INSTITUTE OF BUSINESS MANAGEMENT

Important Assignment

Course Title : Introduction to Financial Accounting Course Code : ACC 101

Faculty : M. Muzaffar Ali Section : M5560
Day /Date : Tuesday 24 03 2020 Duration : 24 Hours
Total Marks : 15

Student’s Name: ________________________ Reg. #: ______________

1. Given the following data, which is the amount of capital:

Cash 50,000
notes receivable 65,000
notes payable 10,000
salaries payable 8,000
merchandise inventory 75,000
notes receivable 12,000
equipment 20,000

2. Balance sheet totals should agree. Is this statement true? 

3. These are the assets and liabilities of a trader 
   Bank               Rs 5,100 
  Stock               Rs 8,100 
  Machinery    RS 12,300 
Creditors         Rs 5,500 

What is the capital? 

4. A motor vehicle was found to be unsuitable for the business was taken by the owner for his private use.
How is this treated in the account? 

5. If assets= Rs 50000 and liabilities=Rs 10000. What is the net worth of the business? 
6. If a business has liabilities in excess of its assets. The owner ‘s equity will be Positive or Negative:

7.which of the following statement is correct:

Assets liabilities
a. we paid creditor by cheque - bank - liability
b. a debtor paid us RS-90 in cash + cash + debtor
c. hall lends us RS-500 by cheque + bank - loan from hall
d. bought goods on credit +stock + capital

8. According to formula which statement is correct? 

1. 75,000 = 60,000 + 25,000
2. 98,000 = 44,000 + 54,000
3. 68,500 = 23,000 + 48,200 
 4. 50,000 = 25,000 + 24,000
9. How many types of the businesses you know? Explain each briefly

10. What is the important factor in understanding a financial statement?

11. Sales revenue should be recognized when goods and services have been supplied, costs are incurred when
goods and services have been received. Which accounting concept governs the above?

12. Which of the following transactions would result in an increase in capital employed?

a. Selling inventory at profit

b. Writing of a bad debt
c. Paying a payable in cash
d. Increasing the bank overdraft to purchase a non current asset

13. Explain in detail the users of financial statements?

14.Rizvi's trial balance include the following items

Current assets: 50,000, Inventory: 15,000 , Payables: 10,000 , Receivable: 5,000 , Bank: 11,0000 ,
Allowance for bad debts: 1,000. What is the figure for current asset?

15. What is contingent liability?

16. Lux had net purchases of $50,000, ending inventory of $25,000, net sales of $100,000, and gross profit of
$32,000. How much was Lux's beginning inventory?

17. The returns of goods by a customer should be debited to ?

18. A/c Receivable had a normal balance of Rs.1,500 on May 31. There were debit postings of RS.900 and credit
postings of Rs.700 during June. What was the Account Receivable balance on June 30?

19. Accounts Payable had a normal beginning balance of Rs. 1,000. There were debit postings of Rs. 600 and credit
postings of Rs. 400 during the period What was the ending balance?

20. Weber Company Ltd has the following account balances:

Purchases $28,000
Sales Returns and Allowances 4,000
Discount on sales 2,500
Freight-in 1,875
Freight-out 2,500
What is the cost of goods purchased for the period is

21. For the current period, the following data were taken from the ledger:
Purchases $40,000
Purchases Returns and Allowances $600
Purchases Discounts $300
Freight-in $200
 Beginning inventory was $8,000 and ending inventory was $13,000. What was cost of goods sold?

22. For the current year, the following data were taken from the accounting records:
Sales $900,000
Sales Returns and Allowances $30,000
Purchases $500,000
Purchase Returns and Allowances $8,000
Discount received $4,000
Freight-in $2,000
Beginning Inventory $90,000
Ending Inventory $130,000

What was the cost of goods available for sale?

23 What are the effects of the following transactions on the on accounting equation in terms of + , - and
0?
a) Paid cash to creditors
b) Received cash from debtors.
c) Sold merchandise costing Rs. 5,000 at Rs. 8,000.
d) Purchased merchandise on credit.
e) Received commission by cheque.
f) Paid salaries by cheque
g) The owner paid tuition fee of his son from the business cash

24. Calculate the net profit of a trader when his beginning capital is Rs. 25,000, drawings is Rs. 23,000 and capital at
end was Rs. 31,000. He did not introduce new capital during the year.

25. Using the following information, What will be the amount of Net Income?

Freight in 3 purchase return & Allowances 3

Merchandise inventory, Jan 1, 12 purchase Discounts 2
Merchandise inventory, Jan3 1, 19 Rent expense 4
Miscellaneous Expense 5 Salary Expense 6
Purchases 43 Sales 60
Sales Return & Allowance 2 Sales discounts 4

26. Fill in the blanks.

a) 34. The three main financial statements are Balance sheet, Income statement & ______.
b) 35. An economic unit engaged in business activities is called ____________.
c) 36. Assets - ____________ = Liabilities.
d) 37. The recording of assets at their original cost is known as ____________.
e) 38. Investment of cash and other assets increase ___________.
f) 39. Increase in revenue is recorded in __________ side.
g) 40. Decrease in expense is recorded in _________ side.
h) 41. Net income directly affects _________ account.
27.Narrate the transaction after looking at the following Accounting equation.

Date ASSETS LIABILITIES OWNER’S EQUITY

CASH FURNITURE STOCK BANK A/C PAYABLE ALI’S CAPITAL

May 1 80,000 80,000
May 4 75,000 5,000 80,000
May 8 50,000 5,000 70,000 20,000 80,000
May 15 75,000 5,000 50,000 20,000 85,000
May 20 65,000 5,000 50,000 10,000 85,000
May 20 50,000 5,000 50,000 15,000 10,000 85,000

28. Following is the Partial Trial Balance of M/s Alex Traders for the year ended 31, 2016.You
are required to prepare Statement of Cost of goods sold and calculate the amount of gross
profit .

S. Title of Account A/c Dr Cr

# # Rs. Rs.
1 Sales 456,000
2 Discount Allowed/Sales Discount 1,800
3 Discount received 1,900
4 Purchases 367,000
5 Merchandise Inventory Beginning 22,000
6 Returns in/Sales Return 4,500
7 Returns out 6,800
8 Freight in 6,000
9 General expense 52,000
10 Capital 650,000
11 Commission Income 16,000
12 Drawing 10,000

Note: Merchandise Inventory

ending Rs. 18,000

29. Assess the Values of the following missing figures:

a) What will be the value of Assets if the liabilities are Rs. 38,570 and Capital is Rs. 111,430.
 b) What will be the value of Capital if the Assets of the firm are Rs 800,000 which are 160% of the
liabilities of the firm.
c) Assess the value of the capital of the firm after looking at the following position of the business:
Cash Rs. 89,000 , Accounts receivable Rs 60,000 , Allowance for Bad Debts Rs. 13,000, Accrued
expenses Rs. 24,000,Accrued Income Rs.12,480. Purchases Rs. 150,000, Bank over draft Rs.
9,750 and prepaid salaries Rs. 6,000.
d) Asses the value of Opening stock if COGS = 530,000, Closing Stock Rs. 26,140 and Purchases
486,970.
e) Assess the value of net profit if COGS is Rs. 500,000 that is 80% of net sales and the expenses of
the firm are Rs. 80,000.
30. Explain all GAAP Principles with examples