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Question Paper

Financial Accounting (CFA510): January 2008

Answer all 70 questions.

Marks are indicated against each question.

Total Marks : 100

1. Which of the following events/transactions is not recorded in the books of accounts of a business?

(a) Withdrawal of goods by the proprietor for his personal consumption

(b) Sale of an asset on credit(c) Purchase of a new asset in exchange of an old asset

(d) Receipt of interest by proprietor on bank fixed deposit held jointly with his spouse

(e) Loss of stock by fire.

(1 mark)

2. In relation to price, the phrase markdown means

(a) The first selling price at which goods are offered

(b) The selling price lowered below the cost

(c) The selling price lowered below the original selling price

(d) The selling price lowered below the previous selling price

(e) The difference between the cost and the original selling price.

(1 mark)

3. Revenue does not include

(a) Inflow of cash out of sale of goods

(b) Interest on investment

(c) Rent received

(d) Dividend received

(e) Advance received for supplies.

(1 mark)

4. In which of the following methods, the cost of the asset is spread over in equal proportion during its useful

economic life?

(a) Straight line method

(b) Written down value method

(c) Units-of-production method

(d) Sum-of-the-years-digits method(e) Machine-hour rate method.

(1 mark)

5. At the time of finalization of accounts, entries passed for outstanding expenses, depreciation and interest on capital

are referred to as

(a) Opening entries

(b) Journal entries

(c) Adjustment entries(d) Contra entries

(e) Closing entries.

(1 mark)

6. Which of the following accounts appear(s) in the balance sheet of a business?

I. Stock at the end of the financial year.

II. Stock at the beginning of the financial year.

III. Prepaid rent.

IV. Interest received.

(a) Only (I) above

(b) Only (II) above

(c) Both (I) and (III) above

(d) Both (II) and (III) above

(e) (I), (III) and (IV) above.

(1 mark)

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7. Balance appearing in the credit column of a trial balance can be

I. An income.

II. An outstanding expense.

III. A Liability.

IV. An income received in advance.

(a) Only (I) above(b) Only (II) above

(c) Only (III) above

(d) Both (I) and (III) above

(e) All (I), (II), (III) and (IV) above.

(1 mark)

8. The rule applicable to a nominal account is

(a) Debit what comes in and credit what goes out

(b) Debit the receiver and credit the giver

(c) Debit all expenses and losses and credit all incomes and gains

(d) Debit the giver and credit the receiver

(e) Debit what goes out and credit what comes in.

(1 mark)

9. Balance Sheet of a business concern is a

(a) Statement of revenue and expenses

(b) Statement of cash receipts and cash payments

(c) Cash flow statement

(d) Valuation statement

(e) Statement of assets and liabilities.

(1 mark)

10.Amount received as interest on trade investments held by a company should be transferred to

(a) Trading account

(b) Profit and loss account

(c) Profit and loss appropriation account(d) Trade investments account

(e) Revaluation reserve account.

(1 mark)

11.Retained earnings is the amount of

(a) Profit after tax less dividends

(b) Profit before tax less dividends

(c) Profit before interest and taxes less dividends

(d) Profit before depreciation and taxes less dividends

(e) Profit before taxes and after depreciation less dividends.

(1 mark)

12.If the profit is 25% of the cost price then it is

(a) 25% of the sale price(b) 33% of the sale price

(c) 20% of the sale price

(d) 12.5% of the sale price

(e) 50% of the sale price.

(1 mark)

13.Ledger is also called as

(a) The principal book

(b) The book of original entry

(c) The journal

(d) The subsidiary books

(e) The profit and loss account.

(1 mark)

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14.Return outward book is maintained by a business to record

(a) Return of goods purchased on cash

(b) Return of goods sold on credit

(c) Return of goods purchased on credit

(d) Return of capital goods purchased on credit(e) Return of capital goods sold on credit.

(1 mark)

15.The liabilities payable over a longer period of time, generally after one year, are called

(a) Current liabilities

(b) Provisions

(c) Non-current liabilities

(d) Contingent liabilities

(e) Reserves.

(1 mark)

16.A credit sale of Rs.2,000 was wrongly entered in the purchases book. The impact of the error on gross profit is

that, it

(a) Decreases the gross profit by Rs.2,000

(b) Increases the gross profit by Rs.2,000

(c) Decreases the gross profit by Rs.4,000

(d) Increases the gross profit by Rs.4,000

(e) Has no impact.

(1 mark)

17.A person who is carrying on profession is required to get his accounts audited, if his gross receipts exceed

(a) Rs.40 lakhs in a year

(b) Rs.50 lakhs in a year

(c) Rs.10 lakhs in a year

(d) Rs.15 lakhs in a year

(e) Rs.25 lakhs in a year.

(1 mark)

18.The system of accounting in which revenue is recognized when it is earned and expenses are recognized whenthey are incurred, is called

(a) Accrual system(b) Hybrid system

(c) Income Tax system

(d) Cash system

(e) Deferral system.

(1 mark)

19.The valuation of goodwill is necessary in the case of

I. Sale of a company.

II. Valuation of shares of a company.III. Purchase of another company.

(a) Only (I) above

(b) Only (II) above

(c) Both (I) and (II) above(d) Both (II) and (III) above(e) All (I), (II) and (III) above.

(1 mark)

20.Which of the following items is deducted from total assets of the concern to arrive at its net worth?

(a) All outside liabilities

(b) Only current liabilities

(c) Only long term liabilities

(d) All reserves and surpluses

(e) Securities premium.

(1 mark)

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21.The systematic allocation of the costs of intangible assets to the periods in which they provide benefits is called

(a) Amortization(b) Depreciation

(c) Depletion

(d) Deterioration

(e) Appropriation.

(1 mark)

22.Errors which can affect both the accounts involved in the transaction are

(a) Errors of complete omission

(b) Errors of partial omission

(c) Errors of overcasting

(d) Errors of undercasting

(e) Errors of carry forward.

(1 mark)

23.Gains arising from sources other than normal operations of the business are called

(a) Gross profit

(b) Operating profit

(c) Non-operating surplus

(d) Profit before tax(e) Profit after tax.

(1 mark)

24.Which of the following is not treated as an allowable expense for computing managerial remuneration?

(a) Payment of ex-gratia to an employee

(b) Compensation paid in lieu of breach of contract

(c) Bad debts written-off

(d) Directors remuneration

(e) Any tax notified as a tax on abnormal profits.

(1 mark)

25.Which of the following persons can be appointed as an auditor of a company?

