Accountancy: Numerical Practice and Group C Question Bank

Step 1 — Start with the cash book balance: Rs. 84,000. Step 2 — Add the items that make the bank's record higher than the trader's: cheques issued but not presented (Rs. 22,000), interest collected by the bank (Rs. 8,000), direct deposit by a customer (Rs. 12,000). Step 3 — Less the items that make the bank's record lower: cheques deposited but not collected (Rs. 14,000), bank charges (Rs. 1,200), cheque dishonoured (Rs. 6,000).

Answer. Balance as per passbook Rs. 1,04,800.

Step 1 — Items appearing only in the passbook adjust the cash book: the extra Rs. 1,000 of insurance paid, the bank charges, the interest on overdraft, the customer's direct deposit and the dishonoured cheque. Step 2 — Items that are timing differences stay in the reconciliation: cheques issued but not presented and cheques deposited but not collected.

Adjusted cash book (bank column)

Step 3 — Adjusted balance = 49{,}500 - 6{,}500 = Rs.\ 43{,}000. Step 4 — Reconcile to the passbook.

Bank reconciliation statement as on 31 Ashad

Answer. Adjusted cash book Rs. 43,000; balance as per passbook Rs. 52,000.

Step 1 — (i) Two expense accounts, both amounts equal: Salary A/c Dr. 20,000; To House Rent A/c 20,000. Two-sided — the trial balance agreed. Step 2 — (ii) The sales book overcast means the credit side is too high: Sales A/c Dr. 5,000; To Suspense A/c 5,000. One-sided — the suspense account was credited with the difference. Step 3 — (iii) An error of principle: Machinery A/c Dr. 40,000; To Purchases A/c 40,000. Two-sided — the trial balance agreed, but profit is understated by Rs. 40,000 and machinery is understated. Step 4 — (iv) Bina's account was debited Rs. 700 instead of Rs. 7,000, short by Rs. 6,300: Bina A/c Dr. 6,300; To Suspense A/c 6,300. One-sided. Step 5 — (v) An error of principle: Machinery A/c Dr. 3,000; To Wages A/c 3,000. Two-sided.

Suspense account

Answer. The debit column of the trial balance was short by Rs. 11,300, carried in the credit of the suspense account and now cleared by the two one-sided corrections. The three two-sided errors (i), (iii) and (v) did not affect the trial balance at all.

Step 1 — Cost of goods sold = 60{,}000 + 2{,}40{,}000 + 12{,}000 + 36{,}000 - 70{,}000 = Rs.\ 2{,}78{,}000; gross profit = 3{,}50{,}000 - 2{,}78{,}000 = Rs.\ 72{,}000.

Trading account for the year ended 31 Ashad 2082

Step 2 — Salary becomes 30{,}000 + 4{,}000 = Rs.\ 34{,}000; rent becomes 20{,}000 - 2{,}000 = Rs.\ 18{,}000; depreciation = 10\% \times 80{,}000 = Rs.\ 8{,}000.

Profit and loss account for the year ended 31 Ashad 2082

Step 3 — Capital = 1{,}50{,}000 + 42{,}000 = Rs.\ 1{,}92{,}000; furniture = 80{,}000 - 8{,}000 = Rs.\ 72{,}000.

Balance sheet as on 31 Ashad 2082

Answer. Gross profit Rs. 72,000; net profit Rs. 42,000; balance sheet total Rs. 2,46,000.

Step 1 — Cost of goods sold = 40{,}000 + 1{,}60{,}000 + 20{,}000 - 50{,}000 = Rs.\ 1{,}70{,}000; gross profit = 2{,}30{,}000 - 1{,}70{,}000 = Rs.\ 60{,}000. Step 2 — Debtors after bad debts = 50{,}000 - 2{,}000 = Rs.\ 48{,}000; provision = 5\% \times 48{,}000 = Rs.\ 2{,}400; depreciation = 10\% \times 60{,}000 = Rs.\ 6{,}000.

Trading account for the year ended 31 Chaitra 2082

Profit and loss account for the year ended 31 Chaitra 2082

Balance sheet as on 31 Chaitra 2082

Answer. Gross profit Rs. 60,000; net profit Rs. 33,600; balance sheet total Rs. 1,83,600.

Step 1 — The release is money received: debit Rs. 6,00,000. Step 2 — Office materials Rs. 45,000 and the advance Rs. 70,000 are payments: credits. Step 3 — On clearance, only the excess of Rs. 82,000 − Rs. 70,000 = Rs. 12,000 is a fresh payment; the rest clears the advance. Step 4 — Salary: only the net Rs. 2,40,000 − 30,000 − 5,000 = Rs. 2,05,000 leaves the bank. Step 5 — The deductions deposited, Rs. 35,000, also leave the bank.

Answer. Total receipts Rs. 6,00,000; total payments Rs. 3,67,000; closing balance Rs. 2,33,000 (debit), subject to reconciliation with the passbook. Note that the computer head 31111 finally carries Rs. 82,000 of expenditure, while only Rs. 12,000 of it was paid after the advance.

Step 1 — Total appropriation = 5{,}00{,}000 + 60{,}000 + 25{,}000 + 90{,}000 + 45{,}000 = Rs.\ 7{,}20{,}000. Step 2 — Total expenditure up to Poush = 2{,}10{,}000 + 9{,}000 + 12{,}000 + 34{,}000 + 13{,}000 = Rs.\ 2{,}78{,}000. Step 3 — Total expenditure of Poush = 35{,}000 + 1{,}500 + 2{,}000 + 8{,}000 + 2{,}500 = Rs.\ 49{,}000. Step 4 — Available balance = 7{,}20{,}000 - 2{,}78{,}000 - 6{,}000 = Rs.\ 4{,}36{,}000.

Answer. Appropriation Rs. 7,20,000; expenditure to date Rs. 2,78,000; Poush expenditure Rs. 49,000; uncleared advance Rs. 6,000; available balance Rs. 4,36,000.

Step 1 — (i) 31111 Machinery and equipment (computer) A/c Dr. 70,000; To DTCO A/c 70,000. (Being a payment order issued for the purchase of a computer.) Step 2 — (ii) Furniture advance A/c Dr. 90,000; To DTCO A/c 90,000. (Being an advance issued for the purchase of furniture.) Step 3 — (iii) 31121 Furniture and fixtures A/c Dr. 1,05,000; To Furniture advance A/c 90,000; To DTCO A/c 15,000. (Being the furniture advance cleared on a bill of Rs. 1,05,000, the excess of Rs. 15,000 being payable.) Step 4 — (iv) Provident fund payable A/c Dr. 25,000; Income tax payable A/c Dr. 3,000; To Bank A/c 28,000. (Being the amount deducted from salary deposited into the concerned office.) Answer. The four vouchers above. Note that (ii) is not an expenditure but a recoverable advance, and that the furniture head finally carries Rs. 1,05,000.

Step 1 — Retention = 5\% \times 6{,}00{,}000 = Rs.\ 30{,}000; net paid = Rs.\ 5{,}70{,}000. Step 2 — (a) Road construction expenditure A/c Dr. 6,00,000; To Contractors' retention A/c 30,000; To Bank / DTCO A/c 5,70,000. (Being the running bill passed and retention of 5 per cent withheld.) Step 3 — (b) Contractors' retention A/c Dr. 30,000; To Bank A/c 30,000. (Being the retention released on the expiry of the defect liability period.) Step 4 — (c) Contractors' retention A/c Dr. 30,000; To Repair and maintenance expenditure A/c 18,000; To Miscellaneous revenue A/c 12,000. (Being the retention adjusted against the cost of remedying the defect and the balance forfeited to government revenue.) Answer. Retention Rs. 30,000 in each case; on forfeiture Rs. 18,000 is set against the repair expenditure and Rs. 12,000 becomes revenue. Until it is released or forfeited, the retention is a liability, not revenue.

Step 1 — Total collected = 3{,}60{,}000 + 2{,}40{,}000 + 1{,}20{,}000 + 1{,}80{,}000 = Rs.\ 9{,}00{,}000. Step 2 — Total undeposited = 40{,}000 + 20{,}000 = Rs.\ 60{,}000. Step 3 — Deposited in the period = 9{,}00{,}000 - 60{,}000 = Rs.\ 8{,}40{,}000.

