SET 2

Candidates are required to give answers in their own words as far as practicable. Figures in the margin
indicate full marks.
Attempt all the questions.
Group "A" [11×1=11]
Very Short Answer Questions
1. Define accounting.
2. Mention any two objectives of book-keeping.
3. Write briefly about 'Business entity concept'.
4. Mention any three items of current liabilities.
5. State the tools of modern banking system.
6. Write the meaning of 'errors of principle'.
7. What is revenue reserve?
8. Write the meaning of capital expenditure with example.
9. Write any two differences between trade discount and cash discount.
10. Mention any two features of government accounting.
11. Mention the components of financial statements.
Group "B"
Short Answer Questions [8×5=40]
12. A. Define double entry system. State any two importance of it. [1+2]
B. Consider the following transactions: [2]
a. Started business with cash Rs. 90,000 and furniture Rs. 40,000
b. Purchased goods of Rs. 10,000 on cash and Rs. 5,000 on credit
c. Depreciation charged on machinery Rs. 4,000
d. Paid rent of Rs. 3,000 and still to be paid Rs. 2,000
Required: Accounting equation
13. A. Cash and banking transactions are given below: [3]
Magh-1. Balance of cash in hand Rs. 1,00,000 and cash at bank Rs. 50,000
Magh-14. Paid to Mohan Rs. 19,500 in full settlement of Rs. 20,000
Magh-23. Deposited cash in to bank Rs. 30, 000
Magh-27. Received cash of Rs. 19,000 from Mukesh after deducting
discount of Rs. 500
Required: Triple column cash Book
 B. Following purchase transactions are given to you: [2]
Fagun- 2: Purchased from Kailash store, Patan:
30 kg of coffee @ Rs. 130 per kg
70 kg of suger @ Rs. 120 per kg
Less: 10% trade discount
Fagun- 15 : Purchased from Buddha store, Kathmandu:
60 kg of Tokla tea @ Rs. 110 per kg
30 kg of Muna tea @ Rs. 140 per kg
Fagun- 25: Purchased from Agni store on cash:
20 kg of Upahar tea @ Rs. 150 per kg
Required : Purchase book
14. The following transaction are given below: [5]
a. Balance as per passbook Rs. 80,000
b. Cheques issued but not presenteefjdjfd for payment Rs. 6,000
c. Cheques sent for collection but not yet credited by bank Rs. 8,000
d. Bank charges debited by bank Rs. 200
e. Dividend income directly collected by bank Rs. 4,000 but not entered in
cash book
f. Cheques of Rs. 5,000 was debited in cash book but not sent to the bank for
collection.
Required : Bank reconciliation statement
15. An unadjusted trial balance of ABC Co. is given below:
Particulars Debit (Rs.) Credit (Rs.)
Opening stock 60,000
Purchases 1,30,000
Plant and machinery 1,60,000
Prepaid insurance 10,000
Creditors 5,000
Cash at bank 60,000
Sales revenue 3,50,000
Investment 1, 00,000
Capital 2,00,000
Interest on investment 8,000
Salary 43,000
Total 5,63,000 5,63,000
Additional information :
a. Salary outstanding Rs. 2,000
b. Depreciation on plant and machinery @10% p.a.
c. Prepaid insurance expired to the extent of Rs.6,000
Required: Adjusted trial balance [5]
OR
 Rectify the following errors before preparation of trial balance:
a. Rent paid to Ramesh Rs. 5,000 debited to his personal account
b. Purchase book was over cast by Rs. 500
c. Goods sold to Mahesh for Rs. 8,000 but wrongly recorded in purchase
book
Required: Entries for rectification
16. A company purchased a machine on 1st January 2021 costing Rs. 2, 20,000 and
spent Rs. 10,000 for its installation. On July 1st 2022, the company purchased
another machine for Rs. 80,000. On December 31st 2023 the machine purchased
on January 1st 2021 was sold for Rs.1,10,000. The company charged
depreciation @10% p.a. under diminishing balance method. Accounts are closed
on 31st December each year.
Required: Machinery account for first three years [1+2+2]=5
17. The trial balance of ABC Trading Concern is given below:
Particulars Debit (Rs.) Particulars Credit (Rs.)
Legal expenses 20,000 Capital 1,50,000
Salary 5,000 Creditors 20,000
Closing stock 16,000 Rent received 40,000
Rent paid 50,000 Gross profit 1,20,000
Prepaid insurance 5,000 Bills payable 30,000
Audit fee 4,000 Bank Loan 50,000
Cash at bank 90,000
Debtors 50,000
Goodwill 70,000
Equipment 1,00,000
Total 4,10,000 Total 4,10,000
Additional information:
a. Depreciation on Equipment @10% p.a.
b. Outstanding salary Rs. 300
c. Prepaid insurance was expired Rs. 3,000
Required : a. Profit and Loss account
b. Balance sheet [2+3=5]
18. The following are the balance sheet and receipt and payment accounts of a
Health Club:
Balance sheet as on 31st December 2018
Liabilities Amount (Rs.) Assets Amount (Rs.)