(a) A body corporate(b) A person indebted to the company for Rs.1,500

(c) A person holding the shares of the company as a trustee

(d) A person appointed as a director of the company(e) An officer of the company.

(1 mark)

26.When fixed assets are sold at book value

(a) The total assets will increase

(b) The total liabilities will increase

(c) The total assets will decrease

(d) There is no change in the total assets

(e) The liabilities will decrease.

(1 mark)

27.Advance tax that appears in the trial balance is shown

(a) As an expense in the profit and loss account

(b) As an appropriation of profits in the profit and loss appropriation account(c) As a current liability in the balance sheet

(d) Under the head fixed assets in the balance sheet

(e) Under the head loans and advances in the balance sheet.

(1 mark)

28.Profit on revaluation of fixed assets should be transferred to

(a) General Reserve a /c

(b) Capital Reserve a/c

(c) Suspense a/c(d) Profit and loss a/c

(e) Profit and loss appropriation a/c.

(1 mark)

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29.If the articles of a company permit, between two annual general meetings the Directors can declare

(a) Interim dividend

(b) Bonus issue

(c) Rights issue

(d) Redemption of debentures(e) Redemption of preference shares.

(1 mark)

30.The value of the goodwill, according to the simple profit method, is

(a) The product of current years profit and number of years of purchase

(b) The product of last years profit and the number of years of purchase

(c) The product of average profit of the given years and number of years of purchase

(d) The expected average profit for future years

(e) The product of average profit of last year, current year and coming year and number of years ofpurchase.

(1 mark)

31.The three column cash book represents

(a) Real accounts only

(b) Both real and nominal accounts

(c) Personal accounts only

(d) Both real and personal accounts

(e) Real, personal and nominal accounts.

(1 mark)

32.On June 10, 2001, Santosh Ltd. had taken a bank loan on which interest at the rate of 8% per annum is payable on

June 30 and December 31, every year. The loan is secured by a charge on the factory building. The interest

accrued and due as on March 31, 2007 was shown in the Balance Sheet of the company under the head

(a) Current liabilities

(b) Secured loans(c) Miscellaneous expenditure

(d) Loans and advances

(e) Unsecured loans.

(1 mark)

33.Which of the following assets appear under the category of current assets in the balance sheet of a company?

(a) Stores and spare parts

(b) Discount on issue of securities

(c) Trust securities

(d) Development of property

(e) Live stock.

(1 mark)

34.Which of the following items does not come under the heading Provisions on the balance sheet?

(a) Provision for taxation

(b) Proposed dividend

(c) Provision for contingencies

(d) Proposed addition to reserves(e) Provision for insurance, pension and provident fund.

(1 mark)

35.Auditing begins where _______ ends.

(a) Sales

(b) Accounting

(c) Manufacturing

(d) Accounting year

(e) Stock valuation.

(1 mark)

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36.Which of the following is optional while submitting the annual reports in the Annual General Meeting?

(a) Balance sheet

(b) Profit and loss account

(c) Funds flow statement

(d) Directors report

(e) Auditors report.

(1 mark)

37.Contingent liabilities do not include(a) Liability for calls on partly paid shares

(b) Liability for bills discounted

(c) Liability for bills accepted

(d) Liability under guarantee

(e) Arrears of dividends on cumulative preference shares.

(1 mark)

38.The costs that are incurred for establishing a company and getting it ready to commence business, for which it isbeing formed, are called

(a) Accrued expenses(b) Preliminary expenses

(c) Investments

(d) Manufacturing expenses

(e) Administrative expenses.

(1 mark)

39.Assets which are acquired for the purpose of using them in the conduct of the business operations and not forreselling them in order to earn profit are to be treated as

(a) Fixed assets(b) Current assets

(c) Liquid assets

(d) Intangible assets

(e) Miscellaneous expenditure to the extent not written-off.

(1 mark)

40.Which of the following is an example of a representative personal account?

(a) Rent

(b) Stock of stationary(c) Outstanding salaries

(d) Cash in hand

(e) Repairs to machinery.

(1 mark)

41.Valley Ltd. has issued 20,000, 10% Preference Shares of Rs.100 each, fully paid and 2,60,000 Equity Shares ofRs.10 each, fully paid, which are issued at a premium of Rs.20. The profit for the year 2006-07 is Rs.21,68,000.

The company has to provide Rs.8,76,000 for taxation of the previous year 2005-06. The company declared an equity dividend of 10%.

The total amount debited to Profit and Loss Appropriation account on account of the above decisions is

(a) Rs. 4,60,000

(b) Rs. 2,86,000

(c) Rs.13,62,000(d) Rs.13,36,000

(e) Rs.11,36,000. (2marks)

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42.Sarovar Ltd. incurred the following costs during the year 2006-07:

Particulars Rs.

Design of tools involving new technology 2,50,000

Modification of the formulation of a process 3,00,000

Troubleshooting in connection with breakdowns during commercial

production 1,50,000

Adaptation of an existing capability to a particular customers need as partof a continuing commercial activity 1,70,000

In its income statement, Sarovar Ltd. should report research and development expense of

(a) Rs.5,50,000

(b) Rs.1,60,000

(c) Rs.2,35,000

(d) Rs.2,85,000(e) Rs.1,70,000.

(2marks)

43.Following is the Balance Sheet of Ravera Enterprises as on March 31, 2007:

Liabilities Rs. Assets Rs.

Capital 5,00,000 Land and building 2,50,000Long term loan 1,50,000 Machinery 3,00,000

Creditors 90,000 Fictitious assets 60,000

Bank overdraft 35,000 Debtors 95,000Stock 60,000

Cash 10,000

Total 7,75,000 Total 7,75,000

The profit after tax for the year 2006-07 was Rs.60,000 and has accrued evenly throughout the year. The rate of

return on average capital employed in similar business is 12%. The normal profit of Ravera Enterprises based on

average capital employed should be

(a) Rs.56,400

(b) Rs.49,200

(c) Rs.67,200(d) Rs.60,000

(e) Rs.52,800.

(2marks)

44.Following is the data pertaining Venus Ltd. as on March 31, 2007 :

Particulars Rs.

Authorised share capital 50,000 shares of Rs.100 each 25,00,000

Issued/subscribed/called-up capital 15,05,000Calls in arrear 5,000

Interim dividend declared 1,05,000

Current year profit 2,37,000

If final dividend of 10% is declared (in addition to interim dividend), the amount that will have to be transferred toGeneral Reserve in lieu of dividend declared (inclusive of interim dividend) out of current year profit would be

(a) Rs.23,700

(b) Rs.15,000

(c) Rs.25,500

(d) Rs.19,125

(e) Rs.17,775.

