Solutions Accounts Mock Test Oct 2020
Solutions Accounts Mock Test Oct 2020
2. True, Discount at the time of retirement of a bill is a gain for the drawee.
3. False, Receipts and payments account highlights cash receipts and payments.
Equity/Capital + Long Term Liabilities = Fixed Assets + Current Assets - Current Liabilities
5. False, According to Partnership Act, in the absence of any agreement, profits and
losses are to be shared equally among partners.
LIMITATIONS OF ACCOUNTING
1. Due to money measurement concept, the Balance sheet cannot reflect the value of
certain factors like loyalty and skill of the personnel which are the most valuable asset
of an enterprise.
2. Balance Sheet shows the position of the business on the day of its preparation and not
on the future date while the users of the accounts are interested in knowing the position
of the business in the near future and also in long run and not for the past date.
3. Accounting is based on estimates and certain accounting estimates depend on the sheer
personal judgement of the accountant, e.g., provision for doubtful debts, method of
depreciation adopted etc.
4. Different accounting policies for the treatment of same item adds to the probability of
manipulations. Accounting principles sometimes conflict with each other. Accounting
ignores changes in some factors like inflation.
ANSWER TO Q.2.(A)
Statement of Valuation of Stock on 30th June, 2020
Particulars Amount
(In Rs.)
Working Notes:
Total 16,500
4. Calculation of commission:
Total commission
Working Note:
, ,
Calculation of interest: × = ` 110 (approx.)
ANSWER TO Q.NO.4 (a)
`
Subscription received during the year 11,25,000
Less: Subscription receivable on 1.4.2019 33,750
Less: Subscription received in advance on 31.3.2020 15,750 (49,500)
10,75,500
Add: Subscription receivable on 31.3.2020 49,500
Add: Subscription received in advance on 1.4.2019 27,000 76,500
Amount of Subscription appearing in Income & Expenditure 11,52,000
Account
`
Payment for Sports material 6,75000
Less: Amounts due for sports material on 1.4.2019 (2,02,500)
4,72,500
Add: Amounts due for sports material on 31.3.2020 2,92,500
Purchase of sports material 7,65,000
Revaluation Account
` `
To Furniture 1,740 By Building 6,400
To Stock 2,140 By Sundry creditors 2,800
To Provision of doubtful debts By Investment 900
(` 3,500 – ` 400) 3,100
To Outstanding wages 3,120 ____
10,100 10,100
P Q R P Q R
` ` ` ` ` `
To Bal 142,000 108,000 50,000 By Bal b/d 88,000 72,000 –
c/d
By Cash A/c – – 50,000
By Goodwill
A/c (WN) 54,000 36,000
Liabilities ` Assets `
Capital Accounts: Goodwill 90,000
P 1,42,000 Building (52,000 + 6,400) 58,400
Q 1,08,000 Furniture (11,600 – 1,740) 9,860
R 50,000 3,00,000 Stock-in-trade (42,800 – 2,140) 40,660
Bills Payable 8,200 Debtors 70,000
Bank Overdraft 18,000 Less: Provision for bad Debts (3,500) 66,500
Sundry creditors 23,000 Investment (5,000 + 900) 5,900
(25,800-2,800)
Outstanding wages 3,120 Cash (31,000 + 50,000) 81,000
3,52,320 3,52,320
Working Note:
Calculation of goodwill
2019 2019
To balance b/d
Jan-01 29,25,000 Oct-01 By Bank A/c 2,70,000
(WN 1)
To Profit & Loss
By Depreciation on lost
A/c
Oct-01 45,000 Oct-01 assets 67,500
(Profit on
(WN 2)
settlement of Car)
By Depreciation A/c
Oct-01 To Bank A/c 5,00,000 Oct-01 4,50,000 x 9 cars x 20% 8,35,000
5,00,000 x 20% x 3/12
Dec-31 By Balance c/d 22,97,500
34,70,000 34,70,000
2020 2020
By Depreciation A/c
Jan-01 To balance b/d 22,97,500 Dec-31 4,50,000 x 9 cars x 20% 9,10,000
5,00,000 x 20%
Dec-31 By Balance c/d 13,87,500
22,97,500 22,97,500
Working Note:
1. Balance b/d in Innova cars A/c:
Cost Price on 01.04.17 = 4,50,000 x 10 = 45,00,000
Depreciation for 2017 = 45,00,000 x 20% x 9/12 = 6,75,000
Depreciation for 2018 = 45,00,000 x 20% = 9,00,000
Balance = 29,25,000
2.
To find out loss on Profit on settlement of car
Rs.
2,25,000
Profit 45,000
ANSWER TO Q.NO.5 (B)
Trading and Profit and Loss Account of Mr.Sanjeev
for the year ended 31st March, 2020
Dr. Cr.
Particulars Amount Particulars Amount
` `
To Opening stock 64,500 By Sales 4,30,600
Less: 3,450
4,27,150
Less: Sales return 5,150
4,22,000
To Purchases 3,06,200 (WN 1) By Closing stock 2,50,000
Less: Purchases return 3,450 3,02,750 (160000 x 100/80 x
100/80)
To Carriage inward 2,250
To Wages 24,330
Less: 900 23,430
To Gross profit c/d 2,79,070
6,72,000 6,72,000
To Depreciation:
Plant and machinery 6,000
Furniture and fittings 2,050 8,050
To Office expenses 20,320
To Interest on loan 6,000
To Net profit 1,67,600
2,79,970 2,79,970
Balance Sheet of Mr. Sanjeev as on 31st March, 2020
5,34,500 5,34,500
Working Note:
1. Purchases 3,20,000
Less: Drawings 7,000
Less: Advertisement expense 1,650
Less: Sales return 5,150
Rs. Rs.
Note : No entry is made in the books of account of the company at the time of making issue of
such debentures. In the Balance Sheet the fact that the debentures being issued as collateral
security and outstanding are shown under the respective liability.
In Matching concept, all expenses matched with the revenue of that period should only be
taken into consideration. In the financial statements of the organization if any revenue is
recognized then expenses related to earn that revenue should also be recognized.