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2012

Compiled and Solved by:

Sameer Hussain

XI – ACCOUNTING

REGULAR

Compiled & Solved by: Sameer Hussain www.a4accounting.weebly.com

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X I – A c c o u n t i n g – 2 0 1 2 ( R e g u l a r )

ACCOUNTING – 2012

REGULAR Time: 20 Minutes Max. Marks: 20

SECTION “A” (MULTIPLE CHOICE QUESTIONS) Note: (i) This section contains of 20 part questions and all are to be answered. Each question carries equal marks. (ii) Do not copy down the part question in your answer book. Write only the answer in full against the proper number of the question and its part. (iv) The code of your question paper must be mentioned in bold letters in the beginning. Q.No.1 Choose the correct answer for each from the given options:

(1) Net profit is transferred to: (a) Owner’s equity / Capital account. (b) Drawings account. (c) Cash account. (d) Purchase accounts.

(2) Normally, this is a debit balance.

(a) Loan to Ali. (b) Loan from Atif. (c) Bank overdraft. (d) Purchase discount.

(3) A trial balance is:

(a) A balance sheet. (b) Balance of the bank account. (c) A rough draft of the final accounts. (d) A list of balances in the ledger.

(4) This is a nominal account closed at the end of the period:

(a) Prepaid rent. (b) Accrued rent. (c) Rent expense. (d) Unearned rent.

(5) This is not a book of original entry:

(a) General journal. (b) Cash receipt journal. (c) Purchase journal. (d) Subsidiary ledger.

(6) Special journals are used to avoid numerous entries in:

(a) Subsidiary ledger. (b) General ledger. (c) Both of these. (d) None of these.


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(7) Current liabilities are such obligations which are to be satisfied with in: (a) One year. (b) Two years. (c) Three years. (d) Four years.

(8) Petty cash book is a book:

(a) Of small size. (b) Used for small payments. (c) Used for small receipts. (d) Used in small business.

(9) A debit balance of bank in firm’s cash book will be shown in the bank statement as:

(a) A debit balance. (b) A nil balance. (c) A credit balance. (d) None of these.

(10) If the gross profit is Rs.5,000 and the net profit is 25% of the gross profit, then the operating

expenses are: (a) Rs.1,250. (b) Rs.3,750. (c) Rs.4,150. (d) Rs.6,250.

(11) A fixed asset is reported on balance sheet at its:

(a) Replacement value. (b) Scrap value. (c) Book value. (d) Market value.

(12) If sales return is recorded as purchases return by mistake, net income will be:

(a) Increase. (b) Decrease. (c) Not change. (d) Be nil.

(13) Owner’s equity is increased by:

(a) Net income. (b) Withdrawal of cash. (c) Net loss. (d) Withdrawal of merchandise.

(14) This is an example of an adjusting entry:

(a) Purchase of supplies on account. (b) Depreciation expense. (c) Billing for services rendered. (d) Payment of wages to employees.


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(15) This financial statement is based on the accounting equation: (a) Balance sheet. (b) Income statement. (c) Statement of retained earnings. (d) Bank reconciliation statement.

(16) Cash book is used to record only:

(a) Credit transaction. (b) Cash transaction. (c) Cash and credit transaction. (d) None of these.

(17) These types of accounts normally have credit balances:

(a) Revenue, assets and owner’s equity. (b) Revenue, expenses and owner’s equity. (c) Revenue, liability and owner’s equity. (d) None of these.

(18) Sold office furniture on account will be recorded in:

(a) Purchase journal. (b) Purchase return and allowance journal. (c) Sales journal. (d) None of these.

(19) Reversing entries are passed:

(a) At the start of an accounting period. (b) At the end of an accounting period. (c) After six month of an accounting period. (d) During the accounting period.

(20) Sales are equal to:

(a) (Cost of goods sold) – (Gross profit). (b) (Cost of goods sold) + (Gross profit). (c) (Cost of goods sold) – (Net profit). (d) (Cost of goods sold) + (Net profit).


