Question
Explain the concept of consistency giving example.
✓
Answer
The principle of consistency suggests that while writing accounts or for preparing financial statements, the same policies, procedures and methods should be followed every year. It should use the same method for all subsequent events of the same type of periods. Example : $(1)$ Valuation of assets and depreciation should be done by applying same method for every year. e.g. Reducing balance method. $(2)$ The method of stock valuation should be followed every year. e.g. $FIFO$ method or $LIFO$ method or everage method. $(3)$ Fixed assets are valued at cost whereas inventory or stock in trade is valued at cost. Here there is no violation of principle of consistency.
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Disclose following information in Income-Expenditure account for the year ending $31-3-2015.$
Note: $(i)$ Salary outstanding $2013-14: Rs. 3,000, 2014-15: Rs. 6,300.$ $(ii)$ Opening stock of stationery $Rs. 670$ and closing stock $Rs.250.$
→| $Dr.$ | Receipt - Payment Account for the Year ending $31-3-2015$ | $Cr.$ | ||||
| Income | Amt. (Rs.) |
Expense | Amt. (Rs.) |
|||
| To Subscription: | By Taxes and Insurance | $6,500$ | ||||
| $2013-14$ | $1,200$ | By Salary | $32,800$ | |||
| $2014-15$ | $75,000$ | By stationery Expense | $2,500$ | |||
| $2015-16$ | $1,650$ | $77,850$ | ||||
State the name of the accounting principle, concept or convention which is followed in the practices or statements given below :
$(1)$ Partnership firm gives interest on partners” capital and charges interest on partners’ drawings if it is so agreed.
$(2)$ Accounts of business are prepared for a specific period.
$(3)$ No accounting entry is passed in books of accounts for resignation of an efficient Plant Manager of a firm even if this event will adversely affect production of the firm.
→$(1)$ Partnership firm gives interest on partners” capital and charges interest on partners’ drawings if it is so agreed.
$(2)$ Accounts of business are prepared for a specific period.
$(3)$ No accounting entry is passed in books of accounts for resignation of an efficient Plant Manager of a firm even if this event will adversely affect production of the firm.
Give the havala entries for the following havalas in the havalamel: $1. $ Akhar stock $2.$ Nahi Chukvel Kharch $3.$ Agauthi Chukvel Kharch
→Accounting Software :
From the following transactions write the journal proper in the books of Shri Atul Awasthi.
$(1)$ Brought goods of $₹ 10,000$ and machinery of $₹ 25,000$ to start the business.
$(2)$ Cellular phone of $₹ 20,000$ purchased for business from Kabir Stores.
$(3)$
$₹ 500$ is payable to Rohit for interest.
$(4)$ Goods of $₹ 12,000$ were stolen away from the shop, for which the insurance company accepted a claim of $75 \%$ of the amount.
$(5)$ Paid $₹ 800$ for bill of family doctor, which debited to sundry expense.
$(6)$ Rent received of $₹ 4000$. Pass the entry to close the account.
→$(1)$ Brought goods of $₹ 10,000$ and machinery of $₹ 25,000$ to start the business.
$(2)$ Cellular phone of $₹ 20,000$ purchased for business from Kabir Stores.
$(3)$
$₹ 500$ is payable to Rohit for interest.
$(4)$ Goods of $₹ 12,000$ were stolen away from the shop, for which the insurance company accepted a claim of $75 \%$ of the amount.
$(5)$ Paid $₹ 800$ for bill of family doctor, which debited to sundry expense.
$(6)$ Rent received of $₹ 4000$. Pass the entry to close the account.
Define bill and state its characteristics.
Write Journal in the books of shree Vasant Traders for the following transaction:$2014$ June
$1$ A current account is opened with $SBI$ bank by depositing $₹ 20,000.$
$2$ Goods sold for $₹ 5000$, the amount of which directly deposited in bank.
$4$ Furniture of $₹ 10,000$ is purchased, payment is made through cheque.
$8$ Withdrawn from bank $₹ 400$ for personal expense and $₹ 700$ for office expenses.
$10$ A cheque of $₹ 1500$ received from Virat.
$15$ Goods of $₹ 3000$ sold on cash to Parthiv, Out of which $50 \%$ amount received by cheque.
$18$ Fire insurance premium $₹ 450$ and life insurance premium of $₹300$ are paid by cheque.
$22$ A cheque of dividend warrant of $₹ 200$ deposited in bank
$25$ Bank has credited $₹ 100$ for bank interest and debited $₹ 50$ as bank charges to our account.
$28$ A cheque of $₹ 800$ issued to Param as final settlement
$30$ A cheque of $₹ 600$ is received from Shivaji
→$1$ A current account is opened with $SBI$ bank by depositing $₹ 20,000.$
$2$ Goods sold for $₹ 5000$, the amount of which directly deposited in bank.
$4$ Furniture of $₹ 10,000$ is purchased, payment is made through cheque.
$8$ Withdrawn from bank $₹ 400$ for personal expense and $₹ 700$ for office expenses.
$10$ A cheque of $₹ 1500$ received from Virat.
$15$ Goods of $₹ 3000$ sold on cash to Parthiv, Out of which $50 \%$ amount received by cheque.
$18$ Fire insurance premium $₹ 450$ and life insurance premium of $₹300$ are paid by cheque.
$22$ A cheque of dividend warrant of $₹ 200$ deposited in bank
$25$ Bank has credited $₹ 100$ for bank interest and debited $₹ 50$ as bank charges to our account.
$28$ A cheque of $₹ 800$ issued to Param as final settlement
$30$ A cheque of $₹ 600$ is received from Shivaji
Write Journal Entry for the following transactions in the books of Akash
→| $1$ | Paid $Rs.500$ for shop rent $Rs.300$ for house rent. |
| $2$ | $Rs.400$ received for commission. |
| $3$ | A cheque of $Rs.800$ received for brokerage. |
Trial Balance of Alay as on $31-03-2015.$
Adjustment: Out of insurance premium paid, $₹ 3,000$ insurance premiums is paid in advance.
→Adjustment: Out of insurance premium paid, $₹ 3,000$ insurance premiums is paid in advance.
Explain differences: Receipt – Payment Account and Income-Expenditure Account: