Commerce Affairs

Class 11 - Accountancy
Sample Paper - 04 (2023-24)

Maximum Marks: 80
Time Allowed: : 3 hours

General Instructions:

1. This question paper contains 34 questions. All questions are compulsory.

2. This question paper is divided into two parts, Part A and B.
3. Question 1 to 17 and 27 to 29 carries 1 mark each.
4. Questions 18 to 20 and 30 to 32 carries 3 marks each.
5. Questions from 21 to 23 carries 4 marks each.
6. Questions from 24 to 26, 33 and 34 carries 6 marks each.

Part A
1. Cash Memo is a source of document prepared by the seller of the goods for
a) debit
b) credit
c) cash
d) cash and credit
2. Assertion (A): Accounting records only those transactions which can be measured in terms of money.
Reason (R): Transactions and events that are not measurable in terms of money can't be valued in Accounts.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
3. Sundry Creditors Account is a:
a) Liability Account
b) None of these
c) Capital Account
d) Revenue Account
4. If total assets of a business are Rs. 550000 and outside liabilities are Rs.250000 Calculate owners equity
a) Rs.100000
b) Rs.200000
c) Rs.300000
d) Rs.500000

OR

A started business and invests Rs. 50000 on 1st April 2010. On31st March 2011, his assets are Rs.65000 and liabilities
Rs.6000. Find the amount of capital on 31st March 2011 and profit
a) Rs.50000, Rs.12000
b) Rs.65000, Rs.18000
c) Rs.55000, Rs. 15000

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d) Rs.59000, Rs.9000
5. Cash Memo is
a) a journal
b) none of these
c) a source voucher
d) an accounting voucher
6. Management accounting provides valuable services to management in performing:
a) All management functions
b) Controlling functions
c) Coordinating management functions
d) None of these

OR

Which of the following is not a business transaction?

A. Purchase of goods for resale amounted to Rs 50,000
B. Paid salaries and wages amounted to Rs 10,000
C. Paid rent for office premises Rs 5,000
D. Purchased an LCD for personal use
a) Only B
b) Only D
c) Only A
d) Only C
7. When the purpose for which reserve is created is not specified, it is called .
a) General reserve
b) Revenue reserve
c) Specific reserve
d) Capital reserves
8. Drawings Account is a
a) None of these
b) Personal Account
c) Nominal Account
d) Real Account

OR

Goodwill account is a:
a) Nominal Account
b) Real Account
c) None of these
d) Personal Account

Question No. 9 to 10 are based on the given text. Read the text carefully and answer the questions:

A business purchased goods for ₹ 2,00,000 and sold 75% of such goods during accounting year ended 31st March 2020.
The market value of remaining goods was ₹ 43,000. Accountant valued closing stod at cost. According to him,

i. Owner of the business is treated as creditor to the extent of his capital;

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ii. All expenses incurred to earn revenue or a particular period should be charged against that revenue to determine the
net income:
Financial statements are prepared on 31st March every year.
9. A business purchased goods for ₹ 200,000 and sold 75% of such goods during the accounting year ended 31st March,
2020. The market value of the remaining goody was ₹ 43,000 Accountant valued closing stock it cost: Identify the
concept violated in the above situation.
a) Matching
b) Conservatism
c) Business entity
d) Accounting period
10. Under which concept owner of the business is treated as creditor to the extent of his capital.
a) Conservatism
b) Business entity
c) Matching
d) Accounting period
11. How secret reserve can be created
a) All of these
b) By charging capital expenditure to revenue
c) Under valuating stock
d) By making excessive provisions
12. X is a part of the inventory of a firm. X needs further processing for converting into finished products i.e X consists of
partly finished goods or semi-finished goods. Identify X.
a) Inventory of stock-in-trade
b) Inventory of finished goods
c) Inventory of raw material
d) Inventory of work-in-progress
13. The source document for recording entries in the sales return book is generally the .
a) debit note
b) credit note
c) None of these
d) trial balance
14. When cash is withdrawn by proprietor, what is its impact on accounting equation?
a) Increase in assets, increase in capital
b) Decrease in assets, decrease in capital
c) Increase in assets, increase in liabilities
d) Decrease in assets, decrease in liabilities
15. Outstanding expense is:
a) Drawings
b) Asset
c) Liability
d) Bad debts

OR

Cash, goods or assets invested by the proprietor in the business for earning profit is called:
a) Profit
b) None of these

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c) Capital
d) Fixed assets
16. A is prepared when a party is to be given a credit for reasons other than credit purchase.
a) credit note
b) None of these
c) written note
d) debit note
17. Which reserve are created for specific purpose
a) Specific Reserve
b) Dividend equalization fund
c) Capital Reserves
d) Dividend fund
18. Enumerate four advantages of Ledger.

OR

Shri Suresh Gupta purchased a running business on 1st April, 2019 at an agreed value of ₹ 10,00,000. Following are the
assets and liabilities taken over:
Land and Building ₹ 4,00,000; Plant and Machinery ₹ 4,50,000; Furniture and Fixtures ₹ 1,50,000; Stock ₹ 3,50,000;
Sundry Debtors ₹ 3,00,000; Sundry Creditors ₹ 2,50,000; Bills Payable ₹ 1,00,000; Bank Loan ₹ 3,00,000.
Pass Journal entry to record the transactions.
19. Roshan, a chartered accountant earned Rs.12,00,000 during the financial years 2012-2013. Out of which he received
Rs.10,50,000. He incurred an expense of Rs.5,10,000, out of which Rs.1,20,000 are outstanding. He also received his
fees relating to previous year Rs.1,35,000 and also paid Rs.60,000 expenses of last year. Find out Rohan's income for
2012-2013 following the cash basis and accrual basis of accounting.

OR

Describe the status of IFRS in India.

20. Classify the following into (i) Assets (ii) Liabilities (iii) Expenses and (iv) Revenues
Sales, Bank balance, Debtors, Bank Overdraft, Creditors, Salary to the manager, Discount to debtors, Cost of goods sold
21. A bookkeeper extracted the following Trial Balance as on 31st March, 2019:
Heads of Accounts Dr. Balance ₹ Cr. Balance ₹
Furniture 20,000 -
Capital - 2,00,000
Debtors 2,00,000 -
Stock (1st April, 2018) 1,04,000 -
Creditors - 80,000
Trade Expenses 50,000 -
Sales - 8,58,000
Wages 30,000 -
Stock (31st March, 2019) 98,000 -
Machinery - 50,000
Purchases 6,25,000 -

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Wife's loan to the business 50,000 -

Discount Allowed - 4,000
Drawings made by the Proprietor - 45,000
Motor Van 60,000 -
Total 12,37,000 12,37,000

You are required to:

i. State the errors giving reasons.
ii. Redraft the Trial Balance correctly.
22. Determine the missing values of the Cash Book with Bank Column of Yashika the basis of the following transactions:
2017 Particular Amount (Rs)
Sept 1 Cash-in-hand 7,500
Bank Overdraft 3,500
Sept 2 Paid Wages 200
Sept 5 Cash Sales 7,000
Sept 10 Cash Deposited into Bank 4,000
Sept 15 Goods Purchased and Paid by Cheque 2,000
Sept 20 Paid Rent 500
Sept 25 Drew from bank for personal use 400
Sept 30 Salary Paid 1000

