Model Test paper-1

HMCT - 4thSem
Accounting skills for hospitality
Subject Code-BHMCT 409-18
Time –3 hrs. MM: 60Marks
Instructions to Candidate:
1. Section – A contains 10 questions carrying two marks each. All are compulsory.
2. Section – B contains 5 questions carrying five marks each. Students have to attempt any
four questions.
Section – C contains 3 questions carrying ten marks each. Students have to attempt any two
questions.
Section –A
1. Attempt all questions. 2X10=20
a) Define Trial Balance.
Ans. Trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled
into debit and credit account column totals that are equal. A company prepares a trial balance
periodically, usually at the end of every reporting period. The general purpose of producing a
trial balance is to ensure the entries in a company’s bookkeeping system are mathematically
correct.

b) Explain rules of Double Entry System with suitable example.

Ans. Doctrine says that if doing something morally good has a morally bad side-effect, it's
ethically OK to do it providing the bad side-effect wasn't intended. This is true even if you
foresaw that the bad effect would probably happen.This might seem counter-intuitive, but the
principle is used in serious argument about some important issues in ethics.

c) Drawings with example.

Ans.A drawing account is an accounting record maintained to track money withdrawn from a
business by its owners. A drawing account is used primarily for businesses that are taxed as sole
proprietorships or partnerships. Owner withdrawals from businesses that are taxed as separate
entities must generally be accounted for as either compensation or dividends.
d) Performa of Trading Account

e) Prepaid Expenses and Outstanding Expenses.

prepaid expenses- are future expenses that have been paid in advance. In other words, prepaid
expenses are costs that have been paid but are not yet used up or have not yet expired.Generally,
the amount of prepaid expenses that will be used up within one year are reported on a
company's balance sheet as a current asset. As the amount expires, the current asset is reduced
and the amount of the reduction is reported as an expense on the income statement.

outstanding expenses- are those expenses which have been incurred during the current
accounting period and are due to be paid, however, the payment is not made. Such an item is to
be treated as a payable for the business.

f) What is departmental accounting?

Ans. Departmental Accounting refers to maintaining accounts for one or more branches or departments
of the company. Revenues and expenses of the department are recorded and reported separately. The
departmental accounts are then consolidated into accounts of the head office to prepare financial
statements of the company.
g) Define Allocation.
Ans.The act of deciding officially which person, company, area of business, etc. something
should be given to, or what share of a total amount of something such as money or time should
be given to someone to use in a particular way. The company is holding a review into
the optimal allocation of a salesperson’s time.

h) What do you mean by Apportionment of expenses?

Ans. Departmental accounting refers to maintaining accounts for one or more departments of the
company. Revenues and expenses of the department are recorded and reported separately. The
departments are then consolidated into the accounts of the head office to prepare the financial
statements of the company. The Allocation of expenses in departmental accounting is made on
various bases.
i) Prepare a Performa of Balance Sheet.
j) Difference between Internal Audit and Statutory Audit.
Ans.

Section- B 4X5=20
2. What are the methods of preparing Trial Balance?
Ans.A Trial Balance is a statement that shows the total debit and total credit balances of accounts.
The total of debit amounts shall be equal to the credit amounts. It thus verifies the arithmetical
accuracy of the postings in the ledger accounts. We will now study the methods of Preparation of
Trial Balance – totals method, balance method and total-cum-balance method.
Preparation of Trial Balance

We can prepare the Trial Balance in the following three ways:

1] Totals Method

In this totals method, we ascertain the total of each side in the ledger i.e. debit and credit, separately
and show them in the respective columns in the Trial Balance. Here also the total of the column
with debit totals should tally with the total of the column of the credit totals. The dual aspect
concept holds true in this case also.

2] Balances Method

In this method, we total the debit side and the credit side of the accounts and balance them. We then
write these debit or credit balances of the ledger accounts in the respective debit and credit columns
in the Trial Balance. A trial balance tallies when the total of the debit column is equal to the total of
the credit column.

3] Totals-cum-Balances Method

In this method, we prepare four columns. In two columns we write debit and credit totals of
accounts and in the other two columns, we write the debit and credit balances of accounts. This
method consumes a lot of time and is a duplicate of work. Hence, it is rarely in use.
3. Explain Trial Balance and its features
.

