Chapter-Wise SolutionsQUESTION BANK

AccountancyIncludes KVS Paper, 2014

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• KVS Examination Paper – 2014 7 - 8

Part A : Financial Accounting - I

1. Introduction to Accounting 1 - 18

2. Theory Base of Accounting 19 - 44

3. Recording of Transactions-I 45 - 86

4. Recording of Transactions-II 87 - 105

5. Bank Reconciliation Statement 106 - 118

6. Depreciation, Provisions and Reserves 119 - 169

7. Accounting for Bills of Exchange 170 - 231

8. Trial Balance and Rectification of Errors 232 - 265

Part B : Financial Accounting - II

9. Financial Statements 266 - 307

10. Final Account with Adjustments 308 - 345

11. Accounting for Not-for-profit Organization 346 - 371

12. Accounting from Incomplete Records 372 - 383

13. Applications of Computers in Accounting 384 - 392

CONTENTS

SYLLABUS

Accountancy (Code No.055) Class–XI (2014-15)

One Paper Theory: 90 Marks

3 Hours

Units Periods Marks

Part A: Financial Accounting-I

Unit-1: Theoretical Framework 25 15

Unit-2: Accounting Process and Special Accounting Treatment 95 35

120 50

Part B: Financial Accounting-II

Unit-3: Financial Statements of Sole Proprietorship from Complete and 40 15

Incomplete Records

Unit-4: Financial Statements of Not-for-Profit Organisations 30 15

Unit-5: Computers in Accounting 20 10

90 40

Part C : Project Work 30 10

Part A : Financial Accounting - I 50 MarksUnit 1 : Theoretical Framework 25 Periods

Introduction to Accounting 11 Periods• Accounting- objectives, advantages and limitations, types of accounting information; users of

accounting information and their needs.• Basic accounting terms: business transaction, account, capital, drawings, liability (Non - current

and current); asset (Non - current; Fixed Assests: tangible and intangible assets and currentassets), receipts (capital and revenue), expenditure (capital, revenue and deferred), expense, income,profits, gains and losses, purchases, purchases returns, sales, sales returns, stock, trade receivables(debtors and bills receivable), trade payables (creditors and bills payable), goods, cost, vouchers,discount - trade and cash.

Theory Base of Accounting 14 Periods• Fundamental accounting assumptions: going concern, consistency, and accrual.• Accounting principles: accounting entity, money measurement, accounting period, full disclosure,

materiality, prudence, cost concept, matching concept and dual aspect.• Bases of accounting - cash basis and accrual basis.• Accounting Standards and IFRS (International Financial Reporting Standards): Concept and

ObjectivesUnit 2 : Accounting Process and Special Accounting Treatment 95 Periods

Recording of Transactions 23 Periods• Accounting equation: analysis of transactions using accounting equation.• Rules of debit and credit: for assets, liabilities, capital, revenue and expenses.• Origin of transactions- source documents (invoice, cash memo, pay in slip, cheque), preparation

of vouchers - cash (debit and credit) and non cash (transfer).• Books of original entry: format and recording - Journal.• Cash Book: Simple Cash Book, Cash Book with Discount Column and Cash Book with Bank and

Discount Columns, Petty Cash Book.• Other books: purchases book, sales book, purchases returns book, sales returns book and journal

proper.Preparation of Bank Reconciliation Statement, Ledger and Trial Balance. 23 Periods• Bank reconciliation statement- calculating bank balance at an accounting date: need and

preparation. Corrected cash book balance.• Ledger - format, posting from journal, cash book and other special purpose books, balancing of

accounts.• Trial balance: objectives and preparation

(Scope: Trial Balance with balance method only)

Solved Paper (KVS) – 2014 | 5

Depreciation, Provisions and Reserves 16 Periods• Depreciation: concept, need and factors affecting depreciation; methods of computation of

depreciation: straight line method, written down value method (excluding change in method)• Accounting treatment of depreciation: by charging to asset account, by creating provision for

depreciation/ accumulated depreciation account, treatment of disposal of asset.• Provisions and reserves: concept, objectives and difference between provisions and reserves;

types of reserves- revenue reserve, capital reserve, general reserve and specific reserves.Accounting for Bills of Exchange 16 Periods• Bills of exchange and promissory note: definition, features, parties, specimen and distinction.• Important terms : term of bill, due date, days of grace, date of maturity, discounting of bill,

endorsement of bill, bill sent for collection, dishonour of bill, noting of bill , retirement andrenewal of a bill.

