QN Bank 2 Sem B Com PDF

B.V.
Patel Institute of Business Management, Computer & Information

Technology, Uka Tarsadia University
Question Bank 030100502: Financial Accounting
Unit 1 Consignment Account
Answer the following. (1 mark)
1. Define consignor.
2. State the meaning of consignee.
3. What is normal loss?
4. Which formula is used to calculate the value of unsold stock?
5. What is the type of consignment account?
6. State the type of “goods sent on consignment account”.
7. What is Del –credere commission?
8. Write the examples of direct expenses. (non- recurring expenses)
9. When goods sent on consignment which journal entry is passed in the books of
consignor?
10. Give an example of normal loss.
11. Which journal entry is passed in the books of consignor? For expenses incurred by
consignee
12. What is direct expense? OR What is non- recurring expense?
13. Define indirect expense. OR Define recurring expense.
14. Write any two examples of indirect expenses.
15. State the type of consignee’s account.
16. What is an abnormal loss?
17. When an advance is received from consignee, which journal entry is passed in the
books of consignor?
18. When goods are sold on credit, which journal entry is passed in the books of the
consignee?
B.V. Patel Institute of Business Management, Computer & Information
2 marks question
1. What is consignment accounting?
2. State any two differences between consignment and sale.
3. What is an account Sale?
4. What is proforma invoice?
5. Hemant sent 100 bicycles to Rajesh on consignment at Rs. 1,000. He paid Rs. 4,000
for freight and carriage. Rajesh paid Rs. 3,000 for customs and carriage. Hemant
received an account sale for 80 bicycles sold by Rajesh at Rs. 1,240. Rajesh has also
paid Rs. 52,000 for advertisement and salary of the salesmen. Find out the value of
the closing stock.
6. A of Ahmedabad consigned goods of Rs. 10,000 to M of Madras and paid Rs. 500 for
expenses. The consignee paid Rs. 100 for freight and Rs. 50 godown rent. 80% of
goods were sold and commission of Rs. 500 was paid. Find out the value of closing
stock.
7. A consignee has sold goods on credit for Rs. 40,000 and is allowed 3% del credere
commission. A debtor of Rs. 1,000 was declared insolvent and a dividend of 25 paise
was received from his receiver. What entries would be made in the books of both
consignor and consignee for these transactions?
8. 100 tins of oil at Rs. 530 per tin of 15 kg. Each was sent to Bhavnagari by
Ahmedabadi to be sold on consignment. He pays Rs. 625 for expenses. Normal loss is
considered to be 5%. Calculate the value of closing stock if the quantity left is 285
kgs.
9. A of Patan consigned goods of Rs. 10,000 to B of Bulsar and pays Rs. 1,000 for
expenses. Goods worth Rs. 2,000 was burnt in transit and the insurance company
accepted a claim of Rs. 1,500. Calculate the abnormal loss.
10. What Journal entries will be made in the books of consignor for bad debts, when (i)
Del – credere commission is given to consignee (ii) Del – credere commission is not
given to consignee.
11. Mr. Kamal from Surat sent on consignment goods worth Rs. 12,000 to Mr. Nishant
from Chikhli. Mr. Kamal paid Rs. 1,200 by way of expenses. Goods valued at Rs.
4,000 were damaged during transit. The insurance company accepted the claim of Rs.
2,500 for damaged goods. Show the calculation of abnormal loss and pass necessary
journal entries.
12. Gujarat Tea Co. has sent 2,000 kgs. Tea on consignment at Rs. 150 per kg. Consignor
has paid the expenses of Rs. 6,000, consignee has paid octroi and carriage Rs. 2,000.
Fire broke into consignee’s godown and destroyed 100 kgs. of tea. The insurance Co.
has accepted claim for Rs. 10,000. Calculate the abnormal loss and pass journal entry.
13. Mahendra and Co. of Unjha dispatched on consignment 100 table fans of Rs. 400
each to Nilesh Bros., Dabhoi. They paid Rs.500 for railway freight, Rs. 100 transport
charges and Rs. 200 for insurance. 10 fans were completely destroyed by accident in
transit. Nilesh Bros. paid following expenses: carriage Rs. 200; Clearing charges Rs.
250 and selling expenses Rs. 1,000 and sold 70 fans.
Ascertain the value of closing stock and calculate the abnormal loss to be transferred
to profit and loss account.
14. Minoo Oil Co. of Ahmedabad consigned 10,000 litres of oil at Rs. 8 per litre to Taru
Motors of Surat. They paid Rs. 4,000 as expenses. 400 litres of oil evaporated. 7,200
litres were sold at Rs. 12.50 per litre. A commission of 5% is payable to the consignee
on sales. Prepare the consignment account in the books of Minoo Oil Co.
15. Ram sent on consignment 5,000 umbrellas of Rs. 100 each to shyam. He paid Rs.
2,000 for freight and insurance premium. 500 umbrellas were destroyed in transit and
the insurance co. accepted a claim of 50%. Write journal entry.
Answer the following (limit 250 words). (5 marks)
1. Write the difference between consignment and sale.

