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Conducted by Field Work Centre, Thondaimanaru
2st Term Examination - 2021
FWC
Grade :- 12 (2022) Accounting - I Time: 3 Hours & 10 Minutes

Instructions:
Index Number: .....................................
• Answer all the questions on the question paper itself.
• Write your Index Number clearly in the space provided For Examiner’s Use only
above. For paper I
• Select the correct answers for the questions No. 1 – 15 and
Q.Nos. Marks
write its number on the dotted lines given.
• Write short answers for the questions No. 16 – 25 on the 01 – 15
dotted lines given. 16 - 25
• Each question carries four marks. Total

01. Which of the following statement is correct?

(1) Historical and forecasted information can be used in financial accounting.
(2) Management accounting provides information to internal and external parties.
(3) Financial accounting is based on accounting concepts, legal procedures, conventions and accounting
standards.
(4) Financial accounting provides information to management at required time for a financial year period.
(5) Historical information only is used in management accounting. (……)

02. Which of the following can be considered as output of accounting?

A – Prime books B – Income statement
C – Ledger accounts D – Statement of financial position
E – Statement of changes in equity F – Trial balance
G – Cash flow statement H – General journal
I – Accounting policies and notes J – Control accounts
(1) A, B, D, F, J (2) B, D, E, F, I (3) C, D, F, G, I
(4) B, D, E, G, I (5) A, C, F, H, I (……)

⚫ Use the following to answer the questions 3 – 6.

Baheerathan started a business selling motor vehicle spare parts on 01.01.2021.
Date Transactions Rs. ‘000’
02.01.2021 Cash brought by owner as capital 3 000
05.01.2021 Purchase of spare parts by cash 300
10.01.2021 Purchase of spare parts on credit basis (trade discount 10%) 400
12.01.2021 Return outwards of spare parts from credit purchase 30
15.01.2021 Bank loan received at 10% interest 240
30.01.2021 Credit sales (including VAT 8%) 324
Note: The cost value of the spare parts sold during this month is Rs. 200 000. Assume that no VAT on
purchases and expenses.

Grade - 12 (2022) – 2021 FWC -1- Accounting - I

03. Select the answers which contains the correct order of source documents for the transactions undertaken
on 05th, 10th, 12th and 30th of January 2021.
(1) Receipt, invoice, debit note, payment voucher (2) Payment voucher, invoice, credit note, invoice
(3) Payment voucher, invoice, debit note, invoice (4) Receipt, invoice, credit note, payment voucher
(5) Payment voucher, invoice, credit note, receipt (……)

04. Gross profit and net profit for the month ending 31.01.2021 are,
Gross profit (Rs. ‘000’) Net profit (Rs. ‘000’)
(1) 100 80
(2) 160 140
(3) 160 80
(4) 100 99
(5) 60 98 (……)

05. If the above business maintains control account, the correct entry for the transaction undertaken on 30th of
January is,
Debit (Rs. ‘000’) Credit (Rs. ‘000’)
(1) Debtor control account 324
Sales account 324
(2) Debtor control account 300
VAT control account 24
Sales account 324
(3) Debtor control account 324
Sales account 300
VAT control account 24
(4) Debtor control account 324
Sales account 283
VAT control account 41
(5) Debtor control account 300
VAT expense account 24
Sales account 300
VAT control account 24 (……)

06. Current assets and current liabilities as at 31.01.2021 are as follows.

Current assets (Rs. ‘000’) Current liabilities (Rs. ‘000’)
(1) 3 694 355
(2) 3 264 330
(3) 3 694 330
(4) 3 264 355
(5) 754 331

07. Net profit of Ragavan company for the year ending 31 March 2021 was Rs. 650 000. This profit has been
calculated without considering the following errors.
- Discount allowed Rs. 10 000 was debited in discount received account.
- Sales Rs. 216 000 including VAT Rs. 16 000 was credited in sales account.

