Directorate of Online Education

ASSIGNMENT

NAME JASVIR SINGH

ROLL NUMBER 2214503044
SESSION NOV 2023
PROGRAM BACHEOR OF BUSINESS ADMINISTRATION (BBA)
SEMESTER II
COURSE CODE & NAME DBB1202 – FINANCIAL ACCOUNTING
CREDITS 4
NUMBER OF ASSIGNMENTS & 02
MARKS 30 Marks each

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of
400 - 450 words. Each question is followed by evaluation scheme.

Q.No Assignment Set – 1 Marks Total

Questions Marks
1. 10 10
Journalize the following transactions in the books of JL ltd for the
month of Jan 2023:
1. Started business with cash Rs.1,00,000
2. Sold goods to R Rs.2,000
3. Bought office furniture Rs.30,000
4. Paid cash to M Rs.2,000
5. Salary Paid Rs.10,000
6. Rent received Rs.3,000
7. Purchased goods from H for cash Rs.9,000
8. Goods returned by R Rs.200
9. Interest on capital paid to owner Rs.800
a. Returned goods to H Rs.300
2. 2.5+2.5+2.5+2.5 10
Elaborate the following accounting concepts:
a. Money measurement concept
b. Cost concept
c. Dual aspect concept
d. Accrual concept
3. The clerk of a firm has incorrectly drafted the following Trial 10 10
balance. Draft the correct trial balance from the details:
S.no Particulars Dr Cr
1 Capital 60,000
2 Opening stock 5,000
3 Discount allowed 500
4 Commission received 700
5 Fixed assets 60,000
6 Sales 85,000
 Directorate of Online Education
7 Purchases 45,000
8 Return outward 1,000
9 Return inward 2,000
10 Carriage Inward 600
11 Carriage outward 700
12 Wages & Salary 25,000
13 Bills receivable 7,000
14 Debtors 9,000
15 Bills payable 7,000
16 Rent 3,000
17 Interest paid 2,000
18 Cash 800
19 Creditors 6,900
20 Closing Stock 33,800
1,77,500 1,77,500

Q.No Assignment Set – 2 Marks Total Marks

Questions
4. Discuss the meaning, features, and advantages of a Bill of exchange. 2+2+2+2+2+2 10
Highlight the meaning and process of acceptance of a bill of
exchange.
5. State the meaning of Depreciation. Also highlight the causes and 5+5 10
need of charging depreciation.
6. Narrate the various types of debentures. 10 10

Assignment Set – 1
Question: 01
Answer: Entry of the following transactions for the month of January 2023 in JL Ltd's books:
1. Started business with cash Rs.1,00,000:
Cash A/C (Dr) 1,00,000
To Capital A/C 1,00,000 (Being business commenced with cash)
2. Sold goods to R Rs. 2,000:
R’s A/C (Dr) 2,000
To Sales A/C 2,000 (Being goods sold to R)
3. Bought office furniture Rs. 30,000:
Furniture A/C (Dr) 30,000
To Cash A/C 30,000 (Being furniture purchased for cash)
4. Paid cash to M Rs. 2,000:
M’s A/C (Dr) 2,000
To Cash A/C 2,000 (Being payment made to M in cash)
 Directorate of Online Education
5. Salary Paid Rs. 10,000:
Salary A/C (Dr) 10,000
To Cash A/C 10,000 (Being salary paid in cash)
6. Rent received Rs. 3,000:
Cash A/C (Dr) 3,000
To Rent 3,000 (Being rent received in cash)
7. Purchased goods from H for cash Rs. 9,000:
Purchase A/C (Dr) 9,000
To Cash A/C 9,000 (Being goods purchased for cash)
8. Goods returned by R Rs.200:
Sales Return A/C (Dr) 200
To R A/C 200 (Being goods returned by R)
9. Interest on capital paid to owner Rs.800:
Interest On Capital A/C (Dr) 800
To Capital A/C 800 (Being interest on capital provided to the owner)
10. Returned goods to H Rs.300:
H’s A/C (Dr) 300
To Purchase Return A/C 300 (Being goods returned to H)