2. Write a short note on del credere commission.
3. Explain the valuation of closing stock of consignment.
4. Write brief note of normal loss and abnormal loss of consignment account.
5. How would you calculate the closing stock in consignment Account?
6. Ayar & Co. of Madras consigned 1,000 radios at Rs. 150 to Jashani Bros. of
Bhavnagar. Ayar & Co. paid Rs. 10,000 for freight; Rs. 1,000 for wages and Rs. 500
for insurance. 100 radios were destroyed by fire in transit and the insurance co.
accepted a claim of Rs. 6,000 only. Jashani Bros. took delivery of the remaining
radios and paid Rs. 13,500 for custom duties and other charges.
The consignee accepted a bill of Rs. 50,000 drawn by the consignor for 3 months. The
consignee sent an account sale after 2 months stating that he has sold 800 radios at Rs.
250. He had paid Rs. 3,000 for advertisement and other selling expenses. The
consignee is entitled to a commission of 5% on gross sale proceeds. Prepare
consignment account in the books of the consignor.
7. Rachael Music consigned 1,000 radio sets costing Rs. 900 each to its agent Sugam
Melodies on 1st July 2008. Rachael Music incurred the following expenditure on
sending the consignment- carriage Rs. 650; freight Rs. 7,000 and insurance Rs. 3,250.
Its agent received the delivery of 950 radio sets. An accounts sale dated 30 th
November, 2004 showed that 750 sets were sold for Rs. 9, 00,000 and Sugam
Melodies incurred Rs. 3,000 for carriage and Rs. 7,500 for the customs duty at the
time of taking the delivery and was entitled to commission @ 6% on the sales
affected. Sugam Melodies incurred expenses amounting to Rs. 2,500 for repairing the
damaged radio sets remaining in the stock.
Rachael Music lodged a claim with the insurance company which was admitted at Rs.
35,000. Show the consignment account and Sugam Melodies account in the books of
Rachael Music.
8. Amul radio consigned 1,000 radios to Bombay Radio service on 1-3-2005. The cost
price was Rs. 600 per radio, but the proforma invoice was made out at a figure so as
to show a profit of 25% on invoice price. On the same day, Amul Radio incurred the
following expenses: carriage Rs. 2,000 , freight Rs. 30,000 and insurance Rs. 25,000.
On the same day Bombay Radio Service sent a bank draft for Rs. 2, 44, 000. On 30 th
June, 2005, Bombay Radio service sent an account sale and a bank draft for the
amount payable. According to Account sale 600 radios were sold at Rs. 820 each for
cash, 100 Radios were sold at Rs. 850 each to Anil on credit and 40 radios were sold
at Rs. 840 each to Darshan on the Recommendation and Responsibility of Amul
Radio. Selling expenses incurred Rs. 10,450, Octroi incurred Rs. 7,000. Anil and
Darshan became bankrupt and Bombay Radio could recover only 80 % from their
estate.
Bombay Radio Service is entitled to get a commission of 5% on sale and 2% Del
credere commission on credit sales and 1/7 share of the net profits on consignment
after deducting both his commission and share of profits. Prepare necessary accounts
in the books of the consignor.
9. Bharath refineries consigned 5,000 litres of industrial oil to southern oil of kochin @
Rs. 15 per litres Bharath refineries paid for freight and insurance Rs. 5,000.
Southern oil received the consignment and incurred selling expenses Rs. 2,000. The
consignee sent an account sale mentioning sale of 4,000 litres @Rs. 18 and remitted
the amount due by a draft after deducting his expenses and commission @ 5%. He
also reported that petrol in hands was 950 litres.
Pass the journal entries and open necessary accounts in the books of consignor.
10. Joyce corporation of Kancipuram consigned 50 bundles of printed silk sarees @ Rs.
700 each bundles to Vasuki Sarees of Chennai to be sold on consignment basis. An
advance of Rs. 16,000 were received from vasuki sarees. Vasuki sarees sent an
account sale which states that total goods were sold for Rs. 56,000 and Rs. 1,800 were
paid for carriage, godown rent and port expenses. Their commissions were Rs. 2,000.
They sent a bank draft for the balance amount to Joyce corporation. From the above
particulars, pass necessary journals in the books of Ganpati and also show important
accounts.
11. An oil agency consigned 200 tins of vegetable oil (one tin contains 10 kg of oil) to its
dealer, sundar costing Rs. 25 per kg. The agency paid Rs. 4,000 for forwarding
charges and Rs. 6,000 for freight. 5 tins of oil were totally damaged during transit and
nothing could be realized from the insurance company.
Sundar took delivery of the oil and sent an account sales showing that 150 tins were
sold for Rs. 60,000. The expenses incurred by him were custom duty and clearing
charges Rs. 3,580 and selling expenses Rs. 1,000. They are entitled to a commission
of 5% on sales. He also reported that 10 kilograms of oil were lost due to leakage.
Show the necessary ledger accounts in the books of oil agency.
12. 1,000 Baby bicycles were consigned by premier Bicycle Co. Delhi to Superior
Brother, Kanpur, at an invoice cost of Rs. 150 cash. Premier Bicycle Company paid
freight Rs. 10,000 and insurance in transit Rs. 1,500. During the transit 100 bicycles
were totally damaged by fire. Superior brothers took delivery of the remaining
bicycles. This loss was changed to profit and loss account.
Superior Brothers sent a bank draft to Premier Company for Rs. 50,000 as advance
payment and later sets an account sales showing that 800 bicycles were sold at Rs.
220 each. Expenses incurred by Superior Brothers on godown rent and advertisement,
etc. amounted to Rs. 2,000. Superior Brothers in entitled to commission of 5%.
Prepare necessary ledger accounts in the books of Baby bicycles.
13. Mohan consigned 400 packets of pen, each packet containing 100 pens. Cost price of
each packet was Rs. 300. Mohan sent Rs. 50 per packet as cartage, freight, insurance
and forwarding commission. One packet was lost on the way and Mohan lodged
claim with the insurance company and could get only Rs. 270 as claim on average
basis. Consignee took delivery of the rest of the packets and spent Rs. 19,950 as other
non-recurring expenses and Rs. 11,250 as recurring expenses. He sold 370 packets as
the rate of Rs. 6.50 per pen. He was entitled to 2% commission on sales plus 1% del
credere commission. Prepare consignment account and consignee account in the
books of consignor.
14 2,000 shirts were consigned by Bhagwan & company of Delhi to Shreyans to Tokyo
at a cost of Rs. 150 each. Bhagwan & company paid freight Rs. 20,000and insurance
Rs. 3,000.
During the transit 200 shirts were totally damaged by fire. Shreyans took delivery of
the remaining shirts and paid Rs. 28,800 as customs duty.
Shreyans has sent a bank draft to Bhagwan & company for Rs. 1,00,000 as advance
payment. 1,600 shirts were sold by him at Rs. 200 each. Expenses incurred by
Shreyans on godown rent and advertisement, etc. amounted to Rs. 4,000. He is
entitled to a commission of 5%.
One to the customer to whom the goods were sold on credit could not pay the cost of
10 shirts.
Prepare the consignment account, goods sent on consignment account and Mr.
Shreyans account in the books of Bhagwan & company
15 Shri Mehta of Mumbai consigns 1,000 cases of goods costing Rs. 100 each to Shri
Sundaram of Chennai. Shri Mehta pays the following expenses in connection with the
consignment:
Carriage Rs. 1,000
Freight Rs. 3,000
Loading charges Rs. 1,000
Shri Sundaram sells 700 cases at Rs. 140 per case and incurs the following expenses:
Clearing charges Rs. 850
Warehousing and Storage Rs. 1,700
Packing and selling expenses Rs. 600
It is found that 50 cases have been lost in transit and 100 cases are still in transit.
Shri Sundaram is entitled to a commission of 10% on gross sales. Draw up the
consignment account, Shri Sundaram account and goods sent on consignment account
in the books of Shri Mehta.
16 On 1st January 2007, Lila & Co. of Kolkata consigned 100 cases of milk powder to
Shilla & Co. of Mumbai. The goods were charged at a proforma invoice value of Rs.
10,000 including a profit of 25% on invoice price. On the same date consignor paid
Rs. 600 for freight and insurance. On 1st July, the consignee paid import duty Rs.
1,000, dock charges Rs. 200 and sent to the consignor a Bank Draft of Rs. 4,000 as
advance. On 1st August , they sold 80 cases for Rs. 10,500 and sent a remittance for
the balance due to the consignors after deducting commission at the rate of 5% on
gross sale proceeds. Show the consignment account and Shilla & Co.’s account in the
books of Lilla & Co.
17 On 1-1-2009 Mr. John of Mumbai consigned to Mr. Raj of Chennai goods for sale at
invoice price. Mr. Raj is entitled to a commission of 5% on sales at invoice price and
20% of any surplus price realized. Goods costing Rs. 1,00,000 were consigned to
Chennai at the Invoice price of Rs. 1,50,000. The direct expenses of the consignment
amounted to Rs. 10,000. On 31-3-2009 an account sales was received by Mr. John
from Mr. Raj showing that he had effected sales of Rs. 1,20,000 in respect of 4/5 of
the quantity of goods consigned to him. His actual recurring expenses were Rs. 3,000.
Mr. Raj accepted a bill drawn by Mr. John for Rs 1,00,000 and remitted the balance
due in cash. Show the Consignment account, Goods sent on consignment account and
account of Mr. Raj in the books of Mr. John.
18 On 1-1-2005 Mr. X of Delhi consigned to Mr. Y of Mumbai goods for sale at invoice
price. Mr. Y is entitled to a commission of 4% on invoice price and 20% of any
surplus price realized. Goods costing Rs. 12,000 were consigned to Mumbai at the
Invoice price of Rs. 14,400. The expenses of the consignment amounted to Rs. 1,000.
On 31-3-2005 an account sales was received by Mr. Y showing that he had effected
sales of Rs. 12,000 in respect of 3/4 of the quantity of goods consigned to him. His
actual out of pocket expense amounted to Rs. 600. Mr. Y accepted a bill drawn by
Mr. X for Rs 5,000 and remitted the balance due from hin in cash. Show the
Consignment account, Goods sent on consignment account and Y account in the
books of X.
19 A of Ahmedabad consigned goods to B of Mumbai for sale at proforma invoice price

