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Guideline Answers for Basic Accountancy-Dec.2002

Guideline Answers for Basic Accountancy-Dec.2002

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Published by: jeevan_v_m on Jun 24, 2009
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Q1. Define any five of the following terms:a. Lease Accountancyb. Accounting Standardsc. Computerised Accountingd. Cash basis of accountinge. Cash Credit f. No-Banking assetsg. Inter-Bank Adjustmentsh. Returns Inwards Journal
Answer to Q 1.
Lease Accounting
: Accounting procedure followed and separate set of booksmaintained to record transactions relating to lease is known as Lease Accounting. b.
Accounting Standards
: A recognized accounting body of a country issues certain policy documents relating to various accounting transactions and procedures which areknown as accounting standardsc.
Computerised Accounting
: Using computer accounting software package for recording, classifying summarizing and interpreting various accounting transactions isknown as computerized accountingd.
Cash basis of accounting
: All accounting entries are recorded only when cash isreceived or paid. Non-cash transactions are not recorded in accounting books.e.
Cash credit
: Cash credit is an arrangement with a bank to get a loan up to a limitagainst pledge or hypothecation of some securitiesf.
Non-banking assets
: Assets in possession of bank, which are acquired for non- payment of loan dues from the loanee are known as non-banking assets.g.
Inter-bank adjustments
: Various adjustment transactions, which take place betweenthe Head Office and various branches of the bank are known as Inter-bank adjustmentsh.
Returns inward journal
: A subsidiary journal or daybook where transactions relatingto sales returns are recorded
Q2. The accounting books of a Commercial Bank show some of the following accountingheads. At the end of an accounting period they are either recorded in the Profit and LossAccount or Balance Sheet. You are required to identify where they are recorded and givereason for your answer. (Any five)a. Demand depositsb. Discount on billsc. Stationeryd. Doubtful debtse. Interest on term depositsf. Loans to co-operative Banksg. Interest on RBI borrowingsh. Payment to and provisions for employees
Answer to Q2.
Sr. No.ItemsEntryReason
a bcdeghDemand depositsDiscount on billsStationeryDoubtful debtsInterest on term depositsLoans to co-operative banksInterest on RBI borrowingsPayments to and provisions for employeesLiabilitiesIncome side P&L a/cExpenditure Not shown in P&L a/c or  balance sheetExpenditure side of P&L a/cAssetExpenditure side of P&L a/cExpenditure side of P&L a/cDeposits received from other banks and public which are returnable on demand.Earned discount on bills is an incomeAmount paid for purchase of stationeryOnly a note to the effect is given in theProfit & Loss a/c. Amount is not specifiedAmount paid by the bank as interest ondeposits collected by themAmount receivable from cooperative banksis recorded as assetAmount of interest expanded on borrowings taken from RBIOperating expenses of the bank 
Date: July 2002
Rs.1Received from chief cashier5003Bought ink 105Paid for telegrams 508Printing charges paid 6010Purchase of tube light 9012Paid for cartage 2015 Refreshment expenses paid for guest 5018 Purchased a pencil box and two note books 8020 Paid for office expenses 4025 Paid conveyance to Ramu 2430Purchased post cards 10
Answer to Q 3.
Columnar Petty Cash Book 
AmtRs.DateTransactionTotal paymentPrinting&stationeryPostageConveyanceOfficeExpensesLFLedger a/c
500.00500.0066.00434.002002July 135810121518202530Aug 1Received from chief cashier Bought ink Paid for telegramPrinting charges paidPurchase of tube lightPaid for cartageRefreshment expensePurchase of pencil box and two note booksPaid for officeexpensePaid for conveyancePurchased post cardsTotal ExpensesBalance c/dBalance b/dReceived from chief cashier 10.0050.0060.0090.0020.0050.0080.0040.0024.0010.00434.0066.00500.0010.0060.0080.00150.0050.0010.0060.0020.0024.0044.0090.0050.0040.00180.00
First option:
 Name the accounts involved in the following transactions and state what type of accountit is and also state with reasons, which account is debited and which account is crediteda. Ram purchased goods worth Rs. 40,000/- from Sam on credit b. Ram withdrew Rs. 2,500 for personal usec. Paid salaries Rs. 5,400 in cashd. Ram pays cash Rs. 12,000 to Tome. Purchased furniture worth Rs. 5,000 and the amount was paid by cheque
Answer to First option:
TransactionAccount NameType of A/CDr. Cr. With reasons
ABCDEPurchase a/cSam a/cDrawings a/cCash a/cSalaries a/cCash a/cTom a/cCash a/cFurniture a/cBank a/c NominalPersonalPersonalReal NominalRealPersonalRealRealPersonalDebit – Debit all expensesCredit – Credit the giver Debit- Debit the receiver Credit – Credit what goes outDebit- Debit expensesCredit – credit what goes outDebit – debit the receiver Credit – credit what goes outDebit – debit what comes inCredit – credit the giver 
Second option:
a. What is the function of a ‘Suspense Account’? How is the ‘Suspense Account’ finallysquared of? b. How do you rectify the following errors assuming that:i.they were detected before preparation of Trial Balanceii.they were detected after preparation of Trial Balance but before preparingFinal Accounts, the difference was taken to suspense accountiii.they were detected after preparing final accounts1. Purchase of Rs. 630 from Raju and Co. was passed through Sales Day Book as Rs. 3602. Purchase of stationery worth Rs. 100 remained unposted from the Cash Book 3. Rs. 5,000 paid for purchase of office furniture charged to office expenses account
Answer to second option:
a. The function of a suspense account is to carry the difference arising in tallying a TrialBalance till the errors in accounting are located and rectified using suspense account.Further a suspense account balance squared off when all the errors affecting the TrialBalance are located and rectification entries are posted to the suspense account

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