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2006 Bangalore University Management B.B.M. Fundamentals of Accounting Question paper

Course: B.B.M.   University/board: Bangalore University

I Semester B.B.M. Examination, December 2006
(Semester Scheme)
1.4: Fundamentals of Accounting

Time : 3 Hours Max. Marks : 90

Instructions : 1) Answers should be written in English.
2) Workings should be given wherever necessary.


Answer any 10 of the following sub-questions. Each question carries 2 marks. (2x10=20)

1. a) What do you mean by narration ?
b) What is a Ledger ?
c) Why Bank Reconciliation statement is prepared ?
d) Give the meaning of nominal account.
e) Who is a Creditor ?
f) What do you mean by GAAP ?
g) Mention two objectives of Trial Balance ?
h) What is a compensating error ?
i) Give the meaning of Deferred Revenue Expenditure.
j) What is the purpose of preparing Balance Sheet ?
k) How do you treat outstanding wages in Final Account ?
l) Who is an Insolvent ?


Answer any 5 questions. Each question carries 5 marks. (5x5=25)

2. Distinguish between Journal and Ledger.

3. Breifly explain the classification of accounts and their corresponding rules.

4. Is the following correctly prepared ? If not prepare it correctly.

Cash Account

Particulars Rs. Particulars Rs.

To Furniture (Cash purchased) 2,500 By Balance b/d 15,700
To Drawings 3,500 By Shyam Sundar (Sale of
goods on credit) 300
To Cash sales 13,700 By Salaries 13,200
To Depreciation 2,000 By Interest (received) 4,000
To Commission (received) 10,000 By Payment of commission 3,100
To Credit sales 10,000 By Discount allowed 200
To Balance c/d 6,400 By Bad Debts 200
By Stationery 400
By Bank (amount withdrawn
from bank for office use) 5,000

39,100 39,100

5. Journalise the following transactions.


Jan 1st Rajini started business with a capital of Rs. 50,000
2nd She purchased furniture for Rs. 5,000
3rd She bought goods on credit from Vinod for Rs. 8,000
14th She sold goods to Suresh for Rs. 5,000
15th She received cash from Suresh Rs. 3,000
18th She purchased goods for cash Rs. 12,000
25th She sold goods for cash Rs. 8,000
28th She paid rent Rs. 1,200
31st She apid Vinod Rs. 3,000 on account.

6. From the following, prepare a Bank Reconciliation Statement showing the balance as per cash book on 31st December 2005.

a) Out of cheque of Rs. 9,200 paid on December 29th Rs. 4,200 appear to have been credited in the pass book only on 2nd January 2006.

b) The cheque issued in December 2005 amounting in all to Rs. 15,000 of which Rs. 6,000 have been cashed in the same month.

c) The Banker wrongly credited a cheque for Rs. 1,200.

d) Rs. 900 interest on overdraft and Rs. 50 for bank charges debited in the pass book on 31st December.

e) Pass book shows a credit of Rs. 1,200 as interest on securities collected by the banker.

f) The Bank pass book showed an overdraft of Rs. 19,200.

7. Enter the following transactions in the simple petty cash book.


Jan 1st Received a cheque for Rs. 100 to open the book.
5th Bought postage stamps Rs. 5.
8th Paid for stationary Rs. 8.
10th Sent a Telegram Rs. 7.
12th Paid for cartage Rs. 5
14th Paid tiffin charges for customers Rs. 13.
20th Balance due to Bindu paid Rs. 6.
25th Paid auto charges of the salesman Rs. 7
28th Paid Coolie Rs. 9
29th Purchased paper clips Rs. 4
31st Paid electric charges Rs. 8

8. You are required to rectify these errors which were located before the preparation of the final accounts.

a) An amount of Rs. 37,500 posted to the cash book as against a cash sales of Rs. 3,75,000.

b) An amount of Rs. 5,000 spent towards wages for installation of a machine posted to wages account.

c) Rs. 10,000 received from Shankar posted Shyam's account.

d) Purchased goods from Arvind worth Rs. 10,000 has been completely omitted.

e) Sale to Shankar has been wrongly posted to purchase book for goods worth Rs. 28,000.

9. From the following balances, prepare a Trial Balance.

Particulars Rs. Particulars Rs.

Drawings 2,000 Sales 68,000
General expenses 4,740 Purchases 40,000
Buildings 20,000 Bank Overdraft 10,000
Stock 16,540 Capital ?
Wages 8,515
Debtors 6,280
Creditors 2,500
Bad Debts 550
Loan on Ravi 7,880


10. From the following Trial Balance of Chandrashekar, prepare Final Accounts for the year 31st March 2006.

Trial Balance as on 31st March 2006.
Debit Rs. Credit Rs.

