DMBA116 FINANCIAL ACCOUNTING

Description

SESSION	JULY-AUGUST 2025
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	I
COURSE CODE & NAME	DMBA116 FINANCIAL ACCOUNTING

 

 

Assignment Set – 1

 

 

Q1. Define financial accounting and describe its basic principles. Explain the role of the accounting equation in financial accounting and illustrate with a simple example. 5+     

Ans 1.

Financial Accounting

Financial accounting is the systematic process of recording, summarizing, and reporting financial transactions of an organization over a specific period. It focuses on preparing financial statements—such as the income statement, balance sheet, and cash flow statement—that provide an accurate picture of a company’s financial performance and position. These statements are used by internal and external stakeholders, including management, investors, creditors,

 

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Q2. Discuss the importance of accounting principles in the preparation of financial statements. Describe the difference between the accrual concept and the matching concept with suitable examples.  5+5

Ans 2.

Importance of Accounting Principles in Financial Statements

Accounting principles are the standardized rules and guidelines that govern how financial transactions are recorded, classified, and reported. They form the foundation of financial reporting by ensuring consistency, reliability, and comparability of financial statements across periods and organizations.

1. Ensures

 

Q3. What is a journal entry in accounting? Explain the rules of debit and credit with examples. Prepare journal entries for the following transactions:

1. Purchased office supplies worth Rs. 500 on credit.
2. Received Rs.1000 cash from a customer for services rendered.
3. Paid Rs. 200 for electricity bill in cash. 2+5+3

Ans 3.

Journal Entry

A journal entry is the primary record of all financial transactions in the accounting books. It represents the first step in the accounting cycle, where every business transaction is recorded in chronological order with equal debit and credit amounts. Each journal entry identifies which accounts are affected, whether they are debited or credited, and provides a brief description of the transaction.

The main purpose of journal entries is to ensure that all financial activities are accurately documented and

 

Assignment Set – 2

 

 

Q4. Explain the purpose and importance of at least four types of secondary books. How do these books help in maintaining the accounting records efficiently?     5+5     

Ans 4.

In accounting, it is necessary to maintain systematic and classified records of all business transactions. The Journal records transactions chronologically, but as the number of entries grows, it becomes difficult to manage. To overcome this limitation, businesses use secondary books or subsidiary books that categorize transactions based on their nature. These books help save time, reduce errors, and improve the accuracy of record-keeping.

Types of

 

 

Q5. A machine was purchased for Rs.20,000 on 1st January 2023. The estimated useful life of the machine is 5 years, and its estimated residual value is Rs.2,000.

Calculate the depreciation expense for the year 2023 using:

1. a) Straight-line method
2. b) Written down value method (using a depreciation rate of 40%)

Show all your workings. 5+5           

Ans 5.

(a) Straight-Line Method

Formula

Subatitute values

 

Q6. What is a trial balance? Explain its objectives and importance in the accounting process. Also, discuss the limitations of a trial balance.            5+5     

Ans 6.

A trial balance is a financial statement that lists all ledger account balances at a particular date to verify the accuracy of the double-entry bookkeeping system. It is prepared after all transactions have been posted to the ledger and before preparing the final accounts. The trial balance ensures that the total of debit balances equals the total of credit balances, thereby confirming the arithmetic accuracy of the books of accounts.

Objectives of a