CA.

Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

For Eenquiries
Call or whatsapp: 8800215448

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Practical Approch to (Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)

Therory of Accounting Email: [Link]@[Link]

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(1) (2)

(ii) to keep records of income and expenses in such a way that the net profit or net
CA. Naresh Aggarwal’s
CHAPTER -1 loss may be calculated.
ACADEMY of
Basics of ACCOUNTS
Accounting (iii) to keep records of assets and liabilities in such a way that the financial position of
the business may be ascertained.
Accounting • Costing • Taxation • Financial Management
(iv) to know the names of the customers and the amount due from them.
When
Westa Patel
person starts
Nagar, a business,
New whether large
Delhi. Ph:8800215448. or small,
Website: his main aim is to earn profit.
[Link]
He receives money from certain sources like sale of goods, interest on bank deposits (v) to know the names of suppliers and the amount due to them.
etc. He has to spend money on certain items like purchase of goods, salary, (vi) to have important information for legal and tax purposes.
advertisement etc. These activities take place during the normal course of his business.
He would naturally be curious at the year end, to know the progress of his business.
Advantages of book-keeping
The number of business transactions are generally too large, that it is not possible to
recall his memory as to how the money had been earned and spent. But if he had From the above objectives of book-keeping, the following advantages can be noted :
noted down these transactions as and when they were occurred, he can readily get (i) Permanent and Reliable Record : Book-keeping provides permanent record for
the required information. Hence, the details of the business transactions have to be all business transactions, replacing the memory which fails to remember
recorded in a clear and systematic manner to get answers easily and accurately for everything.
the following questions at any time he likes : (ii) Arithmetical Accuracy of the Accounts : With the help of book keeping trial balance
(i) What is the Net Profit or Loss of the business ? can be easily prepared. This is used to check the arithmetical accuracy of

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(ii) What are the value of Assets, Liabilities and Capital of the business concern? accounts.

(iii) How much money is used in different type of expenses and money earned from (iii) Net Result of Business Operations : It helps in ascertaining the result (Profit or
different type of incomes Loss) of the business correctly.

(iv) How much amount is to be receive from customers to whom goods have been (iv) Ascertainment of Financial Position : It is not enough to know the profit or loss;
sold on credit ? the proprietor should have a full knowlage of his financial position in business
which includes Assets, Liabilities and Capital values. Once the full information is
(v) How much amount is to be paid to suppliers on account of credit purchases?
known, this helps him to plan for the next year’s business.
These and several other questions can be very easily answered with the help of
(v) Ascertainment of the Progress of Business: When a proprietor prepares financial
accounting.
statements evey year, he will be in a position to compare the statements. This
will enable him to ascertain the growth of his business. Thus book keeping enables
Book-keeping a long range planning of business activities besides satisfying the short term
The need for recording business transactions in a clear and systematic manner is the objective of calculation of annual profits or losses.
basis which gives rise to Book-keeping. (vi) Control over Assets : In the course of business, the proprietor acquires various
Book-keeping is that branch of knowledge which tells us how to keep a record of assets like building, machines, furnitures, etc. He has to keep a check over them
business transactions. It is often routine and clerical in nature. Only those transactions and find out their values year after year.
which are related to the business and which can be expressed in terms of money are (vii) Identifying Do’s and Don’ts : Book keeping enables the proprietor to make an
recorded. The activities of book-keeping include recording in the journal, posting to intelligent and periodic analysis of various aspects of the business such as
the ledger and balancing of accounts. R.N. Carter says, “Book-keeping is the science purchases, sales, expenditures and incomes. From such analysis, it will be
and art of correctly recording in the books of account all those business transactions possible to focus his attention on what should be done and what should not be
that result in the transfer of money or money’s worth”. done to enhance his profit earning capacity.
(viii) Fixing the Selling Price : In fixing the selling price, the businessmen have to
Objectives of book-keeping consider many aspects of accounting information such as cost of production,
cost of purchases and other expenses. Accounting information is essential in
The objectives of book-keeping are as follows :
determining selling prices.
(i) to have permanent record of all the business transactions.
(3) (4)

Accounting Process
CA. Naresh Aggarwal’s The process of accounting as per the above definition is given below:
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management Input  Process  Output 

West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Identifying

Recording
(ix) Taxation : Businessmen pay sales tax, income tax, etc. The tax authorities require Business  Classifying  Information
them to submit their accounts. For this purpose, they have to maintain a record transactions Summarising to
of all their business transactions. (monetary value) Analysing Users
(x) Management Decision-making : Planning, reviewing, revising, controlling and Interpreting
decision-making functions of the management are well helped by book-keeping Communicating
records and reports.
(xi) Legal Requirements : Claims against and for the firm in relation to outsiders can In order to accomplish its final objective of communicating information to the users,
be confirmed and established by producing the records as evidence in the court. accounting embraces the following functions.
(i) Identifying : Identifying the business transactions from the source documents.

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Accounting (ii) Recording : The next function of accounting is to keep a systematic record of all
Book-keeping does not present a clear financial picture of the state of affairs of a business transactions, which are identified in an orderly manner, soon after their
business. When one has to make a judgement regarding the financial position of the occurrence in the journal or subsidiary books.
firm, the information contained in these books of accounts has to be analysed and (iii) Classifying : This is concerned with the classification of the recorded business
interpreted. This is the main purpose of accounting. transactions so as to group the transactions of similar type at one place. i.e., in
Accounting is the process of recording business transactions in a systematic manner, ledger accounts. In order to verify the arithmetical accuracy of the accounts, trial
in term of money and analysing the results thereof. Accounting is needed to maintain balance is prepared.
records of all money related transaction of an organisation in a very systematic way. (iv) Summarising : The classified information available from the trial balance are used
According to American Institute of Certified Public Accountants “Accounting is the art to prepare profit and loss account and balance sheet in a manner useful to the
of recording, classifying and summarising in a significant manner and in terms of money, users of accounting information.
transactions and events which are, in part at least, of a financial character, and (v) Analysing : It establishes the relationship between the items of the profit and loss
interpreting results thereof. account and the balance sheet. The purpose of analysing is to identify the financial
Accounting is considered as a system which collects and processes financial strength and weakness of the business. It provides the basis for interpretation.
information of a business. These informations are reported to the users to enable (vi) Interpreting : It is concerned with explaining the meaning and significance of the
them to make appropriate decisions. relationship so established by the analysis. Interpretation should be useful to the
users, so as to enable them to take correct decisions.
Objectives of Accounting (vii) Communicating : The results obtained from the summarised, analysed and
The main objectives of accounting are as follows interpreted information are communicated to the interested parties.
(i) to maintain accounting records.
(ii) to calculate the result of operations. Accounting Cycle
(iii) to ascertain the financial position. An accounting cycle is a complete sequence of accounting process, that begins with
(iv) to communicate the information to users the recording of business transactions and ends with the preparation of final accounts.
The flow of activites in accounting cycle is given below :
(5) (6)

Relationship between Accountancy, Accounting and Book-keeping

CA. Naresh Aggarwal’s
Book-keeping provides the basis for accounting and it is complementary to accounting
ACADEMY of ACCOUNTS process. Accounting begins where book-keeping ends. Accountancy includes
accounting and book-keeping. This relationship can be easily understood with the
Accounting • Costing • Taxation • Financial Management help of the following diagram.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

Accountancy
Transactions  Journal  Ledger  Trial Balance
Accounting
 (Next Year) 
Book Keeping
Balance Sheet  Profit & Loss Account  Trading Account

When a businessman starts his business activities, he records the day-to-day

transactions in the Journal. From the journal the transactions move further to the ledger

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Distinction between Book-keeping and Accounting
where accounts are written up. Here, the combined effect of debit and credit pertaining
to each account is arrived at in the form of balances. In general the following are the differences between book-keeping and accounting.

To prove the accuracy of the work done, these balances are transferred to a statement No. Basis Book-keeping Accounting
called trial balance. Preparation of trading and profit and loss account is the next step. 1. Scope Recording and maintenance It is not only recording and
The balancing of profit and loss account gives the net result (profit or loss) of the of books of accounts. maintenance of books of
business transactions. To know the financial position of the business concern balance accounts but also includes
sheet is prepared at the end. analysis, interpreting and
These transactions which have completed the current accounting year, once again communicating the
come to the starting point – the journal – and they move with new transactions of the information.
next year. Thus, this cyclic movement of the transactions through the books of accounts 2. Stage Primary stage. Secondary stage.
(accounting cycle) is a continuous process.
3. Objective To maintain systematic To ascertain the net result
records of business of the business operation.
Accountancy, Accounting and Book-keeping transactions.
Accountancy refers to a systematic knowledge of accounting. It explains “why to do” 4. Nature Often routine and clerical Analytical and executive
and “how to do” of various aspects of accounting. It tells us why and how to prepare in nature. in nature.
the books of accounts and how to summarize the accounting information and 5. Responsibility Book-keeper is responsible An accountant is also
communicate it to the interested parties. for recording business responsible for the work of
Accounting refers to the actual process of preparing and presenting the accounts. In transactions. a book-keeper.
other words, it is the art of putting the academic knowledge of accountancy into practice. 6. Supervision The book-keeper does not An accountant supervises
Book-keeping is a part of accounting and is concerned with record keeping or supervise and check the and checks the work of the
maintenance of books of accounts. It is often routine and clerical in nature. work of an Accountant. book-keeper.
7. Staff involved Work is done by the junior Senior staff performs the
staff of the organisation. accounting work.
(7) (8)

External Users
CA. Naresh Aggarwal’s
(a) Creditors, banks, To determine whether the principal and the interest thereof
ACADEMY of ACCOUNTS money lenders will be paid in when due.

Accounting • Costing • Taxation • Financial Management

(b) Present investors To know the position, progress and prosperity of the
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
business in order to ensure the safety of their investment.
(c) Potential investors To decide whether to invest in the business or not.
Users of Accounting Information
(d) Government and To know the earnings in order to assess the tax liabilities
The basic objective of accounting is to provide information which is useful for persons Tax authorities of the business.
and groups inside and outside the organisation.
(e) Regulatory To evaluate the business operation under the regulatory
I. Internal users: Internal users are those individuals or groups who are within the agencies legislation.
organisation like owners, management, employees and trade unions.
(f) Researchers To use in their research work.
II. External users: External users are those individuals or groups who are outside
the organisation like creditors, investors, banks and other lending institutions, present
and potential investors, Government, tax authorities, regulatory agencies and Branches of Accounting
Increased scale of business operations has made the management function more

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researchers.
complex. This has given raise to specialised branches in accounting. The main
branches of accounting are Financial Accounting, Cost Accounting and Management
Users of Accounting Information
Accounting.

Branches of Accounting
Internal Users External Users

Owners Management Employees and Financial Cost Management

Trade unions
Accounting Accounting Accounting

Creditors, Banks, Present Potential Govt. and Regulatory Researchers (1) Financial Accounting : It is concerned with recording of business transactions
Money Lenders Investors Investors Tax Authorities Agencies in the books of accounts in such a way that operating result of a particular period
and financial position on a particular date can be known.
(2) Cost Accounting : It relates to collection, classification and ascertainment of
The users and their need for information are as follows: the cost of production or job undertaken by the firm.
Internal Users Need for Information (3) Management Accounting : It relates to the use of accounting data collected
(a) Owners To know the profitability and financial soundness of the with the help of financial accounting and cost accounting for the purpose of policy
business. formulation, planning, control and decision making by the management.
(b) Management To take prompt decisions to manage the business efficiently.
(c) Employees and To form judgement about the earning capacity of the Basic Accounting Terms
Trade unions business since their remuneration and bonus depend on it. The understanding of the subject becomes easy when one has the knowledge of
a few important terms of accounting. Some of them are explained as follows :
(1) Transactions : Transactions are those activities of a business, which involve
(9) (10)

(9) Purchases : Purchases refers to the amount of goods bought by a business for
CA. Naresh Aggarwal’s resale or for use in the production. Goods purchased for cash are called cash
ACADEMY of ACCOUNTS purchases. If it is purchased on credit, it is called as credit purchases. Total purchases
include both cash and credit purchases.
Accounting • Costing • Taxation • Financial Management (10) Purchases Return or Returns Outward : When goods are returned to the
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] suppliers due to defective quality or not as per the terms of purchase, it is called as
purchases return. To find net purchases, purchases return is deducted from the total
transfer of money or goods or services between two persons or two accounts. For purchases.
example, purchase of goods, sale of goods, borrowing from bank, lending of money, (11) Sales : Sales refers to the amount of goods sold that are already bought or
salaries paid, rent paid, commission received and dividend received. manufactured by the business. When goods are sold for cash, they are cash sales
(2) Proprietor : A person who owns a business is called its proprietor. He contributes but if goods are sold and payment is not received at the time of sale, it is credit sales.
capital to the business with the intention of earning profit. Total sales includes both cash and credit sales.
(3) Capital : It is the amount invested by the proprietor/s in the business. This amount (12) Sales Return or Returns Inward : When goods are returned from the customers
is increased by the amount of profits earned and the amount of additional capital due to defective quality or not as per the terms of sale, it is called sales return or
introduced. It is decreased by the amount of losses incurred and the amounts returns inward. To find out net sales, sales return is deducted from total sales.
withdrawn. For example, if [Link] starts business with Rs.5,00,000, his capital (13) Stock : Stock includes goods unsold on a particular date. Stock may be opening

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would be Rs.5,00,000. and closing stock. The term opening stock means goods unsold in the beginning of
(4) Assets : Assets are the properties of every description belonging to the business. the accounting period. Whereas the term closing stock includes goods unsold at the
Cash in hand, plant and machinery, furniture and fittings, bank balance, debtors, bills end of the accounting perid. For example, if 2,000 units purchased @ Rs.10 per unit
receivable, stock of goods, investments, Goodwill are examples for assets. Assets remain unsold, the closing stock is Rs.20,000. This will be opening stock of the
can be classified into tangible and intangible. subsequent year.
Tangible Assets: These assets are those having physical existence. It can be seen (14) Revenue : Revenue means the amount receivable or realised from sale of goods
and touched. For example, plant & machinery, cash, etc. and earnings from interest, dividend, commission, etc.
Intangible Assets: Intangible assets are those assets having no physical existence (15) Expense : It is the amount spent in order to produce and sell the goods and
but their possession gives rise to some rights and benefits to the owner. It cannot be services. For example, purchase of raw materials, payment of salaries, wages, etc.
seen and touched. Goodwill, patents, trademarks are some of the examples. (16) Income : Income is the difference between revenue and expense.
(5) Liabilities : Liabilities refer to the financial obligations of a business. These denote (17) Voucher : It is a written document in support of a transaction. It is a proof that a
the amounts which a business owes to others, e.g., loans from banks or other persons, particular transaction had been taken place for the value stated in the voucher. It may
creditors for goods supplied, bills payable, outstanding expenses, bank overdraft etc. be in the form of cash receipt, invoice, cash memo, bank pay-in-slip etc. Voucher is
(6) Drawings : It is the amount of cash or value of goods withdrawn from the business necessary to audit the accounts.
by the proprietor for his personal use. It is deducted from the capital. (18) Invoice : Invoice is a business document which is prepared when one sell goods
(7) Debtors : A person (individual or firm) who receives a benefit without giving money to another. The statement is prepared by the seller of goods. It contains the information
or money’s worth immediately, but liable to pay in future or in due course of time is a relating to name and address of the seller and the buyer, the date of sale and the clear
debtor. The debtors are shown as an asset in the balance sheet. For example, Mr. A description of goods with quantity and price.
bought goods on credit from Mr. B for Rs.10,000. Now Mr. A is a debtor to Mr. B till he (19) Receipt : Receipt is an acknowledgement for cash received. It is issued to the
pays the value of the goods. party paying cash. Receipts form the basis for entries in cash book.
(8) Creditors : A person who gives a benefit without receiving money or money’s (20) Account : Account is a summary of relevant business transactions at one place
worth immediately but to claim in future, is a creditor. The creditors are shown as a relating to a person, asset, expense or revenue named in the heading. An account is
liability in the balance sheet. In the above example Mr. B is a creditor to Mr. A till he a brief history of financial transactions of a particular person or item. An account has
receive the value of the goods. two sides called debit side and credit side
(11) (12)

period of one year is considered as the accounting period.

CA. Naresh Aggarwal’s
CHAPTER - 2 (4) Going Concern Assumption : As per this assumption, the business will exist
ACADEMY ofof Accounting
Frame Work ACCOUNTS for a long period and transactions are recorded from this point of view. There is
neither the intention nor the necessity to wind up the business in the foreseeable
Accounting • Costing • Taxation • Financial Management future.
West PatelisNagar,
Accounting New [Link]
the language Ph:8800215448.
business. It Website:
records [Link]
business transactions taking
place during the accounting period. Accounting communicates the result of the Basic Concepts of Accounting
business transactions in the form of final accounts. With a view to make the
These concepts guide how business transactions are reported. On the basis of the
accounting results understood in the same sense by all interested parties, certain
above four assumptions the following concepts (principles) of accounting have been
accounting assumptions, concepts and principles have been developed over a
developed.
course of period.
(1) Dual Aspect Concept : Dual aspect principle is the basis for Double Entry System
Frame Work of Accounting
of book-keeping. All business transactions recorded in accounts have two aspects. It
based on the duality nature of the transactions. Every financial transaction always
has a double effect on the financial position of the enterprise. For example if you buy
Assumptions Concepts Modifying Principles Goods for Rs. 10,000 then it affects twice: first effect is on the cash balance as it
1. Accounting Entity 1. Dual Aspect 1. Cost Benefit decreases and second effect is that the stock in hand is increased. Or if you take a

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2. Money Measurement 2. Revenue Recognisation 2. Materiality loan from a Bank of Rs.50,000 not only you get an asset in form of cash but also a
3. Accounting Period 3. Historical Cost 3. Consistency liability that you have to pay the debt. Similarly all the transactions always have two
4. Going Concern 4. Matching 4. Prudence aspects. Therefore, in modern accounting system all the transactions are recorded in
5. Full Disclosure two parts one is Debit and other is Credit.

6. Verifiable objective evidence (2) Revenue Recognisation Concept : The revenue recognition principle states that,
under the accrual basis of accounting, we should only record revenue when an entity
has substantially completed a revenue generation process; thus, we record revenue
Basic Assumptions when it has been earned. For example, when an entity sells goods on credit to its
(1) Accounting Entity or Business Entity Assumption : According to this customer, it can recognize the revenue immediately upon completion of the sale, even
assumption, business is considered as a separate unit which is distinct from its owners, if it does not expect payment from the customer for several days or weeks.
suppliers, customers, managers and others. A business unit should have a completely Also, if an entity receives payment in advance from a customer, then the entity records
separate set of Books of Accounts. We should have to record every transaction only this payment as a liability, not as revenue. Only after it has completed all work under
from the business point of view and not from the owners or any other persons point of the arrangement with the customer can it recognize the payment as revenue.
view. Even the proprietor is treated as a creditor / money lender to the extent of his
(3) Historical Cost Concept : Under this concept, assets are recorded at the price
capital.
paid to acquire them and this cost is the basis for all subsequent accounting for the
(2) Money Measurement Assumption : In accounting, only those business asset. For example, if a piece of land is purchased for Rs.5,00,000 and its market
transactions and events which are of financial nature are recorded. For example, when value is Rs.8,00,000 at the time of preparing final accounts the land value is recorded
Sales Manager is not on good terms with Production Manager, the business is bound only for Rs.5,00,000. Thus, the balance sheet does not indicate the price at which the
to suffer. This fact will not be recorded, because it cannot be measured in terms of asset could be sold for.
money.
(4) Matching Concept : Matching the revenues earned during an accounting period
(3) Accounting Period Assumption : The users of financial statements need periodical with the cost associated with the same period to ascertain the result of the business
reports to know the operational result and the financial position of the business concern. concern is called the matching concept. It is the basis for finding accurate profit for a
Hence it becomes necessary to close the accounts at regular intervals. Usually a
(13) (14)

is “anticipate no profit and provide for all possible losses”. For example, while
CA. Naresh Aggarwal’s valuing stock in trade, market price or cost price whichever is less is considered.
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management Accounting Standards
To promote world-wide uniformity in published accounts, the International
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Accounting Standards Committee (IASC) has been set up in June 1973 with nine
nations as founder members. The purpose of this committee is to formulate and
publish in public interest, standards to be observed in the presentation of audited
period which can be safely distributed to the owners.
financial statements and to promote their world-wide acceptance and observance.
(5) Full Disclosure Concept : It involves proper classification and explanations of IASC exist to reduce the differences between different countries’ accounting
accounting information. Accounting statements should disclose fully and completely practices. This process of harmonisation will make it easier for the users and
all the significant information. On the basis on this, decisions will be taken by preparers of financial statement to operate across international boundaries. In our
various interested parties and wrong and incomplete infromation may lead to country, the Institute of Chartered Accountants of India has constituted Accounting
wrong decisions. Standard Board (ASB) in 1977. The ASB has been empowered to formulate and
(6) Verifiable and Objective Evidence Concept : This principle requires that each issue accounting standards, that should be followed by all business concerns in
recorded business transactions in the books of accounts should have an adequate India.

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evidence to support it. For example, cash receipt must support the payments made
so that genuineness of the transactions can be established. The documentary evidence
of transactions should be free from any bias. All accounting records should based on
documentary evidence which are capable of verification.

Modifying Principles
To make the accounting information useful to various interested parties, the basic
assumptions and concepts discussed earlier have been modified. These modifying
principles are as under :
(1) Cost Benefit Principle : This modifying principle states that the cost of applying a
principle should not be more than the benefit derived from it. If the cost is more than
the benefit then that principle should be modified.
(2) Materiality Principle : The materiality principle requires all relatively relevant
information should be disclosed in the financial statements. Unimportant and immaterial
information are either left out or merged with other items.
(3) Consistency Principle : The aim of consistency principle is to preserve the
comparability of financial statements. The rules, practices, concepts and principles
used in accounting should be continuously observed and applied year after year.
Comparisons of financial results of the business among different accounting period
can be significant and meaningful only when consistent practices were followed in
ascertaining them. For example, depreciation of assets can be provided under different
methods, but whichever method is followed, it should be followed regularly.
(4) Prudence (Conservatism) Principle : Prudence principle takes into consideration
all prospective losses but leaves all prospective profits. The essence of this principle
(15) (16)

(i) Scientific system : This is the only scientific system of recording business
CHAPTER
CA. Naresh -3
Aggarwal’s transactions. It helps to attain the objectives of accounting.
ACADEMY of ACCOUNTS
Origin, Source Documents and Vouchers (ii) Complete record of transactions : This system maintains a complete record of
all business transactions.
Accounting • Costing • Taxation • Financial Management
Accounting process starts with identifying the transactions to be recorded in the (iii) A check on the accuracy of accounts : By the use of this system the accuracy
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] of the accounting work can be established by the preparation of trial balance.
books of accounts. Accounting identifies only those transactions and events which
involve money. They should be of financial character. Accountant does so by (iv) Ascertainment of profit or loss : The profit earned or loss occured during a period
sorting out various cash memos, invoices, bills, receipts and vouchers. can be ascertained by the preparation of profit and loss account.
In the accounting process, the first step is the recording of transactions in the books (v) Knowledge of the financial position : The financial position of the concern can
of accounts. The origin of a transaction is derived from the source document. be ascertained at the end of each period through the preparation of balance
sheet.
Double Entry System (vi) Full details for control : This system permits accounts to be kept in a very
Double entry system was introduced to the business world by an Italian merchant detailed form, and thereby provides sufficient informations for the purpose of
named Lucas Pacioli in 1494. Though the system has originated in Italy but most of control.
the countries now have adopted this system. (vii) Comparative study : The results of one year may be compared with those of
previous years and the reasons for change may be ascertained.

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There are numerous transactions in a business concern. Each transaction, when
closely analysed, reveals two aspects. The modern system of accounting is based (viii) Helps in decision making : The mangement may be able to obtain sufficient
on this duality nature of the transactions. Every financial transaction always has a information for its work, especially for making decisions. Weaknesses can be
double effect on the financial position of the enterprise. For example if you buy Goods detected and remedial measures may be applied.
for Rs. 10,000 then it affects twice: first effect is on the cash balance as it decreases (ix) Detection of fraud : The systematic and scientific recording of business
and second effect is that the stock in hand is increased. Or if you take a loan from a transactions on the basis of this system minimises the chances of fraud.
Bank of Rs.50,000 not only you get an asset in form of cash but also a liability that you
have to pay the debt. Similarly all the transactions always have two aspects. There-
Accounting Equation
fore, in modern accounting system all the transactions are recorded in two parts one
is Debit and other is Credit. Accounting equation is based on dual aspect concept. It emphasizes on the fact that
every transaction has a two sided effect i.e., on the assets and claims on assets.
In short, the basic principle of this system is, for every debit, there must be a
Always the total claims (those of outsiders and of the proprietors) will be equal to the total
corresponding credit of equal amount and for every credit, there must be a
assets of the business concern. The claims are also known as equities.
corresponding debit of equal amount.

Assets = Capital + Liabilities

Features of Double Entry System
or
(i) Every business transaction affects two accounts.
Assets = Equities
(ii) Each transaction has two aspects, i.e., debit and credit.
(iii) It is based upon accounting assumptions concepts and principles.
(iv) Helps in preparing trial balance which is a test of arithmetical accuracy in Fixed Assets Current Assets Owner’s Equity Outsider’s Equity
accounting. or Capital or Liabilities

(v) Preparation of final accounts with the help of trial balance.

Account
Every transaction has two aspects and each aspect has an account. It is stated
Advantages of Double Entry System that ‘an account is a summary of relevant transactions at one place relating to a
The advantages of Double Entry system are as follows: particular head’.
(17) (18)

accounts, because of buying goods from them or selling goods to them or

CA. Naresh Aggarwal’s borrowing from them or lending to them. Thus they become either Debtors or
ACADEMY of ACCOUNTS Creditors. The proprietor being an individual his capital account and his drawings
account are also personal accounts.
Accounting • Costing • Taxation • Financial Management (2) Impersonal Accounts : All those accounts which are not personal accounts
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] are impersonal accounts. This is further divided into two types viz. Real and Nominal
accounts.
Classification of Accounts (i) Real Accounts : Accounts relating to properties and assets which are owned by
Transactions can be divided into three categories. the business concern are real accounts. Real accounts include tangible and
(1) Transactions relating to properties, goods or cash (Real Accounts) intangible accounts. For example, Land, Building, Goodwill, Purchases, etc.

