Solution

SAMPLE QUESTION PAPER - 3

Accountancy (055)
Class XI (2024-25)
Part A
1.
(c) Debit voucher
Explanation:
A debit voucher helps in recording expenses or a liability and also helps in its payment. They are also called
Source Documents as they help in identifying the source of a transaction. Examples include bill receipts,
cash memos, pay-in-slips.
2.
(c) A is true but R is false.
Explanation:
A is true but R is false.
book keeping only involve recording part of accounting in the books of account. book keeping done by the
junior staff in the organisation and classifying, summarizing and analysing are done by the senior staff.
3.
(c) liability
Explanation:
Purchaser have to pay the amount in future when goods are purchased on credit which increases the liability.
4.
(b) Statement (iv) is Correct.
Explanation:
Capital = Asset - Liabilities
OR

(b) All of these

Explanation:
All of these
5.
(d) on cash
Explanation:
Cash Memo is equivalent to Invoice copy and a legal document. It is used for knowing the cash sales of the
business, to pay tax, for reconciliation and analysis, Inventory planning, Cash flow position, etc. A cash
memo is prepared when goods are sold for cash.
6.
(c) Detection of Errors
Explanation:
Detection of Errors
OR

(d) Communication of information

 Explanation:
The financial position or financial performance of the business is to be communicated to internal and
external users.
7.
(d) Capital
Explanation:
Capital Reserve :- Capital reserves are made out of capital profits. Capital profits may or may not involve
cash receipts example: Premium on issue of shares or debentures involve cash receipts while profit on
forfeiture of shares does not involve cash receipts.
8.
(b) Personal Account
Explanation:
Drawings Account is a Personal Account because it is based on a person.
OR