4. What is Final Accounts? Prepare specimen of Profit and Loss Account / Balance Sheet.
Ans.Final accounts give an idea about the profitability and financial position of a business to its
management, owners, and other interested parties. All business transactions are first recorded in
a journal. They are then transferred to a ledger and balanced. These final tallies are prepared for
a specific period. The preparation of a final accounting is the last stage of the accounting cycle. It
determines the financial position of the business. Under this, it is compulsory to make a trading
account, the profit and loss account, and balance sheet.
Performa of profit and loss account:
Performa of balance sheet:

5. Define internal control? Write down its objectives.

Ans. Definition: Internal Control can be defined as a system designed, introduced and
maintained by the company’s management and top-level executives, to provide a substantial
degree of assurance in achieving business objective, while complying with the policies and laws,
safeguarding the assets, maintaining efficiency and effectiveness in regular operations and
reliability of financial statements.

Objectives of Internal Control System

 To ensure that the business transactions take place as per the general and specific
authorization of the management.
 To make sure that there is a sequential and systematic recording of every transaction, with the
accurate amount in their respective account and in the accounting period in which they take
place. It confirms that the financial statement fulfils the relevant statutory requirements.
 To provide security to the company’s assets from unauthorized use. For this purpose, physical
security systems are used to provide protection such as security guards, anti-theft devices,
surveillance cameras, etc.
 To compare the assets in the record with that of the existing ones at regular intervals and
report to those charged with governance (TCWG), in case any difference is found.
 To evaluate the system of accounting for complete authorization of the transactions.

6. Write down of content of Balance Sheet (Under Uniform System).

 Section –C 2X10=20

7. Consider the following balances extracted from the books of Jain as on 31st
December, 2016.
Prepare the final accounts.

Adjustments

i. Salaries outstanding for December, 2016 amounted to Rs. 600

ii. Provide depreciation on furniture @ 10% p.a.

iii. Provide interest on capital for the year @ 5% p.a.

iv. Stock on 31st December, 2016 Rs. 14,000

Solution
8. Prepare Trial Balance.Record the following transactions in the Journal and post
them into ledger and prepare a Trail Balance

Oct 1st : Neel started business with a capital of 80,000

3rd : Bought goods from Karl on credit 20,000
4th : Sold goods to Tarl 25,000
5th : Cash purchases 25,000
7th : Cash sales 15,000
9th : Goods retuned to Karl 2,000
10th : Bought furniture for 15,000
11th : Cash paid to Karl 12,000
12th : Goods returned by Tarl 3,000
14th : Goods taken by Neel for personal use 3,000
15th : Cash received from Tarl 12,000
16th : Took loan from Parl 30,000
17th : Salary paid 5,000
 18th : Bought stationery for 1,000
19th : Amount paid to Parl on loan account 18,000
20th : Interest received 4,000

Solution : Trial Balance

[Modern Method]

Trial Balance of Mr. Neel as on 31/10/_5

Amount Amount
Particulars L/F
(Dr) (Cr)

Cash a/c – 65,000 –

Capital a/c – – 80,000
Goods/stock a/c – 3,000 –
Karl a/c – – 6,000
Tarl a/c – 10,000 –
Furniture a/c – 15,000 –
Drawings a/c – 3,000 –
Loan from parl a/c – – 12,000
Salaries a/c – 5,000 –
Stationery a/c – 1,000 –
Interest a/c – – 4,000

Total 1,02,000 1,02,000

9. Define Trial Balance. Write down its Advantages and Limitations.
 Model Test paper-II
HMCT - 4th semester
Accounting skills for hospitality
Subject Code-BHMCT 409-18
Time –3 hrs. MM: 60Marks
Instructions to Candidate:
1. Section – A contains 10 questions carrying two marks each. All are compulsory.
2. Section – B contains 5 questions carrying five marks each. Students have to attempt any
four questions.
3. Section – C contains 3 questions carrying ten marks each. Students have to attempt any
two questions.
Section –A
1. Attempt all questions. 2X10=20
a) Bad Debts.
Ans. Bad debt is an expense that a business incurs once the repayment of credit previously
extended to a customer is estimated to be uncollectible. Bad debt is a contingency that must be
accounted for by all businesses who extend credit to customers, as there is always a risk that
payment will not be received.

b) Current Assets.
Ans. Current assets represent all the assets of a company that are expected to be conveniently
sold, consumed, used, or exhausted through standard business operations with one year. Current
assets appear on a company's balance sheet, one of the required financial statements that must be
completed each year.

c) Night Auditor.
Ans.The night auditor typically handles both the duties of the front desk agent and some of the
duties of the accounting department. This is necessitated by the fact that most fiscal days close at
or around midnight, and the normal workday of the employees in the accounting department
does not extend to cover this time of day. Work shifts for night auditors usually run from 11 p.m.
to 7 a.m. but could vary depending on the hotel, with shifts of 10 p.m. to 6 a.m. or midnight to 8
a.m. being common.

