Madras University Question Paper,MWP, FINANCIAL ACCOUNTING,2011 Question Paper

Madras University Question Paper
Subject :FINANCIAL ACCOUNTING
Subject Code :MWP
MAY 2011 U/ID 1380/MWP
Time : Three hours Maximum : 100 marks
SECTION A — (10 × 3 = 30 marks)
Answer ALL questions.
All questions carry equal marks.
1. What are the subsidiary book system?
2. What do you mean by ‘‘loss of profit insurance’’?
3. What do you understand by straight line method?
4. What are the causes for depreciation?
5. Define ‘‘Promissory Note’’.
6. Differentiate between retiring a bill and renewal of a bill.
7. What is ‘Goods in transit’?
8. What is ‘Minimum Rent’?
9. How is the amount due to the outgoing partner settled?
10. Mention any three factors which lead to creation of goodwill.
SECTION B — (5 × 6 = 30 marks)
Answer any FIVE questions.
All questions carry equal marks.
11. From the following particulars prepare a bank reconciliation
statement.
 Rs.
(a) Bank O/D balance as per pass book 9,300
(b) Cheques sent to bank not yet collected 850
(c) Cheques issued but not enchased 580
(d) Interest collected by the bank 250
(e) Bank charges not entered in cash book 10
12. Define inventory. What are the objectives of inventory
valuation?
13. On 1st April 2006, a firm purchases machinery worth
Rs. 1,50,000. On 1st October 2008 it buys additional machinery
worth Rs. 30,000 and spends Rs. 3,000 on its erection. The
accounts are closed on 31st march. Annual depreciation 10%.
Show that machinery account for 4 year under straight line
method.
14. X Sold goods to Y for Rs. 5000 Y accepted a bill for Rs. 5,000
drawn by X. On the due date Y approached X and requested him
to cancel the original bill and to draw a new bill for Rs. 5,100
(including interest) which is agreed by X. On the due date, the
second bill was honoured.
 Write the journal entries in the book of X and Y.
 15. Anand, Banu and Chandar are sharing the profits in the ratio of
3:2:1 respectively. On 31st Dec. 2006 Balance Sheet of the firm
stood as follows :
Liabilities Rs. Assets Rs.
Sundry creditors 13,590 Cash 5,900
Capital : Debtors 8,000
Anand 15,000 Stock 11,690
Babu 10,000 Buildings 23,000
Chandar 10,000
 48,590 48,590
4 U/ID 1380/MWP
 Babu retired on the above mentioned date :
 (a) Building be appreciated by Rs. 7,000
 (b) Provision for bad debts be made at 5% on debtors.
 (c) Goodwill a/c Rs. 9,000 of the firm created.
 (d) Rs. 5,000 be paid to Babu immediately and the balance
may be treated as loan.
 Give necessary ledger a/c and show the New Balance
Sheet.
 16. Tata limited leases a colliery on 2007 at a minimum rent of
Rs. 20,000 merging into a royally of Rs. 1.50 per ton with power
to recoup short workings over the first three years of the lease.
The output of the colliery for the four years was :
 2007 – 9,000 tons, 2008 – 1,200 tons
 2009 – 16,000 tons and 2010 – 20,000 tons
 Pass journal entries in the books of Tata limited for the first
year four years.
17. ‘B’ Ltd issued 1,00,000 shares of Rs. 10 each. The amount
payable as follows :
 On application Rs. 2; on allotment Rs. 3 and on 1st final call
Rs. 5.
 The public applied for 90,000 shares and were allotted. All the
amount were received except the first and final call on 2500
shares. The directors forfeited the shares on which call money
was not paid and reissued them at Rs. 8 per share as fully paid.
 Give necessary journal entries.
 SECTION C — (2 × 20 = 40 marks)
Answer BOTH questions.
All questions carry equal marks.
18. (a) The Trial balance of Chandran as on 31st March 2008
revealed the following balances :
Debit balances Rs. Credit balances Rs.
