Reference no: EM132801988

Question 01

Classify which of the following head of accounts are related to element of accounts?

i.                 Furniture & Fixtures

ii.                Carriage Inwards

iii.               Commission earned

iv.               Cash in hand

v.                Drawings

vi.               Interest expense

vii.             Discount allowed

viii.            Office equipment

ix.               Utility expense

x.                Bank overdraft

xi.               Loan from K Abbott

xii.             Discount received

xiii.            Accounts payable

xiv.            Accrued interest expense

xv.             Carriage outwards

 

Question 02

Identify which of the following head of accounts are wrongly linked with elements and put them in right column?

Assets	Liabilities	Equity	Expenses	Revenue
Postage	Interest expense	Creditors	Commission	Sales
Bank	Discount received	Capital	Drawings	Loan to Rashid
Sales returns	Furniture	Loan from Bank	Discount allowed	Purchases
Land	Investment	Retained profits	Salaries	Fee earned

Question 03

Shadab started business of trading and in first month he recorded following business transactions:

1.      Shadab invested Rs. 165,000 to start the business.

2.      He opened current account with bank by depositing Rs. 100,000.

3.      Bought furniture & fixture with list price Rs. 60,000; subject to 20% discount and payment is made by cheque.

4.      Bought goods for cash Rs. 15,000.

5.      Bought goods from Khanzada Stores worth Rs. 22,000.

6.      Sold goods for cash Rs. 17,000 which originally cost Rs. 12,000.

7.      Sold goods to Maqbool Sons on credit Rs. 27,000 cost Rs. 20,000.

8.      Cash received from Maqbool sons Rs. 15,000.

9.      Cheque paid to Khanzada Stores Rs. 12,000.

10.   Expenses for the month were paid for cash Rs. 11,000.

11.   Shadab withdrew Rs. 5,000 from bank for personal use.

 

Question 04

Misbah is conducting business of selling electric goods to customers, and his transactions for first month of operation are given as under:

1.      Started business with cash Rs. 180,000 and furniture valued Rs. 32,000.

2.      Purchased goods worth Rs. 75,000 and paid cash Rs. 45,000 on the spot.

3.      Paid rent for the month Rs. 20,000.

4.      Opened bank account by depositing Rs. 50,000.

5.      Sold goods costing Rs. 45,000 were sold for Rs. 68,000; 40% payment is received by cheque and balance shall be receivable in next month.

6.      Gave loan to friend Rs. 20,000 by cheque on the terms that he will return in three months with interest of Rs. 2,000.

7.      Cheque paid to supplier against credit purchase Rs. 9,500 and discount received Rs. 500.

8.      Cash received from customer as early payment Rs. 39,000 and discount allowed Rs. 1,000.

9.      Cash of Rs. 35,000 was deposited into bank.

10.   Salaries for the month Rs. 10,000 were paid in cash.

11.   Furniture worth Rs. 10,000 was lost by fire and sold as scrap for Rs. 1,000.

12.   Owner withdrew cash of Rs. 5,000 and goods worth Rs. 3,000 for personal use.

13.   Misbah won prize money of Rs. 50,000 and 70% was brought into business.

14.   Bought furniture of Rs. 15,000; paid Rs. 3,000 in cash and balance through bank account.

15.   Half of the loan which was given to his friend was received in cash along with interest of Rs. 1,000.

Required:

Prepare accounting equation of business of Misbah for first month of operation.

 

Question 05

Enter the following transactions in the books of JAM Enterprises in the form of accounting equation:

1.      Started business with cash Rs. 80,000; Bank balance of Rs. 100,000 and vehicle worth Rs. 150,000.

2.      Purchased furniture & fixture for Rs. 30,000 paying cash Rs. 10,000 and balance through cheque.

3.      Purchased goods from Nihad Enterprises at list price of Rs. 56,000, subject to 15% discount on list price.

4.      Obtained loan from Bank Rs. 150,000 at 10% markup and deposited cash into bank on same day.

5.      Sold goods for cash costing Rs. 21,000 at 30% margin on sales; 50% amount was deposited into bank.

6.      Purchased goods from Jamal Sons at Rs. 75,000 of which Rs. 45,000 was paid by cheque. Balance shall be payable in future.

