Gradable Assignment

MANAGEMENT ACCOUNTING AND ANALYSIS

Name : Rana Vivek Singh

Reg No. : 1801016190313

Batch : 35th

Prof. Name : Lakshmi Narasimhan

1. Given here are a few situations:

a. Personal and business transactions are separately maintained.

Ans: Business/economic entity concept

b. Inventory is recorded at its purchase price.

Ans: Cost Concept

c. The death of the chief executive officer of the company is not recorded in accounts.
Ans: Money Measurement Concept

d. In case of doubt, it is considered better to understate rather than overstate income.

Ans: Conservative or Prudence Concept

e. Assets are not stated at their liquidation value.

Ans: Cost Concept

f. Financial Statements are prepared on an annual basis.

Ans: Accounting period concept

g. Expenses are recognized in the same period as the related revenues.

Ans: Matching Concept

h. Revenue is recognized when it is earned and expense is recognized when it is incurred.

Ans: Accrual Concept

i. The accounting records only events that affect the financial position of the entity and at
the same time can be reasonably determined in monetary terms.
Ans: Money Measurement Concept

j. Same treatment is given to comparable transactions from period to period.

Ans: Consistency Concept
2. The manager of a company who did not have proper accounting knowledge prepared the
following balance sheet. He has wrongly classified the items under assets, liabilities and
owners’ equity.
Owner’s Equity and Rs Assets Rs
Liabilities
Share Capital 10,00,000 Retained Earnings 5,00,000
Equipment 9,00,000 Land and Buildings 7,00,000
Cash 2,00,000 Long – term loan 4,00,000
Accounts Payable 2,00,000
Accounts 3,00,000
Receivables
21,00,000 21,00,000

Answer:

Owner’s Equity and Liabilities Rs Assets Rs

Share Capital 10,00,000 Cash 2,00,000

Long – term loan 4,00,000 Land and Buildings 7,00,000

Retained Earnings 5,00,000 Equipment 9,00,000

Accounts Payable 2,00,000 Accounts Receivables 3,00,000

21,00,000 21,00,000

3. Using Accounting Equation, Answer the following independent Questions.

a) New Company’s assets are Rs 250 lakh and its external liabilities are of Rs 100 lakh,
determine the amount of owner’s Equity.
Ans: Owner’s Equity = Assets - Liabilities
= Rs.250 Lakh - Rs.100 Lakh
= Rs.150 Lakh
b) Royal Industries has total assets of Rs 100 lakh and owners’ Equity of Rs 70 lakh,
Compute the amount of external liabilities.
Ans: We know that: Assets = Liabilities + Owner’s Equity
Hence, Liabilities = Assets - Owner’s Equity
= Rs.100 lakh - Rs.70 Lakh
= Rs.30 Lakh
c) Small Enterprise has following amounts appearing in Balance Sheet as at 31st December,
2015:
Capital Rs 50 lakh, Reserves and undistributed profits Rs 15 lakh, and total external
liabilities Rs 35 lakh, Determine the amount of total assets.
Ans: We know that: Assets = Liabilities + Owner’s Equity
= Rs.50 Lakh + Rs.15 Lakh + Rs.35 Lakh
= Rs. 100 lakh

4. Journalize the following transactions, Post them into ledger account and Prepare
a Trial Balance
2017
March – 1 Commenced business with cash Rs.1,00,000
March – 2 Purchased goods for cash Rs. 25,000
March – 3 Purchased furniture for cash Rs. 6,000
March – 5 Purchased goods from Suresh on credit Rs. 5,000
March – 7 Sold goods for cash Rs. 30,000
March – 10 Sold goods to Mahesh on credit Rs. 25,000
March – 12 Returned goods to Suresh Rs. 500
March – 13 Mahesh returned us goods worth Rs. 500
March -15 Paid Rs. 4,450 to Suresh by cheque in full settlement of his account
March – 20 Received a cheque of Rs. 24,450 from Mahesh and gave a discount of Rs.
50
March – 25 Withdrew cash for personal use Rs. 2,500
March – 28 Paid rent of Rs. 5,000 and Salary Rs. 6,000 by cheque
Ans: Journal entries.
Journal Entries
Date Particular Debit Credit
1-Mar-17 Cash A/C 1,00,000
To Capital A/C 1,00,000
Cash Invested in Business