Grade - 12 (2022) – 2021 FWC -2- Accounting - I

 Profit after rectifying above errors is,
(1) Rs. 670 000 (2) Rs. 660 000 (3) Rs. 634 000
(4) Rs. 666 000 (5) Rs. 686 000 (……)

08. Total assets and total liabilities of a business on 31 March 2020 are Rs. 520 000 and Rs. 270 000. Decrease
in net assets during the period ending 31 March 2021 is Rs. 20 000. What is equity on 31 March 2021?
(1) Rs. 500 000 (2) Rs. 250 000 (3) Rs. 270 000
(4) Rs. 230 000 (5) Rs. 290 000 (……)

09. A telecommunication company which was started newly on 01.03.2020 receives three-month charge as
advance, when it provides the connections to the customers. Monthly charge is Rs. 300. The number of
customers who obtained the telecommunication connections during the quarter year ending 30.05.2020 is
given below.
March 100
April 80
May 120
The amount to be recognized as income for the quarter year period ending 30.05.2020 and income in
advance on 30.05.2020 are,
Income for the period (Rs.) Income in advance on 30.05.2021 (Rs.)
(1) 174 000 96 000
(2) 96 000 174 000
(3) 60 000 36 000
(4) 120 000 96 000
(5) 120 000 174 000 (……)

10. Debtor control account balance on 31.03.2021 is Rs. 700 000.

Total of debtor list balance on 31.03.2021 is Rs. 721 000.
The following reasons were found for this difference later.
A – Total of sales journal was understated by Rs. 16 000.
B – Bad debt recovered Rs. 5 000 from debtor Ragavan was debited in cash control account and
credited in debtor control account and no any other entry has been made. It has not been recorded
in Ragavan’s account also.
The adjusted debtor control account balance on 31.03.2021 is,
(1) Rs. 716 000 (2) Rs. 721 000 (3) Rs. 705 000
(4) Rs. 689 000 (5) Rs. 726 000 (……)

11. During the time general price level increases, historical cost concept,
(1) does not show any impact on value of assets and profit.
(2) increases the value of assets and decreases profit.
(3) increases the value of assets and profit.
(4) decreases the value of assets and increases profit.
(5) decreases the value of assets and profit. (……)

Grade - 12 (2022) – 2021 FWC -3- Accounting - I

12. The details of income, expenses and assets of a business which was started on 2021.01.01 are given below.
Rs.
Stock at cost on 2021.12.31 6 500
Purchases 50 000
Interest expense 1 500
Sales 74 000
Dividend received 10 000
Operating expenses (including interest Rs. 2 000) 5 000
Additional information:
- Net realizable value of the stock on 2021.12.31 is Rs. 6 000.
Total income and total expense for the period ending 2021.03.31 are,
Total income (Rs.) Total expense (Rs.)
(1) 74 000 55 000
(2) 60 000 84 000
(3) 84 000 58 000
(4) 84 000 50 500
(5) 74 000 58 500

13. Which of the following accounting concepts provide the base to identify trade debtor and trade creditors?
(1) Accrual concept (2) Entity concept (3) Matching concept
(4) Realization concept (5) Prudence concept

14. The following errors and omissions were revealed, when accounting books of a business were
investigated.
- Interest income Rs. 12 000 received a bank deposit was debited in interest expense account.
- Total of discount column of cash receipt journal Rs. 2 000 was credited in discount received account.
The other entry was recorded correctly.
The balance of suspense account generated due to the above errors is,
(1) credit Rs. 28 000 (2) debit Rs. 14 000 (3) debit Rs. 20 000
(4) credit Rs. 14 000 (5) credit Rs. 20 000

15. Total assets and total liabilities on 2021.03.31 are Rs. 240 000 and Rs. 110 000. The transactions
undertaken on 2021.04.01 are given below.
- Goods costing Rs. 20 000 were sold for Rs. 35 000 on credit basis.
- Rs. 80 000 was received in relation to the sales to be made following month.
- March month electricity Rs. 3 000 was paid.
The accounting equation after the above transactions is,
Assets = Equity + Liabilities
(1) 240 000 130 000 110 000
(2) 332 000 145 000 187 000
(3) 332 000 142 000 190 000
(4) 335 000 145 000 190 000
(5) 255 000 145 000 110 000

Grade - 12 (2022) – 2021 FWC -4- Accounting - I

 16. Classify the following accounts of a business.
Accounts Classification of accounts
(1) Allowance for doubtful debt ……………………………
(2) Return inwards ……………………………
(3) Accumulated depreciation ……………………………
(4) Employee loan ……………………………

⚫ Use the following information to answer the questions 17 – 18.

Creditor control reconciliation statement of Sahana PLC prepared on 2020 June 30 is given below.