Question:02
Answer: Elaborate the following accounting concepts:
a. Money measurement concept: Every event and transaction needs to have a
monetary equivalent. Monetary expression has two benefits:
(a) it offers a straightforward measuring tool to represent numerous facts in a single
denominator; and
(b) it may be summarised easily. An occurrence is not taken into consideration for
accounting purposes if it cannot be quantified.
b. Cost concept: According to the accounting cost concept, assets like real estate,
machinery, buildings, and plants should be documented in the books of accounts at
the full purchase price, which covers installation, transportation, and other costs. By
deducting the asset's usage and wear and tear from the cost, the cost of the asset is
gradually decreased year over year. The cost concept is justified by its ability to be
independently verified.
c. Dual aspect cost: It acts as the centre of the whole accounting process. Because it
demonstrates that the company owns the assets and the various claimants in turn, it is
a representation of the entity concept. In technical terms, this means that "there is a
credit for every debit."
d. Accrual Concept: The accrual idea states that regardless of whether money is
received or paid in connection to an expense or an income, it should be recognised as
soon as it is earned and incurred. This idea distinguishes between the actual payment
of cash and the responsibility to pay cash for expenses, and the accrual receipt of cash
and the right to receive cash with regard to revenue.
 Directorate of Online Education
Question: 03
Answer:
Correct trial balance from the details:

S/N Particulars Dr Cr
1 Capital 60,000
2 Opening stock 5,000
3 Discount allowed 500
4 Commission received 700
5 Fixed assets 60,000
6 Sales 85,000
7 Purchases 45,000
8 Return outward 1,000
9 Return inward 2,000
10 Carriage Inward 600
11 Carriage outward 700
12 Wages & Salary 25,000
13 Bills receivable 7,000
14 Debtors 9,000
15 Bills payable 7,000
16 Rent 3,000
17 Interest paid 2,000
18 Cash 800
19 Creditors 6,900
20 Closing Stock 33,800
Total 2,91,200 63,800
 Directorate of Online Education
Assignment Set-2
Question:04
Answer:
Bill of Exchange is an instrument in writing, containing an unconditional order, signed by the
maker, directing a certain person, to pay a certain sum of money only, to or to the order of a
certain person, or to the bearer of the instrument," is the legal definition of a bill of exchange.

Features of the Bill of Exchange:

1. Bill of exchange must be in writing.

2. The payment must be ordered, not requested.
3. The order needs to be unconditional.
4. The drawer, or the maker, must sign the order.
5. A specific individual must receive the order.
6. The order can only be for the payment of money.
7. The amount due needs to be obvious and not confusing.
8. The funds must be made payable to the instrument's holder, to the individual named
in the document, or to his order.
9. The necessary revenue stamp needs to be on it.

Advantages of bills of exchange:

1. It fixes the payment date. This makes it possible for the creditor to know when to expect
payment. Additionally, the debtor is aware of the deadlines for his payments.
2. A credit period is granted to the debtor. It is not permissible to request payment from the
debtor ahead of time.
3. It can be transferred (endorsed) from one person to another in order to satisfy debts
because it is a negotiable instrument.
4. It is an acknowledgement of debt that is in writing and signed. As a result, it offers both
parties definitive proof.
5. Because it is a discountable instrument, the holder of a bill does not have to wait until the
payment deadline to obtain their money. By working with a bank to reduce the bill, he is able
to get money.