(2) Transactions relating to expenses or losses and incomes or gains (Nominal (ii) Nominal Accounts : These accounts do not have any existence, form or shape.
Accounts) They relate to incomes and expenses and gains and losses of a business
concern. For example, Salary Account, Rent Account, Interest Account, Fees
(3) Transactions relating to individuals and firms (Personal Accounts)
Account etc.
Therefore, accounts can also be classified into Personal, Real and Nominal. The
classification may be illustrated as follows :
Source Documents

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Source documents are the evidences of business transactions which provide
Accounts
information about the nature of the transaction, the date, the amount and the parties
involved in it. Transactions are recorded in the books of accounts when they actually
take place and are duly supported by source documents. According to the verifiable
Personal Impersonal objective principle of Accounting, each transaction recorded in the books of accounts
should have adequate proof to support it. These supporting documents are the written
and authentic proof of the correctness of the recorded transactions. These documents
are required for audit and tax assessment. They also serve as the legal evidence in
Natural Artificial Representative Real Nominal case of a dispute. Bills receivable, bills payable, wage sheet, salaries pay slips,
correspondence etc., also serve as the source documents. There must be a source
document for each transaction recorded in the books of accounts. The following are
the most common source documents.
Tangible Intangible Income Expense

(1) Invoice / Bill and Cash Memo: When a trader sells goods on credit, he prepares
(1) Personal Accounts : The accounts which relate to persons. Personal accounts a sale invoice and if he sells goods for cash, he prepares a cash memo . Invoice
include the following. and Cash-Memo both are similer in pro-forma and contains full details relating to
(i) Natural Persons : Accounts which relate to individuals. For example, Mohan’s the amount, the terms of payment, name and address of the seller and buyer etc.
A/c, Shyam’s A/c etc. The original copy of the sale invoice or cash memo is sent to the purchaser and
(ii) Artificial persons : Accounts which relate to a group of persons or firms or its duplicate copy is kept for making records in the books of accounts.
institutions. For example, Reliance Ltd., HDFC Bank, Life Insurance Corporation Similarly, when a trader purchases goods on credit, he receives an Invoice from
of India, Ramjus Sports Club etc. the supplier of goods and if he purchases goods for cash he receives a Cash-
(iii) Representative Persons : Accounts which represent a particular person or Memo from the supplier of goods.
group of persons. For example, Outstanding Salary A/c, Prepaid Insurance
A/c, Advance Fees A/c etc.
The business concern may keep business relations with all the above personal
(19) (20)

CA. Naresh Aggarwal’s RECEIPT

ACADEMY of ACCOUNTS Accurate Watch Co.

Accounting • Costing • Taxation • Financial Management 135, West Patel Nagar, New Delhi-110008.

West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] No: 192 Date : 18.05.2016

Received with thanks a sum of Rs.15,000 (Rupees fifteen thousand

only) from M/s ABC & Co. being the supply of watches as per the list
enclosed.
Invoice / Bill / Cash Memo Cheque/DD/No. : 210345
Accurate Watch Co. Dated : 10.05.2016
Bank Name : HDFC Bank, East Patel Nagar
135, West Patel Nagar, New Delhi-110008. Revenue
No: 152 Date : 18.05.2016 Stamp

Manager
Name & address of the Customer : XYZ Enterprises, for Accurate Watch Co.

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181, East Patel Nagar,
New Delhi-110008. (3) Debit Note : A debit note is prepared by the buyer and it contains the date of of
the goods returned, name of the supplier, details of the goods returned and reasons
[Link]. Description RateRs. Qty. Amount for returning the goods. Each debit note is serially numbered. A duplicate copy or
counter foil of the debit note is retained by the buyer. On the basis of debit note,
1. Titan Regulia 1,800 3 5,400
the suppliers account is debited in the books.
2. Titan Raga 1,200 2 2,400
7,800
Less: Discount 10% (-)780
Total 7,020
Terms : Goods once sold are not taken back.
E&OE
Authorised signatory
for Accurate Watch Co.

(2) Receipt : When a trader receives cash from a customer, he issues a receipt
containing the date, the amount and the name of the customer. The original
copy is handed over to the customer and the duplicate copy is kept for record.
In the same way, whenever we make payment, we obtain a receipt from the
(4) Credit Note : A credit note is prepared by the seller and it contains the date on
party to whom we make payment.
which goods are returned, name of the customer, details of the goods received
back, amount of such goods and reasons for returning the goods. Each credit
note is serially numbered. A duplicate copy of the credit note is retained for the
record purpose. On the basis of credit note, the customer’s account is credited in
the books.
(21) (22)

CA. Naresh Aggarwal’s

ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

(7) Vouchers : The documents prepared for the purpose of recording business
transactions in the books of accounts are known as vouchers. Voucher is prepared
on the basis of source documents. For recording business transactions in the books
of accounts, source documents are further analyzed and conclusion is drawn as to

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which account is to be debited and which account is to be credited. The document on
which this conclusion is written is known as voucher or accounting voucher.

(5) Pay-in-slip : Pay-in-slip is a form available in banks and is used to deposit money
Features of Voucher
into a bank account. Each pay-in-slip has a counterfoil which is returned to the
depositor duly sealed and signed by the bank official. This source document relates (i) It is a document.
to bank transactions. It gives details regarding date, account number, amount (ii) It is prepared by analyzing the source documents.
deposited (in cash or cheque) and name of the account (iii) It contains decision regarding the accounts to be debited and credited.
(iv) It helps in recording an accounting entry in the books of accounts.
(v) It is prepared and signed by the accountant and is also countersigned by the
authorized signatory of the business enterprise.

Preparation of Vouchers
Business transactions in the books of accounts are available in the source documents.
These documents are further analysed and conclusion is to be drawn about which
account is to be debited and which account is to be credited. After deciding the head
. redloh of accounts to be debited and credited, vouchers are prepared. Usually, blank forms
are readily available in the printed form in the market.
Accounting Vouchers are broadly of two types
I. Cash Voucher II. Non Cash Voucher

Types of Vouchers
(6) Cheque : A cheque is a document in writing drawn upon a specified banker to
pay a specified sum to the bearer or the person named in it and payable on
demand. Each cheque book has a counterfoil in which the same details in the Cash Voucher Non Cash Voucher
cheque are filled. The counterfoil remains with the account holder for his future (Transfer Voucher)
reference. The counterfoil forms the source document for entries to be made in
Debit Voucher Credit Voucher
the books of accounts.
(23) (24)

CA. Naresh Aggarwal’s

ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

(I) Cash Vouchers : Cash Vouchers are vouchers that are prepared at the time of
receipt or payment of cash. Cash Vouchers are of two types:
(i) Credit Vouchers : Credit Vouchers are vouchers that are prepared at the
time when cash is received. For example when goods sold for cash, sale of
investments, cash collected from customer etc. The content of a Credit
Vouchers are as follows :
(1) Name and address of entity (6) Narration (a brief description)
(2) Voucher Number (7) Supporting voucher number
(3) Date of Preparing Voucher (8) Signature of the preparer
(4) Name of A/c to be Credited (9) Signature of authorized signatory (II) Non Cash Vouchers (Transfer Vouchers) : Non Cash Vouchers are vouchers
(5) Net amount of transaction prepared for the transitions that do not involve cash. For example, credit sales, credit

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purchase, sales return etc. The content of a Non Cash Vouchers are as follows :
(1) Name and address of entity (6) Net amount of transaction
(2) Voucher Number (7) Narration (a brief description)
(3) Date of Preparing Voucher (8) Supporting voucher number
(4) Name of A/c to be Debited (9) Signature of the preparer
(5) Name of A/c to be Credited (10) Signature of authorized signatory

(ii) Debit Vouchers : Debit Vouchers are vouchers that are prepared when cash
is paid. Payment may be on account of expenses, purchases, drawing of
the proprietor, payment to creditor etc. The content of a Debit Vouchers are
as follows :
(1) Name and address of entity (6) Narration (a brief description)
(2) Voucher Number (7) Supporting voucher number
(3) Date of Preparing Voucher (8) Signature of the preparer
(4) Name of A/c to be Credited (9) Signature of authorized signatory
(5) Net amount of transaction (10) Receipt (Optional)
(25) (26)

CA. Naresh Aggarwal’s ‘Assets = Liabilities + Capital’. The accounting equation is a statement of equality

ACADEMY of ACCOUNTS
CHAPTER -4 between the debits and the credits. The rules of debit and credit depend on the
nature of an account. For the purpose of the accounting equation approach, all
Accounting
Accounting • Costing Procedures
• Taxation • Financial Management the accounts are classified into five types and transactions are entered in the
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] books of accounts by applying the following rules :
After identifying the business transactions from the source document the next (i) Assets : Debit for (+) and Credit for (-)
function of accounting is to keep a systematic record of all business transactions. (ii) Expenses / Loss : Debit for (+) and Credit for (-)
All these transactions are recorded in an orderly manner, soon after their occurrence
(iii) Liabilities : Credit for (+) and Debit for (-)
in the journal or subsidiary books.
(iv) Captial : Credit for (+) and Debit for (-)
The books in which a transaction is recorded for the first time from a source document
are called Books of Original Entry or Prime Entry. Journal is one of the books of (v) Income / Revenues : Credit for (+) and Debit for (-)
original entry in which transactions are originally recorded in a chronological (day-to-
day) order according to the principles of Double Entry System.
Account
An account is a record of all business transactions relating to a particular person or
Journal Entries asset or liability or expense or income. In accounting, we keep a separate record of

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Journal entries are the first step in the accounting cycle and are used to record all each individual, asset, liability, expense or income. The place where such a record is
business transactions and events in the accounting system. As business events occur maintained is termed as an ‘Account’.
throughout the accounting period, journal entries are recorded in the journal book to All accounts are divided into two sides. The left hand side of an account is called Debit
show how the event changed in the finacial position of the business. side and the right hand side of an account is called Credit side.
Journal is a date-wise record of all the transactions with details of the accounts
debited and credited and the amount of each transaction. In the Journal, each Ledger
transaction is dealt with separately. Journal entries use debits and credits to record
A Ledger is a book which contains all the accounts whether personal, real or nominal,
the changes of the finacial position in the journal. There are two different ways to
which are first entered in journal or special purpose subsidiary books.
learn the effects of debits and credits on accounts in the double entry system of
book keeping. They are (i) Traditional Approach, and (ii) Accounting Equation According to L.C. Cropper, ‘the book which contains a classified and permanent record
Approach. Irrespective of the approach used, the effect on the books of accounts of all the transactions of a business is called the Ledger’.
remains the same. The ledger that is normally used in a majority of business concern is a bound note
(1) Traditional approach : Following the traditional approach accounts are book. This can be preserved for a long time. Its pages are consequently numbered.
classified as real, personal, and nominal accounts. Real accounts are accounts Each account in the ledger is opened preferably on a separate page. If one page is
relating to physical assets. Personal accounts are accounts relating to persons completed, the account will be continued in the next or some other page. But in bigger
or organisations with whom the business has transactions and will mainly consist concerns, where it is not practical to keep the ledger as a bound note book, Loose-leaf
of accounts of proprietor, debtors and creditors. Nominal accounts relate with ledger are prepared in place of a bound note book. In a loose-leaf ledger, appropriate
revenue, expenses, gains, and losses. Transactions are entered in the books of ruled sheets of thick paper are introduced and fixed up with the help of a binder.
accounts by applying the following golden rules of accounting : Whenever necessary additional pages may be inserted, completed accounts can be
removed and the accounts may be arranged and rearranged in the desired order. This
(i) Real account : Debit what comes in and credit what goes out
type of ledger is known as Loose-leaf Ledger.
(ii) Personal account : Debit the receiver and credit the giver
(iii) Nominal account : Debit all expenses & losses and credit all incomes &
Utility of Ledger
gains
Ledger is a principal or main book which contains all the accounts in which the
(2) American approach or Accounting equation approach : Under this approach
transactions recorded in the books of original entry are transferred. Ledger is also
transactions are recorded based on the accounting equation, i.e.,
(27) (28)

called the ‘Book of Final Entry’ or ‘Book of Secondary Entry’, because the (6) Next Stage Entries are transferred to From the Ledger, first
CA. Naresh
transactions are finally incorporated in theAggarwal’s
Ledger. The following are the advantages the ledger. the Trial Balance is
ACADEMY of ACCOUNTS
of ledger :
(i) Complete information at a glance : All the transactions pertaining to an account
drawn and then final A/cs
are prepared.
Accounting Costing theTaxation
are collected at•one place in • • Financial
ledger. By looking
Management
at the balance of that account, (7) Tax authorities Do not rely upon these Rely on the ledger for
West
onePatel Nagar, New Delhi.
can understand Ph:8800215448.
the collective effect Website: [Link]
of all such transactions at a glance. assessment purpose.
(ii) Arithmetical Accuracy : With the help of ledger balances, Trial balance can be
prepared to know the arithmetical accuracy of accounts. Subsidiary Books
(iii) Result of Business Operations : It facilitates the preparation of final accounts for For a business having a large number of transactions it is practically impossible to
ascertaining the operating result and the financial position of the business concern. write all transactions in one journal, because of the following limitations.
(iv) Accounting information : The data supplied by various ledger accounts are (i) Periodical details of some important business transactions cannot be known, from
summarised, analysed and interpreted for obtaining various accounting information. the journal easily, e.g., monthly sales, monthly purchases.
(ii) Such a system does not facilitate the installation of an internal check system
Posting since the journal can be handled by only one person.
The process of transferring the entries recorded in the journal or subsidiary books to (iii) The journal becomes bulky and voluminous.

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the respective accounts opened in the ledger is called Posting. In otherwords, posting
means grouping of all the transactions relating to a particular account at one place. It
Use of Subsidiary Books
is necessary to post all the journal entries into various accounts in the ledger because
posting helps us to know the net effect of various transactions during a given period Transactions can be classified and grouped conveniently according to their nature, as
on a particular account. some transactions are usually of repetitive in nature. Generally, transactions are of
two types: Cash and Credit. Cash transactions can be grouped in one category
whereas credit transactions can be grouped in another category. Thus, in practice,
Distinction between Journal and Ledger : the main journal is sub-divided in such a way that a separate book is used for each
Books of original entry (Journal) and Ledger can be distinguished as follows: category or group of transactions which are repetitive and sufficiently large in number.
S.N. Basis Journal Ledger Each one of the subsidiary books is a special journal and a book of original or prime
(1) Book It is the book of prime It is the main book of entry. Though the usual type of journal entries are not passed in these sub-divided
entry. account. journals, the double entry principles of accounting are strictly followed.
(2) Stage Recording of entries in Recording of entries in
these books is the first the ledger is the Types of Subsidiary Books
stage. second stage.
The number of subsidiary books may vary according to the requirements of each
(3) Process The process of recording The process of business. The following are the special purpose subsidiary books.
entries in these books is recording entries in the
Transactions
called “Journalising”. ledger is called “Posting”.
(4) Transactions Transactions relating to Transactions relating
a person or property or to a particular account Day Books Cash Book Journal Proper Bills Books
expense are spread over. are found together on
a particular page.
(5) Net effect The final position of a The final position of a Purchases Sales Purchases Sales Bills Bills
particular account can particular account can Book Book Return Return Receivable Payable
not be found. be ascertained just at Book Book Book Book
a glance.
(29) (30)

Journal Proper
CA.
Purpose of different type Naresh Aggarwal’s
of Susbsidiary Books
Journal proper is used for making the original record of such transactions for which
(i)
ACADEMY of ACCOUNTS
Purchases Book : It is also known as Bought Day Book is used to record all
credit purchases of goods which are meant for resale in the business. Cash
no special journal (subsidiary book) has been kept in the business. The usual
entries that are put through this journal is explained below :
Accounting Costing
purchases of•goods • Taxation
and any • Financial
kind of purchases Management
of assets (cash or credit) are
(1) Opening Entries : Opening entries are used at the beginning of every financial
notPatel
West entered
Nagar,inNew
this Delhi.
book. Ph:8800215448. Website: [Link]
year to open the books by recording the assets, liabilities and capial appearing in
(ii) Sales Book : It is used to record all credit sales of goods. Cash sales of goods, the balance sheet of the previous year.
cash and any kind of sale of assets (cash or credit) are not entered in this book.
(2) Closing Entries : Closing entries are recorded at the end of the accounting year for
(iii) Purchases Return Book : It is also known as Return Outword Book. It records closing accounts relating to expenses and revenues. These accounts are closed
the goods returned by the trader to the suppliers but money not received. If by transferring the balances to the Trading Account and Profit & Loss Account.
money is received then it will go to Cash Book in place of Purchase Return
(3) Adjustment Entries : To arrive at a correct figure of profits and loss, certain
Book.
accounts require some adjustments. Entries for making such adjustments are
(iv) Sales Return Book : It is aslo known as Retrun Inward Book. It deals with goods called as adjusting entries. These are needed at the time of preparing the final
returned by the customers to the trader but money not refunded. If money is accounts. Examples are charging depreciation on assets and making provision
refunded then it will go to Cash Book in place of Sales Retrun Book. for doubtful debts etc.
(v) Bills Receivable Book : It records the receipts of bills (Bills Receivable). (4) Transfer Entries : Transfer entries are passed in the journal proper for transferring

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(vi) Bills Payable Book : It records the issue of bills (Bills Payable). an item entered in one account to another account.
(vii) Cash Book : It is used for recording only cash transactions i.e. all receipts and Example: when the proprietor takes goods for his personal use.
all payments of cash or by bank. (5) Rectification Entries : Rectifying entries are passed for rectifying errors which
(viii) Journal Proper: It is the journal which records the entries which can not be have been committed in the book of accounts.
entered in any of the above listed subsidiary books. Example : Purchase of furniture was debited to Purchases Account.
(6) Miscellaneous Entries or Casual Entries : These are entries of casual nature
which do not occur so frequently. Such transactions include the following:
Advantages of Subsidiary Books
(i) Credit purchases and credit sale of assets which cannot be recorded through
The advantages of maintaining subsidiary books can be summarised as under :
cash book, purchases book or sales book
(i) Division of Labour : The division of journal, resulting in division of work, ensures
(ii) Endorsement, renewal and dishonour of bill of exchange which cannot be
more clerks working independently in recording original entries in the subsidiary
recorded through bills book.
books.
(iii) Other adjustments like interest on capital and loan, outstanding expenses,
(ii) Efficiency : The division of labour also helps the reduction in work load, saving in
bad debts, reserves etc.
time and stationery. It also gives advantages of specialisation leading to efficiency.
(iii) Prevents Errors and Frauds : The accounting work can be divided in such a
manner that the work of one person is automatically checked by another person. Cash Book
With the use of internal check, the possibility of occurrance of errors and frauds In every business there are cash transactions as well as credit transactions. All
may be avoided. credit transactions will become cash transactions when payments are made to
(iv) Easy Reference : It facilitates easy references to any particular item. For instance creditors or cash received from debtors.
total credit sales for a month can be easily obtained from the Sales Book. Since, cash transactions will be numerous, it is better to keep a separate book to
(v) Easy Postings : Posting from the subsidiary books may be made at convenient record only the cash transactions.
intervals depending upon the nature of the business.
Features of Cash Book
A cash book is a special journal which is used to record all cash receipts and
(31) (32)

discount received. In the double column cash book, cash column is balanced like
cash payments. The cash [Link] is a book
Naresh of original entry or prime entry since
Aggarwal’s any other ledger account. But the discount column on each side is merely totalled.
transactions are recorded for the first time from the source documents. The cash
ACADEMY of ACCOUNTS
book is a ledger in the sense that it is designed in the form of a cash account and
The total of the discount column on the debit side shows the total discount allowed
to customers and is debited to Discount Allowed A/c. The total of the discount
records cash receipts on the debit side and cash payments on the credit side.
Accounting • Costing • Taxation • Financial Management column on the credit side shows total discount received and is credited to Discount
Thus, the cash book is both a journal and a ledger. Cash Book will always show
West Patel Nagar, New payments
Delhi. Ph:8800215448. Received A/c.
debit balance, as cash can neverWebsite:
exceed [Link]
cash available. In short, cash
book is a special journal which is used for recording all cash receipts and cash
payments. (3) Two Column Cash Book (with Bank) : When bank transactions are more in number,
it is advisable to open a cash book by providing a separate column on either side of
the cash book to record the bank transactions therein. In such case, it is not necessary
Advantages of Cash Book
to open a separate Bank Account in the Ledger because the two columns in the
(1) Saves time and labour : When cash transactions are recorded in the journal a lot cash book serve the purpose of Cash Account and Bank Account respectively. It is
of time and labour will be involved. To avoid this all cash transactions are straight a combination of Cash Account and Bank Account. There are two amount columns
away recorded in the cash book which is in the form of a ledger. on debit side one for cash receipts and the other for bank deposits (i.e., payment
(2) To know cash and bank balance : It helps the proprietor to know the cash and made into Bank Account). Similarly there are two amount columns on the credit side,
bank balance at any point of time. one for payments in cash and the other for payments by cheques respectively.
(3) Mistakes and frauds can be prevented : Regular balancing of cash book reveals

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the balance of cash in hand. In case the cash book is maintained by business (4) Three Column Cash Book : Large business concerns receive and make
concern, it can avoid frauds. Discrepancies if any, can be identified and rectified payments in cash and by cheques. Where cash discount is a regular feature, a
instantly. Three Column Cash Book is more advantageous. This cash book has three amount
(4) Effective cash management : Cash book provides all information regarding total columns (cash, bank and discount) on each side. All cash receipts, deposits into
receipts and payments of the business concern at a particular period. So that, bank and discount allowed are recorded on debit side and all cash payments,
effective policy of cash management can be formulated. withdrawals from bank and discount received are recorded on credit side. The
format is given in the next page.
Kinds of Cash Book
(5) Simple Petty Cash Book : In every business, of whatever size, there are many
The various kinds of cash book from the point of view of uses may be as follow:
small cash payments such as conveyance, carriage, postage, telegram, etc. These
(i) Single column Cash Book expenses are generally repetitive in nature. If all these small payments are recorded
(ii) Two column Cash Book (with Discount) in the cash book, it will be difficult for the cashier to maintain the records all by
(iii) Two column Cash Book (with Bank) himself. In order to make the task of the cashier easy, these small and recurring
(iv) Three column Cash Book expenses are recorded in a separate cash book which looks like an account is
(v) Simple Petty cash Book called “Simple Petty Cash Book” and the person who maintains the petty cash is
(vi) Columnar or Analytical Petty Cash Book called the ‘Petty Cashier’.

(1) Single Column Cash Book : Single column cash book (simple cash book) has (6) Columnar or Analytical Petty Cash Book : As in the case of any other cash book,
one amount column in each side. All cash receipts are recorded on the debit side petty cash book also has the debit side and the credit side. The debit side is smaller
and all cash payments on the credit side. In fact, this book is nothing but a Cash and has very infrequent entries because cash receipt by the petty cashier is mainly
Account. Hence, there is no need to open cash account in the ledger. from the cashier at the beginning or close of a specified period. The credit side is
bigger and thus has many columns. For each important petty expenses there is a
seperate column, and therefore columnar cash book is another name for this petty
(2) Two Column Cash Book (with Discount) : The most common two column cash
cash book. These analytical columns helps to know the actual amount spent on
books are : Cash book with discount and cash columns. On either side of the single
each and every type of petty expenses for the specified period. Each petty payment
column cash book, another column is added to record discount allowed and
(33) (34)

Contra Entries
is first entered in the total
[Link]
Nareshcolumn, and then recorded in the respective
Aggarwal’s
analytical column, so that :
ACADEMY of ACCOUNTS
(i) the total amount spent on each expenses for a particular period can be easily
Accounting Costing
ascertained by•adding Taxationcolumn.
up the• respective • Financial Management Cash deposited into Bank Cash withdrawn for office use
(ii) West
onlyPatel
the Nagar,
periodical total of
New Delhi. each columnWebsite:
Ph:8800215448. is posted to the ledger.
[Link]
Bank A/c Dr. Cash A/c Dr.
(iii) the total petty payment for any period can be easily ascertained from the total
To Cash A/c To Bank A/c
payments column.
The analytical petty cash book may be designed according to the requirements of
the business. Imprest System of Petty Cash Book
Imprest means ‘money advanced on loan’. Under this system the amount required
to meet out various petty expenses is estimated and given to the petty cashier at
Advantages of Analytical Petty Cash Book
the beginning of the specified period, usually a month. All the payments are
The advantages of analytical petty cash book is given below :
supported by vouchers. At the end of the given period or earlier, when the petty
(i) Simple Method : It is a simple method of recording petty expenses. The cashier has spent the petty cash amount, he closes the petty cash book for the
maintenance of petty cash book does not require specialised knowledge of period and balances it. Then he submits the accounts to the cashier. He verifies
accounting.

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the petty cash book with the vouchers. After satisfying himself as to the correctness
(ii) Economy of Time : It requires lesser time in recording and also saves the time of and genuiness of the payments an amount equal to the cash spent is given to the
the main cashier. petty cashier. This amount together with the unspent amount will bring up the
(iii) Lesser chances of mistakes : The petty cash book is checked by the main cashier cash in hand to the amount with which he originally started i.e., the imprest
at the end of the specified period. This process minimises the chances of amount. Thus the system of reimbursing the amount spent by the petty cashier at
mistakes. fixed period, is known as the imprest system of petty cash.

(iv) Frauds can be minimised : Recording transactions on the basis of vouchers For example, On June 1, 2002, Rs.1,000 was given to the petty cashier. He had
and checking of cash book by the main cashier minimises the chances of spent Rs.850 during the month. He will be paid Rs.850 on 30th June by the cashier
fraud. so that he may again have Rs.1,000 for the next month i.e., July.