Trans.No. Details of transactions Rs. ‘000’

Creditor control account balance on 2020.06.30 before adjustment 674
1 Understated discount column of cash payment journal (5)
2 Cheque issued for purchase of a property, plant and equipment but
recorded in creditor column in analysis column in cash payment 25
journal
3 Goods returned by Kumar not recorded in his account 10
Creditor ledger balance on 2020.06.30 (before rectifying) 704

Note: Purchase from Smith Rs. 5 000 was recorded twice in purchase journal.

17. What is adjusted creditor control account balance on 2020.06.30?

…………………………………………………………………………………………………………….

18. Provide the general journal entry to rectify transaction number 2.

…………………………………………………………………………………………………………….
…………………………………………………………………………………………………………….

19. Petty cash control account balance of a business was Rs. 1 320 on 2020 April 01. Total of petty expenses
for March 2020 is Rs. 1 780. Imprest amount was increased by Rs. 500 from 2020 April 01. What is the
amount reimbursed in April?
…………………………………………………………………………………………………………….

⚫ Use the following information to answer the questions 20 – 21.

Cash control account balance on 31.03.2021 is Rs. 32 000 debit. The reasons for the difference between
this cash control account balance and bank statement balance are unpresented cheque Rs. 20 000 and
unrealized cheque Rs. 12 000.
Rs.
Total of cash receipt journal for April 140 000
Total of cash payment journal for April 105 000
The value of cheque realized by bank in April 121 000
The value of cheque presented during April 109 000
Bank service charge for April 1 500

20. What are the values of cheques unpresented and unrealized in April 2021?
…………………………………………………………………………………………………………….
…………………………………………………………………………………………………………….

Grade - 12 (2022) – 2021 FWC -5- Accounting - I

21. What is bank statement balance on 2021 April 30?
…………………………………………………………………………………………………………….
22. Goods sent on sale or return basis at cost Rs. 9 600 were recorded in debtor control account and sales
account. The invoice price was determined by adding 20% profit on sales. These goods have not been sold
and the time duration to return these goods has not yet been over. However, the cost value of these goods
was taken into consideration in stock calculation.
Provide the journal entry to rectify the above errors.
…………………………………………………………………………………………………………….
…………………………………………………………………………………………………………….

⚫ Use the following table to answer the questions 23 – 24.

Income / Expense Accrued on Accrued on Cash Advance on Advance on Transferred
2020.04.01 2021.04.01 received / 2020.04.01 2021.04.01 to profit /
(Rs.) (Rs.) paid (Rs.) (Rs.) (Rs.) loss account
(Rs.)
Rent received 1 500 2 000 ? 500 6 000 12 000
Electricity charge 2 800 - 5 900 100 200 ?

23. What is rent received in cash? ……………………………………………………………………………...

24. What is electricity charge recognized in income statement? ………………………………………………

25. ……………………………………. concept says that the expenses should be recognized for a particular
year where it incurs. Further, ……………………………… concept says that expenses should be
recognized in connection with creation of income. In this point of view, these two concepts conflict each
other.
(25 × 2 = 50 marks)

Grade - 12 (2022) – 2021 FWC -6- Accounting - I

 Part II
Instructions: Answer five questions including the questions No. 1 and 2.
01. Trial balance extracted from the books of Mayavan business on 2021.03.31 is given below.
Details Debit Credit
Rs. ‘000’ Rs. ‘000’
Stock on 2020.04.01 100
Land and building (land Rs. 1000 000) 1 800
Motor vehicle at cost 2 000
Accumulated depreciation on 2020.01.01:
Building 120
Motor vehicle 400
Purchase and sales 880 2 200
Trade receivable and trade payable 240 160
Salary (net) 360
8% Bank loan (received on 2021.01.01) 500
Bank loan interest 8
Cash control account 620
Discount allowed and discount received 6 8
Advertising 12
Insurance 18
Return inwards 100
Carriage inwards 20
Allowance for doubtful debt (2020.04.01) 6
EPF expense 40
Accrued EPF 40
Capital 2 770
6 204 6 204

Additional information:
1. The cost value and the net realizable value of stock on 31.03.2021 are Rs. 140 000 and Rs. 120 000
respectively.
2. Motor vehicles and building should be depreciated at 10% and 5% on straight line method.
3. Rs. 10 000 should be written off from debtors and allowance for doubtful debt should be 5% of
remaining debtor balance.
4. Bank statement for March 2021 was received in April 4. The following were the reasons for the
difference between cash account balance and bank statement balance.
- Bank overdraft interest Rs. 5 000
- Direct deposit Rs. 10 000
5. The contributions of employer and employee for employee provident fund (EPF) are 15% and 10%
respectively. Employer contribution for employee trust fund (ETF) is 3%. Any entry in connection
with employer contribution for EPF has not been recorded. However, employee contribution for EPF
was debited in EPF expense account and credited in accrued EPF account.