7.      Sold goods to Mujahid at Rs. 60,000 on 20% markup on the term 5/15, n/35.

8.      Paid first installment of loan of Rs. 25,000 by cheque which includes Rs. 3,800 interest expense.

9.      Paid 50% amount to Nihad Enterprises at 4% discount by cheque.

10.   Received 40% amount from Mujahid within discount period in cash. 50% amount was deposited into bank on same day.

11.   Owner withdrew Rs. 3,000 cash, Rs. 5,000 by cheque and goods costing Rs. 2,000 for personal use.

12.   Paid salaries of Rs. 15,000 by cheque and wages of Rs. 5,000 in cash.

13.   Paid petrol expenses of Rs. 3,000 in cash to Petrol Pump.

14.   Old vehicle was sold for Rs. 140,000 and settlement was paid by cheque.

15.   Another used vehicle was purchased for Rs. 250,000; 80% amount was paid of which 30% in cash.

 

Question 6

G Basit’s books had shown following balances as at 30^th September 2017:

 

Cash Rs. 25,000; Bank Rs. 15,000; Creditors Rs. 22,000; Debtors Rs. 25,000; Bank Loan Rs. 10,000; Stock Rs. 22,000; Furniture Rs. 10,000

 

Following transactions were taken place during the month of October 2017:

i.                 Deposit Rs. 15,000 into bank account.

ii.                Paid cheque to supplier Rs. 14,500 in full settlement of Rs. 15,000.

iii.               Interest on bank loan Rs. 1,000 was paid by cheque.

iv.               Goods worth Rs. 15,000 were purchased; Rs. 5,000 was paid in cash and balance shall be payable in next month.

v.                Goods sold for cash Rs. 10,000 at 25% markup and goods costing Rs. 6,000 were sold at 25% margin on credit.

vi.               Cheques of Rs. 16,800 were received from various customers after allowing discount of Rs. 700.

vii.             Furniture of Rs. 7,000 was purchased for paying cash of Rs. 3,000 and balance payment was made by cheque.

viii.            Cheque of Rs. 1,950 received from customer against invoice of Rs. 2,000 was dishonoured due to non-availability of funds.

ix.               Cash of Rs. 7,000 was withdrawn from bank for office purposes.

x.                Owner withdrew cash of Rs. 3,000 and stock worth Rs. 2,000 from business for household purposes.

xi.               Bank charged commission for services provided to G basitRs. 500.

xii.             Expenses of Rs.5,000 were paid in cash; Rs. 11,000 were paid by cheque and Rs. 3,000 were incurred but not payable.

 

Required:

Prepare Accounting Equation for the month of October 2017.

 

Question 7

 

An inexperienced accountant had prepared the accounting equation which contained mistakes:

 

ASSETS							LIABILITIES AND EQUITY
Cash	Bank	Creditors	Stock	Bank loan	Furniture	Drawings	Debtors	Expenses payable	Capital
20,000			10,000						(30,000)
6,000		(6,000)	12,000
12,000						12,000
	(10,000)						11,000
(4,000)	2,000		(6,000)
	8,000				12,000		4,000
(3,000)	6,000			9,000
(2,000)								5,000	7,000
29,000	6,000	(6,000)	16,000	9,000	12,000	12,000	15,000	5,000	(23,000)

 

Required:

You are required to identify the errors and prepare corrected accounting equation.

 

Question 8

Following accounting equation was prepared by Accountant of NS Furniture store for the month of January 2017:

		ASSETS					LIABILITIES AND EQUITY
Trans #	Cash		Bank	Debtors	Stock	Furniture	Creditors	Expenses payable	Capital
Balance	27,000		16,000	12,000	30,000	20,000	15,000	10,000	80,000
1	4,000		2,800	(7,000)					(200)
2	(1,000)		(2,000)					4,000	(7,000)
3					(6,000)	6,000
4	2,000		(10,000)						(8,000)
5	(4,000)		(4,500)				(9,000)		500
6	3,000		2,000	9,000	(12,000)				2,000
7			(4,000)		7,000		3,000
Total	31,000		300	14,000	19,000	26,000	9,000	14,000	67,300

 

Required:

Identify the transactions that have been taken place during the month of January 2017 for NS Furniture store.

 

Question 9

Following information pertains to Nishat Enterprises (NE) for the month of August 2017:

(i) Goods worth Rs. 15,000 were returned to supplier against account.

(ii) Goods worth Rs. 24,000 were sold to supplier at 20% margin and amount was settled against receivable balance to same person who is also customer of business.

(iii) An amount of Rs. 25,000 was received in bank account and account could not identify the amount from whom it was received, so credit the suspense account. Now it was identified that this amount was deposited online by customer and bank had deducted clearing charges of Rs. 500.

(iv) An amount of Rs. 14,000 was receivable from customer and he was declared bankrupt.

(v) The owner withdrew cash of Rs. 15,000 and goods costing Rs. 5,000 for his own use.

Required:

Show the effect of the above in the form of accounting equations.

 

Question 10

Given an example of business transaction in each of above situation:

i.                 Increase in two assets, and increase in liability.

ii.                Decrease in two assets, and decrease in liability.

iii.               Increase in two assets, and increase in equity.

iv.               Decrease in two assets, and decrease in equity.

v.                Increase in one asset, and decrease in other asset.

vi.               Increase in one asset, decrease in other asset and decrease in equity.

vii.             Increase in asset, increase in liability and increase in equity.