/sc001 EDUCATION beranrent »\ CHENNAI DISTRICT LEARNING MATERIAL 2022-2023 HIGHER SECONDARY SECOND YEAR ACCOUNTANCY KYPreface We convey our sincere gratitude to our respected Chief Educational Officer, who has given this opportunity to bring out an unique material for the students (Xi standard Accountancy) in the name of Learning Material. The minimum learning material is prepared based on the selected chapters. This includes classification for selected chapters, solved text book exercise problems (2 marks, 3 marks and 5 marks). Students can prepare the example problems based on the classification. All the text book MCQ problems have to be practiced regularly. Students must practice all the problems in the classification. This material mainly focuses on the slow learners to achieve their goals. Good effort alway: All the best!!! —_— ads to success Prepared By: Tmt. R JAYASREE Tmt. AHILA Headmistress, P.G. Asst.,(Commerce), Shree K.S.S.D. Girls’ Hr. Sec. School, Govt, (ADW) GHSS, Sowearpet, Chennai — 79. Kannigapuram, Chennai —12. Tmt. A.K. MANGAIYARKARASI Tmt. V. USHA P.G, Asst.,(Commerce), P.G. Asst.,(Commerce), M.F.S.D. Hr. Sec. School, Shree K.S.S.D. Giris' Hr. Sec, School, Sowearpet, Chennai -79 ‘Sowearpet, Chennai -79INDEX sno | UNIT conTENT NUMBER NO. 1 : UNIT WISE CLASSIFICATION OF QUESTIONS 1 2 1 ACCOUNTS FROM INCOMPLETE RECORDS 1 a 2 ACCOUNTS OF NOT-FOR-PROFIT ORGANISATION 8 4 3 | ACCOUNTS OF PARTNERSHIP FIRMS - FUNDAMENTALS | 12 s | 4 GOODWILL IN PARTNERSHIP ACCOUNTS 7 6 5 ADMISSION OF A PARTNER 20 7 s RETIREMENT AND DEATH OF A PARTNER a s | 7 COMPANY ACCOUNTS 23 o | 8 FINANCIAL STATEMENT ANALYSIS 28 1 | 9 RATIO ANALYSIS 32 u | 40 COMPUTERISED ACCOUNTING SYSTEM ~ TALLY 3s al] - OTHER QUESTIONS «0UNITWISE CLASSIFICATION OF QUESTIONS (BOTH ILLUSTRATION AND EXERCISE) UNIT No. 2 MARKS 3 MARKS 5 MARKS 8,9,16, 1 1,5,10,12,14 6,7,11,13,15 a7i8118,20 2 8, 970 13, 170 5, 6,7, 1470 16 17,1819 2070 24 3 7,11,14,17,18 5,6,8,9,10,12, 1,2,3,4, 13,15,16,19 2170 23 11-45 4 Wi 2,3,6,9,11 4,5,7,8,9,10 5 1,2, 34,5, 7, 87017 18 TO 23 2470 27 6 1,2, 3,4,5,6, 16 To 19, 77011 12 TO 15,20 21,22 6,10,11,12, 1705, 7 78,9 13,19,20 1470 18 1,3,7,8, 1,4,5,10,11, 8 58 12,13 114 To 16 1,2,4,5, 3,6,8,10, 2 911,13 14/16,17,19 7121518 10 - - 182ACCOUNTS FROM INCOMPLETE RECORDS VERY SHORT ANSWER QUESTIONS 1. What is meant by incomplete records? When accounting records are not strictly maintained according to double entry system, these records are called incomplete records. 2. State the accounts generally maintained by small sized sole trader when double entry accounting system is not followed. Generally, cash and the personal accounts are maintained fully. 3. What is a statement of affairs? It is a statement showing the balances of assets and liabilities on a particular date. It is prepared to find out capital Capital = Assets - Liabilities SHORT ANSWER QUESTIONS 4, What are the features of incomplete records? (2)Natur + It isan unscientific way of recording transactions, + Accounting principles are not followed properly (2)Type of accounts maintaine ‘+ Only cash and personal accounts are maintained fully. (3)Lack of uniformity: * Different organisations record their transactions according to their needs and conveniences. 5. What are the limitations of incomplete records? i), Lack of proper maintenance of records: + It isan unscientific way of maintaining records. (ii) Difficulty in preparing trial balance: + The accounting records are incomplete. + Hence, it is difficult to prepare trial balance, (iii) Errors and Frauds: + Errors and frauds cannot be easily detected from partial records. 6. State the differences between double entry system and incomplete records. S.No. Basis Double Entry System Incomplete Records 1 [Types of Accounts fl accounts are maintained [Only personal and cash Maintained \ccounts are maintained fully.2 Preparation of _ [it canbe preparedeasily. It is difficult to prepare. [Trial balance 3 Reliability liable. it is not reliable. 7. Differentiate between statement of affairs and balance sheet. ‘Sino Basis Statement of Affairs Balance Sheet 1 Reliability itis not reliable. lit is reliable. 2 [Missing items: itis very difficult to trace. lit can be traced very easily 3 [Basis of Preparation [itis not fully based on ledger _|[t is fully based on ledger balances. balances. 8. How is the amount of credit sale ascertained from incomplete records? By preparing total debtors accounts credit sale can be ascertained: Dr. Total Debtors Account cr. Particulars =z Particulars z To Balance b/d XXX [By Cash A/c (received) Xxx (opening balance) [By Bank A/c XXX To Sales A/c xxx | (cheque received) (credit sales) [By Discount allowed A/c XXX To Bank A/c XXX [By Sales returns A/c Xxx (cheque dishonoured) [By Bad debts A/c XXX To Bills Receivable A/c xox By Bills Receivable A/c 29x (bills dishonoured) (bills received) By Balance c/d Xxx (closing balance) | Tox TO PROBLEMS WITH SOLUTIONS 9. From the following particulars ascertain profit or loss: Particulars = capital at the beginning of the year (1° April,2018) {capital at the end of the year (31 March,2019) 8,50,000) [Additional capital introduced during the year 1,20,000 Prawings during the year 70,000]ANS: Statement of Profit or Loss for the year ending 31st March, 2019 PARTICULARS t Closing Capital 8,50,000 ‘ADD: Drawings 70,000 920,000 LESS: Additional Capital 1,20,000 Adjusted Closing Capital 8,00,000 LESS: Opening Capital 5,00,000 PROFIT 3,00,000 10. From the following details, calculate the missing figure: Particulars z {Capital as on 1” April,2018 40,000 (capital as on 31 March,2019 50,000| [Additional capital introduced during the year 7,000) Profit for the year 8,000) Prawings during the year 4 ANS: CALCULATION OF MISSING FIGURE PARTICULARS z PARTICULARS z Closing Capital ‘50,000 | Additional Capital 7,000 Drawings 5,000 | Opening Capital 40,000 Loss - | Profit 8,000 55,000 55,000 11. Following are the balances in the books of Thomas as on 31* March 2019 PARTICULARS = PARTICULARS = ‘Sundry Creditors 6,00,000 | Bills Payable 120,000 Furniture 80,000 | Cash in hand 20,000 Land and Buildings 3,00,000 | Bills Receivable 60,000 ‘Sundry Debtors 3,20,000 | Stock 2,20,000 Prepare a statement of affairs as on 31* March 2019 and calculate capital as at that date.ANS: In the books of Thomas Statement of affairs as on 31% March 2019 Liabilities z ‘Assets = Sundry Creditors €,00,000 | Furniture 80,000 Bills payable 1,20,000 | Land and Building 3,00,000 Capital 2,80,000 | Sundry Debtors 3,20,000 Cash in Hand 20,000 Bills Receivable 60,000 ‘Stock 2,20,000 10,00,000 10,00,000 12, Raju does not keep proper books of accounts. Following details are taken from his records. Particulars 24.2018 | 31.12.2018 z z [cash at bank 80,000) 90,009] Stock