Accounting Principles — Account STD 11 Commerce — Question

A Company has been charging depreciation @ 10% p.a. on original cost method. It now wants to change the method from original cost to diminishing balance method, the rate of depreciation being 15% p.a. Can it do so?

Distinguish between ‘general reserve’ and ‘specific reserve’.

What are the different uses available to a holder for dealing with bills receivable?

Open a 'T' shape account of debtor 'Brij' and write the following transactions on the proper side:

S.No		₹
i	Sold goods to Brij on credit	25,000
ii	Cash received from Brij Discount allowed to him	10,000 500
iii	Goods returned by Brij	5,000

Give four examples each of ‘revenue reserve’ and ‘capital reserves’.

Give the rules of Debit and Credit and explain them with imaginary examples.
Under Double Entry System of accounting each transaction has two aspects. One aspect is debit, i.e., receiving or incoming aspect. Another aspect is credit, i.e., giving or outgoing aspect. Debit and credit aspects of a transaction form the basis of Double Entry System.
Rules of Double Entry or Rules of Debit and Credit are formed on the basis of these two aspects in each of the business transactions. There are two approaches for deciding when to write on the debit side of account and when to write on the credit side of an account, i.e., which account is to be debited and which account is to be credited. The rules or: the basis of which such decision is taken are called Rules of Debit and Credit.
Rules of Debit and Credit (Traditional Classification) at a Glance:

S.No	Types of Account	Account to be Debited	Account to be Credited
1	Personal Account	Receiver	Giver
2	Real Account	What comes in	what goes out
3	Nominal Account	Expense and Loss	Income and Gain

From the following transactions, state the nature of accounts and state which account will be debited and which account will be credited:

S.No		₹
1	Mohan started business with cash	5,00,000
2	Purchased goods for cash	1,00,000
3	Sold goods for cash	1,50,000
4	Received interest from Ram in cash	500
5	Sold goods to Ashok	60,000
6	Purchased furniture for cash	50,000
7	Paid wages	20.000

Why the full cost of an asset is not treated as an expense in the year of its purchase?

Prove that the Accounting Equation is satisfied in all the following transactions of Sameer Goel:

1. Started business with cash ₹ 10,000.
2. Paid rent in advance ₹ 300.
3. Purchased goods for cash ₹ 5,000 and credit ₹ 2,000.
4. Sold goods for cash ₹ 8,000 costing ₹ 4,000.
5. Paid salary ₹ 450 and salary outstanding being ₹ 100.
6. Bought motorcycle for personal use ₹ 3,000.