JGU Id. No.

______________

O.P. Jindal Global University

Jindal Global Law School
Re-sit Examinations – Semester B

Course Name : Accounting Principles

Course Code : L-CB-0002
Programme : B.B.A., LL.B. – Year I
Session : 2013 – 2014
Time Allowed : 3 Hours
Maximum Marks : 50

This question paper has two (2) printed pages (including this page).

Instructions to students:
1. You are required to answer all five (5) questions.
2. Each question accounts for ten (10) marks.
3. Use of a simple calculator is allowed.
4. DO NOT write your Name and Student Id. No. anywhere on the answer book except on the space provided.
5. DO NOT write anything on the question paper except Student Id. No. on the space provided.
6. Start each question on a new page.
7. Use of mobile phone or any electronic storage and access system is prohibited.
8. Students undertaking the examination are requested to adhere to the University norms related to
examinations.

__________________________________________________________________________________________
This is a Closed Book examination. Students are not allowed to bring any material in the Examination Hall.

Warning: Plagiarism in any form is prohibited. Anyone found using unfair means will be penalized
severely.

JGLS [Re-sit Examination of Semester B, June’2016] Page 1

Question 1.
a. What are the main objectives of accounting? (5 Marks)
b. Who are typical users of financial reports? Please provide examples and discuss how financial reports are
used by each type of user. (5 Marks)

Question 2. Rajesh started Vogue Garments. The following transactions took place in the first month:
1) Rajesh invested cash in the company’s share capital. ₹25,000.
2) Paid rent deposit for premises, ₹5,000.
3) Appointed an assistant on a monthly salary of ₹1,000.
4) Bought supplies on credit, ₹4,000.
5) Took a bank loan, ₹15,000.
6) Bought equipment for cash, ₹18,000.
7) Provided services for cash, ₹7,800.
8) Received cash for services to be provided later, ₹3,500.
9) Paid electricity expense, ₹1,000.
10) Paid for supplies in (4), ₹3,000.
11) Billed customers for services provided, ₹8,000.
12) Paid salary for the month, ₹1,600.
13) Paid rent for the month, ₹500.
14) Collected amounts due from customers, ₹5,500.

a. Prepare journal entries to record above transactions. (5 Marks)

b. Prepare a trial balance at the month end. (5 Marks)

Question 3.
a. Explain any two of the following accounting concepts: (5 Marks)
i. Money measurement
ii. Business entity
iii. Going concern
iv. Realisation
v. Cost
b. What is depreciation? Distinguish between depreciation and amortisation. (5 Marks)

Question 4. The following are the details of an equipment acquired by Axis Ltd. in 2007.
Acquisition cost ₹110,000
Estimated useful life 10 years
Estimated residual value ₹10,000

Axis Ltd. uses the straight-line method of depreciation. Please answer the following questions.

a. In 2009 it reviewed and revised the estimated useful life and the estimated residual value to five years and
₹40,000, respectively. Please calculate the amount of depreciation that Axis Ltd. should charge per

JGLS [Re-sit Examination of Semester B, June’2016] Page 2

 annum over the remaining useful life of the equipment after the revised estimated useful life and residual
value in 2009. (5 Marks)
b. Assume the entity uses the Indian GAAP to prepare financial statements and in 2009 it decides to use the
reducing balance method of depreciation. The rate of depreciation under this method is 21.3%. Explain
how the effect of this change in accounting policy should be accounted for in year 2009. (5 Marks)

Question 5. Rahul is in his late 20s. To his parents’ expectations, he completed his college degree and got to
work as a software engineer at a large IT consulting firm. Although he loves to code, he aspires to have his own
business. He is pondering about a different career path. He loves traveling and enjoys meeting new people. His
dream is to start a travel agency and helps people plan their dream trips.

Rahul came to know about PK’s travel agency business through a mutual friend. He volunteers to work for PK
while PK’s bookkeeper is on leave so that he can learn more about the business. At the beginning of the month,
PK wants to review balance sheet and profit and loss statements and is asking Rahul for help.

Below is a trial balance the bookkeeper prepared before his leave. Can you help Rahul prepare a balance sheet
and profit and loss statement at 31 January 20xx? (10 marks)

PK Travel Agency Private Limited 31 January 20xx

Trial Balance
debit credit
Computer equipment 58,000
Computer supplies 6,000
Cash 14,500
Trade receivable 8,000
Loan payable 20,000
Trade payable 4,000
Owner's capital 50,000
Drawings 3,500
Sales, tours 20,000
Salaries, tour guide 4,000
94,000 94,000

JGLS [Re-sit Examination of Semester B, June’2016] Page 3