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ACCOUNTING – 2012

REGULAR Time: 2 Hours 40 Minutes Max. Marks: 80

SECTION “B” (SHORT – ANSWER QUESTIONS) (50) Note: Attempt any Four questions. All questions carry equal marks. The use of calculator is allowed. Q.No.2 ACCOUNTING EQUATIONS

a) State the rules of Debit and Credit in terms of increase and decrease in the values of assets, liabilities, proprietorship, revenue and expenses.

b) For any seven of the following accounts, state whether it is an asset, liability or owner’s equity: i) Office equipment ii) Capital iii) Cash iv) Office supplies v) Merchandise inventory vi) Prepaid rent vii) Accounts receivable viii) Accounts payable ix) Salaries payable

SOLUTION 2 (a) Rules of Debit and Credit:

Head of Accounts Increases Decreases

Assets Recorded as Debit Recorded as Credit

Liabilities Recorded as Credit Recorded as Debit

Owner’s Equity Recorded as Credit Recorded as Debit

Revenue & Income Recorded as Credit Recorded as Debit

Expenses Recorded as Debit Recorded as Credit

SOLUTION 2 (b)

Name of Account Head of Account Name of Account Head of Account

Office equipment Asset Capital Owner’s equity

Cash Asset Office supplies Asset

Merchandise inventory Asset Prepaid rent Asset

Accounts receivable Asset Accounts payable Liability

Salaries payable Liability

Q.No.3 GENERAL JOURNAL GIVEN The following transactions were completed by Almas Brothers during April: April 1, Proprietor commenced business with cash Rs.50,000; office furniture Rs.40,000. April 3, Deposited cash into bank Rs.30,000. April 4, Purchased merchandise Rs.8,000; paid Rs.3,000 and issued a note for the balance. April 7, Sold merchandise on account for Rs.12,000. April 16, Proprietor withdrew cash Rs.8,000 and merchandise worth Rs.2,000. April 18, Paid advertising expense by cheque Rs.4,500. REQUIRED Record the above transactions in the standard form of General Journal.


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SOLUTION 3 ALMAS BROTHERS GENERAL JOURNAL

FOR THE MONTH OF APRIL

Date Particulars P/R Debit Credit

April 1 Cash 50,000 Office furniture 40,000 Capital 90,000

(To record the investment by owner in the business)

April 3 Bank 30,000 Cash 30,000

(To record the cash deposited into bank)

April 4 Purchases 8,000 Cash 3,000 Notes payable 5,000 (To record the goods purchased for cash & on account)

April 7 Accounts receivable 12,000 Sales 12,000 (To record the goods sold on account)

April 16 Drawings 10,000 Cash 8,000 Purchases 2,000 (To record the cash and goods withdrew by owner for

personal use)

April 18 Advertising expense 4,500 Bank 4,500 (To record the advertising expense paid by cheque)

Q.No.4 CASH BOOK GIVEN Following are the selected transactions of Sanaullah Stores. Set up a Three Column Cash Book and make postings therein: March 01, 2012: Opening balances: Cash Rs.50,000 and Bank Rs.10,000 (overdraft). March 01, 2012: Sold merchandise for Rs.50,000 and deposited 80% amount into bank. March 03, 2012: A cheque of Rs.10,000 issued against invoice of 23rd February, under credit term

(2/10, n/30). March 08, 2012: Received a cheque of Rs.11,000 from Umair, a customer, against his account of

Rs.11,100 in full settlement. March 18, 2012: Deposited Umair’s cheque into bank. March 25, 2012: Received Rs.3,000 as advance from Shoaib for the goods to be sold after two

weeks. March 28, 2012: Withdrew cash Rs.3,000 for personal use. SOLUTION 4


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SANAULLAH STORES THREE COLUMN CASH BOOK

FOR THE MONTH OF MARCH 2012

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Q.No.5 BANK RECONCILIATION STATEMENT GIVEN A study of cash record and the bank statement of Naeem Traders for the month of April 2012 revealed the following information: Balance as per cash book Rs.22,500 Balance as per bank statement Rs.27,000

(i) April 30, deposit not shown in bank statement Rs.5,000. (ii) Cheque issued but not presented for payments Rs.7,000. (iii) Cheque deposited by a customer directly in the firm’s bank account for Rs.6,000 which was not

recorded in the firm’s cash book. (iv) Collection charges of Rs.500 not recorded in the cash book. (v) The bank had credited the firm’s account for markup Rs.4,000 which was not recorded in cash

book. (vi) A customer’s cheque for Rs.7,000 which was earlier deposited into bank was dishonoured by his

bankers. This was not recorded in the cash book. REQUIRED

a) Prepare a Bank Reconciliation Statement as of April 30, 2012. b) Make adjusting entries in General Journal.

