Accounting Question and Answer
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CHAPTER-1: INTRODUCTION TO ACCOUNTING
1. What is the objective of financial statements?
Ans: The objective of financial statements is to provide information the financial position, performance and change
financial position of an entity that is useful to a wide range of users in making economic decision.
2. Mention the users of financial statements.Ans:Theusers of financial statement as per BFR framework are as follows:
!. "nvestors
#. $mployees
%. &enders
'. uppliers and others creditors
(. )ustomers
*. +overnments and their agencies
. -ublic.
3. Why it is easier to get financial information for internal user and harder for external user?
Ans: "t is easier to get financial information for internal user because the internal users can just go along to
accounts department and ask the staff there to prepare whatever accounting statements he she needs.
But it is harder to get financial information for e/ternal users because they can not get the internal accou
related information smoothly.
. !oint out the information needs of follo"ing users?
a0 tewardship functioning
b0 1anagement performance analysis
c0 2bility to pay debt
d0 2ssessing ta/ liability and determine ta/ policy
e0 $fficient allocation of resources
f0 )ontribution to local economy, using local supplier, environmental effect
Ans: The information needs of following users are pointed out:
tewardship functioning Managers# directors
1anagement performance analysis $hareholders
2bility to pay debt $u%%liers2ssessing ta/ liability and determine ta/ policy &'(
$fficient allocation of resources )overnment agencies
)ontribution to local economy, using local supplier, environmental effect !ublic
*. Mention financial re%orting frame"or+ in 'angladesh.
Ans: The financial reporting frameworks in Bangladesh are as under:
&egislation3 2ccounting concept3
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2ccounting standard3 2ccounting practice3 True and fare view fair representation.
,. What -ualitative characteristic are a%%ro%riate for each of the belo" cases?
a0 undue delay in financial reporting
b0 incomplete information or redundant information in the financial statement
c0 error free, neutral information presented in the financial statement , prudence and economic substance used
d0 information provided in the financial statements on a consistence basis
Ans:
a0 Relevance3
b0 4nderstandability3
c0 Reliability3
d0 )omparability.
. )ive */ exam%les of 0A! and 2/ for (?
Ans: xam%les of 0A! 4ca%ital ex%enditure5 are given belo":
!. "nvoice price of machine purchase
#. Freight charge of machine purchase
%. -urchase of building by a real estate company
'. Fees for inspection of the machine by engineer
(. Repair and maintenance of the machine with an enhance capacity
*. pare parts with enhance capacity. "mport duty charged on imported machine
5. 2dd additional !#51B ram for office computer
6. -urchase of property
!7. olicitor fees in connection with the purchase of property
!!. )ost of new machine
!#. )ustom duty charged on machinery
!%. The carriage cost of transporting the new machinery from the suppliers factory to the premises of the
purchasing it
xam%les for ( 4(evenue ex%enditure5 are given belo":
!. 8epreciation of the machine
#. Royalty e/penses
%. Repair maintenance of the machine within an e/isting capacity
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'. 8ividend
(. 2ny administrative and selling 9 distribution e/penses
*. &oss on sale of fi/ed assets
. -urchase of new computer after replacing old machine within e/isting capacity
5. ages of the machinery operator
6. 7dentifying 0A! and (
a0 purchase of an application software for the company
b0 purchase a second hand machine with reduced price
c0 wages for operating the newly purchased machine
d0 advertisement bill given for ( years at time
e0 gain on sale of fi/ed assets
Ans:
a0 )2-$;
b0 )2-$;
c0 R$
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&on'A$ ;erm 'A$ ;erm
Fi/ed assets =on>current asset
tock "nventory
8ebtor Receivable
)reditor -ayable
-rofit 9 loss account "ncome statement
12. $u%%ose< list %rice in an invoice of sales "as t+. *// 4A; inclusive< at standard rate5< trade discount =1/
cash discount = *> 42#1/< n#3/5< customer %aid the amount on 21 st day. 9etermine the invoice val
9etermine )! ratio &! ratio and Administrative cost to sale if 0)$ "as t+. 3// and Admin cost "as t+. 6/
Ans:
@ist %rice *//
@ess: A; =1/ >4 *//1*#11*5 ,*
3*
@ess: trade discount =1/ >
&et sales 381
@ess: 0)$ 3//
)ross %rofit 81
@ess: admin cost 6/
&et %rofit 11
)! ratio)!# &et sales 81#381 23.2>
&! ratio&!# &et sales11#381 2.61>
CHAPTER-3: RECORDING FINANCIAL TRANSATIONS
13. Mention the name of all source documents.
Ans: purchase invoice, sales invoice, credit notes, pay slips, debit notes, credit notes and cash vouchers.
