BBA (Hons.) I (First) Semester Examination 2014-15

Course Code: BBH105 Paper ID: 050115

Fundamentals of Accounting

Time: 3 Hours Max. Marks: 70 Max Marks: 75

Note: Attempt six questions in all. Q. No. 1 is compulsory.

1. Answer any five of the following (limit your answer to 50 words). (4x5=20)

a) Goods lost in fire worth ` 10,000 and insurance company accepted the claim for ` 8,000 only. Pass the journal entry.

b) Define opening entries in journal.

c) Purchased goods worth ` 2,000 from Hari but wrongly recorded in sales book as credit sale. Pass rectifying entry.

d) Explain written down value method of depreciation.

e) Differentiate cash discount and trade discount.

f) What are compensating errors in trial balance?

g) How do you classify fixed and current assets in balance sheet?

h) Why bank reconciliation statement is prepared?

2. Define accounting principles. Discuss important generally accepted accounting principles practiced by accounting professionals. (10)

3. You are required to pass necessary journal entries for the following transactions: (10)

a) Started business with cash ` 5,00,000 furniture ` 50,000 and building ` 20,000.

b) Purchased an Air-conditioned for ` 20,000 fromXYZ ltd.

c) Purchased goods from Goyal sons for ` 30,000.

d) Sold goods for cash ` 2,000.

e) Goods lost in fire ` 3,000.

f) Cash deposited into bank ` 50,000.

g) Payment made to Goyal sons by cheque ` 29,500.

h) Payment made to XYZ ltd. ` 25,000.

i) Goods distributed as free sample worth ` 5,000.

j) Sold air-conditioned for ` 12,000.

4. Define bank reconciliation statement. Discuss the reasons for differences in cash balance in cash book and bank pass book. (10)

5. X ltd Purchased a machinery for ` 1,90,000 on 1st April 2010 and spent `10,000 on its installation. Another machinery was purchased on 30th sept 2011 for ` 50,000. Initially Company decided to follow WDV method of Depreciation @ 20% but from 1 st April 2012 company decided to change method of depreciation from WDV to SLM @15% of original cost with retrospective effect.

Prepare machinery and depreciation account from 1st April 2010 to 31st March 2014. (10)

6. Define final accounts. Explain important items in Profit & Loss Account and Balance Sheet with their treatment. (10)

7. Explain share capital of a company. Discuss the accounting treatment of issue, forfeiture and reissue of shares of a company. (10)

8. Pass necessary rectifying entries for the followings: (2x5=10)

a) Sold goods worth ` 20,000 but wrongly recorded this transaction in sales return book.

b) Purchased a machinery for ` 19,500 and spent ` 500 for wages on its installation and this wages account was debited as wages account.

c) Paid Salary to Mr Ravi Gupta ` 20,000 and debited to his personal account.

d) Paid personal LIC premium of owner’s family ` 30,000 was debited as insurance premium.

e) Purchased Goods worth ` 2,500 from Hari and Co. but recorded with the name Ravi and Co.