Institute of Rural Management Anand

PGDM-RM42 – Term I –Mid Term Examination

<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

Question Number 4

Ans 1. Example of capital expenditure is purchase of furniture while example of revenue expenditure is purchase of raw material.

Ans 2. According to Going Concept accounting assumes that the business will keep running indefinitely

Ans 3. Accrual is accounting method where the revenue or expense is recorded when the transaction occurs rather than when the payment is made. Example if I sold a
chair for 500 such the person who bought it paid Rs. 400 and promised to pay Rs. 100 in 10 days then my revenue is Rs. 500 of which Rs. 400 is in cash and Rs. 100 is in
the form of receivables.

Ans 4. The amount required to produce or sell any goods or service is called Cost of Goods Sold or COGS. If we are selling a chair for Rs. 500 that requires raw material
of Rs. 250 then Rs. 250 is the COGS

Ans 5. According to Historical Cost concept the value of an asset is recorded at its original price in the balance sheet when acquired by a company. Example if a chair
costs Rs. 200 in 2010 and its cost is Rs. 300 in 2011 then the cost will still be recorded as Rs. 200.

Ans 6. GAAP - Generally Accepted Accounting Principles

Ans 7. EBITDA, Depreciation and Amortization, EBIT, Interest, EBT, Tax, EAT

Ans 8. The decrease in the value of asset held by a company over time due to wear and tear or technological advancement is called depreciation (or amortization for
non tangible assets). Effects of depreciation includes reduction in the retained earning, stockholders equity and reduction in the amount of total asset. Example a chair
bought for Rs. 500 will not be of Rs. 500 after 3 years

Ans 9. Investors, Accounting Professionals

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 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

Ans 10. A balance sheet shows the summary of all the business asset of a company. At any particular time it is a snapshot representing owner’s equity.

Ans 11. Goodwill is prohibited in IFRS while it is defined as transaction different from ordinary activities and are not expected to recus frequently in Ind AS

Ans 12. A contingent liability is a liability that may or may not occur depending on certain future event. Example if I am guaranteeing the loan of my friend in a bank
and he is unable to pay it then it will be my contingent liability.

Ans 13. Provision for Bad Dept is the reserve against the future recognization of any account receivable as being not collectible.

Ans 14. Ind Accounting Standard

Ans 15. A wasting asset is an item that has a limited life span and whose value decreases with time.

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 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

Question Number 1

Sr.No Owner's Revenu

Assets + Expense = Liabilities +
. Equity e
Account Wages Account
Cash-in- Furnitur Debetor Receivabl Salar Outstandin Discoun Payable/Credito
Hands Bank e s Goods Rent e y g t rs Capital Sales

1 250,000 250,000

- 150,00
2 150,000 0

25,00
3 0 25,000
-
4 5,000 5,000
-
5 3,750 3,750
-
6 6,250 6,250
-
7 4,000 4,000

-
8 24,750 -25,000 250

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 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

-
9 6,200 6,250 50

- 5,00 5,00
10 10,000 0 0

11 3,500 3,500
-
12 2,000 2,000

110,25 19,75 5,00 5,00

Total 104,450 0 3,750 - 0 - 0 2,000 0 3,500 50 - 3,500 250,000 - 250

253,750 253,750

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 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

Question Number 2

Journal
Debit Credit
Date Particular LF
Amount Amount
1-Apr-
20 Cash Ac Dr 250,000

To Captital Account 250,000

1-Apr- Bank Account

20 Dr 150,000

To Cash Account 150,000

3-Apr-
20 Purchase Account Dr 25,000

To Account Payable (Kedar) 25,000

4-Apr-
20 Purchase Account Dr 5,000

To Bank Account 5,000

5-Apr- Furniture Account

20 Dr 3,750

Page 5 of 9
 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

To Cash Ac 3,750

6-Apr-
20 Account Receivable (Himesh) Dr 6,250

To Purchase Ac 6,250

9-Apr- Cash Ac
20 Dr 4,000

To Purchase Ac 4,000

10-Apr-
20 Account Payable (Kedar) Dr 25,000

To Revenue Ac 250

To Bank Ac 24,750

15-Apr- Cash Ac
20 Dr 6,200
Discount
Dr 50

To Account Receivable (Himesh) 6,250

30-Apr- Rent Ac

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 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

20 Dr 5,000
Wage Ac
Dr 5,000

To Bank Ac 10,000
30-Apr- Wages Outstanding
20 Dr 3,500

To Wages Payable 3,500

30-Apr- Insurance Premium
20 Dr 2,000

To Cash Ac 2,000

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 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

Question Number 3

Balance Sheet

Liabilities Amount Assets Amount

Non -Current
Capital 3500 Assets:
Plus: Reserve&
Surplus 0 Furniture 3750
Equity Fund 250000 Current Assets
Liabilities 0 Bank Balance 110250
Creditors 0 Cash Balance 104450
Debtors 0
Total: 250000 Total 218450

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 Institute of Rural Management Anand
PGDM-RM42 – Term I –Mid Term Examination
<FAC>
<14th September 2021>
<Anvesh Verma, Roll Number: P42176>

INCOME
STATEMENT
Particulars Amount
Income: Sales 10200

Expense: COGS 0
Damaged
Goods 0
Bad Debt 0
Salary -8500
Rent -5000
Profit/Loss -3300

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