Contra Entry Trade Discount : Trade discount is an allowance or concession granted by the
seller to the buyer, if the customer purchases goods above a certain quantity or
When an entry affect both cash and bank accounts it is called a contra entry.
above a certain amount. This discount is always necessary in case where goods
Contra is a Latin word which means opposite. In contra entries both the debit and
are sold to a customer who is a trader himself. For example all deals of sale and
credit aspects of a transaction are recorded in the cash book itself. Contra entry
purchase between whole sellers and retailers must have a portion of trade discount,
is made when (i) Cash deposited into bank and (ii) Cash withdrawn from bank
as If there is no trade discount then retailer will not be able to earn profit on further
for office use. As two cash book with bank columns is a combined cash and bank
resale. The amount of the purchase or sale, is always arrived at after deducting the
account, both the aspects of the transaction will be entered in the same book.
trade discount, ie., only the net amount is considered. For example, if the MRP of a
Such contra entries are denoted by writing the letter ‘C’ in the ‘L.F.’ column, on
product is Rs.5,000 and trade discount granted by manufacturer to the whole
both sides of the cash book. They indicate that no posting in respect thereof is
seller is 20% then net price of the product to the wholesaler is Rs.4,000 and by this
necessary in the ledger.
amount entry will be recored. Trade discount is not recorded in the books. They are
used only for determining the net price.
Cash Discount : Sale of goods on credit is a common phenomenon in any business.
When goods are sold on credit the customers enjoy a facility of making payment on
some date in the future. In order to encourage them to make the payment immediately
or before the expiry of the credit period a deduction is offered. The deduction so
(35) (36)

CHAPTER - 5
CA. Naresh Aggarwal’s
Bank Reconciliation Statement
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management Normally entries in the cash book should tally (agree) with those in the pass book
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] and the balances shown by both the books should be the same. But in practice, the
balances generally differ. In case of disagreement in the balance of the cash book
and the pass book, the need for preparing Bank Reconciliation Statement arises.
made is known as cash discount. For example, If Ram purchases goods worth
Rs.5,000 on 30 days credit then, as per the terms of contract, he is authorised to Bank Reconciliation Statement
make payment 30 days after the date of purchase. If he is offered a cash discount
The balance of the bank column in cash book represents the customers cash balance
of 2% on payment within 10 days and if he does so, he is entitled to deduct Rs.100
at bank. It should be the same as shown by his bank pass book on any particular
from the invoice price and pay Rs.4,900. In this case Rs.100 is cash discount. But
day. For every entry made in the cash book if there is a corresponding entry in the
if he does not choose to make payment within 10 days then he will not get any cash
pass book (maintained by the banker) or vice versa, the bank balance will be the
discount. In this case he will pay Rs.5,000 within 30 days.
same in both the books.
However, the cash book and the pass book are maintained by two different

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Distinction between cash discount and trade discount parties and hence it is not certain that entry in one book will always have a
Trade discount differs from cash discount in the following respects. corresponding entry in the other.
S.N. Basis Trade Discount Cash Discount Bank reconciliation statement is a list in which the various items that cause a
(1) Purpose It help the trader to earn It encourage prompt difference between bank balance as per cash book and pass book on any given
some profit. payment within a specified date are indicated.
time period. A Bank reconciliation statement is prepared by starting with the balance shown by
(2) Time when It is allowed on the It is allowed when payment is any of the two books. But in actual practice, a Bank reconciliation statement is
allowed purchase of goods. made within specified period. prepared by the customer starting with the balance as per cash book and will ensure
that the balance as per pass book is arrived at.
(3) Variation It is usually given at the It varies from customer to
same rate which is customer depending on
applicable to all customers the time and period of Need and Importance of Bank Reconciliation Statement
and will vary with the payment. After tracing the various items of difference, a bank reconciliation statement is
quantity purchased. prepared. The following are its advantages in which lies its importance.
(4) Disclosure It is shown by way of It is not shown in the (1) The errors that might have taken place in the cash book in connection with
deduction in the invoice. invoice. bank transactions can be easily found.
(5) Ledger A/c No separate Account is Separate Accounts are (2) Regular preparation of bank reconciliation statement prevents frauds.
opened in the Ledger. opened in the Ledger for (3) It indirectly imposes moral check on the accounting staff.
discount received and
(4) By the preparation of bank reconciliation statement, uncredited cheque can
discount allowed.
be detected and steps can be taken for their collection.

Pass Book or Bank Statement

Pass Book (Bank Statement) is merely a copy of the customer’s account in the
books of a bank. It shows all the deposits, withdrawals and the balance available in
the customers account. Banker credits the account of the customer for all the
(37) (38)

(7) Balancing It is balanced at the end It is balanced after each

CA. Naresh Aggarwal’s of a specified period. transaction.
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management Causes of disagreement between the balance shown by the cash book and the
balance shown by the pass book
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
(1) Cheques paid / deposited into bank but not yet collected : The cheques paid
into bank for collection but not credited into the account of the customer, because
amounts received from the customer and on his behalf. Similarly the banker
the cheque is
debits the account of the customer for all withdrawals and amounts paid to others
on behalf of the customers. (i) not collected and credited till that date (most common).
(ii) collected but the bank staff has forgotten to make entry.
The main point to be remembered is that entries are made only after cash is
(iii) collected but credited to wrong account.
received or paid, except in the case of interest and bank charges. Interest and
(iv) dishonoured.
bank charges are mere book adjustments and in these, there are neither receipt
of cash nor payment of cash. As soon as the cheques are sent to the bank, entries are made in the debit side
of the cash book (bank column). But, usually bank credit the customers account
only when they have received payment from the bank concerned, in other
Bank Overdraft
words, when the cheques have been collected. Hence, there will be a time

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Bank overdraft is an amount drawn over and above the actual balance kept in the gap between the depositing of the cheques and the collection by the bank.
bank account. This facility is available only to the current account holders. Interest
(2) Cheques issued but not yet presented for payment : The cheques issued but
will be charged for the amount overdrawn i.e., overdraft. The Cash book will show a
not debited customers account may be because the cheque is
credit balance i.e., unfavourable balance. The pass book will show a debit balance.
(i) not cashed till date.
(ii) not presented till date.
Difference between Cash Book and Pass Book (iii) presened but dishonoured for some reasons or other.
S.N. Basis Cash Book (Bank Column) Pass Book (iv) lost by the party to whom the cheque was issued.
(1) Maintained by Cashier Banker (v) debited to wrong account.

(2) Deposits of Cash Entered on the debit Entered on the credit In all of the above cases, the entry in the cash book is made immediately on the
side of the cash book. column of the pass book. issue of cheque but naturally the entry will be made by bank only when the
cheque is presented for payment. Thus there will be a gap of some days between
(3) Withdrawals of Entered on the credit Entered on the debit
the entry for issue of cheque in the cash book and the entry for payment made in
Cash side of the cash book. column of the pass book.
the pass book.
(4) Cheques deposited Entered on the Entered in the pass
(3) Amount credited by the banker in the pass book without the immediate knowledge
for collection debit side of the cash book only on the date
of the customer : The following are some of the examples for the above
book on the date of of the realisation
statement
depositing the cheques of the cheque.
into the bank. (i) The bank might have collected rent, dividend, bills of exchange, interest
etc., due for the customer as per standing instructions .
(5) Cheques issued Entered on the credit side Entered on the debit
(ii) Some debtors might have directly paid into bank.
of the cash book on the column of the pass book
(iii) Bank credits interest on the credit balance of the customer’s account.
date of issuing the only on the date on which they
(iv) The banker has wrongly credited this account instead of some other account.
cheque to the creditors. are presented and paid.
In all the above cases, the entry will be first entered in the pass book. The
(6) Collections and Entered in the Cash Entered in the Pass book
customer will know this only after he verifies the entries in the pass book. So
payments as per book after seeing the first.
there may be a time gap of some days before the customer includes entries
standing instructions pass book.
made in the pass book.
(39) (40)

CA. Naresh Aggarwal’s

CHAPTER - 6
ACADEMY of ACCOUNTS Trial Balance and Rectification of Errors
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

(4) Amounts debited by the banker in the pass book without the immediate After recording and classifing the transactions in the various accounts along with
knowledge of the customer : The following are some of the examples for this. balancing thereof. The next step in the accounting process is to prepare a statement
to check the arithmetical accuracy of the transactions recorded so for. This statement
(i) The banker has recorded bank charges, interest on overdraft etc.
is called ‘Trial Balance’.
(ii) The banker has paid insurance premium, subscription for
Trial balance is a statement which shows debit balances and credit balances of all
periodicals,[Link] behalf of the customer as per the standing instructions.
accounts in the ledger. Since, every debit should have a corresponding credit as per
(iii) The banker has wrongly debited this account instead of some other the rules of double entry system, the total of the debit balances and credit balances
account. should tally (agree). In case, there is a difference, one has to check the correctness
(iv) The banker has paid the bills payable of the customer as per standing of the balances brought forward from the respective accounts. Trial balance can be
instructions . prepared in any date provided accounts are balanced.

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(v) Dishonour of a cheque deposited and discounted bills receivable
In all the above cases, the entry will be first entered in the pass book of the Objectives of Trial Balance
customer. And the customer will know only after he verifies the entries in the The objectives of preparing a trial balance are :
pass book or statement of account . So there may be a time gap of some days
(i) To check the arithmetical accuracy of the ledger accounts.
before the customer includes the entries made in the pass book.
(ii) To locate the errors.
(iii) To facilitate the preparation of final accounts.

Advantages of Trial Balance

The advantages of the trial balance are :
(i) It helps to ascertain the arithmetical accuracy of the book-keeping work done
during the period.
(ii) It supplies in one place ready reference of all the balances of the ledger
accounts.
(iii) If any error is found out by preparing a trial balance, the same can be rectified
before preparing final accounts.
(iv) It is the basis on which final accounts are prepared.

Methods of preparing Trial Balance

A trial balance can be prepared in the following methods.
(i) The Total Method : According to this method, the total amount of the debit
side of the ledger accounts and the total amount of the credit side of the
ledger accounts are recorded.
(41) (42)

(1) Errors of Principle : Transactions are recorded as per generally accepted

(ii) The Balance MethodCA. : In Naresh Aggarwal’s
this method, only the balances of an account either accounting principles. If any of these principles is violated or ignored, errors
ACADEMY of ACCOUNTS
debit or credit, as the case may be, are recorded against their respective
accounts. This method is more widely used, as it supplies ready figures for
resulting from such violation are known as errors of principle. For example,
Purchase of assets recorded in the purchases book. It is an error of principle,
Accounting • Costing
preparing the final accounts.• Taxation • Financial Management because the purchases book is meant for recording credit purchases of goods
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] meant for resale and not fixed assets. A trial balance will not disclose errors of
Limitations of Trail Balance principle.
Though the trial balance helps to ensure the arithmetical accuracy of the books of (2) Clerical Errors : These errors arise because of mistakes committed in the
accounts, it is possible only when the accountant has not committed any error. As ordinary course of accounting work. These can be further classified into three
all the errors made are not disclosed by the trial balance, it would not be regarded as types as follows :
a conclusive proof of correctness of the books of accounts maintained. (i) Errors of Omission : This error arises when a transaction is completely or
partially omitted to be recorded in the books of accounts. Errors of omission
Errors in Accounting may be classified as below :
The fundamental principle of the double-entry system is that every debit has a (a) Error of Complete Omission : This error arises when a transaction is
corresponding credit of equal amount and vice-versa. Therefore, the total of all totally omitted to be recorded in the books of accounts. For example,
debit balances in different accounts must be equal to the total of all credit balances Goods purchased from Ram completely omitted to be recorded. This

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in different accounts, i.e., the total of the two columns should tally (agree). error does not affect the trial balance.
The tallying of the two totals (debit balances and credit balances) of the trial (b) Error of Partial Omission : This error arises when only one aspect of
balance ensures only arithmetic accuracy but not accounting accuracy. If however, the transaction either debit or credit is recorded. For example, a credit
the two totals do not tally, it implies that some errors have been committed while sale of goods to Ravi recorded in sales book but omitted to be posted in
recording the transactions in the books of accounts. his A/c. This error affects the trial balance.
(ii) Errors of Commission : This error arises due to wrong recording, wrong
Types of Errors posting, wrong casting, wrong balancing, wrong carrying forward etc. Errors
of commission may be classified as follows :
Keeping in view the nature of errors, all the errors committed in the accounting process
can be mainly classified into two types: (i) Errors of Principal, (ii) Clerical Errors (a) Error of Recording : This error arises when a transaction is wrongly
recorded in the books of original entry. For example, Goods of Rs.2,500,
purchased on credit from Sunil, is recorded in the book for Rs.1,500.
Types of Errors This error does not affect the trial balance.
(b) Error of Posting : This error arises when information recorded in the
Errors of Principle Clerical Errors books of original entry are wrongly entered in the ledger. Error of
posting may be as follows :
(i) Amount posted in wrong account.
Errors of Errors of Compensating (ii) Amount posted in wrong side.
Omission Commission Errors (iii) Wrong amount posted
i. Partial omission i. Error of recording This error may or may not affect the trial balance which depends on
ii. Complete omission ii. Error of posting the type of error committed.

iii. Error of casting (c) Error of Casting (Totalling) : This error arises when a mistake is
committed while totalling the subsidiary book or account. For example,
iv. Error of carrying forward
If correct total of an account is Rs.10,000 but it may be wrongly totalled
as Rs.9,000. This is called overcasting. If it is wrongly totalled as
Rs.9,000, it is called undercasting.
(43) (44)

CA. Naresh Aggarwal’s

Suspense Account
ACADEMY of ACCOUNTS When debit and credit side of trial balance does not tally (agree) and it is difficult
Accounting • Costing • Taxation • Financial Management to locate the mistakes before preparing the final accounts, the difference in the
trial balance is transferred to newly opened imaginary and temporary account
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] called ‘Suspense Account’. Suspense account is prepared to avoid the delay in
the preparation of final accounts. If the total of debit balances of the trial balance
(d) Error of Carrying Forward : This error arises when a mistake is
exceeds the total credit balances, the difference is transferred to the credit side of
committed in carrying forward a total of one page to the next page. For
the suspense account. On the other hand, if the total credit balances of the trial
example, Total of purchase book in page 122 of the ledger was Rs.4,500,
balance exceeds the total debit balances the difference is transferred to the debit
while carrying forward the balance to the next page it was recorded as
side of the suspense account.
Rs.5,400.
When the errors affecting the suspense account are located, they are rectified
(iii) Compensating Errors : The errors arising from excess debits or under
with suspense account. Suspense account is continued in the books until the
debits of accounts being neutralised by the excess credits or under credits
errors are located and rectified. Such balance will be shown in the balance
to the same extent of same or some other account is compensating error.
sheet. Debit balance will be shown on the asset side and the credit balance will
Since the errors in one direction are compensated by errors in another
be shown on the liability side.
direction, arithmetical accuracy of the trial balance is not at all affected inspite

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of such errors. For example, If the purchases book and sales book are both When all the errors affecting the trial balance are located and rectified, the
overcast (excess totalling) by Rs.1,000, the errors mutually compensate suspense account automatically gets closed.
each other. This error will not affect the agreement of trial balance.

Errors disclosed and not disclosed by trial balance

If the impact of the errors on trial balance is considered, errors may be classified into ••••••••••••••••••••••
two categories – (i) Errors disclosed by trial balance, (ii) Errors not disclosed by trial
balance.
ERRORS

Disclosed by Trial Balance Not disclosed by Trial Balance

(i) Errors of partial omission (i) Errors of complete omission
(ii) Errors of casting (ii) Errors of recording
(iii) Errors of carrying forward (iii) Errors of principle
(iv) Errors of posting in the wrong side (iv) Errors of posting to wrong A/c
(v) Errors of posting with wrong amount (v) Compensating Errors
(vi) Double posting in the same A/c

Rectification of Errors
Correction of errors in the books of accounts is not done by erasing, rewriting or
striking the figures which are incorrect. Correcting the errors that has occured is
called Rectification. Appropriate entry is passed or suitable explanatory note is
written in the respective account or accounts to neutralise the effect of errors.
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

For Eenquiries
Call or whatsapp: 8800215448
(Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)
Basics of Accounting

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Email: [Link]@[Link]
& Website: [Link]

Accounting Equations

Watch us on

[Link]
(1) (2)

management purposes. It gives information related with Profits or Losses, position

CA. Naresh Aggarwal’s of Assets and Liabilities etc. which are very helpful in proper management.
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management Basic Accounting Assumptions
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Accounting assumption is the foundation of on which the structure of modern accounting
is based. It provides general framework on which our accounting is based.
Meaning of Accounting
(1) Business Entity Assumption: According to this assumption, business is
Accounting is the process of recording business transactions in a systematic manner,
considered as a separate unit which is distinct from its owners, suppliers,
in term of money and analysing the results thereof. Accounting is needed to maintain
customers, managers and others. A business unit should have a completely
records of all money related transaction of an organisation in a very systematic way.
separate set of Books of Accounts. We should have to record every transaction
According to American Institute of Certified Public Accountants “Accounting is the art
only from the business point of view and not from the owners or any other persons
of recording, classifying and summarising in a significant manner and in terms of money,
point of view.
transactions and events which are, in part at least, of a financial character, and
interpreting results thereof.
(2) Money Measurement Assumption: According to this assumption, in accounting
only those events and transactions are recorded which are in terms of money.

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We do not record a happening in the Books of Accounts, if that can not be measured
Benefits/Advantages of Accounting in term of money with a fair degree of accuracy. For example: honesty of employees
(1) Replaces Memory: When we record transactions in books of accounts, we and intelligence of managers etc. will not get place in books of accounts.
need not to remember them for future needs. We can refer our accounts books
for any past transaction, as accounting provided information about all the incomes (3) Going on Concern Assumption: As per this assumption, it is assumed that
and expenses. business will be continued for a long period in the future. All the financial
transactions are recorded on the assumption that it is a continuing enterprise.
(2) Faciliciate in ascertaining Profits: Accounting helps in recording all financial
transactions of the business which can be used later in finding the Net Profit (4) Accounting Period Assumption: According to this assumption the total life of
earned or Net Loss suffered by the business. the business is divided in small periods, generally of one year. As the business is
intended to continue indefinitely for a long period, the true result of profit or loss
(3) Faciliciate in ascertaining Position: Accounting helps in ascertaining the can be ascertain only when the business is completely wound off. But at that
financial position of the assets and liabilities of the organisation. point of time the result is very less useful as it will be too late to take corrective
steps. Therefore it is very important that users of the accounting information get
(4) Faciliciate to complying with legal requirements: To comply with the some information in frequent intervals. For this purpose the life of the business is so
legal requirements we must have to maintain books of accounts. For Income divided in small intervals for the measurement of the performance of the enterprise.
Tax, Sales Tax, Companies Act and other commercial laws it is necessary that
all financial transactions are properly recorded.
Basic Accounting Terms
(5) Accounting helps in minimising disputes: Through accounting proper records
(1) Assets: Assets refers to any valuable thing which is owned by the enterprise or
of all the financial transactions are maintained which results more accuracy and
any benefit which will come in future to it. It includes Cash, Bank Balance, Furniture,
avoid disputes. Further, even if a dispute arises with customers, suppliers or
Machine, Building, Goods, Sum due on customers (Debtors), Expenses paid in
other parties, Books of Accounts can be referred for settlement of the disputes.
advance (Prepaid Expenses) etc.

(6) Assistance in Management: Accounting provide vital information to the owner

(2) Liabilities: It refers to all the sums which the enterprise owes to the outsiders. It
and managers of the organisations for their planning, decision making and
(3) (4)

(9) Business Transaction: Happening of an event with someone which result a

CA. Naresh Aggarwal’s change in the composition of the financial position of an enterprise is a Business
ACADEMY of ACCOUNTS Transaction. It may be like started business with cash, sale of goods, loan taken,
payment of salary, cash paid to supplier and fees received etc.
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Double Entry System of Accounting
The modern system of accounting is based on the duality nature of the transactions.
is the sum which will required to be paid out. It includes money due to suppliers Every financial transaction always has a double effect on the financial position of the
(Creditors), Expenses due but not paid (Outstanding Expenses), Loan taken from enterprise. For example if you buy Goods for Rs. 10,000 then it affects twice: first
others etc. effect is on the cash balance as it decreases and second effect is that the stock in
hand is increased. Or if you take a loan from a Bank of Rs.50,000 not only you get an
(3) Capital: It is the amount invested by the owner in the business. For running any asset in form of cash but also a liability that you have to pay the debt. Similarly all the
business owner has to invest some money. For example if you want to start a transactions always have two aspects. Therefore, in modern accounting system all
retail shop which need an investment of Rs.8,00,000 and you invest Rs.1,00,000 the transactions are recorded in two parts one is Debit and other is Credit.
in cash, uses your own house worth Rs.5,00,000 as the shop and borrow
Rs.2,00,000 from the bank then your capital will be Rs.6,00,000 which is the total
amount invested by you from your side in the business as an owner.

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(4) Drawings: Any cash or other valuable thing which is withdrawn by the owner,
from the business, for his personal use or for the use of his family, friends and ••••••••••••••••••••••
relatives is called drawings. It includes cash withdrawn for private use, payment
of home electricity bill, payment of children’s school fees, goods used for home
consumption etc.

(5) Debtors: It represents those persons or enterprises to whom goods have been
sold or services have been rendered but full payment has not yet received. They
will remain debtors till the full payment is not received from them or any settlement
is not made.

(6) Creditors: It represents those persons or enterprises from whom goods have
been purchased or services have been received but full payment has not yet
made. They will remain creditors till the full payment is not made to them or any
settlement is not made.

(7) Expenses: It represents value of services used for the purpose of generating
revenues/profits. It includes Rent, Interest, Commission, Brokerage, Fees, Wages,
Salaries, Depreciation, Printing & Stationery, Electricity Bill, Telephone Bill etc., if
paid or payable.

(8) Incomes: It represents increase in the economic benefits due to increase in

assets or decrease in liabilities. It includes Rent, Interest, Commission, Brokerage,
Fees, Discount etc., if received or receivable.
(5) (6)

(6) izca/k esa lgk;d %& ys[kkadu Lokeh ,oa izca/kdksa dks /ku laca/kh [Link] lwpuk,a
CA. Naresh Aggarwal’s
iznku djrk gS ftlds dkj.k ;kstuk cukus] [Link]; ysus ,oa O;kikj lapkyu esa enn
ACADEMY of ACCOUNTS feyrh gSA ys[kkadu ykHk&gkfu ,oa lEifÙk;ksa ,oa nkf;Roksa dh fLFkfr Hkh n'kkZrk gS
Accounting • Costing • Taxation • Financial Management tks mfpr izca/k ds fy, vfr vko';d gksrk gSA
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
vk/kkjHkwr ys[kkadu ekU;rk,a
ys[kkadUk dk vFkZ (Basic Accounting Assumptions)
(Meaning of Accounting)
ys[kkadu ekU;rk,a os vk/kkj gS ftu ij vk/kqfud ys[kkadu fuHkZj gSA ;g og okrkoj.k
ys[kkadUk dk vFkZ ml izfd;k ls gS ftles O;olkf;d ysu -nsuks dks izÒ[Link] rjhd¢ ls
iznku djrk gS ftlds varxrZ ys[kkadu dk;Z djrk gSA
eqnzk d¢ #i esa fy[kk tkrk gS ,oa mud¢ [Link] dh O;k[;k dh tkrh gSA ys[kkadUk dh
1- ys[kkadu bdkbZ dh ekU;rk (Business Entity Assumption) %& bl ekU;rk ds
vko”;drk lÒh ekSfnzd ysu -nsuks dks fof/kor #i ls fy[kus d¢ fy, gksrh gSA
vuqlkj ys[kkadu esa O;kikj dks mlds Lokeh] ysunkjks] xzkgdksa] izca/kdksa bR;kfn ls
vefjdu baLVhV~;wV vkWQ ifCyd vdkmVsaV~l d¢ vuwlkj “ys[kkadUk lkSnksa ,oa ?kVukvksa
i`Fkd ,d vyx vfLrRo izkIr gksrk gSA O;olk; ds lkSnksa ,oa ?kVukvksa ds fy,
dks] tks fd de ls de va”kRk% fofÙk; izÑfRk d¢ gSa] izÒ[Link] rjhd¢ ls vkSj eqnzk esa
vyx ls cgh [kkrs cuk, tkrs gSaA bu cgh [kkrksa esa lHkh ysu&nsu dsoy O;olk;
vfÒys[k djus] oxhZdj.k djus] rFkk lkjka{k esa O;Dr djus ,oa mud¢ [Link] dh
ds i{k dks /;ku esa j[kdj fd, tkrs gS] u fd O;kikjh ;k fdlh vU; ds i{k dks
O;k[;k djus dh dyk gSA”
/;ku esa j[kdjA