Drawings 4,500 Capital 24,000
Purchases 20,000 Sales 30,500
Returns Inwards 1,500 Discounts 1,900
Stock (1-4-2005) 8,000 Sundry Creditors 10,000
Salaries 4,200 Bills Payable 2,500
Wages 1,200
Rent 350
Bad Debts 400
Discounts 700
Sundry Debtors 14,000
Cash in hand 260
Cash at Bank 5,940
Insurance 400
Trade expenses 300
Printing 150
Furniture 2,000
Machinery 5,000

68,900 68,900

Adjustments :
a) Closing stock Rs. 7000
b) Insurance prepaid rs. 60
c) Outstanding liabilities : Salaries Rs. 200, wages Rs. 200
d) Make provision for doubtful debts at 5% on debtors
e) Calculate interest on capital at 5% p.a.
f) Depreciate machinery at 5% and Furniture at 10%
g) Reserve for discount on creditors at 15%.

11. Mr. Ramlal keeps his books under single entry system.

Particulars 1-1-2005 31-12-2005
Rs. Rs.

Bank overdraft 10,000 12,000
Furniture 20,000 20,000
Land and Building 70,000 70,000
Investments --- 10,000
Sundry Debtors 20,000 30,000
Sundry Creditors 30,000 40,000
Stock 45,000 50,000
Motor Car (1-7-2005) --- 20,000
Cash 10,000 20,000
Plant & machinery 40,000 40,000

During the year he withdraw Rs. 10,000 for personal use. On 1-7-2005 he introduce further capital os Rs. 20,000 by selling his private house.

Adjustments :
a) Appreciate Land and Building by 20%

b) Debtors include Rs. 1,000 from a customer who is insolvent and is irrecoverable.

c) Maintain RDD at 5% on Debtors.

d) Depreciate Plant and Machinery at 10%, Furniture at 5%, and Motor car at 10%.

Prepare a statement showing profit or loss for the year 2005 and a revised statement of affairs as on that date.

12. Draw the two column cash book and record the following transactions. Also prepare the Bank account.


Jan 1st Commened business with cash Rs. 20,000
2nd Opened a current account and deposited Rs. 16,000
5th Received cheque for Rs. 15,000 for goods sold.
8th Issued cheque for Furniture purchased.
9th Purchased goods for Rs. 3,000 and paid by cheque.
10th Received a cheque for Rs. 4,900 in settlement of Rs. 5,000 for Ram
12th Paid into bank Rs. 5,000
15th Paid Rajan Rs. 2,250 in settlement of Rs. 500
18th Drew cheque for personal use Rs. 500
20th Paid wages in cash Rs. 600
22nd Drew for office use Rs. 2,500
25th Paid salary by cheque Rs. 1,500
30th Paid in excess of Rs. 1,000 to bank.

13. Enter the following transactions in the subsidiary books of Soundarya Saree Shop.


August 1st Purchased from Pathi Silk Kendra, 100 Silk Sarees at Rs. 250 each.
5th Purchased from NSR and company, 200 Kanchi Silk Sarees at Rs. 1,000 each
7th Sold to Kumar on account, 50 printed sarees at Rs. 300 each, 100 Kanchi Sarees at Rs. 1,000 each
8th Claimed for damages from Pathi Silk Kendra Rs. 500.
9th Returned damaged goods to NSR and Co., 5 kanchi Sarees
12th Purchased from Sudharshan Silks 150 Mysore Silk at Rs. 250 each, 100 Handloom sarees at Rs. 750 each, less trade discount at 10%.
15th Sold to Kala on account 20 printed sarees at Rs. 300 each, 25 Kanchi Sarees at Rs. 1,300 each, 20 Mysore Silk Saree at Rs. 300 each, less trade discount at 5%.
20th Sold to Kusum Sarees, 40 Handloom Sarees at Rs. 1,000 each
21st Kumar returned, 10 Printed Sarees and 20 Kanchi Sarees.
25th Returned to Sudharshan's Silk, 25 Mysore Silk
27th Returned from Kusum Sarees, 10 Handloom Sarees
30th Purchased from Nandi Silk, 400 Nandii brand sarees at Rs, 500 each.

14. Journalise the following transaction and open only personal accounts on the ledger.


July 1st Govind started his business with the following :
Cash Rs. 2,000
Goods Rs. 1,000
Furniture Rs. 500

5th Sold goods to Raghavan Rs. 500
Sold goods for cash Rs. 300

9th Received from Raghavan on account Rs. 300

12th Purchased goods from Mukundan Rs. 900

15th Paid Mukundan Rs. 500

20th Paid interest to Mukundan Rs. 10

31st Paid stationery charges Rs. 6
Paid salaries Rs. 25
Paid rent Rs. 16.


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