Required,
1. Income statement for the year ending 2021.03.31
2. Statement of financial position as at 2021.03.31

Grade - 12 (2022) – 2021 FWC -7- Accounting - I

02. Varathan conducts an electric equipment repairing and spare parts selling business. The balances of his
business on 01.04.2020 are as follows.
Rs.
Repairing equipment 150 000
Spare parts inventory 50 000
Trade receivable 25 000
Bank loan 100 000
Accrued expenses 25 000
Cash 100 000
The transactions undertaken during April 2020 are given below.

Date Transactions Value (Rs.)

2020.04.01 Purchase of repairing equipment in cash 50 000
2020.04.05 Income received on repairing (spare parts used for repairing Rs. 10 000) 50 000
2020.04.10 Purchase of spare parts by cash 30 000
2020.04.12 Cash additionally invested by owner 50 000
2020.04.15 Electricity paid for previous months 1 500
2020.04.18 The spare parts used to repair own equipment of owner 15 000
2020.04.20 Sales of spare parts by cash (cost Rs. 20 000) 25 000
2020.04.25 Accrued repair service income (cost of spare parts used Rs. 20 000) 60 000
2020.04.28 Employee salary for repair work (out of which Rs. 2 000 was paid for 40 000
Varathan’s own equipment repair)
2020.04.30 Monthly bank loan installment paid (including interest Rs. 600) 10 500
2020.04.30 Electricity bill was received.
April – 2020
Account No: 01134446
Balance b/d + Previous month
250 + 1 400 = 1650.00
Paid on 15.04.2020 1500.00
Outstanding balance 150.00
Current month charge 1350.00
Total outstanding 1500.00

Required,
1. Show the impact of the above transactions in the following equation using ‘–‘ to indicate decrease and
‘+’ to indicate increase with values.

Date Repairing Inventory Trade Cash Equity Bank loan Accrued

equipment of spare receivable expense
parts

2. Calculate net profit or loss April 2020 for on net assets basis. (20 marks)

Grade - 12 (2022) – 2021 FWC -8- Accounting - I

03. The trial balance extracted from the books of a business registered for VAT, on 30.06.2020 is given below.

Details Debit Credit

Opening inventory 37 000
Sales 273 600
Debtors 80 000
Creditors 70 000
VAT payable 34 000
Purchase 150 000
Other income 30 000
Discount received 6 000
Property, plant and equipment 400 000
Capital 175 000
Suspense account 78 400
667 000 667 000

The following errors and omissions were revealed, when the accounting books were investigated.
1. Total of discount column of cash receipt Rs. 2 000 has not been posted to the relevant accounts.
2. Sales by cash Rs. 40 000 was recorded in cash receipt journal but recorded in cash received from
debtor column in analysis column.
3. Additional capital invested by owner Rs. 30 000 was recorded in cash receipt journal but recorded in
income column and recognized as other income.
4. Total of VAT column of purchase journal Rs. 1 800 was credited in VAT account.
5. Cheque issued to a creditor Rs. 42 000 after discount Rs. 3 000 was dishonoured by bank. It was
recorded in cash control account only.
6. The balance of property, plant and equipment account Rs. 360 000 was listed as Rs. 400 000.
7. Balance of inventory account was understated by Rs. 20 000.

Required,
1. Journal entries to record the corrections
2. Suspense account
3. Trial balance after rectifying (20 marks)

04. Debtor control account balance of a business on 01.09.2020 is Rs. 230 000. The details extracted from the
prime books of the business on 30 September 2020 are given below.
Rs. ‘000’
Total of sales journal 1 500
Total of return inwards journal 100
Total of discount allowed column 300
Cash received from debtors 1 000
Transactions recorded in general journal:
Bad debt 4
Interest levied on delay payment 5
Set off 200

Grade - 12 (2022) – 2021 FWC -9- Accounting - I

 The debtor control account balance and debtor list balance were not equal to each other on 30.09.2020.
The following errors and omission were revealed later.
1. Bad debt Rs. 4 000 was recorded in personal account of debtor as Rs. 400.
2. Sales journal was incorrectly understated by Rs. 100 000.
3. Credit note forwarded to Nathan Rs. 50 000 was recorded in the relevant journal as Rs. 5 000.
4. Cheque received from a debtor Rs. 20 000 was dishonoured by bank but a new cheque was received
from him instead of that cheque and recorded properly in cash receipt journal. No entry has been
recorded in in connection with the cheque dishonoured.
5. Rs. 10 000 repaid to debtor was recorded in cash payment journal and in other payment column but
not recorded in control accounts.