of goods 1,80,000) 1,40,000| Debtors 90,000) 2,00,000 ‘Sundry creditors 1,30,000) 1,95,000| Bank Loan 60,000 60,000 Bills payable 80,000 45,000 plant and machinery 1,70,009] 1,70,000| During the year he introduced further capital of #50,000 and withdrew 22,500 per month from the business for his personal use. Prepare statement of profit or loss with the above information. In the books of Raju ANS: Statement of Affairs as on 1.1,2018 Liabilities z Assets z ‘Sundry Creditors 1,30,000 | Cash at bank 80,000 Bank loan 60,000 | Stock of goods 1,80,000 Bills payable 80,000 | Sundry Debtors 90,000 Capital 2,50,000 | Plant and Machinery 1,70,000 5,20,000 5,20,000Statement of Affairs as on 31.12.2018 Liabilities z Assets z Sundry Creditors |_1,95,000 | Cash at bank 90,000 Bank Loan 60,000 | Stock of goods 140,000 Bills payable 45,000 | Sundry Debtors 2,00,000 Capital 3,00,000 | Plant and Machinery | _1,70,000, 600,000 6,00,000 Statement of Profit or Loss for the year ended 31st December 2018 Particulars z [Closing capital 3,00,000] ladd: Drawings (2500 x 12) 30,000] 3,30,000] Less: Additional capital 50,000] Adjusted Closing Capital 2,80,000] Less: Opening capital 2,50,000] Profit 30,000) 13. From the following details find out total sales made during the year. Particulars z Debtors on1St january2018 Sales returns ‘ash received from debtors during the year 1,30,009] 4,20,000} 35,000 15,000) 2,00,000} 4,60,000} Dr. Total Debtors Account cr. Particulars z Particulars z jTo Balance b/d 1,30,000 [By Cash A/e 4,20,000 [To Sales A/c (Credit) | 5,40,000 [By Sales returns A/c 35,000 IBy Bad debts A/c 15,000 By Balance c/d 2,00,000 6,70,000 6,70,000 ‘Total Sales= Cash Sales + Credit Sales 24,60,000 + 25,40,000 Total Sales = %10,00,00014, From the following details, calculate credit purchases. Particulars Opening creditors Purchase returns Cash paid to creditors losing creditors z 1,70,001 20,001 ANS: Dr. Total Creditors Account Cr. Particulars: z Particulars z To Purchase returns A/c 20,000 | By Balance b/d 1,70,000 To Cash A/c 4,50,000 | By Purchases A/e | 4,90,000 To Balance c/d 1,90,000 | (Credit) 6,60,000 6,60,000 15, Selvam does not keep his books under double entry system. From the following information prepare trading and Profit and loss A/c and Balance Sheet as on 31-12-2018 Particulars 1-1-2018 | 31-12-2018 zg zg Machinery 60,004 60,000 (Cash at bank 25,001 33,000 Sundry debtors 70,004 1,00,000, Stock 45,00 22,000 Bills receivable 20,001 38,000 Bank loan. 45,00 45,000, Bundry creditors 25,001 21,000| zg Cash sales 20,000 Credit sales Cash purchases 8,000 Credit purchases Wages 6,000 Salaries Advertisement 7,000 Interest on bank loan Drawings 60,000 Additional capital Adjustmen z 1,80,000 52,000 23,500 4,500 21,000 Write off depreciation of 10% on machinery. Create a reserve of 1% on debtors for doubtful debts,Ans: In the books of Selvam Statement of Affairs as on 1.1.2018 Liabilities z ‘Assets z Opening Capital 1,50,000Machinery 60,001 IBank loan 45,000Cash at bank 25,00 sundry Creditors 25,000Sundry Debtors 70,00 {Stock 45,00 Bills receivable 20,00 220,001 220,00 Trading and Profit and loss Account Dr. for the year ended 31 December, 2018 cr. Particulars z Particulars z \To Opening Stock 45,000) [To Purchases: By Sales: Cash 8,000) (Cash 20,000 Credit 52,000 60,o00Credit 4,80.000 | 2,00,000) [To wages 6,0008Y Closing stock 22,000) [To Gross profit ¢/d 1,11,000 2,22,000 2,22,000] [To Depreciation on Machinery 6,000By Gross profit b/d 111,000] [To Provision for doubtful debts 1,000 [To Salaries 23,500 [To Advertisement 7,000 [To Interest on bank loan 4,500 [To Net profit, 69,000) (Transferred to Capital A/c) 1,11,009] 111,000] Balance sheet as on 31° December, 2018 Liabi z Assets z Bank loan 45,000Machinery 60,000 ‘Sundry Creditors 21,000Less: Depreciation 6,000, 54,000 (capital 1,50,000 Icash at bank 33,000 lAdd: Net profit 69,000 [Sundry Debtors 1,00,000 2,19,000 LLess: Provision for doubtfuldebts| ‘1,000, 99,000 ladd: Additional capital | __21,000) [closing Stock 22,000 2,40,000) Bills receivable 38,000 Less: Drawing 60,000] _1,80,009 2,46, 000 2,46 000UNIT - 2: ACCOUNTS OF NOT-FOR-PROFIT ORGANISATION MERY SHORT ANSWER QUESTIONS State the meaning of not-for-profit organisation ‘Some organisations are established for the purpose of rendering services to the public without any profit motive They may be created for the Promotion of Art, Culture, Education, Sports, etc. What is receipts and payments account? It is a summary of cash and bank transactions. It is a real account in nature. What is legacy? A gift made to a not-for-profit organisation by a will, is called legacy. It is a capital receipt. Write a short note on life membership fees. Amount received towards life membership fee from members. It is a capital receipt It is non-recurring in nature Give four examples for capital receipts of not-for-profit organisation Life membership fees Legacies Sale of fixed assets Prize fund Give four examples for revenue receipts of not-for-profit organisation. Subscription Sale of old newspapers Sale of old sports materials Interest on investment SHORT ANSWER QUESTIONS What is income and expenditure account? It is a nominal account. It is prepared to find out the Surplus or Deficit relating to a particular year, Only revenue receipts and expenditure items are recorded.8. State the differences between Receipts and Payments Account and Income and Expenditure Account Sno Basis Receipt and Payment Tacome and Expenditure ‘Account ‘Account 1 Nature of account ft is a real account. It is a nominal account. 2. Basis of accounting [It is based on cash system. _[It is based on accrual system. 3 purpose iit is prepared to know the cash [It is prepared to know the feceipts and cash payments. surplus or deficit. PROBLEMS WITH SOLUTIONS: 9. From the following information, prepare Receipts and Payments account of Cuddalore Kabaddi Association for the year ended 31st March, 2019. Particulars z Particulars z Opening Cash Balance (1.4.2018) | 11,000 | Interest and bank charges 250 Bank overdraft balance (1.4.2018) 20,000 | Miscellaneous income 350 Stationery purchased 5,200 | Upkeep of ground 550 Travelling expenses 1,800 | Grant from Government 12,000 Dividend received 3,000 | Telephone charges paid 2,800 General expenses 500 | Endowment fund receipts 10,000 ‘Admission fees 4,000 | Insurance premium paid 2,000 Courier charges 2,000 | Electricity charges paid 5,000 Municipal taxes paid 3,000 | Gosing cas balance 1,750ANS: In the book of Cuddalore kabaddi Association Receipts and payments account for the year ended 31% March 2019 Dr. cr. Receipts ze Payments a To Balance b/d By Balance b/d Cash in hand 11,009 Bank overdraft 20,000) [To Dividend received 3,000By Stationery purchased 5,200 [To Admission