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2- eqnzk esa eki dh ekU;rk (Money Measurement Assumption) %& bl ekU;rk ds
ys[kkadUk d¢ ykÒ vuqlkj ys[kkadu esa dsoy mu lkSnksa ,oa ?kVukvksa dks fy[kk tkrk gS tks eqnzk ds :i
(Benefits/Advantages of Accounting) esa iznf'kZr gks ldrh gSA ge mu ?kVukvksa dks ys[kkadu esa ugha fn[kkrs tks eqnzk esa
(1) Lej.k “kfDr dk foLFkkiu %& tc ge ?kVukvksa dk ys[kkadUk dh iqLrdksa esa lgh <ax ls iznf'kZr ugha fd, tk ldrs] tSls deZpkfj;ksa dh dq'kyrk] izca/kdksa dh
fy[k ysrs gSa rc gesa mUgs Òfo’; d¢ fy, ;kn j[kus dh dksbZ vko ”;drk ugh cqf)ekurk bR;kfn ys[kkadu esa ugha fn[kk, tkrsA
gksrhA fdlh Òh iqjkuh ?kVuk dh tkudkjh gesa ys[kkadUk dh iqLrdksa ls fey 3- pkyw O;kikj dh ekU;rk (Going on Concern Assumption) %& bl ekU;rk ds
ldrh gSA vuqlkj ;g ekuk tkrk gS fd O;olk; dks Hkfo"; esa yEcs le; rd tkjh j[kk
(2) ykÒ-gkfu dh [Link] djus esa lqfo/kk %& ys[kkadUk lkSnksa ,oa ?kVukvksa dks tk,xkA O;olk; ds lHkh lkSns blh ckr dks /;ku esa j[kdj fd, tkrs gS fd
izÒ[Link] rjhd¢ ls fy[kus esa gekjh lgk;rk djrk gS ftls ge ckn esa ykÒ-gkfu O;olk; tkjh jgsxkA
dh [Link] djus esa iz;ksx dj ldrs gSaA D;ksafd lÒh vk; ,oa O;;ksa dh tkudkjh 4- ys[kk vof/k dh ekU;rk (Accounting Period Assumption) %& bl ekU;rk ds
gesa ys[kkadUk dh iqLrdksa ls fey tkrh gSA vuqlkj O;olk; ds dqy thou dks NksVh vof/k;ksa esa ckaV fn;k tkrk gS tks
(3) O;olk; dh fLFkfr tkuus esa lgk;d %& ys[kkadUk O;olk; dh vkfFkZd lkekU;r% ,d o"kZ gksrh gSA pqafd O;olk; dks yEcs lke; rd pykus dh Òkouk
fLFkfr tkuus esa gesa lgk;rk iznku djrk gSA ;g gesa O;olk; dh lÒh lEifÙk;ksa gksrh gS] O;olk; ds okLrfod ykÒ vFkok gkfu dh [Link] mldh lekfIr ij gh dh
,oa nkf;Roksa dh fLFkfr d¢ ckjs eSa tkudkjh iznku djrk gSA tk ldrh gSA ijUrq bl fLFkfr esa og vf/kd mi;ksxh ugh gksxk] D;ksafd vc rd
(4) dkuwuh vko”;drkvksa dh iwfrZ %& dqN dkuwuh fu;eksa d¢ varxZr cgh-[kkrs dfe;ksa dks nwj djus esa cgqr nsj gks pqdh gksxhA blfy, ;g vR;kf/kd [Link]
cukuk ,oa fofÙk; ysu-nsuks dk [Link] C;kSjk j[kuk vko”;d gksrk gSA vk;dj] gS fd izca/kdksa dks bldh lwpuk le;&le; ij feyrh jgsA blh mns'; dh iwfrZ
fcØhdj] dEiuh vf/kfu;e ,oa vU; dkuwukas d¢ varxZr ys[kkadUk vfuok;Z gks tkrk dss fy, O;olk; ds dqy thou dks NksVh vof/k;ksa esa ckaVk tkrk gS rkfd O;olk;
gSA dh dq'kyrk dh tkudkjh le;&le; ij feyrh jgsA
(5) Hkwy&pwd esa deh %& ys[kkdu ds varZxr lHkh fofÙk; ysu nsuksa dks le; ij
ntZ dj fy;k tkrk gS ftlds dkj.k Hkwy&pwd dh lEHkkouk de gks tkrh gSA bl
ij Hkh dksbZ fookn mRiUu gksus ij [kkrksa dh tkap dj mls fuiVk;k tk ldrk gSA
(7) (8)

7- [kpsZ (Expenses) %& blls vfHkizk; mu lsokvksa ds ewY; ls gS ftUgsa O;kikj pykus
CA. Naresh Aggarwal’s
ds fy, iz;ksx esa yk;k x;k gSA blesa fdjk;k] C;kt] deh'ku] Qhl] etnwjh] osru]
ACADEMY of ACCOUNTS ewY;gkl] dkxt ,oa NikbZ] fctyh dk fcy] VsfyQksu dk fcy bR;kfn ftUgsa
Accounting • Costing • Taxation • Financial Management Hkqxrku dj fn;k x;k gS vFkok nsuk cdk;k gS] 'kkfey gSA
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 8- vk; (Incomes) %& vk; ls vfHkizk; ml vkfFkZd ykHk ls gS tks lEifr;ksa esa o`f)
vFkok nkf;Roksa esa deh ds [Link]:i izkIr gksrk gSA blesa fdjk;k] C;kt] deh'ku]
vk/kkjHkwr ys[kkadu 'kCnkoyh Qhl bR;kfn ftUgsa izkIr dj fy;k x;k gS vFkok ftUgsa izkIr djuk vHkh ckdh gS]
(Basic Accounting Terms) Hkh 'kkfey gSA
1- lEifÙk;ka (Assets) %& lEifÙk;ks ls vfHkizk; fdlh Hkh ewY;oku oLrq ftl ij 9- O;olkf;d ysu&nsu (Business Transactions) %& ,slk dksbZ Hkh lkSnk ,oa ?kVuk
O;kikj dk LokfeRo gks] ls gSA blls Hkfo"; esa feyus okys /ku@ykHk 'kkfey gSA ftlds dkj.k O;kikj dh vkfFkZd fLFkfr esa vFkok mldh enksa dh jkf'k esa ifjorZu
lEifÙk;ksa esa jksdM+] cSad 'ks"k] QuhZpj] e'khusa] Hkou] Hkwfe] eky] xzkgdksa dh cdk;k vkrk gS mls O;olkf;d ysu&nsu dgrs gSA blesa O;kikj 'kq: djuk] eky [kjhnuk]
jkf'k] [kpksZa dk is'kxh Hkqxrku bR;kfn 'kkfey gSA _.k ysuk] osru dk Hkqxrku djuk] foØsrkvksa dk Hkqxrku djuk ,oa Qhl izkIr
2- nkf;Ro (Liabilities) %& nkf;Roksa ls vfHkizk; ml jkf'k ls gS tks O;kikj ij ckgjh djuk bR;kfn 'kkfey gSA
yksxksa dk m/kkj gSA ;g og /kujkf'k gS ftls pqdk;k tkuk gSA blesa foØsrkvksa dk
cdk;k] ysunkj [kpsZ ftUgsa pqdk;k ugha x;k gS] nwljksa ls fy;k x;k dtZ bR;kfn ys[kkadu dh nksgjk ys[kk [Link]

AoA
'kkfey gksrs gSaA (Double Entry System of Accounting)
3- iwath (Capital) %& ;g og /ku gS ftls O;olk; ds Lokeh us O;olk; esa yxk;k gSA vk/kqfud ys[kkadu fofÙk; lkSnksa ,oa ?kVukvksa ds nksgjs i{k gksus dh izd`fr ij
fdlh Hkh O;olk; dks pykus ds fy, O;kikj dk Lokeh mlesa viuk Lo;a dk /ku vk/kkfjr gSA lHkh fofÙk; ?kVukvksa ds lnSo nks i{k gksrs gSaA os O;olk; dh fofÙk; fLFkfr
vo'; yxkrk gSA mnkgj.k ds fy, ;fn vki ,d QqVdj nqdku pykuk pkgrs gSa dks nks ckj izHkkfor djrs gSaA mnkgj.k ds fy, ;fn vki dksbZ lkeku 10]000 :0 esa
ftlesa 8 yk[k : yxsaxsA vki mlesa Lo;a dk 1 yk[k :0 udn rFkk viuk edku [kjhnrs gSa rks ;g vkidks nks rjg ls izHkkfor djsxkA igyk vkids ikl /ku esa deh gks
ftldh dher 5 yk[k :0 gS dks iz;ksx esa ykrs gSa rFkk ckdh ds 2 yk[k :0 cSad tk,xh] nwljk vkids ikl lkeku esa o`f) gks tk,xhA blh izdkj ;fn vki cSad ls
ls _.k ysrs gSa rks vkidh iwath 6 yk[k :0 gksxh tks fd vkidk Lo;a dk O;olk; 50]000 : dtZ ys rks ;g Hkh vkidks nks rjg ls izHkkfor djsxk] igyk vkids ikl /
esa fuos'k gSA ku esa o`f) gks tk,xh] nwljk vki ij ml /ku dks okfil djus dk nkf;Ro c<+ tk,xkA
4- vkgj.k (Drawings) %& O;kikj ds Lokeh }kjk O;kikj ls fudkyh xbZ dksbZ Hkh blh izdkj lHkh fofÙk; ?kVukvksa ds nks i{k gksrs gSaA blfy, vk/kqfud ys[kkadu esa lHkh
ewY;oku oLrq vkgj.k dgykrh gSA ;s oLrq,a og vius Lo;a ds iz;ksx ds fy,] vius ?kVukvksa dks nks Hkkxksa esa fy[kk tkrk gSA igys Hkkx dks MsfcV rFkk nwljs Hkkx dks
ifjokj ds fy, vFkok vius fe=ksa bR;kfn ds fy, fudky ldrk gSA blesa futh ØsfMV dgk tkrk gSA
iz;ksx ds fy, jksdM+ fudkyuk] ?kj ds fctyh fcy ds fy, /ku fudkyuk] cPpksa dh
Qhl vFkok ?kj ds fy, lkeku fudkyuk bR;kfn 'kkfey gksrk gSA
5- nsunkj (Debtors) %& nsunkj os O;fDr vFkok bdkbZ;ka gSa ftUgss lkeku cspk x;k
gS vFkok dksbZ lsok iznku dh xbZ gSa ijUrq mlds ewY; dk [Link] Hkqxrku vHkh ugha
fd;k x;k gSA tc rd os [Link] Hkqxrku ugha dj nsrs ;k muls [Link] fuiVkjk ugha gks ••••••••••••••••••••••
tkrk rc rd os nsunkj cus jgrs gSaA
6- ysunkj (Creditors) %& ysunkj os O;fDr vFkok bdkbZ;ka gSa ftuls lkeku [kjhnk
x;k gS vFkok dksbZ lsok izkIr dh xbZ gSa ijUrq mlds ewY; dk [Link] Hkqxrku vHkh ugha
fd;k x;k gSA tc rd ge mUgs [Link] Hkqxrku ugha dj nsrs ;k muls [Link] fuiVkjk
ugha gks tkrk rc rd os ysunkj cus jgrs gSaA
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3. Sold goods costing Rs. 1,000 for Rs. 1,400.

CA. Naresh Aggarwal’s 4. Paid rent Rs. 500.
ACADEMY of ACCOUNTS 5.
6.
Cash deposited into Bank Rs.5,000.
Withdrawn cash for private expenses Rs. 600.
Accounting • Costing • Taxation • Financial Management [Capital 14,300; Creditors 4,000 = Cash 10,300; Goods 3,000; Bank 5,000]
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Q-5: Make the ‘Accounting Equation’ of the following transactions:
1. Pooja started business with Rs. 12,000.
2. Purchased goods costing Rs. 4,000.
Accounting Equation 3. Sold goods to Monika on credit costing Rs. 1,200 at 25% profit on cost.
4. Paid General Expenses Rs. 1,000 and for Wages Rs. 200.
5. Sold good costing Rs. 800 for cash Rs. 1,000.
Q-1: Make the ‘Accounting Equation’ of the following transactions:
6. Received from Monika Rs. 1,000.
1. Sonu started business with cash Rs. 30,000.
[Capital 11,300 = Cash 8,800; Goods 2,000; Debtors 500]
2. Purchased goods worth Rs. 5,000.
3. Purchased Furniture of Rs. 3,500. Q-6: Make the ‘Accounting Equation’ of the following transactions:
4. Sold goods for cash Rs. 1,800 (cost Rs. 1,500). 1. Anjali started business with Rs. 15,000 and goods worth Rs. 5,000.
5. Sonu withdrawn Rs. 1,000 for personal use in cash. 2. Purchased goods costing Rs. 3,000.
6. Paid Salaries Rs. 1,200. 3. Sold goods to Mohan costing Rs. 1,500 for Rs. 1,800 on credit

AoA
7. Paid office Rent Rs. 800. 4. Sold goods on credit at 20% profit on cost of Rs.3,000.
[Capital 27,300 = Cash 20,300; Goods 3,500; Furniture 3,500] 5. Sold good costing Rs. 1,800 for cash Rs. 2,000.
6. Received from Mohan Rs. 1,200.
Q-2: Make the ‘Accounting Equation’ of the following transactions:
7. Sold an obsolete item of goods for Rs.600 (costing Rs.1,000).
1. Sumit started business with Rs. 18,000.
[Capital 20,700 = Cash 15,800; Goods 700; Debtors 4,200]
2. Purchased goods from Neetu on credit Rs. 4,000
3. Sold goods costing Rs. 1,500 for Rs. 1,800. Q-7: Make the ‘Accounting Equation’ of the following transactions:
4. Paid Wages Rs. 700. 1. Bharat commenced business with Rs. 15,000.
5. Withdrawn cash for private expenses Rs. 600. 2. Purchased goods for cash Rs. 2,000
6. Paid to Neetu Rs. 3,000. 3. Purchased goods on credit Rs. 6,000.
[Capital 17,000; Creditors 1,000 = Cash 15,500; Goods 2,500] 4. Sold goods costing Rs. 3,000 on credit for Rs. 3,500.
5. Sold goods costing Rs. 2,000 for cash Rs. 2,300.
Q-3: Make the ‘Accounting Equation’ of the following transactions:
6. Paid to creditors Rs. 2,500.
1. Sonia started business with cash Rs. 25,000.
7. Sold a defective item of goods costing Rs.1,800 for Rs.1,000.
2. Cash deposited into bank Rs. 15,000.
8. Received from debtors Rs. 2,000.
3. Purchased goods worth Rs. 4,000 and paid by cheque.
[Capital 15,000; Creditors 3,500 = Cash 15,800; Goods 1,200; Debtors 1,500]
4. Purchased Equipments of Rs. 2,500.
5. Sold goods for cash Rs. 1,200 (cost Rs. 1,000).
Q-8: Make the ‘Accounting Equation’ of the following transactions:
6. Sonia withdrawn Rs. 3,000 for personal use in cash.
1. Poonam commenced business with Rs. 25,000.
7. Paid Salaries Rs. 2,500 and office Rent Rs. 1,200.
2. Purchased goods for cash Rs. 7,000
8. Paid Telephone Bill Rs. 2,000 by cheque.
3. Purchased goods on credit Rs. 5,000.
9. Purchased goods worth Rs. 3,000 on credit.
4. Sold goods costing Rs. 2,500 for cash Rs. 3,000.
[Capital 16,500; Creditors 3,000 = Cash 2,000; Bank 9,000; Equipments 2,500; Goods 6,000]
5. Sold goods costing Rs. 1,000 on credit for Rs. 1,500.
Q-4: Make the ‘Accounting Equation’ of the following transactions: 6. Paid to creditors Rs. 4,000.
1. Sunil started business with Rs. 15,000. 7. Received from debtors Rs. 1,200.
2. Purchased goods from Naveen on credit Rs. 4,000 8. Paid for Electricity Bill Rs. 2,000.
(11) (12)

10. Paid to Neeru for loan Rs. 3,000 and for interest Rs. 500.
CA. Naresh Aggarwal’s [Capital 43,000; Loan 7,000 = Cash 23,500; Bank 18,000; Goods 2,500; Machine 6,000]
ACADEMY of ACCOUNTS Q-12: Make the ‘Accounting Equation’ of the following transactions:
Accounting • Costing • Taxation • Financial Management 1. Mukesh started business with Rs. 20,000 in bank and Rs. 10,000 in cash.
2. Purchased goods for cash costing Rs. 4,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 3. Goods costing Rs. 1,000 sold for cash at Rs. 1,200.
4. Sold goods costing Rs. 1,200 for Rs. 1,500 received by cheque.
[Capital 24,000; Creditors 1,000 = Cash 16,200; Goods 8,500; Debtors 300] 5. Paid Rs. 800 for Electricity and Rs. 1,200 for Salaries.
6. Mukesh paid Rs. 2,000 from bank for his personal expense.
Q-9: Make the ‘Accounting Equation’ of the following transactions: 7. Rs.6,000 taken from Raju as loan.
1. Ram started business with cash Rs. 20,000. 8. Received commission Rs. 2,800.
2. Purchased goods for cash Rs. 5,000. 9. Paid to Raju for loan Rs. 3,000 and for interest Rs. 1,000.
3. Sold goods costing Rs.2,000 for cash Rs. 3,000. [Capital 28,300; Loan 3,000 = Cash 10,000; Bank 19,500; Goods 1,800]
4. Purchased goods from Mohan on credit worth Rs. 2,500.
5. Sold goods costing Rs. 1,500 to Sohan on credit for Rs. 2,000. Q-13: Make the ‘Accounting Equation’ of the following transactions:
6. Paid wages amounted to Rs. 1,000. 1. Started business with cash Rs.8,000, goods Rs.4,000 and Machine Rs.5,000.
7. Paid salaries to Rs. 2,500 2. Purchased Machine for Rs. 2,000.
8. Received commission Rs. 2,000. 3. Purchased goods on credit from Neha Rs. 3,000.

AoA
9. Cash Received from Sohan Rs. 1,200. 4. Purchased goods for cash Rs. 2,200.
10. Purchased furniture worth Rs. 2,000. 5. Purchased goods on credit Rs. 1,300.
[Capital 20,000; Creditors 2,500 = Cash 15,700; Goods 4,000; Debtors 800; Furniture 2,000] 6. Paid to Neha Rs. 2,800 in full settlement of her claim.
7. Charge depreciation Machinery by Rs.1,000.
Q-10: Make the ‘Accounting Equation’ of the following transactions: [Capital 16,200; Creditors 1,300 = Cash 1,000; Goods 10,500; Machinery 6,000]
1. Rahul started business with cash Rs. 50,000.
2. Purchased goods for cash Rs. 15,000. Q-14: Make the ‘Accounting Equation’ of the following transactions:
3. Purchased Equipments worth Rs. 2,000. 1. Started business with cash Rs. 10,000.
4. Sold goods costing Rs.4,000 for cash Rs. 5,000. 2. Purchased machine for Rs. 3,000.
5. Purchased goods from Deepak on credit worth Rs. 7,500. 3. Purchased goods for cash Rs. 1,500.
6. Sold goods costing Rs. 6,000 to Sohan on credit for Rs. 7,000. 4. Purchased goods on credit Rs. 1,200 from Pramod.
7. Paid wages amounted to Rs. 3,000. 5. Paid to Pramod Rs. 1,150 in full settlement.
8. Received Rent Rs. 2,500. 6. Depreciation of Rs. 500 charged on Machine.
9. Cash Received from Sohan Rs. 4,000. [Capital 9,550 = Cash 4,350; Machine 2,500; Goods 2,700]
[Capital 51,500; Creditors 7,500 = Cash 41,500; Goods 12,500; Equipment 2,000; Debtors 3,000] Q-15: Make the ‘Accounting Equation’ of the following transactions:
Q-11: Make the ‘Accounting Equation’ of the following transactions: 1. Sanjay started business with Cash Rs. 20,000 and Furniture Rs. 5,000.
1. Sudhir started business with Rs. 25,000 in bank and Rs. 20,000 in cash. 2. He purchased goods from Rosy on credit Rs. 7,000.
2. Purchased goods for cash costing Rs. 7,000 3. He sold goods for cash costing Rs. 1,500 for Rs. 2,000.
3. Goods costing Rs. 3,000 sold for cash at Rs. 4,000. 4. Purchased more furniture for cash Rs. 3,000.
4. Sold goods costing Rs. 1,500 for Rs. 2,000 received by cheque. 5. Sold goods on credit to Dinesh costing Rs. 2,500 for Rs. 3,200.
5. Purchased Machine costing Rs. 6,000 and paid by cheque. 6. Paid wages Rs. 500.
6. Sudhir withdrawn Rs. 3,000 from bank for private use. 7. Received Rs. 3,000 from Dinesh in full settlement of the claim.
7. Rs. 10,000 taken from Neeru as loan. 8. Withdrawn cash for personal use Rs. 3,000.
8. Received commission Rs. 2,000. 9. Paid cash to Rosy Rs. 6,800 in full settlement.
9. Paid General Expenses Rs. 1,800 and for Stationery Rs. 200. 10. Received Rent from tenant Rs. 1,200.
[Capital 23,900 = Cash 12,900; Furniture 8,000; Goods 3,000]
(13) (14)

5. Paid cash for salaries Rs. 1,000 and outstanding salaries were Rs. 200.
CA. Naresh Aggarwal’s 6. Bought Furniture in cash for personal use Rs. 1,500.
ACADEMY of ACCOUNTS [Capital 15,300; O/s Exp. 200 = Bank 3,000; Furniture 5,000; Cash 5,000; Advance Exp. 2,500]

Accounting • Costing • Taxation • Financial Management Q-20: Make the ‘Accounting Equation’ of the following transactions:
1. Mukesh started business with Bank balance of Rs.10,000.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 2. Bought Furniture for Rs. 3,000 and paid by cheque.
3. Bought Furniture for personal use Rs. 900.
Q-16: Make the ‘Accounting Equation’ of the following transactions: 4. Withdrawn cash for office use Rs. 5,000.
1. Rajesh started business with Cash Rs. 15,000 and Machine of Rs. 8,000. 5. Paid Fees in advance Rs. 1,000 in cash.
2. He purchased goods from Ajay on credit Rs. 6,000. 6. Paid cash for Commission Rs.800 (including advance Rs. 500).
3. He sold goods for cash costing Rs. 2,500 for Rs. 2,000. 7. Paid cash for Rent Rs. 1,200 and Outstanding Rent were Rs. 300.
4. Purchased more Machine for cash Rs. 4,000. 8. Cash paid for Salaries Rs. 800 and remain Outstanding Rs. 200.
5. Sold goods on credit to Mona costing Rs. 1,500 for Rs. 1,800. [Capital 6,300; O/s Exp. 500 = Bank 1,100; Furniture 3,000; Cash 1,200; Advance Exp. 1,500]
6. Paid wages Rs. 500, Rent Rs. 700 and Municipal Taxes Rs. 800. Q-21: Make the ‘Accounting Equation’ of the following transactions:
7. Received Rs. 1,700 from Mona in full settlement of the claim. 1. Started business with cash Rs. 10,000.
8. Paid cash to Ajay Rs. 5,800 in full settlement. 2. Paid Rent Rs. 600 including Rs. 100 as advance.
9. Received Rent from tenant Rs. 2,800 and Fees from client Rs. 1,200. 3. Received commission Rs. 1,000 and remain outstanding Rs. 400.

AoA
[Capital 24,900 = Cash 10,900; Machine 12,000; Goods 2,000] 4. Received fees in advance Rs. 800 to complete an assignment.
Q-17: Make the ‘Accounting Equation’ of the following transactions: 5. Paid son’s school fees Rs. 300 from office cash.
1. Started business with Rs. 8,000. 6. Assignment could not be completed therefore all fees returned.
2. Bought goods on credit Rs. 1,000. 7. Purchased a Machine for Rs.5,000; paid only Rs.1,500 and took loan from Bank
3. Bought Machinery for Rs. 2,000. for the balance.
4. Paid Rent Rs. 1,500 and Security deposit Rs. 1,000. [Capital 10,600; Loan 3,500= Cash 8,600; Advance Expenses 100; O/s Incomes 400; Machine 5,000]
5. Paid to creditors Rs. 980 in full settlement. Q-22: Make the ‘Accounting Equation’ of the following transactions:
6. Depreciate Machine by Rs. 300. 1. Ravi started business with cash Rs. 15,000.
7. Outstanding salaries are Rs. 500. 2. Paid Rent Rs.1,500 including Rs. 200 as advance.
[Capital 5,720; O/s Expenses 500 = Cash 2520; Goods 1,000; Machine 1,700; Deposit 1,000] 3. Received Interest Rs. 600 and remain outstanding Rs. 300.
Q-18: Make the ‘Accounting Equation’ of the following transactions: 4. Received fees in advance Rs. 500 to complete an assignment.
1. Started business with Rs. 25,000. 5. Paid wife’s insurance premium Rs. 400 from office cash.
2. Bought Furniture for Rs. 6,000. 6. Assignment could not be completed therefore all fees returned.
3. Bought goods on credit Rs. 5,000. 7. Purchased Scooter for Rs.7,000; paid only Rs.2,000 and took loan for the balance.
4. Paid Rent Rs. 2,500 and Security deposit Rs. 5,000. [Capital 14,200; Loan 5,000 = Cash 11,700; Advance Exp. 200; O/s Income: 300; Scooter: 7,000]
5. Paid to creditors Rs. 4,800 in full settlement. Q-23: If Capital of a business is Rs 60,000 and outside liabilities are Rs 20,000 then
6. Depreciate Furniture by Rs. 1,000. calculate total assets of the business.
7. Paid for Wages Rs. 1,500 and remain outstanding Rs. 500. [Rs.80,000]
[Capital 19,700; O/s Exp. 500 = Cash 5,200; Furniture 5,000; Goods 5,000; Security Deposit 5,000]
Q-19: Make the ‘Accounting Equation’ of the following transactions: Q-24: If total assets of a business are Rs 80,000 and net worth/capital is Rs.60,000.
1. Mukesh started business with Bank balance of Rs. 18,000. Calculate external equities/liabilities.
2. Bought Furniture for Rs. 5,000 and paid by cheque. [Ans.: Rs 20,000]
3. Withdrawn cash for office use Rs. 10,000.
4. Paid rent in advance Rs. 2,500.
(15) (16)

She also withdrawn Rs.20,000 for her private use. What is the total of her assets and
CA. Naresh Aggarwal’s her capital in the business on 31.12.2012.
ACADEMY of ACCOUNTS [Total Assets: Rs.1,10,000; Capital: Rs.85,000]

Accounting • Costing • Taxation • Financial Management Q-32: Ram started a business on 01.01.2012 with a capital of Rs. 90,000 and he
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] borrowed Rs.30,000 from a friend which is not yet paid. He earned a profit of Rs.
15,000 during 2012 and withdrew cash Rs. 10,000 for private use. What is amount of
his capital and total assets on 31.12.2012.
Q-25: If capital of a business is Rs.1,00,000 and liabilities are of Rs. 30,000 calculate [Capital: Rs.95,000; Total Assets: Rs.1,25,000]
total assets of the business.
[Rs.1,30,000] Q-33: Rohit Started a business on 01.04.2012 with a capital of Rs. 45,000 and a loan
of Rs. 15,000 borrowed from Bank. During the year he had paid Rs.5,000 of loan. On
Q-26: A had a capital of Rs. 70,000 on 31.03.2013. He had also purchased good 31.03.2013 his assets were Rs.80,000. Find out his capital as on 31.03.2013 and
amounting to Rs.10,000 on credit and the payment had not been made. Find the value profit/loss made during the year 2012-13.
of the total assets of the business. [Capital: Rs.70,000; Profit: Rs.25,000]
[Rs.80,000]
Q-34: Neeru started a business on 01.04.2012 with a capital of Rs.45,000 and a loan
Q-27: Ram started business on 01.01.2012 with capital of Rs.50,000. On 31.12.2012 of Rs. 25,000 borrowed from Bank. During the year she had introduced additional

AoA
his assets were Rs.75,000 and liabilities of Rs. 10,000. Find out his closing capital capital of Rs. 20,000; paid bank loan of Rs.10,000 and had withdrawn Rs. 5,000 for
and profits earned during the year. personal use. On 31.03.2013 her assets were Rs.1,10,000. Find out her capital as on
[Capital Rs. 65,000; Profit Rs. 15,000] 31.03.2013 and profit/loss made during the year 2012-13.
[Closing capital: Rs.95,000; Profit: Rs.35,000]
Q-28: A starts a business and invests Rs. 60,000 on 01.04.2012. On 31.03.2013 his
assets are Rs. 95,000 and liabilities are Rs. 10,000. Find the amount of capital on
31.03.2013. Also find his profit.
[Capital: Rs.85,000; Profit: Rs.25,000]

Q-29: Calculate total equity/Assets and amount of owner’s equity/capital, if: ••••••••••••••••••••••
Owner’s equity at the beginning is Rs. 80,000.
Equity of creditors is Rs. 20,000.
Revenue during the period is Rs. 30,000.
Expenses during the same period are Rs. 25,000.
[Total Equity Rs. 1,05,000, Owner’s Equity Rs. 85,000]

Q-30: Calculate total equity/Assets and amount of owner’s equity/capital, if:

Owner’s equity at the beginning is Rs. 50,000.
Equity of creditors is Rs. 10,000.
Revenue during the period is Rs. 20,000.
Expenses during the same period are Rs. 15,000.
[Total Equity Rs. 65,000, Owner’s Equity Rs. 55,000]

Q-31: Sangeeta started a business with a capital of Rs. 75,000 on 01.01.2012. During
the year, she made a profit of Rs. 30,000. She owes Rs. 25,000 to suppliers of goods.
(if taken) etc.
(17)

Hints:

Capital + Liabilities = Assets

Total Equities = Total Assets

CA. Naresh Aggarwal’s

Net Worth = Owners Equity = Capital

External Equities = Outside Liabilities
Outstanding Incomes, Bills Receivable, Loan (if given to others) etc.