Cash Book (Double Column)

Dr. Cr.
Date Cash Bank Date Cash Bank
Particular L.F. Particular L.F.
2009 (Rs) (Rs) 2009 (Rs) (Rs)

Sept By Balance
Sept 1 To Balance b/d 3,500
1 b/d

Sept By Wages
Sept 5 To Sales A/c 7,000 200
2 A/c

Sept By
Sept 10 To 4,000 4,000
10

To Balance By
Sept
Sept 30 c/d (Bank Purchases
15
Overdraft) A/c

Sept By Rent
500
20 A/c

Sept By
400
25

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Sept By Salary 1,000
30 A/c
Sept By Balance
30 c/d

23. From the following particulars prepare a Bank Reconciliation Statement in the books of Mr. K.R. Yadav as on 30th June
2022:-
i. Balance as per Pass Book on 30th June 2022 ₹ 6,000.
ii. Out of total cheques amounting to ₹ 37,500 drawn by Mr. Yadav, Cheques aggregating ₹ 5,000 were encashed in June
2022, Cheques aggregating ₹ 4,000 were encashed in July 2022 and the rest have not been presented at all.
iii. Out of total Cheques amounting to ₹ 12,000 deposited, Cheques aggregating ₹ 7,500 were credited in June 2022,
cheques aggregating ₹ 2,000 were credited in July, 2022 and the rest have not been collected at all.
iv. Bank has charged ₹ 27 as its commission for collecting outstation cheques and has allowed interest ₹ 330 on his bank
balance.
v. Amount wrongly debited by bank ₹ 2,400
vi. A cheque of ₹ 1,200 was entered in the Cash Book in June 2022, but was sent to the Bank in July 2022.
vii. A cheque of ₹ 13,300 paid into the bank was returned dishonoured but no intimation was received from the bank till
June 2022.

OR

On 30th June 2014, the Cash Book of a trader shows a bank overdraft of ₹2,500. Following informations are available:
i. Cheques amounting to ₹14,600 had been paid to the bank, but of these only ₹12,200 were credited in the Pass Book,
up to 30th June, 2014.
ii. He had also issued cheques amounting to ₹10,000, but of which only Rs 3,600 had been presented for payment.
iii. A cheque of ₹500 which he had debited to the bank account was not sent to bank for collection by mistake.
iv. There is a debit in the Pass Book of ₹10 for Bank Charges and ₹50 for interest.
v. A customer directly paid into his bank ₹1,000, but it was not shown in the Cash Book.
vi. Bank has paid insurance premium of ₹400 according to his instructions, but this is not recorded in the Cash Book.

Prepare a Bank Reconciliation Statement.

24. Pass journal entries for the following transactions in the journal of Abhishek Singh.
2023
Abhishek Singh started the business with cash ₹ 1,50,000, Furniture ₹ 10,000
April 1
and Goods ₹ 60,000.

April 4 Sold goods to Parvesh of the list price of ₹ 20,000 at a trade discount of 10%.
April 6 Parvesh returned goods of the list price of ₹ 2,000.
April
Received from Parvesh ₹ 16,000 in full settlement of his account.
10

April
Purchased furniture for ₹ 12,000.
15

April
Purchased goods from Mahadev of the list price of ₹ 50,000 at 12% Trade Discount.
15

April Returned goods to Mahadev of the list price of ₹ 4,000.

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18
April
Cleared the account of Mahadev by paying cash at a discount of 5%.
20

April
Sold goods to Aasha ₹ 20,000 and Seema ₹ 32,000.
21

April Received cash from Aasha ₹ 19,600 in full settlement of her account. Paid insurance premium ₹ 1,500 by
24 cheque.

April
Paid ₹ 2,400 for insurance premium for the proprietor by cheque.
25

April
Purchased goods for ₹ 16,000 for cash at a trade discount of 10% and cash discount of 2%.
26

April
Received full payment from Seema at a discount of 5% in full settlement of his account.
27

April
Paid for advertisement ₹ 2,000, salaries ₹ 8,000 and rent ₹ 1,600.
28

April
Received Commission ₹ 1,000.
30

OR

Following was the position of Mahesh & Co. as on 1st April, 2023:
Cash in Hand ₹ 10,000; Cash at Bank ₹ 16,800; Furniture ₹ 8,000; Stock ₹ 50,000; Debtors - Rishab ₹ 8,000; Raman ₹
12,000; Creditors - Arnab ₹ 4,000; Satish ₹ 5,000.
Following transactions took place during April, 2023:
2023
April 2 Received a cheque from Rishab in full settlement of his account after deducting 5% cash discount.
April 4 Deposited the above cheque into Bank.
April 5 Goods purchased for ₹ 20,000 at 10% trade discount and 5% cash discount. Payment made by cheque.
Received a cheque from Raman for ₹ 3,860 and discount allowed to him ₹ 140.
April 6
Cheque deposited into the bank on the same day.

April 10 Cash paid to Arnab after deducting 2% cash discount.

April 15 Old furniture sold for ₹ 800.
April 16 Sold goods to Ram Parshad of the list price of ₹ 10,000 at a trade discount of 15%.
April 18 Ram Parshad returned goods of the list price of ₹ 1,000.
April 20 Paid for furniture repairs to Bahadur Singh ₹ 100.
April 25 Received a cheque from Ram Parshad after deducting 4% cash discount. Cheque was deposited into bank.
April 28 Bank charged ₹ 50 for ‘Bank Charges’.
April 30 Received Commission ₹ 200.
25. Fill up the missing information in the following rectifying entries:

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JOURNAL ENTRIES

Amount Amount
Date Particulars L.F.
Dr. (₹) Cr. (₹)

(i) Dr.
To
(Purchase book undercast by ₹ 10,000)

(ii) Dr. 50,000

To 50,000
(Wages paid for the construction of office wrongly debited to wages A/c, now
rectified)

(iii) Dr.
To
To
(Credit sales to Gopal for ₹ 40,000 wrongly passed through purchase book,
now rectified)

(iv) Dr.
To
(Goods purchased for ₹ 30,000 posted to purchase account as ₹ 3,000, now
rectified)

(v) Dr. 25,000

To Bad Debts Recovered A/c 25,000
(Bad-debts recovered, wrongly posted to the credit of Jagdish Kumar, now
rectified)

(vi) Dr.
To
(Rectification of credit purchase of ₹ 32,800 from Danish Choudhary
recorded in the books as ₹ 38,200)

(vii) Dr.
To
(Goods Costing ₹ 10,000 distributed as free samples omitted to be recorded,

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now recorded)

(viii) Dr.
To
(Goods returned by Manisha Traders for ₹ 7,500 omitted to be recorded, now
recorded)

OR

During the course of an accounting year, an Accountant found a difference in the trial balance. He puts this difference in
a newly opened suspense account. Subsequently, he located the following errors in his books of account:
i. Goods purchased from Satyam for ₹ 10,000, but entered in the sales book.
ii. Received a bill receivable for ₹ 18,000 from Gopal, but recorded in bills payable book.
iii. An item of ₹ 4,000 in respect of purchases returns, wrongly debited to purchases account.
iv. An item of ₹ 2,000 relating to the pre-paid salary account omitted to be brought forward.
v. Paid ₹ 1,000 on account of repair of furniture, but wrongly debited to furniture account.

