ACCOUNTANCY (Code: 055)

Time: 3 Hours Maximum Marks: 80

General Instructions:

(i) This question paper contains 34 questions. All questions are compulsory.

(ii) Question 1 to 20 carries 1 mark each.

(iii) Questions 21 to 26 3 marks each.

(iv) Questions from 27 to 29 carries 4 marks each.

(v) Questions from 30 to 34 carries 6 marks each.

 (vi) There is no overall choice. However, an internal choice has been provided in 7 questions of one mark, 2
questions of three marks, 1 question of four marks and 2 questions of six marks.

Q. Marks
No
.

1. A summarized record of relevant transactions of particulars head at one place are: 1

(a) Ledger
(b) Journal
(c) Account
(d) Purchases book
2. Those assets which have physical existence and can be seen and touched are: 1
(a) Current assets
(b) Tangible assets
(c) Intangible assets
(d) Liquid assets
3. The goods available with the business for sale on a particular date is known as: 1
(a) Stock
(b) Creditors
(c) Debtors
(d) Purchases
OR
Qualitative characteristics of accounting information are:
(a) Reliability
(b)Relevance
(c) Understandable
(d) All of these
4. The excess of expenses of a period over its related revenues is termed as: 1
(a) Profit
(b) Loss
(c) Gain
(d) Expenses
OR
Current liabilities are liabilities that are payable within:
(a) 2 years
(b) 1 year
(3) years
(d) 4 years
5. Calculate the value of the asset at the time of preparing final account that is purchased for Rs. 1
5,00,000 ,if the market value is Rs. 7,00,000 as per the cost concept.
a) Rs. 5,00,000
b) Rs. 7,00,000
c) Rs.1,20,000
d) Rs. 2,00,000
6. As per the Duality principle calculate the total outsider’s equity if the raw materials cost Rs. 5000, 1
machine cost Rs. 50,000, Furniture used in the firm cost Rs. 20,000, cash at bank is Rs. 30,000 and
the owner’s equity is Rs. 70,000.
a) Rs.35,000
b) Rs. 1,75,000
c) Rs. 70,000
 d) Rs. 1,40,000
7. Calculate the Liabilities, If Assets=Rs.1,00,000, capital= Rs. 40,000. 1
a) Rs.60,000
b) Rs.1,60,000
c) Rs.1,00,000
d) Rs.40,000
8. Voucher which records a transaction that entails multiple debits / credits and one credit / debit is 1
called:
a) Debit voucher
b) Credit voucher
c) Compound voucher
d) Journal voucher
OR
document given by the seller to the buyer for sale of goods or provision of service on
credit, is known as:
(a) Invoice (b) Debit note (c) Cash memo (d) All of these

9. Journal is a part of . 1

1) Recording
2) Classifying
3) Summarising
4) Analysing

10 Wages paid for the construction of building were recorded in wages account. This is 1

1) Error of omission
2) Error of commission
3) Compensating error
4) Error of principle
OR
Bank reconciliation statement is:

a) Part of Bank statement

b) Memorandum statement
c) Part of journal
d) Ledger account

11 Book Value of an asset after 2 years is Rs.80,000; Rate of depreciation is 10% p.a. under Straight Line 1
method. The Original Cost Of an asset would be
a. Rs.8,000
b. Rs. 1,00,000
c. Rs.8,00,000
d. Rs.80,000

12 Suspense Account in The Trial balance will be entered in the 1

a) Manufacturing A/c
b) Trading a/c
 c) Profit & Loss A/c
d) Balance Sheet
OR
Cheques deposited but not collected will result in:
(A) Increasing the balance of pass-book when compared to cash-book.
(B) Increasing the balance of cash-book when compared to pass-book.
(C) Decrease the balance of pass-book when compared to cash-book.
(D) Both (B) and (C)
13 Goods worth RS 24000 were returned by X. the accountant however, credited the sales returns 1
account by Rs 42,000. In order to rectify this error, what should be done?
a) Debit the sales return account by Rs 42,000.
b) Credit the sales return account by Rs 24,000
c) Debit the sales return account by Rs 66,000
d) Debit the sales return account by Rs 18,000

14 Reserves Created for a particular purpose are known as 1

a. General Reserve
b. Secret Reserve
c. Specific Reserve
d. Capital Reserve

15 Rent paid during the year amounted to Rs. 300000, which includes Rs. 20000 relating to the previous 1
year and Rs. 20000 relating to the next year. Rs. 30000 relating to the current year is still
outstanding. How much rent will be debited to the profit & Loss account of the current year?
a. Rs. 200000
b. Rs. 2,90,000
c. Rs. 2,15,000
d. Rs. 2,80,000

16 The Trial balance of a firm shows Debtor Rs. 30000, Bad debts Rs. 200 and Provision for doubtful 1
debts at Rs. 1400. A 10% provision for doubtful debts is to be created on debtors. The profit and loss
account for the current year is to be debited by
a. Rs. 3200
b. Rs. 3000
c. 4600
d. 1800

