MAHENDRA ARTS & SCIENCE COLLEGE (AUTONOMOUS)
PG & RESEARCH DEPARTMENT OF COMMERCE
FINANCIAL ACCOUNTING – II
PAPER CODE: M19UCM03
I-B.COM
QUESTION BANK
PART-A
ONE MARK QUESTIONS
1.In departmental accounts expenses like director fees, interest is transferred to___
A. Balance sheet. B. Trading account. C.General P & L account.
D. P & L Appropriation account.
2. The departmental accounting enables a business firm to maximize _____
A. Profit. B. Losses. C. Cash. D. Assets.
3. Branch which does not maintain its own set of books _________
A. Dependent branch. B. Independent branch. C. Foreign branch. D. Local branch.
4. The business policies and the administration of a branch are wholly controlled by the head
office the type of branch is ____________
A. Independent branch. B. Dependent branch. C. Local branch D. Foreign branch.
5. In Partnership, revaluation of assets is done due to__________
A. Admission B. Retirement C. Death D. All of the above
6. A, B, and C are equal partners. C retires. He surrenders 3/5th of his share in favour of A
and 2/5th in favour of B. New ratio will be ___________
A. 3:2 B. 8:7 C.7:8 D.2:3
7 the firm interest on drawing is___________
A. Expense B. Income C. Liability D. None
8. The object of partnership is to___________
A. Earn profit B. Not to earn profit C. Welfare of members D. None of these
9. The written agreement of partnership is called____________
A. Partnership deed B. Articles of association C. memorandum of association D.certificate
of incorporation
10 Revaluation account is operated to find out gain or loss at the time of.
A. admission of a partner B.retirement of a partner C.death of a partner D.all
the above
PART-B TWO MARK QUESTIONS
11. what is meant by department
12. Identify the objectives Departmental Accounts.
13. Define branch
14. State the need for Branch accounts
15. Define partnership?
16.What is meant by Partnership Deed?
17.What does gaining ratio means?
18. What is dissolution of partnership?
19. What is meant by goodwill?
20. ‘R’, ‘M’ and ‘J’ were partners in a firm. ‘J’ died on 29th Feb. 2008. His share of profit
from the closure of the last accounting year till date of death was to be calculated on the basis
of the average of profit of three completed years before death. Profits for 2005, 2006 and
2007 were Rs. 7,000, Rs. 8,000 and Rs.9,000 respectively.
Calculate J’s share of profit till his death and pass the necessary journal entry for the same.
PART-C
FIVE MARKS QUESTIONS
21. Explain the difference between departments and branches?
22. From the under mentioned information instruction prepare departmental trading and profit
and loss account in columnar form of the three departments of Green Ltd.,
Particular Red Blue Green
Stock ,January 1,1998 82,560 67,950 1,87,442
Stock, December 31,1998 65,680 87,656 1,63,252
Purchases for the year 4,20,684 1,50,592 2,78,218
Return (Purchases) 28,764 11,259 3,646
Sales for the year 8,00,346 3,08,170 7,24,378
Return (Sales) nil 6,518 22,434
Wages 1,45,646 60,168 49,226
Goods transferred as follows (all at cost):
Red to Blue Rs. 778 and to Green Rs. 13358, ladies wear to tailoring Rs.10,630.
Green to Red Rs.8,542 and to Blue Rs.11,602.
Apportion equally, stationery Rs. 1,842. Postage Rs. 1,326, general charge Rs. 79,254,
insurance Rs. 3,570 and depreciation Rs. 10,920.
23. Hari company ltd opened a branch at Madres in 1 st January 2013.From the following
particulars prepare the necessary account for 2014 in the books of the head office.
Particulars Rs
Stock at branch on 31stjuly 2014 3,000
Goods supplied to branch during the year 48,000
Salaries 2,400
Rent 720
Telephone 200
Petty Expenses 300
Remittance received from the branch during the year 55,000
Stock on 31st June 2014 2,500
Balance of Petty Cash 20
24. Bombay Soap Mills Ltd opened a branch at Bombay on 1st January 2008. From the
following particulars prepare the necessary accounts for 2008 and 2009 in the books of the
head office.
Particulars 2008 2009
Goods sent to Branch 20,000 50,000
Cheque sent to branch for
Rent 2,000 2,000
Salaries 2,500 2,550
Other expenses 1,000 1,250
Cash received from the branch 30,000 67,500
Stock on 31st December 4,000 12,500
Petty Cash in hand on 31st December 75 125
25. List out the contents of partnership deed in detail.
26. A Partner makes Drawings of Rs.5,000 p.m. under the partnership deed. Interest is to be
charged at 10% p.a. what is the interest that should be charged to the partner, if the amount
was withdrawn. a) In the beginning of the month. b) In the middle of the month and c) At the
end of the month.