Pass journal entries to rectify the above-mentioned errors and prepare suspense account assuming that no error remained
undetected.
26. On 1st April, 2020, Walter Oil Ltd. purchased a machinery for ₹ 8,00,000. On 1st January, 2023, a part of this machine
purchased on 1st April, 2020 for ₹ 1,00,000 was sold for ₹ 44,000 and on the same date, a new machine was purchased
for ₹ 1,20,000. Depreciation was provided @10% p.a. on Original Cost of the machinery and accounts are closed on 31st
March every year.
Show the Machinery Account and Machinery Disposal Account assuming that:
i. Provision for Depreciation Account is not maintained, and
ii. Provision for Depreciation Account is maintained.

OR

On 1st April 2015, Shivam Enterprise purchased second-hand machinery for ₹52,000 and spent ₹2,000 on cartage,
₹3,000 on unloading, ₹2,000 on installation and ₹1,000 as the brokerage of the middle man. It was estimated that the
machinery will have a scrap value of ₹6,000 at the end of its useful life, which is 10 years. On 31st December 2015,
repairs and renewals amounted to ₹2,500 were paid. On 1st Octorber 2017, this machine was sold for ₹30,600 and an
amount of ₹600 was paid as commission to an agent. Calculate the amount of annual depredation and rate of
depredation. Also prepare the machinery Account for first 3 years, assuming that the firm follows a financial year for
accounting.
Part B
27. When closing capital is greater than opening capital it means:
a) Profit
b) No profit, no Loss
c) Loss
d) Profit if fresh capital is not introduced

OR

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Calculate profit if closing capital is Rs.14,250, additional capital is Rs.200, opening capital is Rs.11,300 and drawings @
Rs.100 per month
a) Rs.5,950
b) Rs.6,950
c) Rs.3,950
d) Rs.1,950
28. In the event of an abnormal loss (say, loss of goods by fire), the amount of loss debited is:
a) Purchase Cost of the goods
b) As per the firm's decision
c) None of these
d) Purchase Cost of the goodsplus GST Paid
29. The net profit of a firm before charging the manager’s commission is Rs 21,000. If the manager is entitled to a 5%
commission after charging such commission, how many managers will get a commission?
a) Rs 1,000
b) Rs 2,100
c) Rs 2,000
d) Rs 1,050

OR

Accrued Income, if given outside the Trial Balance is shown in:

a) Profit and Loss Account
b) Balance Sheet
c) Trading Account
d) P & L Account and Balance Sheet
30. Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case:
i. A sum of ₹ 32,000 has been spent on a machine as follows:
a. ₹ 20,000 for addition to double the output,
b. ₹ 5,000 for repairs necessitated by negligence and
c. ₹ 7,000 for replacement of worn-out parts.
ii. Total expenditure on a cinema building during the year was ₹ 2,00,000 out of which 20% related to repairs and 80%
represented improvements and additions.
iii. Compensation paid to a retrenched employee for the loss of employment.
iv. Second-hand furniture worth ₹ 40,000 was purchased and repairing of this furniture cost ₹ 15,000. The furniture was
installed by own workmen-wages for this being ₹ 5,000.
v. A person was injured by the motor car of the company. ₹ 10,000 was paid to him by way of compensation.
vi. Advertisement expenditure on special advertisement drives.
31. From the following details, calculate Opening Inventory:
Closing Inventory ₹ 60,000; Total Revenue from Operations ₹ 5,00,000 (including cash revenue from operations ₹
1,00,000); Total purchases ₹ 3,00,000 (including credit purchases ₹ 60,000). Goods are sold at a profit of 25% on cost.
32. Dilip, the proprietor of Ultra Sales, had written off ₹ 20,000 receivable from Jatin as bad debts, he was unable to pay. In
the current year, Dilip received ₹ 5,000 from Jatin. Pass Journal entry and show how it will be shown in the Profit and
Loss Account.
33. Gokul Das maintains incomplete records of his business. He wants to know the result of his business on 31st March,
2013 and for that following information are available
items 1st April, 2012 (Rs) 31st March, 2013(Rs)

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Cash in hand 1,50,000 1,75,000
Bank balance 7,50,000 6,00,000
Furniture 1,00,000 1,00,000
Stock 5,00,000 4,50,000
Creditors 3,50,000 4,00,000
Debtors 2,50,000 3,00,000

Personal expenses of Gokul Das paid from business account amounted to Rs 4,80,000 and goods worth Rs 20,000 were
withdrawn by him for personal use. He sold ornaments of his wife for Rs 3,50,000 and invested that amount into the
business. Calculate his profit or loss.

OR

Mrs. Vandana runs a small printing firm. She was maintaining only some records, which she thought, were sufficient to
run the business. On April 01, 2016, available information from her records indicated that she had the following assets
and liabilities: Printing Press ₹ 5,00,000, Buildings ₹ 2,00,000, Stock ₹ 50,000, Cash at bank ₹ 65,600, Cash in hand ₹
7,980, Dues from customers ₹ 20,350, Dues to creditors ₹ 75,340 and Outstanding wages ₹ 5,000. She withdrew ₹ 8,000
every month for meeting her personal expenses. She had also introduced ₹ 15,000 during the year as additional capital.
On March 31, 2017, her position was as follows:
Press ₹ 5,25,000, Buildings ₹ 2,00,000, Stock ₹ 55,000, Cash at bank ₹ 40,380, Cash in hand ₹ 15,340, Dues from
customers ₹ 17,210, Dues to creditors ₹ 65,680.
Calculate the profit made by Mrs. Vandana during the year using the statement of affairs method.
34. Prepare Trading and Profit and Loss Account and Balance Sheet from the following Trial Balance and information as on
31st March, 2023:
Name of Account Dr. (₹) Cr. (₹)
Drawings and Capital 15,000 3,25,000
Plant and Machinery 2,00,000
Motor Vehicle 1,50,000
Return Inward and Outward 25,000 37,000

Stock on 1st April, 2022 82,000

Purchases and Sales 4,40,000 6,75,000

Carriage Inward 6,000
Trade Expenses 2,500
Bad Debts 4,250
Provision for Doubtful Debts 6,000
Commission 4,000
Rent, Rates & Taxes 12,000
Salaries and Wages 24,000
Debtors and Creditors 70,000 55,000
Fuel and Water 4,750

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Cash in Hand 16,500

Cash at Bank 50,000
Total 11,02,000 11,02,000

Adjustments:
i. Closing Stock was valued at ₹ 1,12,500.
ii. Commission include ₹ 1,200 being commission received in advance.
iii. Salaries and wages is outstanding for the month of Feb. & March, 2023.
iv. Depreciate Plant & Machinery by 15% and Motor Vehicle by 20%.
v. Write off ₹ 500 as further Bad Debts and maintain provision for doubtful debts at 1% on debtors.