Machinery 8,000 Capital 1,00,000
Purchases 66,725 Sales 1,26,000
Opening stock 30,000 Discount received 800
Discount allowed 350 Sundry creditors 25,000
Bank charges 75
Sundry debtors 45,000
Salaries 6,800
Wages 10,000
Freight inwards 750
Freight outwards 1,200
Rent and taxes 2,000
Advertisement 2,000
Cash at bank 6,900
 2,51,800 2,51,800
7 U/ID 1380/MWP
 Adjustments :
 (i) Closing stock on 31st March 2008 Rs. 35,000
 (ii) Outstanding salaries Rs. 400
 (iii) Write off 10% depreciation on machinery.
 (iv) Create a provision of 5% on debtors for doubtful
debts.
 Prepare the Trading, P & L account and the Balance
Sheets.
 Or
 (b) A company has acquired a lease of a Cinima theatre
building for a term. Of 5 years by payment of Rs. 4,00,000.
It is proposed to depreciate the lease by the annuity
method, charging 5% interest p.a. Show ledger account of
the asset during the period of the lease. Reference to the
annuity table shows that the amount for Re. 1 for 5 years
at 5% is Re. 0.230975.
 19. (a) The following purchases were made by a business house
having three departments.
 Department X 1000 units
 Department Y 2000 units at a total cost of Rs. 1,00,000
 Department Z 2400 units
 Stock on January 1, were :
 Department X 120 units
 Department Y 80 units
 Department Z 152 units
 The sales were :
 Department X 1020 units at Rs. 20 each.
 Department Y 1920 units at Rs. 22.50 each.
 Department Z 2496 units at Rs. 25 each.
 The rate of gross profit is the same in each case prepare
the departmental trading accounts.
 Or
 (b) X, Y and Z were partners carrying on business in
partnership showing profits and losses in the ratio of 3:2:1
respectively. On 31st March 2008 the balance sheet of the
firm stood as follows :
10 U/ID 1380/MWP
Liabilities Rs. Assets Rs.
Creditors 14,000 Cash 5,900
Capital A/c Debtors 8,000
X 15,000 Stock 12,100
Y 10,000 Buildings 23,000
Z 10,000
 49,000 49,000
 Y retired on the above mentioned date on the following
terms :
 (i) Buildings be appreciated by Rs. 7000
 (ii) Provision for bad debts be made @ 5% on debtors.
 (iii) Goodwill of the firm is valued a Rs. 9,000
 (iv) Rs. 5000 be paid to ‘Y’ immediately and balance due
to him be treated as loan.
——————————

MWP,Madras University Question Paper,2011 Question Paper,FINANCIAL ACCOUNTING

Madras University Question Paper
Subject :FINANCIAL ACCOUNTING
Subject Code :MWP
MAY 2011 U/ID 1380/MWP
Time : Three hours Maximum : 100 marks
SECTION A — (10 × 3 = 30 marks)
Answer ALL questions.
All questions carry equal marks.
1. What are the subsidiary book system?
2. What do you mean by ‘‘loss of profit insurance’’?
3. What do you understand by straight line method?
4. What are the causes for depreciation?
5. Define ‘‘Promissory Note’’.
6. Differentiate between retiring a bill and renewal of a bill.
7. What is ‘Goods in transit’?
8. What is ‘Minimum Rent’?
 9. How is the amount due to the outgoing partner settled?
10. Mention any three factors which lead to creation of goodwill.
SECTION B — (5 × 6 = 30 marks)
Answer any FIVE questions.
All questions carry equal marks.
11. From the following particulars prepare a bank reconciliation
statement.
 Rs.
(a) Bank O/D balance as per pass book 9,300
(b) Cheques sent to bank not yet collected 850
(c) Cheques issued but not enchased 580
(d) Interest collected by the bank 250
(e) Bank charges not entered in cash book 10
13. On 1st April 2006, a firm purchases machinery worth
Rs. 1,50,000. On 1st October 2008 it buys additional machinery
worth Rs. 30,000 and spends Rs. 3,000 on its erection. The
accounts are closed on 31st march. Annual depreciation 10%.