or over. B is entitled to a commission on sale at 5% on proforma invoice price and
25% of any surplus price realized.
Goods consigned by A to B during the year ended 31st March, 2005, cost A Rs 20,900
and invoiced at Rs. 28,400. A paid Rs. 1,045 as freight and received Rs. 15,000 as
advance from B. 80% of the goods were sold by B for Rs. 26,000. B remitted the
balance of proceeds after deducting his commission.
Prepare necessary ledger accounts in the books of A.
20 On January 15, 2003 Prem sends a consignment of goods costing Rs. 24,000 to
sunder invoiced at Rs. 30,000 to be sold at a commission of 4% on sale price. He was
allowed an overriding commission of 1% on sale. By March 2003, 80% of the goods
are sold for Rs. 32,000.
Prem and Sunder have respectively incurred the following expense on the
consignment.
Prem :- Freight Rs. 350, Cartage Rs. 400, Insurance Rs. 250
Sunder :- Customs duty Rs. 960 , Cartage Rs. 360 , Sales Expense Rs. 120,
Warehouse Expense Rs. 120
Prem decides to adopt the invoice amount for entering in the consignment account
and also to take customs duty paid by Sunder as part of the cost of the closing stock in
addition to expenses incurred by him.
Write up the relevant accounts in the books of Prem and Sunder, the money due to
Prem as on March 31, 2003 being paid by means of cheque.
Unit-2 Joint Venture Account
1. Who are Co- ventures?
2. What is the other name of joint venture?
3. Write the type of joint venture account.
4. What is the nature of co-venture account?
5. Which account is debited when goods are purchased for joint venture?
6. For which types of business out of the following is joint venture suitable:
Construction of college building
Paper mills
Film distribution
Steel Factory
7. When ventures contributed cash to the joint venture which journal entry is passed?
8. When expenses are paid by the ventures which journal entry is passed?
9. Which account is transferred the profit of joint venture account?
10. What are the rights of co-ventures?
11. Which act is followed by partnership firm?
12. What are the systems of accounting in joint venture?
13. Which journal entry is passed for unsold stock in joint venture account?
14. What is a joint trade?
15. State any one features of joint venture.
Briefly answer the following. (2 marks)
1. Define joint venture.

2. Mention any two differences between joint venture and consignment.
3. Write any two differences between joint venture and partnership firm.
4. Which accounts are kept in books of joint venture?
5. State the methods of recording transaction of joint venture.
6. What is joint venture account?
7. What is joint bank account?
8. Ram and Rahim are partners in joint venture. If Rahim sold of goods worth Rs. 5,000.
What will be journal entry in the books of Ram?
9. Dev and Dhruv are partners in a joint venture. Dhruv has to pay Rs. 5,000 to Dev as
interest for capital invested in joint venture. write journal entries in the books of both
the partners.
10. In which of the following business joint venture can be adopted?
Construction of building
Film distribution
Paper mill
Steel factory
Sale and purchase of old books
Underwriting of shares
House building contract
1 Define joint venture. Explain the difference between joint venture and partnership firm.
2 Differentiate between joint venture and consignment.
3 X and Y of Mumbai agreed to import cotton into India on Joint venture. On Jan. 1,
2008 they opened a bank account, X contributing Rs. 1, 40,000 and Y Rs. 1, 00,000
and agreed to divide profits and losses according to their cash contributions.
They remitted Rs. 1, 80,000 to their agent in Egypt to pay for the cotton purchased
there and later on a further Rs. 10,000 in settlement of his account.
The fright insurance and dock charges were all paid in Mumbai and amounted to Rs.
10,000. On July 31, 2008 the various sales realized Rs. 2, 40,000 net which enabled
them to repay themselves(taking no account of interest) the cash respectively advanced
by them on Jan.1. The venture is then closed by X taking over the balance of cotton
unsold for Rs. 38,000 for which he paid a cheque into the bank account.
You are required to prepare necessary accounts dealing with these transactions and to
finally close them.
4 Rajiv and Shyam enter into a joint venture to import silk. On 1st January, 2006, they
opened a joint bank account with the syndicate bank, Rajiv contributing Rs. 20,000 and
Shyam Rs. 10,000. They agreed to share profits in the ratio of the capitals introduced
by them. On 15th February, 2006, they remitted to a manufacturer in Japan Rs. 25,000
for the goods received and incurred an expense of Rs.800 for freight, insurance, etc.
The goods were sold for Rs. 33,000 for which the selling expenses were as follows:
Godown rent Rs. 200, commission payable to Shyam on the gross amount of sales
10%, and Misc. expenses Rs. 300
Give Journal entries and the necessary ledger accounts showing the final distribution of
cash among the co- ventures.
5 Mr. S and Mr. R carrying on a business separately as contractors, jointly take up the
work of constructing a building at an agreed price of Rs. 3,50,000, payable in cash Rs.
2,40,000 and in fully paid shares of a company for the balance of Rs. 1,10,000. A bank
account is opened in which Mr. S Mr. R paid Rs. 75,000 and Rs. 50,000 respectively.
The following costs were incurred in completing the construction and the contract
price was duly realized:
(1) Wages paid Rs. 90,000
(2) Materials purchased for cash Rs. 2,10,000
(3) Materials supplied by R from his stock Rs. 27,000
(4) Consulting Engineer’s fees paid by Mr. S Rs. 6,000
The accounts were closed, Mr. S taking up all the shares of the company at an agreed
valuation of Rs. 48,000, treating loss on shares as Joint venture loss and Mr. R taking
the remaining stock of materials at Rs. 9,000.
Prepare and closed the Joint venture account and personal accounts of Mr. S and Mr. R
assuming that separate set of books are opened for this purpose and that the net result
of the venture is shared by Mr. S and Mr. R in the ratio of 2: 1.
6 Prakash and Suresh doing business separately as building contractors, undertake jointly
to construct a building for a newly started Joint Stock Company for a contract price of
Rs. 1,00,000 payable as to Rs. 80,000 by instalment in cash and Rs. 20,000 in fully
paid shares of the company. A bank account is opened in their joint names, Prakash
paying in Rs. 50,000 and Suresh Rs. 25,000. They are to share profit or loss in the
proportion of 2/3 and 1/3 respectively. Their transactions were as follows:

Wages paid Rs. 30,000
Bought materials Rs. 40,000
Materials supplied by Prakash from his stock Rs. 5,000
Materials supplied by Suresh from his stock Rs. 4,000
Architect’s fees paid by Prakash Rs. 2,000
The contract was completed and price duly received. The joint venture was closed by
Prakash taking up all the shares of the company at an agreed valuation of Rs. 16,000.
Prepare joint venture account, showing profits and loss and the accounts of Prakash
and Suresh showing the final distribution.
7 Ram and Laxman were participants in a joint venture, sharing profits and losses in the
proportion of 2/3 and 1/3 respectively. Each party maintains a complete record in his
own books. Ram supplies goods to the value of Rs. 15,000 and incurs an expenditure
of Rs. 600 on them, and Laxman supplies goods to the extent of Rs. 12,000 and his
expenses amount to Rs. 900. Ram sells all the goods for Rs. 36,000 for which he is
entitled to receive a commission at 5%. Accounts are settled by bank draft. Give the
necessary journal entries and the ledger accounts in the books of Ram to record the
above transactions.
8 Banerjee and Mukherjee agree to import Russian timber into India. On 1st July, 2004
they opened a joint bank account with Rs. 25,000 towards which Banerjee contributed
Rs. 15,000 and Mukhaerjee contributed Rs. 10,000. They agree to share profits and
losses in proportion to their cash contributions.
They remitted to their agent in Russia Rs. 20,000 to pay for timber purchased, and later
Rs. 2,100 in settlement of his account. Freight, insurance and dock charges amounted
to Rs. 3,900. On Dec. 31, 2004 the sales amounted to Rs. 28,740 which enabled them
to repay themselves with cost originally advanced. They then decided to close the
venture and Mukherjee agreed to take over the timber unsold for Rs. 1,260, which is to
be deducted from his share profit.
Prepare necessary accounts showing the amount of cash available for division by way
of profits and how the same is divisible between Banerjee and Mukherjee.
9 Rajeev and Ashok enter into a joint venture as dealers in land and opened a joint bank
account with Rs. 60,000 towards which Rajeev contributed Rs. 40,000. They agreed to
share profits and losses in proportion to their cash contribution. They purchased a plot
of land measuring 5,000 square yards for Rs. 50,000. It was decided to sell the land in
smaller plots and a plan was got prepared at a cost of Rs. 1,200. In the said plan, 1/5th
of the total area of the land was left over for public roads and the remaining land was
divided into 8 plots of equal sizes. Out of 8 plots, 3 plots were sold @ Rs. 15 per
square yard and the remaining 5 plots were sold @ Rs. 14 per square yard. Expenses
incurred in connection with the plots were : Registration expenses Rs. 4,000, stamp
duty Rs. 400 and other expenses Rs. 1,000. Allow 2% on the sale proceeds as a
commission to Rajiv.
Journalise the above transactions and prepare the necessary ledgers accounts.
10 A and B, both contractors, undertook a joint venture involving the construction of a

building. A joint Bank Account was opened in which A contributed Rs. 75,000 and B
contributed Rs. 37,500. The contract price was Rs. 3, 75,000. The result of joint
venture was shared to 2/3 and 1/3. The details of the transactions were as follows:
Wages paid Rs. 89,000.
Materials supplied by A Rs. 13,500
Materials supplied by B Rs. 12,000
Materials purchased Rs. 1,65,000
Salaries Rs. 12,000
Cartage Rs. 18,500
Architect fee paid by A 10,000
Concrete mixer plant purchased Rs. 38,500
The stock of materials on the completion of the contract, valued at Rs. 16,500, was
taken over by A. concrete mixer plant was taken over by B for Rs. 30,000. A was to be
paid Rs. 18,000 per annum against establishment expenses to be charged to the Joint
Venture Account. The contract lasted for 8 months.
Prepare Joint Venture Account, Joint Bank Account and accounts of A and B.
11 Misha, Seema and Nisha entered into a joint venture agreeing to share profits 6:3:1.
They paid into a Joint Bank Account their contribution amount as follows: Misha Rs.
60,000, Seema Rs. 40,000 and Nisha Rs.20,000. Purchases paid from Joint Bank
Account Rs. 1,00,000. Most of the goods were sold for Rs. 2,50,000. Nisha took over
damaged goods for Rs. 1,500. Other expenses were as follows: carriage paid by Misha
Rs. 5,200; rent paid by Seema Rs. 2,500 and Nisha paid for advertising Rs. 2,000.
Prepare the necessary ledger accounts.
12 A and B enter into a Joint Venture to take a building contract for Rs. 2,40,000. They
provide the following information regarding the expenditure incurred by them.
Particulars A (Rs.) B (Rs.)
Materials 68,000 50,000
Cement 13,000 17,000
Wages - 27,000
Architect’s fee 10,000 -
Licence fee - 5,000
Plant - 20,000
Pant was valued at Rs. 10,000 at the end of the contract and B agreed to take it at that
value. Contract amount of Rs. 2,40,000 was received by A.
Show joint venture account and B’s account in the books of A and joint venture
account and A’s account in the books of B.
Unit 3 Hire purchase and Installment purchase system
1. Who is hirer?
2. How many ledger accounts are prepared in the books of hire purchaser?
3. What is down payment?
4. Define cash price.
5. Which act is followed by hire purchase system?
6. Which price of the asset is calculated depreciation?
7. What is interest?
8. Which journal entry is passed in the books of hire purchaser on taking the delivery of
assets at the time of agreement?
9. Which act is followed by instalment purchase system?
10. Which journal entry is passed in the books of vendor on receipt of instalment?
11. Total amount payable less its cash price is equal to ……….
12. Cash price of asset + interest =?
13. What is the other name of hire purchase charges?
14. What is an agreement of sale?
15. What is an agreement of hire?
16. Who is vendor?
1. What are the conditions of instalment purchase system?

2. State any two differences between hire purchase system and instalment purchase
system.
3. List out ledger accounts are prepared in the books of hire purchaser under hire
purchase system.
4. State the ledger accounts are prepared in the books of vendor under hire purchase
system.
5. On 1-1-2008 a machine was purchased on hire purchase system. Its cash price was Rs.
109,000. At the time of contract Rs. 25,000 was paid. Thereafter four yearly
installments of Rs. 25,000 each were paid. Find out the amount of interest and the
amount paid for asset in each installment.
6. Write a condition of hire purchase contract.
7. State the ledger accounts are prepared in the books of hire purchaser under installment
system.
8. Mention the ledger accounts are prepared in the books of vendor under installment
system.
9. Calculate the cash price of the machinery from the following information.
Paid Rs. 2,800 at the time of contract.
Four annual installment were paid respectively Rs. 3,120, Rs. 2,480, Rs. 1,880 and
Rs. 1,320. Rate of interest 10%.
10. Rashmi Ltd. has purchased one machine from Ashma Ltd. on 1-4-2006 on hire
purchase agreement, paying cash Rs. 20,000 and agreed to pay further three
instalments of Rs. 23,400, Rs. 21,600 and Rs. 19,800 respectively on 31st March,
every year. Compute the cash price.
11. A machine was purchased for Rs. 6,000 on hire purchase. Rs. 1,200 was paid on
signing the agreement and the balance was paid in four equal annual instalments of
Rs. 1,800 each. Find out interest for all the years.
12. Gita has purchased one machinery on hire purchase agreement. The cash price of
machinery is Rs. 90,000. The amount is to be paid on agreement Rs. 30,000 and
balance amount is paid by three equal annual instalments of Rs. 30,000 each.
Compute the interest of third year.
13. X purchased a truck from B whose cash price is Rs. 60,000 on 1st Jan. 2001. Rs.
20,000 is paid at the signing of the contract and the balance is to be paid in three equal
annual instalments of Rs. 20,000 each. The rate of interest being 22% p.a. You are
required to calculate the amount of interest included in each installment.
14. A acquired on 1st January, 2003 a machine under a hire purchase agreement which
provides for 5 half- yearly installments of Rs. 6,000 each, the first installment being
due on 1st July, 2003. Assuming that the applicable rate of interest is 10%, calculate
the cash value of the machine.
15. A purchased two trucks on hire purchase system. He pays Rs. 50,000 down and Rs.
60,000 at the end of second year, fourth year and sixth year. Interest is charged by the
vendor at 10% with two yearly rests on unpaid balance. Calculate interest paid with
each installment.
1. Differentiate between hire purchase system and installment purchase system.
2. Clarion Industries purchased on instalment basis a machine on 1st January, 2008. The
term was that on 31st December each year a payment of Rs.5,000 has to be made to
the vendors Messrs Sole Expert Co., which includes interest @5% on the balance of
cash down price due and so on for five years completing the payment in five
instalments. It was decided to depreciate the machinery @ 10% p.a. on reducing
balance method. Ascertain the cash down price and show Machinery account, Interest
suspense Account and Depreciation account in the books of the buyer.
3. On 1st July 2006, Eastern Printers purchased a printing machine on a hire purchase
basis, payments to be made Rs. 10,000 on the said date and the balance in three half-
yearly instalments of Rs. 8,200, Rs. 7,440 and Rs. 6,300 commencing from 31 st
December, 2006. The vendor charged interest at 10 % per annum calculated at half-
yearly rates.
Eastern printers close their books annually on December, 31st and provide
depreciation at 10% per annum on diminishing balance in each year.

Determine the cash price of the machine and prepare journal entries in the books of
Eastern Printers.
4 Write journal entries in the books of vendor under the hire purchase system.
5 Ahmedabad Manufactures Ltd. purchased on 1st April ,2003 machinery costing Rs.
47,400 from ABC Co. Ltd. on Hire purchase system. The terms were as under:
(1) Rs. 20,000 to be paid on 1st April, 2003
(2) Rs. 10,000 to be paid on 31st march, 2004
You are required to write up Machinery Account, Interest Account and ABC Co.
Ltd.’s Account. Charge interest at 5% per annum on the yearly balances. Depreciation
at 20% on the original cost was to be written off each year. Give journal entries in the
books of both the parties.
6 On 1st January, 2004 Jaya Brothers acquired a machine on hire purchase. The terms of
the contract were as follows:
1. The cash price of the machine was Rs. 10,000.
2. Rs. 4,000 was to be paid on the signing of the contract.
3. The balance was to be paid in annual instalments of Rs. 2,000 plus interest.
4. Interest chargeable on outstanding balance was @ 6% per annum.
Depreciation at 10% per annum is to be written off on the straight line method.
Prepare necessary ledger accounts in the books of hire purchaser and vendor.
7 Which journal entries are passed in the books of hire purchaser in hire purchase
system?
8 D ltd. had purchased machinery on hire purchase system from H ltd. The terms are
that they would pay Rs. 20,000 down on 1-1-2003 and 5 annual instalments of Rs.
11,000 each commencing from 1.1.2004. They charged depreciation on machinery at
the rate of 15% per annum under diminishing balance system.
Prepare machinery account, H ltd. account, interest account and depreciation account
in the books of D ltd. account.
9 Rapid Engineering works sold to Pratap Industries a machine of the cash price of Rs.
31,360 on hire purchase basis on 1st April, 2001. A sum of Rs. 9,000 was paid at the
time of delivery. The balance was payable in three equal annual instalments of Rs.
9,000 each payable on 31st March of every year. Interest was charged @ 10% per
annum. The purchaser charged 10% depreciation per annum on the diminishing
balance of the machine. Prepare necessary ledger accounts in the books of hire
purchaser.
10 A purchased on instalment basis, a machinery from B on 1st January, 2005 for a sum
of Rs. 80,000, Rs. 20,000 is to be paid on the signing of the contract and rest in three
instalments of Rs. 20,000 each. The cash price of the machine is Rs. 74,500 and
interest is charged by the vendor at 5% p.a. the buyer charges depreciation at 10% p.a.
on the diminishing balance. Give journal entries in the books of both the buyer and
the vendor.
11 Write journal entries in instalment system in the books of vendor.
12 On 1st January 2003, the C company purchased machinery on Instalment system. Rs.
6,000 was to be paid on signing the agreement and the balance in four annual
instalments of Rs. 6,000 each payable on 31st December every year. 5% interest is
charged on the balance by the vendor company. The cash price of the machinery is
Rs. 27,300. Depreciation is written off at 10% per annum on the reducing balance
method. Give necessary journal entries and ledger accounts in the books of the C
company and the vendor.
13 Which journal entries are passed in the books of hire purchaser in installment system?
14 On 1-1-2003, A purchased four machines from B on Instalment system. The cost of

each machine is Rs. 2,000 payable as under:
On 31-12-2003 Rs. 2,400
On 31-12-2004 Rs. 2,300
On 31-12-2005 Rs. 2,200
On 31-12-2006 Rs. 2,100
Interest is charged at 5% on opening balance of each year. Depreciation is charged at
10% on original cost of machines. Make entries in the books of A for all the four
years.
15 On 1st April 2005 A Ltd. bought a machine from B Ltd. on Hire purchase system, the
cash price being Rs. 29,900. Rs. 8,000 was payable on signing the contract and the
balance in three annual instalment of Rs. 8,000 each.
Depreciation is provided at 10% per annum by reducing balance method. Prepare
machine account and B Ltd. account in the books of A ltd.
Unit 4 Branch accounting
1. State the types of branches.
2. When goods are supplied by the head office to the branch, which journal entry is
passed in the books of the head office?
3. Define dependent branch.
4. State the nature of Branch account.
5. Goods worth Rs. 5,000 sent by the head office on 27th December to its branch,
received by the branch in the beginning of the next year. Give journal entry in the
books of the head office.
6. Which account is prepared to find out the balance of the debtors at the end of the
accounting period?
7. State the type of branch account under the branch final account system.
8. When goods are returned by branch, which journal entry is passed in the books of the
head office?
9. Who are paid all expenses of the branch?
10. Petty expenses are recorded by branch in which books of accounts?
1. What is cash-in-transit?
2. What are various methods of writing accounts of dependent branches?
3. What is goods-in-transit?
4. What is inter branch transaction?
5. Goods worth Rs. 15,000 sent by Baroda head office to Deesa branch on 25-3-2006 which
were received by the branch on 5-4-3006. Give journal entry in the books of the head office.
6. Write any two objects of branch account.
7. What is the use of branch stock account?
8. What are various accounts opened under the stock and debtors system?
9. Goods amounting to Rs. 400 transferred from Ahmedabad Branch to Rajkot Branch under
instructions from head office. Pass journal entry in the books of head office.
1 X & Co. of Delhi have a branch at Chennai. Goods are sent by the Head Office at
invoice price which is at the profit of 25%von cost price. All expenses of the branch
are paid by the Head Office. From the following particulars, prepare Branch Account
in Head Office books: when goods are shown at invoice price.
1. Opening balance:
Stock at invoice price Rs. 11,000
Debtors Rs. 1,700
Petty cash Rs. 100
2. Goods sent to branch at invoice price Rs. 20,000
3. Expenses made by head office:
Rent Rs. 600
Wages Rs. 200
Salary Rs. 900
4. Remittances made to head office:
Cash sales Rs. 2,650
Cash collected from Debtors Rs. 21,000
5. Goods returned by Branch at invoice price Rs. 400
6. Balance at the end:
Stock at invoice price Rs. 13,000
Debtors at the end Rs. 2,000
Petty cash Rs. 25
2 From the following particulars relating to Kolkata Branch for the year ended
December 31, 2006 prepare Branch account in the books of head office:
Particulars Rs.
Stock at branch on January 1, 2006 10,000
Branch debtors on January 1, 2006 4,000
Branch debtors on Dec. 31, 2006 4,900
Petty cash at branch on January 1, 2006 500
Furniture at branch on January 1, 2006 2,000
Prepaid fire insurance on January 1, 2006 150
Salaries outstanding at branch on January 1, 2006 100
Goods sent to branch during the year 80,000
Cash sales during the year 1,30,000
Credit sales during the year 40,000
Cash received from debtors 35,000
Cash paid by the branch debtors direct to head office 2,000
Discount allowed to debtors 100
Cash sent to branch for expense

Rent 2,000
Salaries 2,400
Petty cash 1,000
Insurance upto March 31 , 2007 600 6,000
Goods returned by the branch 1,000
Goods returned by the debtors 2,000
Stock on December 31 5,000
Petty Expenses at Branch 850
Provide depreciation on furniture 10% p.a.
Goods costing Rs. 1,200 were destroyed on account of fire and a sum of
Rs. 1,000 was received from the Insurance Company.
3 From the following particulars, prepare Branch Account showing the profit or loss of
the Branch:
Opening stock at the branch Rs. 30,000
Goods sent to branch Rs. 90,000
Sales (cash) Rs. 1,20,000
Expenses :
Salaries Rs. 10,000
Other expenses Rs. 4,000
Closing stock could not be ascertained, but it is known that the branch usually sells at
cost plus 20 %. The Branch Manager is entitled to a commission of 5% on the profit
of the branch before charging such commission.
4 Explain the features of dependent branch.
5 Messrs Gupta Brothers have their Head Office at Delhi and Branch at Calcutta. The
following are the transactions of the Head Office with Branch for the year ended 31 st
August, 2007.
Particular Rs.
Stock at Branch as on 1.9.2006 30,800
Debtors at Branch as on 1.9.2006 16,500
Petty cash as on 1.9.2006 500
Goods supplied to the branch 1,51,200
Remittances from Branch
Cash sales 10,500
Realization debtors 1,57,740 1,68,240
Amount sent to branch:
Salary 7,440
Rent 2,400
Petty cash 3,000 12,840
Stock at Branch as on 31.8.2007 23,150
Sundry Debtors at the Branch as on 31.8.2007 50,460

