Theory Base of Accounting — Account STD 11 Commerce — Question

“In case of a long term asset, repair and maintenance expenses are expected to rise in later years than in earlier year”. Which method is suitable for charging depreciation if the managernent does not want to increase burden on Profit & Loss Account on account of depreciation and repair.

Describe the events recorded in accounting systems and the importance of source documents in those systems?

On 31st March, 2019, the balance as per the Bank Statement was ₹ 10,000 debit. On the same date, outstanding cheques amounted to ₹ 30,000 and outstanding deposits amounted to ₹ 50,000. Also, there was a dishonoured cheque from a customer of ₹ 5,000 recorded in the Bank Statement but not in the Cash Book. On the basis of the above information, determine the balance as per the Cash Book.

Explain the meaning of the following term:
Business Transaction.

Prepare Journal from the transactions given below:

		₹
(a)	Cash paid for installation of machine	500
(b)	Goods given as charity	2,000
(c)	Interest charge on capital @ 7% p.a. when total capital were	70,000
(d)	Received ₹ 1,200 of a bad debts written-off last year.
(e)	Goods destroyed by fire	2,000
(f)	Rent outstanding	1,000
(g)	Interest on drawings	900
(h)	Sudhir Kumar who owed me ₹ 3,000 has failed to pay the amount. He pays me a compensation of 45 paise in a rupee.
(i)	Commission received in advance	7,000

Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Also prepare a Balance Sheet:

1. Started business with Cash ₹ 1,20,000.
2. Purchased a typewriter for Cash for ₹ 8,000 for office use.
3. Purchased goods for ₹ 50,000 for cash.
4. Purchased goods for ₹ 40,000 on credit.
5. Goods costing ₹ 60,000 sold for ₹ 80,000 on credit.
6. Paid for Rent ₹ 1,500 and for salaries ₹ 2,000.
7. Received ₹ 800 for Commission.
8. Withdrew for private use ₹ 5,000 in cash.

Determine, if the following are Assets, Liabilities, Capital, Revenue from Operations, Revenues, Expenses or none:
a. Machinery
b. Purchases
c. Stock
d. Creditors
e. Capital
f. Salary paid to a clerk
g. Sales
h. Furniture
i. Interest received and
j. Rent paid

Journalise the following transactions:
i. Goods destroyed by fire for Rs 4,500
ii. Paid Rs 1,500 in cash as wages on the installation of machinery
iii. Issue a cheque in favour of M/s. Parmatma Saran & Sons on accounts of purchase of goods Rs 7,500
iv. Goods sold costing Rs 6,000 of M/s. Kalu sons at an invoice price of 10% above cost less 5% Trade Discount.

You are to open the books of Rajesh Prabhu, Gurugram (Haryana) a trader, through the Journal to record the assets and liabilities and then post the transactions to the Ledger for the month of April, 2019.
Inter-state transactions are subject to levy of IGST @ 12% and Intra-state transactions are subject to levy of CGST and SGST @ 6% each. GST is not levied on transactions marked with (*).

Pass Journal entries in the books of Hari Shankar & Co. from the following:

2017		₹
April 1	Commenced business with cash	50,000
April 2	Purchased goods from Subhash	20,000
April 4	Sold goods to Ramnath	15,000
April 6	Ramnath returned defective goods	1,000
April 10	Received cash from Ramnath and	13,800
	Discount allowed	200
April 12	Gopal sold goods to us	10,000
April 14	Paid to Gopal in full settlement of his account after deducting 5% discount
April 15	Paid Rent	10,000
April 16	Paid Rent of Hari Shankar's residence	5,000
April 18	Purchased goods for cash from Govind for ₹ 6,000 at 20% trade discount
April 20	Purchased goods from Govind for ₹ 10,000 at 20% trade discount
April 24	Paid to Govind ₹ 7,850 in full settlement of his account
April 25	Paid to Subhash ₹ 4,750 discount received ₹ 250
April 30	Paid wages ₹ 400, Salaries ₹ 4,000, Advertisement expenses ₹ 800 and Trade expenses ₹ 1,000