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Account 3 Marks Question

Accounts from Incomplete Records Single Entry System · CBSE STD 11 Commerce (CBSE - English Medium). 20 questions.

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Question 13 Marks
Why the statement of assets and liabilities prepared under Single Entry System at the end of the accounting period is called a Statement of Affairs instead of Balance Sheet?
Answer
Although Statement of Affairs, like Balance Sheet, shows assets and liabilities yet it is not a Balance Sheet. It is so because the values of the assets and liabilities, shown in the Statement of Affairs are merely the result of estimates made by the owner and no Ledger Accounts exist for them. Since, these amounts are not drawn from the accounts, they cannot strictly be called balances and their depiction as liabilities and assets in a Balance Sheet.
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Question 23 Marks
From the following particulars, prepare Total Creditors Account:
  ₹
Credit purchases 2,40,000
Cash purchases 50,000
payment to creditors 2,10,000
Discount allowed by them 5,000
Bills Payable accepted 30,000
Creditors in the beginning of the year 90,000
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Question 33 Marks
“Single Entry System of book keeping is most incomplete, inaccurate, unscientific and unsystematic.” Discuss this statement.
Answer
Because of the following reasons:
  1. It doesn't record both the aspects of a transaction.
  2. We cannot prepare Trial Balance, so mathematical errors can not be found out.
  3. Because complete transactions are not recorded, so, we can not prepare final accounts of business and can not get true profit or loss made by business.
  4. Assets may be misappropriated, because assets accounts are not maintained.
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Question 43 Marks
Mayank does not keep proper records of his business, he gives you the following information:
  ₹
Opening Capital 1,00,000
Closing Capital 1,25,000
Drawings during the year 30,000
Capital added during the year 37,500
Calculate the profit or loss for the year.
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Question 53 Marks
Cash sales of a business in a year were ​₹ 85,000, the Cost of Goods Sold (including direct expenses) was ₹ 97,000 and Gross Profit as shown by the Trading Account for the year was ₹ 1,29,000. Calculate Credit Sales during the year.
Answer
Gross Profit = Net Sales - Cost of Goods Sold
1,29,000 = Net Sales - 97,000
Net Sales = ₹ 2,26,000
Credit Sales = Total Net Sales - Cash Sales
Credit Sales = 2,26,000 - 85,000 = ₹ 1,41,000
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Question 63 Marks
Is it possible to prepare a Trial Balance and check the arithmetical accuracy of the books of account under Single Entry System?
Answer
No, Trial Balance cannot be prepared under Single Entry System as it does not record the dual aspect of each transaction. Therefore, the arithmetical accuracy of the books of account cannot be verified.
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Question 73 Marks
A firm sells goods at Cost plus 25%. Sales to credit customers (3/4 of total) was ₹ 1,80,000. His Opening and Closing Stocks were ₹ 20,000 and ₹ 15,000 respectively. Find out the value of Purchases.
Answer
Credit Sales = ₹ 1,80,000 (3/4 of Total Sales)
Total Sales = ₹ 2,40,000
Gross Profit = 25% of Cost or 20% of Sales
Gross Profit = ₹ 48,000
Cost of Goods Sold = Net Sales - Gross Profit
Cost of Goods Sold = 2,40,000 - 48,000 = ₹ 1,92,000
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock
1,92,000 = 20,000 + Purchases - 15,000
Purchases = ₹ 1,87,000
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Question 83 Marks
Calculate Stock in the beginning:
  ₹
Sales 80,000
Purchases 60,000
Stock at the end 8,000
Loss on Cost $\frac{1}{6}$
Answer
Let cost be ₹ 100
Loss = ₹ 16.67 $\Big(\frac{1}{6}$ of 100$\Big)$
Sale = ₹ 83.33 (100 - 16.67)
% Loss on Sale $=20\%\Big(\frac{16.67}{83.33}\Big)$
Loss on Sale = ₹ 16,000 (20% of 80,000)
Cost of Goods Sold = Net Sales + Loss on Sale
Cost of Goods Sold = 80,000 + 16,000 = ₹ 96,000
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock
96,000 = Opening Stock + 60,000 - 8,000
Opening Stock = ₹ 44,000
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Question 103 Marks
Vikas is keeping his accounts according to Single Entry System. His capital on 31st December, 2015 was ₹ 2,50,000 and his capital on 31st December, 2016 was ₹ 4,25,000. He further informs you that during the year he gave a loan of ₹ 30,000 to his brother on private account and withdrew ₹ 1,000 per month for personal purposes. He used a flat for his personal purpose, the rent of which @ ₹ 1,800 per month and electricity charges at an average of 10% of rent per month were paid from the business account. During the year he sold his 7% Government Bonds of ₹ 50,000 at 1% premium and brought that money into the business.
Prepare a Statement of Profit or Loss for the year ended 31st December, 2016.
Answer