Salaries, Depreciation, Printing & Stationery, Electricity, Telephone etc.

- Drawings + Profit - Loss = Closing Capital/Capital at the End

Opening Capital/Capital at the Beginning + Additional/Further Capital
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management

Assets : Cash, Bank, Furniture, Machine, Goods, Debtors, Prepaid Expenses,

Income/Expenses : Rent, Interest, Commission, Brokerage, Fees, Discount, Wages,

Liabilities : Creditors, Outstanding Expenses, Advance Incomes, Bills Payable, Loan

General Key to Accounting Equations

S.N. Different Situations Treatment Effected Head

1. Business started with Assets Increase in Capital Add: In Capital

Increase in Assets Add: In Related Assets

2. Withdrawn for personal use / Drawings Decrease in Capital Less: In Capital

Decrease in Assets Less: in Related Assets

3. Purchase of Asset for Cash Increase in Assets Add: In Related Assets

Decrease in Assets Less: In Cash

4. Purchase of Asset on Credit Increase in Assets Add: In Related Asset

Increase in Liabilities Add: In Creditors
(18)

5. Goods returned to Creditors/Suppliers Decrease in Assets Less: In Goods

Decrease in Liabilities Less: In Creditors

6. Paid to Creditors/Suppliers Decrease in Assets Less: In Cash/Bank

Decrease in Liabilities Less: In Creditors

7. Paid to Creditors/Suppliers Decrease in Assets (Amount Paid) Less: In Cash/Bank

and Discount Received Increase in Capital (Discount Amount) Add: In Capital
Decrease in Liabilities (Total Amount) Less: In Creditors
AoA

8. Loan Taken Increase in Assets Add: In Cash/Bank

Increase in Liabilities Add: In Loan
(19)

9. Loan Paid with Interest Decrease in Assets (Total Amount) Less: In Cash/Bank
Decrease in Liabilities (Loan Amount) Less: In Loan
Decrease in Capital (Interest Amount) Less: In Capital

10. Sale of Goods for Cash Increase in Assets (Sales Price) Add: In Cash
Decrease in Assets (Cost Price) Less: In Goods
*Increase in Capital (Profit Amount) Add: In Capital
*Decrease In Capital (Loss Amount) Less: In Capital
* There will be one item at a time, either Profit or Loss. Both will not come simultaneously.

11. Sale of Goods on Credit Increase in Assets (Sales Price) Add: In Debtors
Decrease in Assets (Cost Price) Less: In Goods
*Increase in Capital (Profit Amount) Add: In Capital
*Decrease In Capital (Loss Amount) Less: In Capital
* There be one Item at a time, either Profit or Loss. Both will not come simultaneously.
CA. Naresh Aggarwal’s

12. Goods returned by Debtors Decrease in Assets Less: In Debtors

Increase in Assets Add: In Goods

13. Cash Received from Debtors/Customers Decrease in Assets Less: In Debtors

Increase in Assets Add: In Cash
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management

14. Cash Received from Debtors/Customers Increase in Assets (Amount Received) Add: In Cash
and Discount allowed Decrease in Capital (Discount Amount) Less: In Capital
Decrease in Assets (Total Amount) Less: In Debtors

15. Expenses Paid Decrease in Assets Less: In Cash

Decrease in Capital Less: In Capital

16. Unpaid/Outstanding/Due Expenses Increase in Liabilities Add: In O/S Expenses

Decrease in Capital Less: In Capital

17. Prepaid/Advance Expenses Increase in Assets Add: In Prepaid Expenses

Decrease in Assets Less: In Cash

18. Income Received Increase in Assets Add: In Cash

Increase in Capital Add: In Capital

19. Outstanding Income Increase in Assets Add: In O/S Incomes

Increase in Capital Add: In Capital

20. Advance/Unearned Income Increase in Assets Add: In Cash

Increase in Liabilities Add: In Advance Incomes

21. Depreciation on Assets Decrease in Assets Less: In Related Assets

Decrease in Capital Less: In Capital

-------------------------------------------------------------------------------------------------------------------------
AoA
CA. Naresh Aggarwal’s Traditional Rules of Journal Entries
ACADEMY of ACCOUNTS Real Accounts :
Debit what comes in (MSfcV t¨ oLrq vk,)
Credit what goes out (ØSfMV t¨ oLrq tk,)
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Debit all Losses and Expenses (MSfcV lHkh [kPksZ o gkfu;k¡ )
Nominal Accounts :
Credit all Gains and Incomes (ØSfMV lHkh vk; o ykHk)

Debit the Receiver (MSfcV ysus okyk)

Personal Accounts :
Credit the Giver (ØSfMV nsus okyk)

Modern Rules of Journal Entries

Particulars + - Particulars + -

AoA
Journal Entries
Assets Dr. Cr. Liabilities Cr. Dr.

Expenses Dr. Cr. Capital Cr. Dr.

Income Cr. Dr.

For Eenquiries
Call or whatsapp: 8800215448
(Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)
Journal Entries through Accounting Equation
Email: [Link]@[Link] Capital + Liabilities = Assets
Website: [Link]
Credit Balance Debit Balance

(+) (-) (+) (-)

Credit Debit Debit Credit
(1) (2)

Feb.-19 Sangeeta withdrawn Rs. 3,000 from bank for private use.
CA. Naresh Aggarwal’s Feb.-21 Returned goods to Neeru of Rs. 3,200.
ACADEMY of ACCOUNTS Feb.-25
Feb.-27
Paid wages amounted to Rs. 1,000.
Received commission Rs. 2,000.
Accounting • Costing • Taxation • Financial Management Feb.-27 Salary paid Rs. 600.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Feb.-27 Paid to Neeru Rs. 7,000.
Feb.-28 Paid General Expenses Rs. 1,800 and for Stationery Rs. 200.

Solved Examples Q-4: Journalise the following transactions:

1. Dinesh started business with cash Rs. 50,000; Bank deposits Rs. 10,000
Q-1: Journalise the following transactions: and Furniture Rs. 5,000.
Jan-1 Ramesh started business with cash Rs. 50,000. 2. Purchased goods of Rs. 1,500.
Jan-4 Purchased goods for cash Rs. 7,000. 3. Purchased goods of Rs. 1,500 from Suresh.
Jan-5 Sold goods for cash Rs. 5,000. 4. Purchased goods of Rs. 1,500 from Suresh for cash
Jan-7 Purchased goods from Mohan on credit worth Rs. 4,500. 5. Purchased goods of Rs. 1,500 from Suresh and paid by cheque.
Jan-12 Sold goods to Sohan on credit worth Rs. 2,000. 6. Purchased Furniture of Rs. 1,500 from Suresh.
Jan-16 Paid wages amounted to Rs. 4,000. 7. Sold goods of Rs. 2,000.

AoA
Jan-17 Paid salaries to Rs. 2,500 8. Sold goods of Rs. 2,000 to Manish
Jan-22 Received commission Rs. 2,000. 9. Sold goods of Rs. 2,000 to Manish for cash
Jan-25 Goods returned by Sohan worth Rs. 1,500. 10. Sold goods of Rs. 2,000 to Manish and received a Cheque
Jan-28 Returned goods to Mohan Rs. 1,000. 11. Sold Furniture to Manish at Rs. 2,000.
Jan-30 Cash Received from Sohan Rs. 1,200. 12. Paid Cartage Rs. 700; Printing Charges Rs. 300 and Sundry Expenses Rs.500
Jan-31 Purchased furniture from Deepak worth Rs. 5,000. by cheque.
13. Paid for insurance Rs. 1,000.
Q-2: Show the Journal Entries of the following transactions: 14. Received fees from clients Rs. 1,100 and Rent Rs. 2,000.
May-1 Sohan started business with cash Rs. 45,000.
May-1 Cash deposited into bank Rs. 15,000. Q-5: Journalise the following transactions:
May-4 Purchased goods worth Rs. 4,000 and paid by cheque. 1. Cash paid to Shelly Rs. 2,000.
May-7 Purchased Office Equipments of Rs. 2,500. 2. Paid to Amitabh by cheque Rs. 1,500.
May-8 Sold goods for cash Rs. 1,200. 3. Received cheque from Bharti Rs. 1,800.
May-10 Sold goods to Neeru Rs. 800. 4. Paid to Amit Rs. 1,150 in full settlement of Rs. 1,200.
May-15 Goods returned by Neeru worth Rs. 150. 5. Claim of Rosy Rs. 2,000 settled for Rs. 1,900.
May-18 Sohan withdrawn Rs. 8,000 for personal use in cash. 6. Received Rs. 3,800 from Sumit in full settlement of Rs. 4,000.
May-24 Paid Salaries Rs. 2,500. 7 Received cash from Pramod at 3% discount for amount due Rs. 10,000.
May-27 Paid office Rent Rs. 1,200. 8. A cheque received from Sonia at 5% discount for claim amount of Rs. 3,000.
May-30 Paid Telephone Bill Rs. 2,700 by cheque. 9. A cheque issued to Aggarwal at 5% discount for claim amount of Rs. 4,000.

Q-3: Journalise the following transactions: Q-6: Make the Journal Entries of the following transactions:
Feb.-1 Sangeeta started business with Rs. 25,000 deposited with bank. 1. Purchased goods from M/s Cheap Traders of Rs. 8,000 at 10%trade discount.
Feb.-2 Purchased goods from Neeru Rs. 13,000 2. Purchased goods from Rich Limited of Rs. 5,000 at 5% trade discount and paid in
Feb.-6 Sold goods for Rs. 14,000. cash.
Feb.-8 Sold goods worth Rs. 2,000 and received by cheque. 3. Sold goods to Kriti worth Rs. 6,000 at 10% trade discount.
Feb.-11 Purchased Machine costing Rs. 6,000 and paid in cash. 4. Sold goods to Monika of Rs. 4,000 at 5% trade discount and money received by
Feb.-15 Goods returned by customer of Rs. 1,500 and cash refunded to him.
(3) (4)

Q-10: Make the Journal Entries of the following transactions:

CA. Naresh Aggarwal’s 1. Allow interest on capital @ 10% on Rs. 50,000.
ACADEMY of ACCOUNTS 2. Interest is due on loan of Rs. 20,000 taken from Bank @ 12% for one month.
3. Interest paid on loan of Rs. 15,000 taken from Bank @ 10% P.A. for 6 months.
Accounting • Costing • Taxation • Financial Management 4. On drawings of Rs.5,000; charge interest at the rate of 6%.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 5. Charge interest on drawings Rs. 150.
6. Interest is accrued Rs. 1,200 on loan given to friend .

cheque. Q-11: Make the Journal Entries of the following transactions:

5. Purchased goods from ‘Best Dealer’ of Rs. 10,000 at 20% trade discount and 1. Goods costing Rs. 4,000 distributed as samples.
2% cash discount. 2. Goods worth Rs. 1,100 given in charity.
6. Purchased goods from ‘Disha’ worth Rs. 5,000 at 10% trade discount and half 3. Grant from Government received Rs. 5,000.
paid in cash at 2% cash discount 4. Cash Rs. 2,000 and goods worth Rs. 3,100 given in charity.
5. Bill of Rs. 4,000 collected from Debtors.
Q-7: Make the Journal Entries of the following transactions: 6. Bill of Rs. 6,000 received from Sonu.
1. Depreciate at the rate of 10% on Furniture costing Rs. 10,000. 7. Bill of Rs. 4,000 discounted from bank at 2%.
2. Machine costing Rs. 20,000 is depreciated @ 20% P.A. 8. Bill of Rs. 6,000 endorsed to Monu.

AoA
3. Depreciate Building @ 5%, Machine @ 10% and Equipments @ 20%, Building 9. Cheque received from Sanjay Rs. 1,000.
was costing Rs. 50,000; Machine Rs. 20,000 and Equipments Rs. 5,000. 10. Sanjay’s cheque returned dishonored.
4. Depreciate typewriter by 2,500.
Q-12: Make the Journal Entries of the following transactions:
Q-8: Make the Journal Entries of the following transactions: 1. Salary paid in advance Rs. 600.
1. Mohan from whom amount due is Rs. 2,000 become insolvent and received only 2. Prepaid insurance Rs. 1,000.
60% of the claim. 3. Paid wages Rs. 1,800 including Rs. 300 for advance.
2. Sohan a customer with balance due Rs. 1,000 bankrupted and received only 25 4. Paid office rent Rs. 2,000 and security deposit Rs. 5,000 by cheque.
paise in Re. 5. Electricity bill due but not paid amounted to Rs. 2,200.
3. Sanjay from whom an amount of Rs. 4,000 was to be received is declared insolvent 6. Wages not paid to laborers Rs. 700.
and could receive a cheque of Rs. 1,500 in full satisfaction of the claim from the 7. Salary paid to clerks Rs. 800 and remain outstanding Rs. 400.
court. 8. Repairs charges were Rs. 1,800 but only 1,200 are paid.
4. Sangeeta disappeared and an amount due on her Rs. 800 is not expected to be 9. Commission due but not received Rs. 700.
collected. 10. Fees earned but not received Rs. 300.
5. Mohan recovered and received Rs. 300 from him. 11. Received cash for fees Rs. 1,000 and remain due Rs. 200.
6. Sohan the bad debts earlier recovered and gives a cheque for the balance 12. Received cheque for rent Rs. 2,000 and advance rent Rs. 5,000.
remained. 13. Interest income was of Rs. 1,200 but collected only Rs. 900.
7. Sangeeta came back and received half of the amount due in cash and half by 14. Received Fees in advance Rs. 600.
cheque.
Q-13: Show the Opening Journal Entries of the following transactions :
Q-9: Make the Journal Entries of the following transactions: 1. Opening Balances of Assets: Cash Rs.15,000; Machinery Rs.7,000; Stock
1. A fire occurred in the premises resulting loss of furniture worth Rs. 6,000. Rs.3,000; Dinesh Rs.2,000; Ravi Rs.1,000. Liabilities: Bank Loan Rs.6,000;
2. A computer stolen by a thief Costing Rs. 25,000. Outstnading Rent Rs.2,000; Sonu Rs.1,000; Ramesh Rs.3,000.
3. Fire destroying Machines costing Rs. 15,000; Furniture Rs. 10,000 and goods 2. Debit Balances: Cash Rs.7,000; Furniture Rs.5,000; Stock Rs.8,000; Mahesh
Rs. 5,000. Rs.4,000. Credit Balances: Loan Rs.5,000; Outstnading Expenses Rs.2,000;
4. Insurance claim received for goods lost in fire Rs. 1,500. Sunil Rs.3,000.
5. Cheque received for claim of stolen computer Rs. 18,000.
(5) (6)

Date Particulars L.F. Debit Credit

CA. Naresh Aggarwal’s ___________________________________________________________________

ACADEMY of ACCOUNTS Jan.25 Sales Return A/c

To Sohan
Dr. 1,500
1,500
Accounting • Costing • Taxation • Financial Management (Being returned goods by Sohan)
_______________________________________________
___________________________________________
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Jan.28 Mohan Dr. 1,000
To Purchases Return A/c 1,000
Solution-1:
(Being returned goods to Mohan)
Date Particulars L.F. Debit Credit _______________________________________________
___________________________________________
____________________________________________________________________
Jan.30 Cash A/c Dr. 1,200
Jan.-1 Cash A/c Dr. 50,000 To Sohan 1,200
To Capital A/c 50,000 (Being received cash from Sohan)
(Being started business with cash) _______________________________________________
___________________________________________
_______________________________________________
Jan.31 Furniture A/c Dr. 5,000
Jan.-4 Purchases A/c Dr. 7,000 To Deepak 5,000
To Cash A/c 7,000 (Being purchased furniture from Deepak)

AoA
(Being purchased goods for cash) ____________________________________________________________________
_______________________________________________
Jan.-5 Cash A/c Dr. 5,000 Solution-2:
To Sales A/c 5,000
Date Particulars L.F. Debit Credit
(Being sold goods for cash) ____________________________________________________________________
_______________________________________________
May-1 Cash A/c Dr. 45,000
Jan.-7 Purchases A/c Dr. 4,500 To Capital A/c 45,000
To Mohan 4,500 (Being started business with cash)
(Being purchased goods from Mohan on credit) _______________________________________________
___________________________________________
_______________________________________________
May-1 Bank A/c Dr. 15,000
Jan.12 Sohan Dr. 2,000 To Cash A/c 15,000
To Sales A/c 2,000 (Being deposited cash into bank)
(Being sold goods to Sohan on credit) _______________________________________________
___________________________________________
_______________________________________________
May-4 Purchases A/c Dr. 4,000
Jan.16 Wages A/c Dr. 4,000 To Bank A/c 4,000
To Cash 4,000 Being purchased goods and paid by cheque)
(Being paid wages) _______________________________________________
___________________________________________
_______________________________________________
May-7 Office Equipments A/c Dr. 2,500
Jan.17 Salaries A/c Dr. 2,500 To Cash A/c 2,500
To Cash A/c 2,500 (Being purchased office equipments)
(Being paid salaries) _______________________________________________
___________________________________________
_______________________________________________
May-8 Cash A/c Dr. 1,200
Jan.22 Cash A/c Dr. 2,000 To Sales A/c 1,200
To Commission A/c 2,000 (Being sold goods for cash)
(Being received commission) _______________________________________________
___________________________________________
_______________________________________________
(7) (8)

Date Particulars L.F. Debit Credit

CA. Naresh Aggarwal’s ___________________________________________________________________

ACADEMY of ACCOUNTS Feb.2 Purchases A/c

To Neeru
Dr. 13,000
13,000
Accounting • Costing • Taxation • Financial Management (Being purchased goods from Neeru)
___________________________________________
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Feb.6 Cash A/c Dr. 14,000
To Sales A/c 14,000
Date Particulars L.F. Debit Credit (Being sold goods for cash)
___________________________________________________________________ ___________________________________________
May10 Neeru Dr. 800 Feb.8 Bank A/c Dr. 2,000
To Sales A/c 800 To Sales A/c 2,000
(Being sold goods to Neeru) (Being sold goods and received cheque)
___________________________________________
May15 Sales Return A/c Dr. 150 Feb.11 Machinery A/c Dr. 6,000
To Neeru 150 To Cash A/c 6,000
(Being returened goods by Neeru) (Being purchased machinery for cash)
___________________________________________

AoA
___________________________________________
May18 Drawings A/c Dr. 8,000 Feb.15 Sales Return A/c Dr. 1,500
To Cash A/c 8,000 To Cash A/c 1,500
(Being withdrawn cash for personal use) (Being returned goods by customer and cash
___________________________________________
refunded to him)
May24 Salary A/c Dr. 2,500 ___________________________________________
To Cash A/c 2,500 Feb.19 Drawings A/c Dr. 3,000
(Being paid salary) To Bank A/c 3,000
___________________________________________
(Being withdrawn from bank for personal use)
May27 Rent A/c Dr. 1,200 ___________________________________________
To Cash A/c 1,200 Feb.21 Neeru Dr. 3,000
(Being paid rent) To Purchase Return A/c 3,000
___________________________________________
(Being returned goods to Neeru)
May30 Telephone Expenses A/c Dr. 2,700 ___________________________________________
To Bank A/c 2,700 Feb.25 Wages A/c Dr. 1,000
(Being paid telephone bill) To Cash A/c 1,000
____________________________________________________________________
(Being paid wages)
___________________________________________
Solution-3:
Feb.27 Cash A/c Dr. 2,000
Date Particulars L.F. Debit Credit To Commission A/c 2,000
____________________________________________________________________
(Being received commission)
Feb.-1 Bank A/c Dr. 25,000 ___________________________________________
To Capital A/c 25,000 Feb.27 Salary A/c Dr. 600
(Being started business with cash) To Cash A/c 600
___________________________________________
(Being paid salary)
___________________________________________
(9) (10)

Date Particulars L.F. Debit Credit

CA. Naresh Aggarwal’s ___________________________________________________________________

ACADEMY of ACCOUNTS 6. Furniture A/c

To Suresh
Dr. 1,500
1,500
Accounting • Costing • Taxation • Financial Management (Being purchased furniture from Suresh)
_______________________________________________
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
7. Cash A/c Dr. 2,000
To Sales A/c 2,000
Feb.27 Neeru Dr. 7,000
(Being sold goods for cash)
To Cash A/c 7,000 _______________________________________________
(Being paid to Neeru)
_______________________________________________ 8. Manish Dr. 2,000
To Sales A/c 2,000
Feb.28 General Expenses A/c Dr. 1,800
(Being sold goods to Manish)
Stationery A/c Dr. 200 _______________________________________________
To Cash A/c 2,000
9. Cash A/c Dr. 2,000
(Being paid expenses in cash)
____________________________________________________________________ To Sales A/c 2,000
(Being sold goods for cash)

AoA
_______________________________________________
Solution-4:
10. Bank A/c Dr. 2,000
Date Particulars L.F. Debit Credit To Sales A/c 2,000
____________________________________________________________________
(Being sold goods and received cheque)
1. Cash A/c Dr. 50,000 _______________________________________________
Bank A/c Dr. 10,000
11. Manish Dr. 2,000
Furniture A/c Dr. 5,000
To Furniture A/c 2,000
To Capital A/c 65,000
(Being sold furniture to Manish)
(Being started business with sundry assets) _______________________________________________
_______________________________________________
12. Cartage A/c Dr. 700
2. Purchases A/c Dr. 1,500
Printing Charges A/c Dr. 300
To Cash A/c 1,500
Sundry Expenses A/c Dr. 500
(Being purchased good)
_______________________________________________ To Bank A/c 1,500
(Being paid sundry expenses)
3. Purchases A/c Dr. 1,500 _______________________________________________
To Suresh 1,500
13. Insurance A/c Dr. 1,000
(Being purchased goods from Suresh)
_______________________________________________ To Cash A/c 1,000
(Being paid for insurance)
4. Purchases A/c Dr. 1,500 _______________________________________________
To Cash A/c
14. Cash A/c Dr. 3,100
(Being purchased goods for cash)
_______________________________________________ To Fees A/c 1,100
To Rent A/c 2,000
5. Purchases A/c Dr. 1,500
(Being fees and rent received)
To Bank A/c 1,500 ____________________________________________________________________
(Being purchased goods and paid by cheque)
_______________________________________________
(11) (12)

Date Particulars L.F. Debit Credit

CA. Naresh Aggarwal’s ____________________________________________________________________

ACADEMY of ACCOUNTS 8. Bank A/c

Discount Allowed A/c
Dr.
Dr.
2,850
150
Accounting • Costing • Taxation • Financial Management To Sonia 3,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (Being received cheque from Sonia and allowed
her discount)
_______________________________________________
Solution-5:
9. Aggarwal Dr. 4,000
Date Particulars L.F. Debit Credit To Bank A/c 3,800
____________________________________________________________________
To Discount Received A/c 200
1. Shelly Dr. 2,000
(Being issued cheque to Aggarwal and received
To Cash A/c 2,000
discount)
(Being paid to shelly) ____________________________________________________________________
_______________________________________________
2. Amitabh Dr. 1,500 Solution-6:
To Bank A/c 1,500
Date Particulars L.F. Debit Credit