(2marks)

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45.Owners equity at the beginning of the year Rs.22,000. During the year, the owner contributed Rs.12,000

additionally towards capital and withdrew Rs.8,000 for his personal use. If the firm had a net profit of Rs.16,000

for the year, what was the owners equity at the end of the year?

(a) Rs.34,000

(b) Rs.58,000

(c) Rs.18,000

(d) Rs.42,000(e) Rs.30,000.

(2marks)

46.Consider the following data pertaining to Zircon Ltd.

I. Average capital employed in the business is Rs.6,00,000.

II. Rate of interest expected from capital having regard to the risk involved is 10%.

III. Net trading profits of the company for the past three years were Rs.1,07,600, Rs.90,700 and Rs.1,12,500.

IV. Fair remuneration to the directors for their services is Rs.12,000 per annum.

The value of goodwill on the basis of 3 years purchase of super profits calculated on the average of past three

years profits is

(a) Rs.1,30,800

(b) Rs. 43,600(c) Rs. 94,800

(d) Rs. 55,600

(e) Rs. 59,080.

(2marks)

47.The Managing Director of Avon Ltd. is entitled to a commission of 5% on net profits before charging such

commission. The net profit of the company for the year ended March 31, 2007 was reported to be Rs.76,50,000.Subsequently, it was noticed that the following transactions were omitted:

Particulars Rs.

Payment of Directors remuneration 1,50,000

Sale of a plant (cost price Rs.3,00,000; written down value Rs.2,40,000) 3,30,000

Payment of bonus to Production Executive 1,50,000Payment of income tax and super tax 15,000

Issue of 60,000 equity shares of Rs.10 each at a premium of Rs.2 7,20,000

The commission payable by the company to the managing director for the year 2006-07 was

(a) Rs.3,70,500(b) Rs.3,78,000

(c) Rs.3,85,500

(d) Rs.3,52,860

(e) Rs.4,80,000.

(2marks)

48.Xelon Ltd. proposed a dividend of 15%. The called-up equity share capital of the company is Rs.75,000. Calls-in-

arrear amounted to Rs.5,000 and calls in advance aggregated to Rs.12,500. The amount of dividend payable is(a) Rs.12,375

(b) Rs.10,500

(c) Rs. 9,750

(d) Rs. 8,750

(e) Rs. 8,625.

(2marks)

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49.The reserves and surplus of a company at the beginning of the accounting year were Rs.20,00,000. During the year

the company made profit and appropriated the same as follows:

Rs.

Profit during the year 5,00,000

Less:

Dividend distributed 1,00,000

Transfer to General Reserves 2,00,000Balance in the profit & loss Account 2,00,000

The reserves and surplus at the end of the year, would be

(a) Rs.22,00,000

(b) Rs.24,00,000

(c) Rs.25,00,000(d) Rs.21,00,000

(e) Rs.24,50,000. (2marks)

50.Anu Ltd. paid a dividend of Rs.3,60,000 at the end of March 31, 2007. At the beginning of April 01, 2006, there

was Rs.1,20,000 of dividends in arrears. If the companys capital structure was 15,000 9%, cumulative preference

shares of Rs.100 each fully paid-up and 30,000 equity shares of Rs.30 fully paid-up, in the year 2006-07 how

much dividend was paid by Anu Ltd. to its equity shareholders?

(a) Rs.1,95,000

(b) Rs.2,25,000

(c) Rs.1,35,000

(d) Rs.1,05,000

(e) Rs.2,40,000.

(2marks)

51.The balance sheet items of Super Ltd. as at March 31, 2007 have increased by the following amounts compared

with those at the end of the previous year:

Assets Rs.2,32,000

Liabilities Rs.1,40,000

Share Capital Rs.1,00,000

The only change to retained earnings during 2006-07 was relating to a dividend payment of Rs.20,000. The net

income for the year 2006-07 amounted to

(a) Rs.14,000

(b) Rs.10,000

(c) Rs. 8,000

(d) Rs.12,000

(e) Rs. 4,000.

(2marks)

52.On June 15, 2007 a fire occurred in the godown of Recants Ltd. and part of the stock was destroyed. The value of

the stock salvaged was Rs.16,000. The following transactions took place between April 01, 2007 and June 15,

2007:

Particulars Rs.Purchases 5,40,000

Sales 10,00,000

Wages 2,20,000Opening stock 4,00,000

On an average, the company makes a gross profit of 20% on sales. The value of stock lost by fire was

(a) Rs.3,60,000

(b) Rs.3,28,000

(c) Rs.3,44,000

(d) Rs.3,24,000

(e) Rs.2,00,000.

(2marks)

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53.The following data is extracted from the books of Fara Ltd.:

Year Profit (Rs.)

2004-2005 2,20,500

2005-2006 3,22,500

2006-2007 2,40,000

Additional information:

i. An office expense of Rs.8,250 was omitted to be provided in the year 2004-05.ii. 10% profits of 2005-06 are of non-recurring nature.

iii. Bad debts provision of Rs.15,750 on sundry debtors in 2006-07 is no longer required.

The simple average of maintainable profit of the company is

(a) Rs.2,52,750

(b) Rs.2,61,000

(c) Rs.2,51,500

(d) Rs.2,34,900

(e) Rs.2,46,250. (2marks)

54.The balance in the creditors account of a company as on December 1, 2007 was Rs.1,70,000. During the month a

sum of Rs.92,500 was paid to the creditors and goods purchased on credit from them amounted to Rs.1,23,500.

Purchase returns were Rs.4,000. They allowed a sum of Rs.2,400 as cash discount. A bill for Rs.4,000 accepted

earlier by the company in favour of a creditor was dishonoured on December 20, 2007. The balance of creditorsaccount as on December 31, 2007 was

(a) Rs.2,01,000(b) Rs.1,97,100

(c) Rs.1,98,600

(d) Rs.2,02,600

(e) Rs.2,01,600.

(2marks)

55.The following balances are extracted from the books of Ambica Ltd. as on March 31, 2007:

Particulars Rs. Particulars Rs.