17 Calculate Gross profit if rate of gross profit is 20% on cost of goods sold and cost of goods sold is Rs.
120000.
a. Rs. 24000
b. Rs. 15000
c. Rs. 10000
d. Rs. 35000

OR

Depreciation for current year given in Trial balance. Its treatment will be
a. Debited to Trading Account
b. Deducted from Fixed Assets in Balance Sheet
c. Debited to Profit & Loss Account
 d. Debited to Profit & Loss Account and Deducted from Fixed Assets in Balance Sheet

18 1
Match the following:
1. Provision for bad and doubtful debts A. Fall in the value of fixed assets due to
tear and wear
2. Depreciation of the year B. stock of goods remaining unsold at
the end
3. Bad debts C. provision against amount due from
debtors
4. Closing stock D. debtors which cannot be recovered.

a) 1.(a) 2(c) 3(b) 4(d)

b) 1.(a) 2(c) 3(d) 4(b)
c) 1.(a) 2(b) 3(c) 4(d)
d) 1.(c) 2(a) 3(d) 4(b)

19 Given below are two statements: one labeled as Assertion A and the other labeled as Reason R. 3
Assertion (A): Provision is the amount of any known liability to be determined with substantial
accuracy.
Reason (R) : Provision and Reserves used interchangeably.

In the light of the above statements, choose the most appropriate answer from the options given
below:
A) Both (A) and (R) are true and (R) is the correct explanation of (A)
B) Both (A) and (R) are true and (R) is not the correct explanation of (A)
C) (A) is true, but (R) is false
D) (A) is false, but (R) is true
20 Which of the following statement is true? 4
a. Depreciation is a charge against profit.
b. Depreciation is an appropriation to profit
c. Depreciation is provided only if there is a profit.
d. In case of loss, depreciation should not be charged.

OR

Which among the following is a correct difference between Provision and reserve?

a. Provision is created out of legal necessity whereas Reserve is created as a matter of prudence
b. Provision is invested whereas reserve is not invested
c. Provision is an appropriation to profit whereas reserve is a charge against profit
d. Provision can be used as a distribution of dividend whereas a reserve cannot be allowed to be
used for distribution of dividend.

21 Prepare accounting equation on the basis of the following: 3

(a) Harsha started business with cash Rs 2,00,000

(b) Purchased goods from Naman for cash Rs 40,000

 (c) Sold goods to Bhanu costing Rs 10,000/- Rs 12,000

22 Record journal entries for the following transactions in the books of Anudeep of Delhi: 3
(a) Bought goods Rs. 2,00,000 from Kanta of Delhi (CGST @ 9%, SGST @ 9%)
(b) Bought goods Rs. 1,00,000 for cash from Rajasthan (IGST @ 12%)
(c) Sold goods Rs. 1,50,000 to Sudhir of Punjab (IGST @ 18%)
23 Describe how debits and credits are used to analyse transactions. 3
OR
Define the purpose of maintaining subsidiary journal.
24 Prepare a double column cash book with the help of following informa tion for December 2016: 3

Rs
01 Started business with cash 1,20,000
03 Cash paid into bank 50,000
05 Purchased goods from Sushmita 20,000
06 Sold goods to Dinker and received a cheque 20,000
10 Paid to Sushmita cash 20,000
14 Cheque received on December 06, 2010 deposited into bank
18 Sold goods to Rani 12,000
25 What are closing entries? Give two examples of closing entries.. 3
OR
Why is it necessary to record the adjusting entries in the preparation of final accounts?
26 From the following balances taken from the books of Simmi and Vimmi Ltd. 3
for the year ending March 31, 2017, calculate the gross profit.
Rs
Closing stock 2,50,000
Net sales during the year 40,00,00
0
Net purchases during the 15,00,000
year
Opening stock 15,00,000
Direct expenses 80,000

27 What is matching concept? Why should a business concern follow this concept? Discuss? 4
OR

The accounting concepts and accounting standards are generally referred to as the essence of
financial accounting’. Comment.
28 The following are the extracts from the trial balance of M/s Bhola and Sons as on March 31, 2017 4
Debit Credit
Account title Rs Rs
Opening Stock 2,00,000
Purchases 8,10,000
Sales 10,10,000
10,10,000 10,10,000

(Only relevant items)

Closing Stock as on date was valued at Rs 3,00,000.
You are required to record the necessary journal entries and show how the above items will appear
 in the balance sheet of M/s Bhola and Sons.

29 An extract from a Trial Balance as on December 31, 2010. 4

Debtors 10,500
Provision for Doubtful Debts as on January 01, 2010 1,000
Bad Debts Account 1,500

Adjustment:
(i) Further bad-debts amount to Rs 500.
(ii) Create a provision for doubtful-debts at 5% on debtors.

Prepare Bad debts and Provision for debtors account.