AoA
(Being paid to Amitabh by cheque) ____________________________________________________________________
_______________________________________________
1. Purchases A/c Dr. 7,200
3. Bank A/c Dr. 1,800
To M/s Cheap Traders 7,200
To Bharti 1,800
(Being purchased goods at 10% trade discount)
(Bing received cheque from Bharti) _______________________________________________
_______________________________________________
2. Purchases A/c Dr. 4,750
4. Amit Dr. 1,200
To Cash A/c 4,750
To Cash A/c 1,150
(Being purchased goods at 10% trade discount)
To Discount Received A/c 50 _______________________________________________
(Being paid to Amit and received discount)
_______________________________________________ 3. Kriti Dr. 5,400
To Sales A/c 5,400
5. Rosy Dr. 2000
(Being sold goods to Kriti at trade discount)
To Cash A/c 1,900 _______________________________________________
To Discount Received A/c 100
4. Bank A/c Dr. 3,800
(Being paid to Rosy and received discount)
_______________________________________________ To Sales A/c 3,800
(Being purchased goods at 5% trade discount)
6. Cash A/c Dr. 3,800 _______________________________________________
Discount Allowed A/c Dr. 200
5. Purchases A/c Dr. 8,000
To Sumit 4,000
To Cash A/c 7,840
(Being received cash from Sumit and allowed
To Discount Received A/c 160
him discount)
_______________________________________________ (Being purchased goods at 20% trade discount
and 2% cash discount)
7. Cash A/c Dr. 9,700 _______________________________________________
Discount Allowed A/c Dr. 300
6.a Purchases A/c Dr. 4,500
To Promod 10,000
To Disha 4,500
(Being received cash from Pramod and allowed
(Being purchased goods at trade discount)
him discount) _______________________________________________
_______________________________________________
(13) (14)

CA. Naresh Aggarwal’s Solution-8:

ACADEMY of ACCOUNTS Date Particulars L.F. Debit Credit

____________________________________________________________________
Accounting • Costing • Taxation • Financial Management 1. Cash A/c Dr. 1,200
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Bad Debts A/c Dr. 800
To Mohan 2,000
(Being Mohan become insolvant and received
Date Particulars L.F. Debit Credit
____________________________________________________________________ only 60% of amount due.)
_______________________________________________
6.b Disha Dr. 2,250
To Cash A/c 2,205 2. Cash A/c Dr. 250
To Discount Received A/c 45 Bad Debts A/c Dr. 750
(Being paid to Disha half amount at cash discount) To Sohan 1,000
____________________________________________________________________ (Being Sohan become insolvant and received
only 25% of amount due.)
_______________________________________________
Solution-7:
3. Bank A/c Dr. 1,500

AoA
Date Particulars L.F. Debit Credit
____________________________________________________________________ Bad Debts A/c Dr. 2,500
1. Depreciation A/c Dr. 1,000 To Sanjay 4,000
To Furniture A/c 1,000 (Being Sanjay become insolvant and received
(Being depreciatied furniture) only Rs.1,500 from amount due.)
_______________________________________________ _______________________________________________

2. Depreciation A/c Dr. 4,000 4. Bad Debts Dr. 800

To Machine A/c 4,000 To Sangeeta 800
(Being depreciatied Machinery) (Being Sangeeta disappeared and could not
_______________________________________________ received anything)
_______________________________________________
3. Depreciation A/c Dr. 5,500
To Building A/c 2,500 5. Cash A/c Dr. 300
To Machinery A/c 2,000 To Bad Debts Recovered A/c 300
To Equipments A/c 1,000 (Being Mohan recovered and received from him)
_______________________________________________
(Being depreciatied various assets)
_______________________________________________ 6. Bank A/c Dr. 750
4. Depreciation A/c Dr. 2,500 To Bad Debts Recovered A/c 750
To Typewriter A/c 2,500 (Being Sohan recovered and received from him)
_______________________________________________
(Being depreciatied typewriter)
____________________________________________________________________ 7. Cash A/c Dr. 400
Bank A/c Dr. 400
To Bad Debts Recovered A/c 800
(Being Sangeeta paid the amount earlier
considered as bad debts)
____________________________________________________________________
(15) (16)

3. Interest on Loan A/c Dr. 750

CA. Naresh Aggarwal’s
To Cash A/c 750
ACADEMY of ACCOUNTS (Being paid interest on loan)
_______________________________________________
Accounting • Costing • Taxation • Financial Management 4. Drawings A/c Dr. 300
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] To Interest on Drawings 300
(Being charged interest on drawings)
Solution-9: _______________________________________________

Date Particulars L.F. Debit Credit 5. Drawings A/c Dr. 150

____________________________________________________________________
To Interest on Drawings 150
1. Loss by Fire A/c Dr. 6,000 (Being charged interest on drawings)
To Furniture A/c 6,000 _______________________________________________
(Being furniture lost in fire) 6. Accrude Interest A/c Dr. 1,200
_______________________________________________
To Interest A/c 1,200
2. Loss by theft A/c Dr. 25,000 (Being accruded interest on loan)
To Computer A/c 25,000 ____________________________________________________________________
(Being computer stolen by thief)

AoA
_______________________________________________ Solution-11:
3. Loss by fire A/c Dr. 30,000 Date Particulars L.F. Debit Credit
To Machinery A/c 15,000 ____________________________________________________________________
To Furniture A/c 10,000 1. Samples A/c Dr. 4,000
To Purchases A/c 5,000 To Purchases A/c 4,000
(Being lost various assets in fire) (Being distributed samples)
_______________________________________________ _______________________________________________
4. Cash A/c Dr. 1,500 2. Charity A/c Dr. 1,100
To Insurance Claim 1,500 To Purchases A/c 1,100
(Being claim received for lost goods) (Being distributed goods in charity)
_______________________________________________ _______________________________________________
5. Bank A/c Dr. 18,000 3. Cash A/c Dr. 5,000
To Insurance Claim 18,000 To Govt. Grant A/c 5,000
(Being claim received for stolen computer) (Being received grant from Govt.)
____________________________________________________________________ _______________________________________________
4. Charity A/c Dr. 5,100
Solution-10: To Cash A/c 2,000
Date Particulars L.F. Debit Credit To Purchases A/c 3,100
____________________________________________________________________
(Being given cash and goods in charity)
1. Interest on Capital A/c Dr. 5,000 _______________________________________________
To Capital A/c 5,000 5. Bills Receivable A/c Dr. 4,000
(Being allowed interest on capital) To Debtors A/c 4,000
_______________________________________________
(Being received bill from debtors)
2. Interest on Loan A/c Dr. 200 _______________________________________________
To Bank Loan A/c 200
(Being interest on loan is due)
_______________________________________________
(17) (18)

CA. Naresh Aggarwal’s 3. Wages A/c Dr. 1,500

ACADEMY of ACCOUNTS Prepaid Wages A/c

To Cash A/c
Dr. 300
1,800
Accounting • Costing • Taxation • Financial Management (Being paid wages and advance wages)
_______________________________________________
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
4. Office Rent A/c Dr. 2,000
Security Deposit Dr. 5,000
6. Bills Receivable A/c Dr. 6,000 To Bank A/c 7,000
To Sonu 6,000 (Being paid rent and security deposit)
(Being received bill from Sonu) _______________________________________________
_______________________________________________
5. Electricity Expenses A/c Dr. 2,200
7. Bank A/c Dr. 3,920 To O/s Electricity Expenses A/c 2,200
Discount A/c Dr. 80 Being electricity charges are due but not paid)
To Bills Receivable A/c 4,000 _______________________________________________
(Being discounted bill from bank) 6. Wages A/c Dr. 700
_______________________________________________ To O/s Wages A/c 700

AoA
8. Monu Dr. 6,000 Being wages not paid to laborers)
To Bills Receivable A/c 6,000 _______________________________________________
(Being endorced bill to Monu) 7. Salary A/c Dr. 1,200
_______________________________________________ To Cash A/c 800
9. Bank A/c Dr. 1,000 To O/s Salary A/c or clerk’s A/c 400
To Sanjay 1,000 (Being salary paid and remain outstanding too)
_______________________________________________
(Being received cheque from Sanjay)
_______________________________________________ 8. Repairs A/c Dr. 1,800
10. Sanjay Dr. 1,000 To Cash A/c 1,200
To Bank A/c 1,000 To O/s Repairs A/c 600
(Being sanjay’s cheque returned dishonred) (Being paid repairs and remain outstanding too)
____________________________________________________________________ _______________________________________________
9. Outstanding Commission A/c Dr. 700
Solution-12: To Commission A/c 700
(Being commission became due but not received)
Date Particulars L.F. Debit Credit _______________________________________________
____________________________________________________________________
1. Prepaid Salary A/c Dr. 600 10. O/s Fees A/c Dr. 300
To Cash A/c 600 To Fees A/c 300
(Being paid salary in advance) (Being fees became due but not received)
_______________________________________________ _______________________________________________

2. Prepaid Insurance A/c Dr. 1,000 11. Cash A/c Dr. 1,000
To Cash A/c 1,000 O/s Fees A/c Dr. 200
(Being prepaid insurance) To Fees A/c 1,200
_______________________________________________ (Being received fees and remained due too)
_______________________________________________
(19) (20)

Exercise
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS Q-1:
Jan.-1
Journalise the following transactions:
Neha started business with cash Rs. 35,000.
Accounting • Costing • Taxation • Financial Management Jan.-4 Purchased goods for cash Rs. 5,000.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Jan.-7 Paid wages amounted to Rs. 3,000.
Jan.-8 Paid salaries to Rs. 5,500
Jan.-12 Received commission Rs. 2,000.
12. Bank A/c Dr. 7,000
Jan.-17 Sold goods for cash Rs. 5,000.
To Rent A/c 2,000
Jan.-18 Purchased goods from Meena on credit worth Rs. 1,500.
To Advance Rent A/c 5,000
Jan.-24 Sold goods to Sonia on credit worth Rs. 2,000.
(Being received rent with Advance)
_______________________________________________ Jan.-27 Goods returned by Sonia worth Rs. 500.
Jan.-28 Returned goods to Meena Rs. 400.
13. Cash A/c Dr. 900
Jan.-30 Cash Received from Sonia Rs. 1,200.
O/s Interest A/c Dr. 300
Jan.-31 Purchased furniture from Deepa worth Rs. 5,000.
To Interest A/c 1,200
(Being received interest and remained due too)
_______________________________________________ Q-2: Show the Journal Entries of the following transactions:

AoA
May-1 Sohan started business with cash Rs. 25,000.
14. Cash A/c Dr. 600
May-3 Cash deposited into bank Rs. 5,000.
To Advance Fees A/c 600
May-5 Purchased goods worth Rs. 4,000.
(Being received fees in advance)
____________________________________________________________________ May-8 Paid Salaries Rs. 3,500.
Solution-13: May-12 Paid Electricity Rs. 2,100 by cheque.
May-15 Purchased Office Furniture of Rs. 2,500.
Date Particulars L.F. Debit Credit
____________________________________________________________________ May-18 Sold goods for cash Rs. 1,500.
1. Cash A/c 15,000 May-22 Paid office Rent Rs. 2,200.
Machinery A/c 7,000 May-25 Sold goods to Naveen Rs. 1,800.
Stock A/c 3,000 May-28 Goods returned by Naveen worth Rs. 300.
Dinesh 2,000 May-29 Sohan withdrawn Rs. 8,000 for personal.
Ravi 1,000
To Bank Loan A/c 6,000 Q-3: Show the Journal Entries of the following transactions:
To Outstnading Rent A/c 2,000 Nov.-1 Sudha started business with Bank Balance of Rs. 25,000.
To Sonu 1,000 Nov.-4 Purchased goods worth Rs. 6,000 from Deepak.
To Ramesh 3,000 Nov.-6 Purchased Furnitures of Rs. 4,000.
To Capital A/c (Balancing Figure) 16,000
Nov.-9 Sold goods for cash Rs. 8,000.
(Being made opening journal entry)
_______________________________________________ Nov.-14 Paid for Wages Rs. 1,500.
Nov.-19 Sold goods to Nisha worth Rs. 1,800.
2. Cash A/c 7,000
Furniture A/c 5,000 Nov.-22 Received commission Rs. 4,000
Stock A/c 8,000 Nov.-25 Paid for Stationery Rs. 3,000.
Mahesh 4,000 Nov.-27 Sudha withdrawn Rs. 3,000 for personal from Bank.
To Loan A/c 5,000 Nov.-29 Paid Rent Rs. 2,000 by cheque.
To Outstnading Expenses A/c 2,000
To Sunil 3,000 Q-4: Journalise the following transactions:
To Capital A/c (Balancing Figure) 14,000 July-1 Raju started business with Rs. 30,000 deposited with bank.
____________________________________________________________________
July-2 Purchased Machine costing Rs. 3,000 and paid in cash.
(21) (22)

10. Received from Subhash Rs. 3,000.

CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS Q-7: Journalise the following transactions:
1. Started business with cash Rs. 35,000 and Bank Balance of Rs. 10,000.
Accounting • Costing • Taxation • Financial Management 2. Purchased goods from Ramesh for cash Rs. 5,000.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 3. Paid for Cartage Rs. 1,500.
4. Sold goods to Rajesh worth Rs. 2,800.
5. Purchased goods from Sumit Rs. 3,000.
July-5 Purchased goods from Suresh Rs. 4,000
6. Paid Rent Rs. 2,100 by cheque.
July-7 Paid Interest amounted to Rs. 1,200.
7. Loan taken from Bank Rs. 10,000
July-10 Received Brokerage Rs. 2,000.
8. Paid to Sangeeta Rs. 4,000 for her salary.
July-14 Sold goods for Rs. 4,500.
9. Received commission Rs. 1,700
July-17 Sold goods worth Rs. 2,000 and received by cheque.
10. Returned goods to Sumit of Rs. 500.
July-20 Goods returned by customer of Rs. 1,000 and cash refunded to him.
11. Paid Rs. 3,000 for Loan and Rs. 250 for Interest on Loan.
July-22 Raju withdrawn Rs. 1,000 from bank for private use.
July-25 Returned goods to Suresh of Rs. 800.
Q-8: Journalise the following transactions:
July-27 Salary paid Rs. 1,600.
1. Radha started business with cash Rs. 14,000.

AoA
July-29 Paid to Suresh Rs. 2,000.
2. Purchased goods worth Rs. 4,000.
July-31 Paid for Stationery Rs. 400 and for General Expenses Rs. 1,000.
3. Cash deposited into bank Rs. 5,000.
4. Cash paid to Sanjay Rs. 2,000.
Q-5: Journalise the following transactions:
5. Paid for Sundry Expenses Rs. 700 and for Freight Rs. 400.
Apr.-1 Vivek started business with Rs. 18,000 deposited with bank.
6. Paid to Amit by cheque Rs. 1,200.
Apr.-2 Purchased goods from Kapil Rs. 2,500
7. Received cheque from Bheem Rs. 1,000 for commission.
Apr.-4 Paid for Insurance amounted to Rs. 2,200.
8. A cheque received from Ramesh at 1% discount for amount due Rs. 3,000.
Apr.-8 Received Fees Rs. 12,000.
9. Received Rs. 3,900 from Ravi in full settlement of Rs. 4,000.
Apr.-12 Sold goods worth Rs. 1,000 to Mona and received by cheque.
10. A cheque issued to Ajay at 5% discount for amount due Rs. 2,000.
Apr.-15 Purchased Typewriter costing Rs. 4,000 and paid in cash.
11. Paid to Rahul Rs. 950 in full settlement of Rs. 1,000.
Apr.-20 Sold goods for Rs. 2,500.
12. Received cash from Sunita at 2% discount for amount due Rs. 5,000.
Apr.-22 Salary paid Rs. 2,600.
Apr.-25 Paid to Kapil Rs. 1,000.
Q-9: Journalise the following transactions:
Apr.-28 Goods returned by a customer cash refunded to him Rs. 400.
1. Purchased goods for Rs. 6,000.
Apr.-29 Raju withdrawn Rs. 1,400 from bank for private use.
2. Paid to Rahul Rs. 750 in full settlement of Rs. 800.
Apr.-30 Returned goods to Kapil of Rs. 500.
3. Paid for Rent Rs. 700 and for Insurance Rs. 400.
4. Loan taken from Sharma Rs. 5,000
Q-6: Journalise the following transactions:
5. A cheque received from Monika at 2% discount for amount due Rs. 1,000.
1. Started business with cash Rs. 25,000 and Bank Balance of Rs. 8,000.
6. Goods returned by a customer cash refunded to him Rs. 400.
2. Purchased goods from Deepak for cash Rs. 5,000.
7. Bank allowed interest Rs.50
3. Paid wages amounted to Rs. 1,000 to Suraj.
8. A cheque issued to Mukesh at 5% discount for amount due Rs. 5,000.
4. Sold goods to Ravi for cash Rs. 4,000
9. Returned goods to supplier and received a cheque of Rs. 500.
5. Paid Fees Rs. 2,500 by cheque.
10. Received a cheque for Rent Rs. 1,800 from Ramesh.
6. Sold goods to Neha Rs. 1,800.
11. Paid full amount of Loan with Interest Rs. 500 for Interest on Loan.
7. Paid to Kabeer Rs. 1,400.
12. Bank Charges were Rs. 100.
8. Received Interest Rs. 1,000
9. Purchased Machinery costing Rs. 4,000
(23) (24)

2. Depreciate Furniture at the rate of 10%.

CA. Naresh Aggarwal’s 3. Machine is depreciated @ 20% P.A.
ACADEMY of ACCOUNTS 4.
5.
Provide depreciation on Equipments @ 10% p.a. for 6 months only.
Depreciate typewriter by 2,500.
Accounting • Costing • Taxation • Financial Management 6. Provide depreciation on computers by 15%; costing Rs. 25,000.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 7. Depreciate old building of Rs. 40,000 for full year and new building of Rs. 20,000
for 3 months at the rate of 10% p.a.
Q-10: Journalise the following transactions:
Q-13: Make the Journal Entries of the following transactions:
1. Received Fees Rs. 700, Rent Rs. 300 and Commission Rs. 500.
1. Ravi from whom amount due is Rs. 1,000 become insolvent and received only
2. Bank allowed interest Rs.90
70% of the claim.
3. Cash received from a customer at 2% discount for amount due Rs. 2,000.
2. Hari a customer with balance due Rs. 2,000 bankrupted and received only 40
4. Loan given to a friend amounted to Rs. 5,000.
paise in Re.
5. Paid to Sanjeev Rs. 4,000 in full settlement of Rs. 4,100.
3. Sudhir from whom an amount of Rs. 3,000 was to be received is declared insolvent
6. Proprietor withdrawn Rs. 2,500 for private use.
and could receive a cheque of Rs. 1,800 in full satisfaction of the claim from the
7. Paid for Salaries Rs. 1,000; for Rent Rs. 500 and for Insurance Rs. 300.
court.
8. Paid to Ramesh Rs. 2,950 in full settlement of Rs. 3,100.
4. Suraj disappeared and an amount due on him Rs. 1,200 is not expected to be
9. Received Rs. 200 for Interest and Rs. 3,000 for Loan given to friend.

AoA
collected.
10. Proprietor brought Rs.5,000 as further capital in the business.
5. Ravi recovered and received Rs. 200 from him.
6. Hari the bad debts earlier recovered and gives a cheque for the balance remained.
Q-11: Make the Journal Entries of the following transactions:
7. Suraj came back and received half of the amount due in cash and half by
1. Purchased goods from Sunil Traders of Rs. 3,000 at 10% trade discount.
cheque.
2. Sold goods to Bharat worth Rs. 4,000 at 10% trade discount.
8. Sonia, a bad debts earlier came back and received Rs. 1,800 from her.
3. Sold goods for cash to Monika of Rs. 2,000 at 5% trade discount.
4. Purchased goods for cash from India Limited of Rs. 5,000 at 5% trade discount.
Q-14: Make the Journal Entries of the following transactions:
5. Purchased goods from Deepak of Rs. 5,000 at 20% trade discount and
1. A Typewriter stolen by a thief Costing Rs. 7,000.
5% cash discount.
2. A fire occurred in the premises resulting loss of goods worth Rs. 4,000.
6. Sold goods to Raju worth Rs. 2,000 at 10% trade discount and 2% cash discount.
3. Fire destroying Machines costing Rs. 5,000; Furniture Rs. 3,000 and goods Rs.
7. Sold goods to Subhash of Rs. 2,000 at 5% trade discount and received a cheque
2,000.
for the amount due.
4. Cheque received for claim of stolen Typewriter Rs. 5,500.
8. Purchased goods from Dinesh Ltd. of Rs. 6,000 at 5% trade discount and paid by
5. Insurance claim received for goods lost in fire Rs. 2,500.
cheque.
9. Purchased goods from Suresh of Rs. 4,000 at 20% trade discount and 5% cash
Q-15: Make the Journal Entries of the following transactions:
discount was allowed on payment. Only half of amount due was paid.
1. Purchased goods for cash from Bhola of Rs. 6,000 at 5% trade discount.
10. Purchased goods from Mohan of Rs. 10,000. 5% cash discount was allowed on
2. Bought Computer of Rs. 25,000; Furniture of Rs. 6,000 and Equipments of Rs.
payment. Only 40% of due amount was paid.
4,000.
11. Sold goods to Shefali of Rs. 5,000 at 1/5 trade discount and 5% cash discount
3. Sudha from whom an amount of Rs. 4,000 was to received is declared insolvent
was allowed on payment. Only 25% of amount due was paid by her.
and could receive a cheque of Rs. 2,800 in full satisfaction of the claim from the
12. Sold goods to Hema of Rs. 7,000 at 1/7 trade discount and 2% cash discount was
court.
allowed on payment. Only half of amount due was paid by her.
4. A fire occurred in the premises resulting loss of goods worth Rs. 3,500.
5. Computer is depreciated at the rate of 20%.
Q-12: Make the Journal Entries of the following transactions:
6. Provide depreciation on Equipments @ 10% for 9 months.
1. Bought Machinery of Rs. 20,000; Furniture of Rs. 5,000 and Equipments of Rs.
7. Manoj, a bad debts earlier came back and received Rs. 1,800 from him.
15,000.
8. Insurance claim received for goods lost in fire Rs. 2,500.
(25) (26)

5. Telephone bill due but not paid amounted to Rs. 1,200.

CA. Naresh Aggarwal’s 6. Received Commission Rs. 700 and remain due Rs. 300.
ACADEMY of ACCOUNTS 7.
8.
Rent received in advance Rs. 1,200.
Wages not paid to workers Rs. 1,000.
Accounting • Costing • Taxation • Financial Management 9. Salary paid to manager Rs.5,000 and remain outstanding Rs.1,000.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 10. Repairs charges were Rs. 2,000 but only 1,500 are yet paid.

Q-20: Make the Journal Entries of the following transactions:

Q-16: Make the Journal Entries of the following transactions:
1. Ram started business with cash Rs. 40,000 and goods worth Rs. 10,000.
1. Anjali started business with cash Rs. 25,000.
2. Purchased goods from Mohan worth Rs. 7,000.
2. Allow interest on capital @ 10%.
3. Sold goods worth Rs. 3,000 at Rs. 4,000 for cash to Deepak.
3. Interest paid on loan amounted to Rs.1,000.
4. Purchased goods from Monika Rs. 5,000 in cash
4. Interest is due on loan of Rs. 24,000 taken from Bank @ 5% for three month.
5. Paid wages Rs. 1,100 and outstanding remained Rs. 100.
5. Charge interest on drawings Rs. 250.
6 Received commission from Rajni Rs. 800 and outstanding remained Rs. 400.
6. On drawings of Rs.10,000; charge interest at the rate of 5%.
7. Sold goods to vijay worth Rs. 5,000 at 10% trade discount.
7. Interest is accrued on Investment amounted to Rs.400 .
8. Paid to Mohan Rs. 6,900 in full settlement.
9. Sold goods to sanjay at Rs. 4,000.
Q-17: Make the Journal Entries of the following transactions:

AoA
10. Cash received from Vijay and allowed him 5% cash discount.
1. Bills Receivable of Rs. 2,500 collected from Customers.
11. Sanjay become insolvent and received only 75% in total debt.
2. Bills Receivable of Rs. 3,000 received from Mukesh.
12. Paid for salary Rs. 1,500 including 300 as advance.
3. B/R of Rs. 5,000 discounted from bank at 2%.
13. Sanjay recovered and received the remaining money.
4. B/R of Rs. 1,000 endorsed to Anil.
14. Furniture purchased for Rs. 3,000.
5. Cheque received from Dinesh Rs.1,800
15. Deposited into Bank Rs.10,000
6. Goods worth Rs. 1,100 given as donations.
16. Machinery purchased of Rs. 4,000 and paid by cheque.
7. Grant from Government received Rs. 3,000.
17. Bank allowed interest Rs.50.
8. Dinesh’s cheque returned dishonored.
18. Insurance premium of Ram (proprietor) paid by firm’s Bank A/c Rs. 250.
19. Ram introduced further capital Rs. 7,000 and deposited into Bank.
Q-18: Make the Journal Entries of the following transactions:
20. Customer directly deposited into Bank Rs. 1,000.
1. A cheque of Rs. 950 received from Arun in full settlement of Rs.1,000.
21. Depreciate Furniture by 10% and Machinery by 20%
2. Goods costing Rs. 2,000 distributed as free samples.
22. Interest allowed to capital @ 5% on opening Balance.
3. A cheque of Rs.1900 issued to Ram in full settlement of his debt of Rs.2,000.
23. Received rent Rs. 1,000 and security deposit Rs. 5,000.
4. Cash Rs. 1,000 and goods worth Rs. 1,100 given in charity.
24. Bank charged for outstation cheque Rs. 25.
5. Cheque of Arun returned dishonored.
25. Interest charged on drawings Rs. 40.
6. Salary paid in advance Rs. 2,500.
26. Discounted a Bill from bank of Rs. 3,000 at 2%.
7. Prepaid Legal Charges amounted to Rs. 1,000.
27. Fees received in advance Rs. 900.
8. Cheque issued to Ram returned dishonored.
28. Paid to Anil Rs. 980 by cheque in full settlement of his claim of Rs. 1,000.
9. Commission due but not received Rs. 900.
29. Goods of Rs. 600 and Cash Rs. 500 given in charity.
10. Fees earned but not received Rs. 200.
30. Goods lost by fire Rs. 800.
Q-19: Make the Journal Entries of the following transactions:
1. Fees of Rs. 1,000 and Advance Fees of Rs. 500 received by cheque.
2. Interest on Investment was total of Rs. 2,000 but collected only Rs. 1,500.
•••••••••••••••••••••••••
3. Paid for Salaries Rs.3,000; including Rs.1,000 as Advance Salaries.
4. Paid office rent Rs. 2,000 and security deposit Rs. 5,000 by cheque.
(27) (28)

Q-21: Show Journal Entries, Ledger Posting and Trial Balance of the followings: Jan.27 Mohan Dr. 1,000
Jan.1 Ramesh startedCA. Naresh
business Aggarwal’s
with cash Rs.50,000. To Purchases Return A/c 1,000
ACADEMY of ACCOUNTS
Jan.4
Jan.5
Purchased goods for cash Rs.7,000.
Purchased furniture for Rs.5,000. Jan.28
_________________________________________
Cash A/c Dr. 1,200
Accounting
Jan.6 Sold goods Costing
• for • Taxation • Financial Management
cash Rs.5,000. To Sohan 1,200
Jan.8 Purchased goods from Mohan on credit worth Rs.4,500. ____________________________________________________________________
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Jan.12 Sold goods to Sohan on credit worth Rs.2,000.
Jan.15 Paid wages of Rs.4,000 and Salaries of Rs.2,500
Jan.20 Received commission Rs.1,200 and Fees Rs.800. Ledger Postings
Jan.22 Goods returned by Sohan worth Rs.800.
Jan.27 Returned goods to Mohan Rs.1,000. Dr. Cash Account Cr.
Jan.28 Cash Received from Sohan Rs.1,200. Date Particulars LF Amount Date Particulars LF Amount

Solution: Jan. 1 To Capital A/c 50,000 Jan. 4 By Purchases A/c 7,000

Journal Entries Jan. 6 To Sales A/c 5,000 Jan. 5 By Furniture A/c 5,000
Jan. 20 To Commission A/c 1,200 Jan. 15 By Wages A/c 4,000
Date Particulars L.F. Debit Credit
____________________________________________________________________ Jan. 20 To Fees A/c 800 Jan. 15 By Salaries A/c 2,500
Jan.1 Cash A/c Dr. 50,000 Jan. 28 To Sohan 1,200 Jan. 31 By Balance c/d 39,700

AoA
To Capital A/c 50,000 58,200 58,200
_________________________________________
Jan.4 Purchases A/c Dr. 7,000 Feb. 1 To Balance b/d 39,700
To Cash A/c 7,000
_________________________________________ Dr. Capital Account Cr.
Jan.5 Furniture A/c Dr. 5,000 Date Particulars LF Amount Date Particulars LF Amount
To Cash 5,000
_________________________________________ Jan. 31 To Balance c/d 50,000 Jan. 1 By Cash A/c 50,000
Jan.6 Cash A/c Dr. 5,000 50,000 50,000
To Sales A/c 5,000
(Being sold goods for cash) Feb. 1 By Balance b/d 50,000
_________________________________________
Jan.8 Purchases A/c Dr. 4,500 Dr. Purchases Account Cr.
To Mohan 4,500 Date Particulars LF Amount Date Particulars LF Amount
_________________________________________
Jan.12 Sohan Dr. 2,000 Jan. 4 To Cash A/c 7,000 Jan. 31 By Balance c/d 11,500
To Sales A/c 2,000 Jan. 8 To Mohan 4,500
_________________________________________
11,500 11,500
Jan.15 Wages A/c Dr. 4,000
Salaries A/c Dr. 2,500 Feb. 1 By Balance b/d 11,500
To Cash 6,500
_________________________________________ Dr. Sales Account Cr.
Jan.20 Cash A/c Dr. 2,000 Date Particulars LF Amount Date Particulars LF Amount
To Commission A/c 1,200
To Fees A/c 800 Jan. 31 To Balance c/d 7,000 Jan. 4 By Cash A/c 5,000
_________________________________________ Jan. 12 Sohan 2,000
Jan.22 Sales Return A/c Dr. 800 7,000 7,000
To Sohan 800
_________________________________________ Feb. 1 By Balance b/d 7,000
(29) (30)

Dr. Wages Account Cr. Dr. Mohan’s Personal Account Cr.