• Accounting treatment of bill transactions.Rectification of Errors 17 Periods• Errors: types-errors of omission, commission, principles, and compensating; their effect on

Trial Balance.• Detection and rectification of errors; preparation of suspense account.

Part B : Financial Accounting - II 40 Marks

Unit 3: Financial Statements of Sole Proprietorship: From Complete and Incomplete Records40 Periods

• Financial Statements: objective and importance.• Profit and loss account: gross profit, operating profit and net profit.• Balance Sheet: need, grouping, marshalling of assets and liabilities.• Adjustments in preparation of financial statements : with respect to closing stock, outstanding

expenses, prepaid expenses, accrued income, income received in advance, depreciation, baddebts, provision for doubtful debts, provision for discount on debtors, manager’s commission,abnormal loss, goods taken for personal use and goods distributed as free samples.

• Preparation of Trading and Profit and Loss Account and Balance Sheet of sole proprietorship.• Incomplete records: use and limitations. Ascertainment of profit/loss by statement of affairs

method.

Unit 4: Financial Statements of Not-for-Profit Organizations 30 Periods• Not-for-profit organizations: concept.• Receipts and Payment account: features.• Income and Expenditure account: features. Preparation of Income and Expenditure account

and Balance Sheet from the given Receipts and Payments account with additional information.Scope:(i) Adjustments in a question should not exceed 3 or 4 in number and restricted to subscriptions,

consumption of consumables, and sale of assets/ old material.(ii) Entrance/ admission fees and general donations are to be treated as revenue receipts.(iii) Trading Account of incidental activities is not to be prepared.

Unit 5: Computers in Accounting 20 Periods• Introduction to Computer and Accounting Information System {AIS}: Introduction to computers

(Elements, Capabilities, Limitations of Computer system),• Introduction to operating software, utility software and application software. Introduction to

Accounting Information System (AIS), as a part of MIS• Automation of Accounting Process. Meaning• Stages in automation (a) Accounting process in a computerised environment (Comparison

between manual accounting process and Computerised accounting process.) (b) Sourcing ofaccounting Software (Kinds of software: readymade software; customised software and tailor-made software; Generic Considerations before sourcing accounting software)(c) Creation ofAccount groups and hierarchy ( d) Generation of reports - Trial balance, Profit and Lossaccount and Balance Sheet.

Scope:• The scope of the unit is to understand accounting as an information system for the generation

of accounting information and preparation of accounting reports.• It is presumed that the working knowledge of Tally software will be given to the students for

the generation of accounting software. For this, the teachers may refer Chapter 4 of Class XIINCERT textbook on Computerized Accounting System.

6 | Oswaal CBSE Question Bank Chapter-wise Solution, ACCOUNTANCY-XI

Part C : Project Work (Any One) 10 Marks 30 Periods1. Collection of Source Documents, Preparation of Vouchers, Recording of Transactions with the

help of vouchers.

2. Preparation of Bank Reconciliation Statement with the given cash book and the pass bookwith twenty to twenty-five transactions.

3. Comprehensive project starting with journal entries regarding any sole proprietorshipbusiness, posting them to the ledger and preparation of Trial balance. The students will thenprepare Trading and Profit and Loss Account on the basis of the prepared trial balance.Expenses, incomes and profit (loss) are to be depicted using pie chart / bar diagram.

Accountancy (Code No. 055) Class XI (2014-15)

March 2015 Examination

Marks 90 Duration: 3 hrs.

S. No.

Typology of Questions

Very Short

Answer MCQ

1 Mark

Short

Answer I

3 Marks

Short

Answer II

4 Marks

Long Answer I

6 Marks

Long Answer

II

8 Marks

Marks

%

1. Remembering- (Knowledge based Simple recall questions, to know specific facts, terms, concepts, principles, or theories; Identify, define, or recite, information)

2 2 2 1 - 22 25

2. Understanding- (Comprehension –to be familiar with meaning and to understand conceptually, interpret, compare, contrast, explain, paraphrase, or interpret information)

- 1 - 2 1 23 25

3. Application (Use abstract information in concrete situation, to apply knowledge to new situations; Use given content to interpret a situation, provide an example, or solve a problem)

- - 1 1 1 18 20

4. High Order Thinking Skills (Analysis & Synthesis- Classify, compare, contrast, or differentiate between different pieces of information; Organize and/or integrate unique pieces of information from a variety of sources)

2 2 1 1 - 18 20

5. Evaluation and Multi-Disciplinary- (Appraise, judge, and/or justify the value or worth of a decision or outcome, or to predict outcomes based on values)

2 1 1 - - 9 10

TOTAL 6x1=6 6x3=18 5x 4=20 5x6=30 2x8=16

90(24)

100% 100

Suggested Question Paper Design

Solved Paper (KVS) – 2014 | 7

Time : 3 hours ] [ Maximum Marks : 90

General Instructions :(i) All questions are compulsory to attempt.(ii) Work should be done neat & clean.

