bba203 smu bba fall 2014 II sem assignment

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DRIVE- Fall 2014

PROGRAM- BBA

SEMESTER- 2

SUBJECT CODE & NAME BBA 203 & FINANCIAL ACCOUNTING

Q1. Journalize the following transactions in the books of Balu.

2004		Rs.
Jan. 1	Commenced business with	25,000
Jan. 2	Goods purchased for cash	15,000
Jan. 3	Paid freight	500
Jan. 7	Goods sold to Raj Kumar on credit	5,000
Jan. 8	Paid for stationery	2,000
Jan.10	Paid for Rent	1,000
Jan.13	Cash received from Mohan Das	15,400
	Allowed him discount	600
Jan.15	Paid Premium	4,000
Jan.20	Paid to postage	1,000
Jan.25	Paid for salaries	500
Jan.30	Commission received	1,000

(Preparation of all the journal entries with the correct amount, Narration) 8, 2

Answer:

				Dr	Cr
Date	Particulars		L.F.	Amount	Amount
				(Rs.)	(Rs.)
2004	Cash A/c …………	Dr.		25,000
Jan.1	To Capital A/c				25,000
	(Being Business commenced with cash

Q2. Accountancy refers to a systematic knowledge of accounting. It explains ‘why to do’ and ‘how to do’ of various aspects of accounting. Explain the objectives of accounting and explain the categories of users. (Explanation of accounting objectives, Explanation of categories of users) 5, 5

Answer:

Objectives for Accounting

The basic objective of accounting is to provide full, accurate and meaningful financial information about the financial activities of a business to all those who have a right and a need to have such information.

The main objectives of accounting include:

Q3. What do you understand by good will? Explain the accounting treatment of goodwill at the time of admission. Give journal entry for the below problem:              

T and S are partners in a firm sharing profit in the ratio 5:3. They admitted G as a new partner for 1/4th share in the profit. G brings Rs.45,000 for her share of goodwill and Rs.1,20,000 for capital. They have withdrawn the goodwill from the firm. Make journal entries in the books of the firm after the admission of G. The new profit sharing ratio will be 2:1:1.

(Meaning of good will with the formula, Accounting treatment of goodwill at the time of admission, Journal entry in the books of T,S and G) 2, 4, 4

Answer: Goodwill-Meaning

Goodwill generally means the reputation of the firm. When a business is doing its operations over a number of years, it may develop a good name and reputation among the customers or society. In accounting parlance, it can be called as “Goodwill”.

Q4. Differentiate between trade discount and cash discount.          

Enter the following transactions in Sadhana’s simple cash book.       

2010 April  1st April Balance of cash in hand Rs.1500          

8th April Purchased goods for cash from X for Rs.320          

15th April  Sold goods for Rs. 480 to Y for cash        

20th April Received commission Rs.65          

22nd April Paid Commission Rs.55    

28th April  Paid to Reena on account Rs.715 

30th April Paid salary to the office clerk Rs.100 and office rent Rs.60

(Differences between trade discount and cash discount, Preparation of cash book) 5, 5

Answer:

	Trade discount		Cash discount
1)	It is reduction granted by a	1)	It is the reduction granted by
	supplier from the list price of		a supplier from the invoice
	goods or services bought		price in consideration of
	other than for prompt		immediate payment or

Q5. Final  Accounts  are  prepared  at  the  end  of  the  accounting  year  with  various adjustments. Explain the features and objectives of final accounts. (Explanation of objectives of final accounts, Explanation of features of final accounts) 3, 7

Answer:

Objectives of Final Accounts

A financial statement should reflect true and fair view of the business affairs of the organization. As these statements are used by various constituents of the society / regulators, they need to reflect true view of the financial position of the organization.

Financial statements are required for measuring the performance of the business which is indicated by gross profit or gross loss. Financial statements facilitate the comparison of trading results of the current year with those of the previous year. International Accounting Standards

Committee (IASC) stated that the objective of financial statements is to provide information about the

Q6. Prepare Trading, Profit and Loss Account and Balance Sheet from the following particulars as on 31st March 2012.

Trial Balance

Particulars	Dr. (Rs)	Cr. (Rs)
Capital / Drawings	1,400	10,000
Cash in hand	1,500	-
Bank overdraft @ 5%	-	2,000
Purchase and Sales	12,000	15,000
Returns	1,000	2,000
Establishments charges	2,500	-
Taxes and Insurance	500	-
Provision for Doubtful Debts	-	1,000
Bad Debts	500	-
Sundry Debtors and Creditors	5,000	1,850
Commission	-	500
Investments	4,000	-
Stock on 1 April 2010	3,000	-
Furniture	600	-
Bills Receivable & Bills payable	3,000	2,500
Collected Sales Tax	-	150
Total	35,000	35,000

Further, you are required to take into consideration the following information:

a)      Salary Rs.100 and taxes Rs.400 are outstanding but insurance Rs.50 prepaid

b)      Commission amounting to Rs.100 has been received in advance for work to be done next year.

c)      Interest accrued on investments Rs.210

d)      Provision for doubtful Debts is to be maintained at 20%

e)      Depreciation on furniture is to be charged at 10% p.a.

f)       Stock on 31^st March 2012 was valued at Rs.4,500

g)      A fire occurred on 25^th March 2012 in the godown and stock of the value of Rs.1,000 was destroyed. It was fully insured and the insurance company admitted the claim in full.

(Calculation of Trading and P/L a/c, Preparation of balance sheet) 5, 5

Answer:

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