Mock Test Paper - Series II: August, 2024

DateofPaper:16thAugust,2024
TimeofPaper:10.30A.M.to1.30P.M.

FOUNDATION COURSE
PAPER – 1:ACCOUNTING

TimeAllowed:1.5 Hours
(a)State with reasons,whether the following statements are true or false:
(i) Wages paid for erection of machinery are debited to Profit and Loss
Account.
(ii) Amount spent for the construction of temporary huts, which were
necessary for construction of the Cinema House and were
demolished when the Cinema House was ready, is capital
expenditure.
(iii) If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(iv) Promissory note is different from bill of exchange because the
amount is paid by the maker in case of former and by the acceptor
in the later.
(v) The business of partnership must be carried on by all the partners.
(vi) Debenture interest is payable after the payment of preference
dividend but before the payment of equity dividend.
(6 Statements x 2Marks=12Marks)
(b) Explain Materiality concept and conservatism concept with example?
(4Marks)
(c) Calculate the missing amount for the following.
Assets Liabilities Capital
(a) 45,00,000 7,50,000 ?
(b) ? 4,50,000 2,25,000
(c) 43,50,000 ? 41,25,000
(d) 1,71,00,000 (8,40,000) ? (4Marks)
(12+4+4=20Marks)

2. (a) Savin & Co. purchased a machine for ` 1,00,000 on 1.4.2021 Another
machinecosting`1,50,000waspurchasedon1.10.2022.On31.3.2024the
machine purchased on 1.4.2021 was sold for `50,000. The company
providesdepreciationat15%onWrittenDownValueMethod.Prepare–(i)
Machinery Account, (ii) Machinery Disposal Account and (iii) Provision for
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 Depreciation Account. (10Marks)
(b) On 30thJune.
2024, Cash Book of Ms. Suman (Bank Column of Account
No. 1) shows a Bank Overdraft of ` 1,97,400. On going through the Bank
Passbook for reconciling the Balance, she found the following:
(a) Out of cheques drawn on 26thJune, those for ` 14,800 were cashed
by the bankers on 2ndJuly.
(b) A crossed cheque for `3000 given to Abdul was returned by him and
a bearer cheque was issued to him in lieu on 1stJuly.
(c) Cash and cheques amounting to ` 13,600 were deposited in the
Bank on 29thJune, but cheques worth ` 5,200 were cleared by the
Bank on 1stJuly., and one cheque for ` 1,000 was returned by them
as dishonoured on the latter date.
(d) According to Suman’s standing instructions, the bankers have on
30thJune, paid ` 1,280 as interest to her creditors, paid quarterly
premium on her policy amounting to ` 640 and have paid a second
call of`2,400 on shares held by her and lodged with the bankers for
safe custody. They have also received ` 600 as dividend on her
shares and recovered an Insurance Claim of ` 3,200, as their
charges and commission charged on the above being ` 400. On
receipt of information of the above transaction, she has passed
necessary entries in her Cash Book on 1stJuly.
(e) Bankers seem to have given a wrong credit for`2,000 paid in by
herinNo.2accountandwrongdebitinrespectofachequefor
`1,200drawnagainstherNo.2account.
Prepare a Bank Reconciliation Statements on 30thJune,2024.
(10Marks)
(10+10=20Marks)

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3. (a) Mr. Prakash furnishes following information for his readymade garments
business:
(i) ReceiptsandPaymentsduring2023-24:
Receipts Amount Payments Amount
` `
Bank Balance as on Payment to Sundry
1-4-2023 16,250 creditors 3,43,000
Received from Salaries 75,000
Sundry 4,81,000
debtors General expenses 22,500
Rent and taxes 11,800
Cash sales 1,70,800 Drawings 96,000
Capital brought in
the business during
50,000 Cash purchases 1,22,750
the year
Balance at bank on
31-03-2024 36,600
Interest on
Investment received 9,750 Cash in hand on
31-03-2024 20,150

7,27,800 7,27,800
(ii) Particulars of other Assets and Liabilities are as follows:
1stApril,2023 31stMarch,2024
(`) (`)
Machinery 85,000 85,000
Furniture 24,500 24,500
TradeDebtors 1,55,000 ?
TradeCreditors 60,200 ?
Inventory 38,600 55,700
12%Investment 85,000 85,000
Outstanding Salaries 12,000 14,000
(iii) Additional information:
(1) 20%oftotalsalesand20%oftotalpurchasesareincash.
(2) Of the debtors, a sum of ` 7,200 should be written off as Bad
debt and further a provision for doubtful debts is to be provided
@2%.
(3) Providedepreciation@10%p.a.onmachineryandfurniture
You are required to prepare Trading and Profit & Loss Account for
the year ended 31stMarch, 2024, and Balance Sheet as on that date.
(10Marks)

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 (b)
(i) EXPLAIN ADVANATGES OF JOURNAL AND SUBSIDIARY
BOOKS (5Marks)
(10+5+5=20Marks)
Q4- On 1st January 2018, Akshay draws two bills of exchange for `16,000 and `25,000. The
bill of exchange for `16,000 is for two months while the bill of exchange for `25,000 is for
three months. These bills are accepted by Vishal. On 4th March, 2018, Vishal requests
Akshay to renew the first bill with interest @ 15% p.a. for a period of two months. Akshay
agreed to this proposal. On 25th March, 2018. Vishal retires the acceptance for `25,000, the
interest rebate i.e. discount being `250. Before the due date of the renewed bill. Vishal
becomes insolvent and only 50 Paisa in a rupee could be recovered from his estate. Show
the journal Entries (with narrations) in the books of Akshay. 4m

Q5- Shri Thangavel sells goods at 20% GP on Cost. He provides the following data. Find out
the value of closing inventory.
Opening Inventory at Market Prices= ` 1,20,000 (Cost=?)¬4M
Sales made during the period= ` 38,40,000¯
Purchases during the period (at Cost)=` 34,00,000¬4M