SOLUTION 5 (a)

NAEEM TRADERS BANK RECONCILIATION STATEMENT

FOR THE MONTH ENDED 30 APRIL 2012

Particulars Cash Book Pass Book

Balance on 30 April 2012 22,500 27,000 Add: Last day deposit (i) 5,000 Less: Unpresented cheque (ii) (7,000) Add: Direct deposit by customer (iii) 6,000 Less: Collection charges (iv) (500) Add: Markup (v) 4,000 Less: Dishonoured cheque (vi) (7,000)

Reconcile Balance 25,000 25,000

SOLUTION 5 (b)

NAEEM TRADERS GENERAL JOURNAL

FOR THE MONTH OF APRIL 2012


1 Bank 10,000 Accounts receivable 6,000 Interest income 4,000

(To record the increase in bank account)

2 Collection charges 500 Accounts receivable 7,000 Bank 7,500 (To record the decrease in the bank account)


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Q.No.6 SPECIAL JOURNAL GIVEN Following are the selected transactions taken from the records of Kainat General Stores for the month of April 2012: April 10: Milk powder of Rs.200 was returned by Bushra. April 12: Shampoo of Rs.1,000 was returned to Aadil Stores. April 15: Biscuits of Rs.1,500 were returned to Union Traders. April 20: A pouch of oil of Rs.150 was returned by Mohsin. April 22: Cereal boxes of Rs.500 were returned by Yousuf. April 26: Received a concession from Desi Oil Stores of Rs.450 on the delivery of leaked pouches. April 28: Washing powder of Rs.140 was returned by Ahmad. REQUIRED Prepare:

a) Sales Returns and Allowance Journal page # 3. b) Purchases Returns and Allowance Journal page # 4.

SOLUTION 6 (a)

KAINAT GENERAL STORES SALES RETURNS AND ALLOWANCE JOURNAL

FOR THE MONTH OF APRIL 2012 (Page # 3)

Date Invoice No. Name of Customers P/R Amount

April 10, 2012 Bushra 200 April 20, 2012 Mohsin 150 April 22, 2012 Yousuf 500 April 28, 2012 Ahmad 140

April 30, 2012 Sales return & allowance Dr. 990 Accounts receivable Cr.

SOLUTION 6 (b) KAINAT GENERAL STORES

PURCHASES RETURNS AND ALLOWANCE JOURNAL FOR THE MONTH OF APRIL 2012

(Page # 4)

Date Invoice No. Name of Suppliers P/R Amount

April 12, 2012 Aadil Stores 1,000 April 15, 2012 Union Traders 1,500 April 26, 2012 Desi Oil Stores 450

April 30, 2012 Accounts payable Dr. 2,950 Purchase return & allowance Cr.

Q.No.7 CORRECTION OF ERROR GIVEN The following errors were discovered before closing the book of Mr. Farhan:

a) Office supplies amounting to Rs.1,500 were debited to purchase account. b) Construction as addition of office building for Rs.50,000 was wrongly debited to building repairs

accounts. c) Withdrawals by the proprietor of Rs.8,000 had been debited to salaries expense account. d) Purchase of office furniture on account for Rs.6,500 was recorded and posted as Rs.5,600. e) Sales of office equipment Rs.2,000 was credited to sales account.

REQUIRED Prepare correcting entries in General Journal.