fees 4,000By Travelling expenses 1/800 [To Miscellaneous income 350By General expenses 500, [To Grant from government 12,0008By Courier charges 2,000 jTo Endowment fund receipt 10,000By Municipal tax paid 3,000, jTo Balance c/d 4,500By Interest and bank charges 250, Bank overdraft By Upkeep of ground 550 By Insurance premium paid 2,000 By Electricity charges paid 5,000 By Telephone charges 2,800 By Balance /d Cash in hand 1,750, 44,850) | 44,850) 10. From the following receipts and payment account, prepare income and expenditure account of Kumbakonam Basket Ball Association for the year ended 31° March, 2018, Receipts z z Payments z z jTo Balance b/d By Rent of ground paid 12,000] Cash in hand 23,000 By Printing charges 5,000 Cash at bank 12,000 | 35,000By Bank charges 1,000 [To Rent of hall received 6,000By Insurance for building 2,000 [To Subscription received 9,000By Tournament expenses 16,000 [To Life membership fees 7,000By Audit fees 3,000 [To Locker rent received 2,000By Sports materials purchased 4,000 By Balance c/d Cash in hand 2,000 Cash at bank 14,000 __ 16,000 59,009 59,009] 10ANS: In The Book of Kumbakonam basketball Associat ny Dr, Income and Expenditure account for the year ended 31" March 2018 _Cr. Expenditure z Income z iTo Rent of ground 12,000By Rent of hall 6,004 [To Printing charges 5,0008y Subscription 9,009 [To Bank charges 1,000By Locker rent 2,000} [To Insurance for building 2,000Deficit 26,000 iTo Tournament expenses 16, 000{Excess of Expenditure over Income) [To Audit fees 3,00 [To Sports material purchased 4,00 43,000, 43,000 11. How will the following appear in the final accounts of Vedaranyam Sports club? Particulars z Opening stock of bats and balls 3,00 Purchase of bats and balls during the year 17,004 Sale of old bats and balls 2,00 Llosing stock of bats and balls 4,001 ANS: In The Book of Vedaranyam Sports Club Dr. __Income and Expenditure account for the year ended cr. Expenditure z Income z [To Bats and balls consumed By Sale of Sports Materials 2,000] Opening Stock 3,000 ‘Add: Purchases 17,000 20,000, Less: Closing Stock 4,000, 16,000 Balance sheet as on z Assets IClosing Stock 4,004 a12. Compute capital fund of Salem Sports Club as on 1.4.2019. Particulars z Particulars z [Sports equipment 30,000Prize fund 10,000 computer 25,000Prize fund investments 10,009] [Subscription outstanding for 2018-19 5,000Cash in hand 7,000} [Subscription received in advance for 2019-20 | _8,000ash at bank 21,000 ANS: In the books of Salem Sports Club Balance sheet as on 1* April 2019 Liabi z Assets z (Capital Fund '80,000Sports Equipment 30,000) Prize Fund 10,000Computer 25,000} ‘Subscription received in advance | 8,000Subscription outstanding 5,000} Prize fund investments 10,000] ‘ash in hand 7,000} fash at bank 21,000) 98,000 98,000 UNIT — 3: ACCOUNTS OF PARTNERSHIP FIRMS - FUNDAMENTALS VERY SHORT ANSWER QUESTIONS 1. Define partnership, The relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. - Indian Partnership Act, 1932 (Section 4) 2. What is a partnership deed? * It is a document in writing that contains the terms of the agreement among the partners. + It is not Compulsory for a Partnership to have a partnership deed as per the Indian Partnership Act, 1932 3. What is meant by fixed capital method? The capital of the partners is not altered and it remains generally fixed. ‘Two accounts are maintained for each partner a) Capital account b) Current account 24, What is the journal entry to be passed for providing interest on capital to a partner? Journal entry Date Particulars LF Credit z interest on capital A/C Dr} To Partners capital/current A/C ro {Interest on capital provided) Profit and Loss appropriation A/C Dr.| XXX To Interest on capital A/C ocd {Interest on capital transferred) ‘SHORT ANSWER QUESTIONS 5. State the features of partnership It is an association of two or more persons. Minimum is 2 and Maximum number of members is limited to 50. ‘The agreement may be oral or written. 6. State any six contents of a partnership deed. Name of the firm and nature and place of business Date of commencement and duration of business Names and addresses of all partners Capital contributed by each partner Profit sharing ratio Amount of drawings allowed to each partner. 7. State the differences between fixed capital method and fluctuating capital method, ‘S.no Basis Fixed Capital Method Fluctuating Capital Method 1 Number of [Two accounts are maintained Only capital account is maintained. Accounts ). capital account i). current account 2 (Change in iThe amount of capital remains The amount of capital Capital inchanged ‘changes from period to period 3 [Adjustments [All adjustments are done in Il adjustments are done in turrent account apital account 8. Write a brief note on the applications of the provisions of the Indian Partnership Act, 1932 in the absence of partnership deed. B(i) Remuneration to partners: No salary or remuneration is allowed to any partner [Section 13(a)] (ii) Profit sharing ratio: Profits and losses are to be shared equally. [Section 13(b)] ) Interest on loans advanced by partners to the Interest on loan is to be allowed at the rate of 6%. [Section 13(d)] PROBLEMS WITH SOLUTIONS 9. Akash, Bala, Chandru and Daniel are partners in a firm. There is no partnership deed. How will you deal with the following? 1. Akash has contributed maximum capital. He demands interest on capital at 10% per annum, Ans: Interest on capital is not allowed. Sec 13 (c) 2. Bala has withdrawn %3,000 per month, Other partners ask Bala to pay interest on drawings @ 8% per annum to the firm. But, Bala did not agree to it. Ans: Interest on Drawings is not allowed. 3. Akash demands the profit to be shared in the capital ratio, But, others do not agree. Ans: Profits and Losses to be shared equally. Sec 13 (b) 4. Daniel demands salary at the rate of 210,000 per month as he spends full time for the business. Ans: Salary is not allowed. Sec 13 (a) 5. Loan advanced by Chandru to the firm is $50,000. He demands interest on loan @ 12% per annum. Ans: Interest on Loan allowed @ 6% p.a. Sec 13(d) 10. Mani is @ partner, who withdrew %30,000 on 1st September, 2018. Interest on drawings is charged at 6% per annum. Calculate interest on drawings on 31st December, 2018 and show the journal entries by assuming that fluctuating capital method is followed. Ans: Interest on drawings= Amount of drawings x Rate of interest x Period of Interest Interest on Drawings = 6% p.a. 6 4 = 30000x—— x 100 600 12 Interest on Drawings = 600 4Journal entries Date Particulars Credit z 2018 | Man's capital A/e Or Dec 31] To Interest on Drawings A/c 600 (Interest on Drawings provided) 31 [interest on Drawings A/e Dr. 600 To Profit and Loss Appropriation A/c 600 (Interest on drawings transferred) 11, Santhosh is a partner in a partnership firm. As per the partnership deed, interest on drawings is charged at 6% per annum. During the year ended 31st December, 2018 he withdrew as follows Date February 1 May 1 duly 1 Pctober 1 Calculate the amount of interest on drawings. ANS: Interest on drawings= Amount of drawings x Rate of interest x Period of Interest Interest on Drawings = 6% p.a. Withdrawal on Date z February 1 2000 x6/100 x 11/12 110 May 1 10000%6/100 x 8/12 400 July 1 400% 6/100 x 6/12 120 October 1 6000x6/100 x 3/12 90 Total Interest on Drawings 720 12, Mathew is a partner who withdrew 220,000 during the year 2018, Interest on drawings is charged at 10% per annum. Calculate interest on drawings on 31st December 2018. 