Process of acceptance of bill of exchange:

Acceptance is only the drawee's declaration that he has acknowledged the liability under the
bill. The drawee accomplishes this by signing the note and writing the word "accepted"
across its face, or just by writing his name all the way across the bill. A draft of a bill is one
that has not yet been approved by the drawee. It is referred to as a "Bill," "Acceptance," or
"Bill of Exchange" once it has been approved.
 Directorate of Online Education
Question: 05
Answer:
Depreciation: Certain assets undergo physical deterioration as a result of wear and tear from
use. others, like mines, quarries, etc., lose value in proportion to the volume of
production and still others, even if they are in proper working order, may become obsolete.
Some assets, like leasehold property, patent rights, copyrights, and so on, lose value simply
because time passes and they are not utilised. "Depreciation" is the term used to describe this
value reduction.

Causes of depreciation:
1. Wear and tear by real usage: When fixed assets are used or worn out by continuous use
in the business, their value may drop. Physical wear and tear has been identified as the cause
of this decline.
2. Obsolescence: A consistent change in demand might result in a decline in the value of an
item. The change in demand could be the consequence of new discoveries, modifications to
consumer behaviour, etc.
3. Efflux of time: Even if an asset is not used, time will still cause its value to decrease.
4. Accident: Accidents may result in a decline in the asset's quality, which will lower the
asset's worth.
5. Expiration of Legal Rights: Because the usage of assets like patents, leases, and the like
is constrained by time-bound agreements, their value might decrease with time.

For the following reasons, depreciation has to be charged:

1. Calculating the accurate profit or loss: A loss results from depreciation. Thus, it is
impossible to determine accurate profit or loss unless it is taken into account as an
expense.
2. Calculating Production Cost: Since fixed assets like plant and machinery, which
suffer depreciation throughout production, are used to manufacture items,
depreciation must be taken into account when calculating production costs.
3. To reveal the real financial situation: To reveal the actual financial situation: Since
depreciation causes assets' value to gradually decline, it is necessary to display the
asset's true value.
4. Replacement of asset: An asset's utilisation will eventually cause it to run out
entirely. The next step is to buy a new asset, which will cost a significant amount of
money. The required cash might not be accessible for purchasing the new asset if the
entire profit is taken out of the company each year without accounting for the loss due
to depreciation.
 Directorate of Online Education
Question: 06
Answer: Types of debentures.

1. From security point of view

(i) Secured or Mortgage debentures: These are the debentures that have a charge placed
against the company's assets as security. Another name for these is mortgage debentures. The
right of holders of secured debentures to obtain their principle amount back from the
company's mortgaged assets, along with any outstanding interest. Debentures need to be
secured in India. There are two varieties of secured debentures:
a) First mortgage debenture: The assets charged are initially claimed by the holders of such
debentures.
b) Second mortgage debenture: There is a second claim on the assets charged to the holders
of such debentures.
ii) Simple/Naked debentures: Unsecured debentures are those that have no security attached
to them concerning the principle amount or unpaid interest. We refer to these as basic
debentures.

2. On the basis of redemption:

i) Redeemable debentures: These are the debentures that have a set duration of
issuance. When that time comes to an end, the principal amount of those
debentures is returned to the holders. These can be bought on the open market or
redeemed through yearly drawings.
ii) Irredeemable debentures: These are the debentures that aren't redeemed during
the company's lifetime. These debentures are only repaid in the event that the
business files for liquidation.
3. On the basis of Records:
i) Registered debentures: These are the debentures that the company has on record.
Only holders of such debentures whose names are included in the company's
registration are eligible to receive the amount of such debentures.
ii) Bearer debentures: These are the debentures that are not listed in the company's
register. These debentures can be transferred just by delivery. The interest is
payable to the holder of these debentures.
4. On the basis of convertibility:
i) Convertible Debenture: These are the debentures that, upon the end of a
predetermined time, may be exchanged into shares of the business. When
debentures are issued, the terms and conditions of conversion are often disclosed.
ii) Non-convertible debentures: These debenture holders are unable to exchange
their debentures for company shares.
5. On the basis of priority:
i) First debentures: These debentures redeemed before other debentures.
ii) Second debentures: These debentures redeemed after the redemption of the first
debentures.