FINANCIAL ACCOUNTING Time: 3 hours Full Mark: 100 Answer the first question which is compulsory and any

four from the rest. No-(1A).What do you mean by Accounting Principle? Explain the Accounting Concepts and conventions. No-(1B). Distinction between the Capital Expenditure and the Revenue Expenditure with the example. No-(2A) From the following data of the O&M solution Ltd as on 31-03-2004 prepare the final account. A s capital B s Capital Stock opening Bad debt Bill payable Purchases Sales Sales Return Wages 80,000 1, 00,000 9,000 300 12000 64,500 19,000 2000 10000 Discount (cr)-500 Land& Building-90000 Plant & machinery-70000 Furniture-1000 Debtor-25400 creditor-42000 A s drawing-1400 B s drawing-1800 Insurance-1500 Postage-100 Advertisement -1000

Manufacturing exp12000 Excise duty Salary 6000 8000

Cash in hand & bank-49500

Stock on 31-03-2004 was 16000.Provide depreciation on Land & building@5%, furniture@10% plant & machinery@ 5%.Outstading salary Rs 1500 and wages Rs 2100.Insurance is paid for 15 month up to June 30 -2004.Write off Bad debt of Rs 400.Provission for Bad debt @5% on debtor. Goods withdrawn by A for personal use Rs 2000.A& B are equal partner. No-(2B). What is Asset and Liability? Discuss the various types of asset with the proper example.

No-(3A). O&M Solution ltd purchased on 1st January, 1997 a plant for Rs 30000 and spent Rs 20000 in the installation process. On 1st July 1997 additional machine of a cost of Rs 25000 was purchased. On 1st July, 1999 the plant purchased on 1st January, 1997 become obsolete and was sold for Rs 10000. On that date new machine was purchased at a cost of Rs 60000. Depreciation was provided for annually on 31st December at 10% p.a. On the original cost of the asset.IN 2000, the company decided to change this method of providing depreciation and adopted WDV @15%. Show the plant account as it would be appear in the books of the company for the year 1997-2002 No-(3B) What is the merits and the demerits of written down value method? No-(4A) Receipts TO cash in hand To Subscription To donation To Interest on Investment @7% To proceed from charity show RECEIPTS & PAYMENT ACCOUNT For the year ended 31st December 2002 Rs Payments 7130 47996 14500 7000 10450 By Medicine BY doctors Honorarium By salary By petty Exp By Equipments By exp on charity show By cash in hand 1st Jan 2002 240 64 8810 21200 40000 10000

RS 30590 9000 27500 461 15000 750 3775 31st Dec 2002 280 100 9740 31600 38000 8000

Additional information: Subscription Due Subscription received in advance Stock of medicine Estimated value of Equipment Building Creditor for medicine

No-(4B) Distinction between Income and expenditure account & Receipts and payment account. No-(5A)

O&M Solution had a branch at Kolkata, Goods are invoiced at cost plus 25%.Branch is instructed to deposit all cash every day in the head office account. All exp are paid by the branch manager. From the following particular prepare a branch account in the books of head office. Stock on 1-1-2002 Stock on 31-12-2002 Sundry Debtor on 1-1-2002 Sundry Debtor on 31-12-2002 Cash sales for the year Credit sales for the year Cash remitted to the HO No-(5B) What is Stock and debtor system? Explain what are the main accounts involved in that system. No-(6A) On 31st March 2002, the balance sheet of Ram, Hair, Mohan sharing profit and losses in the ratio of 2:3:2 stood as under. Capital Account Ram Hari :1000000 :1500000 3500000 500000 40,00,000 Land & Building Machinery Closing Stock Sundry Debtor Cash & bank 1000000 1700000 500000 600000 200000 40,00,000 2500 3000 1400 1800 10800 7000 15000 Furniture purchased by the manager Goods invoiced from the head office Expenses paid by the HO Expenses paid by the Branch Head office sent cash to purchase safe 1200 18200 1640 120 1300

Mohan :1000000 Sundry Creditor

On 31st March 2002, Hari desire to retire from the firm and the remaining partners decided to carry on it. It was agreed to revalue the asset and liabilities on that date on the following basis. 1234567Land and building be appreciated by 30% Machinery be depreciated by 20% Closing stock to be valued at Rs 4,50,000 Provision for bad debt be made at 5% Old credit balance of sundry creditor Rs 50000 be written back. Joint life policy of the partners surrender and cash obtained Rs 350000 Goodwill of the entire firm be valued at Rs 630000 and Hari share of the same be adjusted in the accounts of Ram and Mohan who share the future profit and loss in the share of 3:2 8- The total capital of the firm is to be the same as before retirement 9- Amount due to Hari is to be settled on 50% on the retirement and 50% within one year.

Prepare a Revaluation account, Capital account, cash account, and a Balance sheet as on 1-4-2002 of O&M solution Limited. No-(6B) What is Goodwill? Explain the methods of calculation the goodwill in different situation.

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