27. A, B and C are in partnership sharing profit and losses in the ratio of 9:6:5. Their balance
sheet stood as follows:
Liabilities Rs Assets Rs
Creditors 15,000 Sundry assets 80,000
Capital account
A 20,000
B 20,000
C 15,000
Profit and loss a/c 10,000
80,000 80,000
C retires and a revaluation loss of Rs. 2,000 is visualized. The goodwill of the firm is Rs.
20,000 and the remaining partners A and B pay for the share of goodwill due to C so as to
keep the goodwill as a secret reserve. Write up the capital account of the outgoing partner C
and transfer it to C’s loss account.
28. L and H were carrying on the business as equal partners. It was agreed that L should retire
from the firm on 31.3.1992 and his son ‘C’ should join the firm on 1.4.1992 and should be
entitled to ½ of the profits. The balance sheet on 31.3.1992 was as follows:
Liabilities Rs Assets Rs
Capital Cash at bank 20,000
Accounts:
L 64,000 Sundry debtors 33,800
H 60,000 Furniture 10,200
Sundry 20,000 Building 60,000
Liabilities
Goodwill 20,000
1,44,000 1,44,000
On 31.3.1992 goodwill was valued at Rs.44,000 and Building at Rs.68,000
It was also agreed that enough money should be introduced to enable ‘L’ to be paid
out and leave Rs. 20,000 cash by way of working capital.
H and C were to provide such sum as would make their capitals proportionate to
their share of profits.
‘L’ agreed to give a gift to ‘C’ by transfer from his capital account of half the
amount which C had to provide.
H and C paid due from them in cash on 7.4.92 and the amount due to L was paid
out on the same day.
Prepare the necessary accounts and balance sheet.
29. Explain the settlement procedure between partners after dissolution of firm?
30. Give the difference between realization and revaluation.
PART-D
TEN MARK QUESTIONS
31. From the under mentioned information instruction prepare departmental trading and profit
and loss account in columnar form of the three departments of outfitters Ltd.,
Particular Tailoring Ladies wear Out fittings
Stock ,January 1,1989 41,280 33,975 93,721
Stock, December 31,1989 32,840 43,828 81,626
Purchases for the year 2,10,342 75,296 1,39,109
Return (purchases) 14,382 5,629 1,823
Sales for the year 4,00,173 1,54,085 3,62,189
Return (sales) nil 3,259 11,217
Wages 72,823 30,084 24,613
Goods transferred as follows (all at cost):
Tailoring to ladies wears Rs. 389 and to out fitting Rs. 6679, ladies wear to tailoring Rs.5315,
Out fitting to Tailoring Rs.4,271 and to ladies wear Rs.5,801.
Apportion equally, stationery Rs. 921. Postage Rs. 663, general charge Rs. 39,627, insurance
Rs. 1,785 and depreciation Rs. 5,460
32. Sridhar & sons has two departments: Cloth and Readymade. Readymade Clothes are
manufactured by the firm itself out of cloth supplied by the cloth department its usual selling
rate. From the following figures, prepare departmental trading and profit and loss a/c and
general p&l a/c for the year ending 31.12.91
Cloth dept Readymade
dept Rs
Rs
Opening stock on 1.1.91 3,60,000 60,000
Purchase 29,00,000 20,000
Sales 35,00,000 7,00,000
Transfer to readymade dept 4,50,000 ------
Manufacturing expenses ------ 1,40,000
Closing stock on 31.12.91 1,00,000 48,000
1. General expenses incurred for both the departments were Rs. 1,20,000.
2. The stock in the readymade department may be considered as consisting of 66 2/3 %
cloth and 33 1/3 % other expenses.
The cloth department earned profit at the rate of 18% in 1990
33. Enumerate about stock and debtor’s system in detail.
34. A head office sends goods to its branch at 20% less than the list price. Goods are sold to
customers at cost plus 100%. From the following particulars calculate the profit made the
head office and branch on the wholesale basis.
Particulars H.O Rs Branch office
Rs
Opening stock at cost(at wholesale price in case of 80,000 64,000
branch)
Purchases 4,00,000 ---
Goods sent to branch (at wholesale price) 1,92,000 ---
Sales 3,40,000 1,60,000
Sundry expenses 28,000 16,000
35. Enumerate the methods of capital accounts of partners.
36. A and B started business on 1st January 1995. They contributed Rs. 1,60,000 and Rs.
1,20,000 respectively as their capitals. The terms of the partnership agreements are as
follows:
a) Interest on capital and drawings @ 12% per annum.
b) A and B to get a monthly salary of Rs.4,000 and Rs.6,000 respectively.
c) Sharing of profit or loss will be in the ratio of their capital contribution.
The profit for the year ended 31 st December 1995, before making above appropriation was
Rs. 2,00,600. The drawings of A and B were Rs. 80,000 and Rs. 1,00,000 respectively.