Called-up share capital 5,00,000 Fixed assets 7,70,000

Secured loans 4,00,000 Calls in arrears 30,000Loans to employees 51,200 Capital reserve 90,000

Cash 4,000

Sundry debtors 1,10,000

Profit and loss account (credit balance) 50,000

Stock 96,000 Sundry creditors 91,200

Bank balance 40,000 Preliminary expenses 30,000

The total of the liabilities side of the balance sheet of Ambica Ltd. as on March 31, 2007 was

(a) Rs.11,01,200

(b) Rs.11,00,200

(c) Rs.11,31,200

(d) Rs.11,41,200

(e) Rs.11,01,900.(2marks)

56.In the books of Brenda Ltd., the balance in the furniture and fixtures account as on March 31, 2006 was

Rs.3,10,000. The following additional information is given:

I. Sales of the company during the year 2006-07 include Rs.17,000 in respect of sale of an old furniture on

March 31, 2007. The book value of the furniture on April 01, 2006 was Rs.20,000.

II. Depreciation @ 5% is provided on furniture and fixtures.

The amount at which the furniture and fixtures is shown in the balance sheet of Brenda Ltd. as on March 31, 2007

was

(a) Rs.3,10,000

(b) Rs.2,74,500

(c) Rs.2,75,500(d) Rs.2,77,500

(e) Rs.2,78,350.

(2marks)

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57.The following is the Balance Sheet of Pioneer Ltd. as on March 31, 2007:

Balance Sheet as on March 31, 2007

Liabilities Rs. Assets Rs.

Goodwill 60,00075,000 equity shares of Rs.10

each, fully paid 7,50,000 Plant and Machinery 8,50,000

General reserve 3,30,000 Other current assets 2,00,000

Bank loan 1,50,000 Sundry debtors 4,00,000

Sundry creditors 4,20,000 Preliminary expenses 1,40,000

Total 16,50,000 Total 16,50,000

Additional Information:

I. Sundry debtors include a debt of Rs.90,000 of which only Rs.60,000 is likely to be recovered. A provision

has to be made for the balance.

II. The average profit earned by the company during the last four years was Rs.1,20,000.

III. The average rate of dividend paid by the company during the last four years was 12%.

The value of goodwill of the company by using the capitalization method is

(a) Rs. 60,080

(b) Rs. 1,50,000(c) Rs. 1,20,000

(d) Rs. 8,50,000

(e) Rs.10,00,000.

(2marks)

58.The opening balance in the Reserve for discount on creditors of a firm is Rs.4,400 and discount received during

the year is Rs.3,200. If the business wants to keep its Reserve for discount on creditors at the rate of 2% on its

sundry creditors of Rs.3,25,000, the profit and loss account will be

(a) Credited with Rs.3,300

(b) Debited with Rs.3,300

(c) Credited with Rs.7,700

(d) Credited with Rs.5,300(e) Credited with Rs.9,700.

(2marks)

59.Consider the following data pertaining to ABC Ltd. for the year 2006-07:

Partciulars Rs.

Opening balance of debtors 90,000

Closing balance of debtors 80,000

Collection from debtors during the year 1,80,000

Discount allowed to debtors 8,000

The amount of credit sales during the year 2006-07 were

(a) Rs.2,68,000(b) Rs.1,78,000

(c) Rs.1,88,000

(d) Rs.1,98,000

(e) Rs.1,62,000.

(2marks)

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60.Consider the following data pertaining to Band Ltd.:

i. Average profits of the last three years Rs. 7,29,000

ii. Remuneration to Directors Rs. 1,29,000

iii. Capital employed Rs.36,00,000

iv. Normal rate of return 12%

The amount of super profit for calculation of goodwill is

(a) Rs.7,29,000(b) Rs.6,00,000

(c) Rs.2,97,000

(d) Rs.4,32,000(e) Rs.1,68,000.

(2marks)

61.Pivotal Limited depreciates its machinery which was bought on April 1, 2004 for Rs.3,50,000 at 10% using the

written down value method. On April 1, 2007 the company decided to change the method of depreciation to the

straight line method with retrospective effect. Excess depreciation of Rs.10,850 on account of change in the

method of depreciation was credited to the profit and loss account by the company. The depreciation percentage as

per the straight line method would be

(a) 10.50%

(b) 10.00%(c) 8.00%

(d) 6.00%

(e) 4.00%.

(2marks)

62.Consider the following data pertaining to M/s. Ramu Enterprises as on March 31, 2007:

Particulars Rs.

Net sales 8,00,000

Total purchases 5,00,000

Wages paid 50,000

Carriage inward 20,000

Carriage outward 15,000

Gas, water and fuel 20,000

Raw materials destroyed by fire 10,000

Opening stock 1,50,000

Gross profit on sales @ 20%

The value of closing stock of M/s. Ramu Enterprises for the year ended March 31, 2007 was

(a) Rs.73,800

(b) Rs.90,000

(c) Rs.74,800

(d) Rs.76,200

(e) Rs.75,200.

(2marks)

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63.Consider the following data pertaining to Joy Ltd. for the year ended March 31, 2007:

Particulars Rs.

Sales 4,00,000

Excess of opening stock over closing stock 40,000

Plant & Machinery 1,70,000

Rent received 55,000

Purchases 2,85,000

Sales commission paid 12,000Additional information:

Rent received in advance amounted to Rs.2,500. A credit purchase of Rs.15,000 was wrongly recorded in sales day book as Rs.51,000. The company has the practice of depreciating the Plant and Machinery at the rate of 15% per annum on

straight line method. The original cost of the Plant and Machinery was Rs.2,00,000.

Sales commission was paid only to the extent of two thirds of the amount payable.The net profit of the company for the period ended March 31, 2007 was(a) Rs.18,000

(b) Rs.19,500

(c) Rs.13,500

(d) Rs.28,000

(e) Rs.18,500. (2marks)

64.Rosy Ltd. is following weighted average cost method for valuing its inventory. The details of purchase and issueof its raw-materials during the 1

stweek of December, 2007 are as follows:

1.12.2007 Opening stock 50 units value Rs.2,200. 2.12.2007 Purchased 100 units @ Rs.47. 4.12.2007 Issued 50 units. 5.12.2007 Purchased 200 units @ Rs.48.

The value of inventory at the end of the 1st

week December, 2007 was

(a) Rs.14,200

(b) Rs.14,300

(c) Rs.14,000(d) Rs.14,400

(e) Rs.14,600.

(2marks)

65.The total of debit column of trial balance of a company is Rs.2,45,000 and that of the credit column is

Rs.2,72,900. Subsequently the following mistakes are discovered:

ParticularsCorrect Amount

(Rs.)

Amount which appears in

trial balance (Rs.)

