General Instructions:

1. All questions are compulsory.

2. The paper consists of four sections:

Section A: 1 Mark Questions (MCQs)

Section B: 3 Mark Questions

Section C: 4 Mark Questions

Section D: 5 Mark Questions

3. Write your answers neatly and show all necessary workings.

4. Use appropriate accounting formats where required.

Section A: 1 Mark Questions (MCQ)

1. Which accounting principle treats the business and its owner as separate entities?

a) Going Concern

b) Business Entity

c) Consistency

d) Accrual

2. The first book of entry where transactions are recorded is the:

a) Ledger

b) Journal

c) Cash Book

d) Trial Balance

3. In a trial balance, the total of debit entries must be:

a) Greater than credit entries

b) Equal to the total credit entries

c) Less than the credit entries

4. Which of the following is an intangible asset?

a) Machinery

b) Land

c) Goodwill

d) Inventory

5. Goods returned by a customer result in a:

a) Debit note

b) Credit note

c) Journal entry in Sales Book

d) Reduction in cash

6. A bank overdraft is shown on the:

a) Asset side

b) Liability side

c) Revenue side

d) Capital side

7. What is the effect on the accounting equation when goods are purchased on credit?

a) Increase in assets and increase in liabilities

b) Increase in assets only

c) Increase in liabilities only

d) No effect

8. The concept of “matching” relates to:

a) Revenue recognition
 b) Expense recognition

c) Asset valuation

d) Liability measurement

9. In the double column cash book, the “bank column” records:

a) Only bank receipts

b) Both cash receipts and bank receipts

c) Bank transactions only

d) Cash transactions only

10. Which of the following adjustments is not generally shown in the final accounts?

a) Outstanding expenses

b) Prepaid expenses

c) Trade discounts

d) Depreciation

11. If a business started with ₹2,00,000 cash and purchased machinery for ₹50,000 on credit, the
accounting equation is affected by:

a) Increasing assets and decreasing liabilities

b) Increasing assets and increasing liabilities

c) Decreasing assets and increasing liabilities

d) No change in the equation

12. Which book records only credit purchases?

a) Sales Book

b) Purchase Book

c) Journal Proper

d) Cash Book
13. In recording depreciation, the method that reduces the asset’s value by a fixed percentage each year is
called:

a) Straight Line Method

b) Written Down Value Method

c) Sum-of-Years-Digits Method

d) None of these

14. A cash discount is offered to encourage:

a) Early payment

b) Delayed payment

c) Purchase returns

d) None of these

15. The balance shown on the bank statement is adjusted in the:

a) Ledger

b) Cash Book

c) Bank Reconciliation Statement

d) Journal

16. Which of the following represents an indirect expense?

a) Direct Materials

b) Factory Rent

c) Direct Labor

d) Sales Commission

17. Outstanding salaries are treated as a:

a) Prepaid expense
 b) Accrued expense

c) Deferred revenue

d) Capital expenditure

18. The effect of a trade discount is recorded:

a) In the books of accounts

b) In the cash book only

c) Off the books

d) In the trial balance

19. Incomplete records are usually maintained by:

a) Sole proprietors

b) Large corporations

c) Partnership firms only

d) Government bodies

20. Manager's commission, if based on net profit before commission, is an example of:

a) A fixed expense

b) A variable expense

c) An indirect income

d) A capital expenditure

Section B: Short Answer Questions (3 Marks Each)

21. Journalize the following five transactions

a) Purchased goods worth ₹50,000 from Ramesh & Co. with a trade discount of 10% and paid by
cheque.

b) Sold goods worth ₹30,000 on credit to Mohan, offering a cash discount of 5% if paid within 10 days.

c) Settled a creditor’s bill by paying ₹19,000 in full settlement of a ₹20,000 liability.

e) Withdrew ₹5,000 from the bank for personal use.

22. Prepare Final Accounts (Trading and Profit & Loss Account) :

- Opening Stock: ₹40,000

- Purchases: ₹2,20,000

- Sales: ₹3,00,000

- Closing Stock: ₹50,000

- Wages: ₹15,000

- Rent: ₹8,000

23. Calculate the Closing Capital given the following information:

- Opening Capital: ₹1,50,000

- Additional Capital Introduced: ₹50,000

- Drawings: ₹20,000

- Net Profit for the year: ₹75,000

- Cash withdrawn by the owner (not previously recorded as drawings): ₹30,000

Show your calculations step by step.

24. Explain how the following transactions affect the Accounting Equation:

- (i) A business starts with ₹2,00,000 cash and ₹50,000 worth of inventory.

- (ii) Goods worth ₹40,000 are purchased on credit.

- (iii) Payment of ₹15,000 is made in cash for rent.

- (iv) Sales of ₹25,000 are made on credit.

- (v) Payment of ₹10,000 is made towards creditors in cash.

25. From the following incomplete records, calculate the missing value:

- Opening Cash Balance: ₹40,000

- Total Credit Sales: ₹70,000

- Closing Cash Balance: Unknown

- Cash received from debtors during the period: ₹55,000

- Cash expenses paid: ₹20,000

Determine the closing cash balance based on the above information.

Section C: Short Answer Questions (4 Marks Each)

26. Record the following transactions in the Purchases Book (with GST calculations):

- Purchased 50 cars from Mohan Co. at ₹40,000 per car, plus 28% GST on credit.

- Purchased 30 air conditioners from Cool Air Pvt. Ltd. at ₹35,000 each, plus 18% GST for cash.

