Question
Explain the major factors that you would take into consideration in allocation expenditure between capital and revenue.

Answer

SELF

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From the following Trail Balance of A.B. Chandra as on 31st December, 2019.
TRIAL BALANCE of A.B. Chandra As on 31.12.2019
ParticularsAmount (Dr.)ParticularsAmount (Cr.)
Cash in Hand2,000Discount Received750
Drawings2,800Capital40,000
Opening Stock (01/01/2018)4,000Purchases Returns1,250
Wages2,000Sales83,000
Cash at Bank3,500Creditors15,000
Insurance700Bank Loan10,000
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Buildings61,000
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1,50,0001,50,000

The closing stock was valued at 12,000.
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Prepare a Trading, Profit and Loss account of Mr. A. Awasthi for the year ending on 31st March, 2022 and a Balance Sheet as on 31st March, 2022.
31st March, 2022
ParticularsAmount (Dr.) (₹)Amount (Cr.) (₹)
Capital60,000
Drawings4,500
Cash at Bank4,200
Purchase66,000
Sales1,35,000
Purchase Returns3,000
Sales Returns6,000
Discount1,200
Carriage Outwards1,800
Salaries18,000
Trade expenses3,600
Opening stock15,000
Bad debts1,800
Rent4,500
Machinery1,08,000
Furniture15,000
Debtors15,000
Creditors30,000
Stationery7,500
Commission received900
Loan43,200
2,72,1002,72,100

Closing stock on 31st March, 2022 was valued at Rs. 78,000