IBRI COLLEGE OF TECHNOLOGY DEPARTMENT OF BUSINESS STUDIES DIPLOMA I: ACADEMIC YEAR 2011-201 - ANSWER KEY FINAL EXAMINATION SEMESTER

II (January April 2012 ) Course Code & Title: Date 11-4-2012 BAAC 1102 Principles of Accounting - 1 Time 8.30-10.30AM Duration 2 Hours STUDENT DETAILS Student ID. Student Name Specialization Accounting Level Diploma-I Section Total Marks 50

INSTRUCTION TO CANDIDATES 1. Do not open this question paper until the invigilator told you to do so. 2. Read the entire question paper before you start writing. 3. Answer the questions in the space provided by using PEN only. 4. Use of GSM (or mobile phones) and any electronic gadgets such as MP3 player inside the examination hall are not allowed. 5. Copying, cheating, and any kind of malpractices on the examination are strictly prohibited. Action will be taken as per the Article 80, Bylaws of Colleges of Technology. 6. Students should bring their own pencils, pens, erasers, rulers, calculators, and any other tools required for writing. .. FOR DEPARTMENT USE ONLY SECTION A (15 X 1 = 15 Marks) 1 2 3 4 5 6 7 8 9 10 TOTAL: 11 12 13 14 15 MARKS DISTRIBUTION SECTION C SECTION B (1 X 15 = 15 Marks) (5X 4 = 20 Marks) 1 2 3 4 5 6 1 2

Grand Total (in words)

Grand Total (in Figures) A: B: * C: Moderator Name and Signature

Examiner Name and Signature

INSTRUCTIONS: PLEASE READ CAREFULLY AND ANSWER ALL THE SECTIONS.

SECTION A: (Multiple Choice, Fill in the blank & True/False Questions)

Write True/ False (T / F ) for each statement given below ( Q1 to Q5) Q. No. 1 2 3 4 5 TRUE/ FALSE TRUE TRUE FALSE TRUE FALSE STATEMENT Book keeping is the art of collecting, recording, classifying and summarizing the business transactions in a systematic manner. Trail balance provides balances of all ledger accounts in order to avoid the necessity of going through the pages of the ledger to find it out. The cash receipt journal records all payments of cash. A general ledger is the main ledger of the business from which the trial balance is prepared. Drawing is the money or moneys worth invested by the owner or the proprietor of the business. (5 x1 Mark = 5 Marks)

Fill in the blank (Q6 to Q10)

(5x 1Mark = 5 Marks)

6. Trial balance is a list of all the ledger account balances, as at a particular date. 7. Any amount or goods taken by the owner for his personal use mean Drawings 8. Journal is the book of original entry because transaction is first written in this form. 9. Subsidiary ledger is a separate detailed ledger containing a group of accounts of a similar nature which have been removed from the general ledger and replaced by a control account. 10. The main objectives of preparing financial statements are to find Financial Performance of business at regular periodic intervals.

Multiple choice questions (Q11 to Q15)

(5x 1 Marks = 5 Marks)

11. What are the examples of selling and distribution expenses from the following:

A. Advertising B. Salaries to sales man C. Delivery expenses D. All the above 12. When the goods unsold and remains in hands of the business at the beginning of the Period is known as___________ ? A. Closing stock B. Opening stock C. Balancing stock D. Stock turnover E. 13. Mr Ahmed sold goods to Mr Ali for RO.3000 on credit basis. Here Mr. Ahmed sells his goods without receiving money but he can claim in future. Therefore Mr. Ahmed is a A. Debtor B. Creditor C. Holder D. Cashier 14. The main purpose of Accounting is to provide the information about the business to those interested parties, identify from the following who all are the interested parties? A. Police, customs B. Owners, employees C. Banks and Financial Institutions 15. D. B & C The trial balance is a tool for verifying the correctness of ___________________ amounts A. Asset & liability B. Journal & Ledger C. Debit & credit D. Cash & bank

SECTION B: (Short answer type)

1

Instructions: Answer ANY FIVE questions from this section. Q1. What do you mean by Accounting? Explain its branches?

(5 x 4 marks= 20 Marks)

Accounting is the process of collecting, recording, classifying, summarizing the business transactions and presentation and interpretation of financial reports to meet the information requirements of the various interested parties in the operation of a business. In other words, accounting is the language of business and also communicating the information about business.
Branches of Accounting

Accounting is classified into three branches they are: 1. Financial Accounting The main purpose of the financial accounting is to ascertain profit and loss and the financial position of the business for specific period. In other words financial accounting is concerned with preparation of financial statements. Cost Accounting The main purpose of the cost accounting is to ascertain cost relating to various operations of a concern. It helps to control the cost of production / operations. Management Accounting The main purpose of management accounting is to provide the significant information to the management for enabling effective planning, controlling, evaluating the performance and decision making

2.

