ULTIMATE BOOK OF ACCOUNTANCY Class 11th

Answers
1. Case 1: 30 June 2021 Case 2: 14 August 2021
2. (i) Error of commission
(ii) Error of Principle
(iii) Error of omission
(iv) Compensating Error
3. Items shown in the Debit side of Trial Balance:
(iv) Fixed Deposits @8% p.a.
(v) Commission Allowed
(vii) Bills Receivable
(viii) Cash in Hand
4. Rectifying Entries
(i) Machinery A/c Dr. 5,600
To Dep. On machinery 5,600
(ii) Purchase A/c Dr. 4,000
Sales A/c Dr. 4,000
To Mohan 8,000
(iii) Vinod Dr. 5,000
To Manoj 5,000
5. Journal (In the Books of Vinod)

Date Particulars L.F. Debit Credit

15 Satish Dr. 50,000
Feb. To Sales A/c 50,000
(Being goods sold to Satish)

15 Bill Receivable A/c Dr. 50,000

Feb. To Satish 50,000
(Being bill accepted by Satish)

15 Bank A/c Dr. 48,500

March Discounting Charges A/c Dr. 50,000 x 18/100 x 2/12 1,500
To Bill Receivable A/c 50,000

Journal (In the Books of Satish)

Date Particulars L.F. Debit Credit

15 Purchase A/c Dr. 50,000
Feb. To Vinod 50,000
(Being goods purchased from Vinod)
 ULTIMATE BOOK OF ACCOUNTANCY Class 11th
15 Vinod Dr. 50,000
Feb. To Bills Payable 50,000
(Being acceptance given)
18
May Bills Payable A/c Dr. 50,000
To Bank A/c 50,000
(Being amount paid on maturity)

6. Gross Profit = 9,00,000 x 25/125 = 1,80,000

Cost of goods sold = Sales – Gross profit
9,00,000 – 1,80,000 = 7,20,000
7. (i) Ready-to-Use
Ready-to-Use accounting software is suited to organisations running
small/conventional business where the frequency or volume of accounting
transactions is very low. This is because the cost of installation is generally low and
number of users is limited. Ready-to-use software is relatively easier to learn and
people (accountant) adaptability is very high. This also implies that level of secrecy
is relatively low and the software is prone to data frauds.
(ii) Customised
Accounting software may be customised to meet the special requirement of the user.
Standardised accounting software available in the market may not suit or fulfil the
user requirements. For example, standardised accounting software may contain the
sales voucher and inventory status as separate options. However, when the user
requires that inventory status to be updated immediately upon entry of sales voucher
and report be printed, the software needs to be customised.
(iii) Tailored
The accounting software is generally tailored in large business organisations with
multi users and geographically scattered locations. These software requires
specialised training to the users. The tailored software is designed to meet the specific
requirements of the users and form an important part of the organizational MIS. The
secrecy and authenticity checks are robust in such softwares and they offer high
flexibility in terms of number of users.
OR
Limitations:
Cost of Training : The sophisticated computerised accounting packages generally require
specialised staff personnel. As a result, a huge training costs are incurred to understand
the use of hardware and software on a continuous basis because newer types of hardware
and software are acquired to ensure efficient and effective use of computerised
accounting systems.
• Staff Opposition : Whenever the accounting system is computerised, there is a
significant degree of resistance from the existing accounting staff, partly because of the
fear that they shall be made redundant and largely because of the perception that they
shall be less important to the organisation.
 ULTIMATE BOOK OF ACCOUNTANCY Class 11th
• Disruption : The accounting processes suffer a significant loss of work time when an
organisation switches over to the computerised accounting system. This is due to
changes in the working environment that requires accounting staff to adapt to new
systems and procedures.

8. (a) 11,65,000 i.e. 25,000 opening stock + 10,40,000 Net purchases + 1,00,000 wages
Trading Account
Particulars Amount Particulars Amount
To Opening Stock 25,000 By Net Sales 15,50,000
To Net Purchases 10,50,000 – 10,40,000 By Closing Stock 30,000
10,000 1,00,000
To Wages 4,15,000
To Gross Profit
15,80,000 15,80,000
Cost of goods sold = Net Sales – Gross Profit
15,50,000 – 4,15,000 = 11,35,000
9. Statement of Affairs
Liabilities Amount Assets Amount
Creditors 90,000 Cash at Bank 24,980
Capital (Balancing Figure) 85,330 Debtors 1,25,600
Stock 24,750
1,75,330 1,75,330

Statement of Profit and Loss

Capital as on March 31, 2017…………………………………………………………… 85,330
Add Drawings during the year……………………………………………………………10,000
95,330
Less Additional capital introduced during the year ………………………………(15,000)
Adjusted capital at end of the year, i.e. March 31, 2017……………………….…80,330
Less Actual capital at the beginning of year, i.e. April 01, 2016……………… (50,000)
Profit made during the year …………………………………………………………….30,330

