Model Paper 4 Account - Model Paper 4

________ is a reserve which does not appear in the balance sheet.

The source document for recording entries in the sales return book is generally the ________.

The nature of capital is

The nature of accrued income is:

If the total liabilities of a business decrease by Rs.5000 what will be the effect on total asset? (assuming the amount of capital remain same)

Distinguish between expenses and expenditure.

Give two advantages of GST.

Explain any three points highlighting the utility of accounting standards.

Exe Co. has purchased 50 computers from HCL and is allowed a discount of ₹10,000 for purchase thereof. Is the discount allowed Trade Discount or a Cash Discount? How will you record it in the books of account?

What do you mean by posting?

Govind maintains his Current Account with HDFC Bank. On 31st March, 2023, the bank column of Cash Book showed an overdraft of ₹ 42,000 in his Current Account. From the following particulars, prepare Bank Reconciliation Statement as on 31st March, 2023:
i. A cheque of ₹ 1,040 deposited was dishonoured and bank charges debited in the Pass Book were ₹ 110 . It was not recorded in the Cash Book.
ii. Out of the total cheques of ₹ 1,00,000 issued, cheques aggregating ₹ 30,000 were debited in March, cheques aggregating ₹ 40,000 were debited in April, and the rest have not yet been debited.
iii. Payments side of the Cash Book is undercast by ₹ 3,000 .
iv. A cheque of ₹ 4,000 received from Om on 20th March, 2023 was recorded in the discount column of the Cash Book and was not banked.
v. ₹ 80 for bank charges were recorded two times in the Cash Book whereas bank levied annual charges of ₹ 70 , which were not recorded in the Cash Book.

The cash book shows a bank balance of ₹ 7,800 . On comparing the cash book with the passbook the following discrepancies were noted:
i. Cheque deposited in bank but not credited ₹ 3,000
ii. Cheque issued but not yet present for payment ₹ 1,500
iii. An insurance premium paid by the bank ₹ 2,000
iv. Bank interest credit by the bank ₹ 400
v. Bank charges ₹ 100
vi. Directly deposited by a customer ₹ 4,000

Enter the following transaction in a two column cash book

2013		Amt (Rs.)
Feb-01	Cash in hand	75,000
Feb-05	Paid to Kartik	15,000
	Discount allowed by Kartik	500
Feb-08	Goods purchased	20,000
Feb-10	Received from Parth	49,000
	Discount allowed to Parth	1,000
Feb-16	Goods sold	20,000
Feb-21	Paid to Aroha	14,750
	Discount allowed by him	250
Feb-28	Paid wages for the month	25,000
	Paid in full settlement of Rs. 20,000 to Amit	19,500

The following are the balances extracted from the books of Amit. Prepare a Trial Balance as on 31st March, 2023:

	₹		₹
Cash	2,000	Sundry Creditors	40,000
Capital	80,000	Investment	8,000
Purchases	85,000	Plant and Machinery	15,000
Sales	1,08,400	Building	20,000
Purchases Return	6,000	Furniture	6,000
Sales Return	4,000	Electricity	700
Transportation	1,800	Postage	400
Discount Allowed	500	Drawings	8,000
Printing	5,000	Salaries	6,000
Sundry Debtors	70,000	Travelling Expenses	2,000
Input CGST A/c	2,500	Output CGST A/c	1,500
Input SGST A/c	2,500	Output SGST A/c	1,500
Input IGST A/c	4,000	Output IGST A/c	6,000

A Book-keeper finds that the totals of his trial balance disagree by ₹ 2,800. He temporarily debits a Suspense Account with this amount and closes the books. On an examination of the books, the following errors are discovered:
i. The total of Purchase Return Book ₹ 710 was posted Twice.
ii. Goods costing ₹ 800 were distributed as free samples but no entry was passed in the books.
iii. Purchase of Machinery for ₹ 5,600 on credit was recorded in Purchase Book as ₹ 6,500.
iv. Cash Sales to Roshan Gupta for ₹ 1,200 were recorded in Cash Book as well as in Sales Book and were posted from both.
v. Closing Stock has been overvalued by ₹ 1,500 .
vi. Sales Return Book was untotalled, though personal accounts were posted ₹ 1,580 .
vii. No entries have been made in the Cash Book for the Insurance Premium directly paid by bank ₹ 700 and interest charged on overdraft ₹ 320 .
viii. A sum of ₹ 200 for Drawings on the Credit Side of Cash Book was not posted to the Drawings account.
Pass entries to rectify the above errors. Close the Suspense Account already opened.

Rectify the following errors identified in the books of Goel. The Trial Balance did not match, ₹ 14,930 being excess credit. The difference was placed in Suspense Account:
i. An amount of ₹ 100 was received from Das on 31st March, 2023 but was entered in the Cash Book on 4th April, 2023.
ii. Returns Inward Book for March was short casted by ₹ 1,000 .
iii. Purchase of an office table for ₹ 3,000 was passed through the Purchases Book.
iv. ₹ 3,750 paid for wages to workmen for making showcases was charged to the Wages Account.
v. Purchase of ₹ 670 was posted to Creditor's Account as ₹ 600 .
vi. A cheque for ₹ 200 received from Kuldeep was dishonoured and was debited to the 'Printing and Stationery Account'.
vii. ₹ 10,000 paid for purchase of a motorcycle was debited to 'Miscellaneous Expenses Account'.
iii. An amount of ₹ 10,000 owed by Danish was omitted from Sundry Debtors.
ix. Daman paid ₹ 6,700 but her account was wrongly credited with ₹ 10,700 .

