What are the various types of Accounting Errors ? Explain the errors
which are not disclosed by the Trail Balance.
Or
The book-keeper of a firm having been unable to agree the Trail
Balance of 31-3-2018 raised Suspense Account On investigation you
find the following errors:
(a) Goods purchased from K & Co amounting to 660 has been posted
to debit of their account as 660 from the Purchases Day Book.
(b) A cheque for 80.06 received from Bose Bros has been posted to
their Sales Ledger Account as 86.
(c) The Sales Day Book has been overcast on page 38 by 1,000
(d) A cash sale of 73 to A Ohja correctly entered In the cash Book was
posted to the debit of A Ojha’s personal account in the ledger.
(e) The purchase Return Book for December 1984 has been undercast
by 100
(f) 380 paid for repairs to plant and was charged to Plant Account as
830.
(g) goods sent out on approval were valued at 2,500 Out of this supply
goods valued at 1,200 were returned as not approved No book-keeping
entry has been passed.
Show journal entries which necessary to correct the above errors and
prepare the Suspense Account.
8. A second-hand machine was purchased on 1-1-2014 for 4,00,000
Overhauling and installation expenses for the same machine amounted
to 1,00,000 another machine was purchased for 2,00,000 on 1-7-
2014.On 1-7-2016, the machine installed on 1-1-2014 was sold for
2,50,000 Dismantling charges for the machine sold on 1-7-2016 were
10,000 On the same date another machine was purchased for 8,00,000
and was commissioned on 30-2-2016 The company has adopted
calendar year as its financial year. Under the existing practice, the
company provides depreciation @ 10% p.a on original coast In 2017 it
has been decided that depreciation will be charged on the diminishing
balance @ a5% p.a. The change is not be made with retrospective
effect.
Shown Plant Account from 2014-2018 as it cloud appear in ledger Also
show sale of Asset Account or Machinery Disposal Account.
Or
Define depreciation. Explain the methods of charging depreciation
giving their merits and demerits.
9. From the following trail balance of K karak as on 31-3-2018 prepare
Trading and Profit & Loss Account for the year ended 31-3-2018 and a
Balance Sheet as on that date after making necessary adjustments:
Trail Balance
Dr
K. Katrak’s Drawings 12,000
Furniture and Fixtures 4,000
Plant & Machinery 30,000
Opening Stock 20,000
Purchases 80,000
Salaries and Wages 22,400
Debtors 20,400
Returns Inwards 5,000
Postages and Telegrams 1,500
Rent,Rates and Taxes 3,600
Bad Debts Written-off 400
Trade Expenses 200
Interest on loan from M. Mehta 150
Insurance 800
Travelling Expenses 500
Sundry Expenses 300
Cash in Hand 3,050
Cash at bank 10,300
Total 2,14,600
 Cr
K. Katrak’s Capital 60,000
Returns outwards 2,000
Sales 1,30,000
Creditors 12,000
Loan at 6% p.a. taken from M. Mehta on 1-10-1982 10,000
Discount 600
2,14,600
Adjustments:
(i) Closing stock was valued at 21,000
(ii) Of the debtors 400 are bad and should be written-off. Create a
reserve for bad debts at 5% on Sundry debtors and a reserve for
1
discount on Debtors at 2 2%.
(iii) Salaries 800 for March 2018 were not paid.
(iv) Interest on Capital is to be calculated at 6% p.a. and on drawings
330
(v) Prepaid Insurance amounted 100
(Vi) Depreciate Furniture and Fixture by 5% and Plant and Machinery
by 10%.
Or
2000 shares of 10 each were issued by M/s Arihnat & Co. Ltd at a
premisum 2 per share payable on applications 2 per hare on allotment
5 (including premium). On first call 3 and on final call 2 Applications for
3000 shares were received and allotment was made pro-rata to
applications of 2400 shares. Money overpaid on applications was
employed on account of sums due on allotment.
Kailash to whom 40 shares were allotted failed to pay allotment money
and on his subsequent failure to pay 1st call his shares were forfeited .
Romen, the holder 60 shares, failed to pay the two calls and his shares
were forfeited after the 2nd and Final Call. Of these shares forfeited, 80
shares were sold to Karim credited as fully paid for 9 per share, the
whole Kailash shares being included.
Show Cash book and Journal entries to record the above and also a
balance Sheet.