PART A(Financial Accounting-I)

1. State any two advantages of Accountancy. 1 2. What do you mean by Accounting Standard ? 1 3. What are the types of Cash Book ? 1 4. Give two examples of capital expenditures. 1 5. What do you mean by Depreciation ? 1 6. Name two methods of computing depreciation. 1 7. Mention three items appear in debit side of Trial Balance. 3 8. Briefly explain any three types of error. 3 9. Opening Stock ` 15,000; Sales ` 48,000; Carriage Inward ` 3,000; Sales Returns ` 3,000; Gross Profit `

18,000; Purchases ` 30,000; Purchases Returns ` 27,000.Calculate Closing Stock and the Cost of Goods Sold. 3

10. Explain the following :Debtor, Capital, Revenue, Depreciation. 4

11. Journalise the following transactions :Salary outstanding ` 3,000.Goods worth ` 5,000 were destroyed by fire.Salary paid ` 600 to Mr Varun.Purchase machinery for ` 8,000 and paid ` 2,000 on its establishment. 4

12. Write the journal entry to rectify the following errors using suspense account wherevernecessary :(a) Goods of the value of ̀ 2,000 returned by Vikram were entered in the sales day book and posted there

from to the credit of his Account.(b) Old furniture sold to Rajesh ` 700 on credit not recorded in the books.(c) Installation charges paid ` 8,000 on machinery debited in the installation charges account.(d) An amount of ` 3,000 entered in the sales returns book has been posted in the debit of Sharma who

returned the goods. 413. Enter the following transactions of M/s Rama Prasad in cash book :

2008Dec. 1 Cash in hand ` 4,000

Bank overdraft ` 1,000Dec. 3 Received a cheque from Ramlal on account ` 290 and allowed him discount ` 40Dec. 7 Ramlal’s cheque deposited in BankDec. 10 Withdrew from bank for office use ` 800Dec. 12 Paid bill payable by cheque ` 600Dec. 15 Cheque received from Chandulal of ` 400 and allowed him discount ` 100Dec. 20 Issued a cheque for petty cash ` 1004

14. Explain the following principles : 6(a) Money measurement concept.(b) Principle of full disclosure.(c) Principle of consistency.

15. A Maruti van was purchased on 01/01/2000 for ` 60,000 and ` 5,000 was spent on its repairs andregistration. On 01/07/2001 another van was purchased for ` 70,000.On 01/01/2002, the firm van purchased on 01/01/2000 was sold for ` 45,000 and a new van costing `1,70,000 was purchased on the same date.Show the Maruti van Account from 2000-2002 on the basis of Straight Line Method, if the rate ofdepreciation charged @ 10% p.a. Assume that books are closed on 31st Dec. every year. 6

16. The cash book of Mr. Ashish shows ` 16,728 as the balance at bank (debit balance) as on 31st Dec. 2007,but due to the following reasons the pass book showed a difference :(a) On 15th Dec., the payments side of the cash book was undercast by ` 200.(b) Cheques had been issued for ` 3,000, out of which cheques worth ` 2,400 only were presented

for payment.(c) Cheques worth ` 840 were deposited in the bank on 28th Dec. but had not been credited by the bank.

In addition to this, one cheque for ̀ 300 was entered in the cash book on 30th Dec. but was banked on3rd Jan.

(d) A cheque from Suresh for ̀ 240 was deposited in the bank on 26th Dec., but was dishonoured and theadvice was received on 2nd Jan.

You are required to prepare Bank Reconciliation Statement as on 31st Dec. 2007. 6

KENDRIYA VIDYALAYA SANGATHAN*Common Session Ending Examination 2014

Accountancy Class-XI

* Solutions of this paper has been merged Chapterwise in the book.