OR

From the following balances extracted from the books of Karan and the additional information, prepare the trading and
profit and loss account for the year ended 31st March, 2013 and also show the balance sheet as on that date.

Debit Credit
Name of Accounts
Amount Amount
(Rs. in 000's) (Rs. in 000's)
Stock on 1st April 2012 625
Purchases and sales 903 1,372
Returns 22 13
Capital A/c 300
Drawings 45
Land and Buildings 300
Furniture and fittings 80
Trade debtors and trade creditors 250 450
Cash in hand 35
Investments 100
Interest 5
Commission 30
Direct expenses 75
Postage, stationery, and telephone 25
Fire insurance premium 20
Salaries 90
Bank overdraft 400

2,570 2,570
====== ======

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Additional Information
i. Closing stock on 31st March 2013 is valued at Rs 6,50,000. Goods worth Rs 5,000 are reported to have been taken
away by the proprietor for his personal use at home during the year.
ii. Interest on investments Rs 500 is yet to be received while Rs 10,000 of the commission received is yet to be earned.
iii. Rs 5,000 of the fire insurance premium paid is in respect of the quarter ending 30th June 2013.
iv. Salaries Rs 10,000 for March 2013 and bank overdraft interest estimated at Rs 20,000 are yet to be recorded as
outstanding charges.
v. Depreciation is to be provided on land and buildings @ 5% per annum and on furniture and fittings @ 10% per
annum.
vi. Make a provision for doubtful debts @ 5% of trade debtors

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Class 11 - Accountancy
Sample Paper - 04 (2023-24)

Solution

Part A
1. (c) cash
Explanation: When a seller sell some goods on cash he provides a receipt of sale that receipt or source document on the
basis of which we record transaction in accounts is called cash memo.
2. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
3. (a) Liability Account
Explanation: Sundry Creditors are the trade payables who come under the current liability.
4. (c) Rs.300000
Explanation: The basic accounting equation is :-
Assets = capital+ Liabilities
550000= Capital+ 250000
Capital = 550000-250000
Capital= 300000

OR

(d) Rs.59000, Rs.9000

Explanation: At year end,
Closing Assets= Closing Capital+ Closing Liabilities
65000= Closing Capital+6000
Closing Capital= 65000-6000
Closing Capital = 59000
Now, Profit = closing capital+ Drawings -opening capital- addtional capital
Since there is no additional capital and drawing so,
Profit= 59000-50000
Profit = 9000
5. (c) a source voucher
Explanation: In case of a cash sale, the seller prepares the cash memo and hands it over to the purchaser. It acts as a
proof for all-cash sales made by a business. On the other hand, it acts as proof for cash purchases made by a person or
business.
6. (a) All management functions
Explanation: Management accounting provides valuable services to management in performing all management
functions.

OR

(b) Only D
Explanation: Purchased an LCD for personal use transactions from the business is not a part of business transactions.
7. (a) General reserve
Explanation: General reserve

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8. (b) Personal Account
Explanation: Drawings Account is a Personal Account because it is based on a person.

OR

(b) Real Account

Explanation: Goodwill account is a Real Account, goodwill is an intangible asset and all assets are real.
9. (b) Conservatism
Explanation: Conservatism
10. (b) Business entity
Explanation: Business entity
11. (a) All of these
Explanation: Secret Reserve :- A secret reserve is one whose existence is not disclosed in the balance sheet. It can be
created by all the methods mentioned above by suppressing sales, by charging over depreciation etc. It is created without
showing to public.
12. (d) Inventory of work-in-progress
Explanation: Inventory of work-in-progress
13. (b) credit note
Explanation: As we have to inform the customer that his account has been credited.
14. (b) Decrease in assets, decrease in capital
Explanation: As drawings are made by the proprietor, it will reduce the capital as well as cash (asset).
15. (c) Liability
Explanation: As outstanding expenses need to be paid in future, though they are current expenses, so it becomes
liability of the business to pay the expenses in future. outstanding means due but not paid i.e. which is to be paid in
future. It is payable in future.

OR

(c) Capital
Explanation: Cash, goods or assets invested by the proprietor in the business for earning profit is called capital.
16. (a) credit note
Explanation: credit note is issued by seller of goods to purchaser of goods informing that his account has been credited
to the extent of goods received back.
17. (a) Specific Reserve
Explanation: Specific reserves are created to meet specific purposes and contingencies. They can be utilised only for
that purpose. Example: Dividend equalisation reserve, Capital redemption reserve .
18. Advantages of Ledger are as follows:
i. All accounts are opened on separate pages in this book. Hence, all the transactions pertaining to an account are
collected at one place in the ledger.
ii. A trial balance can be prepared with the help of ledger balances which helps in ascertaining the arithmetical accuracy
of the accounts.
iii. Trading and profit and loss account can only be prepared with the help of ledger balances.
iv. A balance sheet can also be prepared with the help of ledger balances which depict the true financial position of the
business.

OR

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In the Books of Shri Suresh Gupta
JOURNAL PROPER

Date Particulars L.F. Dr. (₹) Cr. (₹)

2019
Land and Building A/c Dr. 400000
April 1
Plant and Machinery A/c Dr. 450000
Furniture and Fixtures A/c Dr. 150000
Stock A/c Dr. 350000
Sundry Debtors A/c Dr. 300000
To Sundry Creditors A/c 250000
To Bills Payable A/c 100000
To Bank Loan A/c 300000
To Capital A/c (b/f) 1000000
(Being the different assets and liabilities taken over against a purchase
consideration of ₹ 1000000)
Opening entry is passed in journal proper.
19. Cash basis refers to a major accounting method that recognizes revenues and expenses at the time cash is received or
paid out.
Cash Basis of Accounting =10,50,000+1,35,000-3,90,000-60,000
=Rs.7,35,000
Under the accrual basis of accounting (or accrual method of accounting), revenues are reported on the income statement
when they are earned. When the revenues are earned but cash is not received, the asset accounts receivable will be
recorded.
Accrual Basis of Accounting=12,00,000-5,10,000
=Rs.6,90,000

OR

In India, the convergence of IFRS with its domestic accounting standards will be made in a phased manner starting from
1st April 2011 as under: Following companies are required to converge with IFRS from April 2011 in the first phase :
i. Companies not listed but have a net worth of ₹1,000 crores or more.
According to the Institute of Chartered Accountants of India (ICAI), IFRS was to be implemented from April 2011
but was put on hold and is under review. The expected date of implementation is yet to be declared.
ii. Companies listed in India or outside.
20. Classification is as follows:-
i. Assets: Bank balance, Debtors
ii. Liabilities: Bank overdraft, creditors
iii. Expenses: Salary to Manager, Discount to debtors, cost of goods sold
iv. Revenues: Sales
21. i. a. Stock on 31st March, 2019, will not appear in the Trial Balance because it represents a part of the goods
purchased but not yet sold. As the total purchases have been included in the Trial Balance, there is no need for
including the Closing Stock again.