(c) i, ii, iii and iv

Explanation:
i, ii, iii and iv
9. (a) Cash Basis
Explanation:
Under the cash basis of accounting, incomes are not recorded unless they are received in cash. Expenses are
only recorded when they are paid in the cash pf any year. No credit transactions are recorded.
10.
(c) 1973
Explanation:
The International Accounting Standards Committee (IASC) was responsible for developing the international
accounting standards and promoting the application of these standards worldwide so as to bring the
international uniformity in the presentation and methods followed by the organisations. It was founded in
June 1973 in London.
11. (a) Capital Reserve
Explanation:
Capital Reserve
12.
(b) Closing stock
Explanation:
The unsold goods left at the end of the year is called closing stock.
13.
(d) ₹1,82,000
Explanation:
Amount recorded in Purchase Book.
20 TV @ ₹2,000 40,000
(+) 15 Tape Recorders @ ₹12,500 1,87,500
₹2,27,500
 (-) Trade Discount @ 20% (45,500)
₹1,82,000
14.
(d) Increase liabilities
Explanation:
Provision for bad debt can deduct from debtors or can shown as a liability in the balance sheet. this will
increase the liability balance or we can say reduces the assets balance.
15. (a) cost or market value, whichever is lower
Explanation:
Stock:- Stock is valued at cost or market value, whichever is lower.
OR
(a) Assets
Explanation:
The things or properties which help in the smooth functioning of the business and which are owned by the
business are called assets of the business.
16.
(b) Debit Note
Explanation:
A note sent by the buyer on the return of goods is Debit Note. Goods returned to the supplier.
17. (a) General Reserve
Explanation:
General reserve is the amount set aside of the revenue profits for no specific purpose. They can be utilised
for any future contingencies of the business.
18. No, it is not correct. The accounts may show either debit balance or credit balance. If the debit side total
exceeds the credit side total, then the balance is called Debit Balance. If the credit side total exceeds the
debit side total, then the balance is called Credit Balance.
OR
Journal Books
Sl no. Particulars L.F. Debit ₹ Credit ₹
1 Loss by Fire A/c Dr. 50,000
To Purchases A/c
50,000
(Destroyed goods by fire)
2 Advertisement Expenses (free samples) A/c Dr. 18,000
To Purchases A/c
18,000
(Distributed goods as free samples)
Charity A/c Dr. 20,000
To Cash A/c
20,000
(Cash gave for charity)
3 Drawings A/c (40,000 + 25,000) Dr. 65,000
To Cash A/c 40,000
 To Purchases A/c
25,000
(Cash and goods are withdrawn for personal use)
4 Charity A/c Dr. 25,000
To Cash A/c 5,000
To Purchases A/c (20,000 + 5,000)
20,000
(Cash and goods given for charity)
5 Loss by Theft A/c Dr. 1,00,000
To Cash A/c
1,00,000
(Cash stolen from iron safe)
Total 2,78,000 2,78,000
19. The cash basis of accounting is the system of accounting under which revenues and expenses are recorded
when they are received or paid in cash. Cash basis of accounting is not popular due to the following reasons
:
i. It does not make a clear cut distinction between revenue items and capital items.
ii. It is not recognized under the Companies Act.
iii. It is not in line with matching principle because revenues and costs are recognized not on the basis of
incurrence but on the basis of receipt and payment. As a result, incomes include unearned incomes and
exclude accrued incomes. Similarly, expenses include expense, paid in advance but does not include
outstanding expenses.
OR
Accrual basis of accounting is better than cash basis of accounting due to the following reasons:
i. The accrual basis of accounting makes a clear-cut distinction between capital items and revenue items. It
gives a correct picture of operating results and the financial position of the business.
ii. Accrual basis is based on generally accepted accounting principles and is considered as systematic,
scientific, and reliable.
iii. Accrual basis of accounting ensures the recording of all revenues and expenses even if these are not
received or paid. Thus, it gives a complete picture of the business.
iv. Accrual basis is mandatory in the case of companies under the provisions of Companies Act.
20. a. Asset
b. Expense
c. Asset
d. Liability
e. Capital
f. Expense
g. Revenue from Operations
h. Asset
i. Revenue
j. Expenses
21. Books of Rajesh Associates
Trial Balance
as on March 31, 2023
Name of Accounts L.F. Dr. (₹) Cr. (₹)
 Sundry Debtors 4,10,000
Sundry Creditors 80,000
Rent & Taxes 48,000
Purchases 34,00,000
Sales 56,00,000
Trade Expenses 12,000
Return Outwards 80,000
Return Inwards 1,20,000
Expenses 4,000
Motor Vehicles 6,50,000
Electricity 25,000
Opening Stock (on April 01, 2023) 2,30,000
Premises 12,00,000
Fixture & Fittings 3,10,000
Bad Debts written off 8,000
Loan from Rahul 1,50,000
Interest on Rahul’s Loan 15,000
Drawings 40,000
Cash in Hand 75,000
Rent received from Sub-let of part of Premises 30,000
Capital (Balancing Figure) 6,07,000
Total 65,47,000 65,47,000
Note: Closing Stock of ₹ 3,80,000 will not appear in Trial Balance, it will be shown after trial balance.
Balance remains in trial balance is recorded as capital according to question.
22. CASH BOOK
Dr. Cr.
Cash Progressive Goodwill Cash Progressive Goodwill
Date Particulars L.F. Date Particulars L.F.
(₹) Bank (₹) Bank (₹) (₹) Bank (₹) Bank (₹)
2023 2023
June To Balance June By Balance
1,180 19,040 6,460
20 b/d 20 b/d
By
20 To X 1,800 21 Purchases 18,210
A/c
By Office
To Sales
23 21,090 22 Expenses 410
A/c
A/c
 To By
23 Progressive C 8,000 22 Stationery 80
Bank A/c A/c
To By Bank
25 Progressive C 600 23 Charges 4
Bank A/c A/c
By Bank
25 To A 1,110 23 Charges 21
A/c
By
To Cash
28 C - 1,500 23 Goodwill C 8,000
A/c
Bank A/c
By Cash
25 C 600
A/c
25 By A 1,110
By
28 Goodwill C 1,500
Bank A/c
By Postage
29 200
A/c
By Balance
30 700 13,299 3,726
c/d
2,890 40,130 11,300 2,890 40,130 11,300
July To Balance
700 13,299 3,726
1 b/d
23. Balance as per Cash Book will be higher than the balance as per Bank Pass Book or Bank Statement in the
following situations:
i. Cheques deposited but not collected by the bank.
ii. Cheque recorded in the Cash Book but not deposited in Bank.
iii. Interest debited by bank but not recorded in the Cash Book.
iv. Bank Charges debited by bank but not recorded in the Cash Book.
v. Payment by bank as per standing instructions, not recorded in Cash Book.
vi. Wrong debit by bank.
OR
ADJUSTED CASH BOOK (BANK COLUMN ONLY)
as on 31st December, 2023
Dr. Cr.
Receipts L.F. Amount Payments L.F. Amount
₹ ₹
To Balance b/d 20,000 By Drawings (Life Insurance Premium) 6,000
 To B/R (Proceeds of a bill) 15,000 By Bank Charges 150
By Balance c/d 28,850
35,000 35,000
To Balance b/d 28,850
BANK RECONCILIATION STATEMENT
as on 31st December, 2023
Plus Minus
Particulars
Items Items
₹ ₹
Balance as per Adjusted Cash Book (Dr.) 28,850
Cheques issued but not presented for payment 36,000
Cheques sent for collection but not credited (60,000 - 48,000) 12,000
Cash collection entered in the Cash Book in the bank column but banked on 2nd
25,000
Jan, 2024
64,850 37,000
Balance as per Pass Book (Cr.) 27,850
Amended cash book is prepared to make cash book correct and rectification is made by preparing BRS.
24. JOURNAL OF SUMIT STORES
Date Particulars L.F. Amount Dr. Amount Cr.
2023 ₹ ₹
April 1 Cash A/c Dr. 15,000
Bank A/c Dr. 5,000
Stock A/c Dr. 40,000
Furniture A/c Dr. 3,600
X Dr. 6,000
Y Dr. 8,000
Z Dr. 10,000
To Loan from Bank 10,000
To Ajit 5,000
To Vinay 7,500
To Capital (balancing figure)
65,100
(Assets and liabilities brought forward)