15Ans: Interest on drawings= Amount of drawings x Rate of interest x Period of Interest Interest on drawings= 10% 20,000% $x 000 Interest on drawings = %1,000 13. Santhosh is a partner in a partnership firm. As per the partnership deed, interest on drawings is charged at 6% per annum. During the year ended 31st December, 2018 he withdrew as follows Date z February 1 2,00 May 1 10,000) uly 1 4,004 joctober 1 6,00 Calculate the amount of interest on drawings by using product method Ans: Date of Amount | Period upto | Product Drawings | Withdrawn | 31Dec 2018 z z (months) February 1 2,000 iL 22,000 May 1 10,000 8 80,000 July 1 4,000 6 24,000 October 1 6,000 3 18,000 Sum of product 1,44,000 Interest on Drawings = 6% p.a. (Product Method) Interest on drawings = Sum of product x Rate of interest x + 4a000x£x = 720 Interest on Drawings= 720 16UNIT - 4: GOODWILL IN PARTNERSHIP ACCOUNTS VERY SHORT ANSWER QUESTIONS What is goodwill? It is the good name or reputation of the business, It enables the business to earn more profit What is acquired goodwill? Goodwill acquired by making payment in cash or kind is called acquired goodwill. It is also called purchased goodwill What is super profit? It is the excess of average profit over the normal profit of a business. Super Profit = Average Profit - Normal Profit What is normal rate of return? It is the rate at which profit is earned by similar business entities in the industry under normal circumstances. State any two circumstances under which goodwill of a partnership firm is valued. Admission of a partner Retirement or death of a partner SHORT ANSWER QUESTIONS State any six factors determining goodwill. Profitability of the firm. Favorable location of the business enterprise Good quality of goods or services offered. Efficiency of management. Degree of competition. Tenure of the business enterprise How is goodwill calculated under the super profits method? A profit = —Zotal Profits Verage Profit = Number of years Normal Profit = Capital Employed X Normal Rate of Return Super Profit = Average Profit - Normal Profit Goodwill = Super Profit X No. of years of Purchase v7PROBLEMS WITH SOLUTIONS 8. Compute average profit from the following information. 2016: €8,000; 2017: €10,000; 2018: €9,000 Ans: Average profit = Total Profit Number of years 8,000+10,000+9,000 = 9,000 3 Average profit = 9,000 9. Calculate the value of goodwill at 2years purchase of average profit when average profit is 215,000. Ans: Goodwill = Average profit x Number of years of purchase = 15,000x2 = 30,000 Goodwill = €30,000 10. The following are the profits of a firm in the last five years: 2014: 710,000; 2015 211,000; 2016: 212,000; 2017: 213,000 and 2018: 214,000. Calculate the value of goodwill at 2years purchase of average profit of five years. Step1: Goodwill = Average profit x Number of years of purchase Step2: Average profit = Total Profit Number of years _ 10,000+11,000+12,000 + 13,000 + 14,000 = 60,000 = 212,000 5 5 Step3: Number of years of Purchase = 2 Step 4: Goodwill = 12,000 X 2 = 24,000 Goodwill = %24,000 11. From the following information, calculate the value of goodwill on the basis of 3years purchase of average profits of last four years. 18Year Result | Amount z 2015 Profit 5,000 2016 Profit 8,000 2017 Loss 3,009, 2018 Profit 6,000, Step1: Goodwill = Average profit x Number of years of purchase step2: Average profit = Total Profit Number of years = _5,000+8,000-3,00046,000 = 16,000 = 4,000 4 4 Step3: Number of years of Purchase = 3 Step 4: Goodwill = 4,000 X 3 = 212,000 Good: € 12,000 12.A partnership firm earned net profits during the last three years as follows: 2016: %20,000; 2017: 217,000 and 2018: %23,000. The Capital investment of the firm throughout the above mentioned period has been 280,000. Having regard to the risk involved, 15% is considered to be a fair return on capital employed in the business. Calculate the value of goodwill on the basis of 2years purchase of super profit. Ans: Step1: Goodwill = Super profit X Number of years purchase. Step2: Super Profit= Average Profit - Normal Profit Total Profit a) Average Prot = Total Profit __ ) 9 Number of Years = 20,000 + 17,000 + 23,000 3 Average total Profit = 220,000 b) Normal Profit= Capital Employed x Normal Rate of Return 45 = 80,000 100 Normal Profit = 212,000 Super Profit = 20,000 - 12000, = %8,000 19Step3: Number of years purchase = 2 years Step4: Goodwill= 800% 2 Good 16,000 %16,000 UNIT - 5: ADMISSION OF A PARTNER VERY SHORT ANSWER QUESTIONS 1. What is meant by revaluation of assets and liabilities? ‘+ When a partner is admitted into the partnership, the assets and liabilities are revalued as the current value may differ from the book value. ‘+ Determination of current value of assets and liabilities is called revaluation of assets and liabilities. 2. What is sacrificing ratio? ‘+ Sacrificing Ratio is the proportion of the profit which is sacrificed or foregone by the old partners in favour of the new partner. + Share sacrificed= old share - New Share. 3. State whether the following will be debited or credited in the revaluation account. a. Depreciation on assets b. Unrecorded liability . Provision for outstanding expenses d. Appreciation of assets ANS: . Depreciation on assets - Debited b. Unrecorded liability - Debited C. Outstanding expenses - Debited d. Appreciation of assets - Credited SHORT ANSWER QUESTIONS 4, What are the adjustments required at the time of admission of a partner? Distribution of accumulated profits, reserves and losses Revaluation of assets and liabilities Determination of new profit-sharing ratio and sacrificing ratio Adjustment for goodwill Adjustment of capital on the basis of new profit sharing ratio. 