- Purchased 500 LED lights from Bright Lights Ltd. at ₹1,500 each, plus 12% GST on credit.

- Purchased 100 office chairs from Comfort Seating Ltd. at ₹3,000 each, plus 18% GST on credit.

27. Prepare a Sales Book from the following details :

- June 1: Sold goods to Ramesh for ₹30,000 with a trade discount of 10% and an applicable GST of
18%.

- June 5: Sold goods to Sohan for ₹50,000 with no discount, GST at 12%.

- June 10: Sold goods to Mohan for ₹40,000 with a trade discount of 5% and GST at 18%.

- June 15: Sold goods to Rajesh for ₹25,000 with no discount, GST at 12%.

28. Prepare a Trial Balance from the following 20 items (values given):

| Capital 4,00,000

| Drawings 25,000

| Cash in Hand 35,000

| Bank Balance 1,20,000

| Purchases 2,50,000

| Sales 5,00,000

| Opening Stock 70,000

| Creditors 90,000

| Rent 40,000

| Wages 30,000

| Salaries 45,000

| Advertisement 15,000

| Insurance 8,000

| Machinery 2,00,000

| Land & Building 3,00,000

| Furniture 50,000

| Bills Payable 35,000

| Bills Receivable 20,000

Prepare a Trial Balance listing all debit and credit totals

29. Prepare a Bank Reconciliation Statement as on 31st March from the following details

- Balance as per Cash Book: ₹80,000

- Cheques issued totaling ₹20,000 are not yet presented.

- Cheques deposited amounting to ₹15,000 have not been credited by the bank.

- Bank charges of ₹1,500 are not recorded in the Cash Book.

- A direct deposit by a customer of ₹5,000 is not recorded in the Cash Book.

- Interest of ₹3,500 is credited by the bank.

- A cheque issued for ₹10,000 was mistakenly recorded as ₹1,000 in the Cash Book.

- The bank debited ₹2,000 for an insurance premium paid directly.

30. Prepare a Double Column Cash Book from the following transactions

- Jan 1: Opening balances — Cash in Hand: ₹50,000; Bank Balance: ₹1,00,000.

- Jan 3: Deposited 5% of the cash balance into the bank.

- Jan 5: Withdrew ₹10,000 from the bank for office expenses.

- Jan 15: Received ₹20,000 from a debtor; deposited 50% of this amount into the bank.

- Jan 20: Paid ₹30,000 to a creditor, half in cash and half through the bank.

- Jan 25: Recorded cash sales of ₹25,000; deposited **60% of the cash received into the bank.

- Jan 30: Bank debited ₹1,500 for cheque bouncing charges.

Maintain separate columns for Cash and Bank transactions and prepare the double column cash book
accordingly.

Section D: Long Answer Questions (5 Marks Each) (3 × 5 = 15 Marks)

31. Prepare the Financial Statements (Trading Account, Profit & Loss Account, and Balance Sheet) for the
year ending 31st March 2024 using the following Trial Balance and adjustments.

Trial Balance as on 31st March 2024

Drawings 20,000

Land & Building 3,00,000

Plant & Machinery 2,50,000

Purchases 2,00,000

Sales 5,50,000

Opening Stock 75,000

Debtors 1,50,000

Creditors 80,000

Salaries 60,000

Wages 30,000

Rent 40,000

Advertisement 15,000

Bank Loan (5%) 1,00,000

Commission Received 20,000

Insurance 10,000

Interest on Loan 5,000

Bills Payable 40,000

Cash in Hand 25,000

Furniture 50,000

Miscellaneous Expenses 8,000

Repairs & Maintenance 12,000

Stationery 5,000

Adjustments

1. Closing Stock: ₹1,00,000

2. Outstanding Salaries: ₹10,000

3. Prepaid Insurance: ₹3,000

4. Depreciation on Machinery @ 10%

5. Write off additional Bad Debts of ₹4,000 and create a Provision for Doubtful Debts at 5% on Debtors

6. Manager's Commission at 10% of Net Profit before commission

7. Interest on Capital at 5%

Prepare the Trading Account, then the Profit & Loss Account (incorporating the adjustments above), and
finally the Balance Sheet

32. Prepare Ledger Accounts for the following transactions:

- Purchased goods worth ₹80,000 from Mohan on credit.

- Sold goods worth ₹50,000 on credit to Ramesh.

- Paid ₹40,000 to Mohan.

- Mohan allowed a trade discount of ₹2,000 on the purchase.

- Goods worth ₹5,000 were returned to Mohan.

Maintain proper ledgers showing the posting of each journal entry.

33. Prepare a Machinery Account using the Written Down Value (WDV) Method considering the
following complex transactions:

April 1, 2021: Purchased Machinery A for ₹1,50,000.

July 1, 2022: Purchased Machinery Bfor ₹2,00,000, with installation charges of ₹10,000 (include
installation charges in the cost).
 Jan 15, 2023: Purchased Machinery Dfor ₹1,00,000.

Oct 1, 2023: Purchased Machinery C for ₹3,00,000; on the same date, sold Machinery A for ₹80,000
(original cost ₹1,50,000).

Mar 1, 2024: Sold a scrap portion of Machinery B for ₹20,000.

Depreciation: Charge depreciation at 10% per annum on the Written Down Value for all machinery held
during the year ending 31st March 2024.

Consider different purchase/disposal dates while calculating depreciation.

Prepare the Machinery Account showing opening balances, additions, disposals, and depreciation
adjustments as per the WDV method.