d) Departmental Profit.
Ans. Departmental Accounts are accounts relating to the several departments or sections of a
business drawn up with a view to ascertaining their individual performances. A business may
have a number of departments each dealing in a different type of goods. For instance,
Departmental Store is an example of large scale trading by a retail trader.
e) Internal Audit.
Ans. Internal audits evaluate a company’s internal controls, including its corporate
governance and accounting processes. They ensure compliance with laws and regulations and
help to maintain accurate and timely financial reporting and data collection. Internal audits also
provide management with the tools necessary to attain operational efficiency by identifying
problems and correcting lapses before they are discovered in an external audit.

f) Outstanding expenses
Ans. outstanding expenses- are those expenses which have been incurred during the current
accounting period and are due to be paid, however, the payment is not made. Such an item is to
be treated as a payable for the business

g) Allocation of expenses
Ans.The act of deciding officially which person, company, area of business, etc. something
should be given to, or what share of a total amount of something such as money or time should
be given to someone to use in a particular way. The company is holding a review into
the optimal allocation of a salesperson’s time.

h) Define Depreciation.
Ans. Depreciation is an accounting method of allocating the cost of a tangible or physical asset
over its useful life or life expectancy. Depreciation represents how much of an asset's value has
been used up. Depreciating assets helps companies earn revenue from an asset while expensing a
portion of its cost each year the asset is in use. If not taken into account, it can greatly
affect profits.

i) What is Uniform System of Accountancy.

Ans. Uniform System of Account is used by several hotels/restaurants of the same accounting
(costing and sale) principal and/or practices. Uniform accounting is thus not a separate technique
or method. It simply denotes a situation in which a number of hotels/restaurants may use the
same accounting (costing and sales) principal in such a way as to produce sales, valuable
conclusions can be drawn and one hotel can be compared to others.

j) Basis of Allocation.
Ans.An allocation base is the basis upon which an entity allocates its overhead costs. An
allocation base takes the form of a quantity, such as machine hours used, kilowatt hours
consumed, or square footage occupied. Cost allocations are mostly used to assign overhead
costs to produced inventory, as required by several accounting frameworks. The typical
allocation process in a multi-department company is:Allocate service department costs to
operating departments.Assign operating department costs (including the allocations from
service departments) to products and services.
Section- B 4X5=20
2. Write a note on Departmental Accounting..
3. Draw imaginary figures an Income Statement with Schedule as per Uniform System of
Accounting.
Ans.
4. Difference between Trading Account and Profit and Loss Account.
Ans.
5. Write down the implementation and review of Internal Audit.
Ans.
 Section –C 2X10=20
7. What are the difference between Internal Audit and Statutory Audit?

Ans.

8. From the following Trial Balance, Prepare the Trading A/C, Profit and Loss Account
and the Balance Sheet.
Given below are the balances extracted from the books of Natarajan as on 31st
March, 2016.

Prepare the trading and profit and loss account for the year ended 31st March, 2016
and the balance sheet as on that date after adjusting the following:

i. Commission received in advance Rs. 400

ii. Advertisement paid in advance Rs. 150

iii. Wages outstanding Rs. 200

st
iv. Closing stock on 31 March 2016, Rs. 2,100

Solution
 Cr.
Q9) Find out gross profit from the following information:
Prepare trading account from the following ledger balances presented by P. Sen as
on 31st March, 2016.

Additional information:

i. Stock on 31st March, 2016 Rs. 20,000

ii. Outstanding wages amounted to Rs. 4,000

iii. Gas and fuel was paid in advance for Rs. 1,000
 Model Test paper-III
HMCT -4th semester
Accounting skills for hospitality
Subject Code-BHMCT 409-18
Time –3 hrs. MM: 60 Marks
Instructions to Candidate:
1. Section – A contains 10 questions carrying two marks each. All are compulsory.
2. Section – B contains 5 questions carrying five marks each. Students have to attempt any
four questions.
3. Section – C contains 3 questions carrying ten marks each. Students have to attempt any
two question.
Section –A
1. Attempt all questions. 2X10=20
a) Current Assets

Ans. Current assets represent all the assets of a company that are expected to be conveniently
sold, consumed, used, or exhausted through standard business operations with one year. Current
assets appear on a company's balance sheet, one of the required financial statements that must be
completed each year.