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b. Machinery is an asset and thus will appear in the debit column.
c. The wife’s loan to the business is a liability. It will appear in the credit column.
d. Discount allowed, being an expense, will appear in the debit column.
e. Drawings made by the proprietor is a decrease of capital (i.e., a decrease of proprietor’s claim from the business).
It will appear in the debit column.
ii. TRIAL BALANCE as on 31st March 2019
Heads of Accounts LF. Dr. Balance ₹ Cr. Balance ₹
Furniture 20,000 -
Capital - 2,00,000
Debtors 2,00,000 -
Stock (1st April, 2018) 1,04,000 -
Creditors - 80,000
Trade Expenses 50,000 -
Sales - 8,58,000
Wages 30,000 -
Machinery 50,000 -
Purchases 6,25,000 -
Wife's loan to the business - 50,000
Discount Allowed 4,000 -
Drawings made by the
45,000 -
Proprietor

Motor Van 60,000 -

Total 11,88,000 11,88,000
Note: If total of trial balance does not match then balance is done by opening suspense account if prepared trial balance
is accurate and correct.

22. Cash Book (Double Column)

Dr. Cr.
Date Cash Bank Date Cash Bank
Particular L.F. Particular L.F.
2009 (Rs) (Rs) 2009 (Rs) (Rs)

By Balance b/d ( Bank

Sept 1 To Balance b/d 7,500 Sept 1 3,500
Overdraft )

Sept 5 To Sales Account 7,000 Sept 2 By Wages Account 200

Sept 10 To Cash A/c (C) 4,000 Sept 10 By Bank A/c (C) 4,000
To Balance c/d (Bank
Sept 30 1,900 Sept 15 By Purchases A/c 2,000
Overdraft)

Sept 20 By Rent A/c 500

Sept 25 By Drawings A/c 400

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Sept 30 By Salary A/c 1,000
Sept 30 By Balance c/d 8,800
14,500 5,900 14,500 5,900

23. BANK RECONCILIATION STATEMENT

as on 30th June 2022

Particulars Plus Items Minus Items

₹ ₹

(i) Balance as per Pass Book (Cr.) (Favourable)(1) 6,000

(ii) Cheques drawn but not presented for payment upto June 2022 (₹ 37,500 - ₹ 5,000) 32,500
(iii) Cheques deposited but not credited upto June 2022 (₹ 12,000 - ₹ 7,500) 4,500
(iv) Commission charged by bank 27
Interest allowed by Bank 330
(v) Amount wrongly debited by bank 2,400
(vi) Cheque entered in the Cash Book but not yet sent to bank 1,200
(vii) Cheque returned dishonoured 13,300
27,427 32,830
Overdraft (Cr.) balance as per Cash Book 5,403
Note: (1) In the above illustration, it has not been clearly stated whether the passbook balance given at the start is a debit
or a credit balance. Hence, it will be treated as a credit (Favourable) balance.
Since the balance as per pass book is given, all the errors are rectified in pass book.

OR

Bank Reconciliation Statement

S.No. Particulars Addition(₹) Subtract(₹)

Credit Balance (Overdraft) as per Cash Book 2,500
Add:
Cheques issued but not presented (10,000 - 3,600) 6,400
Amount directly deposited by customer 1,000
Less:
Cheque paid into bank but not credited(14,600 - 12,200) 2,400
Bank charges 10
Bank interest 50
Cheque not sent to bank for collection 500
Insurance premium paid by bank as per standing instructions 400
Credit Balance as per Pass Book 1,540

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Commerce Affairs
7,400 7,400
Working Note:-
Cheques issued but not presented = ₹10,000 - ₹3,600 = ₹6,400
Cheque paid into bank but not credited ₹14,600 - ₹12,200 = ₹2,400
Point of Knowledge:-
A bank reconciliation statement locates the error or omissions that may have been committed either on the part of the
bank. The error so detected can be rectified accordingly.
Since balance as per cash book is given all the errors are rectified only in cash book.

24. Journal of Abhishek Singh

Date Particulars L.F. Amount Dr. Amount Cr.

2023 ₹ ₹
April 1 Cash A/c Dr. 1,50,000
Furniture A/c Dr. 10,000
Purchases A/c (or Stock A/c) Dr. 60,000
To Capital A/c
2,20,000
(Business started with cash, furniture and goods)

April 4 Parvesh A/c (20,000 × 90%) Dr. 18,000

To Sales A/c
(Goods of the list price of ₹ 20,000 sold at 10% 18,000
discount)

April 6 Sales Returns A/c Dr. 1,800

To Parvesh A/c (2,000 × 90%)
1,800
(Goods returned for ₹ 2,000 less 10% trade discount)

April 10 Cash A/c Dr. 16,000

Discount Allowed A/c (Note 1) (16,200-16,000 ) Dr. 200
To Parvesh A/c (18,000-1,800)
16,200
(Cash received from Parvesh and discount allowed to him)

April 15 Furniture A/c Dr. 12,000

To Cash A/c
12,000
(Furniture purchased for cash)

April 15 Purchases A/c Dr. 44,000

To Mahadev A/c (50,000 × 88%) 44,000
(Goods of the list price of ₹ 50,000 purchased at 12% trade discount)

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Commerce Affairs

April 18 Mahadev A/c (4,000 × 88%) Dr. 3,520

To Purchases Returns A/c
3,520
(Goods returned for ₹ 4,000 less 12% trade discount)

April 20 Mahadev A/c (44,000-3,520) Dr. 40,480

To Cash A/c (40,480-2,024) 38,456
To Discount Received A/c (40,480 × 5%)
2,024
(Cash paid to Mahadev and discount received)

April 21 Aasha A/c Dr. 20,000

Seema A/c Dr. 32,000
To Sales
52,000
(Goods sold on credit)

April 24 Cash A/c Dr. 19,600

Discount Allowed A/c Dr. 400
To Aasha A/c
20,000
(Cash received and discount allowed)

April 24 Insurance Expenses A/c Dr. 1,500

To Bank A/c
1,500
(Insurance premium paid)

April 25 Drawings A/c Dr. 2,400

To Bank A/c
2,400
(Paid for insurance premium for proprietor)

April 26 Purchases A/c (16,000 × 90%) Dr. 14,400

To Cash A/c (14,400-288) 14,112
To Discount Received A/c (14,400 × 2%)
288
(Goods purchased at 10% trade discount and 2% cash discount)

April 27 Cash A/c (32,000-1,600) Dr. 30,400

Discount Allowed A/c (32,000 × 5%) Dr. 1,600
To Seema A/c
32,000
(Cash received and discount allowed)

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Commerce Affairs

April 28 Advertisement Expenses A/c Dr. 2,000

Salaries A/c Dr. 8,000
Rent A/c Dr. 1,600
To Cash A/c
11,600
(Expenses paid)

April 30 Cash A/c Dr. 1,000

To Commission Received A/c
1,000
(Commission received)

Total ₹ 4,90,900 4,90,900

Note:

i. Discount allowed to Parvesh is calculated as follows: ₹

Sales 18,000
Less: Sales Returns (1,800)
Amount due from Parvesh 16,200
Amount received from him in full settlement 16,000
Discount allowed 200

ii. Discount received from Mahadev is calculated as follows: ₹

Purchases 44,000
Less: Purchases Returns (3,520)
Net amount due to Mahadev 40,480
Discount received from him: 40,480 × 5
2,024
100
Amount paid to him in frill settlement 38,456

iii. Invoice price of goods purchased 16,000

Less: Trade Discount @ 10% (1,600)
14,400
Less: Cash Discount @ 2% (288)
14,112

OR

Journal Books of Mahesh & Co.