Date Particulars
CA. LF
Naresh Aggarwal’s
Amount Date Particulars LF Amount Date Particulars LF Amount Date Particulars LF Amount
ACADEMY
Jan. 15To Cash A/c [Link]
4,000 31 By Balance c/d 4,000 Jan. 27 To Purchase Returns A/c 1,000 Jan. 8 By Purchases A/c 4,500
Accounting • Costing • Taxation • Financial Management Jan. 31 To Balance c/d 3,500
4,000 4,000
[Link]
1 Patel Nagar,b/d
To Balance New Delhi. Ph:8800215448.
4,000 Website: [Link] 4,500 4,500
Feb. 1 By Balance b/d 3,500
Dr. Salaries Account Cr.
Date Particulars LF Amount Date Particulars LF Amount Dr. Purchases Returns Account Cr.
Date Particulars LF Amount Date Particulars LF Amount
Jan. 15 To Cash A/c 2,500 Jan. 31 By Balance c/d 2,500
Jan. 31 To Balance c/d 1,000 Jan. 27 By Mohan 1,000
2,500 2,500
Feb. 1 To Balance b/d 2,500 1,000 1,000
Feb. 1 By Balance b/d 1,000
Dr. Commission Account Cr.
Date Particulars LF Amount Date Particulars LF Amount Dr. Furniture Account Cr.

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Date Particulars LF Amount Date Particulars LF Amount
Jan. 31 To Balance c/d 1,200 Jan. 20 By Cash A/c 1,200
Jan. 5 To Cash 5,000 Jan. 31 By Balance c/d 5,000
1,200 1,200
Feb. 1 By Balance b/d 1,200 5,000 5,000
Feb. 1 To Balance b/d 5,000
Dr. Fees Account Cr.
Date Particulars LF Amount Date Particulars LF Amount

Jan. 31 To Balance c/d 800 Jan. 20 By Cash A/c 800 Trial Balance
(as on 31st January)
800 800
Particulars Dr. Amt. Cr. Amt.
Feb. 1 By Balance b/d 800
Cash A/c 39700
Dr. Sohan’s Personal Account Cr. Capital A/c 50,000
Date Particulars LF Amount Date Particulars LF Amount Purchases A/c 11,500
Sales A/c 7,000
Jan. 12 To Sales A/c 2,000 Jan. 22 By Sales Returns A/c 800 Wages A/c 4,000
Jan. 28 By Cash A/c 1,200 Salaries A/c 2,500
Commission A/c 1,200
2,000 2,000 Fees A/c 800
Sales Returns A/c 800
Dr. Sales Returns Account Cr. Mohan’s Personal A/c 3,500
Date Particulars LF Amount Date Particulars LF Amount Purchases Returns A/c 1,000
Furniture A/c 5,000
Jan. 22 To Sohan 800 Jan. 31 By Balance c/d 800
63,500 63,500
800 800
Feb. 1 To Balance b/d 800
(31) (32)

CA. Naresh Aggarwal’s (25) Typewriter ........................................

ACADEMY of ACCOUNTS (26) Bank Charges ........................................

(27) Brokerage ........................................

Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (28) Suppliers ........................................
(29) Goods ........................................

(30) Insurance ........................................

Q-22: Fill in the blanks with the nature of the Accounts (Real/Nominal/Personal):
(31) Equipments ........................................
(1) Machinery ........................................
(32) Discounts ........................................
(2) Cash ........................................
(33) P.P. Jewellers ........................................
(3) Vijay ........................................
(34) Computer ........................................
(4) Salary ........................................
(35) Depreciation ........................................
(5) Building ........................................

AoA
(36) Printing and Stationery ........................................
(6) Capital ........................................
(37) Sales ........................................
(7) Commission ........................................
(38) Loss by Fire ........................................
(8) Drawings ........................................
(39) Bad Debts Recovered ........................................
(9) Furniture ........................................
(40) Purchases ........................................
(10) Sangeeta ........................................
(41) Satyam Cineplex ........................................
(11) Bank ........................................
(42) Charity ........................................
(12) Raju Traders ........................................
(43) Freight ........................................
(13) Wages ........................................
(44) Sales Returns ........................................
(14) Fees ........................................
(45) Purchases Returns ........................................
(15) Debtors ........................................

(16) Interest ........................................

(17) Bad Debts ........................................

(18) Creditors ........................................

(19) Electricity ........................................

(20) Advertisements ........................................

(21) Lovely Studio ........................................

(22) Legal Charges ........................................

(23) Rent ........................................

(24) Customers ........................................

(33) (34)

CA. Naresh Aggarwal’s Feb. 20 Advertisement charges of Rs.20,000 paid by cheque.

Feb. 22 Sold goods for Rs.70,000 and received a cheque for the same. Cheque is
ACADEMY of ACCOUNTS sent to bank.
Accounting • Costing • Taxation • Financial Management Feb. 25 Commission of Rs.15,000 received in cash.
Feb. 28 Payment made of balance amount of GST.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Q-24: Pass entries in the books of Ravi Dealers of Delhi doing his business there.
GST Transactions Assuming tax rate of IGST @18%; CGST @9% and SGST @9% are applicable:
May 11 Purchased goods from Ajay of Haryana the list price of Rs.50,000 at 20%
trade discount and 5% cash discount on purchase price of goods.
Q-21: Pass entries in the books of ABC & Sons assuming that all transactions have Payment was made immediately by cheque.
been entered within the State of Delhi and assuming CGST @6% and SGST @6%: May 15 Purchased goods from Raman of Delhi the list price of Rs.30,000 at 1/6th
02 Jan. Purchased goods for Rs.2,00,000 on credit from Mohan. trade discount and 5% cash discount on purchase price of goods.
05 Jan. Sold goods for Rs.2,50,000 on credit to Sohan. Payment was made immediately by cheque.
12 Jan. Purchased Computer for office for Rs.40,000 and payment made by May 20 Sold goods to Vijay of Punjab of the list price of 80,000 at 25% trade
cheque. discount and 3% cash discount on sale price. Full payment received by

AoA
15 Jan. Legal consultation fee of Rs.25,000 paid in Cash. cheque at the time of sale itself
24 Jan. Rent of Rs.20,000 paid by Cheque. May 27 Sold to Sanjay of Delhi of the list price of 25,000 at 20% trade discount and
31 Jan. Payment made of balance amount of GST. 4% cash discount on sale price. The amount received immediately.
May 31 Payment made of balance amount of GST.
Q-22: Pass entries in the books of Bharat Traders assuming that all transactions
have been entered within the State of Haryana and assuming CGST @6% and SGST Q-25: Pass entries in the books of Anita of Rajasthan doing her business there.
@6%: Record the following transactions in her books assuming all transactions have been
entered within the State of Rajasthan and tax rate of IGST @18%; CGST @9% and
April 1 Purchased goods for Rs.50,000 from Shyam.
SGST @9% are applicable:
April 5 Sold goods for Rs.80,000 to Ajay.
April 10 Returned goods by Ajay for Rs.10,000. (a) Started business with Cash Rs.1,50,000 and Cheque of Rs.1,00,000.
April 15 Returned goods to Shyam of Rs.20,000. (b) Bought goods of the list price of Rs.50,000 from Sunita at 20% trade discount
April 19 Printing & stationery expenses of Rs.5,000 paid in cash. and 5% Cash discount on purchase price. 60% of the amount was paid
April 25 Goods withdrawn by Proprietor for personal use Rs.6,000. immediately by cheque.
April 28 Goods destroyed by fire Rs.15,000. (c) Sold goods to Kavita of the list price of Rs.60,000 less 10% trade discount and
April 30 Payment made of balance amount of GST. 4% Cash discount on sale price and received 40% by cheque.
(d) Paid to Sunita Rs.25,000 by Cheque after deducting 5% Cash discount.
Q-23: Pass entries in the books of Sanjay Textiles assuming that all transactions (e) Electricity expenses paid by Cheque for office Rs.10,000 and for her own
have been entered within the State of Punjab and assuming CGST @9% and SGST residence Rs.5,000. (GST is not applicable)
@9%: (f) Paid salaries by Cheque Rs.25,000.
(g) Dinesh, a debtor for Rs.12,000 has become bankrupt and 25% is received from
Feb. 5 Purchased goods for Rs.1,20,000 from Aman Traders, at 20% Trade
his estate by Cheque.
discount.
(h) Withdrawn from bank Rs.40,000 for office use and Rs.20,000 for personal use.
Feb. 10 Sold goods to Bheem Brothers for Rs.1,00,000.
(i) Received by Cheque for a bad debt written off last year Rs.6,000.
Feb. 15 Received from Bheem Brothers a cheque for Rs.80,000 on account.
(j) Sold goods costing Rs.20,000 to Suresh against Cheque at a profit of 25% on
Cheque is sent to bank.
cost less 10% trade discount.
Feb. 18 Purchased furniture for Rs.30,000 and payment made by cheque.
(35) (36)

CA. Naresh Aggarwal’s

ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
GST Output / Input Adjustments

Q-26: Pass entries in the books of Vijay of Punjab doing his business there. Record Type of GST Output CGST Output SGST Output IGST Output
the following transactions in his books assuming tax rate of IGST @18%; CGST @9% 1st Adjustment CGST Input SGST Input IGST Input
and SGST @9% are applicable:
2nd Adjustment IGST Input IGST Input CGST Input
(a) Purchased goods for Rs.50,000 from outside the State and made payment by
cheque. 3rd Adjustment -NA- -NA- SGST Input
(b) Sold goods for Rs.40,000 outside the State on credit to Sunil.
(c) Sold goods for Rs.30,000 locally on credit to Anita
(d) Paid telephone bill for Rs.5,000 by cheque.
(e) He purchased an Air-Conditioner for his office for Rs.25,000 and paid the

AoA
amount by cheque.
(f) Payment made of balance amount of GST.

Q-27: Pass entries in the books of Sudhir of Delhi in the following cases :
(a) Purchased goods from Haryana for Rs.1,00,000. (IGST @18%)
(b) Sold goods to Anil of Delhi for Rs.40,000. (CGST @6% and SGST @6%)
(c) Sold goods to Manish of Bihar for Rs.60,000. (IGST @18%)
(d) Purchased Machinery for Rs.80,000 from Best Ltd. against cheque. (CGST
@9% and SGST @9%)
(e) Paid rent Rs.15,000 by cheque. (CGST @6% and SGST @6%)
(f) Purchased goods from Ram of Delhi for Rs.30,000. (CGST @6% and SGST
@6%)
(g) Paid insurance premium Rs.10,000 by cheque. (CGST @9% and SGST @9%)
(f) Received commission Rs.20,000 by cheque. (CGST @9% and SGST @9%)
(g) Payment made of balance amount of GST.

Theoretical Questions

1. What is Double-Entry System ?

2. What do you mean by Journal Entry ?
3. Name the three type of Accounts and their rules.
4. What is the difference between Cash Discount and Trade Discount ?
5. What do you mean by Source Documents or Vouchers ? Name few of them.
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Measurements:

1 Ream = 500 Sheets

1 Dozen = 12 Pieces
1 Gross = 12 Dozen
1 Quintal = 100 Kgs.
1 Ton = 1000Kgs.

AoA
Cash Book and
Subsidiary Books

For Eenquiries Watch us on

Call or whatsapp: 8800215448
(Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)

Email: [Link]@[Link] [Link]

Website: [Link]
(1) (2)

” 16 Salary paid Rs. 900.

CA. Naresh Aggarwal’s ” 17 Loan taken in cash Rs. 3,000.
ACADEMY of ACCOUNTS ”
”
21
23
Bought goods form Suresh on credit worth Rs. 1,500.
Cash received from Deepak Rs. 1,200.
Accounting • Costing • Taxation • Financial Management ” 29 Received commission Rs. 300.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] ” 30 Paid to Suresh Rs. 600.
[Cash Balance: Rs. 13,700]
Cash Book Q-4: Enter the following transactions in a simple Cash Book :
Jan. 1 Business started with cash Rs. 15,000.
Q-1: Enter the following transactions in a simple Cash Book :
” 4 Purchased Machine for Rs. 5,000.
Jan. 1 Business started with cash Rs. 25,000.
” 6 Purchased goods for Rs. 2,000.
” 3 Purchased Building for cash Rs. 10,000.
” 6 Commission received Rs. 1,000.
” 5 Purchased goods for cash Rs. 3,000.
” 12 Withdrawn cash for personal use Rs. 900.
” 8 Paid advance salary Rs. 1,200.
” 17 Paid for insurance Rs. 2,000.
” 10 Sold goods for cash Rs. 1,800.
” 18 Sold goods for cash Rs. 1,500.
” 15 Cash deposited into Bank Rs. 5,000.
” 25 Cash deposited into Bank Rs. 2,000.

AoA
” 17 Interest received Rs. 300.
” 30 Paid to Rajender Rs. 400.
” 21 Withdrawn cash for personal use Rs. 1,100.
” 31 Bought office furniture Rs. 1,300.
” 25 Paid insurance premium Rs. 1,400.
[Cash Balance: Rs.3,900]
” 30 Paid to Mr. Verma Rs. 450.
” 31 Bought office furniture Rs. 2,100.
Q-5: Enter the following transactions in a simple Cash Book :
[Cash Balance: Rs. 2,850]
Jan. 1 Cash in hand Rs. 4,500.
” 4 Paid to Sonia Rs. 480, discount allowed by her Rs. 20.
Q-2: Enter the following transactions in a simple Cash Book :
” 7 Purchased goods on credit from Sangeeta Rs. 300.
Sep. 1 Cash in hand Rs. 8,000.
” 10 Paid to Sangeeta Rs. 290 in full settlement.
” 4 Purchased office Furniture for Rs. 1,500.
” 14 Sold goods for Cash Rs. 1,500.
” 6 Salary paid to Ravi Rs. 700.
” 18 Interest received from Mona Rs. 150.
” 6 Loan taken Rs. 2,000.
” 21 Sold goods to Rosy Rs. 150 on credit.
” 6 Sold goods for cash Rs. 1,200.
” 25 Received cash from Rosy Rs. 145 in full settlement.
” 14 Purchased goods for cash Rs. 4,400.
” 27 Paid wages Rs. 200.
” 18 Sold goods to Radha on credit Rs. 1,000.
[Cash Balance: Rs.5,325]
” 21 Bought goods form Bharat on credit worth Rs. 500.
” 25 Cash received from Radha Rs. 1,000.
Q-6: Enter the following transactions in a simple Cash Book :
” 29 Rent Received Rs. 750.
Feb. 1 Cash in hand Rs. 7,500.
” 29 Paid to Bharat Rs. 300.
” 5 Paid to Deepak Rs. 980, discount allowed by him Rs. 20.
[Cash Balance: Rs.6,050]
” 8 Purchased goods on credit from Rohit Rs. 800.
” 15 Sold goods to Mahesh Rs. 650 on credit.
Q-3: Enter the following transactions in a simple Cash Book :
” 17 Paid to Rohit Rs. 790 in full settlement.
Apr. 1 Cash in hand Rs. 15,000.
” 25 Received cash from Mahesh Rs. 630 in full settlement.
” 2 Purchased office table for cash Rs. 2,500.
” 26 Sold goods for Cash Rs. 1,500.
” 6 Sold goods for cash Rs. 2,200.
” 28 Rent received from Sudhir Rs. 750.
” 11 Purchased goods for cash Rs. 4,000.
” 28 Paid for Salary Rs. 1,000.
” 12 Sold goods to Deepak on credit Rs. 1,200.
[Cash Balance: Rs.7,610]
(3) (4)

” 7 Purchased goods on credit from Sangeeta Rs. 300.

CA. Naresh Aggarwal’s ” 10 Paid to Sangeeta Rs. 290 in full settlement.
ACADEMY of ACCOUNTS ”
”
14
18
Sold goods for Cash Rs. 1,500.
Interest received from Mona Rs. 150.
Accounting • Costing • Taxation • Financial Management ” 21 Sold goods to Rosy Rs. 150 on credit.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] ” 25 Received cash from Rosy Rs. 145 in full settlement.
” 27 Paid wages Rs. 200.
[Cash Balance: Rs.7,325]
Q-7: Enter the following transactions in a simple Cash Book :
Jan. 1 Cash in hand Rs. 14,500. Q-10: Enter the following transactions in a simple Cash Book :
” 3 Purchased goods for Cash Rs. 4,500. May 1 Cash in hand Rs. 16,000.
” 6 Paid for rent Rs. 2,200. ” 3 Purchased goods for Cash Rs. 7,500.
” 7 Sold goods for Cash Rs. 2,500. ” 6 Paid for Wages Rs. 3,000.
” 11 Paid cartage Rs. 250. ” 7 Sold goods for Cash Rs. 4,500.
” 12 Paid for insurance Rs. 750. ” 11 Paid for cartage Rs. 500.
” 16 Sold old furniture for cash Rs. 200. ” 15 Sold goods to Neha Rs. 1,000 on credit.
” 19 Purchased goods on credit from Rahul Rs. 1,000. ” 16 Paid for Sundry Expenses Rs. 300.

AoA
” 21 Sold goods for cash Rs. 1,100. ” 20 Cash Received from Neha Rs. 970 in full settlement of his account.
” 21 Paid cash to Rahul Rs. 950 in full settlement. ” 22 Purchased Equipments for Rs. 4,000.
” 24 Sold goods to Monika Rs. 750 on credit. ” 22 Paid for Telephone Bill Rs. 900.
” 26 Paid for stationery Rs. 250. ” 26 Sold office furniture for cash Rs.2,500.
” 29 Cash Received from Monika Rs. 730 in full settlement of her account. ” 29 Purchased goods on credit from Ajay Rs. 2,000.
” 29 Purchased office typewriter worth Rs. 1,300. ” 29 Sold goods for cash Rs. 1,500.
[Cash Balance: Rs.8,830] ” 29 Paid cash to Ajay Rs. 1,950 in full settlement.
[Cash Balance: Rs.7,320]
Q-8: Enter the following transactions in a simple Cash Book :
Aug. 1 Balance from the last month Rs. 15,000. Q-11: Enter the following transactions in a simple Cash Book :
” 2 Purchased goods form Gupta Rs. 2,200 for cash. May 1 Started business with cash Rs.10,000.
” 5 Paid for Electricity Rs. 2,100. ” 7 Loan taken in cash from wife Rs.4,000.
” 9 Paid to Manoj at discount of 5% on debt of Rs. 1,000. ” 9 Purchased goods on credit from Yogesh Rs. 3,000.
” 15 Paid cash for Sundry Expenses Rs. 1,500. ” 15 Paid to Yogesh Rs. 2,900 in full settlement.
” 18 Paid for Freight Rs. 150. ” 17 Sold goods for Cash Rs. 2,200.
” 19 Received from Anil Rs. 750 and Discount allowed to him Rs. 50. ” 20 Paid to wife for loan, Rs.3,000.
” 22 Cash Sales Rs. 2,000. ” 22 Rent received from Raju Rs. 750.
” 26 Purchased Typewriter for office use Rs. 4,000. ” 25 Sold goods to Mukesh Rs. 1,500 on credit.
” 28 Received cash from Suman Rs. 1,000. ” 25 Received cash from Mukesh Rs. 1,450 in full settlement.
” 28 Paid cash for stationery to Ravinder Rs. 500. ” 29 Paid for Freight Rs. 250.
” 30 Withdrawn cash for personal use Rs. 2,500. [Cash Balance: Rs.12,250]
[Cash Balance: Rs.4,850]
Q-12: Enter the following transactions in a simple Cash Book :
Q-9: Enter the following transactions in a simple Cash Book : Nov. 1 Balance from the last month Rs. 10,250.
Jan. 1 Cash in hand Rs. 6,500. ” 2 Purchased goods form Vijay Rs. 1,200 for cash.
” 4 Paid to Sonia Rs. 480, discount allowed by her Rs. 20. ” 5 Received cash from Kavita Rs. 700.
” 9 Paid cash for Sundry Expenses Rs. 450.
(5) (6)

Q-15: Enter the following transactions in the Cash Book with Cash and Bank Columns:
CA. Naresh Aggarwal’s 2012 Rs.
ACADEMY of ACCOUNTS Jan.1
Jan.1
Cash in Hand
Cash at Bank
12,000
10,000
Accounting • Costing • Taxation • Financial Management Jan.4 Sold goods for cash 5,200
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Jan.7 Received from Raman 2,000
Jan.9 Received a Cheque from Reena and deposited it into Bank 4,000
” 11 Paid for Postage Rs. 50. Jan.12 Salary paid to office staff by Cheque 7,500
” 11 Received from Neeru Rs. 490, Discount allowed Rs. 10. Jan.17 Goods purchased and paid by Cheque 3,000
” 18 Cash Purchases Rs. 950. Jan.19 Paid for travelling expenses 1,200
” 21 Paid Rent Rs. 1,100. Jan.20 Cash Purchases 4,500
” 23 Paid to Sangeeta at discount of 5% on debt of Rs. 600. Jan.21 Received a Cheque from Deepak and deposited it into Bank 4,600
” 26 Purchased furniture for office use Rs. 1,800. Jan.22 Cash deposited into Bank 3,000
” 27 Paid cash for printing Rs. 150 to Rajni. Jan.25 Cash Sales 3,500
” 30 Withdrawn cash for personal use Rs. 2,000. Jan.28 Purchased Machinery for Cash 6,000
[Cash Balance: Rs.3,170] Jan.28 Withdrew from Bank for office use 2,500
Jan.29 Deepak’s Cheque returned by Bank dishonored

AoA
Q-13: Enter the following transactions in a Two Column Cash Book : Jan.31 Paid into Bank 7,000
Feb. 1 Cash in hand Rs. 8,000. [Cash: Rs.3,500; Bank: Rs.11,000]
” 1 Cash at Bank Rs. 6,000.
” 3 Deposited into Bank Rs. 1,500. Q-16: Enter the following transactions in a Two Column Cash Book :
” 5 Purchased an office table and paid by cheque Rs.1,200. Apr. 1 Cash Balance Rs. 4,500.
” 12 Withdrawn form Bank for office use Rs. 1,000. ” 1 Bank Balance Rs. 2,000.
” 15 Paid Wages through cheque Rs. 750. ” 4 Cash received for sale of old furniture Rs. 1,200.
” 17 Paid for freight Rs. 100. ” 7 Paid salary Rs. 900.
” 20 Purchased Machinery for cash Rs. 2,000. ” 10 Sold goods for cash and deposited into Bank Rs. 1,300.
” 22 Paid to Meena by cheque Rs. 950 and discount received Rs.50. ” 10 Purchased goods from Tarun and paid by cheque Rs. 1,700.
” 25 Cheque received from Sumit Rs. 1,200 and deposited into Bank. ” 19 Cash withdrawn from Bank for personal use Rs. 500.
” 28 Cash sales Rs. 1,800. ” 21 Paid for Legal Charge Rs. 850.
[Cash: Rs.7,200; Bank: Rs.4,800] ” 21 Paid to Sudhir by cheque Rs. 880 in full settlement of a debt of Rs. 900.
” 27 Cash deposited into Bank Rs. 2,500.
Q-14: Enter the following transactions in a Two Column Cash Book : ” 29 Received a cheque from Deepak Rs. 640 and discount allowed Rs. 10.
Jan. 1 Cash in hand Rs. 4,500. ” 30 Cheque received from Rekha Rs. 1,000 and deposited into Bank.
” 1 Cash at Bank Rs. 11,000. ” 30 Cash withdrawn from Bank for office use Rs. 1,500.
” 3 Deposited into Bank Rs. 800. [Cash: Rs.2,950; Bank: Rs.2,860]
” 6 Purchased Furniture for cash Rs. 300.
” 9 Paid to Sanjeev by cheque Rs. 1,140 and discount received Rs. 10. Q-17: Enter the following transactions in a Two Column Cash Book :
” 12 Cheque received from Pramod Rs. 600 and deposited into Bank. Apr. 1 Started business with cash Rs. 60,000.
” 15 Cash sales Rs. 1,100. ” 2 Opened an account with Bank by deposit of Rs. 24,000.
” 19 Purchased a Cycle for personal use and paid by cheque Rs. 1,400. ” 4 Bought office building worth Rs. 18,000 and paid by cheque.
” 22 Withdrawn form Bank for office use Rs. 250. ” 8 Bought goods in cash Rs. 6,000.
” 25 Paid salary through Bank Rs. 450. ” 11 Sold goods to Ravi on credit Rs. 2,400.
” 27 Paid cartage in cash Rs. 60. ” 14 Paid wages Rs. 1,000.
[Cash: Rs.4,690; Bank: Rs.9,160] ” 21 Bought goods from Himani on credit Rs. 3,600.
(7) (8)

” 22 Sold goods for cash and deposited into Bank Rs. 900.
CA. Naresh Aggarwal’s ” 26 Purchased goods from Monika and paid by cheque Rs. 1,200.
ACADEMY of ACCOUNTS ”
”
28
30
Cash withdrawn from Bank for personal use Rs. 750.
Paid Rent Rs. 1,150.
Accounting • Costing • Taxation • Financial Management [Cash: Rs.3,250; Bank: Rs.4,330]
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Q-20: Enter the following transactions in a Two Column Cash Book :
” 22 Bought office Computer Rs. 10,000. Apr. 1 Started business with cash Rs. 30,000.
” 22 Cash received from Ravi in full settlement Rs. 2,320. ” 2 Opened an account with Bank by deposit of Rs. 12,000.
” 24 Cash deposited into Bank Rs. 6,000. ” 4 Bought office building worth Rs. 9,000 and paid by cheque.
” 25 Paid rent by cheque Rs. 1,400. ” 8 Bought goods in cash Rs. 3,000.
” 26 Paid to Himani by cheque Rs. 3,500 in full settlement. ” 11 Sold goods to Tripti on credit Rs. 1,200.
” 28 Drew from Bank for office use Rs. 2,000. ” 14 Paid wages Rs. 500.
” 30 Drew from Bank for personal use Rs. 700. ” 21 Bought goods from Himanshu on credit Rs. 1,800.
[Cash: Rs.17,320; Bank: Rs.4,400] ” 22 Bought office Computer Rs. 5,000.
” 22 Cash received from Tripti in full settlement Rs. 1,160.
Q-18: Enter the following transactions in a Two Column Cash Book : ” 24 Cash deposited into Bank Rs. 3,000.