Note: Drawings include loan to brother, withdrawals in cash, rent and electricity charges.
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Question 113 Marks
Mohan maintains books on Single Entry System. He gives you the following information:
  ₹
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
You are required to calculate the Profit or Loss made by Mohan.
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Question 123 Marks
Books maintained by the Single Entry System are not as reliable as they are when maintained following the Double Entry System. Comment.
Answer
Double Entry System of accounting records both aspects of a transaction. Thus, it provides accurate information as to profit, liabilities, assets, etc. On the other hand, Single Entry System of accounting does not record all transactions in some cases, while in some, it records both aspects and still in some only one aspect. Thus, Single Entry System is less reliable than Double Entry System.
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Question 143 Marks
Calculate the Stock at the end:
  ₹
Stock in the beginning 20,000
Cash Sales 60,000
Credit Sales 40,000
Purchases 70,000
Rate of Gross Profit on Cost 1/3
Answer
Rate of Gross Profit on Cost = 1/3
Rate of Gross Profit on Sale = 1/4
Total Sales = Cash Sales + Credit Sales
Total Sales = 60,000 + 40,000 = 1,00,000
Gross Profit = ₹ 25,000 (1/4 of 1,00,000)
Cost of Goods Sold = Net Sales - Gross Profit
Cost of Goods Sold = 1,00,000 - 25,000 = ₹ 75,000
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock
75,000 = 20,000 + 70,000 - Closing Stock
Closing Stock = ₹ 15,000
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Question 153 Marks
Capital of Ganesh Gupta in the beginning of the year was ₹ 70,000. During the year his business earned a profit of ₹ 20,000, he withdrew ₹ 7,000 for his personal use. He sold ornaments of his wife for ₹ 20,000 and invested that amount into the business. Find out his Capital at the end of the year.
Answer
Capital at the end
= Opening Capital + Additional Capital + Profit - Drawings
= 70,000 + 20,000 + 20,000 - 7,000 = ₹ 1,03,000
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Question 163 Marks
Mahesh who keeps his books on Single Entry System sells goods at Cost plus 50%. On 1st April, 2018 his Capital was ₹ 4,00,000 and on 31st March, 2019 it was ₹ 3,50,000. He had withdrawn ₹ 20,000 per month besides goods of the sale value of ₹ 60,000. How much did he earn in 2018-19?
Answer

Cash withdrawn = ₹ (20,000 × 12) = ₹ 2,40,000
Goods taken for personal use $=₹\Big(60,000\times\frac{100}{150}\Big)=₹ \ 40,000$
Total Drawings = Cash withdrawn + Goods withdrawn for personal use
Total Drawings = ₹ (2,40,000 + 40,000) = ₹ 2,80,000
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Question 173 Marks
Following information of an accounting year is given:
Opening Capital ₹ 60,000; Drawings ₹ 5,000; Capital added during the year ₹ 10,000 and Closing Capital ₹ 90,000. Calculate the Profit or Loss for the year.
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Question 183 Marks
A firm sells goods at a Gross profit of 25% of sales. On 1st April, 2017 the Stock was ₹ 40,000; Purchases were ₹ 1,10,000 and the Stock on 31st March, 2018 was ₹ 30,000. What was the value of Sales?
Answer
Cost of Goods Sold = Net Sales - Gross Profit
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock
Cost of Goods Sold = 40,000 + 1,10,000 - 30,000 = ₹ 1,20,000
Gross Profit = 25% of Sales or 33.33% of COGS
Gross Profit = ₹ 40,000
Net Sales = Cost of Goods Sold + Gross Profit
Net Sales = 1,20,000 + 40,000 = ₹ 1,60,000
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Question 193 Marks
How profit is calculated under Statement of Affairs Method?
Answer
For determining the profit, capital in the beginning of the year must also be determined, if necessary, by preparing a Statement of Affairs as in the beginning of the year. If the capital at the end of the year exceeds that in the beginning, it is taken as a profit. If, on the other hand, the capital in the beginning was more than that at the end, a loss. However, following two adjustments must be kept in mind for determin.
  1. Adjustments for Capital Introduced: If the proprietor brought in additional capital during the year, it should be deducted from the capital at the end (since this increase is not due to profit but fresh introduction of capital).
  2. Adjustment for Drawings: Drawings by the proprietor should be added to the capital at the end-had the drawings not been made, the capital at the end of the year would have been higher.
Formula: Formula for determining the Profit is as follows:
Profit = Capital at the end + Drawings - Additional capital introduced - Capital in the beginning
The above formula may be shown as follows in the form of Statement of Profit or Loss.
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Question 203 Marks
Vikas maintains his books of account on Single Entry System. He provides following information from his books. Find out additional capital introduced in the business during the year 2018-19.
Opening Capital - ₹ 1,30,000 Drawings during the year ₹ 50,000
Closing Capital - ₹ 2,00,000 Profit made during the year ₹ 1,00,000
Answer
Additional Capital:= Capital at the End + Drawings - (Capital in the Beginning + Profit)
= 2,00,000 + 50,000 - (1,30,000 + 1,00,000)
= 2,50,000 - 2,30,000 = ₹ 20,000
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