Opening stock 40,500 40,600

Advertisement expenses 15,000 15,000 (credit column)

Interest from investments 36,000 30,000Sundry creditors 76,000 80,000

The total of the corrected trial balance is

(a) Rs.2,74,900

(b) Rs.2,59,900

(c) Rs.2,75,100(d) Rs.2,84,900

(e) Rs.2,82,800.

(2marks)

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66.The balance in the accumulated provision for depreciation account of a company as on April 1, 2006 was

Rs.1,00,000 when the original cost of the assets amounted to Rs.5,00,000. The company charges 10% depreciation

on a straight line basis for all the assets. One such asset costing Rs.2,50,000 with an accumulated depreciation of

Rs.40,000 was disposed off on April 1, 2006. The closing balance of the accumulated depreciation account on

March 31, 2007 was

(a) Rs.1,10,000

(b) Rs. 85,000(c) Rs. 60,000

(d) Rs.1,25,000

(e) Rs.1,07,750.

(2marks)

67.Consider the following Balance Sheet of Penguin Ltd. as on March 31, 2007:

Liabilities Rs. Assets Rs.

Share capital 20,00,000 Land 2,00,000

Profit and loss account 1,00,000 Buildings 10,00,000

Provision for depreciation: Plant and machinery 15,00,000

Buildings 2,00,000 Furniture and fittings 1,00,000

Plant and machinery 5,00,000 Investments 4,45,000

Furniture and fittings 20,000 Sundry debtors 1,50,000

Short-term loan 6,00,000 Closing stock 50,000

Sundry creditors 50,000 Cash and bank 25,000

Total 34,70,000 Total 34,70,000

The company charges depreciation on all fixed assets (except land) at the rate of 10% on written down value

method. The amount to be charged to profit and loss account for the year ended March 31, 2007 on account of

depreciation was

(a) Rs.2,60,000

(b) Rs.1,88,000

(c) Rs.2,80,000(d) Rs.2,08,000

(e) Rs.9,08,000.

(2marks)

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68.An inexperienced book-keeper of Volga Ltd. has drawn up the following trial balance of the firm for the year

ended March 31, 2007:

Trial Balance as on March 31, 2007

Particulars Debit (Rs.) Particulars Credit (Rs.)

Provision for doubtful debts 4,000 Capital 91,820

Bank overdraft 33,080 Sundry creditors 32,740

Sundry debtors 59,660 Discount allowed 14,660Discount received 5,040 General expenses 16,580

Drawings 24,000 Returns inward 6,600

Office furniture 43,100 Cash sales 1,21,600

Purchases 2,18,460 Credit sales 2,16,040

Rent and rates 6,280Salaries 50,400

Opening stock 48,360

Provision for depreciation on office

furniture

7,280

Total 4,99,660 Total 5,00,040

The amount debited/credited to suspense account in corrected trial balance was

(a) Rs. 380 (Debit)

(b) Rs. 1,060 (Credit)(c) Rs.23,500 (Debit)

(d) Rs. 8,340 (Debit)

(e) Rs.23,500 (Credit).

(2marks)

69.On April 01, 2006, Chitra Lekha Limited showed a balance of Rs.5,600 to the credit of Provision for bad and

doubtful debts. On March 31, 2007 the Sundry Debtors showed a balance of Rs.2,50,400. Out of the total debtors,the status of the following debtors is as follows:

Sinha Rs.3,800 identified as bad debt and is to be written off. Gupta Rs.9,000 expected to realize only 80%. Patel Rs.8,000 expected to realize only 60%.

Iyer Rs.5,500 likely to file insolvency petition and the percentage of recovery is not known.All other debts as on the date of finalization of accounts are estimated to be good. The closing balance of provision

for bad and doubtful debts for the year ended as on March 31, 2007 was

(a) Rs.14,300

(b) Rs. 8,700

(c) Rs.15,700

(d) Rs.10,500

(e) Rs. 4,900.

(2marks)

70.In the books of Pannalal Kunnalal Ltd. the machinery account shows a debit balance of Rs.30,000 as on April 1,

2005.The machinery was sold on September 30, 2006 for Rs.15,000. If the company charges depreciation @20%

p.a. on diminishing balance method, the amount of depreciation and the profit/loss on sale of machinery reflected

in the profit and loss account of the company for the period ended March 31, 2007 was

(a) Depreciation of Rs.6,000 and loss on sale of machinery Rs.3,000

(b) Depreciation of Rs.4,800 and loss on sale of machinery Rs.4,200

(c) Depreciation of Rs.2,400 and loss on sale of machinery Rs.6,600

(d) No depreciation and loss on sale of machinery Rs.9,000

(e) Depreciation of machinery Rs.4,800 and profit on sale of machinery Rs.4,200.

(2marks)

E

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Suggested Answers

Financial Accounting (CFA510): January 2008

Answer Reason

1. D The receipt of interest by proprietor on bank fixed deposit held jointly with his spouse cannot be

entered in the books of account of the business. The other items i.e. withdrawal of goods by the

proprietor for personal consumption, sale of an asset on credit, purchase of new asset in exchange of

old asset and loss of stock by fire are all recorded in the books of account of a firm.

< TOP >

2. C The phrase markdown means the selling price lowered below the original selling price. < TOP >

3. E Inflow of cash or receivables out of sales, interest on investment, royalty and dividends are revenueitems. Where as advance received for supplies is not a revenue item.

< TOP >

4. A Under straight line method of depreciation, the depreciable asset whether tangible or intangible is

depreciated over its useful life with an equal amount of depreciation in each period. This is the widely

used approach of recognizing an equal amount of depreciation expense in each period of a depreciable

assets useful life. Thus, alternative (a) is the correct answer.

< TOP >

5. C At the time of finalization of accounts entries passed for outstanding expenses, depreciation and

interest on capital are known as adjusting entries. Hence, (c) is the correct answer

< TOP >

6. C Stock at the end of the financial year is the closing stock, and prepaid rent is the amount of rent which

is paid in advance. Interest received is an income appearing in profit and loss account. Similarly, stock

at the beginning is the opening value of stock which appears on the debit side of the trading account.

Hence item (I) and (III) are appearing in balance sheet and option (c) is the right answer.

< TOP >

7. E Balance appearing on the credit side of a trial balance can be an income or Profit or Gain, an

Outstanding expense, a liability or an income received in advance.

< TOP >

8. C The rule applicable to nominal account is debit all expenses and losses and credit all incomes and

gains.