1. What are the main boo+s of original entries
Ans: sales day book, purchase day book, cash book, petty cash book, the payroll and the journal.
1*. $tate system note for credit sales %rocess indicating basic documents re-uired in each stage
Ans:
MOTIUR RAHMAN AHKC, CHARTERED ACCOUNTANTS
(eceive sales order
from customer
(eceive sales order
from customer
$ales order
@Received from
customer0
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1,. $tate system note for credit %urchase %rocess indicating basic documents re-uired in each stage
1. $tate system note for %urchase of fixed assets in credit indicating basic documents re-uired in each stage
Ans: ystem note for purchase of fi/ed assets in credit indicating basic documents re?uired in each stage are give
below:MOTIUR RAHMAN AHKC, CHARTERED ACCOUNTANTS
Prepare goods and delivery
Note: deliver to customer
Prepare goods and delivery
Note: deliver to customer
Prepare sales invoice
And send to customer
SOURCE DOCUMENT
OR ACCOUNT!N" S#STEM
Prepare sales invoice
And send to customer
SOURCE DOCUMENT
OR ACCOUNT!N" S#STEM
Sales
invoice
Delivery
notes
Send purc$ase order tosupplier
Purchase
order
Receive goods %it$supplier&s delivery note:prepare goods received
note '"RN)
Goods
received
note
Receive purc$ase invoice (rom
supplier) and matc$ to "RN
SOURCE DOCUMENT OR
ACCOUNT!N" S#STEM
Purchase invoice
(Received from
customer)
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16. What are basis inclusion of )oods (eceived &otes 4)(&5
Ans:
i. -urchase order no
ii. uppliers vendors name
iii. upplierAs challan delivery note no
iv. 8ate of receipt
v. 8escription of goods
vi. "tem code
vii. uantity received.
18. What information are needed to draft invoice< credit notes< delivery challan and )(&
Ans:
7n case of invoice:
"nvoice number=ame and address of seller and purchaser
ale date -roduct service description uantity and unit price of what has been sold 8etails of trade or bulk discount, if any Total invoice amount including
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The date by which payment is due and other term of sales Tear off remittance advice for the customer to send to the business along with payment.
7n case of credit notes:
)redit note number=ame and address of seller and purchaser
ale date -roduct service description uantity and unit price of what has been sold 8etails of trade or bulk discount, if any Total invoice amount including
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#7!7
1arch #'
!#(7 Rajan 9 )o !7'.5! !(.*! (7 %6.#7
!#(! 1otiur 9 )o 5*.'5 !#.55 %.*7 >+= 77% "mam 9 )o @%!.'60 @'.*60 > @#*.570
!#(# 12 9 )o !#*'. !55.% 577.%7 #*.!7
12.* 212.1 823.8/ 266.*/
!urchase day boo+
!urchase 9ay 'oo+
9ate
7nvoice
#credit note
no.
su%%liers ;otal 4;+.5 A; 4;+.5!urchase
4;+.5
x%ens
4;+.5
#7!7
1arch #7
!'!6# )ook %!'.67 '*.67 #*5 >
)= 7'5 Butler @#6.*!0 @'.'!0 @#(.#70 >
!'!6% Telcom !!*.(* !.%* > 66.#7!'!6' how !77.!! !'.6! 5(.#7 >
*/1.8, ., 326 88.2/
!etty cash 'oo+:
!etty cash 'oo+
(ecei%ts
4;+.59ate &arrative
!ayments
4;+.5
A;
4;+.5
Mil+
4;+.5
!ostage
4;+.5
;ravel
4;+.5
the
4;+.