April 2 Purchases A/c (20,000 × 90%) Dr. 18,000

To Cash A/c (10,800-216) 10,584
To Discount Received A/c (18,000x60% × 2%) 216
 To Karim (18,000 × 40%)
7,200
(Goods purchased and discount received)

April 4 X A/c Dr. 9,000

To Sales A/c
9,000
(Goods sold on credit)

April 5 Cash A/c Dr. 14,800

Discount Allowed A/c(15,000-14,800 ) Dr. 200
To X
15,000
(Cash received and discount allowed)

April 6 Bank A/c Dr. 10,000

To Cash A/c
10,000
(Cash deposited into Bank)

April 8 Bank A/c Dr. 7,850

Discount Allowed A/c (8,000-7,850) 150
To Y
8,000
(Cheque received and deposited into bank)

April 10 Cheques in Hand A/c Dr. 2,000

To Z A/c
2,000
(Cheque received)

April 12 Bank A/c Dr. 2,000

To Cheques in Hand A/c
2,000
(Cheque received from Z now deposited into Bank)

April 15 Y a/c Dr. 8,000

To Bank A/c 7,850
To Discount Allowed A/c
150
(Cheque dishonoured, and discount withdrawn)

April 16 Cash A/c (15,000-12,000) Dr. 3,000

Bank A/c Dr. 12,000
To Sales A/c
15,000
(Cash sales)

April 16 Ajit A/c Dr. 5,000

To Bank A/c
5,000
(Cheque given to Ajit)

April 18 Cahs A/c (50+750) Dr. 800

To Miscellaneous Income A/c 50
 To Furniture A/c
750
(Old newspapers and old furniture sold)

April 20 Bank A/c (8,000 × 0.40) Dr. 3,200

Bad Debts A/c (8,000-3,200) Dr. 4,800
To Z a/c
8,000
Amount received and bad-debts written off)

April 22 Purchases A/c Dr. 8,000

To Bank A/c
8,000
(Goods purchased by cheque)

April 24 Chandu Dr. 5,200

To Sales A/c (8,000 × 50% × 130%)
5,200
(Goods sold on credit)

April 25 Drawings A/c (2,000+3,000) Dr. 5,000

To Cash A/c 2,000
To Bank A/c
3,000
(Amount withdrawn for private use)

April 30 Salary A/c Dr. 2,000

Rent A/c Dr. 1,500
To Bank A/c (1,500+2,000)
3,500
(Expenses paid by cheque)