< TOP >

9. E Balance sheet is a statement of assets and liabilities of a business organization at any particular date. < TOP >

10. B Amount of income from investment should be transferred to the profit and loss account, distinguishing

between trade investments and other investments. Therefore, amount received as interest on tradeinvestments held by a company should be transferred to its Profit and loss account.

< TOP >

11. A Retained earnings is profit after tax less dividends. < TOP >

12. C If the profit is 25% of the cost price then it is 20% of the sales price.

Particulars Rs.

Assume cost price 100

Add: Profit 25% 25

Selling price 125

Percentage of profit on selling price 25/125x 100 = 20%

< TOP >

13. A The ledger is also called as principal book as the final information pertaining to the financial positionof the business emerges only from the accounts. Hence, (a) is the correct answer.

< TOP >

14. C Return outward book is maintained by a business to record return of goods purchased on credit. < TOP >

15. C The liabilities payable over a longer period of time, generally after one year are called non-current

liabilities.

< TOP >

16. C A credit sale of Rs.2,000 was wrongly entered in the purchases book. The impact of the mistake is that

purchases increased by Rs.2,000 and sales decreased by Rs.2,000, with this the gross profit will

decrease by Rs.4,000.

< TOP >

17. C A person who is carrying on profession required to get his accounts audited, if his gross receipts

exceed Rs.10 lakhs in a year

< TOP >

18. A The system of accounting in which revenue is recognized when earned and expenses are recognized

when incurred, is called accrual system.

< TOP >

19. E The valuation of goodwill is necessary whenever a business is sold or purchased and also for valuationof shares. Thus (e) is the correct answer.

< TOP >

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20. A Net worth is arrived after deducting all outside liabilities both current and non-current from total assets

of the concern.

< TOP >

21. A The systematic allocation of the costs of intangible assets to the periods in which they provide

benefits is called amortization.

< TOP >

22. A Errors which can affect both the accounts are errors of complete omission. For instance, if atransaction is omitted to be recorded in the purchase book, both purchases a/c and creditors a/c will be

affected. Errors of partial omission, errors of overcasting, errors of undercasting and errors of carryforward may affect only one account.

< TOP >

23. C a. The difference between net sales and cost of goods sold is called gross profit.

b. The difference between gross profit and operating expenses is called operating profit.

c. Gains arising from sources other than normal operations of the business is called non-operating

surplus.

d. The difference between profit before interest and taxes and interest is called profit before tax.

e. The difference between profit before tax and tax for the year.

Hence (c) is correct answer.

< TOP >

24. A Payment of ex-gratia to an employee is not treated as an allowable expense for computing managerialremuneration. Thus, alternative (a) is the correct answer.

< TOP >

25. C According to Section 226(3) of the Companies Act, 1956, a body corporate, an officer of the company,

a person indebted to the company for an amount exceeding Rs.1,000, a person disqualified to be

appointed as an auditor of its subsidiary company, a person holding any security of the company are

disqualified to be appointed as an auditor. However, a person holding the shares of the company as anominee or a trustee for any third person and in which the holder has no beneficial interest shall not be

disqualified. Hence the answer is (c).

< TOP >

26. D When fixed assets are sold for book value, there will be no change in the total assets. Hence, (d) is

correct answer.

< TOP >

27. E Advance tax that appears in the trial balance is shown under the head loans and advances in the

balance sheet.

< TOP >

28. B When a company revalues its fixed assets and if there is a profit on revaluation, it should betransferred to Capital Reserve a/c.

< TOP >

29. A If the articles of a company permits the directors can declare an interim dividend between two annual

general meetings.

< TOP >

30. C The value of the goodwill, according to the simple profit method, is the product of average profit of

the given years and number of years.

< TOP >

31. E The three column cash book is a refinement over single column cash book and double column cash

book. Under three column cash book an additional column for discount is included on either side.

Thus, it represents cash column-real account, Bank column-personal account and discount column-

nominal account. The three-column cash book represents real, personal and nominal accounts.

< TOP >

32. B Schedule VI of the Companies Act, 1956 clearly specifies that the interest accrued on secured loans

but not paid should be shown under the head Secured Loans.

< TOP >

33. A The Companies Act, 1956 specifies both the form and contents of the balance sheet of a company.

Stores and Spare parts (a) are shown under the category of current assets. Discount on issue of

securities is shown under the head Misc. expenditure; Development of property (d) and Live stock (e)

are shown under fixed assets; Trust securities (c) are investments

< TOP >

34. D Proposed additions to reserve does not come under the head provision, it should be listed under

Reserves and surplus.

< TOP >

35. B Auditing begins where -- Accounting ends. The auditing begins as soon as the accounting process is

completed. (b) is the correct answer.

< TOP >

36. C In an Annual General Meeting, submission of funds flow statement is not mandatory. But submission

of Balance Sheet, Profit & Loss account, Directors report and Auditors report are mandatory. Hence,

(c) is correct answer.

< TOP >

37. C Liability for bills accepted is a current liability and it is not a contingent liability. < TOP >

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38. B The costs/expenses that are incurred for establishing a company are called preliminary expenses. < TOP >

39. A The assets which are acquired for the purpose of using them in the conduct of business operations and

not for reselling to earn profit are to be treated as fixed assets.

< TOP >

40. C Outstanding salaries is an example of representative personal account.

Rent is an example of nominal account

Stock of stationery is an example of real account

Cash in hand is an example of real account

Repairs to machinery is an example of nominal account. Hence, (c) is correct answer.

< TOP >

41. D Provision for taxation of the previous year = Rs. 8,76,000

Dividend on 10% 20,000 Preference Shares of Rs.100 = Rs. 2,00,000

10% Dividend on 2,60,000 equity shares of Rs.10 each = Rs. 2,60,000

The total amount debited to Profit and Loss appropriation account = Rs.13,36,000

< TOP >

42. A R &D costs include design of tools and modification of the formulation of a process, totaling to

Rs.5,50,000. R &D costs does not include trouble shooting breakdowns during production and

adaptation of existing capability for a specific customer.

< TOP >

43. B Particulars Rs.

Total assets 7,75,000

Less: Fictitious assets 60,000

Long term loan 1,50,000

Creditors 90,000

Bank overdraft 35,000

Capital employed at the end 4,40,000

Less: of the profit during the year 2006-2007 30,000

Average capital employed 4,10,000

Normal profit = Average capital employed Normal rate of return

= Rs.4,10,000 12% = Rs.49,200.

