MITTAL COMMERCE CLASSES CA FOUNDATION– MOCK TEST

(GCF-10, GCF-11, VCF-3, ACF-3, ACF-4, DCF-1, DCF-3, & DCF-4 & DRIVE-1)
DATE: 04.11.2023 MAXIMUM MARKS: 100 TIMING: 31/4 Hours

PRINCIPLES & PRACTICE OF ACCOUNTING

Question No. 1 is compulsory.
Candidates are required to answer any four questions from the remaining five questions .

Question 1:
(a) State with reasons weather the following statements are true or false:
(i) Accrual means recognition as money is received or paid and not of revenue
and costs as they are earned or incurred.
(ii) Balance sheet shows the position of the business on the day of its preparation
and not on the future date.
(iii) Amount spent as lawyer’s fee to defend a suit claiming that the firm’s factory
site belonged to the plaintiff’s land is Capital Expenditure.
(iv) A claim that an enterprise is pursuing through legal process, where the
outcome is uncertain, is a contingent liability.
(v) Promissory note is different from that of a bill of exchange where the amount
is paid by the maker in case of former and by the acceptor in the latter.
(vi) The customer retains the goods even after the expiry of the mentioned term,
but this act does not confirm to sale of goods as there is no express consent
given.
(6×2 = 12 Marks)

(b) Distinguish between the following.

(1) Errors of omission and errors of commission.
(2) Money measurement concept and matching concept.
(2×2 = 4 Marks)

(c) The following are some of the transaction of M/s. Kanha & Sons of the year 2020 as
per their Waste Book. Make out their Sales Book.
Sold to M/s. Gupta & Verma on credit:
30 shirts @ Rs. 800 per shirt.
20 trousers @ Rs. 1,000 per trouser.
Less : Trade Discount @ 10%
Sold furniture to M/s. Sehgal & Co. on credit Rs. 8,000.
Sold 50 shirts of M/s. Jain & Sons @ Rs. 800 per shirt.
Sold 13 shirts to Cheap Stores @ Rs. 750 each for cash.
Sold on credit to M/s. Mathur & Jain.
100 shirts @ Rs. 750 per shirt
10 overcoats @ Rs. 5,000 per overcoat.
Less: Trade Discount @ 10%
(4 Marks)
(Total 20 Marks)

Question 2:
(a) You are given following balances as on 1st April, 2005 :
Machinery A/c Rs. 10,00,000
Provision for Depreciation A/c Rs. 2,32,000
Depreciation is charged on machinery at 20% p.a. by the Diminishing Balance
Method. A piece of machinery purchased on 1 st April, 2003 for Rs. 2,00,000 was sold
on 1st October, 2005 for Rs. 1,20,000. Prepare the Machinery Account and Provision

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MITTAL COMMERCE CLASSES CA FOUNDATION– MOCK TEST
for Depreciation Account for the year ended 31 st March, 2006. Also, prepare the
Machinery Disposal Account.
(10 Marks)

(b) Trial Balance of John did not agree. He put the difference to Suspense Account and
discovered the following errors:
(a) In the Sales Book for the month of January total of Page No. 2 was carried
forward to Page No. 3 as Rs. 1,000 instead of Rs. 1,200 and total of Page No.
6 was carried forward to Page No. 7 as Rs. 5,600 instead of Rs. 5,000.
(b) Wages paid for installation of Machinery Rs. 500 was posted to Wages
Account as Rs. 50.
(c) Machinery purchased from R & Co. for Rs. 10,000 on credit was entered in
Purchase Book as Rs. 6,000 and posted therefrom to R & Co. as Rs. 1,000.
(d) Credit Sales to Mohan Rs. 5,000 were recorded in Purchases Book.
(e) Goods returned to Ram Rs. 1,000 were recorded in Sales Book.
(f) Credit Purchases from S & Co. for Rs. 6,000 were recorded in Sales Book.
However, S & Co. was correctly credited.
(g) Credit Purchases from M & Co. Rs. 6,000 were recorded in Sales Book as Rs.
2,000 and posted therefrom to the credit of M & Co. as Rs. 1,000.
(h) Credit Sales to Raman Rs. 4,000 posted to the credit of Raghvan as Rs.
1,000.
(i) Bill receivable for Rs. 1,600 from Noor was dishonoured and posted to debit
of Allowances account.
(j) Cash paid to Mani Rs. 5,000 against our acceptance was debited to Manu.
(k) Old furniture sold for Rs. 3,000 was posted to Sales Account as Rs. 1,000.
(l) Depreciation provided on furniture Rs. 800 was not posted.
(m) Purchases Rs. 10,000 and Wages Rs. 3,000 were used for construction of
building. No adjustment was made in the books.
Rectify the errors and prepare Suspense Account to ascertain the difference in Trial
Balance.
(10 Marks)

Question 3:
(a) Fashion Garments Ltd invited applications for issuing 10,000 Equity Shares of Rs. 10
each. The amount was payable as follows:
(i) On Application Rs. 1 per share
(ii) On Allotment Rs. 2 per share
(iii) On First call Rs. 3 per share
(iv) On Second and final Call Rs. 4 per share