30 Carriage Transport Company purchased 5 trucks at the cost of Rs 2,00,000 each on April 01, 2011. 6
The company writes off depreciation @ 20% p.a. on original cost and closes its books on December
31, every year. On October 01, 2013, one of the trucks is involved in an accident and is completely
destroyed. Insurance company has agreed to pay Rs 70,000 in full settlement of the claim. On the
same date the company purchased a second hand truck for Rs 1,00,000 and spent Rs 20,000 on its
overhauling. Prepare truck account and provision for depreciation account for the three years ended
on December 31, 2013. Also give truck account if truck disposal account is prepared.
OR
Saraswati Ltd. purchased a machinery costing Rs 10,00,000 on January 01, 2011. A new machinery
was purchased on 01 May, 2012 for Rs 15,00,000 and another on July 01, 2014 for Rs 12,00,000. A
part of the machinery which originally cost Rs 2,00,000 in 2011 was sold for Rs 75,000 on April 30,
2014. Show the machinery account, provision for depreciation account and machinery disposal
account from 2011 to 2015 if depreciation is provided at 10% p.a. on original cost and account are
closed on December 31, every year.
31 On comparing the cash book with passbook of Naman it is found that on March 31, 2017, bank 6
balance of Rs 40,960 showed by the cash book differs from the bank balance with regard to the
following:
(a) Bank charges Rs 100 on March 31, 2017, are not entered in the cash book.
(b) On March 21, 2017, a debtor paid Rs 2,000 into the company’s bank in settlement
of his account, but no entry was made in the cash book of the company in respect
of this.
(c) Cheques totaling Rs 12,980 were issued by the company and duly recorded in the
cash book before March 31, 2017, but had not been presented at the bank for
payment until after that date.
(d) A bill for Rs 6,900 discounted with the bank is entered in the cash book with
recording the discount charge of Rs 800.
(e) Rs 3,520 is entered in the cash book as paid into bank on March 31st, 2017, but
not credited by the bank until the following day.
(f) No entry has been made in the cash book to record the dishonour or on March
15, 2017 of a cheque for Rs 650 received from Bhanu.
Prepare a reconciliation statement as on March 31, 2017.

32 Rectify the following errors and ascertain the amount of difference in trial balance by preparing 6
suspense account:
(a) Credit sales to Mohan Rs 7,000 were not posted.
(b) Credit purchases from Rohan Rs 9,000 were not posted.
(c) Goods returned to Rakesh Rs 4,000 were not posted.
(d) Goods returned from Mahesh Rs 1,000 were not posted.
(e) Cash paid to Ganesh Rs 3,000 was not posted.
(f) Cash sales Rs 2,000 were not posted.
 OR

As an accountant of a company, you are disappointed to learn

that the totals in your new trial balance are not equal. After
going through a careful analysis, you have discovered only one
error. Specifically, the balance of the Office Equipment account
has a debit balance of Rs. 15,600 on the trial balance.
However, you have figured out that a correctly recorded credit
purchase of pen-drive for Rs 3,500 was posted from the journal
to the ledger with a Rs. 3,500 debit to Office Equipment and
another Rs. 3,500 debit to creditors accounts. Answer each of
the following questions and present the amount of any
misstatement :

(a) Is the balance of the office equipment account overstated,

understated, or correctly stated in the trial balance?

(b) Is the balance of the creditors account overstated,

understated, or correctly stated in the trial balance?

(c) Is the debit column total of the trial balance overstated,

understated, or correctly stated?

(d) Is the credit column total of the trial balance overstated,

understated, or correctly stated?

(e) If the debit column total of the trial balance is Rs. 2,40,000
before correcting the error, what is the total of credit column.

33 Prepar e Journal from the transactions given below : 6

Rs
(a) Cash paid for installation of machine 500
(b) Goods given as charity 2,000
(c) Interest charge on capital @ 7% p.a. when total capital were 70,000
(d) Received Rs 1,200 of a bad debts written-off last year.
(e) Goods destroyed by fire 2,000
(f) Rent outstanding 1,000
34 Prepare a trading and profit and loss account of M/s Green Club Ltd. for the year ending March 31, 6
2017. from the following figures taken from his trial balance :

Account Title Amount Account Title Amount

Rs Rs

Opening stock 35,000 Sales 2,50,000

Purchases 1,25,000 Purchase return 6,000

Return inwards 25,000 Creditors 10,000

Postage and Telegram 600 Bills payable 20,000

Salary 12,300 Discount 1,000

 Wages 3,000 Provision for bad debts 4,500

Rent and Rates 1,000 Interest received 5,400

Packing and Transport 500 Capital 75,000

General expense 400

Insurance 4,000

Debtors 50,000

Cash in hand 20,000

Cash at bank 40,000

Machinery 20,000

Lighting and Heating 5,000

Discount 3,500

Bad debts 3,500

Investment 23,100

3,71,900 3,71,900

Adjustments
1. Depreciation charged on machinery @ 5% p.a.
2. Further bad debts Rs 1,500, discount on debtors @ 5% and make a provision on debtors @ 6%.
3. Wages prepaid Rs 1,000.
4. Interest on investment @ 5% p.a.
5. Closing stock 10,000.