Scribd
Upload
6 views

Accounting

The document covers various accounting concepts, including the accounting equation, double-entry bookkeeping, and the significance of historical texts in accounting. It also outlines practical exercises involving journal entries, cash books, and bank reconciliation statements, along with specific transactions for different businesses. Additionally, it emphasizes the preparation of financial statements and adjusting entries.

Uploaded by

uyoonalam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
6 views

Accounting

The document covers various accounting concepts, including the accounting equation, double-entry bookkeeping, and the significance of historical texts in accounting. It also outlines practical exercises involving journal entries, cash books, and bank reconciliation statements, along with specific transactions for different businesses. Additionally, it emphasizes the preparation of financial statements and adjusting entries.

Uploaded by

uyoonalam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 8

ACCOUNTING

1. Which of the following best defines the accounting equation?


A) Assets = Revenues + Liabilities
B) Assets = Liabilities + Owner's Equity
C) Liabilities = Assets + Owner’s Equity
D) Revenues = Assets – Expenses
2. What is meant by the term "double-entry bookkeeping"?
A) Every transaction affects only one account
B) Every transaction is recorded twice for accuracy
C) Every transaction affects two or more accounts, maintaining balance
D) Every transaction requires a receipt and an invoice
3. Luca Pacioli is known as:
A) The founder of modern economics
B) The creator of calculus
C) The father of accounting
D) The inventor of the abacus
4. What was the significance of La Geometria?
A) It introduced algebraic notation
B) It laid the foundation for bookkeeping principles
C) It introduced early calculus theories
D) It was the first book to explain taxation
5. Which of the following best defines accounting?
A) The science of managing people and processes in a business
B) The art of recording, classifying, and summarizing financial transactions
C) The process of buying and selling goods in a market
D) The method used to calculate national income statistics
6. What is the primary purpose of accounting?
A) To provide entertainment through financial storytelling
B) To ensure taxes are never paid
C) To systematically record and communicate financial information for decision-making
D) To manufacture goods and services
Show the effect on accounting equation on the basis of following transactions.
1) Mr. Irshad started business with cash investment Rs100,000
2) Purchased Building for cash Rs.50,000
3) Purchased Furniture on account (credit) Rs.30,000
4) Cash collected from Consultation Fee Income Rs.80,000
5) Rendered services and invoiced Rs.70,000
6) Paid salaries to employee Rs.25,000.
7) Paid Account payable Rs.20,000
8) Cash received from customer Rs.40,000
9) Paid Utilities expense for the month Rs.10,000
10) Mr. Irshad withdrew cash Rs.55,000 for personal use.

Assets Liabilities Capital


(+Revenue, -Expenses)
1 (How to do it) + 0 +
2
3
4
5
6
7
8
9
10
Mr. AYYAN started a business and completed following transactions.
1. Commence business with cash investment Rs.200,000.
2. Purchase goods for Rs.50,000 cash.
3. Purchase goods for Rs.95,000 on credit.
4. Sold goods for cash Rs.70,000.
5. Sold goods on credit for Rs.150,000.
6. Cash received from customer Rs.125,000.
7. Cash paid to creditor Rs.90,000.
8. Purchased Equipment for cash Rs.25,000.
9. Paid Salaries expense Rs.45,000.
10. Ayyan withdrew cash from business Rs.4,000 to pay his son coaching fee.
11. Paid rent in advance Rs.5,000
12. Collection of advance commission Rs.3,000

Required:
1. Prepare General Journal Entries to record above transactions.
2. Post these entries to “T” accounts (general ledger) and Trial balance for the period

For example:
Date Particulars P/R Debit Credit
1 Cash 200,000
Capital 200,000
(To record cash
investment)
Arshad Company uses three column cash book, on this date balance of Cash in Hand is
Rs.20,000 and balance of Cash in Bank Rs.25,000. The following are transactions of
Arshad Company for the month of May Current Year.
May 01: Cash sale Rs.9,000.
May 03: Purchase merchandise for cash Rs.6,000.
May 05: Purchased furniture for Rs.3,000 and issued cheque.
May 08: Sold goods to Mr. A on credit Rs.5,000.
May 10: Received cheque from Mr. A Rs.5,000.
May 12: Received cheque from Mr. B Rs.6,000 and deposited into bank same day.
May 15: Cash deposited into bank Rs.4,000.
May 18: Withdrew cash from bank for private use Rs.6,000.
May 25: Withdrew cash from bank for office use Rs.3,000.
May 30: Paid salaries Rs 2,000 from cash.
May 31: Issued Cheque for payment of rent Rs.3,000.
Required:
Record the above transactions in a Three Column Cash Book. Balance the cash book on
May 31, Year 01 and bring down the balance on June 01, Year 01. (Balance b/d , c/d)