Capital fund 1,75,000 Plant and machinery 1,34,000
Salary due 5,000 Subscription due 6,000
Cash at bank 40,000
Total 1,80,000 Total 1,80,000
Receipt and payment account
For the year ended on 31st December 2019
Receipt Amount (Rs.) Payments Amount (Rs.)
To Balance b/d 40,000 By Salary 35,000
To Subscription 60,000 By General expenses 25,000
To Entrance fee 10,000 By Plant and machinery 50,000
To Life membership fees 25,000 By Audit fee 7,000
By balance c/d 18,000
Total 1,35,000 Total 1,35,000
Additional information:
a. Depreciation on plant and machinery @ 10% p.a.
b. Subscription due for the year Rs. 5,000
c. Outstanding salary of Rs. 3,000
Required: a. Income & expenditure account b. Balance sheet [2+3=5]
19. A. Ramu, who keeps his book of accounts under the single entry system,
started a business with cash Rs. 1,50,000 and machinery of Rs.50, 000 in
January 1st 2020. His position on December 31, 2020 is as follows:
Debtors Rs. 30,000. Land and building Rs. 2,00,000.
Bills payable Rs. 15,000. Cash at bank Rs. 50,000.
Outstanding expenses Rs. 3000.
Additional information:
 He withdrew Rs. 500 per month for his personal use
 He introduced additional capital in business of Rs. 10,000
 Depreciation machinery by @ 10% p.a.
Required: a. Closing statement of affairs b. Profit and loss statement [2+1=3]
B. Following information is given:
Particulars Debit (Rs.) Credit (Rs.)
Provision for bad debts 6,000
Bad debt 2,000
Sundry debtors 1,20,000
Additional information:
 Create provision for bad debts @10% on debtors.
Required : Provision for bad debts account [2]
 Group "C"
Attempt all the questions. [3×8=24]
20. The following transactions of Rainbow Co. are given below:
Jan-1: Started business with cash Rs. 1,20,000 and bank balance Rs. 50,000
Jan-7: Sold goods for Rs. 60,000 and received a cheque of Rs. 40,000
Jan-14: Purchased goods from Karan for Rs. 10,000
Jan-18: Paid salary Rs. 5,000
Jan-27: Deposited cash into bank Rs. 25,000
Jan-28: Paid to Karan Rs. 9,500 in full settlement of the account.
Required: a. Journal entries. b. Necessary ledger accounts c. Trial balance [4+3+1=8]
21. The trial balance of Shivam Company as on 31st December 2020
Particulars Debit (Rs.) Credit ( Rs.)
Machinery 2,50,000
Wages 30,000
Capital 2,45,000
Salary 15,000
Selling expenses 25,000
10% Bank Loan 1,30,000
Commission received 25,000
Prepaid rent 12,000
Purchase 90,000
Cash at bank 1,00,000
Copyright 60,000
Investment 1,60,000
Carriage inward 5,000
Opening stock 35,000
Sales revenue 4,30,000
Interest on bank loan 11,000
Debtors 60,000
Bills payable 55,000
General expenses 25,000
Creditors 8,000
Carriage outward 15,000
Total 8,93,000 8,93,000
Additional Information :
a. Depreciation on machinery by 10% p.a.
b. Prepaid Rent was expired Rs. 8,000
c. Stock at the end valued Rs. 60,000
d. Provision for tax @10% of net profit
Required: a. Statement of profit or loss as per NFRS
b. Statement of financial position as per NFRS [4+4=8]
22. A. You are given the following transactions of District Education office,
Danusha:
Fagun-1 Issued a payment order to DTCO for the payment of computer
purchase of Rs. 20,000
Fagun-8 Issued a payment order to DTCO for the payment of electricity
charges of Rs. 15,000
Fagun-13 Issued a payment order to DTCO of Rs. 30,000 to give advance
to store keeper Mr. Ram Bahadur for purchase food materials
Fagun-20 Section officer, Mr. thapa's advance of Rs. 20,000 cleared after
the submission of bill of furniture purchased of Rs. 19,500 and
deposited a slip on Treasury single account of Rs. 500
Required: Journal voucher [1x4=4]
B. Define new accounting System of Government of Nepal. Explain any three
objectives of it. [1+3=4]
