Capital Uniersity of Science and Technology

Department of Management Sciences

ACCB2003 – Principles of Accounting 1
Final Examinatin - BBA (S1, S2)
Semester: Fall 2020 Max Marks:40
Date: ` 14/01/2021 Time: 2 Hrs. 30 Mins.
Instructor Name: Nasir Rasool
Instructions:
• This exam carries 40% weightage towards the final evaluation.
• Write your name and registration number on each of your answer sheet.
• Write the honor statement given in files section, at the start of your final exam.
• This examination is being conducted in extra ordinary circumstances so I expect that all
students will exhibit higher moral standards.
Name: Reg. No.

Part 1
Question - 1 (CLO - 2) (10 Marks)
Part A (6 Marks)
Following balances are available from the books of Friends Enterprises as on 31 December 2018:`
Machinery Rs. 1,500,000
Office Equipment 800,000
Debtors 550,000
Accumulated Depreciation on Machinery 800,000
Accumulated Deprecation on Office Equipment 280,000
Provision for Bad Debts 5,500
Cash in Hand 500,000

Following Transactions were carried out during 2019:

Feb 1 Purchased new machinery Rs. 300,000
Apr 1 An office laptop was stolen its cost was Rs. 60,000 and accumulated depreciation was Rs.
30,000.
June 1 Bad debts written off Rs. 4,000.
Oct 10 Sold goods on credit Rs. 10,000
Nov 10 Payment was made to debtors Rs.40,000 in cash.

Additional Information:
1. Machinery is depreciated at 10% of cost.
2. Office equipment is depreciated at 20% of cost.
3. Provision for bad debts should be adjusted to 3% of debtors as on 31 December 2019.

Required:
a. Record the transactions in relevant ledger accounts
b. Show the closing entries at the end of year 2019
c. Show the relevant portion of profit and loss account and balance sheet at the end of year 2019.

ACCB2003– Principles of Accounting I Page 1 of 3

Part B (4 Marks)
Briefly discuss the reasons for charging depreciation and creating provision for bad debts at the end of every
accounting period

Part 2
Question - 2 (CLO - 2) (10 Marks)
Prepare an Income Statement for the year ended 31 December 2018 and a Balance Sheet as at that
date from the following Trial Balance:
ALVIN Enterprises
Trial Balance on 31 December 2018
Debit Rs. Credit Rs.
Drawings and Capital 30,000 150,000
Loan From HBL - 586,800
Purchases and Sales 650,000 1,000,000
Debtors and Creditors 71,000 61,000
Return Inwards and Return Outwards 4,500 5,500
Discount Allowed and Discount Received 4,800 6,000
Land and Building 150,000 -
Furniture and Fittings 30,000 -
Motor Vehicle 600,000 -
Stock 29,000 -
Cash in Hand 2,000 -
Cash at Bank 105,000 -
Wages and Salaries 90,000 -
Carriage Expenses 42,000 -
Light, Heat and Water Expenses 22,000 -
Rent Income - 23,000
General Expenses 40,000 -
Telephone and Postage 9,000 -
Advertisement 10,000 -
Insurance 3,000
Accumulated Depreciation on Furniture and Fittings 10,000
Accumulated Depreciation on Motor Vehicles 50,000
Total 1,892,300 1,892,300

Adjustments at end of the year:

• Closing Stock, Rs. 90,000
• Land and building are depreciated at 10% of cost, furniture and fittings are depreciated at
20% of book value and motor vehicles are depreciated at 20% of cost.
• Accrued Salaries Rs. 10,000.
• Adjust provision for bad debts to 2% of debtors.
• Prepaid Insurance, Rs. 500.
• Rent received in advance Rs. 5,000
• General expenses payable Rs. 200

ACCB2003– Principles of Accounting I Page 2 of 3

 Part 3
Question - 3 (CLO - 3) (10 Marks)
30 June 2020 Balance as per cash book: your registration number.
Following information was extracted after careful review of the data:
Cheques issued but not presented:
Cheque number 5487 Rs. 50,000
Cheque number 2487 Rs. 120,000
Cheque number 7785 Rs. 30,000
Cheque collected but not credited
Cheque number 4576 Rs. 180,000
Cheque number 4571 Rs. 220,000
Cheque number 7458 Rs. 180,000
Bank charges/taxes deducted by the bank
Withholding Tax Rs. 16000
ATM Charges Rs. 1500
Other bank Charges Rs. 2500
Dishonored Cheques
Cheque No. 2251 Rs. 100000
Cheque No. 1125 Rs. 140000
Required:
Prepare a bank reconciliation statement starting with cash book balance

Part 4
Question - 4 (CLO - 3) (10 Marks)
Describe the following accounting concepts and principles:
a. Principle of objective evidence
b. Matching Concept
c. Separate Entity Concept
d. Materiality Principle

ACCB2003– Principles of Accounting I Page 3 of 3