5. Write a short note on accounting treatment of goodwill i). When new partner brings cash towards goodwill 20ii). When the new partner does not bring goodwill in cash or in kind. iii), Existing goodwill, PROBLEMS WITH SOLUTIONS 6. Arul and Anitha are partners sharing profits and losses in the ratio of 4:3. On 31.3.2018, Ajay was admitted as a partner. On the date of admission, the book of the firm showed a general reserve of 242,000. Pass the journal entry to distribute the general reserve. ANS: General Reserve = 42,000 —> 4:3 ‘Aral Anitha 42000x+ 42000%= 7 7 = 224,000 =218,000 Journal entry Date Particulars LF Credit z z 2018 General Reserve A/c Dr, 42,000 Mar 31 To Arul’s Capital A/c 24,000 To Arun’s capital A/c 18,000 (General Reserve Transferred) UNIT - 6 : RETIREMENT AND DEATH OF A PARTNER VERY SHORT ANSWER QUESTIONS 1. What is meant by retirement of a partner? When a partner leaves from a partnership firm, it is known as retirement. A Partner who retires from the firm is called an outgoing partner or a retiring partner. 2. What is gaining ratio? The continuing partners may gain a portion of the share of profit of the retiring partner. Gaining ratio is the proportion of the profit which is gained by the continuing partners. + Share gained = New share - Old share 23. What is the journal entry to be passed to transfer the amount due to the deceased partner to the executor of the deceased partner? Date Particulars LF] Debit | Credit z z [Deceased partner's capital A/C Dr. OX To Deceased partner’s executor A/C ox |(Deceased partner amount transferred 0 capital account) SHORT ANSWER QUESTIONS 4, List out the adjustments made at the time of retirement of a partner in a partnership firm. Distribution of accumulated profits, reserves and losses Revaluation of assets and liabilities Determination of new profit sharing ratio and gaining ratio Adjustment for goodwill Distinguish between sacrificing ratio and gaining ratio. sno] Basis Sacrificing ratio Gaining ratio 1 | Meaning [A share of profit sacrificed by the _|A share of profit gained by existing old partner to new partner. partner from retiring partner. 2 | Time [Admission of a partner Retirement of a partner 3. | Formula [Sacrificing Ratio = jaining Ratio = Old ratio - New ratio New ratio - Old ratio 6. What are the ways in which the final amount due to an outgoing partner can be settled? The amount due to the retiring partner may be settled in one of the following ways: Paying the entire amount due immediately in cash Transfer the entire amount due to the loan account of the partner Paying part of the amount immediately in cash and transferring the balance to the loan account of the partner PROBLEMS WITH SOLUTIONS 7. Roja, Neela and Kanaga are partners sharing profits and losses in the ratio of 4:3:3. On 1st April 2017, Roja retires and on retirement, the following adjustments are agreed upon. 2(i)Increase the value of building by % 30,000 (ji)Depreciate stock by 25,000 and furniture by £12,000. (iii)Provide an outstanding liability of 21,000 Pass journal entries and prepare revaluati n account, ANS: JOURNAL ENTRIES Date Particulars LF | Debit | Credit z z 2018 Building A/c Dr. 30,000 APRIL 1 | To revaluation A/c 30,000 (Profit items recorded) Revaluation A/e Dr. 18,000 1| To Stock A/c 5,000 To furniture A/c 12,000 To Outstanding liability A/c 1,000 (Loss items recorded: Revaluation A/c Dr. 12,000 1| To Roja’s capital A/c 4,800 To Neela’s capital A/c 3,600 To Kanaga’s capital A/c 3,600 (Gain on revaluation transferred) Dr. Revaluation Account cre Particulars = z Particulars | © = To Stock A/c 5,000 | By Buildings A/c 30,000 To Furniture A/c 12,000 To Outstanding Liability A/c 1,000 To Partner's capital A/c Roja 4,800 Neela 3,600 Kanaga 3,600 | 12,000 30,000 30,000 UN. ': COMPANY ACCOUNTS VERY SHORT ANSWER QUESTIONS 1. What is a share? + The capital of a company is divided into small units of fixed amount. + These units are called shares. 2. What is Over-subscription? + When the number of shares applied for is more than the number of shares offered for subscription, it is said to be over subscription. 2B3. What Is meant by calls in arrear? The amount called up but not paid is called calls in arrears. 4. Write a short note on securities premium account. When a company issues shares at a price more than the face value, the shares are said to be issued at premium. 5, Why are the shares forfeited? If the shareholders fail to pay the amount due on allotment or on calls, shares may be forfeited, ‘SHORT ANSWER QUESTIONS 6. State the differences between preference shares and equity shares. Sno Basis Preference shares | Trowards the payment of 1 Preferential Rights dividend and repayment Po not enjoy any preferential bof capital, i 2 Rate of dividend Fixed ariable [They can vote on any 3 froting rignts jesoiutions affecting the (THe. can vote on all ights. 7. Write a brief note on calls in advance. +The excess amount paid over the called up value of a share is known as calls in advance. + It is the excess money paid on application or allotment or calls. 8. What is reissue of forfeited shares? + Shares forfeited can be reissued by the company, + The shares can be reissued at any price. + It cannot be less than the amount unpaid on forfeited shares. 9. Write a short note on (a) Authorised capital (b) Reserve capital ). Authorized Capi * Itmeans such capitals as is authorised by the memorandum of association. = Itis the maximum amount which can be raised as capital. + Itis also known as Registered capital or Nominal capital )). Reserve Capital: 24+ The company can reserve a part of its subscribed capital to be called up only at the time of winding up. + Itis called Reserve Capital. 10. What is meant by issue of shares for consideration other than cash? ‘A company may issue equity shares either for cash or for consideration other than cash. ‘A company may also issue shares as consideration for * the purchase of business * to promotors for their services and * underwriters for their commission PROBLEMS WITH SOLUTIONS 11, Progress Ltd. issued 50,000 ordinary shares of €10 each, payable *2 on application, <4 on allotment, %2 on first call and 2 on final call. All the shares are subscribed and amount was duly received, Pass journal entries, Ans: In the books of Progress Ltd. Journal entries Date Particulars LF] Debit | Credit z z (50,000%2) Bank A/c Dr. 1,00,000 To Equity share application A/c 1,00,000 (Application money received) {50,000%2) Equity share application A/c Dr. 1,00,000 To Equity share capital A/c 1,00,000 (Transfer of share application money to share capital) (50,000%4) Equity share allotment A/e Dr 2,00,000 To Equity share capital A/c 2,00,000 (share allotment money due) (50,000%4) Bank A/c Dr. 2,00,000 To Equity share allotment A/c 2,00,000 (Allotment money received) 150,000%2) Equity share first call A/e Dr. 7,00,000 To Equity share capital A/c 1,00,000 (share first call money due) (50,000%2) Bank Ale Dr. 1,00,000 To Equity share first call A/c 1,00,000 (share first call money received) (50,000%2) Equity share final call