DISTANCE EDUCATION
B.B.A. DEGREE EXAMINATION, DECEMBER 2017.
BASIC FINANCIAL ACCOUNTING
(2005 onwards)
Time Three hours Maximum 100 marks
PART A — x 8 40 marks)
Answer any FIVE questions.
1. What are the stages of the Accounting cycle?
2. What is average due date? How is it calculated?
3. What is Income and Expenditure Account? Explain the
steps required in its preparation.
4. What is single entry? What are its salient features?
5. What is consignment? What are its main features?
6. Briefly explain various methods of providing for
depreciation on fixed assets?
7. Short notes
Debtors ledger
Creditors ledger.
Sub. Code
12
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8. A partner has withdrawn the following sums of money
during the half year ending 30th September 1990
Rs.
1st May 2,000
18th May 200
3rd July 50
17th September 1,000
Find the average due date.
PART B — 15 60 marks)
Answer any FOUR questions.
9. The following Trial balances extracted from the books of
Mr. Rahul on 31st December 1994.
Rs. Rs.
Dr. Cr.
Furniture Fittings 640
Motor vehicles 6,250
Buildings 7,500
Capital A/c 12,500
Bad debts 125
Provision for bad debts 200
Sundry debtors and creditors 3,800 2,500
Stock on 1st January 1994 3,460
Purchases 5,475 15,450
Bank overdraft 2,850
Sales and purchases returns 200 125
Advertising 450
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Rs. Rs.
Dr. Cr.
Interest 118
Commission 375
Cash 650
Taxes and insurance 1,250
General expenses 782
Salaries 3,300
34,000 34,000
Adjustments
Stock in hand on 31.12.1994 was Rs. 3,200.
Depreciate building at 5%. furniture and fittings at
10% and motor vehicles at 20%
Rs. 85 is due for interest on Bank Overdraft
Salaries Rs. 300 and Taxes Rs. 120 are outstanding
Insurance amounting to Rs. 100 is Prepaid
1/3 of the commission received is in respect of work
to be done next year
Write off further Rs. 100 as bad debts and provision
for bad debts is to be made equal to on sundry
debtors.
Prepare Trading and Profit and loss A/C for the
year ending 31.12.1994 and a balance sheet as on
that date.
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10. The cost of machinery in use with a firm on 1.4.80 was
Rs. 2,50,000 against which the depreciation provision
stood at Rs. 1,05,000 on that date. The firm provided
depreciation at 10% of the diminishing value.
On 31.12.80 two machines costing Rs. 15,000 and
Rs. 12,000 respectively, both purchased on 1.10.77 had to
be discarded because of damage and had to be replaced by
two new machines costing Rs. 20,000 and Rs. 15,000
respectively. One of the discarded machines was sold for
Rs. 8000: against the other, it was expected that
Rs. 3,000 would be realizable.
Show the relevant accounts in the ledger of the firm for
the year 1980-81.
11. The following is the Receipts and Payments account of
Kandan Recreation club for the year ended 31st March
2002.
Receipts Rs. Payments Rs.
To Balance B/d 7,000 By Salaries 28,000
To Subscription By General Expenses 6,000
2000-2001 5,000 By Electricity 4,000
2001-2002 20,000 By Books purchased 10,000
2002-2003 4,000 By periodicals purchased 8,000
To rent for use By loan Repaid 20,000
of conference room 14,000 By Balance C/d 4,000
To Receipts from
Entertainment facility 28,000
To sale of old magazines 2,000
80,000 80,000
Additional Data
The club has 50 members, each paying Rs. 500 p.a
as subscription.
Subscriptions outstanding on 31-3-2002 Rs. 6000
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Salaries outstanding Rs. 2,000. Salaries paid
include Rs. 6,000 for 2000-01
On 1-4-2001, the clubs properties were: Building
Rs. 2,00,000 Furniture and Fittings Rs. 20,000 and
Books Rs. 20,000
Provide 10% Depreciation on Buildings and
furniture.
Prepare income and expenditure account for the
year ending 31-3-2002 and a balance sheet on that
date.
12. A Co. of Calcutta sent on consignment account goods to
B Co. of Mumbai at an Invoice price of Rs. 29,675 and
paid for freight Rs. 762, Cartage Rs. 232, and insurance
Rs. 700. Half the goods were sold by agents for
Rs. 17,500, subject to the agents commission of Rs. 875,
storage expenses of Rs. 200, and other selling expenses of
Rs. 350. one-fourth of the consignment was lost by fire,
and a claim Rs. 5,000 was received. Draw up the
necessary accounts in the books of A Co. and ascertain
the profit or loss made on consignment. The consignor
received a two month bill of exchange from the agents in
satisfaction of the dues. Goods sent include 25% profit on
cost.
13. Arul keeps his book under the single entry. He gives the
following particulars for the year 2003.
1.1.2003 31.12.2003
Stock 18,470 22,500
Bills receivable 5,500 3,800
Bills payable 6,200 4,300
Furniture 2,100
Machinery 15,500
Debtors 13,200 16,000
Creditors 10,070 13,200
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Summary of the cash book
Rs. Rs.
To balance b/d 2,300 Creditors 11,600
Debtors 30,990 Purchases 6,600
Interest from investment 150 Wages 5,400
Furniture 450 Salaries 6,000
Bills receivable 8,250 Rent 600
Sales 10,300 Investment 5,000
Insurance 600
Advertisement 500
Carriage inwards 250
Bills payable 9,400
Drawings 2,400
Furniture 200
Balance C/D 3,890
52,440 52,440
A reserve for doubtful debts is to be provided at on
debtors. Furniture and machinery are to be depreciated
at 10%. Salaries Rs. 500 and stationery expenses Rs. 150
are yet to be paid. The prepaid insurance was Rs. 200.
interest accrued on investment was Rs. 75 furniture of
book value of Rs. 600 (1.1.2003) was sold on September
30 and new furniture was purchased on the same date.
Prepare the trading and Profit and loss A/C and balance
sheet as on 31.12.2003.
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14. Neelu draws a bill on bhanu for Rs. 3,000 and bhanu
accepts the same for the mutual accommodation of both
of them to the extent of neelu 2/3 and bhanu and
discount the same for Rs. 2,820 and remits 1/3 to bhanu.
Before the due date, bhanu draws another bill for
Rs. 4,200 on neelu in order to meet the first bill. The
second bill is discounted for Rs. 4,080 with the help of
which the first bill was met and Rs. 720 remitted to her.
Before the due date of the second bill, neelu becomes
insolvent and bhanu receives a dividend of 50 paise in the
rupee in full satisfaction. Pass necessary journal entries
in the books of neelu and bhanu.
15. A and B doing business separately as building
contractors, undertake jointly to construct a building for
a newly started joint stock company for a contract price of
Rs. 1,00,000 payable as to Rs. 80,000 by instalments in
cash and Rs. 20,000 in fully paid shares of the company.
A banking account is opened in their joint names,
A paying Rs. 25,000 and B Rs. 15,000. They are to share
profits and losses in the proportions of 2/3 and 1/3
respectively. Their transactions were as follows
Rs.
Paid wages 30,000
Bought materials 70,000
Materials supplied by A 5,000
Materials supplied by B 4,000
Architect's fees paid by A 2,000
The contract was completed and the price (cash and
shares) duly received. The joint venture was closed by
taking up all the shares of the company at an agreed
valuation of Rs. 16,000 and taking up the stock of
materials at an agreed valuation of Rs. 3,000.
Show the necessary ledger accounts.
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