Finanacial Accounting and Analysis

June 2022 Exaination

Ans 1.

Particulars Dr Cr
Bank a/c 500000
To capital a/c 500000
(Being business commenced with Bank)
Purchase a/c 40000
To Ms Ritu 40000
(Being purchase of goods on credit)
Salary a/c 10000
To Bank a/c 10000
(Being salary paid to employee from bank)
Fixed Deposit a/c 200000
To bank a/c 200000
(Being fixed deposit made with bank)
Drawings a/c 25000
To Bank a/c 25000
(Being owner use business amount for personal use)
TOTAL 775000 775000

Ans 2
Financial accounting is the field of accounting concerned with the summary, analysis and
reporting of financial transactions related to a business. This involves the preparation of
financial statements available for public use. Several terms are used in accounting, below are
some examples;

Accounts Payable- Accounts payable is the money a business owes to its suppliers, vendors,
or creditors for goods or services bought on credit. A short-term debt that must be paid back
quickly to avoid default, accounts payable shows up as a liability on an organization's balance
sheet. An example of accounts payable includes when a restaurant receives a meat order on
credit from an outside supplier.

Accounts Receivable- Accounts receivable is the money owed to a business, typically by its
customers, for goods or services delivered. An example of accounts receivable is when a
meat supplier delivers meat order on credit to a restaurant. While the restaurant records that
transaction to accounts payable, the meat supplier records it to accounts receivable and a
current asset in its balance sheet.
Assets- Assets are resources with economic value which companies expect to provide future
benefits. These can reduce expenses, generate cash flow, or improve sales for businesses.
Companies report assets on their balance sheets. Types of assets include fixed, current, liquid,
and prepaid expenses. Assets may include long-term resources like buildings and equipment.
Current assets include all assets a company expects to use or sell within one year. Liquid
assets can easily convert to cash in a short time-frame. Prepaid expenses include advance
payments for goods or services a company will use in the future.

Dividends- Dividends include company earnings, or profit, which a business pays to its
shareholders as a reward for their investment in its equity. Companies may distribute
dividends as cash or additional shares of stock. Shareholders may receive regularly scheduled
or special one-time dividends. Exchange-traded funds and mutual funds also pay dividends.

Balance Sheet- Balance sheets are financial statements providing snapshots of organizations'

liabilities, assets, and shareholders' equity at specific moments in time. Balance sheets
represent one type of financial statement used to evaluate companies' financial health and
worth. Accountants use the accounting equation to create balance sheets; 'Assets = Liabilities
+ Equity.'

Ans 3(a). Total purchases= closing stock- Opening stock +cost of goods sold

70-40+580= 610

Credit purchases= creditor closing balance+ cash paid- opening creditor balance

= 100+45- 60= 85

Payment to creditor

= Cost of goods sold+ increase in inventor- increase in accounts payable

580+ 30-40= 570

(b) Net book value- is the amount at which an organization records an asset in its accounting
records.

Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its

life.

NBV= 400-80= 320

Gain from sale=Cash proceeds(X)- cost- accumulated depreciation

50= X- 400-80

50= X- 320

X= 370