Petty cash as on 31.8.2007 750
Show the Branch account in the books of the head of office.
6 Hari Brothers of Calcutta has a branch at Ranchi and in order to maintain strict control
on stock, invoices goods to the branch at selling price which is cost plus 33 %. From
the following particulars, prepare branch stock account , branch debtors account ,
goods sent to branch account and branch adjustment account to show gross profit and
net profit or loss made there:
Stock on 1st January, 2008 (invoice price) Rs. 15,000
Debtors on 1st January, 2008 Rs. 11,400
Goods invoiced to branch during the year (invoice price) Rs. 67,000
Sales at the Branch:
Cash Rs. 31,000
Credit Rs. 37,400
Cash received from debtors Rs. 40,000
Bad debts written off Rs. 250
Expenses at the branch Rs.6,700
Stock on 31st December, 2008 (invoice price) Rs. 13,400
7 Delhi head office supplies goods to its branch at Kanpur at invoice price which is cost
plus 50%. All cash received by the branch is remitted to Delhi and all branch
expenses are paid by the head office. From the following particulars relating to
Kanpur branch for the year 2007, prepare branch stock account, branch debtors
account , branch expenses account and branch adjustment account in the books of
head office so as to find out gross profit and net profit or loss made by the branch.
Stock with branch on 1.1.2007 (invoice price) Rs. 60,000
Branch debtors on 1.1.2007 Rs. 12,000
Petty cash balance on 1.1.2007 Rs. 100
Goods received from head office (invoice price) Rs. 1,86,000
Goods returned to head office Rs. 3,000
Credit sales less returns Rs. 84,000
Allowance to customer off selling price (already adjusted while invoicing) Rs. 2,000
Cash received from debtors Rs. 90,000
Discount allowed to debtors Rs. 2,400
Expenses (cash paid by head office)
Rent Rs. 2,400
Salaries Rs. 24,000
Petty cash Rs. 1,000 27,400
Cash sales Rs. 1,04,000
Stock with branch on 31.12.2007 (invoice price) Rs. 54,000
Petty cash balance on 31.12.2007 Rs.100
8 Shri X has a retail branch at Allahabad. Goods are sent by the H.O.to the Branch
marked at selling price which is cost plus 25%. All the expenses of the branch are
paid by the H.O. all cash collected by the branch (from customers and from cash
sales) is deposited to the credit of H.O.
From the following particulars of the branch, prepare branch stock account, branch
debtors’ account, branch expenses account and branch adjustment account in the
books of head office.
Particulars Rs.
Debtors on 1.1.2007 12,000
Debtors on 31.12.2007 14,000
Inventory with the branch at invoice price : on 1.1.2007 16,000
on 31.12.2007 17,000
Cash sales during the year 60,000
Total amount deposited in the H.O. account during the year 1,27,000
Return of goods to H.O. at invoice price 5,000
Salaries paid 6,000
Rent paid 4,000
Discount allowed to customers 2,000
Bad debts written off 1,000
Spoilage 2,000
9 P.O.Ltd., Kolkata, started a branch in Mumbai on 1st April, 2003 to which goods were
sent at 20% above cost. The branch makes both credit and cash sales. Branch
expenses are met from branch cash and balance money remitted to H.O. The branch
does not maintain double entry books of account and necessary accounts relating to
branch are maintained in H.O.
Following are further details for the year ended 31st March, 2004.
Particulars Rs.
Cost of goods sent to Branch 50,000
st
Goods received by branch till 31 March, 2004 at invoice price 54,000
Credit sales for the year 58,000
Debtors as on 31st march, 2004 20,800
Bad debts and discount written off 200
Cash remitted to H.O 43,000
st
Cash in hand at branch on 31 march, 2004 2,000
Cash remitted by H.O. to Branch during the year 3,000
Closing stock at branch at invoice price 6,000
Expenses incurred at Branch 12,000
Show the necessary ledger accounts according to stock and debtors system in the
books of the Head office and determine the profit or loss of the branch for the year
ended 31st March, 2004.

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Patel Institute of Business Management, Computer & Information

Question Bank 030100502: Financial Accounting

Unit 1 Consignment Account

Answer the following. (1 mark)

2. State the meaning of consignee.

3. What is normal loss?

4. Which formula is used to calculate the value of unsold stock?

5. What is the type of consignment account?

6. State the type of “goods sent on consignment account”.

7. What is Del –credere commission?

8. Write the examples of direct expenses. (non- recurring expenses)

10. Give an example of normal loss.

12. What is direct expense? OR What is non- recurring expense?

13. Define indirect expense. OR Define recurring expense.

14. Write any two examples of indirect expenses.

15. State the type of consignee’s account.

16. What is an abnormal loss?

Question Bank 030100502: Financial Accounting

1. What is consignment accounting?

2. State any two differences between consignment and sale.

3. What is an account Sale?

4. What is proforma invoice?

Question Bank 030100502: Financial Accounting

Question Bank 030100502: Financial Accounting

Answer the following (limit 250 words). (5 marks)

1. Write the difference between consignment and sale.

Question Bank 030100502: Financial Accounting

Question Bank 030100502: Financial Accounting

Question Bank 030100502: Financial Accounting

19 A of Ahmedabad consigned goods to B of Mumbai for sale at proforma invoice price

Question Bank 030100502: Financial Accounting

Question Bank 030100502: Financial Accounting

Unit-2 Joint Venture Account

Answer the following. (1 mark)

1. Who are Co- ventures?

2. What is the other name of joint venture?

3. Write the type of joint venture account.

4. What is the nature of co-venture account?

Construction of college building

9. Which account is transferred the profit of joint venture account?

10. What are the rights of co-ventures?

11. Which act is followed by partnership firm?

12. What are the systems of accounting in joint venture?

14. What is a joint trade?

15. State any one features of joint venture.

Briefly answer the following. (2 marks)

1. Define joint venture.

Question Bank 030100502: Financial Accounting

2. Mention any two differences between joint venture and consignment.

4. Which accounts are kept in books of joint venture?

5. State the methods of recording transaction of joint venture.

6. What is joint venture account?

7. What is joint bank account?

10. In which of the following business joint venture can be adopted?

Sale and purchase of old books

House building contract

Answer the following (limit 250 words). (5 marks)

2 Differentiate between joint venture and consignment.

Question Bank 030100502: Financial Accounting

Question Bank 030100502: Financial Accounting

proportion of 2/3 and 1/3 respectively. Their transactions were as follows:

Question Bank 030100502: Financial Accounting