Date 2023 Particulars L.F. Debit ₹ Credit ₹

April 1 Cash in Hand A/c Dr. 10,000
Cash at Bank A/c Dr. 16,800

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Commerce Affairs
Furniture A/c Dr. 8,000
Stock A/c Dr. 50,000
Rishab's A/c Dr. 8,000
Raman's A/c Dr. 12,000
To Arnab's A/c 4,000
To Satish's A/c 5,000
To Capital A/c
95,800
(Previous year's balances brought forward)

2 Cheques-in-Hand A/c Dr. 7,600

Discount Allowed A/c Dr. 400
To Rishab's A/c (7,600+400)
8,000
(Cheque received from Rishab in full settlement)

4 Bank A/c Dr. 7,600

To Cheques-in-Hand A/c
7,600
(Cheques-in-hand sent to bank)

5 Purchases A/c Dr. 18,000

To Bank A/c 17,100
To Discount Received A/c
900
(Purchased goods for cash and received discount)

6 Bank A/c Dr. 3,860

Discount Allowed A/c Dr. 140
To Raman's A/c (3,860+140)
4,000
(Received cheque from Raman after receiving discount)

10 Arnab's A/c Dr. 4,000

To Cash A/c 3,920
To Discount Received A/c
80
(Paid full settlement cash to Arnab)

15 Cash A/c Dr. 800

To Furniture A/c
800
(Sold Furniture for cash)

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Commerce Affairs

16 Ram Parshad's A/c Dr. 8,500

To Sales A/c
8,500
(Sold goods to Ram Parshad on credit)

18 Sales Return A/c Dr. 850

To Ram Parshad's A/c
850
(Returned goods by Ram Parshad)

20 Repairs A/c Dr. 100

To Cash A/c
100
(Paid cash for furniture repair)

25 Bank A/c Dr. 7,344

Discount Allowed A/c Dr. 306
To Ram Parshad's A/c
7,650
(Payment received in Full settlement cheque)

28 Bank Charges A/c Dr. 50

To Bank A/c
50
(Bank charges recorded)

30 Cash A/c Dr. 200

To Commission A/c
200
(Received commission in cash)
Total 1,64,550 1,64,550

25. RECTIFYING JOURNAL ENTRIES

Amount Amount
S.No. Particulars L.F.
Dr. (₹) Cr. (₹)

(i) Purchases A/c Dr. 10,000

To Suspense A/c 10,000
(Purchase book undercast by ₹ 10,000 now rectified)

(ii) Building A/c Dr. 50,000

To Wages A/c 50,000
(Wages paid for construction of office wrongly debited to wages A/c, now
rectified)

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Commerce Affairs

(iii) Gopal A/c Dr. 80,000

To Purchases A/c 40,000
To Sales A/c 40,000
(Credit sales to Gopal for ₹ 40,000 wrongly passed through purchase book, now
rectified)

(iv) Purchase A/c Dr. 27,000

To Suspense A/c 27,000
(Goods purchased for ₹ 30,000 posted to purchase account as ₹ 3,000, now
rectified)

(v) Jagdish Kumar A/c Dr. 25,000

To Bad Debts Recovered A/c 25,000
(Bad-debts recovered, wrongly posted to the credit of Jagdish Kumar, now
rectified)

(vi) Danish Choudhary A/c Dr. 5,400

To Purchases A/c 5,400
(Rectification of credit purchase of ₹ 32,800 from Danish Choudhary recorded
in the books as ₹ 38,200 now rectified)

(vii) Free Samples distribution A/c (or Advertisement Exp. A/c) Dr. 10,000
To Purchases A/c 10,000
(Goods Costing ₹ 10,000 distributed as free samples omitted to be recorded,
now recorded and rectified)

(viii) Sales Return A/c Dr. 7,500

To Manisha Traders A/c 7,500
(Goods returned by Manisha Traders for ₹ 7,500 omitted to be recorded, now
recorded and rectified)

OR

Rectifying Journal Entries

Debit Amount Credit Amount

S.No. Particulars L.F.
(₹) (₹)

(i) Purchases A/c Dr. 10,000

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Commerce Affairs

Sales A/c Dr. 10,000

To Satyam A/c 20,000

(Purchases from Satyam entered in Sales Book now rectified)

(ii) Bills Receivable A/c Dr. 18,000

Bills Payable A/c Dr. 18,000

To Gopal A/c (Bills receivable recorded as bills payable now 36,000

rectified)

(iii) Suspense A/c Dr. 8,000

To Purchases A/c 4,000
To Purchases Returns A/c 4,000
(Purchases return wrongly debited to Purchases Account now
rectified)

(iv) Prepaid Salaries A/c Dr. 2,000

To Suspense A/c 2,000
(Prepaid salary omitted to be brought forward now rectified)

(v) Repairs A/c Dr. 1,000

To Furniture A/c 1,000
(Repair of furniture debited to Furniture Account now rectified)

Suspense Account

Dr. Cr.
Particulars Amount (₹) Particulars Amount (₹)
To Purchases A/c 4,000 By Difference as per Trial Balance (Balancing Figure) 6,000
To Purchases Return A/c 4,000 By Prepaid Salaries A/c 2,000
8,000 8,000
26. i. When ‘Provision for Depreciation Account’ is not maintained:

MACHINERY ACCOUNT

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(₹) (₹)

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Commerce Affairs
2020 April To Bank A/c 8,00,000 2021 Mar. 31 By Depreciation A/c 80,000
1
Mar. 31 By Balance c/d 7,20,000
8,00,000 8,00,000
2021 April To Balance 2022 Mar.
7,20,000 By Depreciation A/c 80,000
1 b/d 31
Mar. 31 By Balance c/d 6,40,000
7,20,000 7,20,000
2022 April To Balance By Depreciation A/c (On ₹1,00,000 for 9
6,40,000 2023 Jan 1 7,500
1 b/d months)

2023 Jan.1 To Bank A/c 1,20,000 Jan. 1 By Machinery disposal A/c 72,500(1)

Mar. 31 By Depreciation A/c 73,000(2)