April 30 Trade Expenses A/c Dr. 500

To Cash A/c
500
(Expenses paid in cash)
Total ₹ 2,10,600 2,10,600
Note: (1)
₹
Total Amount 20,000
Less: 10% Trade Discount 2,000
18,000
Cash Purchase: 60% of ₹ 18,000 10,800
Less: Cash Discount (2% of 10,800) 216
Amount paid 10,584
Credit Purchase: 40% of ₹ 18,000 7,200
OR
In the Books of Ram, Delhi
Journal
 Dr. Cr.
Date Particulars L/F
(Rs) (Rs.)
2018 Rs. Rs.
Jan. 1 Cash A/c Dr. 30,000
To Capital A/c 30,000
(Being business started)
Jan. 2 Bank A/c (UBI) Dr. 21,000
To Capital A/c 21,000
(Being bank account opened through savings A/c)
Jan. 3 Purchased A/c Dr. 10,000
Input CGST A/c Dr. 600
Input SGST A/c Dr. 600
To Cash A/c 11,200
(Being goods purchase)
Jan. 7 Cash A/c Dr. 3,000
To Bank A/c 3,000
(Being Cash withdraw)
Jan. 10 Hari Dr. 5,600
To Sales A/c 5,000
To Output CGST A/c 300
To output SGST A/c 300
(Being goods sold)
Jan. 15 Purchased A/c Dr. 15,000
Input IGST A/c Dr. 1,800
To Shyam 16,800
(Being goods purchased)
Jan. 20 Cash A/c Dr. 3,360
To Sales A/c 3,000
To Output CGST A/c 180
To Output SGST A/c 180
(Being goods sold)
Jan. 25 Shyam Dr. 15,000
To Cash A/c 14,750
To Discount Received A/c 250

(Being cash paid to Shyam)

 Jan. 31 Salaries A/c Dr. 10,000
To Cash A/c 10,000
(Being salaries paid in cash)
25. Rectifying Journal Entries
Debit Amount Credit Amount
S.No. Particulars L.F.
(₹) (₹)
(i) Purchases A/c Dr. 10,000
Sales A/c Dr. 10,000
To Satyam A/c
(Purchases from Satyam entered in Sales Book now 20,000
rectified)

(ii) Bills Receivable A/c Dr. 18,000

Bills Payable A/c Dr. 18,000
To Gopal A/c (Bills receivable recorded as bills payable
36,000
now rectified)

(iii) Suspense A/c Dr. 8,000

To Purchases A/c 4,000
To Purchases Returns A/c 4,000
(Purchases return wrongly debited to Purchases Account
now rectified)

(iv) Prepaid Salaries A/c Dr. 2,000

To Suspense A/c 2,000
(Prepaid salary omitted to be brought forward now
rectified)

(v) Repairs A/c Dr. 1,000

To Furniture A/c 1,000
(Repair of furniture debited to Furniture Account now
rectified)
Suspense Account
Dr. Cr.
Particulars Amount (₹) Particulars Amount (₹)
To Purchases A/c 4,000 By Difference as per Trial Balance (Balancing Figure) 6,000
To Purchases Return A/c 4,000 By Prepaid Salaries A/c 2,000
8,000 8,000
OR
Journal
 Debit Amount Credit
Date Particulars L.F.
(₹) Amount (₹)
(i) Purchases A/c Dr. 5,500
To Royal Traders A/c 5,500
(Credit purchases from Royal Traders were omitted to be
recorded now rectified)

(ii) Creditors A/c Dr. 1,500

To Purchases Return A/c 1,500
(Purchases return of ₹ 1,500 was not recorded now
rectified)

(iii) Sita Traders A/c Dr. 1,800

To Sales A/c 1,800
(Goods sold to Sita Traders were recorded as ₹ 200 instead
of ₹ 2,000 now rectified)

(iv) Sales Return A/c Dr. 1,800

To Suraj & Co. A/c 1,800
(Goods return by Suraj & Co. were omitted to be recorded
now rectified)

(v) Creditors A/c Dr. 8,100

To Purchases A/c 8,100
(Goods purchases for ₹ 900 were recorded as ₹ 9,000 now
rectified)

