BCOM101 FINANCIAL ACCOUNTING I

Description

SESSION SPRING 2024

PROGRAM BACHELOR OF COMMERCE (B.COM)

SEMESTER I

COURSE CODE & NAME BCOM101 FINANCIAL ACCOUNTING I

CREDITS 4

 

Assignment Set – 1^st

Questions

 

1. A. Explain the process of Accounting.

Ans: Accounting is a systematic process of identifying, recording, classifying, summarizing, interpreting, and communicating financial information. It is essential for making informed business decisions and ensuring financial transparency.

Here’s an overview of the accounting process: 

Identifying Transactions: 

Step: Identify events and transactions that are financial in nature.

Description: Only transactions that can be measured in monetary terms and affect the financial position of the business are considered. Examples include sales, purchases, receipts, and payments.

Recordin

 

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2. Describe any five Accounting concepts.

Ans: Accounting concepts are fundamental principles that underpin the practice of accounting, providing a framework for consistent and accurate financial reporting.

Here are five key accounting concepts: 

1. Accrual Concept Description:

Principle: Revenues and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid.

Example: If a company provides services in December but receives payment in January, the revenue is

 

 

3. Classify and explain the Accounts under modern approach method.

Ans: The modern approach to accounting, often referred to as the classification of accounts under the “modern” or “expanded” accounting equation, classifies accounts into five main types:

Assets, Liabilities, Equity, Revenues, and Expenses.

Here’s an explanation of each type: 

1. Assets Definition: Assets are resources owned by a business that are expected to bring future economic benefits.

Types: 

Current Assets: Short-term

 

 

 

Assignment Set – 2

Questions

 

4. Prove that the accounting equation is satisfied in all the following transactions of Dream world co.
5. Commenced business with cash ₹ 60,000.
6. Paid rent in Advance ₹ 500.

III. Purchased goods for cash ₹ 30,000 and credit ₹ 20,000.

1. Sold goods for cash ₹ 30,000 costing ₹ 20,000.
2. Paid salary ₹ 500 and salary outstanding ₹ 100.

Ans: The accounting equation states that:

\[ \text{Assets} = \text{Liabilities} + \text{Equity} \]

 

We need to prove that this equation holds true after each transaction for Dream World Co.

Here’s how the transactions affect the accounting equation:

 

1. Commenced business with cash ₹ 60,000

 

**Transaction**:

– Assets (

 

 

5. Explain the different types of capital in detail.

Ans: Capital is a crucial component in business finance and economics, representing the resources and funds that businesses use to generate revenue and sustain operations. Different types of capital serve distinct purposes, and understanding these categories is essential for financial management and investment decisions.

Here’s a detailed explanation of the various types of capital: 

1. Working

 

 

6. The following balances are extracted from the books of Hindustan Traders on 31st March 2008. You are required to prepare the Trading and Profit and Loss Account and a Balance sheet as on that date.

Particulars	Amount (₹)	Particulars	Amount (₹)
Opening stock Commission received B/R Return outwards Purchases                            Trade expenses Wages Office furniture Bills payable Return inwards Creditors	5000 2000 22500 2500 195000 1000 14000 5000 15000 6500 98250	Insurance Cash in hand Sundry debtors Cash at bank Carriage inwards Rent and taxes Commission paid Carriage outwards Interest on capital Sales Stationary Capital	5500 2500 150000 23750 4000 5500 4000 7250 3500 250000 2250 89500

 

The closing stock was valued at Rs. 1, 25,000/-

Ans: To prepare the Trading and Profit and Loss Account and a Balance Sheet for Hindustan Traders as of 31st March 2008, we need to organize the given balances and include the closing stock in our calculations.

Let’s start with the Trading Account, followed by the Profit and Loss Account, and then the Balance Sheet.

Trading Account for the year ended 31st March

s equal total liabilities plus equity.