Required,
1. Debtor control account before adjustment
2. Adjusted debtor control account
3. Journal entries to rectify the errors (20 marks)

05. (a) Vishakan is a retired government officer. He started a furniture selling business in the part of his house
on 01.02.2020. He decided to use the current account he used when he was in service. Monthly pension
fund is transferred to this account. There was bank balance Rs. 400 000 in accordance with a note
book of Vishakan.
The transactions undertaken during February 2020 are given below.

Date Details Value (Rs.)

04.02.2020 Cheque issued for purchase of furniture (cheque no. 10155) 300 000
05.02.2020 Furniture at cost Rs. 50 000 sold 75 000
10.02.2020 Cash received on sales of furniture at cost Rs. 25 000 (cheque no. 0738) 40 000
15.02.2020 Bank loan received for business purpose (interest 12%) 300 000
18.02.2020 Cheque issued for purchase (cheque no 10156) 100 000
19.02.2020 Cheque issued for salary (cheque no 10157) 26 000
26.02.2020 Cheque received on sales of furniture at cost Rs. 100 000 (cheque no.
5368) 135 000

Cash control account

Other receipts 700 000 Purchase 400 000
Other receipts
Sales 175 000 Expenses 26 000
Capital 400 000
c/d 449 000
875 000 875 000 Bank loan 300 000

700 000

Grade - 12 (2022) – 2021 FWC - 10 - Accounting - I

 Bank statement forwarded by bank for February 2020 is given below.

Date Details Debit Credit Balance

01.02.2020 Balance 410 000
02.02.2020 Cheque 10154 10 000 400 000
06.02.2020 Cheque 10155 300 000 100 000
12.02.2020 Cheque 0738 40 000 140 000
15.02.2020 Bank loan 300 000 440 000
20.02.2020 Cheque 10156 100 000 340 000
27.02.2020 Pension 60 000 400 000
28.02.2020 Bank charge 1 000 399 000

Note: Cheque no 10154 was issued for own life insraucne premium of Vishakan in January 2020.

Required,
1. Adjusted cash control account
2. Bank reconciliation statement for February 2020

(b) Complete the following table based on the transactions given above.
Details of transactions Followed or violated Adjustment entries
accounting concept
1. Out of the furniture purchased on
04.02.2020, half is for business. It has not ………………………
been adjusted. ……………………… ………………………
2. Pension received was recognized as ………………………
additional capital of owner. ……………………… ………………………
3. As bank loan interest is not paid, interest has ………………………
not been recognized as expense. ……………………… ………………………

06. Sundaram PLC is a business registered for VAT. The following balances were taken from the statement
of financial position on 31.03.2021.
Rs.
Cash 260 000
Trade payable 80 000
Accrued VAT 40 000
Trade receivable 100 000
Property, plant and equipment 150 000
The following transactions were carried out during April 2021.

Date Transactions Value (Rs.)

04.04.2020 Credit purchase of goods from Mangala PLC 270 000
08.04.2020 Sales of goods by cash 172 800
10.04.2020 Received all receivable from debtors on 31.03.2020 subject to 95 000
discount allowed
15.04.2020 Sales to Senthuran company 216 000
20.04.2020 All amount payable to Mangala PLC was settled including opening -
balance payable Rs. 40 000 subject to discount Rs. 8 000

Grade - 12 (2022) – 2021 FWC - 11 - Accounting - I

 22.04.2020 Purchase of goods by cash 108 000
24.04.2020 All amount receivable from Senthuran company was collected subject
to discount Rs. 12 000 -
25.02.2020 Equipment purchased by cash 162 000
30.02.2020 VAT paid in cash (Inland Revenue Department) 8 000

Note: All purchases and sales (including property, plant and equipment purchase) include 8% VAT.

Required,
1. Cash receipts journal and cash payment journal
2. Sales journal and purchase journal
3. Debtor control account
4. Creditor control account
5. VAT control account
6. Property, plant and equipment account
7. Purchase account and sales account

*****

Grade - 12 (2022) – 2021 FWC - 12 - Accounting - I