Following transactions of Ramesh for April, 2018 are given below. Journalise them.

2018		Rs.
Apr 1	Ramesh started business with cash	1,00,000
Apr 2	Paid into bank	20,000
Apr 3	Bought goods for cash	50,000
Apr 4	Drew cash from bank for office use	10,000
Apr 13	Sold goods in Krishna on credit	15,000
Apr 20	Bought goods from Shyan on credit	22,500
Apr 24	Received from Krishna	12,500
	Allowed him discount	500
Apr 28	Paid cash to Shyam	21,500
	Discount received	1,000
Apr 28	Krishna returned goods	2,000
Apr 30	Cash sales for the month	80,000
Apr 30	Paid rent	5,000
Apr 30	Paid salary	10,000

Balance of Provision for Doubtful Debts (As on 1 April, 2023); ₹ 1,250; Bad Debts during the year were: ₹ 300. Provision for Doubtful Debts is required @ 5% on debtors of ₹ 10,000. Provision for Doubtful Debts credited to Profit & Loss Account will be

In the Trial Balance are shown Debtors ₹ 2,400, Bad Debts ₹ 221, Bad Debts Provision ₹ 324. For creating a Provision for Doubtful debts @ 10% on debtors, the P & L A/c will be debited by:

Drawings account is a:

Commission received in advance is to be shown in statement of affairs on

Single Entry System of book keeping is:

Give the adjustment entry and accounting treatment of the following items while preparing financial statements:
i. Outstanding Salaries
ii. Accrued Interest

Calculate the amount of Gross Profit when the net loss is ₹ 75,000, Operating Expenses are ₹ 1,20,000 and Sales are ₹ 3,00,000.

From the following trial balance, prepare the trading and profit and loss account for the year ended 31st March, 2013 and the balance sheet as at that date.

Name of Accounts	Amt(Rs)	Name of Accounts	Amt(Rs)
Salaries	20,446	Sales	1,32,840
Bills receivable	12,754	Capital	1,00,000
Investments	80,000	Provision for doubtful debts	5,000
Furniture	24,000	10% Loan (1st October, 2012)	20,000
Opening stock	9,000	Discount received	800
Purchases	60,000	Sundry creditors	18,600
Sundry debtors	40,000	Bills payable	10,000
Interest on loan	800	Outstanding salaries	1,000
Insurance premium	1,800	Bad debts recovered	400
Wages	9,200	Interest on investments	4,000
Rent	3,040	Trading commission	14,000
Bad debts	2,400
Carriage Outwards	1,200
Cash at Bank	20,000
Depreciation of furniture	5,000
Accrued commission	2,000
Advertisement	15,000
	3,06,640		3,06,640

Additional Information
i. Closing stock Rs 12,000 .
ii. Goods costing Rs 2,000 were distributed as free samples while goods costing Rs 1,000 were taken by the proprietor for personal use.
iii. A credit sale of Rs 4,000 was not recorded in the sales book.
iv. Closing stock included goods costing Rs 2,000 which were sold and recorded as sales but not delivered to the customer.
v. Maintain provision for doubtful debts @ 5\%.

The following Trial Balance has been extracted from the books of Shri Sanjay Kumar as at 31^st March, 2023:

	Dr. ₹	Cr. ₹
Plant and Machinery	1,00,000
Furniture	12,000
Capital Account		1,91,000
Household Expenses	16,000
Sales		4,68,000
Loose Tools	20,000
Goodwill	10,000
Opening Stock (1-4-2022)	20,000
Returns Outward		4,000
Discount		6,000
Purchases	2,12,000
Returns Inwards	8,000
Wages	1,00,000
Salaries	60,000
Outstanding Salaries		5,000
Investments at 10% p.a.	6,000
Interest on Investments		300
Sundry Creditors		24,000
Miscellaneous Receipts		2,000
Carriage Inwards	12,000
General Expenses and Insurance	39,000
Advertisement Expenses	15,000
Postage	4,000
Sundry Debtors	56,000
B. Bhuwan	2,000
Cash Balance	14,000
Bank		3,200
Suspense Account		2,500
	7,06,000	7,06,000

The following additional information is available:-
i. Stock on 31^st March, 2023 was ₹ 30,800. 
ii. Depreciation is to be charged on Plant and Machinery at 5% and Furniture at 6%. Loose Tools are revalued at ₹ 16,000. 
iii. Create a provision of 2% for Discount on Debtors. 
iv. Salary of 2,000 paid to Shri B. Bhuwan, a temporary employee, stands debited to his personal account and it is to be corrected. 
v. Write off 1/5 th of advertisement expenses. 
You are to prepare Trading and Profit & Loss Account for the year ended 31^st March, 2023 and a Balance Sheet as at that date.

What is meant by single entry system of accounts and give any three salient features.

Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information:

	April. 01, 2016 (₹)	March. 31, 2017 (₹)
Cash	1,200	1,600
Bills receivable	-	2,400
Debtors	16,800	27,200
Stock	22,400	24,400
Investment	-	8,000
Furniture	7,500	8,000
Creditors	14,000	15,200

He withdrew ₹ 300 per month for personal expenses. He sold his investment of ₹ 16,000 at 2% premium and introduced that amount into business.