Show that machinery account for 4 year under straight line
method.
14. X Sold goods to Y for Rs. 5000 Y accepted a bill for Rs. 5,000
drawn by X. On the due date Y approached X and requested him
to cancel the original bill and to draw a new bill for Rs. 5,100
(including interest) which is agreed by X. On the due date, the
second bill was honoured.
 Write the journal entries in the book of X and Y.
 15. Anand, Banu and Chandar are sharing the profits in the ratio of
3:2:1 respectively. On 31st Dec. 2006 Balance Sheet of the firm
stood as follows :
Liabilities Rs. Assets Rs.
Sundry creditors 13,590 Cash 5,900
Capital : Debtors 8,000
Anand 15,000 Stock 11,690
Babu 10,000 Buildings 23,000
Chandar 10,000
 48,590 48,590
4 U/ID 1380/MWP
 Babu retired on the above mentioned date :
 (a) Building be appreciated by Rs. 7,000
 (b) Provision for bad debts be made at 5% on debtors.
 (c) Goodwill a/c Rs. 9,000 of the firm created.
 (d) Rs. 5,000 be paid to Babu immediately and the balance
may be treated as loan.
 Give necessary ledger a/c and show the New Balance
Sheet.
16. Tata limited leases a colliery on 2007 at a minimum rent of
Rs. 20,000 merging into a royally of Rs. 1.50 per ton with power
to recoup short workings over the first three years of the lease.
The output of the colliery for the four years was :
 2007 – 9,000 tons, 2008 – 1,200 tons
 2009 – 16,000 tons and 2010 – 20,000 tons
 Pass journal entries in the books of Tata limited for the first
year four years.
17. ‘B’ Ltd issued 1,00,000 shares of Rs. 10 each. The amount
payable as follows :
 On application Rs. 2; on allotment Rs. 3 and on 1st final call
Rs. 5.
 The public applied for 90,000 shares and were allotted. All the
amount were received except the first and final call on 2500
shares. The directors forfeited the shares on which call money
was not paid and reissued them at Rs. 8 per share as fully paid.
 Give necessary journal entries.
 SECTION C — (2 × 20 = 40 marks)
Answer BOTH questions.
All questions carry equal marks.
18. (a) The Trial balance of Chandran as on 31st March 2008
revealed the following balances :
Debit balances Rs. Credit balances Rs.
Machinery 8,000 Capital 1,00,000
Purchases 66,725 Sales 1,26,000
Opening stock 30,000 Discount received 800
Discount allowed 350 Sundry creditors 25,000
Bank charges 75
Sundry debtors 45,000
Salaries 6,800
Wages 10,000
Freight inwards 750
Freight outwards 1,200
Rent and taxes 2,000
Advertisement 2,000
Cash at bank 6,900
 2,51,800 2,51,800
7 U/ID 1380/MWP
 Adjustments :
 (i) Closing stock on 31st March 2008 Rs. 35,000
 (ii) Outstanding salaries Rs. 400
 (iii) Write off 10% depreciation on machinery.
 (iv) Create a provision of 5% on debtors for doubtful
debts.
 Prepare the Trading, P & L account and the Balance
Sheets.
Or
 (b) A company has acquired a lease of a Cinima theatre
building for a term. Of 5 years by payment of Rs. 4,00,000.
It is proposed to depreciate the lease by the annuity
method, charging 5% interest p.a. Show ledger account of
the asset during the period of the lease. Reference to the
annuity table shows that the amount for Re. 1 for 5 years
at 5% is Re. 0.230975.
19. (a) The following purchases were made by a business house
having three departments.
 Department X 1000 units
 Department Y 2000 units at a total cost of Rs. 1,00,000
 Department Z 2400 units
 Stock on January 1, were :
 Department X 120 units
 Department Y 80 units
 Department Z 152 units
9 U/ID 1380/MWP
 The sales were :
 Department X 1020 units at Rs. 20 each.
