Depreciation, Provisions and Reserves — Account STD 11 Commerce — Question

Give two differences between provisions and reserves.

Give rectifying entries for the following:

1. ₹ 5,400 received from Mr. A was posted to the debit of his account.
2. The total of Sales Return Book overcasted by ₹ 800.
3. ₹ 2,740 paid for repairs to motor car was debited to Motor Car Account as ₹ 1,740.
4. Returned goods to Shyam ₹ 1,500 were passed through Returns Inward Book.

On 31st March, 2017, Pass Book showed a balance of ₹ 25,000. Prepare a Bank Reconciliation Statement from the following particulars:

1. Cheques of ₹ 20,000 were deposited in Bank on 27th March, 2017, out of which cheques of ₹ 5,000 were cleared on 1st April, 2017. Rest are not cleared.
2. On 28th March, 2017, cheques were issued amounting to ₹ 15,000, out of which cheques of ₹ 3,000 were presented in March, ₹ 4,000 on 2nd April and rest were not presented.
3. Cheques of ₹ 10,000 were deposited in Bank on 28th March, 2017, out of which cheques of ₹ 4,000 were cleared on 2nd April, 2017 and rest are dishonoured.
4. Interest on investment collected by bank does not appear in the Cash Book ₹ 800.
5. A B/R of ₹ 9,000 previously discounted from the bank was dishonoured on 30th March, 2017 but no intimation was received from the bank till 31st March.
6. Bank has debited ₹ 1,500 and credited ₹ 1,200 in our account.

Rectify the following errors:

1. The total of one page of Sales Book was carried forward as ₹ 371 instead of ₹ 317.
2. ₹ 540 received from Yatin was posted to the debit of his Account.
3. Purchases Returns Book was overcast by ₹ 300.
4. An item of ₹ 1,062 entered in Sales Return Book had been posted to the debit of customer who returned the goods.
5. ₹ 1,500 paid for furniture purchased had been charged to ordinary Purchase Account.

“Accounting Standards ensure the consistency and comparability of Financial Statements.” Explain.

A Company purchased a second-hand machine on 1st April, 2016, for ₹ 30,000 and immediately spent ₹ 4,000 on its repair and ₹ 1,000 on its installation. On Oct. 1, 2018, the machine was sold for ₹ 25,000. Prepare Machine Account after charging depreciation @ 10% p.a. by diminishing balance method, assuming that the books are closed on 31st March every year. IGST was charged @12% on purchase and sale of machine.

The following information relate to the business of Mohit Raina, who requests you to prepare his amended Cash Book and reconcile his Cash Book balance with his Pass Book balance:

	₹
Balance as per Cash Book (Cr.)	40,000
Unpresented cheques	72,000
Uncredited cheques	13,000

You have been given the following additional information:

1. The debit side of the Cash Book (Bank Column) has been undercast by ₹ 25,000.
2. A cheque for ₹ 10,000 paid to a creditor has been wrongly entered in the Cash Column.
3. Bank commission and other charges ₹ 4,000 have not been recorded in the Cash Book.

Distinguish Trade Discount from Cash Discount. (Two points)

State four merits of written down value method of providing depreciation.

Elucidate the following statement:
‘Only cash transactions are recorded in Cash Book'.