< TOP >

44. E Calculation of Transfer to General Reserve :

Final dividend declared Rs.15,05,000 Rs.5,000 10% = Rs.1,50,000

Total of dividend declared and proposed during the year

= Rs.(1,05,000 + 1,50,000) = Rs.2,55,000

Dividends as a percent of paid-up capital = (2,55,000/15,00,000) 100 = 17%

Since this rate of dividend falls in the slab greater than 15% but less than 20% the transfer to

reserves should be 7.5% of the current profits.

Transfer to reserves = (7.5/100) 2,37,000 = Rs.17,775.

< TOP >

45. D The owners equity at the beginning of the year = Rs.22,000

Add: additional capital = Rs.12,000

Net Profit = Rs.16,000

Total = Rs.50,000

Less: Drawings during the year = Rs. 8,000

Owners equity at the at the end of the year = Rs.42,000.

< TOP >

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46. C Trading profits for the last three years :

Particulars Rs.

Year 1 1,07,600

Year 2 90,700

Year 3 1,12,500

Total 3,10,800

Average Profit (3,10,800 / 3) 1,03,600

Less : Remuneration of the directors 12,000Average Maintainable Profits 91600

Less: Normal Profit expected @ 10% on average capital

employed

106,00,000

100

60,000

Super Profit 31,600

Goodwill at 3 years purchase (31,600 3) 94,800

< TOP >

47. A

Particulars Rs. Rs.

Net Profit as calculated 76,50,000

Add: Revenue Profit on sale of plant 60,00077,10,000

Less: Directors remuneration 1,50,000

Bonus paid to production executive 1,50,000 3,00,000

Net Profit 74,10,000

Where the amount for which the fixed asset is sold exceed the written-down value, credit shall be

given for so much of the excess as is not higher than the difference between the original cost of the

fixed asset and its written down value. Hence only Rs.60,000 (Rs.3,00,000 Rs.2,40,000) should be

added

The directors remuneration and the bonus paid to any member of companys staff should be deducted

whereas Income tax and super tax should not be deducted.

Credit should not be given to profits by way of premium on shares

Managing Directors Commission = 74,10,000 5% = Rs.3,70,500.

< TOP >

48. B Dividend is payable on paid up capital;

Rate of dividend = 15%

Called-up capital Rs.75,000

Less: Calls in arrears Rs. 5,000

Paid up capital Rs.70,000

Dividend payable =

15 .70,000.10,500

100

RsRs

< TOP >

49. B (Rs.)

Reserves & Surplus (opening balance) 20,00,000

Add : Transfer to General Reserve 2,00,000Balance in Profit & Loss A/c 2,00,000

Reserves & Surplus (at year end) 24,00,000

< TOP >

50. D Of the Rs.3,60,000 paid, Rs.1,20,000 was paid toward dividends in arrears and Rs 2,40,000 was paid

toward dividends for 2006-07. Of the Rs.2,40,000, Rs.1,35,000 was paid to preferred shareholders

(15,000 shares x Rs 100 per share x .09), leaving Rs.1,05,000 to be paid to equity shareholders

(Rs.2,40,000 Rs.1,35,000).

< TOP >

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51. D

Particulars Rs. Rs.

Assets increased by 2,32,000

Add: Dividend paid during the year 20,000

2,52,000

Less: Liabilities increased by 1,40,000

Share capital increased by 1,00,000 2,40,000

Net income for the year 12,000

< TOP >

52. C Trading account in the books of Recants Ltd. for the period April 1, 2007 to June 15, 2007

Dr. Cr.

Particulars Rs. Particulars Rs.

To Opening stock 4,00,000 By Sales 10,00,000

To Purchases 5,40,000 By Stock lost by fire

(Bal. fig.)

3,44,000

To Wages 2,20,000 By Closing stock

(stock salvaged)

16,000

To Gross profit

(Rs.10,00,000 x 20/100)

2,00,000

13,60,000 13,60,000

< TOP >

53. A The average maintenance profits of the company are

Year Rs. Rs.

2004-2005 Profit 2,20,500

Less : Omission of office expenses 8,250 2,12,250

2005-2006 Profit 3,22,500

Less : 10% non-recurring 32,250 2,90,250

2006-2007 Profit 2,40,000

Add : Provision for bad debts 15,750 2,55,750

Total profits 7,58,250

The simple average maintainable profits of the company

= Rs.7,58,250 3 = Rs.2,52,750.

< TOP >

54. C Dr. Creditors a/c Cr.

Particulars Rs. Particulars Rs.

To Cash 92,500 By Balance b/d 1,70,000

To Purchases Returns 4,000 By Purchases 1,23,500

To Discount received 2,400 By Bills Payable 4,000

To Balance c/d 1,98,600

2,97,500 2,97,500

By Balance b/d 1,98,600

< TOP >

55. A Balance Sheet of Ambica Ltd. as on March 31, 2007

Liabilities Rs. Assets Rs.

Share capital 5,00,000 Fixed assets 7,70,000

Less call in arrears 30,000 4,70,000 Sundry debtors 1,10,000Capital reserve 90,000 Stock 96,000

P & L A/c 50,000 Loans to employees 51,200

Secured loans 4,00,000 Cash 4,000

Bank 40,000

Sundry creditors 91,200 Preliminary expenses 30,000

11,01,200 11,01,200

< TOP >

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56. C Dr. Furniture and fixtures account Cr.

Particulars Rs. Particulars Rs.

To Balance b/d 3,10,000 By Bank (sale) 17,000

By Profit and loss account 2,000

By Depreciation (Rs.3,10,000 x 5%) 15,500

By Balance c/d 2,75,500

3,10,000 3,10,000

Particulars Rs.

Written down value of machinery sold as on April 01, 2006 20,000

Less : Depreciation (Rs.20,000 x 5%) 1,000

Value of machine on March 31, 2007 19,000

Less : Sale consideration 17,000

Loss on sale of machine 2,000

< TOP >

57. B Computation of net tangible assets of Pioneer Ltd.

Particulars Rs. Rs.

Plant & machinery 8,50,000

Other current assets 2,00,000

Sundry debtors 4,00,00014,50,000

Less: Liabilities:Bank loan 1,50,000

Sundry creditors 4,20,000

Provision for bad debts 30,000 6,00,000

Net tangible assets 8,50,000

= Total value of the business=

Average ma int ainable profit

Normal rate of return x 100

=

Rs.1,20,000

12% = Rs.10,00,000

Goodwill = Total value of the business Net tangible assets= Rs.10,00,000 8,50,000 = Rs.1,50,000.