A/c Dr 1,00,000 To Equity share capital A/c (share second and final call money 1,00,000 due) (50,000%2) Bank Ale Dr. 1,00,000 To Equity share final call A/c 1,00,000 (share second and final call money received) 2512. Lalitha Ltd, offered 30,000 equity shares of £10 each to the public payable @ 2 per share on application, £3 on share allotment and the balance when required. Applications for 50,000 shares were received on which the directors allotted as: Applicants for 10,000 shares- Full Applicants for 35,000 shares- 20,000 shares (excess money will be utilised for allotment) Applicants for 5,000 shares - Nil All the money due was received. Pass journal entries upto the receipt of allotment. Ans: 1. Received share amount 50,000 X 2 = @1,00,000 2, Issued share amount 30,000 x2 = 260,000 3. Refund share amount 5,000 X 2 = €10,000 4. Allotment adjustment amount 15,000x2 = €30,000 In the books of Lalitha Ltd. Journal entries Date Particulars LF] Debit Credit z z (50,000x2)__| Bank A/c Dr 7,00,000 To Equity share application A/c 1,00,000 (Application money received) (30,000x2) | Equity share application A/c Dr. 60,000 To Equity share capital A/c 60,000 (share application money transferred) (5,000%2) Equity share application A/c Dr. 10,000 To Bank A/c 10,000 (Excess application money refunded) (25,000x2) | Equity share application A/c Dr. 30,000 To share allotment A/c 30,000 (Excess share application money utilised for allotment ) (30,000x3)__| Equity share allotment A/c Dr. 90,000 To Equity share capital A/c 90,000 (share allotment money due) (90,000- Bank A/c Dr. 60,000 30,000) To Equity share allotment A/c 60,000 (allotment money received) 13.Goutham Ltd. forfeited 500 equity shares of %10 each issued at par held by Ragav for nonpayment of the final call of *2 per share. The shares were forfeited and reissued to Madhan at 88 per share. Show the journal entries for forfeiture and reissue. 26Ans: 14, In the books of Goutham Ltd. Journal entries Date Particulars LF | Debit | Credit z z (S00x10) | Equity share capital A/c Dr. 5,000 (500x2) To Equity share final call A/c 1,000 (500x8) To Forfeited shares A/c 4,000 (500 shares forfeited) (S00x8) | Bank Ae Dr. 4,000 (500x2) —_| Forfeited shares A/c Or. 1,000 (50x10) To Equity share capital A/c 5,000 (forfeited share reissued) ,000- Forfeited shares A/c Or 3,000 1,000) To Capital reserve A/c 3,000 (Gain on forfeited shares account transferred) Viswanath Furniture Ltd. invited applications for 20,000 equity shares of 210 each at a premium of 22 per share payable. %2 on application @ 5 (including premium) on allotment 2 5 on first and final call There was over subscription and applications were received for 30,000 shares and the excess applications were rejected by the directors. All the money due were received, Pass the journal Ans: entries. In the books of Viswanath Furniture Ltd. Journal entries Date Particulars LF] Debit | Credit z z (30,000%2)_| Bank A/e Dr. 60,000 To Equity share application A/c 60,000 (Application money received) (20,000x2)_| Equity share application A/c Dr. 40,000, To Equity share capital A/c 40,000 (share application money transferred) (10,000%2) | Equity share application A/e Dr. 20,000 To Bank A/c 20,000 (money refunded for rejected applications) (20,000%5) | Equity share allotment A/c Dr. 1,00,000 (20,000x3) | To Equity share capital A/c 60,000 (20,0002) | To securities premium A/c 40,000 (Share allotment money due! (20,000%5)_ [Bank A/c Dr 1,00,000 To Equity share allotment A/c 1,00,000 {allotment money received) 2(50,000x2) | Equity share first and final call A/c Dr 1,00,000 (20,000x5) | To Equity share capital A/c 1,00,000 (Share first and final call money due) Bank A/c Dr 1,00,000 To Equity share first and final call A/c 1,00,000 (first call money received) UNIT -8 [ANCIAL STATEMENT ANALYS! VERY SHORT ANSWER QUESTIONS 1. What are financial statements? * Financial statements are the statements prepared by the business concerns at the end of the accounting period to ascertain the operating results and the financial position. 2. List the tools of financial statement analysis. Comparative statement Common size statement Trend analysis Fund flow analysis Cash flow analysis 3. What is working capital? The term ‘fund’ refers to working capital. Working capital refers to the excess of current assets over current liabilities. Working Capital = Current Asset ~ Current Liabilities SHORT ANSWER QUESTIONS 4, Write a short note on cash flow analysis. + It is concerned with Preparation of cash flow statement. + It shows the inflow and outflow of cash and cash equivalents in a given period of time. + Cash includes cash in hand and demand deposits with banks. 5. Briefly explain any three limitations of financial statements, i), Record of historical data: + Financial statements are prepared based on historical data ii), Ignore price level changes: + Adjustments for price level changes are not made in the financial statements. + Hence, financial statements may not reveal the current position. iii). Lack of consistency: ‘+ Different business concerns may use different accounting methods. + Hence, comparison between two business concerns becomes difficult. 28PROBLEMS WITH SOLUTIONS 6. From the following particulars, prepare comparative income statement of Barani Ltd, ‘ANS: Particulars 2016-17 2017-18 x x Revenue from operations 30,000 45,000 ther income 4,000 6,000 Expenses 10,000 15,000 Income tax 30% 30% Comparative income statement of Barani Ltd., for the years ended 31*March 2017 and 31*March 2018 ‘Absolute | Percentage amount of | Increase (+) - 1g | increase(+) or Particulars 2036-47 | 2017-18 or Decrease (-) decrease (-) z z z % | Q) (2) (3) (4) (5) Revenue from Operations | 30,000] 45,000, +15,000/ +50 ‘Add: Other income 4,000| 6,000 +2,000/ +50 Total revenue 34,000| 51,000, +i7,000/ +50 Less: Expenses 10,000] 15,000 +5,000[ +50 Profit before tax 24,000] 36,000, +12,000/ +50 Less: Tax (30%) 7,200 | 10,800 +¥3,600[ +50 Profit after tax 16,800] 25,200 +8,400[ +50 Percentage increase or decrease = Absolute amount of increase or decrease Year 1 amount 29 X 1007 Prepare common-size income statement for the following particulars of Raja Ltd, for the year ended 31" March, 2017 Particulars 2016-17 z Revenue from operations 4,50,000 Other income 67,500 Expenses 1,35,000 ANS: Common-size income statement of Raja Ltd. for the year ended 31° March, 2017 Particulars ‘Absolute | Percentage amount Of Revenue from operations z % Revenue from Operations 450,000 100 ‘Add: Other income 67,500 is Total revenue 5,17,500 115 Less: Expenses 1,35,000 30 Profit before tax 3,82,500 85 From the following particulars, calculate the trend percentages of Kala Ltd @ in thousands Particulars 2015-16 | 2016-17 | 2017-18 Revenue from