Accounting

Part Paper 1
Total Marks: 50 Time: 1.5 Hours

Q1a) State with reasons whether the following statements are True or False: [6 Marks]
1) If the errors are detected after preparing trial balance, then all the errors are rectified through
suspense account.

2) A ledger is also known as the principal book of accounts.

3) A cheque for ₹ 25,000 that was issued and was also presented for payment in same month but
erroneously recorded on debit side of the cash book would cause a difference of ₹ 50,000 from the
balance in pass book.

4) Depreciation is non-cash and non-operating expense which is to be provided for if there are
profits.

5) There are two ways of preparing an account current.

6) The Sale Book is kept to record both the cash and credit sales.

Q1b) State the causes of difference between the balance shown by the pass book and the cash
book.

Q2a) Prepare a Bank Reconciliation statement for Krishna Traders as on 31st March,2023.
The cash book of Krishna Traders shows a debit balance of ₹ 8,24,400 at bank as on 31st
March,2023, but you find that it does not agree with the balance as per Pass Book. After checking
you find the following:
1. On 12th March, 2023 the payment side of the Cash Book was under cast by ₹ 24,000/-
2. A cheque of ₹ 1,70,000 issued on 20th March, 2023 was not taken in the bank column.
3. On 22nd March, 2023 the debit balance of ₹ 37,000 as on the previous day, was brought
forwards as credit balance.
4. Out of the total cheques amounting to ₹ 84,000 issued in, the last week of March, 2023, cheques
aggregating ₹ 57,000 were encashed in March, 2023.
5. Dividends of ₹ 70,000 collected by the Bank and Fire insurance premium of ₹ 40,000 paid by it
were not recorded in the cash book.
6. One cheque issued to a Creditor of ₹ 2,58,000 was recorded twice in the Cash book.
7. A debtor Mr. A has deposited the Cheque for ₹ 64,000 into the bank directly in the month of
March, 2023 without intimating to Krishna Traders and the same cheque was dishonored by the
bank due to insufficient funds in the month of March itself.
8. A cheque from customer for ₹ 10,000 was deposited in bank on 28th March,2023 but was
dishonored and advice received from bank on 3rd April, 2023.
9. Bank paid credit card bill of ₹ 5,000 which is not recorded in cash book.
10. Bank wrongly credited cheque of ₹ 50,000 of other customer in our account.
11. Bank credited cheque of ₹ 4,000 in savings account of proprietor of Krishna Traders instead of
crediting cheque in current account of Krishna Traders.
12. ₹ 1,000 discount received wrongly entered in bank column in cash book.
13. Bank debited charges ₹ 400 on 25th March for which no intimation received till 31st March.
[10 Marks]

Q3a) M/s Kedar, Profit and loss account showed a net profit of ₹ 8,00,000, after considering the
closing stock of ₹ 7,50,000 on 31st March, 2017. Subsequently the following information was
obtained from scrutiny of the books:
(i) Purchases for the year included ₹ 30,000 paid for new electric fittings for the shop.
(ii) M/s Kedar gave away goods valued at ₹ 80,000 as free samples for which no entry was made in
the books of accounts.
(iii) Invoices for goods amounting to ₹ 5,00,000 have been entered on 27th March, 2017, but the
goods were not included in stock.
(iv) In March, 2017 goods of ₹ 4,00,000 sold and delivered were taken in the sales for April, 2017.
(v) Goods costing ₹ 1,50,000 were sent on sale or return in March, 2017 at a margin of profit of 33-
1/3% on cost. Though approval was given in April, 2017 these were taken as sales for March, 2017.
You are required to determine the adjusted net profit for the year ended on 31.3.2017 and
calculate the value of stock on 31st March, 2017. [5 Marks]

Q3b) Prepare Journal entries for the following transactions in K. Katrak’s books.
(i) Katrak’s acceptance to Basu for Rs. 2,500 discharged by a cash payment of Rs. 1,000 and a new
bill for the balance plus Rs. 50 for interest.
(ii) G. Gupta’s acceptance for Rs. 4,000 which was endorsed by Katrak to M. Mehta was
dishonoured. Mehta paid Rs. 20 noting charges. Bill withdrawn against cheque.
(iii) D. Dalal retires a bill for Rs. 2,000 drawn on him by Katrak for Rs. 10 discount.
(iv) Katrak’s acceptance to Patel for Rs. 5,000 discharged by Patel Mody’s acceptance to Katrak for a
similar amount. [5 Marks]

Q4a) "The cost of Property, Plant and Equipment comprises of any cost directly attributable to
bring the asset to the location and condition necessary for it to be capable of operating in a
manner intended by the enterprise". Give any five examples of such 'directly attributable costs'.
[5 Marks]

Q4b) Enter the following transactions in Sales Book of Gurgaon Engineers, Gurgaon for January
2022: [3 Marks]
Date
5 Sold to Praneet Electricals10 pieces of microwaves@₹8,500/-eachlesstradediscount15%
10 Sold to Ajanta plaza, 8 pieces of Mixergrinders@₹12,500/-eachlesstradediscount10%.
20 Sold to Naveen traders,15 pieces of juicers@₹5,500/-eachlesstradediscount5%

Q4c) A Plant & Machinery costing ₹ 10,00,000 is depreciated on straight line assuming 10 year
working life and zero residual value, for four years. At the end of the fourth year, the machinery
was revalued upwards by ₹ 40,000. The remaining useful life was reassessed at 8 year. Calculate
Depreciation for the fifth year. [2 Marks]

Q5a) Before preparation of the Trial Balance, the following errors were found in the books of Hare
Rama & Sons. Give the necessary entries to correct them.
(i) Minor Repairs made to the building amounting to ₹ 1,850 were debited to the Building Account.
(ii) An amount of ₹ 3,000 due from Shayam Lal, which had been written off as bad debts in the
previous year, recovered in the current year, and had been posted to the personal Account of
Shayam Lal.
(iii) Furniture purchased for office use amounting to ₹ 20,000 has been entered in the purchase day
book.
(iv) Goods purchased from Ram Singh amounting to ₹ 8,000 have remained unrecorded so far.
(v) College fees of proprietor's son, ₹ 15,000 debited to the Audit fees Account.
(vi) Receipt of ₹ 4,500 from Meet Kumar credited to the Pinki Rani.
(vii) Goods amounting to ₹ 6,200 had been returned by a customer and were taken into inventory,
but no entry was made in the books.
(viii) ₹ 1500 paid for wages to workmen for making office furniture had been charged to wages
account.
(ix) Salary paid to a clerk ₹ 12,000 has been debited to his personal account.
(x) A purchase of goods from Raghav amounting to ₹ 20,000 has been wrongly entered through
the sales book. [10 Marks]
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