Question
Define Depreciation.
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Answer
Depreciation is a fall in value of an asset because of its usage or with efflux of time or due to obsolescence or accident. “Depreciation is the permanent and continuing diminution in the quality, quantity or value of an asset".
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The Swati Industries removed their works to a more suitable premises:
i. A sum of ₹ 4,750 was spent on dismantling, removing and re-installing Plant,Machinery and Fixtures.
ii. The removal of Stock from the old Works to the new one cost ₹ 500.
iii. Plant and Machinery which stood in the books at ₹ 75,000 included a machine at a book value of ₹ 1,700. This being obsolete was sold off at ₹ 450 and was replaced by a new machine which cost ₹ 2,400.
iv. The freight and cartage on the new machine amounted to ₹ 150 and the erection charges cost ₹ 275.
v. The Fixtures and Furniture appeared in the books at ₹ 7,500. Of these, some portion of the book value of ₹ 1,500 was discarded and sold off for ₹ 1,600 and new Furniture of the value of ₹ 4,200 was acquired.
vi. A sum of ₹ 1,100 was spent on painting the new factory; and ₹ 400 on next Diwali.
State which item of expenditure would be charged to capital and which to revenue.
i. A sum of ₹ 4,750 was spent on dismantling, removing and re-installing Plant,Machinery and Fixtures.
ii. The removal of Stock from the old Works to the new one cost ₹ 500.
iii. Plant and Machinery which stood in the books at ₹ 75,000 included a machine at a book value of ₹ 1,700. This being obsolete was sold off at ₹ 450 and was replaced by a new machine which cost ₹ 2,400.
iv. The freight and cartage on the new machine amounted to ₹ 150 and the erection charges cost ₹ 275.
v. The Fixtures and Furniture appeared in the books at ₹ 7,500. Of these, some portion of the book value of ₹ 1,500 was discarded and sold off for ₹ 1,600 and new Furniture of the value of ₹ 4,200 was acquired.
vi. A sum of ₹ 1,100 was spent on painting the new factory; and ₹ 400 on next Diwali.
State which item of expenditure would be charged to capital and which to revenue.
From the Balance Sheet given below, calculate:
→- Fixed Assets.
- Current Assets.
- Current Liabilities.
- Working Capital.
“Single Entry System of book keeping is most incomplete, inaccurate, unscientific and unsystematic.” Discuss this statement.
List the assets in order of permanence:
Sundry Debtors, Stock, Land and Building, Plant and Machinery, Furniture, Investments, Cash in Hand and Cash at Bank.
Sundry Debtors, Stock, Land and Building, Plant and Machinery, Furniture, Investments, Cash in Hand and Cash at Bank.
What is meant by Outstanding Expenses? Give its adjusting entry.
Mohan maintains books on Single Entry System. He gives you the following information:
You are required to calculate the Profit or Loss made by Mohan.
| ₹ | |
| Capital on 1st April, 2018 | 15,200 |
| Capital on 31st March, 2019 | 16,900 |
| Drawings made during the year | 4,800 |
| Capital introduced on 1st August, 2018 | 2,000 |
On 31st March, 2019. Bank Account in the books of Ramesh shows a credit balance of ₹ 36,000. On the same date, outstanding cheques amounted to ₹ 14,000 and outstanding deposits a mounted to ₹ 20,000. A cheque for ₹ 5,000 received from a debtor, was subsequently dishonoured. The receipt had been correctly recorded but no entry has yet been made in the books for the dishonour. On the basis of the above information, determine the balance as per the Bank Statement.
From the information given below ascertain the profit for the year:
| ₹ | |
| Capital at the beginning of the year, | 70,000 |
| Additional capital introduced during the year, | 17,500 |
| Stock, | 59,500 |
| Sundry debtors, | 25,900 |
| Business premises, | 8,600 |
| Machinery, | 2,100 |
| Sundry creditors, | 33,400 |
| Drawings made during the year, | 26,400 |
Calculate the amount of Gross Profit when the net loss is ₹ 75,000, Operating Expenses are ₹ 1,20,000 and Sales are ₹ 3,00,000.
Name three components of a Transaction Processing System.