10. Profit and Loss Account (Extract)

Particulars Amount Particulars Amount

To Interest on Bank loan 1,000 By Interest on Investment 5,000
Add: Outstanding Interest 600 1,600 Add: Accrued interest 3,000 8,000

By Interest from Mohan 700

Add: Accrued interest 300 1,000

Balance Sheet (Extract)

Liabilities Amount Assets Amount
Bank loan 80,000 Investment 1,00,000
Interest due on Bank loan 600 Loan to Mohan 20,000
Accrued interest on Investment 3,000
Accrued interest from Mohan 300
 ULTIMATE BOOK OF ACCOUNTANCY Class 11th
11. Comparison between Manual Accounting and Computerised Accounting

• Identifying : The identification of transactions, based on application of accounting principles

is, common to both manual and computerized accounting system.

• Recording : The recording of financial transactions, in manual accounting system is through

books of original entries while the data content of such transactions is stored in a well-
designed accounting database in computerised accounting system.

• Classification : In a manual accounting system, transactions recorded in the books of

original entry are further classified by posting into ledger accounts. This results in
transaction data duplicity. In computerized accounting, no such data duplication is made to
cause classification of transactions. In order to produce ledger accounts, the stored
transaction data is processed to appear as classified so that the same is presented in the form
of a report. Different forms of the same transaction data are made available for being
presented in various reports.

• Summarising : The transactions are summarised to produce trial balance in manual

accounting system by ascertaining the balances of various accounts. As a result, preparation
of ledger accounts becomes a prerequisite for preparing the trial balance. However, in
computerized accounting, the originally stored transactions data are processed to churn out
the list of balances of various accounts to be finally shown in the trial balance report. The
generation of ledger accounts is not a necessary condition for producing trial balance in a
computerised accounting system.

• Closing the Books : After the preparation of financial reports, the accountants make
preparations for the next accounting period. This is achieved by posting of closing and
reversing journal entries. In computerised accounting, there is year-end processing to
create and store opening balances of accounts in database.

12. Trading and Profit and Loss Account.

Particulars Amount Particulars Amount

` `

Opening stock 60,000 Sales 3,00,000

Purchases 2,50,000 Less Return (2,000) 2,98,000
Less Returns (2,500) 2,47,500 Closing stock 70,000
Wages 1,200
Carriage inwards 500
Factory rent 1,450
Gross profit c/d 57,350
3,68,000 3,68,000
Interest 2,000 Gross profit b/d 57,350
Salary 2,500 Rent received 10,380
Carriage outwards 700 Less Advance rent (6,000) 4,380
Office Rent 2,300 Commission received 16,000
Insurance 780
Less Prepaid insurance (200) 580
Depreciation on furniture 1,125
Depreciation on Plant and 7,800
Machinery
Depreciation on building 19,600
Commission 500
Bad debts 3,500
Add Further bad debts 2,000
Add New provision 2,400
7,900
Less Old provision (1,550) 6,350
 ULTIMATE BOOK OF ACCOUNTANCY Class 11th
Net Profit (transferred to 34,275
capital account)
77,730 77,730

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Balance Sheet
as at March
31, 2021
Liabilities Amount Liabilities Amount
` `

Creditors 2,50,000 Cash In hand 22,500

Bills payable 70,000 Cash at bank 35,000
Advance rent 6,000 Bills receivable 3,000
Capital 2,20,000
Add Net profit 34,275 2,54,275 Prepaid insurance 200
Debtors 50,000
Less Further (2,000)
bad debts 48,000
Less New provision (2,400) 45,600
Plant and Machinery 1,22,200
Furniture 21,375
 ULTIMATE BOOK OF ACCOUNTANCY Class 11th
Buildings 2,60,400
Closing stock 70,000
5,80,275 5,80,275

OR

(a) Cost of goods sold = Total Purchase – Purchase Return + Direct Expenses
12,60,000 = 12,00,000 – 30,000 + 90,000
Cost of 2/3 goods sold = 12,60,000 x 2/3 = 8,40,000
Gross Profit = 9,15,000 – 8,40,000 = 75,000

(b) . Trading and Profit & Loss Account

Particulars Amount Particulars Amount

To Opening Stock 2,00,000 By Sales 10,10,000
To Purchases 8,10,000 By Closing Stock 3,00,000
To Gross Profit 3,00,000

13,10,000 13,10,000
By Gross Profit 3,00,000
To Net Profit 3,00,000
3,00,000 3,00,000

Balance Sheet (Extract)

Liabilities Amount Assets Amount

Capital --- Closing Stock 3,00,000
Add: Net Profit 3,00,000 3,00,000
3,00,000 3,00,000