DATE: 30.01.17 FINAL TERMINAL EXAMINATION F.M.

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CLASS -11 ACCOUNTS TIME: 3hrs
PART –I (20 marks)
All Questions are compulsory (10x2=20)

1)a) What is ‘Legacy’ and how is it treated in accounts of a not-for-profit organization?

b) Give two differences between ‘Balance Sheet’ and ‘Statement of Affairs’.
c) Explain ‘Error of Commission’ with an example.
d) How can we differentiate between ‘operating profit’ and ‘net profit’?
e) What are ‘Noting Charges’? What is its accounting treatment in the books of drawee in case of
retained bill on which noting charges are incurred by the drawer?
f) State and explain two importances of providing depreciation.
g) What is the purpose of posting Journal Folio(J.F.) numbers that are entered in the Journal at the
time entries are posted to the accounts?
h) What similarities does a Cash Book have with a Journal?
i) What advantages does a wholesaler or manufacturer derive by charging trade discount?
j) What is meant by ‘window dressing’ in Accounts?
Part II (60 Marks)
Answer any five Questions (5x12=60)
2) Balance Sheet of Nalanda Club
as on 31st March,2015
Liabilities Amt(₹) Assets Amt(₹)
Capital Fund 1,64,000 Buildings 80,000
Special Fund 20,000 Furniture and Fixtures 40,000
Subscriptions 1,000 Sports Equipments 35,000
received in advance Fixed Deposit with Central Bank 20,000
Subscription in arrear 2,500
Cash at Bank 7,500
1,85,000 1,85,000
Receipts and Payments Account
for the year ended 31st March, 2016
Receipts Amt(₹) Payments Amt(₹)
To Balance b/d 7,500 By Printing and Stationery 6,000
To Subscriptions 50,600 By Insurance 4,000
To Interest received 1,200 By Repairs and Renewals 2,500
To Hall rent received 23,000 By Salaries 21,500
To Special Fund receipts 15,000 By Sports Equipment purchased 30,000
To Donations 25,000 (1st January, 2016)
To Miscellaneous receipts 3,000 By Special Fund expenses 7,000
To Admission fees 18,000 By Fixed Deposit with Central Bank 10,000
(1/1/16)
By Computer (1/2/16) 36,000
By Balance c/d (31/3/16) 26,300
1,43,300 1,43,300
Additional information:-
i) Subscriptions for 2016-2017 received during the year is ₹ 1,200.
ii) Society comprises 100 members, annual subscription payable being ₹ 500.
iii) Rent for society’s hall is ₹ 1,000 per day and hall was let out on hire for 25 days annually.
iv) Interest accrued on fixed deposits with the bank has to be provided @ 8% p.a.
v) Depreciation on building and other assets @10% p.a. has to be provided.
vi) Donations have been collected for constructing a building and needs to be shown separately.

Prepare Income and Expenditure Account and Balance Sheet as on 31 st March, 2016.
3) Mr. Agrawal started business on 1st April, 2015 with a capital of ₹ 1,00,000 (₹ 60,000 in cash; goods
worth ₹ 30,000 and balance in the form of furniture). He keeps his books by Single Entry
System. On 1st October, 2015, he further introduced ₹ 40,000 into the business of which ₹ 25,000
 was borrowed from his wife. His position on 31st March, 2016 was as follows:-
Assets:- Stock ₹ 52,000; Sundry Debtors ₹ 45,000; Bills Receivable ₹ 3,000; Furniture ₹ 10,000;
Cash in hand ₹ 12,000; Bank Balance ₹ 6,000.
Liabilities:- Sundry Creditors ₹ 16,000; Loan from wife ₹ 25,000; outstanding expenses ₹ 2,600.
Mr. Agrawal withdrew from business ₹ 4,000 for his life insurance premium and ₹ 1,500 per month for his
household expenses. Out of his drawings, he spent ₹ 10,000 for purchasing a
Typewriter for the business on 1/1/2016. Determine profit or loss and prepare Statement of Affairs after
considering the following adjustments:-
a) Depreciate typewriter @ 20% p.a.
b) Interest is allowed on wife’s loan @ 18%p.a.
c) Insurance premium@ ₹ 2,400 p.a. was paid on 1st July, 2015 to run for one year.

4) A Book keeper made a Trial Balance on 31st March, 2016 which showed a difference of ₹ 3,715.The
difference was placed to the debit of Suspense A/c. Following errors were discovered after Trial Balance:-
a) ₹ 710, the total of Sales Return book has been posted to the credit of Purchase Return A/c.
b) A Bill Receivable for ₹ 500 received from Gopal was passed through Bills Payable Book.
However, the personal A/c was correctly credited.
c) An item of ₹ 626 written off as bad debt from Chandni has not been debited to Bad Debt A/c.
d) Goods sold to X and Y for ₹ 1,600 and ₹ 1,200 respectively but were recorded in the Sales Book as
to X ₹ 1,200 and Y as ₹ 1,600.
e) Goods of ₹ 850 were returned to Bhaduri. It was recorded in Purchases Book as ₹ 580.
f) An amount of ₹ 675 for a credit sale to Govind, although correctly entered in Sales Book, has
been wrongly posted as ₹ 756.
g) A sum of ₹ 375 owed by Ravi has been included in the list of Sundry Creditors.
h) An amount of ₹ 750 spent on repairs of an old machinery has been debited to Repairs A/c.
Journalise to rectify the errors and prepare a suspense A/c.