b) Nominal Account

Ans, nominal accounts are the general ledger accounts that are closed at the end of each
accounting year. The closing process transfers their end-of-year balances from the nominal
accounts to a permanent or real general ledger account. As a result, the nominal accounts are also
referred to as temporary accounts. The closing process also means that each nominal account
will start the next accounting year with a zero balance.

c) Concept of Materiality

Ans.The materiality concept or principle is an accounting rule that dictates any transactions or
items that significantly impact the financial statements should be accounted for
using GAAP exclusively. In other words, if a transaction or event happened during the year that
would affect how an investor would view the company, it must be accounted for using GAAP on
the financial statements.
D) Narration

Ans.All Transactions and Events are ‘Recorded’ in the Account Books called Journal/
Subsidiary Books. The recording is done through a process called as ‘Accounting-Entry’ or
‘Journal Entry’ which has two-fold effect called as Debit and Credit in Accounts.When someone
passes a journal entry the Debit and Credit effects are recorded thereby establishing the
‘completeness’ of the recording entry.

E) Posting

Ans. Posting is the act of moving debit and credit account balances from individual journals to
their corresponding ledgers. These ledgers are later used to create a trial balance used to generate
the income statement, balance sheet, and other financial statements.

F) Fictitious Assets

Ans.The word fictitious literally means fake, imaginary or not true. Hence, fictitious assets
means the assets which are not actually assets of the company though these assets are shown in
the assets side of the balance sheet.

H) 3 Rules of Accounting along with their respective accounts

I) Representative Accounts

Ans.The accounts recording transactions relating to the expenses and incomes are classified as
nominal accounts. But in certain cases due to the matching concept of accounting the amount, on
a particular date, is payable to the individuals or recoverable from individuals. Such amount (a)
relates to the particular head of expenditure or income and (b) represents persons to whom it is
payable or from whom it is recoverable. Such accounts are classified as representative personal
accounts

J) Define Tangible and intangible assets.

Section- B 4X5=20

2.“Accounting serves as an information system and meets a need of a wide variety of

stakeholders”. In the light of this statement discuss the meaning and importance of
accounting.

Ans. Accounting is a very vital subject in the commerce field. For a better understanding of the
objectives and the functions of accounting, first of all, it is very important to know about the
accounting beforehand. The objectives and the function of accounting will be later discussed in
depth.
scope of Accounting:

Accounting is basically the systematic process of handling all the financial transactions
and business records. In other words, Accounting is a bookkeeping process that records
transactions, keeps financial records, performs auditing, etc. It is a platform that helps through
many processes, for example, identifying, recording, measuring and provides other financial
information.

Accounting is a very important procedure and holds great importance in people’s lives. Accounting
aids to a lot of financial procedures and analytics taking place every day. There are specific people
for doing this job and they are known as accountants. As said earlier, accounting is a very important
process and in addition, holds a lot of objectives and functions.

Importance of Accounting

To move ahead to the functions of accounting, first of all, it is very important to know about the role
of accounting. The basic role of accounting is to provide relevant financial information to the
businessmen and the stakeholders. Furthermore, facilitating the decision making processes and
keeping them updated. There are two types of functions of accounting, first, historical functioning
and second, managerial functionals.

Browse more Topics under Meaning And Scope Of Accounting

 Meaning of Accounting

 Bookkeeping

 Sub-fields of Accounting

 Limitations of Accounting

 Functions of an Accountant

3) Write a note on following terms:

1) Capital- Capital is a term for financial assets, such as funds held in deposit accounts and/or
funds obtained from special financing sources. Capital can also be associated with capital assets
of a company that requires significant amounts of capital to finance or expand

2) Income- Income is money (or some equivalent value) that an individual or business
receives, usually in exchange for providing a good or service or through investing
capital. Income is used to fund day-to-day expenditures. Investments, pensions,
and Social Security are primary sources of income for retirees. For individuals, income
is most often received in the form of wages or salary. Business income can refer to a
company's remaining revenues after paying all expenses and taxes. In this case, income
is referred to as "earnings.” Most forms of income are subject to taxation.

3) Expenditure-An expenditure is funds used by a business, organization, or corporation to

attain new assets, improve existing ones, or reduce a liability. In other words, it’s the use of a
resource in the operations of a business.

4) Expenses- An expense is the cost of operations that a company incurs to generate revenue. As
the popular saying goes, “it costs money to make money.”Common expenses include payments
to suppliers, employee wages, factory leases, and equipment depreciation. Businesses are
allowed to write off tax-deductible expenses on their income tax returns to lower their taxable
income and thus their tax liability.

