Accountancy and Auditing Paper 1, 2004

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Scholarship Description:

Accountancy and Auditing Paper 1, 2004 is open for . The scholarship allows level programm(s) in the field of taught at . The deadline of the scholarship is .

 NOTE: (i) Attempt FIVE questions in all. Including question No. 5 & 6 which are compulsory. Qs 5 carrries 40 marks. All other questions carry EQUAL marks i.e. 20 marks each.
(ii) Give workings to solution of questions, wherever relevant.


1. What is a Trial Balance? Why is it prepared? What are the two methods of preparing it and which of them is a better one and why?

2. Answer the following short questions briefly. Each question carries two marks.

(a) Define ledger
(b) List three disadvantages of not preparing the Trial Balance
(c) Give Two examples of errors of principle.
(d) State two methods of charging depreciation on fixed assets
(e) What is reserve for doubtful debts?
(f) Why is revaluation account prepaid?
(g) Enumerate at least four reasons for which a cheque is dishonoured.
(h) What are capital receipts?
(i) Name two methods of preparing final accounts final accounts from incomplete records.
(j)What do you understand by closing entries?

3.
Given below is the Receipts and payments account of the Eagle Club for the year ending 31st December 2003.

Balance b/d …………………………..….. 10,250
Subscriptions
2002………..………..………..………….… 400
2003………..………..………..……….…… 20,500
2004………..………..………..………….… 600
Donations………..………..……………... 5,400
Proceeds of drama tickets ……….. 9,500
Sales of waste paper ………..…….. 450
TOTAL ………..………..………... 47,100

Salaries………..………..………..……….. 6,000
General expenses………..………..….. 750
Drama expenses…………………….…… 4,500
Newspaper etc. …………………………. 1,500
Municipal taxes ………..……………….. 400
Charity ………..………..………..….……. 3,500
Investments ………..………..….…..…. 20,000
Electricity Charges ………..….………. 1,450
Balance c/d ………..………..….…..….. 9,000
TOTAL ………..…….…..……….… 47,100

Required: Prepare the Club’s Income and Expenditure Account for the year ended 31st December 2003 and its Balance sheet as on that date, after taking the following information into account.

  1. There are 500      members, each paying on annual subscription of Rs. 50, Rs, 600 being in      arrears for 2002.

  2. Municipal taxes      amounting to Rs. 400 per annum have been paid up to 31st March      2004 and Rs. 500 for salaries in outstanding.

  3. Building stood      in the books at the Rs. 60,000 and it is required to write off      depreciation at 5 percent.

  4. Four percent      interest has accrued on investments for five months.



4.
A and B were in partnership sharing profit and losses in the proportion of three fourth and one fourth respectively. Their balance Sheet stood as follows on 31st December 2003.

LIABILITIES …….…….…. Rs.
Creditors …………………....... 37,500
Capital Account
A ……………………………......… 40,000
B…………………………......……. 10,000
TOTAL ……………….…… 87,500

ASSETS …………….….. Rs.
Cash at bank ………... 22,500
Bill receivable……..…. 3,000
Book debts…………..… 16,000
Stock………..………….. 20,000
Furniture………..…….. 1,000
Building………..…….... 25,000
TOTAL……………... 87,500

They admitted C into partnership 1st January 2004 on the following terms:

  1. The C pays Rs.      10,000 as his capital for 1/5 share in the future profits.

  2. That goodwill      for Rs. 20,000 is raised in the books of the new firm.

  3. That stock and      furniture are reduced by 10% and that a 5% provision is made for likely      bad debts.

  4. That the capital      Accounts of A and B are readjusted on the basis of their profit sharing      ratios.


Required: Pass the necessary journal entries and give the ledger Accounts and opening Balance Sheet of the new firm.

COMPULSORY QUESTION



5. The following balances appeared in the books of a merchant on 31st December, 2003.

Building……….……….…………….70,000
Motor trucks……….……….…….12,000
Furniture……….……….…….…...1,640
Sundry debtors……….………….15,600
Sundry creditors……….….…….18,852
Stock……….……….……….……….15,040
Cash in hand……….……..…..….988
Cash at bank……….…….……….14,534
Bills receivable……….………..….5,844
Bills payable……….……….……….6,930
Purchases……….……….…..…….85,522
Sales……….……….……….…...….1,21,850
Capital……….……….…………..….92,000
Carriage on purchase……..….1,291
Carriage on sales………..…..…800
Reserve for bad debts….…….1,320
Establishment……….…….…....2,135
Taxes & Insurance…….…..….783
Interest (Cr.) …….….…..…….340
Bad Debts……….….……….…….613
Audit fee……….……….……..….400
General charges……….…....…3,950
Travelling expenses ……….….325
Discount (Dr.) …….….…….….620
Investments……….……………..8,922
Sales returns………..……...….285

Required:
Prepare Trading and Profit and Loss account for the year ended 31st December 2003 and Balance Sheet as on that date. In doing so take the following matters into consideration.