 Department Y 1920 units at Rs. 22.50 each.
 Department Z 2496 units at Rs. 25 each.
 The rate of gross profit is the same in each case prepare
the departmental trading accounts.
Or
 (b) X, Y and Z were partners carrying on business in
partnership showing profits and losses in the ratio of 3:2:1
respectively. On 31st March 2008 the balance sheet of the
firm stood as follows :
10 U/ID 1380/MWP
Liabilities Rs. Assets Rs.
Creditors 14,000 Cash 5,900
Capital A/c Debtors 8,000
X 15,000 Stock 12,100
Y 10,000 Buildings 23,000
Z 10,000
 49,000 49,000
 Y retired on the above mentioned date on the following
terms :
 (i) Buildings be appreciated by Rs. 7000
 (ii) Provision for bad debts be made @ 5% on debtors.
 (iii) Goodwill of the firm is valued a Rs. 9,000
 (iv) Rs. 5000 be paid to ‘Y’ immediately and balance due
to him be treated as loan.
——————————

MWP, Madras University Question Paper,2011 Question Paper,FINANCIAL ACCOUNTING

Madras University Question Paper
Subject :FINANCIAL ACCOUNTING
Subject Code :MWP
OCTOBER 2011 U/ID 1380/MWP
Time : Three hours Maximum : 100 marks
SECTION A — (10 × 3 = 30 marks)
Answer ALL questions.
All questions carry equal marks.
1. What are the objectives of Accounting?
2. Define a 'Cash book'.
3. What is Diminishing balance method of depreciation?
4. What are the causes for Depreciation?
5. What are the features of Bills of Exchange?
6. Write short notes on :
 (a) Trade bill
 (b) Accommodation of bill
 (c) Endorsement of bill.
7. What are dependent and independent branches?
8. List out three differences between hire purchase and instalment
system.
9. What is Revaluation Account?
10. What is meant by gaining ratio?
SECTION B — (5 × 6 = 30 marks)
Answer any FIVE questions.
All questions carry equal marks.
11. A fire occurred on 15th September 2010 in the godown of a
merchant from the following figures ascertain the claim to be
lodged.
Rs.
 Stock on 1st April 2010 25,300
 Purchases from 1st April 2010 to 15th September 2010 50,400
 Manufacturing expenses and wages 60,000
 Sales from 1st April 2010 to 15th September 2010 1,56,000
 Goods used for his personal use 2,500
 The rate of gross profit is 30% on cost
 the stock salvaged was valued at 3,600
12. What are the various reasons for the difference in Bank balance
as per cash book and balance as per pass book.
13. From the following particulars prepare sales ledger adjustment
account.
 Rs.
 Balance of debtors on 1.4.2009 55,842
 Credit sales 98,602
 Cash received from debtors 88,753
 Discount allowed to debtors 480
 Bills receivable received 7,120
 Sales return 5,430
 Bills receivable dishonoured 1,120
 Bad debts 3,890
 Sundry charges debited to customers 370
 Transfer to creditors ledger 100
14. Seafood export concern which a head office in Naga also has a
branch in Tuticorin. The goods are invoiced to the branch at a
profit of 20% on invoice price. All expenses of the branch are paid
by the head office. From the following particulars prepare
branch account in the head office books :
 Rs.
 Opening balances :
 Space of invoice price 11,000
 Debtors 1,700
 Petty to cash 100
 Goods sent to branch at invoice price 20,000
 Expenses net by head office :
 Rent 600
 Wages 200
 Salary and other expenses 900
5 U/ID 1380/MWP
 Remittance made to H.O :
 Cash sales 2,650
 Cash collected from debtors 21,000
 Goods returned by branch at invoice price 400
 Balance at the end :
 Stock at invoice price 13,000
 Debtors 2,000
 Pet
15. On 1.1.2006 Raghu purchased a machine from Ganesh on Hire
purchase basis. The particulars are as follows :
 (a) Cash price Rs. 10,000
 (b) Rs. 4,000 to be paid on signing the contract
 (c) Balance in three instalments of Rs. 2,000 plus interest
 (d) Interest charged on outstanding balance at 5%
 (e) Depreciation at 10% p.a on Diminishing Balance method.