8 | Oswaal CBSE Question Bank Chapter-wise Solution, ACCOUNTANCY-XI

17. ‘A’ sells goods for ` 800 to ‘B’ on 1 January, 2007 and on that date draws a bill for 3 months on the latterfor the amount. ‘B’ accepts it and returns it to ‘A’, who discounts it with his bankers for ̀ 785. On the duedate the bill is dishonoured. Noting charges of ` 15 were paid by the bank. ‘B’ then pays ` 300 in cash andaccepts a new bill at 3 months for the amount then due to ‘A’ with ̀ 12 as interest. On the due date secondbill paid by B.Draft entries in the books of ‘A’. 8

18. The following balances has been extracted from the Trial Balance of M/s Ram Ltd. Prepare a Trading andProfit & Loss Account and a Balance Sheet as on :

December 31, 2005

Account Title Amount (`) Account Title Amount (`)

Purchases 1,50,000 Sales 2,50,000Opening Stock 50,000 Returns Outward 4,500Returns Inward 2,000 Interest Received 3,500Carriage Inward 4,500 Discount Received 400Cash in hand 77,800 Creditors 1,25,000Cash at Bank 60,800 Bills Payable 6,040Wages 2,400 Capital 1,00,000Printing and Stationery 4,500Discount 400Bed debts 1,500Insurance 2,500Investment 32,000Debtors 53,000Bills Receivable 20,000Postages & Telegraph 400Commission 200Interest 1,000Repair 440Lighting Charges 500Telephone Charges 100Carriage Outward 400Motor Car 25,000Total 4,89,440 4,89,440

Adjustments :1. Further Bad Debts ` 1,000. Discount on Debtors ` 500 and make a provision on debtors

@ 5%.2. Interest received on investment @ 5%.3. Wages and interest outstanding ` 100 and ` 200.4. Depreciation charges on Motor Car @ 5% p.a.5. Closing Stock ` 32,500. 8

PART B(Financial Accounting-II)

19. Define the Not for profit organisation. 120. Give the full form of MIS. 121. State one limitation of keeping incomplete records. 122. What types of values are promoted by Not for Profit organisation ? 323. What is Automated accounting system ? Explain any two advantages of it. 324. Calculate profits from the followings :

Opening capital: ` 6,000; Closing capital ` 8,000; Withdraws ` 2,000; Fresh capital ` 1,000. 425. (a) Explain any three advantages of a computerized accounting system over a manual accounting

system.(b) Explain the types of accounting packages. 3 + 3 = 6

26. From the following receipts and payments account of Sonu Sports Club and from the given additionalinformation prepare Income and Expenditure Account for the year ending 31st December, 2006 and theBalance Sheet as on that date :

Receipts Amount (`) Payments Amount (`)

To Balance b/d 1,90,000 By Salaries 3,30,000To Subscription 6,60,000 By Sports Equipments 4,00,000To Interest on Investment By Balance c/d 1,60,000 @ 8% p.a.for full year 40,000 Total 8,90,000 8,90,000

Additional information :(a) The club had received ` 20,000 for Subscription in 2005 for 2006.(b) Salaries had been paid only for 11 months.(c) Stock of Sports Equipments on 31st December, 2005 was ` 3,00,000 and on 31st December,

2006 ` 6,50,000. 6

1Introduction to

Accounting

Syllabus • Accounting : Objectives, Advantages and Limitations, Types of accounting information,

Users of accounting information and their needs. • Basic accounting terms: Business transaction, Account, Capital, Drawings, Liabilities

(Non current and current), Assets (Non-current; Fixed Assets; Tangible & Intangible assets and Current assets), Receipts (Capital & Revenue), Expenditure (capital, revenue & deferred), Expense, Income, Profits, Gains & losses, Purchases, Sales, Stock, Debtors, Bills receivable, Creditors, Bills payable, Goods, Cost, Vouchers, Discount trade & Cash.

Weightage : 5 Marks (5 or 4+1 or 3+1+1)

Quick Review Introduction : Accountancy is an interesting

practical subject. People are increasingly recognizing its importance these days. It is a simple technique of organizing and recording financial information, which enables easy reference, easy comparison and easy decision-making.

Accounting – Meaning : Accounting is the process of maintaining financial information. This is a process of recording and classifying the information.

Accounting Process : Following are the steps in accounting process :

1. Recording of transactions in the Journal (Journalizing)

2. Recording in the Ledger (Posting to Ledger) 3. Summarising the Activities 4. Analysis and Interpretation

5. Communicating the results. Objectives of Accounting : Following are the

important objectives or purposes of Accounting : 1. Maintaining Records 2. Estimating Profit or Loss 3. Presenting the Financial Position

Advantages of Accounting 1. Availability of information 2. Identifies strength and weakneses of

business 3. Enables comparison between periods and

similar companies 4. Evidence in the court of law 5. Payment of tax 6. Helps in realisation of debts

Limitations of Accounting 1. Financial accounting is not absolutely exact

PART A :

Financial Accounting --_-.I–

cont inue

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