(vi) Sales A/c Dr. 100

To X A/c 100
(Invoice for goods sold was overcast by ₹ 100 now
rectified)
26. In the Books of ...
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars J.F. Date Particulars J.F.
(Rs) (Rs)
2011 Jan 2011 Dec
To Bank A/c 90,000 By Depreciation A/c 9,000
1 31
2011 Dec
By Balance c/d 81,000
31
90,000 90,000
2012 Jan 2012 Jan
To Balance b/d 81,000 By Bank A/c (Sales) 12,500
1 1
1 July 2012 Jan By Profit & Loss A/c
To Bank A/c 28,000 1,000
2012 1 (Loss)
2012 Dec
By Depreciation A/c 8,900
31
2012 Dec
By Balance c/d 86,600
31
1,09,000 1,09,000
2013 Jan 2013 Jan
To Balance b/d 86,600 By Bank A/c (Sales) 12,500
1 1
2013 Jan To Profit & Loss A/c 2013 Dec
500 By Depreciation A/c 8,800
1 (Profit) 31
2013 Dec
By Balance c/d 65,800
31
87,100 87,100
Working Notes:
S. No. Particular Amount (Rs)
1. Loss on Sale of 1st Machine:
Cost of machine 15,000
Less: Depreciation 1,500
Book value 13,500
Less: Sale price of Goods 12,500
Loss on sale of machinery 1,000
2. Profit on Sale of 2nd Machine
Cost 15,000
Less: Depreciation ( 1500+1500 ) 3,000
Book value 12,000
Sale of machinery 12,500
Profit on sale of machinery 500
3. Depreciation for the year 2012
Depreciation on old machines (Rs 75,000 × 10%) 7,500
Depreciation for new machine 28,000 × 10% × 6

12
1,400
8,900
4. Depreciation for the year 2013
Depreciation for old machines (Rs 60,000 × 10%) 6,000
Depreciation for the new machine (Rs 28,000 × 10%) 2,800
 8,800
OR
Books of Ganga Ltd.
Machinery Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2014 2014
Depreciation
Jan.01 Bank (i) 6,00,000 Dec.31 72,333
(i) 60,000 (ii) 12,333
(5,50,000 + 50,000) Dec.31 Balance c/d
Sep.01 Bank (ii) 3,70,000 (i) 5,40,000, (ii) 3,57,667 8,97,667
9,70,000 9,70,000
2015 2015
Jan.01 Balance b/d Dec.31 Depreciation
(i) 5,40,000, (ii) 3,57,667 8,97,667 (i) 60,000, (ii) 37,000,
May.01 Bank (iii) 8,40,000 (iii) 56,000 1,53,000
Dec.31 Balance c/d
(i) 4,80,000 (ii) 3,20,667,
(iii) 7,84,000 15,84,667
17,37,667 17,37,667
2016 2016
Jan.01 Balance b/d Dec.31 Depreciation
(i) 4,80,000, (ii) 3,20,667 (i) 60,000, (ii) 37,000,
(iii) 7,84,000 15,84,667 Dec.31 (iii) 84,000 1,81,000
Balance c/d
(i) 4,20,000, (ii) 2,83,667,
(iii) 7,00,000 14,03,667
15,84,667 15,84,667
2017 2017
Jan.01 Balance b/d Dec.31 Depreciation
(i) 4,20,000, (ii) 2,83,667, (i) 60,000, (ii) 37,000,
(iii) 7,00,000 14,03,667 (iii) 84,000 1,81,000
Dec.31 Balance c/d
(i) 3,60,000, (ii) 2,46,667,
(iii) 6,16,000 12,22,667
14,03,667 14,03,667
The balance of machine account is ₹.12, 22,667.
Depreciation Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2014 2014
Dec.31 Machinery 72,333 Dec.31 Profit and Loss 72,333
72,333 72,333
2015 2015
Dec.31 Machinery 1,53,000 Dec.31 Profit and Loss 1,53,000
1,53,000 1,53,000
2016 2016
Dec.31 Machinery 1,81,000 Dec.31 Profit and Loss 1,81,000
1,81,000 1,81,000
2017 2017
Dec.31 Machinery 1,81,000 Dec.31 Profit and Loss 1,81,000
1,81,000 1,81,000
(b)
Machinery Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2014 2014
Jan.01 Bank (i) 6,00,000
(5,50,000 + 50,000) Dec.31 Balance c/d
Sep.01 Bank (ii) 3,70,000 9,70,000
9,70,000 9,70,000
2015 2015
Jan.01 Balance b/d
(i) 6,00,000 (ii) 3,70,000 9,70,000
May.01 Bank (iii) 8,40,000 Dec.31 Balance c/d 18,10,000
18,10,000 18,10,000
2016 2016
Jan.01 Balance b/d Dec.31 Balance c/d 18,10,000
(i) 6,00,000 (ii) 3,70,000
(iii) 8,40,000 18,10,000
18,10,000 18,10,000
2017 2017
 Jan.01 Balance b/d Dec.31 Balance c/d 18,10,000
(i) 6,00,000 (ii) 3,70,000
(iii) 8,40,000 18,10,000
18,10,000 18,10,000
Provision for Depreciation Account
Dr. Cr.
Date Particulars J.F. Amount ₹ Date Particulars J.F. Amount ₹
2014 2014
Dec.31 Balance c/d 72,333 Dec.31 Depreciation 72,333
72,333 72,333
2015
2015 Jan.01 Balance b/d 72,333
Dec.31 Balance c/d 2,25,333 Dec.31 Depreciation 1,53,000
2,25,333 2,25,333
2016
2016 Jan.01 Balance b/d 2,25,333
Dec.31 Balance c/d 4,06,333 Dec.31 Depreciation 1,81,000
4,06,333 4,06,333
2017
2017 Jan.01 Balance b/d 4,06,333
Dec.31 Balance c/d 5,87,333 Dec.31 Depreciation 1,81,000
5,87,333 5,87,333
Part B
27.
(c) All of these
Explanation:
The single entry system is suitable for small businesses because Double entry is costly.
OR
(a) ₹ 90,000
Explanation:
Capital at the beginning = Capital at the end + Drawing + Loss - Capital Introduced
= ₹ 40,000 + ₹ 20,000 + ₹ 60,000 - ₹ 30,000
= ₹ 90,000
28.
(b) Rs 109250
Explanation:
Cost of goods sold=Opening stock+Purchases-Closing stock+Wages+Freight
= 200000 + 350000 − 120000 + 2500 + 4500

