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Question Paper
Financial Accounting \u2013 I (111) : October 2004
Answer all questions.
Marks are indicated against each question.
1.Which of the following concepts is not considered as basic principle of Generally Accepted Accounting
(a) Materiality concept
(b) Cost concept
(c) Consistency concept
(d) Matching concept
(e) Logical concept.
(1 mark)
< Answer >
2.The principle of \u201cAnticipate no future profits but provide for all the future losses\u201d is based on
(a) Conservatism concept
(b) Consistency concept
(c) Cost concept
(d) Business entity concept
(e) Accounting period concept.
(1 mark)
< Answer >
3.Which of the following are current assets of a business?
I. Income received in advance
II. Closing stock
III. Sundry debtors
IV. Pre-paid expensesV. Accrued income.
(a) Both (I) and (IV) above
(b) Both (II) and (III) above
(c) (I), (II) and (III) above
(d) (II), (III), (IV) and (V) above
(e) (I), (II), (III) and (IV) above.
(1 mark)
< Answer >
4.The practice of appending a note regarding the contingent liabilities in the financial statements is pursuant to
(a) Convention of consistency
(b) Money measurement concept
(c) Convention of disclosure
(d) Matching concept
(e) Going concern concept.
(1 mark)
< Answer >
5.A construction contractor usually records the revenue and earnings on his project on
(a) Cash basis
(b) Sales basis
(c) Completion basis (d) Period basis
(e) Workers basis.
(1 mark)
< Answer >
6.The closing balance of owner\u2019s equity is Rs.21,000. During the year, the owner contributed Rs.6,000 and
withdrew Rs.4,000. The firm had Rs.8,000 net income for the year. The owner\u2019s equity at the beginning of the
year was
(a) Rs.23,000
(b) Rs.21,000
(c) Rs.19,000
(d) Rs.11,000
(e) Rs.25,000.
(1 mark)
< Answer >
7.Which of the following accounting concepts enables comparison of financial statements over a period of time?
(a) Cost concept
(b) Consistency concept
(c) Materiality concept
(d) Money measurement concept
< Answer >
(e) Accounting period concept.
(1 mark)
8.Which of the following is not a prior period item with respect to the accounting year 2003-2004?
(a) Depreciation for the year ended March 31, 2002 revised in the current year due to the application of
wrong rate
(b) Interest for the previous year which was not paid due to lack of proper details, paid this year
(c) Difference arising in the current year due to wrong stock valuation of an item for the year ended March
31, 2001
(d) Arrears of wages for the year ended March 31, 2003 paid in the current year because of revision in wage
(e) Difference arising because of non-accounting of TDS for the year ended March 31, 2002.
(1 mark)
< Answer >
9.According to cash book of Mr.A, there was a favourable balance of Rs.1,050 in his bank account. But the
passbook showed an overdraft balance. On scrutiny of the transactions, the following discrepancies were
Discount received from suppliers of Rs.100 has been wrongly entered in the bank column of the
A cheque issued for Rs.1,230 has been entered in the cash book as Rs.1,320.

A cheque issued by Mr.B for Rs.2,200 has been wrongly debited to Mr. A\u2019s account.
The overdraft balance as per bank pass book is
(a) Rs.3,440

(b) Rs.1,160
(c) Rs.960
(d) Rs.1,170
(e) Rs.3,260.
(2 marks)
< Answer >
10.ABC Ltd. has the practice of creating provision for doubtful debts at the rate of 5% on debtors. The balance of
provision for doubtful debts on April 01, 2003 and March 31, 2004 is Rs.30,000 and Rs.40,000, respectively. If
the amount collected from debtors is Rs.56,00,000, credit sales during the year 2003-2004 are
(a) Rs.58,00,000
(b) Rs.56,10,000
(c) Rs.54,00,000
(d) Rs.55,90,000 (e) Rs.56,00,000.
(2 marks)
< Answer >
11.Consider the following data pertaining to purchases made by Zodiac Ltd., a dealer in electronic goods, for the
month of September 2004:
No. of units
Rate per unit Rs.
Trade Discount
September 01
Black & White TVs
Colour TVs
September 09
Tape Recorders
September 19
Audio Cassettes
September 22, 2004, the company purchased from Indian Stationers on credit for office use 10 dozens of
carbon papers at the rate of Rs.35 per dozen and 10 dozens of ball pens at the rate of Rs.25 per dozen.
The total of purchases for the month of September 2004, was
(a) Rs.2,14,350
(b) Rs.2,38,000
(c) Rs.2,14,950
(d) Rs.2,38,600
(e) Rs.2,14,200.
(1 mark)
< Answer >
12.Opening entry for the following accounts was passed on April 01, 2004, in the books of John & Co.
< Answer >
Cash on hand
Cash at bank
Bills Payable
Furniture & fittings
Sundry Creditors
Sundry Debtors
Stock in trade
50,000After passing the above entry, the total of the debit side of the
above accounts will be
(a) Rs.55,000
(b) Rs.79,400
(c) Rs.56,640
(d) Rs.1,03,800
(e) Rs.50,000.
(2 marks)
13.The total cost of goods available for sale with a company during the current year is Rs.12,00,000. The total
sales during the period are Rs.13,00,000. If the gross profit margin of the company is 25% on sales, the closing
inventory for the current year is
(a) Rs.4,00,000
(b) Rs.3,40,000
(c) Rs.2,25,000
(d) Rs.1,60,000
(e) Rs.1,00,000.
(1 mark)
< Answer >
14.Consider the following data pertaining to a company for the month of April 2004:
Opening stock
Rs. 22,000
Closing stock
Rs. 25,000
Purchases less returns
Gross profit margin (on sales)
20%The sales of the company during the month are
(a) Rs.1,41,250
(b) Rs.1,35,600
(c) Rs.1,33,750
(d) Rs.1,28,400 (e) Rs.1,13,000.
(1 mark)
< Answer >
15.A usance bill dated January 28, 2004, payable one month after sight was accepted on January 29, 2004. The
due date of the bill was
(a) February 28, 2004
(b) March 02, 2004
(c) March 05, 2004
(d) March 03, 2004
(e) March 04, 2004.
(1 mark)
< Answer >
16.Lakhan accepted a six-months bill drawn by Pradham for Rs.6,000. Pradham endorsed the bill in favour of
Manish. On the due date, the bill was honoured. The entry to be passed in the books of Pradham, to record the
payment of the bill is
(a) Bank account
Dr. 6,000
To Manish account
(b) Bank account
Dr. 6,000
To Bills receivable account
(c) Manish account
Dr. 6,000
To Bills receivable account
(d) Manish account
Dr. 6,000
To Bank account
(e) No entry is required to be passed.
(1 mark)
< Answer >
17.Laxman Ltd. recovered bad debts of Rs.20,000 from Mr.Tarun and it was erroneously credited to Mr.Tarun\u2019s
account. The rectification of this error will result in
< Answer >

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