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A. Objective Type Questions :

 

I. Point out the suitable alternative answer:

 

1. The purpose of final accounts is to ascertain. …. .

(a) Profit                                 (b) the value of assets

(c) The value of liabilities        (d) profit or loss and financial position.

 

2. Final accounts are prepared……..

(a) at the end of calendar year                        (c) on every Diwali

(b) at the end of assessment year        (d) at the end of accounting year.

 

3. Balance sheet is prepared to know….. .

(a) profit                                              (c) balance of accounts

(b) errors                                              (d) financial position.

 

4. Gross profit is ascertained by……..

(a) Trading account                             (c) Balance sheet

(b) Profit and loss account                  (d) Trial balance.

 

5. Suspense account appearing in the trial balance will be shown in the….. .

(a) Balance sheet                                 (b) Ledger account

(c) Trading account                             (d) Profit and loss account.

 

6. The statement of assets and liabilities is…….

(a) Balance sheet                                 (c) Trading account

(b) Trial balance                                  (d) Profit and loss account

 

7. The final account consists of…….

(a) Trial balance                                  (c) Balance sheet

(b) Profit and loss account                  (d) Both (b) and (c).

 

Ans. 1. (d) 2. (d) 3. (d) 4. (a) 5. (a) 6. (a) 7. (d).

 

II. Point out whether the following statements are True or False :

 

  1. Limited liability companies have to prepare their financial statement at the end of assessment year.
  2. Cash will be the first item if assets are arranged in the order of liquidity.
  3. Closing stock will be shown at the assets side of the Balance sheet only.
  4. Balance sheet is an account.
  5. Balance sheet may be prepared half-yearly or annually.
  6. Capital = Assets- Liabilities.
  7. Gross profit is total revenue less cost.
  8. The cost of goods sold and cost of sales are same things.
  9. In the trading account opening stock appears on the debit side because it forms the part of the cost of sales for the current accounting year.
  10. Rent, rates and taxes are the examples of direct expenses.
  11. If the total of the credit side of the profit and loss account is more than the total of debit side, the difference is the net profit.

 

Ans. 1. True 2. True 3. False 4. False 5. True.. 6. True 7. True 8. True 9. True 10. False

11. True.

 

B. Very Short Answer Type Questions:

 

1. Mention the account and side where the following items will be treated.

(a) Carriage, (b) Carriage on Purchases, (c) Carriage on Sales, (d) Wages and Salaries, (e) Salaries and Wages, (j) Investments, (g) Discount on Creditors.

 

2. How will you show the following items:

(I) Drawing; (ii) Returns Inward (Bills returned) ; (iii) Returns outward.

 

3. Mention the stages of Final Accounts.

 

4. How will you treat expenses on acquiring goods?

 

5. Where will you show goods in transit A/c ?

 

 

C. Short Answer Type Questions:

 

  1. Name 4 direct and 6 indirect expenses.
  2. What is the utility of Balance Sheet?
  3. Point out any three points of difference between Profit and Loss Account and Balance Sheet.
  4. Mention the two formulae (except the preparation of trading Account) for the calculation of Gross Profit.
  5. Explain briefly the object of Trading Account.
  6. 6.      Describe briefly three objectives of preparing Profit and Loss A/c.
  7. Explain briefly the two characteristics of position statement.

 

D. Long Answer Type Questions:

 

  1. 1.      What do you mean by Final accounts? What are its constituents? Name them and briefly explain the purpose of each of them.
  2. 2.      Explain the importance and purpose of final accounts.
  3. 3.      Explain :(a) Current assets ; (b) Current liabilities : and (c) Working capital.
  4. 4.      Explain the following statements :

(a) Balance sheet is not an account but it is the list of assets and liabilities.

(b) Balance sheet and profit and loss account are inter-dependent.

 

PRACTICAL QUESTIONS

 

I. Prepare the Trading account of Kumar from the following balances for the year ending March 31, 2003.

 

Name of Accounts                               $                     Name of Accounts                              $

Opening Stock……………………………… 15,800            Sales Return……………………………………. 200

Purchases…………………………………….. 16.000            Wages………………………………………….. 6,500

Sales……………………………………………. 30,000 Carriages………………………………………….. 300

Purchases Return …………………………. 300                 Closing Stock………………………………. 16,000

 

[Ans. Gross Profit = $ 7 ,500]

 

2. From the following information extracted from the books of Rustamji. Prepare the Trading Account for the year ending Marr::h 31,2004.

 

Name of Accounts                                           $          Name of Accounts                               $

Sales……….. …………………………………. .50000            Office expenses…………………….2000

Sales Return……………………………….. ..150                 octroi……………………………….5000

Salaries and wages……………………….. . 4,000             Fuel……………………………………………1,000

Carriage Inward…………………………….. 2,000            Insurance…………………………………… 3,721

Returns Outward………………………….. .. 250              Cash………………………………………….. 1,500

Freight Inward……………….. ……………. . 2,500           Purchases…………………………………. 40,000

Rent …………………………………………………… 750

 

Closing Stock on March 31, 2004 was $ 3,000.                     [Ans. Gross Profit = $ 2,600]

 

3. Following balances were extracted from the books of Shri Rajesh on 30th June, 2003.

 

Name of Accounts                                           $          Name of Accounts                              

Capital……………………………………….. .. 24,500          Bad debts………………………………………… 550

Drawings…………………………………….. .2000              Sales………………………………………….. 65,360

 

General expenses………………………….. .2500              Purchases …………………………………..4 7,000

 

Building………………………………………..11000              Scooter………………………………………… 2.000

 

Stock………………………………………….. .26200              Bad debts provision …………………………900

 

Power…………………………………………..2240                Bills Payable ………………………………..3850.