= 437000
 Let sales be 'x'
Profit= 20

100
× x =
x

Sales-Profit=Cost
x
x − = 437000
5

on solving this, we will get x=546250

So, profit= 546250

5
= 109250

29. (a) ₹ 17,689

Explanation:
₹ 17,689
OR

(c) Assets side

Explanation:
it is current asset so it will be shown on the asset side of balance sheet.
30. Gross Profit = 25% on sales
1

4
th on sales = th on Cost
1

Calculation of Gross Profit:

= ₹ 4,50,000 × 1

Gross Profit = ₹ 1,50,000

Calculation of Sales:
cost of goods sold = Sales + Gross Profit
Sales = cost of goods sold + Gross Profit
Sales = ₹.4,50,000 + ₹ 1,50,000 = ₹ 6,00,000
31. Revenue Expenditure:-
(a) Deferred Revenue expenditure.
(b) Deferred Revenue expenditure.
(f) ₹ 400 is Revenue expenditure.
Capital Expenditure:-
(c) ₹ 1,250 is Capital loss and ₹ 2,400 is capital expenditure.
(d) Capital expenditure.
(e) ₹ 100 is Capital profit and ₹ 4,200 is Capital expenditure.
(f) ₹ 1,100 is Capital expenditure.
32. i. Capital Expenditure: If benefit of expenditure is received for more than one year, it is called capital
expenditure. Example: Purchase of Machinery.
ii. Revenue Expenditure: It is the amount spent to purchase goods and services that are used during an
accounting period for normal operations of busiess is called revenue expenditure. For Example: Rent,
interest, etc.
iii. Deferred Revenue Expenditure: There are certain expenditures which are revenue in nature but benefit
of which is derived over number of years. For Example: Huge Advertisement Expenditure.
33. Statement of Affairs
st
(as at 31 March, 2022)
Liabilities (₹) Assets (₹)
Sundry Creditors 30,000 Cash at Bank 4,500
Capital (Balancing figure) 35,800 Cash in Hand 300
Stock-in-Trade 40,000
Debtors 12,000
Office Equipment 5,000
Furniture 4,000
65,800 65,800
Statement of Affairs (AFTER ADJUSTMENTS)
st
(as at 31 March, 2023)
Liabilities ₹ Assets ₹
Sundry Creditors 20,000 Cash at Bank 3,000
Capital (Balancing figures) 60,350 Cash in hand 4,000
Stock-in-Trade 45,000
Debtors 20,000
Office Equipment 5,000
Less: Depreciation 250 4,750
Furniture 4,000
Less: Depreciation 400 3,600
80,350 80,350
Statement of Profit or Loss
st
for the year ended 31 March, 2023
Particulars ₹
st
Capital at 31 March, 2023 60,350
Add: Drawings During the year 4,000
64,350
Less: Capital Introduced During the year 6,000
Adjusted capital at the end 58,350
st
Less: Capital in the beginning on 31 March, 2022 35,800
Net Profit for the year 22,550
Working Notes:
Calculation of Depreciation on Office Equipment = 5,000× 5% = 250
Calculation of Depreciation on Furniture = 4000 × 10% = 400
Statement of Affair is made to ascertain the Opening and Closing Capital.
Above is Net Worth Method of ascertaining the Profit/ Loss in Single Entry System.
OR
A statement of affairs is a financial statement similar to the balance sheet. It includes assets and liabilities.
Just like the balance sheet, assets are on the right side and liabilities on the left. Even though we call it a
statement of affairs, it is really TWO sets of data. One set is from the beginning of the year, and the other
prepared at the end. This shows the changes in assets and liabilities over the course of the period.
 So we calculate the profit or loss as follow :-
Particulars Rs.
Closing Capital xxxx
Add: Drawings xxxx
xxxx
Less: Opening Capital (xxx)
Less: Additional Capital (xxx)
Profit or Loss xxx/(xxx)
34. TRADING AND PROFIT & LOSS ACCOUNT
for the year ended 31st March, 2023
Dr. Cr.
Particulars ₹ Particulars ₹
To Opening Stock 32,000 By Sales 2,89,600
To Purchases 1,71,000 Less: Sales Return 600 2,89,000
Less: Purchases Return (4,000) By Closing Stock 23,000
Loss of Stock (20,000) 1,47,000
To Wages 23,000
Less: Wages on Assembly of Furniture 5,000 18,000
To Power 9,000
To Carriage Inwards 1,500
To Gross Profit c/d 1,04,500
3,12,000 3,12,000
To Advertisement Expenses 16,050 By Gross Profit b/d 1,04,500
Less: Unexpired ( of ₹ 16,050)
2