How to do it
Receipt side Payment side
(pg 1) (pg 2)
Date Particulars P/R Sales Cash Cash Date Particulars P/R Purchase Cash Cash
discount in in discount in in
hand bank hand bank
Ahad Maxim Dealer maintains petty cash on imprest system. On December 31, of last
year the petty cashier reported a balance of Rs. 500 and presented vouchers for Rs.
5,500. A cheque was issued for the replenishment of the fund, out of which the
following payments were made during the month of January:

01 Paid for computer papers, clips and Inks etc. Rs. 400.
03 Paid for postage stamps Rs. 50.
05 Paid for Railway fare Rs. 550.
10 Paid for tea and cold drinks to customers Rs. 440.
11 Paid for Shehzore truck hire Rs. 500.
15 Paid for T.C.S courier service Rs. 450.
17 Paid for repair of office machine Rs. 200.
19 Paid for pen, ink pad and rubber stamps Rs. 250.
20 Paid for bus fare Rs. 30.
25 Paid for broast and zinger Rs. 400.
30 Paid for cartage Rs. 130.
Required:
a) Record the above transactions in the Petty Cash Book having special columns for
1) Stationary 2) Postage 3) Cartage 4) Entertainment
5) Conveyance 6) Miscellaneous
b) Balance the petty cash book on the June 30.
c) Give necessary entries to record all above transactions.
How to do it

Cash Voucher Date Particulars Cash Stationary Postage Cartage Entertainment Conveyance Misc
received No # paid
The accounting system of M/s ‘Red Rose’ Stores includes a general journal and the following
special journals:

(i) Purchase Journal


(ii) Sales Journal
(iii) Purchase Return and Allowances Journal
(iv) Sales Return and Allowances Journal
(v) General Journal

Selected transactions for the month of July are as follows:

July 04 Purchased merchandise from M/s Mehran & Co. on credit Rs.8,000.
July 06 Sold merchandise for cash Rs.10,000.
July 09 Returned defective merchandise to M/s Mehran & Co. Rs.500
July 12 Sold merchandise to M/s Green Traders on credit Rs.5,000.
July 16 Granted allowance of Rs.300 to M/s Green Traders due to supply of defective goods.
July 17 Purchased Furniture from M/s Haroon & Co on credit Rs.6,000.
July 19 Purchased merchandise for M/s Zahid & Co Rs.6,000.
July 20 Received an allowance of Rs.200 from M/s Zahid & Co due to defective goods.
July 25 Sold merchandise to M/s Saeed & Co on credit Rs.7,000.
July 26 Sold equipment on account Rs.5,000.
July 27 Purchase merchandise to M/s Blue & Co for Rs.8,000.
July 29 Sold merchandise to M/s Mercury Traders on credit Rs.6,000.
July 31 M/s Mercury Traders returned defective goods Rs.800.

Required: Record the above transactions in appropriate journals only.


How to make all
Sale return and allowances journal
Credit Memo
Date Customer P/R Amount (Rs.)
No.

Purchase journal
Invoice
Date Supplier P/R Amount (Rs.)
No.

Purchase return and allowances


Debit Memo
Date Supplier P/R Amount (Rs.)
No.

Sales journal
Date Invoice Customer P/R Amount (Rs.)
No.
On January 31, the following information was obtained from Mahad Co:

1. Balance as per cash book (Dr) Rs. 26,950.


2. Balance as per bank statement (Cr) Rs. 15,300.
3. Bank paid bill of exchange on firm’s behalf was not recorded in the cash book Rs. 1,200.
4. Check issued for the payment but was not presented into the bank Rs. 2,500.
5. Bank debited zakat not recorded in the cash book Rs. 150.
6. Check deposited into the bank but was not collected Rs. 6,900.
7. Bank paid rent on firm’s behalf — no amount recorded in the cash book Rs. 2,000.
8. Check deposited on 31st January into the bank but was not shown in the bank statement
Rs. 1,600.
9. A customer check deposited into the bank but returned by the bank NSF Rs. 7,900.
10. Outstanding checks Rs. 4,200.
11. Bank deducted collection charges not recorded in the cash book Rs. 100.
12. A check was accrued Rs. 1,500.

Required:

i. Prepare a Bank Reconciliation Statement.


ii. Pass adjusting entries in the general journal.

How to make
Particulars Cashbook Bank Statement
REQUIRED :

Prepare adjusting entries and adjusted trial balance


Prepare Income or Loss Statement.
Prepare Balance Sheet.
Prepare closing Entries and post-closing trial balance

You might also like