operations 400) 500 60 [Other income 100 150) 20 [Expenses 209] 290] 35 30Ans: Trend analysis for Kala Ltd. Particulars € In thousands Trend Percentage% 2015-16 | 2016-17 | 2017-48 | 2015-46 | 2016-47 | 2017-18 Revenue from operations 400 500 600 100 125 150 Add: other income 100 150 200 100 150 200 Total Revenue 500 650 800 100 130 160 Less: Expenses 200 290 350 100 145 175 Profit 300 360 450 100 120 150 9. From the following particulars, calculate the trend percentages of Anu Ltd Particulars thousands Yeari| Year2| Year3 T EQUITY AND LIABILITIES Share holders’ Fund 500 550 600 Non-current liabilities 200 250 240 Current liabilities 100 80 120 Total 800) 880 960 II ASSETS Non-current assets 600 720 780 Current assets 200 160 180 Total 800) 880 960 ANS: ‘Trend analysis for Anu Ltd. Particulars = In Lakhs Trend percentage % Yeari [Year2 | VYear3 | Year| Year2 | Year3 T EQUITY AND LIABILITIES Shareholders fund 500 550| 600) 100| 110 120 Non-current liabilities 200 250| 240) 100| 125 120 Current liabilities 100 so] 120) 100 80 120 Total 800 B80; 960; 100] ‘110 120 IT ASSETS Non-current assets 600 720| 780) 100| 120 130 Current assets 200 160] 180] 100 80 90 Total 800 eso|960[ i00[_ti0 20 31UNIT - 9: RATIO ANALYSIS VERY SHORT ANSWER QUESTIONS 1, What is meant by accounting ratios? When ratios are calculated on the basis of accounting information, these are called ‘accounting ratios’, It is the numerical relationship between two items. 2. What is quick ratio? Quick ratio gives the proportion of quick assets to current liabilities. It is otherwise called as liquid ratio or acid test ratio, It is calculated as follows Quick assets Current liabilities Quick ratio 3, What is meant by debt equity ratio? It is calculated to assess the long term solvency position It expresses the relationship between long term debt and shareholders funds. It is computed as follows Long term debt Debt equity ratio =F reholders’ Funds 4, State any two limitations of ratio analysis. Ratios are only means. Accuracy of financial information, Changes in price level. SHORT ANSWER QUESTIONS 5. How is operating profit ascertained? 1. Operating Profit = Revenue from operations - Operating Cost a) Operating Cost = Cost of Revenue from Operations + Operating Expenses b) Operating Expenses = Administration Expenses + Selling & Distribution Expenses + Employee Benefit Expenses 2. Operating Profit = Gross Profit - Operating Expenses 326. State any three advantages of ratio analysis. Measuring financial solvency: ‘+ Ratio analysis helps to ascertain the short term and long term solvency of a business concern. Facilitating investment decisions: It helps the management in making effective decisions Analysing the profitability: ‘+ It helps to analyse the profitability of a business. PROBLEMS WITH SOLUTIONS 7. Calculate quick ratio: Total current liabilities 22,40,000; Total current assets 24,50,000; Inventories 270,000; Prepaid expenses 220,000 ANS: Quick Assets () Quick Ratio Current Liabilities (li) Quick Assets: Total Current Assets 4,50,000 (-) Inventories 70,000 3,80,000 (-) Prepaid Expenses 20,000 Quick assets 3,60,000 (iit) Current Liabilities: = 22,40,000 360,000 3 1 240,000 2. 1 (iv) Quick Ratio Quick Ratio = 1.5 :1 8. The credit revenue from operations of Velavan Ltd, amounted to %10,00,000. Its debtors and bills receivables at the end of the accounting period amounted to 21,10,000 and %1,40,000 respectively. Calculate trade receivables turnover ratio and also collection Period in months. 33ANS: (a) Trade Receivables Turnover Ratio : Credit Revenue from Operations (i) Trade Receivables Turnover Ratio = - - ‘Average Trade receivables (ii) Credit Revenue from Operations = €10,00,000 (iii) Average Trade Receivables: Debtors 1,10,000 (4) Bills Receivable | 1,40,000 2,50,000 10,00,000 (iv) Trade Receivables Turnover Ratio 4 times 2,50,000 Number ofMonthsinayear 1 (b) Debt collection period = _ 5 months Trade Receivables Turnover Ratio =4 times Debt collections Period = 3 months. 9. From the following information of Geetha Ltd., calculate fixed assets turnover ratio (i)Revenue from operations during the year were @55,00,000. (ii)Fixed assets at the end of the year 25,00,000, ANS: Revenue from Operations (i) Fixed Assets Turnover Ratio ‘Average Fixed Assets (ii)Revenue from Operations = %55,00,000 (a) Average Fixed Assets = %5,00,000 00,000 (iv) Fixed Assets Turnover Ratio = —————= 11 times 5,00,000 Fixed Assets Turnover Ratio = 11 times 3410, Calculate gross profit ratio from the following: Revenue from operations #2,50,000, Cost of revenue from operations #2,10,000 and Purchases @1,80,000. Ans: Gross profit + Gross profit ratio | = ———~—_——____ x 100 Revenue from operations + Gross profit, Revenue from operations- Cost of revenue from operations = 22,50,000 - 22, 10,000 = 240,000 Revenue from operation = & 2,50,000 Gross profit ratio x 100 =16% 2,50,000 Gross profit ratio =16% UNIT - 10 : COMPUTERISED ACCOUNTING SYSTEM - TALLY VERY SHORT ANSWER QUESTIONS, 1, What is automated accounting system? ‘Automated accounting is an approach to maintain up-to-date accounting records with the aid of accounting software. 2. What are accounting reports? + It is a compilation of accounting information that are derived from the accounting records of a business concern. * Accounting reports may be classified as Routine Reports and Special Purpose Reports. 3. State any five accounting reports. Day books / Journal Ledger Trial balance Income statement Balance sheet Cash flow statement 4, What is Accounting Information System (AIS)? AIS collects financial data, process them and provides information to the various users. To provide information AIS requires data from other information system that is manufacturing, marketing and human resources. 35What is @ group in Tally. ERP 9? In Tally, a Group Is a collection of ledgers of the same nature, Groups are categorised as primary Groups and sub-Groups. SHORT ANSWER QUESTIONS Write a brief note on accounting vouchers. Voucher is a document which contains details of transactions. Transactions are to be recorded through voucher entries, Tally has a set of predefined vouchers such as Purchase, Sales, Payment, Receipt and Contra. What are the pre-defined ledgers available in Tally.ERP 9? In Tally, to record transactions, the transactions are to be identified with the related ledger accounts. Tally has two predefined legers, Cash and Profit & Loss A/c. ‘The user has to create various other ledgers based on their requirements. Mention the commonly used voucher types in Tally.ERP 9 Receipt Voucher F6 Payment Voucher F5 Contra Voucher F4 Purchase Voucher F9 Sales Voucher F8 Journal Voucher F7 Explain any five applications of computerised accounting system: Maintaining accounting records: In CAS, accounting records can be maintained easily and efficiently for long time period, Inventory management: CAS facilitates efficient management of inventory Pay roll preparation: CAS records the attendance of employees, computes the amount of salary, makes deductions such as provident fund, income tax, ete. Report generation: CAS helps to generate various routine and special purpose reports. Data import/export: Accounting data and information can be imported from or exported to other users within the organisation as well as outside the organisation. Taxation: CAS helps to compute various taxes and to deduct these and deposit the same to the Government account. 