The issue was fully subscribed. Ram to whom 100 shares were allotted, failed to pay
the allotment money and his shares were forfeited immediately after the allotment.
Shyam to whom 150 shares were allotted, failed to pay the first call. His shares were
also forfeited after the first call. Afterwards the second and final call was made.
Mohan to whom 50 shares were allotted failed to pay the second and final call. His
shares were also forfeited. Al the forfeited shares were re-issued at Rs. 9 per share
fully paid-up.
Pass necessary Journal entries in the books of Fashion Garments Ltd.
(10 Marks)

(b) The following are the transactions that took place between A and B during the half
year ended 30th June 2010:

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MITTAL COMMERCE CLASSES CA FOUNDATION– MOCK TEST
Rs.
(a) Balance due to A by B on 1st January 3,000
(b) Goods sold by A to B on January 7 4,400
(c) Goods purchased by A from B on February 16 6,400
(d) Goods returned by A to B on February 18 500
(Out of purchases of February 16)
(e) Goods sold by B to A on March 24 3,500
(f) Bill accepted by A at 3 months on April 22 1,500
(g) Cash paid by A to B on April 29 2,500
(h) Goods sold by A to B on May 17 2,700
(i) Goods sold by B to A on June 22 3,000
Draw up an account current to be rendered by B to A charging interest at 20% p.a.
by Product Method.
(5 Marks)

(c) Meera Enterprises sold goods on ‘sales or return basis’ to few customers. All such
transactions are booked as actual sales. On 31st March 2022 the trade receivable
balance stood at Rs. 1,10,000 which included Rs. 10,000 goods sent on approval
against which no intimation was received during the year. These goods were sent out
at 25% over and above cost price to Mr. Arun.
Mr. Arun sent intimation of acceptance for Rs. 6,000 goods on 15th April 2022 and
balance goods returned.
Make the adjustment entries and show how these items will appear in the Balance
Sheet on 31st March, 2022. Also show the entries to be made during April, 2022.
Value of closing inventories as on 31st March, 2022 was Rs. 70,000.
(5 Marks)

Question 4:
(a) On 31st March 2015, the bank column of the Cash Book of Mr. Sanjeev disclosed an
overdraft balance of Rs. 8,300. On examining the Cash Book and bank statement
you find that :
(i) Cheques were deposited into bank for Rs. 16,000, but of these cheques for
Rs. 4,600 were cleared and credited in April 2015.
(ii) Cheques were issued for Rs. 7,500, out of which cheques for Rs. 6,000 had
been presented for payment in March 2015.
(iii) In March Mr. Sanjeev had discounted with bank a bill of exchange for Rs.
10,000 and had entered this amount in the Cash Book, but the proceeds
credited, as shown by the Pass Book, amounted to Rs. 9,600.
(iv) No entry is made in the Cash Book of an amount of Rs. 6,100 directly
deposited by a customer in the bank account.
(v) Bank column of the payment side of the Cash Book was undercast by Rs.
1,000.
(vi) Payment of insurance premium of Rs. 2,000 and receipt of insurance claim of
Rs. 8,000 appear in the Pass Book but not entered in the Cash Book.
(vii) A cheque for Rs. 3,500 issued to Mr. X was omitted to be recorded in the
Cash Book.
(viii) A cheque for Rs. 2,800 issued to Mr. Y was entered in the cash column of the
Cash Book.
Make the appropriate adjustments in the Cash Book and prepare a bank
reconciliation statement with the Amended Cash Book balance as on 31st March
2015.
(10 Marks)

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MITTAL COMMERCE CLASSES CA FOUNDATION– MOCK TEST

(b) Zed Enterprises furnishes the following information for the year ended 31st March,
2021.
Particulars Amount (Rs.)
Value of Stock as on 1st April,2020 28,00,000
Purchases during the year 1,38,40,000
Manufacturing Expenses during the 28,00,000
year Sales during the year 2,08,80,000

The following further information is also provided:

(i) At the time of valuing stock on 31st March,2020 a sum of Rs. 2,40,000 was
written off for a particular item which was originally purchased for Rs.
8,00,000. This item was sold during the year ended 31st March, 2021 for Rs.
6,40,000.
(ii) Except for the above transaction, the rate of gross profit during the year was
1/3rd on cost.
Ascertain the value of Stock as on 31st March, 2021.
(5 Marks)

(c) The following are the details of a spare part of Santosh Mills:
1-1-2020 Opening Inventory Nil
1-1-2020 Purchases 100 units @ Rs. 30 per unit
15-1-2020 Issued for consumption 50 units
1-2-2020 Purchases 200 units @ Rs. 40 per unit
15-2-2020 Issued for consumption 100 units
20-2-2020 Issued for consumption 100 units
Find out the value of Inventory as on 31-3-2020 if the company follows Weighted
Average basis.
(5 Marks)