2-Mar-17 Purchase A/C 25000

To Cash A/C 25,000
Goods Purchased

3-Mar-17 Furniture A/C 6,000

To Cash A/C 6,000
Furniture Purchased

5-Mar-17 Purchase A/C 5,000

To Suresh A/C 5,000
Goods Purchased from Suresh on credit

7-Mar-17 Cash A/C 30,000

To Sales A/C 30,000
Goods Sold on Cash

10-Mar-17 Mahesh A/C 25,000

To Sales A/C 25,000
Goods Sold to Mahesh on Credit

12-Mar-17 Suresh A/C 500

To Purchase A/C 500
Purchase Returned to Suresh

13-Mar-17 Sales A/C 500

To Mahesh A/C 500
Sales Returned from Mahesh

15-Mar-17 Suresh A/C 4,500

To Bank A/C 4,500
To Discount A/C 50
Amount Paid to Suresh in full setlement with discount

20-Mar-17 Bank A/C 24,450

Discount A/C 50
To Mahesh A/C 24,500
Amount received from Mahesh with Discount
25-Mar-17 Capital A/C 2,500
To Cash 2,500
Cash withdraw from capital

28-Mar-17 Rent A/C 5,000

To Bank A/C 5,000
Rent Paid by cheque

28-Mar-17 Salary A/C 6,000

To Bank A/C 6,000
Salary given by cheque

234500

Ledger
Cash A/C
Date Particular Amount Date Particular Amount
1-Mar-17 To Capital 1,00,000 2-Mar-17 By Purchase A/C 25,000
7-Mar-17 To Sales A/C 30,000 3-Mar-17 By Furniture A/C 6,000
By Capital A/C 2,500
By Balance C/D 96,500
1,30,000 1,30,000

Capital A/C
Date Particular Amount Date Particular Amount
25-Mar-17 To Cash A/C 2,500 1-Mar-17 By Cash A/C 1,00,000
To Balnce c/d 97,500
1,00,000 1,00,000

Purchase A/C
Date Particular Amount Date Particular Amount
2-Mar-17 To Cash A/C 25,000 12-Mar-17 By Suresh A/C 500
5-Mar-17 To Suresh A/C 5,000 31-Mar-17 By Balance C/D 29,500
30,000 30,000

Suresh A/C
Date Particular Amount Date Particular Amount
12-Mar-17 To Purchase A/C 500 5-Mar-17 Purchase A/C 5,000
15-Mar-17 To Bank A/C 4,450
15-Mar-17 Discount 50

Sales A/C
Date Particular Amount Date Particular Amount
13-Mar-17 To Mahesh A/C 500 7-Mar-17 By Cash A/C 30,000
31-Mar-17 To Balanced c/d 54,500 10-Mar-17 By Mahesh A/C 25,000
55,000 55,000

Mahesh A/C
Date Particular Amount Date Particular Amount
10-Mar-17 To Sales A/C 25,000 13-Mar-17 By Sales A/C 500
By Bank A/c 24,450
By Discount A/C 50
25,000 25,000

Bank A/C
Date Particular Amount Date Particular Amount
20-Mar-17 Mahesh A/C 24,500 15-Mar-17 By Suresh A/C 4,500
28-Mar-17 By Rent A/C 5,000
By Salary A/C 6,000
By Balance C/D 9,000
24,500 24,500

Rent A/C
Date Particular Amount Date Particular Amount
28-Mar-17 To Bank A/C 5,000 31-Mar-17 By Balance C/D 5,000

Salary A/C
Date Particular Amount Date Particular Amount
28-Mar-17 To Bank A/C 6,000 31-Mar-17 By Balance C/D 6,000

Furniture A/C
Date Particular Amount Date Particular Amount
3-Mar-17 To Cash A/C 6,000 31-Mar-17 By Balance C/D 6,000
 Discounts A/C
Date Particular Amount Date Particular Amount
20-Mar-17 To Mahesh A/C 50 15-Mar-17 By Suresh A/C 50

Trial Balance
Particular Debit Credit
Cash 96,500
Capital 1,00,000
Purchase 30,000
Sales 55,000
Purchase
500
return
Mahesh 50
Sales return 500
Bank 9000
Rent 5,000
Salary 6,000
Furniture 6,000
personal
2500
usage
Total 155500 155500