 

Insurance…………………………………….. .1315              Cash ………………………………………………..80

 

Wages…………………………………………..7200                Bank Overdraft……………………………..3300

 

Debtors……………………………………….. . 6,280

Charity…………………………………… 105

 

Prepare Trading Ale for year ended 30th June. 2003. Closing Stock amounted to $ 23,500.

[Ans. Gross Profit= $ 16,220]

 

4. A book-keeper has submitted you the following Trial Balance. You are required to prepare Trading and Profit and Loss Ale as on March 31, 2003.

 

Debit Balances                                   $                      Credit Balances

 

Cash in hand ………………………………..30                    Capital………………………………………….7610

Purchases……………………………………..8990                Sales……………………………………………110060

Cash at Bank………………………………..885                   Creditors……………………………………..1950

Fixtures and Fittings ……………………. .. 225               Bills payable…………………………………1875

Freehold Premises ……………………….. . 1,500             Discount received………………………….445

Lighting & heating………………………….. 65

Bills Receivable………………………………. 825

Returns Inward…….. …… …. …. .. .. .. … 30

Salaries……………………………………….. 1,075

Debtors……….. ……………………………… 5, 700

S10ck (1.4.2002) ……………………………3000

Printing…… …………………………………….225

Rates. Taxes & Insurance…………………..190

Disc. allowed ………….. …. ………….. …..200

22,940                                                                         22,940

 

Closing stock on 31st March, 2003 was $ 1800.

[Ans. Gross Profit= $ 840. Net Loss $ 470]

 

Final Accounts

5. The Trial balance of Bihari Lal on 31st March, 2003 revealed the following balances :

$

Debit Balances:                                               Debit balances (Contd.)                                  $

Plant and Machinery……………………90000     Freight Outward ………………………………. ..1200

Purchases…………………………………..58000     Rent. Rates and Taxes ………………………… ..2000

Sales Returns……………………………..1000       Advertisement …………………………………. ..2000

Opening Stock……………………………40000     Cash at Bank ……………………… …………… ..6900

Discount Allowed……………………….350         Credit Balances :

Bank Charges………………………………75          Capital Account …….. ………………………. 1,10,000

Sundry Debtors …………………………. 45000    Sales……………….. …….. ………………………. 1,27,000

Salaries…………………………………….. 6,800      Purchases Return……………………………….. 1, 275

Wages .. …. .. …. .. .. .. . . . .. . … …. 10,000    Discount Received……………………………… 800

Freight Inward……………………………… 750     Sundry Creditors…………………. ……………….. 25,000

 

The stock on 31st March, 2003 was valued at $ 13,262. Prepare Trading and profit and loss account for the year ended 31 st March, 2003 and Balance sheet as on that date.

 

[Ans. Gross profit = $ 31,787 ; Net profit= $ 20,162 :Total of Balance Sheet= $ 1,55, 162)

 

6. Prepare the Trading account of Rajeev Sharma from the following balances for the year ending 31st March, 2004.

 

$                                                                                  $

Opening Stock ……………………………. 60,255                         Manufacturing Wages…………………….46.875

 

Purchases…………. …….. ……………… 1,99,080            Carriage Inward.. ………………………….15,175

 

Sales……. ……………… …………………….. 2,81,505        Coal. Gas and Water …. … .. …. . … .. 1, 1 00

 

Returns Outward …………………………. ……..1455     Inward …………………………………….1875

 

Factory Fuel & Power……………………………. 1,305     Closing Stock…………………………….63,705

 

[Ans. Gross profit = $ 21,000]

 

7. The Trial balance of Messer Rajendra Bros., Kolkata, shows the following balance on 31st March, 2004. Prepare from them a Trading account, a profit and loss account and a Balance Sheet.

$

Capital …………………………………………18000              Cash at bank………………………1900

Stock ………………………………………….. 3720               Machinery ………………………………… 6710

B.P …………………………………………….. 4827               Buildings ………. ………………………….5290

Creditors …………………………………….. 7581               Commission (Cr.) ………………………..390

Debtors ………………………………………. 8100               Insurance ……………………………………119

B.R …………………………………………… 3291                 Postage ………………….. ……… ………. .132

Sales ……………………. ……… …………..12439               Discount (Cr.) ………….. …. …………… 627

Purchases …………………………………….10492              Salaries ……… ……………………………….1400

Returns inward …………………………….1000                Carriage ………………….. …… ……………400

Returns Outward ……….. ……………… 1200                Wages ……………….. …… …. …………. .1510

Cash in hand ……………………………….. 400                 Depreciation ….. .. … .. …… …………….600

Stock (closing) $ 17,929

 

[Ans. Gross profit = $ 14,446: Net profit= $ 13.212; Total of Balance sheet= $ 43,620]