BBA203 & FINANCIAL ACCOUNTING

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ASSIGNMENT

PROGRAM	Bachelor of Business Administration-BBA
SEMESTER	2
SUBJECT CODE & NAME	BBA203 & FINANCIAL ACCOUNTING
CREDIT	4
BK ID	B1520
MAX.MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Accountancy refers to a systematic knowledge of accounting. It explains ‘why to do’ and ‘how to do’ of various aspects of accounting. Explain the objectives of accounting and explain the categories of users.

Ans: Explanation of accounting objectives:

Accounting operates within a broad socio-economic environment, and so, the knowledge required of the accountant cannot be sharply compartmentalized. It is therefore, difficult to discuss one area without relating to other areas of knowledge. We place a great emphasis on the conceptual knowledge. The accountant should not only know but he should understand.

The broad objects of Accounting may be briefly stated follows:

1.To maintain the cash accounts through the Cash

Q.2 Mayur, Veer and Prakash are partners sharing profit and losses in the ratio of 2:1:1.

Their Balance Sheet was as follows:

Prakash has expired on 01.01.2009 and as a result the assets are revalued and  liabilities reassessed as follows:

i) Create a Provision for doubtful debt on debtors at Rs.800.

ii) Building and investment are appreciated by 10%.

iii) Machinery is depreciated at 5%

iv) Creditors were overestimated by Rs.500.

v) Goodwill of the firm valued at Rs.27,000

The balance due to Prakash will be transferred to his executor’s loan account which  carries an interest of 10% p.a. Prepare necessary ledger accounts and show the  balance sheet of new firm after adjustments.

		Revaluation Account
To Provision for Doubtful debt		800	By Buildings	2,000

Q.3 Final Accounts are prepared at the end of the accounting year with various adjustments. Explain the features and objectives of final accounts 

Ans : Explanation of objectives of final accounts :

1. Final accounts and balance sheets help investors make sense of a company's financial condition. They show financiers whether the business is forthcoming with performance data, how it intends to marshal its resources to pound the competition, and the steps it is taking to repay its long-term loans and avoid lender exodus.

Q.4 Prepare Trading and Profit and Loss Account and Balance Sheet from the following

particulars as at 31st March 2012.

Trial Balance

Particulars

Dr. (Rs)

Cr. (Rs)

Capital / Drawings 

1,400

10,000

Cash in hand

1,500

-

Bank overdraft @ 5%

-

2,000

Purchase and Sales

12,000

15,000

Returns 

1,000

2,000

Establishments charges 

2,500

-

Taxes and Insurance 

500

-

Provision for Doubtful Debts

-

1,000

Bad Debts 

500

-

Sundry Debtors and Creditors

5,000

1,850

Commission

-

500

Investments

4,000

-

Stock on 1 April 2010

3,000

-

Furniture 

600

-

Bills Receivable & Bills payable

3,000

2,500

Collected Sales Tax

-

150

Total

35,000

35,000

Further, you are required to take into consideration the following information: 

a) Salary Rs.100 and taxes Rs.400 are outstanding but insurance Rs.50 prepaid 

b) Commission amounting to Rs.100 has been received in advance for work to be done

next year.

c) Interest accrued on investments Rs.210

d) Provision for doubtful Debts is to be maintained at 20%

e) Depreciation on furniture is to be charged at 10% p.a.

f) Stock on 31st March 2012 was valued at Rs.4,500

A

Calculation of Trading and P/L a/c 

Preparation of balance sheet 

Answer)

Trading and P/L a/c

To Opening Stock		3,000	By Sales	15,000
To Purchases	12,000		Less: Returns	1,000
Less: Returns	2,000	10,000			14,000

Q.5  What is Petty Cash Book? Solve the below given problem.

On 1st Jan 2009, Ramanathan opened a Bank Account by depositing Rs.6,000/- in cash. All remittances are to be paid into bank on the same day on which they are received and all payments are made by cheques. Enter the following transactions in three columnar cash book.

Jan 2 – Goods sold to Mohan for cash Rs.250

Jan 5 – Settled Hari’s account of Rs.200 at a discount of 5%

Jan 7 – Received from Shyam a cheque for Rs.725. Discount allowed Rs.25.

Jan 10 – Purchased a calculator for Rs.200.Spent Rs.50 on the cover.

Jan 12 – Shyam’s cheque was returned dishonoured.

Jan 15 – Received a money order for Rs. 25 from Hari.

Jan 20 – Shyam settled his account by means of a cheque for Rs.755,Rs.5 being for interest charged

Jan 27- Purchased machinery from Rajiv for Rs.5000 and paid him by means of a bank draft purchased from bank for Rs.5005.

Answer : (A)Meaning of petty cash solving the problem

Answer: - It is another Cash Book which is maintained, generally, in large business concerns to reduce the burden of 'Main Cash Book', in which numerous transactions involving petty (small) amounts are recorded. For this purpose, a Petty Cashier is appointed by the Chief Cashier. The Chief Cashier advances a sum of money to the Petty Cashier to enable him to meet petty expenses for a fixed period. The Petty Cashier will record this amount on the Debit Side of the Petty Cash Book while the Chief Cashier will record the same amount on the Credit Side of the

Q.6 What are Errors in Accounting? Explain the classifications of Errors. Write any two examples of one sided errors.

Answer: - Errors in accounting:-

A Trial Balance is said to be a statement of proof done arithmetically to prove that proper double was observed in making accounting entries. The assumption is that the Trial balance totals will not agree whenever there is an accounting error. There are several errors in fact which will not affect the agreement of the trial balance totals. This means that there are two basic types of accounting errors:

·         Errors which do not affect the Trial balance totals

·         Errors which do affect the trial balance totals

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