  1. Stock on 31st      December, 2003 amounted to Rs. 15,500.

  2. Depreciate Motor      Trucks at 20 per cent and Furniture at 10 percent.

  3. Increase Bad      Debts Reserve by Rs. 1000

  4. Salaries Rs. 500      and Taxes Rs. 150 are outstanding

  5. Unexpired      Insurance Rs. 50

  6. Interest accrued      on Investments Rs. 210

  7. Rent due for a      portion of the Building let Rs. 150

  8. A bill      receivable for Rs. 500 was discounted in December 2003 but was not due      till January next.


6. Deliver the correct answer in the Answer Book. Over writing is not allowed.

(1) The need for keeping a record of income and expenditure is a clear and systematic manner has given rise to the subject of:
(a) Book keeping
(b) Accounting cycle
(c) Manufacturing
(d) None of these

(2) If proper books of accounts are not kept in a business the amount of profit:
(a) Can be ascertained
(b) Cannot be ascertained
(c) Easily ascertained
(d) None of these

(3) The stage under which transactions are recorded chronologically in the books of accounts is called:
(a) Summarizing
(b) Classifying
(c) Recording
(d) None of these

(4) Book-keeping is mainly concerned with:
(a) Recording of a financial data relating to business transactions
(b) Designing the systems in recording, classifying, summarizing the recorded data
(c) Interpreting the data for internal and external users
(d) None of these

(5) The term expenses and expenditure are:
(a) Same in nature
(b) Different in nature
(c) Opposite in nature
(d) None of these

(6) When goods are given away as charity or free samples, the purchases account should be:
(a) Debited
(b) Credited
(c) Recorded in balance sheet
(d) None of these

(7) The sake of a business asset on credit is recorded in:
(a) Sales journal
(b) General journal
(c) Cash receipt journal
(d) None of these

(8) The discount account is a:
(a) Personal account
(b) Real account
(c) Nominal account
(d) Asset account
(e) None of these

(9) The payment side of the cash book is under cost by Rs. 200 when overdraft as per bank statement is the starting point:
(a) Rs 200 will be deducted
(b) Rs 200 will be added
(c) Rs 400 will be added
(d) Rs 400 will be deducted

(10) All the direct expenses are charged to:
(a) Balance sheet
(b) Profit and Loss account
(c) Trading account
(d) None of these

(11) Those liabilities which arise only on the happening of some event, are called:
(a) Current liabilities
(b) Contingent liabilities
(c) Outstanding liabilities
(d) Fixed liabilities

(12) Marshalling of balance sheet means:
(a) The ordering of its assets and liabilities
(b) The totaling of its assets and liabilities
(c) Excess of assets over liabilities
(d) None of these

(13) Commission received in advance is to be considered as:
(a) Outstanding expense
(b) Accrued income
(c) Prepaid expense
(d) Unearned income

(14) The provision for discount on creditors is often not provided in keeping with the principle of:
(a) Materiality
(b) Consistency
(c) Conservatism
(d) Realization

(15) Which one of the following is not considered the permanent part of the accounting record:
(a) Journal
(b) Trial Balance
(c) Balance sheet
(d) Final accounts

(16) A working paper which is prepared by the accountant for his own convenience is called:
(a) Work sheet
(b) Cash flows statement
(c) Balance sheet
(d) Final accounts

(17) Any expenditure incurred to increase the profit earning capacity of the concern is a:
(a) Revenue expenditure
(b) Capital expenditure
(c) Deferred revenue expenditure
(d) Capital expenditure

(18) Depreciation on fixed assets is an example of:
(a) Revenue expenditure
(b) Capital expenditure
(c) Deferred revenue expenditure
(d) None of these

(19) The capital receipts are shown in the balance sheet on the:
(a) Liability
(b) Asset side
(c) Debit side
(d) None of these

(20) Error due to wrong allocation as expenditure between capital and revenue is regarded as:
(a) Error of omission
(b) Error of principle
(c) Compensation errors
(d) Error of commission

 

Degree Level:

Accountancy and Auditing Paper 1, 2004 is available to undertake level programs at .

Available Subjects:

Following subject are available to study under this scholarship program.

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