Check: 9{,}00{,}000 = 8{,}40{,}000 + 60{,}000. ✔ Answer. Collected Rs. 9,00,000; deposited Rs. 8,40,000; Rs. 60,000 to be deposited on the first working day of the next month.

Step 1 — Producer: 13\% \times 3{,}00{,}000 = 39{,}000. Step 2 — Wholesaler: output 13\% \times 3{,}60{,}000 = 46{,}800; less input 39,000 → 7,800. Step 3 — Retailer: output 13\% \times 4{,}00{,}000 = 52{,}000; less input 46,800 → 5,200. Step 4 — Verification: 39{,}000 + 7{,}800 + 5{,}200 = 52{,}000 = 13\% \times 4{,}00{,}000. ✔ Answer. Producer Rs. 39,000; wholesaler Rs. 7,800; retailer Rs. 5,200; total Rs. 52,000, borne entirely by the final consumer.

Step 1 — Total received = 60 + 30 = 90; total issued = 15 + 20 = 35; balance = 55. Step 2 — Closing stock = 55 \times 2{,}800 = Rs.\ 1{,}54{,}000. Answer. Closing balance 55 chairs, valued at Rs. 1,54,000. The bin card on the shelf must show exactly the same three numbers.

1. Definition (1). A statement prepared on a date to explain and reconcile the difference between the bank column of the cash book and the passbook. Need (3). To check the accuracy of both records and trace errors; to find the true bank balance; to detect dishonoured cheques, unrecorded charges and direct deposits; to prepare the balance sheet; to prevent fraud; to satisfy the auditor and the bank. Causes (2). Timing — cheques issued but not presented, cheques deposited but not collected. Bank-only entries — bank charges, interest, dividend collected, direct deposits, standing instructions, dishonoured cheques. Errors in either book. Format (2). Start with the cash book balance; add cheques issued but not presented, interest and dividends collected, direct deposits and wrong credits by the bank; less cheques deposited but not collected, bank charges and interest on overdraft, dishonoured cheques, standing instructions and wrong debits; arrive at the passbook balance. Show the table.

2. Definition (1). A mistake in recording, posting, casting, carrying forward or summarising a transaction, or in applying an accounting principle. Types (4). Errors of principle (capital expenditure treated as revenue and the reverse); errors of omission (complete and partial); errors of commission (wrong amount, wrong account, wrong side, wrong casting, wrong balance carried forward); compensating errors. Explain each with an example. Detection (3). The trial balance detects only one-sided errors — casting and balancing errors, posting to the wrong side, a wrong amount posted in one account, partial omission. It cannot detect two-sided errors — errors of principle, complete omission, compensating errors, the wrong account of the same class and a transaction entered twice in both accounts. Conclude that the trial balance proves arithmetical accuracy only.

3. Definition (1). The statements prepared at the end of the period from the trial balance after adjustments, to show the profit or loss and the financial position. Steps (3). Complete and agree the trial balance; bring in the closing entries; prepare the trading account and find the gross profit; prepare the profit and loss account and find the net profit; add the net profit to capital and deduct drawings; prepare the balance sheet; check that the two sides agree. Adjustments (4). Explain any five out of: closing stock, outstanding expense, prepaid expense, accrued income, income received in advance, depreciation, interest on capital, interest on drawings, goods taken by the proprietor, provision for doubtful debts, manager's commission — stating in each case the effect in the trading or profit and loss account and the effect in the balance sheet. Emphasise that every adjustment has two effects, and that a missing second effect is the commonest reason for a balance sheet not tallying.

4. Meaning (2). The bank cash book, म.ले.प.फा.नं. २०९, is the operating level office's combined record of its bank account, showing all money received and paid with a running balance. Columns (2). Date; voucher number; particulars; debit (money received); credit (money paid); balance. Debit side (2). Budget release received, revenue deposited, retention and deductions received, refund of an unspent advance, amount transferred in. Credit side (2). Expenditure paid, advances paid, retention and deductions paid over or refunded, amounts transferred out, and the closing balance carried down. Add the rules: enter in date order with the voucher number; carry a running balance; total both sides; reconcile with the passbook every month and send a copy with the statement of expenditure.