< TOP >

58. D The formula for calculating the amount of adjusting entry in respect of reserve for discount on

accounts payable is, discount received during the period plus the required reserve minus the old

reserve. Discount received during the year is 3,200, required reserve at the rate of 2% is 6,500 and old

reserve is 4,400. So the net amount that can be credited to Profit & Los A/c is 3,200 plus 6,500 =

9,700 minus 4,400 = 5,300. Discount receivable being an income, it is credited to P&L A/c.

< TOP >

59. B Dr. Sundry Debtors account Cr.

Particulars Rs. Particulars Rs.

To Balance b/d 90,000 By Bank (collection

from debtors)

1,80,000

To Credit sales (Bal. fig.) 1,78,000 By Discount allowed 8,000By Balance c/d 80,000

2,68,000 2,68,000

< TOP >

60. E

Particulars (Rs.)

Average profits: 7,29,000

Less: Remuneration from alternative employment 1,29,000

6,00,000

Less: Normal profit @ 12% on capital employed

(12% of Rs.36,00,000)

4,32,000

Super Profit 1,68,000

< TOP >

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61. C Amount (Rs.)

Cost of the machinery on 1.4.2004 3,50,000

Less :Depreciation for 2004-05 at 10% 35,000

W.D.V. on 1.4.2005 3,15,000

Less : Depreciation for 2005-06 31,500

W.D.V. on 1.4.2006 2,83,500

Less : Depreciation for 2006-07 28,350W.D.V. on 1.4.2007 2,55,150

Total depreciation provided Rs. (3,50,000 2,55,150) 94,850

Less : excess depreciation provided credited 10,850

Total depreciation provided 84,000

Depreciation per annum (84,000/3) = 28,000

Rate of depreciation =

Annualdepreciationx100

Cost

=

28, 000x100

3, 50, 000 = 8%

< TOP >

62. B Books of Ramu EnterprisesDr. Trading Account for the period ending March 31, 2007 Cr.

Particulars Rs. Particulars Rs.

To Opening stock 1,50,000 By Net Sales 8,00,000

To Purchases 5,00,000 By Stock lost by fire 10,000

To Wages 50,000 By Closing stock 90,000

To Carriage inward 20,000

To Gas, water, fuel 20,000

To Gross Profit 1,60,000

(Rs.8,00,000 x 20%)

9,00,000 9,00,000

< TOP >

63. C Net Profit of Joy Ltd. for the year ending March 31, 2007

Dr. Cr.

Particulars Rs. Rs. Particulars Rs.

To Purchases 2,85,000 By Sales 4,00,000

Add: Omitted to be recorded 15,000 3,00,000 Less Wrong Credit 51,000 3,49,000

To Excess of opening stock over

closing stock 40,000

To Gross Profit 9,000

3,49,000 3,49,000

To Sales Commission 12,000 By Gross Profit 9,000

+ Accrued 6,000 18,000 By Rent received 55,000

To Depreciation 30,000

Less :received in advance

2,500 52,500

To Net Profit 13,500

61,500 61,500

The net profit is Rs.13,500

< TOP >

64. A Stores Ledger in the books of Rosy Ltd. for the 1st

week of December, 2007

Purchases Issues Balance

Date Quantity

(units)

Rate

Rs.Rs.

Quantity

(units)

Rate

Rs.Rs.

Quantity

(units)

Rate

Rs.Rs.

1.12.07 - - - - - - 50 44 2,200

2.12.07 100 47 4,700 - - - 150 46 6,9004.12.07 - - - 50 46 2,300 100 46 4,600

5.12.07 200 48 9,600 - - - 300 47.33 14,200

< TOP >

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65. B

Particulars Rs.

Total of debit side of trial balance 2,45,000

Add : Advertisement expenses 15,000

Less : Opening stock (excess taken) 100

Total of trial balance (Debit side) 2,59,900

Particulars Rs.

Total of credit side of trial balance 2,72,900

Add : Interest on investments (less taken) 6,000

Less : Sundry creditors (excess taken) 4,000

Less : Advertisement expenses (wrongly taken) 15,000

Total of trial balance (credit side) 2,59,900

< TOP >

66. B

Particulars Rs.

The opening balance in the accumulated depreciation a/c = 1,00,000

Less : Accumulated depreciation of the asset disposed = 40,000

60,000Add : Current years depreciation

(5,00,000 2,50,000) (10/100)

25,000

The balance of the accumulated depreciation account = 85,000

< TOP >

67. B

Particulars Rs.

Depreciation:

Buildings (Rs.10,00,000 Rs.2,00,000) 10% 80,000

Machinery (Rs.15,00,000 Rs.5,00,000) 10% 1,00,000

Furniture (Rs.1,00,000 Rs.20,000) 10% 8,000

Total depreciation 1,88,000

< TOP >

68. C Corrected Trial Balance

Particulars Debit (Rs.) Credit (Rs.)

Provision for doubtful debts 4,000

Bank overdraft 33,080

Sundry debtors 59,660

Discount received 5,040

Drawings 24,000Office furniture 43,100

Purchases 2,18,460

Rent and rates 6,280

Salaries 50,400

Opening stock 48,360Provision for depreciation on office furniture 7,280

Capital 91,820Sundry creditors 32,740

Discount allowed 14,660

General expenses 16,580

Returns inward 6,600

Cash sales 1,21,600

Credit sales 2,16,040

Suspense account 23,500

Total 5,11,600 5,11,600

Suspense (Debit) = Rs.23,500.

< TOP >

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69. D The amount debited to profit and loss account in respect of provision for doubtful debts is Rs.8,700

and the closing provision is Rs.10,500.

Provision for bad and doubtful debts

Dr. Cr.

Particulars Rs. Rs. Particulars Rs.

To Bad debts (Sinha) 3,800 By Balance b/d 5,600

To Provision

Gupta 20% of Rs.9,000

1,800 By Profit and loss account 8,700

Patel 40% of Rs.8,000 3,200

Iyer 100% of Rs.5,500 5,500

To Balance c/d 10,500

14,300 14,300

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70. C Machinery Account

Date Particulars Rs. Date Particulars Rs.

April 1, 05

April 1, 06

To Balance b/f

To Balance b/f

30,000

______30,000

24,000

______

24,000

March 31, 06

March 31, 06

Sept.30, 06

March 31, 07

By Depreciation

By Balance c/d

By Depreciation

By Bank

By P&L a/c

6,000

24,00030,000

2,400

15,000

6,600

24,000

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