BUSINESS ECONOMICS AND FINANCIAL ANALYSIS

FOR II YEAR II SEM CE, ME, ECE, EIE

UNIT-4 FINANCIAL ACCOUNTING
1. a) Define account and Accounting? 2M
b) What is accounting cycle? 3M
c) Explain Accounting Concepts? 5M
d) Explain Accounting Conventions? 5M
2. a) What is bookkeeping? 2M
b) Discuss Accounting Equation? 3M
c) Explain Double Entry system of Accounting? What are its advantages and Limitations? 10M
3. a) What is Journal? Draw the format of Journal? 2M
b) What are the rules of personal, Real and Nominal account.? 3M
c) Journalize the following Transaction, post them in the ledger and Balance the accounts on 10M
31st march, 2008.
1. March 1st Abhishek started business with a Capital of Rs. 1,00,000/-
2. Goods purchased from Sandeep on credit worth Rs. 20,000/-
3. Paid cash to Sandeep of Rs. 10,000/- against the goods purchased on credit
4. Abhishek sold goods to Chandan worth Rs. 22,000/-
5. Chandan paid Rs. 22,000/- to Abhishek against goods purchased by him.
6. Abhishek spent Rs.1,000/- towards office expenses.
4. a) What is Trail Balance? Draw the Proforma of Trial Balance? 2M
b) Discuss the purpose and Importance of Profit and Loss account? 3M
c) You are requested to prepare the Traila Balance as on 31-10-2008 from the given Ledger 10M
account Balance.
Particulars Amount Particulars Amount
Capital 65,500 Furniture 4,000
Creditors 18,200 Bills Receivables 21,300
Debtors 21,350 Salaries outstanding 7,200
Cash in Hand 6,750 Wages 3,150
Sales 1,20,000 Insurance prepaid 4,200
Purchases 69,100 Rent 950
Cash at bank 7,800 Bills Payable 4,500
Machinery 35,000 Reserve for bad debts 3,250
Discount allowed 5,000 Tax outstanding 1,110
Discount Received 3,200 Interest on investment 2,150
Drawings 1,510 Fixed Deposits 45,000

5. a) Define Outstanding expenses? How it will be adjusted in final account? 2M

b) Write the difference between Profit and Loss account and Balance Sheet? 3M
c) From the following Trail balance of Sri Subba Rao as on 31-12-2016 prepare a Trading, 10M
Profit and Loss and Balance Sheet.
Particulars Amount(Rs.) Particulars Amount(Rs.)
Drawings 3000 Capital 15,000
Furniture 500 Creditors 13,500
Machinery 1000 Sales 80,000
 Cycle 250 Returns Outwards 500
Debtors 15,000 Discount Allowed 425
Rent 2,400 Trading Expenses 1,800
Salaries 3,600 Stock(1-1-16) 15,000
Purchases 60,000 Return Inwards 1,000
Carriage inwards 750 Carriage outwards 1,000
Rates & taxes 850 Cash in Hand 2,425
Stock as on 31-12-16 Rs.11,000/-
6. From the following Trail Balance of K traders , Prepare the Trading, Profit and Loss and 10M
Balance sheet for the year ended 31-12-2008.
Particulars Debit Amount(Rs.) Credit Amount (Rs.)
Travelling expenses 1,500
Debtors, Creditors 6,800 4,400
Discount 200
Stock(1-1-2008) 17,100
Machinery 6,000
Provision for Bad Debts 400
Tools 3,200
Bank overdraft 1,300
Motor car 3,000
Cash in hand 100
Commission 4,200
Returns 300 700
Purchases, sales 39,000 70,000
Factory Expenses 1,800
Advertisement 1,800
Carriage 300
Electricity : Factory 350
Office 150
Wages 4,700
Salaries 5,000
Rent & Rates 2,500
Capital 22,000
Drawing 1,200
99,000 99,000
Adjustments:1. Provide 5% Depreciation on Machinery and Tools
2. Maintain Provision for bad debts at Rs.600/-
3. Closing Stock Rs. 17,000/-
4. Outstanding Salaries Rs.500/-
7. Prepare the final Accounts from the following Trail Balance for the year ended 21-12-15 of 10M
Sri Parameswaran.
Trail Balance as On 31-12-2015
Debit Amount(Rs.) Credit Amount(Rs.)
Purchases 2,00,000 Sales 4,71,004
Machinery 90,000 Capital 45,000
Returns 5,000 Returns 2,503
Debtors 92,000 Creditors 51,000
Cash at bank 28,000 Provision for bad debts 1,000
 Stock(1-1-15) 50,205
Rate and Taxes 4,800
Wages 40,000
Furniture 8,000
Salaries 47,000
Freight 5,502
5,70,507 5,70,507
Adjustments: 1. Closing Stock Rs.56,000
2. outstanding salaries Rs. 6,000
3. Write off Rs.2000 as bad debts create a provision for doubtful debts at 3%
4. Provide 5% depreciation on machinery
5. Interest on Capital @ 5% is allowed.
8. Prepare a Trading and Profit and Loss account and a Balance sheet ended with 30-6-08 of 10M
Sri Sanjay.
Particulars Debit Amount (Rs.) Credit Amount(Rs.)
Capital - 37,000
Cash in hand 4,000 -
Purchases, Sales 45,000 95,000
Returns 500 600
Wages 8,500 -
Power & Fuel 3,500 -
Salaries 6,500 -
Carriage on Purchases 1,800 -
Stock(1-7-07) 7,200 -
Buildings 25,000 -
Machinery 15,000 -
Furniture 5,000 -
Debtors, Creditors 12,000 9,000
General Expenses 2,600 -
Drawings 5,000 -
Adjustments: 1.Closing Stock Rs.14,000
2. Depreciation Rs. 750 & 250 on Machinery and Furniture Respectively
3. Wage Outstanding Rs.500
4. Bad debts to be written off Rs.600/-
5. Charge 5% on drawings
9. From the following Trial Balance of Rao&Sons prepare the Final account, as on 31-12-17 10M
Particulars Debit Amount(Rs.) Credit Amount(Rs.)
Debtors and Creditors 12,000 7,900
Capital 30,000
Drawings 2,900
Rent & Taxes 570
Trading Expenses 350
Purchases 8,640
Sales 14,290
Purchases Returns 280
Sales Returns 190
 Carriage Inwards 250
Wages 2,920
Salaries 1,200
Stock (1-1-17) 3,100
Discount Allowed and received 80 240
Bad Debts 300
Machinery 3,510
Furniture and Fittings 1,000
Cash at Bank 300
Cash in Hand 15,400
52,710 52,710
Stock as on 31-12-17 : 14,220

10. Prepare final accounts from the following Trial Balance of Gopala Krishna for the year
ended 31-3-16.
Trial Balance as on 31-3-16
Debit Balance Amount (Rs.) Credit Balance Amount(Rs.)
Purchases 25,200 Sales 61,604
Furniture 1,600 Capital 35,000
Wages 3,500 Creditors 3,903
Machinery 20,000 Purchase Returns 222
Opening Stock 17,525
Sales Returns 1,200
Debtors 10,400
Carriage Inwards 200
Salaries 10,600
Carriage Outwards 503
Rent & Taxes 2,001
Cash at Bank 8,000
1,00,729 1,00,729
Adjustments: 1. Closing Stock 16,800/-
2. Outstanding salaries Rs.400 ; Prepaid rent Rs.201
3. Provide 5% to Bad and Doubtful debts on debtors
4. Depreciation on machinery is 10%
Interest on capital 5%