5) From the following information, prepare Trading and Profit and Loss A/c for the year ended
31st March, 2016 and a Balance Sheet as at date:-
Purchases- 72,000; Debtors – 38,000; Return Outward – 2,400; Creditors – 15,600;
Sales – 1,80,000; Capital – 1,80,000; Return Inward – 5,000; Rebates(Dr.) – 1,200;
Rebates(Cr.) – 3,400; Opening Stock – 26,500; Telephone Rent – 1,200; Freight – 4,200;Loan to
Adhir@10%p.a.–25,000; Interest on Adhir’s loan– 2,375; Investments (Short-term)– 15,000;
Dividend received – 450; Bank Overdraft – 8,700; Rent paid – 2,000; Salary– 31,120; Cash – 7,000;
Deposit with D.C.M. Company- 20,000; Interest on above deposits – 2,800; Drawings – 6,000;
Life Insurance Premium – 7,200; Petty Cash – 505; Plant and Machinery – 1,00,000;
Manufacturing Wages – 36,800; Gift to sister-in-law – 5,000; Outstanding Wages – 8,000;
Additional Information:-
a) ₹ 5,000 due from Sunil is included in Debtors whereas ₹ 3,600 due to him is included in Creditors;
make a provision of 5% on Sundry Debtors for doubtful debts.
b) Interest on loan needs to be calculated after considering that ₹ 10,000 were returned by Adhir on
30th September, 2015.
c) Telephone rent for one year was paid on 1st August, 2015
d) A claim of ₹ 20,000 for workmen’s compensation is being disputed in court.
e) Stock was not taken on 31st March,2016 but could be taken only on 10th April, 2016 and was
then valued at ₹ 44,300. Purchases and Sales between 1st April and 10th April, 2016 were
₹ 2,500 and ₹ 4,000 respectively. Gross profit included in sales were 20% on sales.
6) On 1st January, 2016, Rahim drew on Manohar (who is his debtor for ₹ 15,000) three bills of exchange:-
First for ₹ 4,000 for 1 month, Second for ₹ 5,000 at 2 months and Third for ₹ 6,000
for 3 months. Manohar accepted all three bills. On 10th Jan, 2016, Rahim endorsed the first bill
to his creditor, Sohan in full settlement of his account of ₹ 4,120. This bill was duly met on maturity. On
20th Jan, the second bill was discounted from bank for ₹ 4,850. This bill was
dishonoured on due date and bank paid ₹ 40 as noting charges. On Manohar’s request, Rahim drew a
fourth bill on Manohar for 2 months for the amount due plus ₹ 200 as interest. Third bill
 was paid under a rebate of 15%p.a. one month before maturity. The fourth bill was sent to bank for
collection on 4th May, 2016 and was duly met on maturity. Journalise in the books of Rahim, Manohar and
Sohan.

7) On 1st August, 2013, Giant Ltd. purchased a machinery for ₹ 3,00,000. On 1st November, 2014,
another machinery was purchased for ₹ 1,80,000. On 1st July, 2015, the machine purchased on
1st August, 2013 was sold for ₹ 1,68,000 and on the same date, a fresh machinery was purchased
for ₹ 2,00,000. Depreciation was provided @ 10% p.a. on Reducing Balance Method. Books are closed 31 st
March every year. Prepare Machinery A/c, Provision for Depreciation A/c for 3 yrs ending 31 st March,
2016.

8) Following Trial Balance contains many errors. Prepare a correct Trial Balance after incorporating
the adjustments given below:-
Trial Balance
as at 31st March,2016 Dr(₹) Cr.(₹)
Heads of Accounts
Cash 15,000 ---------
Fixed Assets 3,50,000 ----------
Purchases and Sales 2,80,000 1,20,000
Return Inward ---------- 3,000
Return Outward 4,100 ----------
Wages 7,500 ----------
Selling Expenses 2,000 ----------
Debtors and Creditors 24,000 55,000
Capital 2,80,000
Proprietor’s withdrawals 8,000 ----------
Carriage inwards 2,200 ----------
Carriage outwards --------- 1,500
Administrative expenses ------- 22,900

Adjustments:-
i) Purchases and Sales balances have been erroneously interchanged while recording.
ii) Similarly, Debtors and Creditors balances were also interchanged by mistake.
iii) A credit purchase of ₹ 2,000 was omitted in the books.
iv) A credit sale of ₹ 5,000 was also left unrecorded.
v) Schedule of Debtors was undercast by ₹ 1,000.

9) Prepare a Triple Column Cash Book from the following transactions:-

(₹)
2016 Jan 1 Bank Overdraft 12,000
Cash-in-hand 2,300
7 Cheque received from Samir 4,000
Discount allowed 200
9 Samir’s cheque deposited into bank ------
12 Cheque paid to Ramadoss 2,500
Discount received 50
15 Samir’s cheque was dishonoured -----
20 Money withdrawn from bank for office use 3,400
23 Fees of children paid by cheque 75
25 Cheque received from Hiralal and endorsed it 4,500
to Sunny on 27th January
27 Bank charges 20
31 Paid into bank the entire balance after retaining
₹ 700 at office.

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