Mar. 31 By Balance c/d 6,07,000
7,60,000 7,60,000

MACHINERY DISPOSAL ACCOUNT

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(₹) (₹)

2023
2023 Jan. 1 To Machinery A/c 72,500 By Bank A/c 44,000
Jan.1
Jan. 1 By Statement of Profit and Loss (Loss on sale) 28,500
72,500 72,500
ii. When ‘Provision for Depreciation Account’ is maintained:

MACHINERY ACCOUNT

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(₹) (₹)

2020 April 1 To Bank A/c 8,00,000 2021 Mar. 31 By Balance c/d 8,00,000
2021 April 1 To Balance b/d 8,00,000 2022 Mar. 31 By Balance c/d 8,00,000
2022 April 1 To Balance b/d 8,00,000 2023 Jan. 1 By Machinery Disposal A/c 1,00,000
2023 Jan. 1 To Bank A/c 1,20,000 Mar. 31 By Balance c/d 8,20,000
9,20,000 9,20,000

PROVISION FOR DEPRECIATION ACCOUNT

Dr. Cr.

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Commerce Affairs
Date Particulars Amount Date Particulars Amount
(₹) (₹)
2021 Mar. 31 To Balance c/d 80,000 2021 Mar. 31 By Depreciation A/c 80,000
2022 Mar. 31 To Balance c/d 1,60,000 2021 April 1 By Balance b/d 80,000
2022 Mar. 31 By Depreciation A/c 80,000
1,60,000 1,60,000
2023 Jan. 1 To Machinery Disposal A/c 27,500 2022 April 1 By Balance b/d 1,60,000
Mar. 31 To Balance c/d 2,13,000 2023 Jan. 1 By Depreciation A/c 7,500
Mar. 31 By Depreciation A/c 73,000
2,40,500 2,40,500

MACHINERY DISPOSAL ACCOUNT

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
₹ ₹
2023 Jan. 1 To Machinery A/c 1,00,000 2023 Jan. 1 By Provision for Depreciation A/c 27,500
Jan. 1 By Bank A/c 44,000
Jan. 1 By Statement of Profit & Loss (Loss on sale) 28,500
1,00,000 1,00,000
Working Notes:
(1) Calculation of loss on sale of machinery: ₹

Cost as on 1st April, 2020 1,00,000

Less: Depreciation @ 10% p.a. for 2 years 9 months (27,500)

Book Value as on 1st Jan. 2023 72,500

Less: Sale proceeds (44,000)

Loss on sale 28,500

(2) Depreciation on unsold machinery for the year 2022-23:

On old machinery of ₹ 7,00,000 for 1 year 70,000
On new machinery of ₹ 1,20,000 for 3 months 3,000
73,000

OR

( Cost + Expensens )− Scrap Value

i. Amount of Depreciation = = Life
[52,000+(2,000+3,000+2,000+1,000)]−6,000 54,000
= 10
= 10
= ₹5,400 Per annum

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Commerce Affairs
Amount of Depreciation
ii. Rate of Depreciation =
Total Cost × 100
5,400
= 60,000
× 100 = 9%

MACHINERY ACCOUNT

Dr. Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2015-16 2015-16
Apr. 1 To Bank A/c (Cost) 52,000 Mar. 31 By Depreciation A/c 5,400
To Bank A/c (Expenses) 8,000 By Balance c/d 54,600
Total 60,000 Total 60,000
2016-17 2016-17
Apr. 1 To Balance b/d 54,600 31/3/17 By Depreciation A/c 5,400
By Balance c/d 49,200
Total 54,600 Total 54,600
2017-18 2017-18
1/4/17 To Balance b/d 49,200 1/10/17 By Depreciation A/c 2,700
By Bank A/c (Sale)
30,000
[30,600-600]

By Profit & Loss A/c [Loss

16,500
on Sale]
Total 49,200 Total 49,200
Expense on repair and renewal of machinery on Dec 3, 2015, is not entered in machinery account as it is done after the
installation of the machine not on or before the installation. So it is not capitalised.
Part B
27. (d) Profit if fresh capital is not introduced
Explanation: If the closing capital of a company is greater than the opening capital of it then it denotes that the company
has some profit. If the opening capital of a company is greater than the closing capital of it or if the closing capital is less
than the opening capital it means the company has suffered some loss. In this case, there is profit.

OR

(c) Rs.3,950
Explanation: Calculation of profit:
closing capital 14,250
less: additional capital 200
less: opening capital 11,300
add: drawings 1,200
profit during the year 3,950

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28. (d) Purchase Cost of the goodsplus GST Paid
Explanation: Amount of loss is Purchase Cost of the goods plus GST Paid.
29. (a) Rs 1,000
Explanation: If Net Profit is Rs. 100
then, Commission payable = Rs. 5
Thus Net profit after charging the commission = 100 + 5 = Rs.105
Here, Rs 21,000 is equal to 105%
Then, 5% = 21,000 × 5
105
= Rs 1,000

OR

(d) P & L Account and Balance Sheet

Explanation: Accrued Income is treated as an asset for the company, hence it will be shown in Asset Side in the Balance
Sheet. and added to the income in the Profit and Loss Account.
30. Classification of expenses is as follows:
i. Here ₹ 20,000 is capital expenditure as it will increase the output of the firm. ₹ 5,000 is revenue expenditure Repairs
as it is done on regular basis.
ii. Revenue Expenditure repairs of ₹ 40,000 are done on regular basis and ₹ 1,60,000 is done on improvements which
will give future benefits, therefore its capital expenditure.
iii. Revenue expenditure, Compensation and remuneration to employees are done in the normal course of business.
iv. Capital expenditure, Any expenses incurred on bringing the asset into operation will be capitalized.
v. Revenue expenditure, Compensation and remuneration to employees are done in the normal course of business.
vi. Deferred revenue expenditure benefits will be derived over a number of years.
31. Calculation of Cost of Revenue from Operations:
Let Cost of Revenue from Operations ₹ 100
Gross Profit ₹ 25
Revenue from Operations ₹ 125

If Revenue from Operations is ₹ 125, then Cost of Revenue from Operations is = ₹ 100
If Revenue from Operations is ₹ 5,00,000, then Cost of Revenue from Operations
is = 100
125
× 5, 00, 000 = ₹ 4,00,000
Cost of Revenue from Operations = Purchase + Opening Inventory - Closing Inventory
₹ 4,00,000 = ₹ 3,00,000 + Opening Inventory - ₹ 60,000
₹ 4,00,000 = ₹ 2,40,000 + Opening Inventory
Opening Inventory = ₹ 1,60,000

32. IN THE BOOKS OF

JOURNAL ENTRY

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank/Cash A/c Dr. 5,000
To Bad Debts Recovered A/c 5,000
(Being ₹ 5,000 received from Jatin now

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Commerce Affairs
against ₹ 20,000 earlier written off as
bad debts)

PROFIT AND LOSS ACCOUNT OF

for the year ended...