 Prepare Ganesan's Ac in the books of Mr. Raghu.
16. On 1.4.2006 machinery was purchased for Rs. 3,00,000 on
31.3.2010 the machinery was sold for Rs. 1,50,000. Rate of
depreciation is 10%.
 Prepare machinery account under
 (a) Fixed instalment method
 (b) Diminishing balance method.
17. Ashok Ltd., issued 1000, 12% Debentures of Rs. 1,000 cash of a
discount of 10 percent payable as follows :
 On Application Rs. 25
 On Allotment Rs. 45
 On first and final call Rs. 20
 Pass journal entries in the books of the company on the
assumption that all instalments were duly received.
SECTION C — (2 × 20 = 40 marks)
Answer BOTH questions.
All questions carry equal marks.
18. (a) From the following Trial Balance as on 31.3.2008 prepare
the Trading Profit and Loss account and Balance sheet for
the financial year you ending on that date :
Trial Balance
 Dr. Cr.
Rs. Rs.
Capital — 4,250
Drawings 710 —
Machinery 950 —
Stock 1.4.2007 1,460 —
Purchase, sales 10,362 11,906
Purchase returns – 291
8 U/ID 1380/MWP
 Dr. Cr.
Rs. Rs.
Return inward 210 ––
General expenses 440 —
Rent 120 —
Tax 200 —
Apprentice premium — 80
Bank over draft — 240
Bad debts 172 —
Sundry debtors, sundry creditors 4,200 2,000
Cash in hand 48 ––
Provision for Bad debtors — 105
 18,872 18,872
 Adjustments :
 (i) Write off depreciation of machinery at 10% p.a.
 (ii) Provision for Bad debts on debtors is to be increased
to 5%
 (iii) Rent outstanding is Rs. 40
 (iv) Tax paid on advance Rs. 80
 (v)Stock on 31.3.2008 Rs. 1,700
 Or
 (b) A company has acquired a lease of a Cinima theatre for a
term of 5 years by payment of Rs. 1,00,000. It is proposed
to depreciate the lease by the Annuity method, charging
5%. Interest p.a. show ledger account of the asset during
the period of the lease, Reference to the Annuity table
shows that the amount for Re. 1 for 5 years at 5%
Re. 0.230975. 10 U/ID 1380/MWP
19. (a) A firm has two departments A and B. A department
supplied its goods at selling price to B department. From
the following figures, prepare departmental Trading and
Profit and Loss account for the year 2010.
 A B
 Rs. Rs.
Opening stock (1.1.2010) 3,00,000 50,000
Purchases 20,00,000 15,000
Sales 22,00,000 4,50,000
Transfer to B department 3,00,000 —
Manufacturing expenses — 60,000
Selling expenses 20,000 6,000
Stock 31.12.2010 2,00,000 60,000
 Entire stock of 'B' department was supplied by 'A' department.
General expenses of the business as whole came to
Rs. 1,00,000
Or
 (b) Priya and Sadhana share profits in the ratios 3 : 1. Their
Balance sheet as on 31st March 2008 is as under :
Liabilities Rs. Assets Rs.
Creditor 18,750 Cash at Bank 11,250
General reserve 2,000 Bills receivable 1,500
Capital Stock 10,000
 Priya 15,000 Debtors 8,000
 Sadhana 8,000 Furniture 500
Building 12,500
 43,750 43,750
 On 1.4.2008 they admit Kala as a new partner of the
following arrangement :
 (i) Kala to bring Rs. 10,000 as capital for 1/5 share of
profit
 (ii) The new firm to have goodwill Rs. 10,000
 (iii) Stock and furniture to be reduced by 10% a reserve of
5% on debtors for doubtful to be created
 (iv) Building to be appreciated at 20%.
 Give the necessary ledger accounts and Balance
sheet.
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