3.

Q2. Write the difference between Debit note and Credit note?
Debit Note

While returning the goods to the suppliers a letter is sent to them for their information and stating therein that we have debited your account by this amount on account of goods being returned herewith for the reasons stated. Generally such "information letters' are printed with counterfoil. Debit notes are sent to the parties concerned the counterfoils providing the base for writing up the purchases returns book.

Credit Note

When a debit note is received along with the goods returned from the customer, it is a claim on us. If claim is accepted then Credit Note, usually printed in red ink, with full details is sent to the customer signifying our acceptance of the goods and customer's account being given the required credit. Counterfoils provide the base for writing up the Sales Returns Journal.

Q3. Prepare the Trail Balance from the following information:

Ali Trading Date Particulars 2009 Jan 11 Sales Badar Account Folio Amount Date Particulars 2009 SJ 2,200 Jan 14 Sales Returns 21 Cash at Bank & Discount Expense 31 Balance c/d 2,200 700 Discount Revenue Account Folio Amount Date Particulars 2009 100 Jan 31 Accounts Payable 100 Feb 1 Balance b/d Purchases Account Folio Amount Date Particulars 2009 CPJ 550 Jan 16 Drawing PJ 3,960 31 Balance c/d 4,510 4,290 Furniture Account Folio Amount Date Particulars 2009 CPJ 5,500 Jan 31 Balance c/d GJ 1,100 6,600 6,600 Folio SRJ CRJ L1 Amount 550 950 700 2,200

Feb

1 Balance b/d

Date Particulars 2009 Jan 31 Balance c/d

Folio CPJ

L2 Amount 100 100 100 L3 Amount 220 4,290 4,510

Date Particulars 2009 Jan 31 Cash at Bank Accounts Payable Feb 1 Balance b/d

Folio GJ

Date Particulars 2009 Jan 4 Cash at Bank 8 Supplies Ltd Feb 1 Balance b/d

Folio

L4 Amount 6,600 6,600

Date Particulars 2009 Jan 31 Balance c/d

Folio

David Account Amount Date Particulars 2009 11490 Jan 18 Purchases 11490 Feb 1 Balance b/d

Folio PJ

L5 Amount 11490 11490 11490

Answer:

ALI TRADING Trail Balance as at 31 January 2009

Account No:. L1 L2 L3 L4 L5 Badar Account

Account

Dr RO 700

Cr RO

Discount Revenue Account Purchase Account Furniture Account David Account 4290 6600

100

11490

11590

11590

Q4.

You are required to complete the gaps in the following table: Assets RO. a) b) c) d) 76,000 43,600 39,200 = = 35,000 = = = 5,000 6300 Liabilities + Capital (Owners Equity) RO. RO. 3,600 + 31400 50000 + + 38600 + 32,900 26,000

Answer:

Q5. Find Gross Profit from the following information. R.O Sales Purchases Sales Returns Purchases Returns Carriage Inwards Carriage Outwards Closing inventory Opening inventory 200,000 50,000 10,000 5,000 2,000 1,000 10,000 5,000

Ans:

Gross profit = 147000

Q6. Enter the following monthly transactions in the Cash Receipts Journal of Sultan Traders. 2010- Jan 5 10 20 23 30

Cash sales RO.2,980 Received from Sameer for rent RO.350 Received RO.790 from Jasmin and allowed RO.10 discount Cash sales RO.810 Received RO.220 for commission

ANS: 5150

SECTION C: (Long answer type)

Instructions: Answer ANY ONE question from this section. Q1. 2011 OCT 1 6 7 8 15 22 29 (1x15 marks) From the following information of Ahmed prepare the Cash Payments Journal. Purchased goods from Anwar for cash RO.650 Paid salary RO.600, cheque No. 202. Cash purchases of RO.465 ,cheque No. 203. Paid Mizna RO.198, and received discount RO.12 , cheque No. 204. Paid wages RO.400, cheque No. 205. Bought office furniture RO.750 , cheque No. 206. Paid wages RO.200, cheque No. 207.

ANS:

3263

Q2. Using the following information from the business of Akbar Traders: Prepare the petty cash book. 2010 Jun 1 2 3 5 6 Issued cheque No. 2475 for RO.200 to establish the petty cash fund. Paid for advertising RO.33, voucher No. 1. Paid for postage stamps RO.18, voucher No. 2. Bought postage stamps RO.12, voucher No. 3. Paid for carriage RO.11, voucher No. 4. Paid for advertising RO.22, voucher No. 5. Bought stationery for RO.22, voucher No. 6. Paid for cleaning RO.11, voucher No. 7. Bought tea RO.22, voucher No. 8. Paid for carriage RO.11, voucher No. 9.

ANS

Bal 140