#(7 #7!7
1arch
#(
Balance
bd
1ilk bill #( #(-ostage
stamp
( (
Ta/i fare !7 !7Flowers !( !(
MOTIUR RAHMAN AHKC, CHARTERED ACCOUNTANTS
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Balance
cd
!6(
2*/ ;otal 2*/ / 2* * 1/ 1*
0ash 'oo+
0ash 'oo+ 4(ecei%ts5
9ate &arrative
;otal
recei%ts
4;+.5
A; 4;+.5
(eceiv
ables
4;+.5
0ash sales
4;+.5
thers
4;+.5
#7!7
1arch #'
Balance bd 677
)ash sales 6' !' 57Receivable : ;CD %57 %57
Receivable : - '#7 '#7
Receivables : 12 !'7 !'7
&oan : "mam !577 !,577
)ash sales !'! #! !#7
ale of non>current asset #77 #77
#,*550 1,6
3*
!ayroll boo+
!ayroll 'oo+
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!articularsWithholding
tax 4;+.5
!ension
4;+.5
&et %ay
4;+.5
)ross %ay
4;+.5
m%loyer
%ension 4;+.5
;otal %ayroll
cost 4;+.5
12 ((7 !(7 #,%77 %,777 #77 %,#77
$" (77 !%( #,!!( #,(7 !57 #,6%7
11R '*7 !#( !,6!( #,(77 !*( #,**(
;otal 1
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2. fill in the blan+s:
Source document Books of original entry
ales invoice ales day book
-urchase invoice -urchase day book
8ebit note Purchase da1 boo"
)redit note ales day book)he?ue remittance advice )ash book
-ay slip )ash book
-etty cash voucher -etty cash
2*. !re%aring cash boo+:
2s on ! Ganuary #7!7, 2B) )ompany had Tk. 677 in the bank as overdraft. 8uring the year #7!7 the company had
following receipts and payments. -repare an analyHed cash book from the above transactions.
Transactions during #7!7:
a. )ash sale: receipt of Tk. 6' @including
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Ganuary !7-ayable @f0 !#7Telephone bill @g0 %*-etty cash @h0 !77Furniture purchase @i0
Total payment
Balance )8
@'(!(>#76*0
!,(77
#,76*
#,'!6
;otal
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b. ales day book
c. -etty cash book
d. -urchase day book
e. )ash book
f. ales day book
g. -urchase day book
h. )ash book
3/. 9raft a dummy %ayroll sheet#boo+ of your com%any
Ans: 2 draft payroll sheet book of my company are as under:
0ode
no&ame 9esignation
)ross
salary
'asic
*/>
Addition .*> on 'asic Attendance
9eduction!ayment
$igna0o.!
F
"n
!.F. ).$.G!.F.;otal
!.f.Advance Amount (evenue Attend
&et
salary
/1Md.
$amiullah
Manager 13621 ,811 *16 *16 1338 1/3 1/// 1/// * 3/ 12286
31. 2B) &td. Eas !7 employees who had gross pay of tk. !'7,777 per annum among them in #776. "n that year the
company made net pay payments to employees of tk. !#6,#77 and paid tk. #7,677 to eLthe pension trustees. "ts to
payroll cost was tk. !7,'77. Eow much did the company pay to +overnment treasury in respect of withholding ta/
32. What transactions are recorded via journal as a boo+ of original entry?
A&$: =on>current asset purchases are usually recorded via the journal as a book of original entry.
CHAPTER-4: LEDGER ACCOUNTING & DOUBLE ENTRY
33. 9istinguish nominal ledger and subsidiary ledger
Ans: 8istinguish between nominal ledger and subsidiary ledger is mentioned in the following table:
&ominal ledger $ubsidiary ledger
!. 2n accounting record which analyses the
financial records of a business.
!. "t is actually maintained for the backup of
nominal ledger.
#. =ominal ledger represents the total
balance of a respective 2c head after net
off.
#. ubsidiary ledger represents any individuals
or a specific events balance.
%. 2mounts of nominal ledger came from
subsidiary ledger.
%. ubsidiary ledgers maintained for the
breakup record of each transaction.
3. 9efine duality conce%t "ith exam%le
Ans: $very transaction is recorded twice in the ledger accounts. 8ouble entry book keeping is the method used to
transfer totals from the Books of original entry into the nominal ledger. )entral to this process is the idea that
MOTIUR RAHMAN AHKC, CHARTERED ACCOUNTANTS
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every transaction has two effects, which is the 8uality concept. uch as3 purchase a car for Tk. !,777 cash.
