B.COM DCM 1103 FUNDAMENTALS OF ACCOUNTING I

Description

SESSION	july-AUGUST  2024
PROGRAM	BACHELOR of COMMERCE (B.COM)
SEMESTER	I
course CODE & NAME	DCM1103  fundamentals of accounting I

 

 

 

Set – 1

 

1. Define accounting. Elaborate on the uses of accounting for the various stakeholders like investors etc.

Ans 1.

Definition of Accounting

Accounting is the systematic process of identifying, recording, classifying, summarizing, analyzing, and interpreting financial transactions and information. It serves as the language of business, enabling organizations to communicate their financial status effectively. Accounting ensures transparency and accountability, making it a cornerstone of sound financial management. By adhering to established principles and standards, it provides a reliable foundation for decision-making

 

 

 

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2. AJournalize the following transactions in the books of Tarun Enterprises.

i.Tarun introduced Capital by cheque Rs 25,00,000.

ii.Purchased goods on credit from PR Enterprises worth Rs 3,00,000

iii.Sold goods for cash Rs 500,000

iv.Paid salaries to office staff; Rs 400,000

v.Took a loan from HDFC bank Rs 10,00,000.

Ans 2.

1. Write a double column cash book with cash and bank columns from the following transactions

Date 2022       Transaction

March 1          Balance of cash in hand Rs 15,000 Cash at bank 50,000.

March 3          Purchased goods for cash Rs 6000

March 8          Cash deposited in bank Rs 4000

March 20        Sold goods on credit to Mr. Ashok Rs 4000

March 31        Bank charges Rs 250

 

Ans 2.

1. Journal Entries for Tarun Enterprises

Below are the journal entries for the given transactions:

Date	Particulars	Debit (Rs)	Credit (Rs)
i.	Bank A/c Dr.	25,00,000
	To Capital A/c		25,00,000
	(Being capital introduced by cheque)
ii.	Purchases A/c Dr.	3,00,000

 

 

 

3. Explain the meaning of Trial Balance. Analyze its purpose and limitations, if any.

Ans 3.

Trial Balance: Meaning, Purpose, and Limitations

Meaning of Trial Balance

A trial balance is a statement that lists the balances of all ledger accounts at a specific date. It is prepared to verify the arithmetical accuracy of bookkeeping. In a double-entry accounting system, every transaction affects two accounts: one is debited, and the other is credited with an equal amount. The trial balance summarizes these balances, with the total of the debit side equaling the total of the credit side if the accounts are recorded correctly. The trial balance is not a financial

 

Set – 2

 

 

4. Explain the terms capital expenditure and revenue expenditure with relevant examples. Also explain the meaning of the term contingent liability.

Ans 4.

Capital Expenditure

Capital expenditure refers to the expenses incurred to acquire or enhance long-term assets, such as property, machinery, or equipment. These expenditures benefit the business for an extended period and are recorded as assets in the balance sheet. For example, the purchase of a factory building or the cost of installing machinery are capital expenditures. Such expenses are not charged entirely to the income statement in the year they are incurred; instead, they are depreciated over

 

5. On 1st April 2019, Mumbai Enterprises purchased machinery worth Rs.36,000 and spent Rs 4000 on its installation.

On 1st October 2019, another machinery costing Rs 20,000 was purchased. On 1st October 2021 machinery bought on 1st April 2019 was sold for Rs 12,000 and new machinery purchased for Rs 64,000 on the same date.

Depreciation is provided annually on 31st March @10% per annum on the written down value method.

Show the machinery account from the year 2020 to 2022.

Ans 5.

Machinery Account: From the Year 2020 to 2022

The machinery account is maintained to record all purchases, sales, and depreciation charges on machinery over time. The Written Down Value (WDV) Method calculates depreciation as a percentage of the book value (cost minus accumulated depreciation).

Here is the Machinery Account

 

 

6a) Differentiate between the trading account and the profit and loss account.

1. b) Prepare Trading account for the year ended 31st March 2024 from the following balances-

	Particulars	Amount in Rs.
i	Stock (1st April 2023	10,000
ii	Sales	2,50,000
iii	Purchases	2,00,000
iv	Carriage inwards	1,500
v	Factory cleaning expenes	2,500
vi	Sales return	5,000
vii	Purchases returns	2,500
viii	Carriage outwards	3,000
ix	Factory electricity	11,000

 

Note- The closing stock as on 31st March 2024 is Rs 20,000.

6(a) Difference between Trading Account and Profit and Loss Account

Trading Account

The trading account is a financial statement prepared to calculate the gross profit or gross loss for a specific accounting period. It focuses on the direct revenues (sales) and direct costs (cost of goods sold and other production-related expenses). The result of the trading account shows the efficiency of core business operations