5) Assets- An asset is a resource with economic value that an individual, corporation, or

country owns or controls with the expectation that it will provide a future benefit. Assets
are reported on a company's balance sheet and are bought or created to increase a firm's
value or benefit the firm's operations. An asset can be thought of as something that, in the
future, can generate cash flow, reduce expenses, or improve sales, regardless of whether
it's manufacturing equipment or a patent.

4. What do you mean by Trial Balance? Why there is a need of preparing the trial balance?
What are the various errors that are located in the trial balance?
Q5. What is Final Accounts? Prepare specimen of Profit and Loss Account / Balance Sheet.
Ans. .Final accounts give an idea about the profitability and financial position of a business to its
management, owners, and other interested parties. All business transactions are first recorded in
a journal. They are then transferred to a ledger and balanced. These final tallies are prepared for
a specific period. The preparation of a final accounting is the last stage of the accounting cycle. It
determines the financial position of the business. Under this, it is compulsory to make a trading
account, the profit and loss account, and balance sheet.
Q6. Define internal control? Write down its objectives.
Ans.Whether you have your own business or you're planning to start one, it’s crucial to
perform internal controls. These processes are a fundamental part of good corporate
governance, as their objective is to help identify and manage the risks that keep your business
from growing as well as keep them in compliance with governmental rules and regulations. An
internal control audit is typically conducted by a company's management team, the board of
directors and other industry experts.

Objective of Internal Controls

 The objective of every type of internal control within an organization is to ensure ethical and
efficient functioning in the following three areas:

 Operations: Internal controls help an organization operate at peak efficiency when it comes to
finances, personnel and business procedures. They also aid organizations in loss prevention
and future projections.

 Reporting: Internal controls make all types of reporting more accurate, financial or otherwise.
Their objective is to identify problems, solve them and then prevent them in the future, all
while documenting things thoroughly and accurately.

 Compliance: Internal controls aim to ensure that a company is in compliance with all internal
and external rules and regulations that pertain to its industry. This includes everything from
manufacturing to labor laws, branding and even OSHA standards.

Section –C 2X10=20
7. From the following list of balances, prepare a trial balance as on 30.06.2009

Enter the following transactions in the Journal and post them into ledger and
from the information obtained prepare a Trail Balance.

Nov 10th : Mrs. Roy started business with 60,000

11th : Bought furniture from Modern Furniture for 10,000
12th : Purchased goods for cash 15,000
13th : Purchased goods from B. Sen & Co for 30,000
14th : Opened a bank account by depositing 16,000
16th : Sold goods for cash 15,000
17th : Purchased stationery for 1000 from Bharat Stationery
Mart
18th : Sold goods to Zahir Khan for 10,000
19th : Bought machinery for 6,000 and payment made by
cheque
20th : Goods returned by Zahir Khan for 2,000
21st : Payment to B.Sen& Co by cheque 5,000
 22nd : Withdrew from bank for personal use 3,000
23rd : Interest paid through cheque 2,000
24th : Withdrew from bank for office expenses 10,000
26th : Cheque received from Zahir Khan 5,000
27th : Paid electricity bill for 100
29th : Cash sales for 6,000
30th : Commission received by cheque 5,000

Trial Balance of Mrs. Roy as on 30/11/_5

Amount Amount
Particulars L/F
(Dr) (Cr)

Cash a/c – 34,900 –

Capital a/c – – 60,000
Furniture a/c – 10,000 –
Modern Furniture a/c – – 10,000
Purchases a/c – 45,000 –
B.Sen& Co a/c – – 30,000
Bank a/c – 15,000 –
Sales a/c – – 31,000
Stationery a/c – 1,000 –
Bharat Stationery Mart – – 1,000
a/c – 3,000 –
Zahir Khan a/c – 6,000 –
Machinery a/c – 2,000 –
Sales Returns a/c – 5,000 –
B. Sen & Co a/c – 3,000 –
Drawings a/c – 2,000 –
Interest a/c – 10,000 –
Office Expenses a/c – 100 –
Electrical Bill a/c – – 5,000
Commission Received
a/c
Total 1,37,000 1,37,000

Q8) Find out gross profit from the following information:

Prepare trading account from the following ledger balances presented by P. Sen as
on 31st March, 2016.

Additional information:

i. Stock on 31st March, 2016 Rs. 20,000

ii. Outstanding wages amounted to Rs. 4,000

iii. Gas and fuel was paid in advance for Rs. 1,000
9). Difference between Trading Account and Profit and Loss Account and balance sheet.
Ans.