This event would be affected in two ways:
wn a car worth Tk. !,777
)ash reduced by Tk. !,777
3*. $tate the general rule of double entry boo++ee%ing.
Ans: The basic rule, which must always be observed, is that every financial transaction gives rise to two accountingentries, one a debit and the other a credit.
A 9ebit entry "ill: A 0redit entry "ill:
"ncrease an asset
"ncrease an e/pense
8ecrease a &iability
8ecrease )apital
8ecrease "ncome
8ecrease an asset
8ecrease an e/pense
"ncrease a &iability
"ncrease )apital
"ncrease "ncome
3,. 7dentify the debit and credit entries in the follo"ing transactions 4ignore A;5
a5 bought a machine on credit from A< cost t+. 6>>>>>>>>>dr. 5,777
N2A ac>>>>>>>>>>cr. 5,777
b5 bought goods on credit from '< cost t+. *//:
-urchase ac>>>>>>>>>>dr. (77
NBA ac>>>>>>>>>>cr. (77
c5 sale goods on credit to 0< value t+. 1>>>>>>>>>>>>>>>dr. !,#77
ales ac>>>>>>>>>cr. !,#77
d5 %aid 9 4a credit su%%lier5 t+. 3//:
N8A ac>>>>>>>>>>>>>>dr. %77
)ash ac>>>>>>>cr. %77
e5 collected t+. 16/ from < a credit customer:
)ash ac>>>>>>>>>>>>>>>>>>>dr. !57
N$A ac>>>>>>>>>>>>>>>>>cr. !57
f5 %aid net %ay t+.
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=et pay ac>>>>>>>>>>dr. ',777
)ash ac>>>>>>>>>cr. ',777
g5 received rent bill of t+. // from landlord )
i. &o entry needed.
h5 %aid rent insurance %remium t+. 8/
"nsurance premium ac>>>>>>>>dr. 67
)ash 2c>>>>>>>>>>>>>>>cr. 67
3. ummit -ower operates an imprest petty cash system. The imprest amount is Tk. (777. at the end of the period th
totals of the four analysis columns in the petty cash book were as follows:
)olumn >! tk. #%.!#
)olumn ># tk. *.'
)olumn >% tk. !#.67
)olumn >' tk. #5.(7
Eow much cash is re?uired to restore the imprest amountM
Ans: Tk.!.#*, This is the total amount of cash that has been used.
36. )ive t"o exam%le of subsidiary ledger.
Ans: Two e/amples of subsidiary ledger are given below:
Receivables ledger, -ayables ledger.
38. oft upplies )o. recently purchase from Eard "mports )o. !7 printers originally priced at tk. #77 each. 2 !7J trad
discount was negotiated together with a (J cash discount if payment was made within !' days. )alculate the
following.
a0 The total of the trade discount
b0 The total of the cash discount
Ans:
a0 The total of the trade discount O @!7/#770 /!7JO Tk.#77
b0 The total of the cash discount O P@!7/#770 >#77Q / (JO Tk. 67
/. 9efine trade discount and cash discount "ith t"o exam%les
MOTIUR RAHMAN AHKC, CHARTERED ACCOUNTANTS
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;rade discount:2 reduction in the cost of goods, owing to the nature of the trading transaction. "t is deducted from
the list price of goods sold, to arrive at a final sales figure.
xam%le:2 customer is ?uoted a price of tk. ! per unit for a particular item, but lower price of 6(p per unit if the it
is bought in ?uantities of !77 units of more at a time.
0ash discount:2 reduction in the amount payable in return for immediate payment in cash, or for payment within
agreed period.
xam%le:2 supplier charges tk. !,777 for goods, but offers a discount of (J if the goods are paid for immediate in
cash.
1. 9efine the term 2#1/< n#3/
Ans: The term can be defined as to the purchaser must be paid the purchased amount of the goods within %7 da
but if he paid the amount within !7 days he will get #J discount in respect of which he purchased.