Question 5:
(a) BABAI Sold goods to KACHARI for Rs. 90,000 on 1st April, 2018 for which the later
accepted three bills of Rs. 30,000 each due respectively in 1,2 and 3 months. The
first bill is retained by Babai and is duly met. The second bill was discounted
(discount being Rs. 600) and is met in due course. The third bill is also discounted
(discounted being Rs. 900) and is dishonoured, the Noting charges being Rs. 150.
New arrangements were duly made whereby Kachari pays Cash Rs. 10,150 and
accepted a new bill due in 2 months for the balance of the amount with interest at
15% p.a. The bill is retained, on due date the same is dishonoured, noting charges
being Rs. 180. Kachari declared insolvent on 15th Sept. 2018 and 35 paise in a
rupee were received from his estate.
Required:
Pass Journal Entries in the Books of BABAI.
(10 Marks)

(b) M/s. Ram & Co., of Delhi purchased 20,000 pieces of sarees @ Rs. 200 per saree.
Out of these 12,000 sarees were sent on consignment to M/s Laxman traders of
Mumbai at the selling price of Rs. 240 per saree. The consignors paid Rs. 6,000 for
packing and freight.
M/s Laxman Traders sold 10,000 sarees@ Rs. 250 per saree and incurred Rs. 2,000
towards selling expenses and remitted Rs. 10,00,000 to Delhi on account. M/s

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MITTAL COMMERCE CLASSES CA FOUNDATION– MOCK TEST
Laxman Traders are entitled to a commission of 5 per cent on total sales plus a
further 20 per cent commission on any surplus price realised over Rs. 240 per saree.
6,000 sarees were sold at Rs. 220 per saree by the consignor. Owing to fall in the
market price, the value of stock of sarees in hand is to be reduced by 10 per cent.
Prepare the consignment account and the account M/s Laxman Traders in the books
of the consignor.
(10 Marks)

Question 6:
(a) The Accountant of 'Retreat & Refresh' Club furnishes you the following Receipts and
Payment Account for the year ending 31st March, 2018:
Receipts Rs. Payments Rs.
Opening Balance: Honoraria to Secretary 19,200
Cash & Bank 33,520 Misc. expenses 6,120
(as per cash book)
Subscription 42,840 Rates & Taxes 5,040
Sale of Old Magasines 9,600 Ground man's wages 3,360
Entertainment Fees 17,080 Printing & Stationary 1,880
Bank Interest 920 Payment for bar purchases 23,080
Bar Receipts 29,800 Repairs 1,280
Proceeds from Sale of 12,000 Telephone expenses 9,560
Old Car sold on 1.4.17
New Car 62,400
Closing Balance:
Cash & Bank 13,840
1,45,760 1,45,760

Additional Information
1.4.2017 31.3.2018
(Rs.) (Rs.)
Subscription due (not received) 4,800 3,920
Cheque issued, but not presented 360 120
(payment of printing expenses)
Club premises at cost 1,16,000 --
Depreciation on club premises provided so far 75,200 --
Car at cost 48,760 --
Depreciation on car provided so far 41,160 --
Value of Bar stock 2,840 3,480
Amount unpaid for bar purchases 2,360 1,720

Depreciation is to be provided @ 5% p.a. on written down value of the club premises

and @ 15% p.a. on car for the whole year.
You are required to prepare an Income & Expenditure A/c of Retreat & Refresh Club
for the year ending 31st March, 2018 and Balance Sheet as on that date.
(10 Marks)

(b) The following are the balances as at 31st March, 2023 extracted from the books of
Mr. Shyam.
Rs. Rs.
Plant and Machinery 39,100 Bad debts recovered 900
Furniture and Fittings 20,500 Salaries 45,100

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Bank Overdraft 1,60,000 Salaries payable 4,900
Capital Account 1,30,000 Prepaid rent 600
Drawings 16,000 Rent 8,600
Purchases 3,20,000 Carriage inward 2,250
Opening Stock 64,500 Carriage outward 2,700
Wages 24,330 Sales 4,30,600
Provision for doubtful debts 6,400 Advertisement Expenses 6,700
Provision for Discount on Printing and Stationery 2,500
debtors 2,750 Cash in hand 2,900
Sundry Debtors 2,40,000 Cash at bank 6,250
Sundry Creditors 95,000 Office Expenses 20,320
Bad debts 2,200 Interest paid on loan 6,000

Additional Information:
1. Purchases include sales return of Rs. 5,150 and sales include purchases return
of Rs. 3,450.
2. Goods withdrawn by Mr. Shyam for own consumption Rs. 7,000 included in
purchases.
3. Create a provision for doubtful debts @ 5% and provision for discount on
debtors @ 2.5%.
4. Free samples distributed for publicity costing Rs. 1,650.
5. Wages paid in the month of April for installation of plant and machinery
amounting to Rs. 900 were included in wages account.
6. Bank overdraft is secured against hypothecation of stock (closing). Bank
overdraft outstanding as on 31.3.2023 has been considered as 80% of
marginal value of stock. Marginal value of stock has been considered 80% of
the real value of stock.
7. Depreciation is to be provided on plant and machinery @ 15% p.a. and on
furniture and fittings @ 10% p.a.
Prepare a Trading and Profit and Loss Account for the year ended 31st March, 2023
and a Balance Sheet as on that date. Also show the rectification entries.
(10 Marks)

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