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SOLUTION 7 MR. FARHAN

CORRECTING ENTRIES


1 Office supplies 1,500 Purchases 1,500 (To correct the purchase of office supplies)

2 Building 50,000 Building repairs 50,000 (To correct the construction of building)

3 Drawings 8,000 Salaries expense 8,000 (To correct the drawings by owner)

4 Office furniture 900 Accounts payable 900 (To correct the purchase of office furniture)

5 Sales 2,000 Office equipment 2,000 (To correct the sale of office equipment)

SECTION “C” (DETAILED – ANSWER QUESTIONS) (30) Instruction: Attempt the following question which is compulsory: Q.No.8 FINANCIAL STATEMENT AND CLOSING PROCESS GIVEN Following are the trial balance of Ahmed & Co. as of Dec. 31, 2011: Debit Balances: Cash Rs.12,400; Merchandise inventory Rs.87,000; Accounts receivable Rs.56,000; Office supplies Rs.1,600; Unexpired insurance Rs.4,200; Land Rs.68,000; Building Rs.164,000; Office equipment Rs.42,600; Ahmed’s Drawings Rs.20,000; Sales discount Rs.7,000; Cost of goods sold Rs.316,600; Sales salaries expenses Rs.55,200; Advertising expenses Rs.12,200; Office salaries expenses Rs.44,600; Travelling expenses Rs.15,600. Credit Balances: Accounts payable Rs.38,000; Ahmed’s Capital Rs.322,400; Sales Rs.504,000; Allowance for depreciation (equipment) Rs.10,600; Allowance for depreciation (building) Rs.32,000. Data for Adjustment at Dec. 31:

a) Office supplies on hand Rs.500. b) Unexpired insurance Rs.3,000. c) Depreciation for the year on building Rs.4,000; office equipment Rs.1,800. d) Unpaid salaries: sales salaries Rs.3,000; office salaries Rs.2,000.

REQUIRED (i) Prepare Income Statement for the year ended Dec. 31, 2011. (ii) Prepare Balance Sheet as on Dec. 31, 2011. (iii) Prepare adjusting entries in General Journal OR Prepare closing entries in General Journal.


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SOLUTION 8 (i) AHMED & CO.

INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2011

Sales 504,000 Less: sales discount (7,000)

Net sales 497,000 Less: Cost of goods sold (316,600)

Gross profit 180,400 Less: Operating Expenses: Sales salaries expenses (55,200 + 3,000) 58,200 Advertising expenses 12,200 Office salaries expenses (44,600 + 2,000) 46,600 Travelling expenses 15,600 Office supplies expenses 1,100 Insurance expenses 1,200 Depreciation expense (building) 4,000 Depreciation expense (equipment) 1,800

Total operating expenses (140,700)

Net profit 39,700

SOLUTION 8 (ii)

AHMED & CO. BALANCE SHEET

AS ON 31 DECEMBER 2011

ASSETS EQUITIES

Current Assets: Liabilities: Cash 12,400 Accounts payable 38,000 Accounts receivable 56,000 Sales salaries payable 3,000 Merchandise inventory 87,000 Office salaries payable 2,000

Office supplies 500 Total liabilities 43,000 Unexpired insurance 3,000

Total current assets 158,900 Owner’s Equity: Capital 322,400 Fixed Assets: Add: Net profit 39,700

Land 68,000 362,100 Building 164,000 Less: Drawings (20,000)

Less: All for depreciation (36,000) 128,000 Total owner’s equity 342,100

Office equipment 42,600 Less: All for depreciation (12,400) 30,200

Total fixed assets 226,200

Total assets 385,100 Total equities 385,100


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SOLUTION 8 (iii) AHMED & CO.

ADJUSTING ENTRIES FOR THE PERIOD ENDED 31 DECEMBER 2011


1 Office supplies expenses 1,100 Office supplies 1,100 (To adjust the office supplies)

2 Insurance expense 1,200 Unexpired insurance 1,200 (To adjust the prepaid insurance)

3 Depreciation expense 5,800 Allowance for depreciation – Building 4,000 Allowance for depreciation – Office equipment 1,800 (To adjust the depreciation expense)

4 Sales salaries expenses 3,000 Sales salaries payable 3,000 (To adjust the unpaid sales salaries)

5 Office salaries expenses 2,000 Office salaries payable 2,000 (To adjust the unpaid salaries)

OR

AHMED & CO.

CLOSING ENTRIES FOR THE PERIOD ENDED 31 DECEMBER 2011


1 Expense and revenue summary 464,300 Sales discount 7,000 Cost of goods sold 316,600 Sales salaries expenses 58,200 Advertising expenses 12,200 Office salaries expenses 46,600 Travelling expenses 15,600 Office supplies expenses 1,100 Insurance expenses 1,200 Depreciation expenses 5,800 (To close the various expense accounts)

2 Sales 504,000 Expense and revenue summary 504,000 (To close the revenue account)

3 Expense and revenue summary 39,700 Ahmed’s Capital 39,700 (To close the expense and revenue summary account)

4 Ahmed’s Capital 20,000 Ahmed’s Drawings 20,000 (To close the drawings account)

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