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PRESIDENCY UNIVERSITY, BENGALURU

SCHOOL OF MANAGEMENT

Max Marks: 60 Max Time: 120 Mins Weightage: 20 %


2017 MBA I Semester
MID TERM EXAMINATION

I Semester AY 2017-2018 Course : FIN101 ACCOUNTING FOR 24 October 2017


MANAGERS

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Instructions:
i. Answer all questions
ii. Nonprogrammable calculators are allowed
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Part A
(5 Q x 2 M= 10 Marks)

1. Name the two types of assets and give two examples for each.
2. Expand GAAP and state any two accounting concepts.
3. What are the qualitative characteristics of accounting information?
4. Name the four basic financial statements.
5. From the following prepare Proprietor’s Capital account
Oct 1,2016: Commenced business with cash Rs.50000
31 Dec,2016: Net Loss as per the Income statement Rs.12000
31 Dec,2016: Drawings during the period Rs.2000

Part B

(6 Q x 5 M= 30 Marks)
6. Fill in the blanks
Figures are in Rs.
Case Capital as on Capital as on Profit/Loss Drawings Fresh capital
31-12-2005 1 -1-2005 during 2005 during introduced
2005 during 2005
I ? 6000 3000 1200 600
II 12000 ? (600) 1800 2400
III 12600 6000 ? 1200 6000
IV 6000 12000 3000 ? 600
V 9000 18000 (4800) 4200 ?

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7. Calculate the amount of liabilities as on 31-12-2016 in each of the following different cases
(a) On 31-12-2016, the total assets and capital were Rs.50000 and Rs.35000 respectively.
(b) On 1-1-2016, Ram started a business with a capital of Rs.70000 and a loan of Rs.30000 borrowed
from a friend. During 2016, he made a loss of Rs.5000. On 31-12-2015, the total assets were
Rs.120000.
(c) On 1-1-2016, Shyam started a business with a capital of Rs.60000 and a loan of Rs.20000,
introduced an additional capital of Rs.100,000 and had withdrawn Rs.1800 for his personal use.
On 31-12-2015 the total assets were Rs.300000

8. Enumerate the rules of debit and credit based on the Modern Approach.

9. For each of the following entries, describe the event that gave rise to the entry:

a. Accounts payable 1300


Cash 1300
b. Telephone expense 2000
Telephone expense payable 2000
c. Cash 5000
Unearned revenue 5000
d. Office supplies 3000
Cash 3000
e. Prepaid insurance 3500
Cash 3500

10. Give an example for each of the following type of transactions


(a) Increase in one asset, decrease in another asset
(b) Increase in assets, increase in owner’s equity
(c) Decrease in assets, decrease in liabilities
(d) Increase in assets, increase in liabilities
(e) Decrease in assets, decrease in owner’s equity

11. Prove that accounting equation is satisfied in all the following transactions of Suresh.
a. Commenced business with cash Rs.36000
b. Paid rent in advance Rs.3000
c. Purchased goods for cash Rs.18000 and credit Rs.120000
d. Sold goods for cash Rs.18000 costing Rs.120000
e. Paid salary Rs.3000 and salary outstanding Rs.600
f. Bought motor cycle for personal use Rs.30000

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Part C

(2 Q = 20 Marks)

12. Several transactions are listed below, with the accounting equation stated to the right side of each. Use the
following identification codes to indicate the effects of each transaction on the accounting equation. Write
your answers in the space provided under the accounting equation. You need an identification code for each
element of the accounting equation. An example is given before the first transaction.
( 8 marks)

I-Increase D-Decrease NE-No Effect

Assets = Liabilities + Owners’ Equity


Example Common stock is issued to
investors in the company __I___ __NE___ __I___

A) Cash sales are made. _______ _______ ______


B) Equipment is purchased on
credit. _______ _______ ______

C) Payment is made for the


equipment purchased on
credit. _______ _______ ______

D) Sales are made on


account. _______ _______ ______

E) Cash is collected from


customers for accounts _______ _______ ______
receivable balances.

F) Dividends are declared and


paid to stockholders. _______ _______ ______

G) Land and a building are


acquired in exchange for shares
of the company’s common
stock. _______ _______ ______

H) Utility bills are received and


recorded; payment will be made
later. _______ _______ ______

13. Hillary Curran set up her psychology practice on March1. The following transactions occurred during March.
( 12 marks )
March:
1. Hillary deposited ₹250000 in an account in the name of business
2. Paid ₹ 18000 for the month of March as rent of office
5. Purchased office supplies for cash ₹9000
8. purchased ₹48000 of office furniture on account
10. Paid ₹ 2500 for advertising in local newspaper
12. Completed counselling with a client and sent a bill for ₹8500 for services rendered
15. Performed counselling services for local dj and immediately collected ₹ 3500
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18. Paid the March insurance premium of ₹ 3000
20. Received a ₹ 50000 deposit for counselling services to be performed for the employees of Reny
Company beginning next week
21. Received a partial payment of ₹2000 from the clients billed on March 12
25. Paid ₹ 10000 of the amount owed from the purchase of furniture on March 8.
27. Withdrew ₹ 20000 for personal living expenses
31. Paid the receptionist’s salary of ₹ 12000
Required:

 Analyze the effect of the above transactions on the accounting equation


 Prepare the journal entries for each of the following transactions
 Prepare the income statement, statement of cash flows, and balance sheet

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