Question
What are the Limitations of accounting?

Answer

Following are the Limitations of accounting :
$(i)$ Non financial transaction: In accounting transactions which can be measured in terms ofmoney are only recorded. Due to that qualities like honesty, loyalty, commitment ofemployees, etc. which plays significant role in the development of business have no placein accounts.
$(ii)$ Stable value of money: Accounting assumes that value of money is stable which is notpossible practically
$(iii)$ Avoidance of market value: In accounts, actual cost based treatments are given andmarket value is totally ignored. Market price of anything keeps on changing,
$(iv)$ Use of estimates: In accounting, reserves are made based on estimation which is dependson past experience and logic
$(v)$ Dual standard: In final accounts, profit and loss accounts is prepared based on currentprices while items of balance sheet are disclosed at old price. This kind of disparity is thebiggest limitation of accounting.

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Record the following transactions in the journal proper of Rakesh: $(1 )$ Gave goods of $Rs.5,000$ to Anath Ashram. $(2 )$ Distributed goods of $Rs.4,000$ as free samples. $(3)$ Withdrew goods of $Rs.8,000$ from the business for the personal use. $(4)$ Purchased furniture of $Rs.3,000$ by giving goods of $Rs.2,800. (5)$ Goods of $Rs.7,000$ were destroyed by fire, for which the insurance company accepted a claim of $Rs.5,500. (6)$ An amount of $Rs.2,000 $ Is receivable from Nirali, which cannot be received now. $(7)$ Write off depreciation on machinery $Rs.800. (8)$ Salary for the month of March is unpaid $Rs.7,800.$
Shri Gujarat Stores does not maintain separate subsidiary books for transactions of bill receivable, bill payable, purchase return and sales return. Record the following transactions in the Journal Proper.$(1)$ Drew a bill $Rs.8,000$ on Ramnik which he accepted and returned.
$(2)$ Accepted a bill of $Rs.3,000$ drawn by Vijay and returned to him.
$(3)$ Bill receivable of Ramnik endorsed to Ramesh.
$(4)$ Goods of $Rs.3,000$ returned by Paresh to us.
$(5)$ Goods of $Rs.1,500 $ returned to Mahendra.
Pass Jounral entries for the following transaction in Journal Proper:
$(1) Rs.700$ received from Renuka is recorded in Bhumika's account.
$(2) Rs.1,000$ received from Updesh for bad debt written off in past, which is credited to Updesh'saccount.
$(3) Rs.800$ paid to Sharma is debited to Varma's account.
$(4) Rs.1,200$ paid for insurance premium is debited to drawings account.
$(5)$ Old furniture of $Rs.6,000$ of business sold for $Rs.5,800.$
Yuvraj does not maintain separate subsidiary books for bills receivable, bills payable,purchase returns and sales returns. Pass entries of the following transactions in the Journal Proper. $(1)$ A bill of $Rs. 8000$ drawn on a debtor Mayur for collection of dues from him, which heaccepted and returned it to us. $(2)$ We accepted a bill of $Rs. 5000$ drawn by Ketan against his debt of $Rs. 7000,$ which weaccepted and returned to him. $(3)$ The bill accepted by Mayur was dishonoured on the maturity date. $(4)$ Returned goods of $Rs. 4000$ to Chetan. These goods were purchased before ten days onthree months' credit. $(5)$ Pranay returned goods of $Rs. 2000,$ which we had sold on two months' credit.
Total of both the sides of trial balance as on $31-3-2016$ of Shri Atul are not identical. Ascertain errors and prepare a modified trial balance.
Trial Balance of Shri Atul as on $31-3-2016$
Debit Balance Amt.(Rs.) Credit Balance Amt.(Rs.)
Opening stock $22,500$ Sales $3,75,000$
Bad debts reserve $2400$ Investments $15,000$
Interest on investments $900$   $25,500$
Purchase $2,25,000$ Capital $42,000$
Salary $25,500$ Bills receivable $19,500$
Carriage outward $7350$ Debtors $75,000$
Purchase returns $13,050$ Rent received $1050$
Motor car $24,000$ Interest on loan $1080$
Wages $6750$ Discount received $2250$
Telegram-post $600$ Carriage inward $10,500$
Drawings $6000$    
Cash balance $1500$    
Bills payables $9750$    
Bank overdraft $12,000$    
Sundry expenses $13,050$    
Creditors $45,000$    
Bad debts $1950$    
Taxes Insurance $6120$    
Bank loan $36,000$    
Advertisement expenses $7500$    
Land-Building $45,000$    
  $5,11,920$   $5,66,880$
State characteristics of Deshi Nama System.
Trial balance prepared by Vallabh is as follows. If any error lies in it, prepare a modified trial balance and give reasons for it:
Name of A/c Amt.(Rs.) Name of A/c Amt.(Rs.)
Opening stock $6,000$  Capital $61,000$
Sales $86,000$ Discount allowed $1,500$
Sales return $4,000$ Commission received $1,700$
Wages- Salary $31,000$ Fixed assets $61,000$
Bills receivable $8,000$ Purchase $46,000$
Debtors $10,000$ Purchase return $3,000$
Rent $4,000$ Carriage inward $1,600$
Cash $1,800$ Carriage outward $1,700$
Creditors $7,900$ Bills payable $13,000$
Closing stock $34,800$ Interest paid $3,000$
  $1,93,500$   $1,93,500$
What adjustment entries will you pass in the following situations? $1$. Salaries to six employees is outstanding for one month at a rate of $Rs.4,000$ per month. $2$. Insurance premium paid during the year was $Rs.15,000$ of which $Rs.3,000$ pertain to the next year. $3.$ A loan of $Rs.20,000 @ 18 \%$ is given to a friend before six months. He has not paid any interest, so far, on this loan.
From the following transactions write journal entries in the books of Gopi Traders.
$2018$
June
$1$ Loan borrowed from Apexa $₹ 35,000.$
$8$ Bank had debited $₹ 150$ of bank charges and credited $₹ 250$ of interest.
$12$ Janvi becomes insolvent from whom $₹ 10,000$ was receivable out of which $40\%$ amount received as final settlement by cheque.
$18$ Goods of $₹ 60,000$ purchased from Chetan and $50 \%$ amount paid by $NEFT. NEFT$ charge was $₹ 5.$
identify account which are to be debited and credited :
Rent received  $₹ 1500$ by cheque.