Dr. Cr.
Particulars ₹ Particulars ₹
By Bad Debts Recovered A/c 5,000

33. Books of Gokul Das

Statement of Affairs
(as on 1st April, 2012)

Liabilities Amt(Rs) Assets Amt(Rs)

Creditors 3,50,000 Cash in hand 1,50,000
Capital(Balancing figure) 14,00,000 Bank Balance 7,50,000
Furniture 1,00,000
Stock 5,00,000
Debtors 2,50,000
17,50,000 17,50,000

Statement of Affairs
(as on 31st March, 2013)

Liabilities Amt(Rs) Assets Amt(Rs)

Creditors 4,00,000 Cash in hand 1,75,000
Capital(Balancing figure) 12,25,000 Bank Balance 6,00,000
Furniture 1,00,000
Stock 4,50,000
Debtors 3,00,000
16,25,000 16,25,000

Statement of Profit or Loss

(for the year ended 31st March, 2013)

Particulars Amt(Rs)
Capital at the End of the year i.e, 31st March, 2013 12,25,000
(+) Drawings : In Cash 4,80,000
In Goods 20,000 5,00,000
17,25,000

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(-) Further Capital Introduced (Wife's Ornaments) 3,50,000

Adjusted capital at the end 13,75,000
(-)Opening Capital as at 1st April, 2012 14,00,000
Loss During the year (25,000)
Notes :
1. After selling wife's ornaments amount is invested in business so it is treated as additional capital.
2. Drawings may be in cash or in kind. Goods are taken for personal use so treated as Drawings.
3. Statement of Affairs is prepared to ascertain the closing and opening capital.

OR

Books of Mrs. Vandana

Statement of Affairs as of April 1, 2016
and as of March 31, 2017

Liabilities Apr. 01, 16 (₹) Mar. 31, 17 (₹) Assets Apr. 01, 16 (₹) Mar. 31, 17 (₹)
Creditors 75,340 65,680 Printing press 5,00,000 5,25,000
Wages outstanding 5,000 - Buildings 2,00,000 2,00,000
Capital (balancing figure) 7,63,590 7,87,250 Debtors 20,350 17,210
Stock 50,000 55,000
Cash at bank 65,600 40,380
Cash in hand 7,980 15,340
8,43,930 8,52,930 8,43,930 8,52,930

Statement of Profit or Loss for the year ended on March 31, 2017

Particulars ₹
Capital as on March 31, 2017 7,87,250
Add: Drawings during the year 96,000
8,83,250
Less: Additional capital introduced during the year (15,000)
Adjusted capital at the end of the year (31. 3. 2017) 8,68,250
Less Capital as on April 01, 2016 (7,63,590)
Profit made during the year 1,04,660

34. Trading Account

for the year ended March 31, 2023

Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)

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Commerce Affairs
To Opening Stock 82,000 By Sale 6,75,000
To Purchases 4,40,000 Less: Return Inwards (25,000) 6,50,000
Less: Return Outwards (37,000) 4,03,000 By Closing Stock 1,12,500
To Carriage Inward 6,000
To Fuel and Water 4,750
To Gross Profit (Balancing Figure) 2,66,750
7,62,500 7,62,500

Profit and Loss Account

for the year ended March 31, 2023

Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)

To Depreciation: By Gross Profit 2,66,750

Plant & Machinery 30,000 By Commission 4,000
Motor Vehicle 30,000 60,000 Less: Unearned (1,200) 2,800
By Prov. for Doubtful Debts
To Salaries & Wages 24,000 5,305
(Old Provision - New Provision)

Add: Outstanding 4,800 28,800

To Bad Debts 4,250
Add: Further Bad Debts 500 4,750
To Trade Expenses 2,500
To Rent, Rates and Taxes 12,000
To Net Profit (Balancing figure) 1,66,805
2,74,855 2,74,855

Balance Sheet
as on March 31, 2023

Amount Amount
Liabilities Assets
(₹) (₹)

Capital 3,25,000 Fixed Assets

Add: Net Profit 1,66,805 Plant & Machinery 2,00,000
Less: Drawings (15,000) 4,76,805 Less: Dep. (30,000) 1,70,000
Motor Vehicle 1,50,000
Less: Dep. (30,000) 1,20,000
Current Liabilities Current Assets
Creditors 55,000 Closing Stock 1,12,500

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Commerce Affairs

Outstanding Salaries and Wages 4,800 Debtors 70,000

Unearned Commission 1,200 Less: Bad Debts (500)
Less: Provision for Bad Debts (695) 68,805
Cash in Hand 16,500
Cash at Bank 50,000
5,37,805 5,37,805
Working Note:
Calculation of Provision for Doubtful Debts:
Provision for doubtful debts = Sundry Debtors - future Bad debts × Rate
Provision for doubtful debts = (₹ 70,000 - ₹ 500) × 1%
Provision for doubtful debts = ₹ 695
Adjustments shown in trial balance will be recorded in balance sheet only while adjustments shown after trial balance
will be recorded both in trading and profit and loss account and balance sheet.

OR

In the books of Karan

Trading and Profit & Loss Account

For the year ended ------------------

Amount
Particulars Particulars Amount
(Rs)
(Rs)

To Opening Stock 6,25,000 By Sales (13,72,000)

To Purchase (9,03,000) Less Sales Returns (22,000) 13,50,000
Less Purchase Returns (13,000) By Closing Stock 6,50,000
Less Drawings (5,000) 8,85,000
To Direct Expense 75,000
To Gross Profit c/d 4,15,000

20,00,000 20,00,000
========== ========
To Postage, Stationery 25,000 By Gross Profit b/d 4,15,000
To Overdraft Interest 20,000 By Commission (30,000)
To Provision for Doubtful Debts 12,500 Less Unaccrued (10,000) 20,000
To Fire Insurance (20,000) By Interest (5,000)
Less Prepaid (5,000) 15,000 Add Accrued (500) 5,500
To Salary (90,000)
Add Outstanding (10,000) 1,00,000

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Commerce Affairs
To Depreciation:
Land & Buildings (15,000)
Furniture & Fittings (8,000) 23,000
To Net Profit 2,45,000

4,40,500 4,40,500
========= =========

Balance Sheet

As on

Liability Amount Asset Amount

(Rs) (Rs)

Capital 3,00,000 Land & Building 3,00,000

Less Drawings 45,000 Less Depreciation 15,000 2,85,000
Add Net Profit 2,45,000 Furniture & Fixtures 80,000
Less Drawings in Goods 5,000 4,95,000 Less Depreciation 8,000 72,000
Creditors 4,50,000 Debtors 2,50,000
Bank Overdraft 4,00,000 Less Provision for Bad Debts 12,500 2,37,500
Add Outstanding Interest 20,000 4,20,000 Cash 35,000
Unaccrued Commission 10,000 Investment 1,00,000
Outstanding Salary 10,000 Add Accrued 500 1,00,500
Closing Stock 6,50,000
Prepaid Insurance 5,000

13,85,000 13,85,000
======== ========

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