Prepare profit and loss appropriation a/c and partner’s capital accounts assuming that their
capitals are fluctuating.
37. L and H were carrying on the business as equal partners. It was agreed that L should retire
from the firm on 31.3.1992 and his son ‘C’ should join the firm on 1.4.1992 and should be
entitled to ½ of the profits. The balance sheet on 31.3.1992 was as follows:
Liabilities Rs Assets Rs
Capital Cash at bank 20,000
Accounts:
L 64,000 Sundry debtors 33,800
H 60,000 Furniture 10,200
Sundry 20,000 Building 60,000
Liabilities
Goodwill 20,000
1,44,000 1,44,000
On 31.3.1992 goodwill was valued at Rs.44,000 and Building at Rs.68,000
It was also agreed that enough money should be introduced to enable ‘L’ to be paid
out and leave Rs. 20,000 cash by way of working capital.
H and C were to provide such sum as would make their capitals proportionate to
their share of profits.
‘L’ agreed to give a gift to ‘C’ by transfer from his capital account of half the
amount which C had to provide.
H and C paid due from them in cash on 7.4.92 and the amount due to L was paid
out on the same day.
Prepare the necessary accounts and balance sheet.
38. On 31.12.90 the balance sheet of Madan, Mohan and Madhu showed as under:
Liabilities Rs Assets Rs
Capital Cash 6,000
Accounts:
Madan 45,000 Stock 36,000
The Mohan 30,000 Bills 18,000 partnership
deed receivable provides
that the Madhu 30,000 Debtors 45,000 profit be
shared in General Reserve 48,000 Investment 45,000 2:1:1 and
that in the Sundry creditors 45,000 Building 48,000 event of
death of a 1,98,000 1,98,000 partner, his
executors are entitled
to be paid out.
The capital to his credit at the date of last balance sheet.
His share of reserve at the date to last balance sheet.
His share of profit to the date of death based on the average profit or the last three
completed year and
By way of goodwill, his share of the total profit for the preceding three years without
raising goodwill a/c.
The profit for the last three years were: 1988-Rs.48,000; 1989-Rs.49,800; 1990-Rs.46,200;
Madhu died on 1.4.91. He has withdrawn Rs. 12,000 to the date of his death. The
investment was sold at par and madhu’s executors were paid off. Pass the journal entries and
show Madhu’s capital.
39. Kannan, Murali and Ravi share profits in the ratio of 3:2:1. They decided to dissolve the
firm on 31.12.92 on which date their balance sheet was us under.
Liabilities Rs Assets Rs
Creditors 37,000 Bank 10,840
Mrs. Kannan 20,000 Investment 41,660
Life policy fund 28,000 Stock 15,100
Investment fluctuation fund 12,000 Debtors 18,600
Capital : kannan 80,000 (-) provision 1,200 17,400
Murali 40,000 Plant & machinery 81,000
Capital a/c Ravi 23,000
Joint life policy 28,000
2,17,000 2,17,000
Kannan agrees to discharge his wife’s loan.
Murali takes over all the stock at Rs. 14,000 and debtors amounting to Rs. 10,000 at
Rs. 8,000.
The investments are taken over by kannan for Rs.35,000.
The life policy is surrendered for Rs. 24,000.
Machinery is sold for Rs.1,10,000. The remaining debtors realize 50% of book is with
Rs. 6,000.
The same is taken over by one of the creditors at this value.
The realization expenses amount to Rs. 1,200.
Show the necessary ledger accounts, on completion
40. The following is the balance sheet of Anbu and Babu on 31.12.92
Liabilities Rs Assets Rs
Capital: Buildings 15,000
Anbu 10,000
Babu 10,000 Plant & machinery 20,000
General Reserve 10,000 Goodwill 4,000
Investment fluctuation fund 1,000 Investment 10,000
Mrs. Anbu’s loan 5,000 Stock 5,000
Mrs. Babu’s loan 10,000 Cash at bank 8,500
Bills payable 8,000 Debtors 20,000
Sundry creditors 30,000 (-) provision 2,000 18,000
P&L a/c 3,500
84,000 84,000
It was agreed to dissolve the partnership as on 31.12.92 and the term of dissolution were:
Anbu promised to pay off Mrs. Anbu’s loan and took away stock at Rs. 4,000
Babu took away half the investment at 10% discount.
Debtors realized Rs. 19,000.
Creditors and bills payable were due on an average basis of one month after 31st
December. But they were paid immediately on 31st December at 6% discount per
annum.
Plant realized Rs.25,000; goodwill Rs.6,000 and remaining investments at Rs. 4,500.
There was an old typewriter in the firm which had been written of completely from
the books. It is now estimated to realized Rs.300. it was taken away by balu at this
estimated value.
Realization expenses were Rs. 1,000.Give the ledger account to close the books of the
firm.