2. !re%are an income statement from the follo"ing items:
Taka
a0 purchase at gross cost !#7,777
b0 trade discount allowed ',777
c0 cash discount received !,(77
d0 cash sales %',777
e0 credit sale at invoice price !(7,777
f0 cash discount allowed 5,777
g0 distributaries cost %#,777
h0 administrative cost '7,777
i0 drawings by proprietor ##,777
Ans:
7ncome statement
!articulars ;a+a ;a+aRevenue :)ash sales %',777)redit sales !(7,777Total sales !5',777&ess: cost of sales !# 7,777+ross profit *',777ther income :discount received !,(77
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$/pense: )ash discount allowed 5,777 )redit discount allowed ',777
8istributaries cost %#,777 2dministrative cost '7,777
@5',7770&et %rofit # 4@oss5 416
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6. A'0 0om%any usually sell goods at t+. 13/ each< it gives CK ;rade discount of t+. 1/ so he sells goods to
CK for t+. 12/. A'0 is registered for A;. Do" much out%ut A; should A'0 com%any include on CKLs
invoice?
Ans:
!articulars ;a+a
ales value !%7
&ess : Trade discount !7+oods value !#7 4gross amount5< calculate the A; amount?
Ans:
&et, gross amount is Tk. !77
o,
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6
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**. What are the errors do not ma+e a trial balance imbalance?
Ans: The error do not make a trial balance imbalance are as under:
mission errors3
)ommission errors3
)ompensating errors3
$rrors of principle.
*,. 8istinguish between errors that cause trial balance imbalance and those that do not.
Ans:
Transportation error
$rrors of omission
$rrors of principles
$rrors of commission
)ompensating errors
CHAPTER 6: CONTROL ACCOUNT, ERRORS AND OMISSION
*. ;he total of the balance in a com%anyLs receivables ledger is t+. 6// more than the debit balance on its
receivables control account. Which one of the follo"ing errors could by itself account for the discre%ancy?
a0 The sales day book total column has been under cast by tk.577
b0 )ash discounts totallling tk. 577 have been omitted form the nominal ledger
c0 ne receivables ledger account with a credit balance of tk. 577 has been treated as a debit balance in the
of balances
d0 The cash receipts book has been under cast by tk. 577
*6. S'an+ statement is the mirror image of the cash boo+Jex%lain
2ns: )ash is an asset @a debit balance0 in the business ledger accounts. 2s far as the bank concerned it owes the
business money. Thus every item recorded as a debit in the business book>a positive bank balance and any receip
of cash>will be shown as a credit on the bank statement.
hen cash is a liability @a credit balance0 in the business book, as far as the bank is concerned it is owed money.
Thus every credit entry in the business books>a negative bank balance and any payment of cash>will be shown as
debit on the bank statement.
*8. Mention the * common ex%lanations for differences bet"een cash boo+ and ban+ statement
2ns: There are five common e/planations for differences between ash book and bank statement. hich are
given below:MOTIUR RAHMAN AHKC, CHARTERED ACCOUNTANTS
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!. $rror
#. Bank charges or bank interest
%. 2utomated payments and Receipts
'. 8ishonor che?ue
(. Timing differences
,/. x%lain< in brief< the adjusted cash boo+
4ns% Pa1ment made into or from the ban" account b1 :a1 of standing order direct debit or onlinetransfer :hich have not 1et been entered in the cash boo"2
o Aan" interest and ban" charges not 1et entered in the cash boo"2
o !ishonored cheque not 1et entered in the cash boo"2
,1. "dentity types of error from following transactions
Ans:
Error Type
2 credit sales of tk. *,5'% has been incorrectly debited in the receivable ledger as tk.
*,'5%Transposition errors
2 business receives an invoice from a supplier for tk. #(7 and the transaction is missed
from the books$rrors of omission
2n error is to treat revenue e/penditure incorrectly as capital e/penditure $rrors of principal
-utting a debit entry or a credit entry in the wrong account $rrors of commission
)asting error $rrors of commission
2dmin e/penses of tk. #,5## are entered as tk. #,#5# in the administrative e/penses
ledger account. 2t the same time, income of tk. 5,6%! is shown in te sales account as
tk. 5,%6!.
$rrors of compensating
CHAPTER : ACCOUNTING CONCEPT AND CON!ENTIONS:
,2. identifying concepts and conventions:
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