36PRACTICAL PROBLEMS WITH SOLUTIONS 10. Record the following transactions in Tally. () Robert commenced a transport business with a capital of €1,00,000 (ii) An account was opened with State Bank of India and deposited 30,000 (iii) Purchased furniture by paying cash #10,000 (iv) Goods purchased on credit from Mohaideen for £20,000 Cash sales made for 8,000 Goods purchased from Rathinam for 25,000 and money deposited in COM Goods sold to Rony on credit for €60,000 Money withdrawn from bank for office use 29,000 Part payment of 210,000 made to Mohaideen by cheque Rony made part payment of 25,000 by cash Salaries paid to staff through ECS 6,000 Wages of 23,000 paid by cash Purchased stationery from Pandian Ltd. On credit 24,000 Ans: Recording transactions in Tally Debit Credit Particulars 7 ° Voucher type Group 1 [cash A/c Dr] 1,00,000 Receipt Cash-in-Hand To Robert's Capital A/c 1,00,000 | voucher Capital Account 2 State Bank of India fe Or.| 30,000 Contra Bank Accounts To Cash A/c 39000 | Voucher Cash-in-Hand 3. Furniture A/c Dr] 10,000 Payment Fixed Assets To Cash A/c 10,000 | voucher Cash-in-Hand 4 [purchases A/c Dr| 20,000 Purchase Purchase 20,000 | Youcher Accounts To Mohaideen A/c Sundry Creditor 5. |cash A/c Dr] 8,000 3,000 | _ Sales Cash-in-Hand To Sales A/c i Voucher Sales Accounts 6 DF Purchases A/c 5,000 Purchase Purchase NC 5,000 | Voucher ‘Accounts To Cash A/c Cash-in-Hand 7 Tony Ave Dr) 60,000 60,000 | _ Sales ‘Sundry Debtors To Sales A/c 1900 | voucher Sales Accounts 8 |cash A/c Dr. 9,000 9,000 | contra Cash-in-Hand To Bank A/c A Voucher Bank Accounts 9 |Mohaideen A/c Dr) 40,000 1 Payment, Sundry Creditor 9,000 | Voucher Bank Accounts To Bank A/c 3710 I cash ase Dr. 5,000 000 | Receint Cash-in-Hand To Rony A/e 1000 | Voucher Sundry Debtors 1 [salaries ave Dr] 6,000 ,000 | Payment Indirect Expenses To Bank A/c 7000 | Voucher Bank Accounts 12 Jwages a/c Dr.) 3,000 +000 | Payment Direct Expenses To Cash A/c 1000 | Voucher Cash-in-Hand 13 | stationery Ave Or 4,000 4,000 | Jounal Indirect Expenses To Pandian Ltd. A/c " Voucher [Sundry Creditors 11. The following balance sheet has been prepared from the books of Bright on 1-4-2018. Liabilities z Assets z Capital 2,26,000Machinery 1,00,000) Sundry creditors Furniture 10,000 Ramesh A/c 24,000Stock 20,000) Sundry debtors Shankar 50,000) {Cash in hand 15,000 {cash at bank 55,000) | 2,50,000] 2,50,000] During the year the following transactions took place: (a) Wages paid by cash %2,000 (b) Rent paid by cheque %5,000 (c) Cash purchases made for %3,000 (@) Good purchased on credit from Senthamarai €15,000 (e) Goods sold on credit to Pushparaj 25,000 (D) Payment made to Senthamarai by cheque €5,000 (g) Cash received from Shankar 230,000 (h) Cash sales made for 26,000 (i _Depreciate machinery at 10% G)__ Closing stock on 31.03.2019 #15,000 You are required to prepare trading and profit and loss account for the year ended 31-03- 2019 and a balance sheet as on that date using Tally Ans: 381. To create company Company Info > Create Company 2. To maintain accounts only Gateway of Tally > F11 Accounting Features > General > Maintain accounts only: Yes > Accept Yes 3. To create ledger accounts with opening balances Gateway of Tally > Masters > Accounts Info > Ledgers > Single Ledger > Create creation of Name Under Opening | accept balance & Bright's Capital Aye Bright's Capital Aye [Capital Account 2,26,000, Yes IRamesh A/c (Sundry creditors) Ramesh A/c sundry Creditors 24,000 Yes [Machinery A7e Machinery A/c Fixed Assets 7,00,000, Yes Furniture Aye Furniture Ave Fixed Assets 70,000 ves [Opening stock JOpening stock tockin-Hand 20,000 Yes Shankar A7e (Sundry debtors) Shankar A/e ‘undry Debtors 30,000 Ves (Cash in hand (cash (Cash-in-Hand 75,000 Ves [Gash at Bank Bank Bank Accounts 35,000) Yes 4.To create ledger accounts for transactions (Creation of Name Under Recept Wages A/c Wages A/c Direct Expenses Ves Rent Ae Rent Ae indirect Expenses Ves Purchases Ae Purchases A/e Purchases Accounts Ves Senthamarai Ae Senthamarai A/c Sundry Creditors Yes Sales Ale Sales We Beles Accounts Yes Pushparaj A/c Pushparaj Ve Sundry Debtors Yes Depreciation Ale Depreciation A/c [indirect Expenses es 5. To enter transactions through vouchers Gateway of Tally > Transactions > Accounting Vouchers To view reports (To view Profit and Loss Account F10: A/c Reports > Profit & Loss A/c > AItF1 (detailed) Gi) To view Balance Sheet F10: A/c Reports > Balance Sheet > AltF1 (detailed) 3940. i 42. 43 1. OTHER QUESTIONS VERY SHORT ANSWER QUESTIONS Why is Profit and Loss appropriation account prepared? How are accumulated profits and losses distributed among the partners at the time of admission of a new partner? Give the journal entry for writing off existing goodwill at the time of admission of a new partner. What is the purpose of calculating gaining ratio? When is trend analysis preferred to other tools? What does return on investment ratio indicate? SHORT ANSWER QUESTIONS State the procedure for calculating profit or loss through statement of affairs. How annual subscription is dealt with in the final accounts of not-for-profit organizations? How the following items are dealt with in the final accounts of not-for-profit organizations? a) Sale of Sports materials b) Life membership fees c) Tournament Fund Jayaraman is a partner who withdrew 210,000 regularly in the middle of every month. Interest is charged on the drawings at 6% per annum. Calculate interest on drawings for the year ended 31st December, 2018, How is the value of goodwill calculated under the capitalization method? What are the journal entries to be passed on revaluation of assets and liabilities? “Financial statements are prepared based on the past data’ Explain how this is a limitation. Explain the steps involved in preparing Comparative Statement. Explain the procedure for preparing Common-Size statement. Explain the objectives of ratio analysis. What is inventory conversion period? How is it calculated? Bring out the limitations of ratio analysis. Explain how to view profit and loss statement in Tally.ERP 9 FICC I I ICICI 40