3
10,700 5,350 By Rent Received 600
To General Expenses 8,600 By Discount Received 1,800
To Discount Allowed 5,000 By Net Loss transferred to Capital A/c 9,690
To Insurance 22,000
Less: Prepaid 300 21,700
To Provision for Doubtful Debts 1,400
To Salaries 46,390
To Depredation on:
Machinery 2,000
Furniture (₹ 50,000 × 10

100
×
9

12
) 3,750
Patents 900 6,650
To Interest on Bank Loan 1,500
To Loss on Stock by Fire (Note 2) 20,000
 1,16,590 1,16,590
st
BALANCE SHEET as at 31 March, 2023
Liabilities ₹ Assets ₹
Creditors 36,800 Cash at Bank 22,560
Supplier of Furniture 45,000 Debtors 12,500
Bank Loan 55,000 Less: Provision for Doubtful Debts 2,000 10,500
Capital 65,000 Closing Stock 23,000
Less: Drawings 5,000 Advertisement Expenses (Unexpired) 10,700
Income Tax 5,000 Prepaid Insurance 300
Net Loss 9,690 19,690 45,310 Furniture 45,000
Add: Assembly of Furniture 5,000
50,000
Less: Depreciation (₹ 50,000× 10

100
×
9

12
) 3,750 46,250
Machinery 20,000
Less: Depreciation 2,000 18,000
Patents (₹ 2,700 - ₹ 900) 1,800
Goodwill 49,000
1,82,110 1,82,110
Notes:
1. Cost of goods destroyed is deducted from Purchases.
2. When the goods are not insured, firm has to bear total loss. Amount of such loss is shown in the debit side
of Profit & Loss Account.
3. As there is Net Loss, no commission will be given to the manager.
OR
Trading And Profit & Loss Account
For the year ended -------
Particulars Amount Particulars Amount
To Opening Stock 60,000 By Sales 10,00,000
To Purchase 4,00,000 By Closing Stock 1,00,000
To Wages 1,00,000
To Carriage Inwards 66,000
To Gross Profit c/d 4,74,000
11,00,000 11,00,000
======= =======
To Salaries 1,40,000 By Gross Profit b/d 4,74,000
To Discount Allowed 8,000 By Discount Received 10,000
To Advertising 1,00,000
Particulars Amount Particulars Amount
To Office Expense 80,000
To Net Profit 1,56,000
4,84,000 4,84,000
======= =======
Balance Sheet
As on ---------------
Liabilities Amount Assets Amount
Capital 3,00,000 Cash 10,000
Net Profit 1,56,000 4,56,000 Bank 20,000
Creditors 80,000 Closing Stock 1,00,000
Machinery 2,00,000
Furniture 26,000
Debtors 1,80,000
5,36,000 5,36,000
======= =======
A trading, profit and loss account shows the business's financial performance over a given time period.