AoA
June1 Started business with cash Rs. 18,000. ” 25 Paid rent by cheque Rs. 700.
” 4 Opened an account with Bank by deposit of Rs. 10,000. ” 26 Paid to Himanshu by cheque Rs. 1,750 in full settlement.
” 6 Bought goods from Suraj on credit Rs. 2,200. ” 28 Drew from Bank for office use Rs. 1,000.
” 8 Bought Office Furniture of Rs. 4,000 and paid by cheque. ” 30 Drew from Bank for personal use Rs. 350.
” 10 Bought goods in cash Rs. 2,500. [Cash: Rs.8,660; Bank: Rs.2,200]
” 11 Sold goods to Ravi on credit Rs. 1,500.
” 15 Paid for Telephone Bill Rs. 800. Q-21: Enter the following transactions in a Two Column Cash Book :
” 20 Cash deposited into Bank Rs. 1,500. Oct. 1 Cash in hand Rs.8,500 and at Bank Rs.5,500.
” 22 Paid Wages by cheque Rs. 500. ” 4 Cheque received from Anita Rs. 950 and discount allowed Rs. 50.
” 22 Bought Office Equipments for Rs. 3,000. ” 7 Paid to Aman Rs. 720 by cheque, discount allowed by him Rs. 30.
” 22 Cash received from Ravi Rs. 1,450 in full settlement. ” 9 Cash received from Rajesh Rs. 2,000 and half deposited into Bank.
” 26 Paid to Suraj by cheque Rs. 2,100 in full settlement. ” 12 Anita’s Cheque deposited into Bank.
” 27 Drew from Bank for office use Rs. 2,400. ” 15 Purchased goods from ‘Best Co.’ for Rs.1,200 and paid by cheque.
” 29 Drew from Bank for personal use Rs. 500. ” 18 Sold goods to Neha of Rs. 2,000 on credit.
[Cash: Rs.4,050; Bank: Rs.2,000] ” 21 Cash withdrawn for personal use Rs.1,500.
” 21 Cheque received from Neha Rs. 1,900 in full settlement.
Q-19: Enter the following transactions in a Two Column Cash Book : ” 26 Cash withdrawn from Bank for personal use Rs. 800.
July 1 Cash Balance Rs. 1,500. ” 27 Neha’s cheque deposited into Bank.
” 1 Bank Balance Rs. 1,950. ” 28 Paid for Rent Rs. 750.
” 4 Cash received for sale of Machinery Rs. 6,500. ” 31 Cash withdrawn from Bank for office use Rs. 2,000.
” 7 Paid to Anand by cheque Rs. 1,150 in full settlement of a debt of Rs. 1,200. ” 31 Bank allowed interest Rs. 100.
” 9 Cash deposited into Bank Rs. 4,000. [Cash: Rs.9,250; Bank: Rs.4,730]
” 11 Received a cheque from Neetu Rs. 780 and discount allowed Rs. 20.
” 14 Cheque received from Anju Rs. 800 and deposited into Bank. Q-22: Enter the following transactions in a Two Column Cash Book :
” 20 Cash withdrawn from Bank for office use Rs. 1,000. July 1 Cash in hand Rs. 5,000, and Bank Overdraft Rs. 1,200.
” 22 Paid office salary Rs. 600. ” 4 Purchased goods for Cash worth Rs. 1,500 at 10 % trade Discount.
(9) (10)

Q-24: Enter the following transactions in a Two Column Cash Book :

CA. Naresh Aggarwal’s Jan. 1 Cash in hand Rs. 4,500 and at Bank Rs. 10,800.
ACADEMY of ACCOUNTS ” 2
” 4
Cash received from Bhagat Rs. 1,000 and half deposited into Bank.
Cheque received from Sonia Rs. 850, discount allowed her Rs. 50.
Accounting • Costing • Taxation • Financial Management ” 6 Paid to Sanjay Rs. 980 by cheque, discount allowed by him Rs. 20.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] ” 7 Sonia’s Cheque deposited into Bank.
” 7 Purchased goods form Laxmi Traders Rs. 1,500 and paid by cheque.
” 6 Fresh capital introduced into business Rs. 3,000 ” 11 Sold goods to Meenu worth Rs. 1,000 at 10% trade discount on credit.
” 9 Cheque received from Ram of Rs. 980 and discount allowed Rs.20. ” 14 Paid Salary in cash Rs. 400.
” 12 Paid for Rent by cheque Rs. 500. ” 15 Cash withdrawn from Bank for office use Rs. 1,500.
” 12 Bought Furniture for cash Rs. 1,700 ” 17 Cheque received from Meenu Rs. 880 in full settlement.
” 15 Purchased Bonds of a company and paid by cheque Rs. 2,000. ” 21 Cash withdrawn for personal use Rs. 1,000.
” 18 Shyam, a Bad Debts earlier, recovered and received Rs. 800 from him. ” 26 Cash withdrawn from Bank for personal use Rs. 700.
” 22 Received a B/R of Rs. 1,000 from Babita and discounted it with Bank at the ” 27 Meenu’s cheque deposited into Bank.
rate of 5% ” 31 Bank allowed interest Rs. 50.
” 25 Market value of Bonds reduced by Rs. 500. [Cash: Rs.5,100; Bank: Rs.8,400]
” 30 Bank charged interest on overdraft Rs. 80.

AoA
” 31 Depreciate Furniture by 10%. Q-25: Enter the following transactions in a Two Column Cash Book :
” 31 Cheque received and deposited in bank for Interest on Bond Rs. 200. Jan. 1 Cash in hand Rs. 4,000, and Bank Overdraft Rs. 2,300.
[Cash: Rs.5,750; Bank Overdraft: Rs.1,650] ” 1 Bought a Machine for cash Rs. 2,000
” 1 Purchased shares of a company and paid by cheque Rs. 1,000.
Q-23: Enter the following transactions in the Cash Book with Cash and Bank columns: ” 2 Purchased goods for Cash worth Rs. 900 at 10 % trade Discount.
2012 Rs. ” 4 Fresh capital introduced into business Rs. 5,000
April-1 Cash-in-Hand 8,500 ” 8 Cheque received from Deena Nath of Rs. 700 and discount allowed Rs.20.
April-1 Bank Overdraft 7,000 ” 10 Paid salary by cheque Rs. 350.
April-3 Received a cheque from Ram and paid it into bank same day 2,000 ” 15 Received a B/R of Rs. 600 from Nisha and discounted it with Bank @ 2%
April-5 Received a cheque from Ajay 1,300 ” 18 Cheque of Deena Nath endorsed to Prabhu Dayal.
April-6 Cheque received from Ajay paid into bank ” 26 Cheque received and deposited in bank for dividend on shares Rs. 50.
April-7 Purchased goods and paid by cheque 4,000 ” 31 Bank charged interest on overdraft Rs. 70.
April-9 Freight paid 1,000 ” 31 Depreciate Machine @ 12% p.a. for one month.
April-10 Sold goods for cash 3,000 ” 31 Market value of shares reduced by Rs.300.
April-11 Sale proceeds of April 10 deposited into Bank ” 31 Mohan, the earlier bad debts recovered and received Rs. 200 from him.
April-12 Withdrew cash for private use 1,500 [Cash: Rs.6,390; Bank Overdraft: Rs.3,082]
April-14 Goods purchased from Sonal on Credit 2,500
April-16 Paid to Sonal by Cheque 1,800 Q-26: Record the following transactions in a Cash Book with Cash and Bank-Columns:
April-17 Withdrew by cheque for private use 2,000 2012 Rs.
April-18 Received a cheque from Ram 1,000 June-1 Cash-in-Hand 4,000
April-20 Cheque received from Ram endorsed to Shyam June-1 Cash at Bank 2,500
April-25 Paid into Bank 5,000 June-3 Received a cheque for rent and deposited it into bank 1,500
April-28 A customer Mr. Kishore deposited directly in our Bank A/c 2,000 June-4 Bought goods for Rs. 2,000 and paid by cheque at a
April-30 Bank has charged interest on overdraft 150 discount of 5%.
[Cash: Rs.1,000; Bank Overdraft: Rs.1,650] June-7 Paid trade expenses 1,200
June-11 Paid taxes 400
(11) (12)

Q-29: Enter the following transactions in a Cash Book with Cash and Bank Columns
CA. Naresh Aggarwal’s 2012 Rs.
ACADEMY of ACCOUNTS May-1 Bank overdraft
May-1 Cash-in-hand
8,000
12,000
Accounting • Costing • Taxation • Financial Management May-7 Cheque received from Ramesh 4,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Discount allowed 200
May-10 Cheque paid to Radha 2,500
June-15 Paid insurance charges 1,000 Discount received 50
June-25 Sold goods for Rs.5,000 and received a cheque at 5% discount. May-12 Cheque received from Ramesh deposited in bank
June-27 Cheque received on 25th, deposited into Bank May-15 Ramesh’s cheque returned dishonored
June-28 Received cheque from M/s Sun Traders 6,000 May-20 Cash withdrawn from bank for office use 3,000
June-30 Purchased 100 Shares for Rs.60 each and paid for by cheque. May-23 Fees of children paid by cheque 1,000
[Cash: Rs.1,400; Bank: Rs.6,850] May-25 Cheque received from Sonu 2,000
May-27 Sonu’s cheque endorsed to Monu
Q-27: Enter the following transactions in a Two Column Cash Book : May-31 Bank charges 50
July 1 Cash Balance Rs. 3,400. May-31 Paid into Bank the entire balance after retaining Rs.5,000 at office.
” 1 Bank overdraft Rs. 2,500. [Cash: Rs.5,000; Bank Overdraft: Rs.4,550]

AoA
” 3 Cheque received from Sanjeev Rs. 195 and discount allowed him Rs. 5. Hint: Cash deposited on May-31, will be Rs.10,000.
” 4 Paid to Dharmender Rs. 90 and discount received Rs. 10.
” 7 Cheque received from Bharat Rs. 230 in full settlement of debt of Rs. 250. Q-30: Enter the following transactions in a Cash Book with Cash and Bank Columns
” 9 Sanjeev’s Cheque deposited into Bank. 2012 Rs.
” 9 Bharat’s Cheque endorsed to Pramod in full settlement of a debt of Rs.240. Nov.1 Cash-in-hand 10,000
” 12 Cash deposited into Bank Rs. 450. Nov.1 Bank balance 6,000
” 15 Cheque received for sale of goods worth Rs.500 and deposited into Bank. Nov.5 Received a cheque from Hema 2,000
” 17 Paid for purchases of goods Rs. 300 in cash. Nov.5 Discount allowed 100
” 24 Cash withdrawn from Bank for office use Rs. 750. Nov.7 Cash received from sale of shares 3,000
” 31 Bank Charges for outstation cheque Rs. 15. Nov.8 Received cash Rs.1,000 and cheque of Rs.1,200 for cash sales
[Cash: Rs.3,310; Bank Overdraft: Rs.2,120] Nov.10 Paid into bank, including cheques received on 5th and 8th Nov. 4,000
Nov.12 Paid for Repair Charges 500
Q-28: Enter the following transactions in a Two Column Cash Book : Nov.14 Drew a cheque for office use Rs. 2,000 and
Nov. 1 Cash in hand Rs. 6,100, and at Bank overdraft Rs. 400. for personal use Rs. 2,500.
” 4 Sold goods to Monika on credit Rs. 1,000. Nov.15 Paid to Nisha by cheque 1,150
” 9 Cheque received from Monika for amount due on her Nov.15 Discount received 50
” 14 Purchased goods on credit from Anil worth Rs. 1,500. Nov.16 Gave a cheque to Suman for cash purchase of
” 14 Withdrawn cash for office use Rs. 800. furniture for office 5,000
” 17 Monika’s Cheque endorsed to Anil and balance is paid in cash. Nov.20 Received a cheque from Harmeet for commission and
” 19 Cheque received from Sonia of Rs. 600. paid the same into bank 1,500
” 20 Sonia’s cheque deposited into Bank. Nov.20 Rent paid by cheque 800
” 21 Sonia’s cheque returned dishonored. Nov.24 Instructed the Bank to issue a Bank Draft to Sonia 3,500
” 25 Cash received from Sonia for amount of dishonored cheque. Bank charges for issuing the draft 50
” 30 Bank received dividend Rs. 1,500. Nov.29 Received a Bank Draft of Rs. 3,900 from Radha
” 30 Bank Charges Rs.25. in full settlement of Rs. 4,000 due from him.
[Cash: Rs.7,000; Bank Balance: Rs.275] Nov.30 Bank collected interest on securities. 800
[Cash: Rs.14,700; Bank: Rs.1,200]
(13) (14)

” 17 Purchased Machinery and paid by cheque Rs. 7,000.

CA. Naresh Aggarwal’s 17 Cheque received from Reena Rs. 2,000.
”
ACADEMY of ACCOUNTS ”
”
18
19
Depreciation on Machinery is Rs. 700.
Reena’s Cheque endorsed to Mukesh in full settlement of his debt Rs.2,050
Accounting • Costing • Taxation • Financial Management ” 20 Outstanding repairs are amounted Rs. 500.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] ” 21 Received a cheque from Kumar of Rs. 1,000 in full settlement of Rs. 1,020.
” 22 Kumar’s Cheque is deposited into Bank.
” 23 Kumar’s Cheque returned dishonored.
Q-31: Enter the following transactions in a Cash Book with Cash and Bank Columns
” 28 Sold goods to Kavita on credit costing Rs. 1,500 for Rs. 2,000.
2012 Rs.
” 29 Kavita become insolvent and paid only 25 paise in Rupee.
April-1 Balance of Cash-in-Hand 5,000
” 30 Cash withdrawn from Bank for personal use Rs. 1,500.
Overdraft at Bank 7,000
” 30 Bank charged interest on overdraft Rs. 50.
April-2 Further Capital introduced 10,000
[Cash: Rs.19,310; Bank Overdraft: Rs.3,100]
April-3 Purchased goods on credit from Mohan of the list price
of Rs. 5,000 and he allowed a trade discount of Rs.1,000.
Q-33: Prepare a simple and columnar petty cash book for one week from the following
April-6 Settled the account of Mohan by paying cash.
information using imprest system :
April-8 An amount of Rs. 1,000 due from Vasundhara written off
Jan. 1 Cash received from main cashier Rs. 100.

AoA
as bad debts in the previous year, now recovered.
” 1 Paid for stationery Rs. 5.
April-10 Cash withdrawn for office use 2,500
” 2 Paid conveyance Rs. 12.
April-12 Drew from bank for household expenses 4,500
” 3 Paid for refreshment Rs. 3.
April-18 Received a Bank Draft of Rs. 1,900 from Kavita
” 3 Paid for postage stamps Rs. 2.
in full settlement of Rs. 2,000 due from her.
” 5 Paid for Photocopies Rs. 4.
April-25 Sumit to whom amount due was Rs.2,000 became bankrupt
” 6 Paid for Tea Rs. 2.
and paid us 40 paise in a rupee.
” 6 Paid for Telephone calls Rs. 8.
April-30 Bank Charged interest on overdraft 200
” 6 Paid for courier charges Rs. 15.
April-30 Paid into Bank the entire balance after retaining Rs.5,000 in Cash.
” 6 Paid for Cold drinks Rs. 13.
[Cash: Rs.5,000; Bank Overdraft: Rs.2,000]
[Cash Balance Rs. 36]
Hint: Cash deposited into bank on April-30, will be Rs.10,300
Q-34: Prepare a simple and columnar petty cash book for 15 days from the following
Q-32: Enter the following transactions in a Two Column Cash Book :
information using imprest system :
Jan.1 Cash in hand Rs. 15,000.
Apr. 16 Cash in hand Rs. 350.
” 1 Overdraft at Bank Rs. 1,200.
” 16 Paid for photocopies Rs. 20.
” 2 Purchased goods from Ramesh on credit Rs. 1,000.
” 18 Bus fare Rs. 30.
” 4 Cash paid to Ramesh Rs. 990 in full settlement of his debt.
” 20 Paid to labourers Rs. 50.
” 5 Cash Sales Rs. 7,000.
” 21 Paid Money-Order charges Rs. 10.
” 6 Cash deposited into Bank Rs. 5,000.
” 23 Paid cash for Repairs Rs. 40.
” 7 Sold goods to Mohan on Credit Rs. 4,000.
” 25 Conveyance paid Rs. 15.
” 8 Received commission from Neha Rs. 1,200 through cheque.
” 25 Paid for pen and pencils Rs. 25.
” 9 Neha’s cheque deposited into Bank.
” 26 Purchased postage stamps Rs. 15.
” 10 Cheque received from Mohan Rs. 3,950 in full settlement and deposited into
” 28 Paid for cartage Rs. 20.
Bank.
” 29 Bought plain papers Rs. 40.
” 11 Paid for wages Rs. 500 by cheque and Rs. 700 in Cash.
” 30 Paid for tea and coffee Rs. 45.
” 15 Sunil (a bad debts earlier) paid Rs. 500.
[Cash Balance Rs. 40]
” 16 Withdrawn for office use Rs. 3,000.
(15) (16)

CA. Naresh Aggarwal’s Subsidiary Books

ACADEMY of ACCOUNTS Q- 1 : Enter the following transactions in the Subsidiary Books of M/s Moon Ltd.:
Accounting • Costing • Taxation • Financial Management Jan. 1 Purchased from Deepak Stationers, Agra :
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 50 Dozen Pencils @ Rs. 10 per doz.
20 Dozen Pens @ Rs. 15 per doz.
Trade Discount 10%
Q-35: Prepare a simple and columnar petty cash book for one week from the following
information using imprest system :
Jan. 5 Sold to Rajesh Stationery House, Delhi :
Feb. 1 Cash received from main cashier Rs. 300.
20 Dozen Pencils @ Rs. 15 per doz.
” 2 Paid for Photocopies Rs. 25.
10 Dozen Pens @ Rs. 20 per doz.
” 3 Paid for Tea Rs. 15.
Trade Discount 5%
” 4 Paid for Telephone calls Rs. 40.
” 4 Paid for courier charges Rs. 50.
Jan. 8 Bought from Mohan Stationery Mart, Noida :
” 5 Paid for Cold drinks Rs. 30.
15 Gross Note Books at the rate of Rs. 20 per doz.
” 5 Paid for stationery Rs. 15.
10 Gross Rubbers at the rate of Rs. 10 per doz.

AoA
” 5 Paid Cartage Rs. 10.
Trade Discount @ 20%
” 6 Paid for refreshment Rs. 30.
” 6 Paid for postage stamps Rs. 20.
Jan. 15 Sold old newspapers for Rs. 150
[Cash Balance: Rs. 65]
Jan. 19 Sold to Manoj Stationery Shop, Kanpur
Q-36: Prepare a simple and columnar petty cash book for ten days from the following
10 Dozen Note Books at the rate of Rs. 240 per Gross.
information using imprest system :
12 Dozen Rubbers at the rate of Rs. 180 per Gross.
Feb. 11 Cash in hand Rs. 150.
Trade Discount @ 10%
” 12 Conveyance paid Rs. 15.
” 12 Paid for pen and pencils Rs. 10.
Jan. 25 Sold to Mohan Stationery House, Lucknow for Cash
” 14 Purchased postage stamps Rs. 8.
5 Dozen Pencils @ Rs. 2 per piece.
” 15 Paid for cartage Rs. 5.
5 Dozen Note Books at the rate of Rs. 3 per piece.
” 16 Bought plain papers Rs. 4.
Trade Discount @ 10%
” 17 Paid for tea and coffee Rs. 12.
Jan. 27 Sold to Amar & Sons, Allahabad:
” 18 Paid for photocopies Rs. 6.
5 Reams of Paper @ Rs. 40 per Ream
” 19 Bus fare Rs. 5.
Trade Discount 15%
” 19 Paid to labourers Rs. 15.
” 20 Paid Money-Order charges Rs. 2.
Jan. 27 Sold to Gulab & Co., Allahabad on credit
” 20 Paid cash for Repairs Rs. 18.
4 Chairs @ Rs.800 each.
[Cash Balance: Rs. 50]
Jan. 30 Rajesh Stationery House, Delhi returned goods :
••••••••••••••••••••••••• 4 Dozen Pencils
2 Dozen Pens

Jan.30 Bought from Mohan Lal on credit

4 Office Tables @ Rs.500 each.
(17) (18)

CA. Naresh Aggarwal’s Oct. 25 Returned to Seema Book House :

15 Copies of Mathematics Books
ACADEMY of ACCOUNTS 20 Copies of Commerce Books
Accounting • Costing • Taxation • Financial Management
Oct. 27 Sold to Star Book Store, on credit
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
4 Dozen Parker Pen @ Rs. 30 per Pen
5 Dozen Note Books @ Rs. 10 per Note Book
Jan. 31 Returned to Mohan Stationery Mart, Noida :
8 Dozen Pencils @ Rs. 20 per Dozen
1 Gross Note Books
6 Dozen Rubbers
Oct. 29 Returned by Bharat & Co. :
[Purchase Book: Rs.4,560; Sales Book: Rs.987;
5 Books
Purchase Return Book: Rs.240; Sales Return Book: Rs.95]
Oct. 29 Received cash from Anita Book Depot Rs. 1,500.
Q- 2 : Prepare ‘Journal Proper’ from the following transactions :
Oct. 1 Purchased from Suraj & Co. on credit :
Oct. 30 Returned by Anita Book Depot :
200 copies of Accountancy Books @ Rs. 50 each.
2 Copies of Accountancy Books
100 copies of Management Books @ Rs. 20 each.

AoA
[Purchase Book: Rs.38,400; Sales Book: Rs.15,760
Trade Discount 20%
Purchase Return Book: Rs. 2,790; Sales Return Book: Rs.780]

Oct. 4 Sold to Dinesh Book Depot, for cash :

Q- 3 : Enter the following transactions in the Subsidiary Books of Hira Lal:
160 Copies of Economics Books @ Rs. 60 each
Nov.3 Purchased from Bheem Traders, Patna :
120 Copies of Commerce Books @ Rs. 50 each
10 Dozen Pencils @ Rs. 7 per doz.
Trade Discount 15%
20 Dozen Pens @ Rs. 10 per doz.
Trade Discount 10%
Oct. 7 Sold to Bhola on credit :
10 Kg. old News Papers @ Rs. 5 per Kg.
Nov.7 Bought from Shyam Lal on credit
4 old chairs @ Rs. 25 each.
2 Office Tables @ Rs.500 each.

Oct. 12 Bought from Seema Book House :

Nov.9 Sold to Amar Singh, Delhi :
200 Copies of Mathematics Books @ Rs. 100 each.
20 Dozen Pencils @ Rs. 10 per doz.
150 Copies of Commerce Books @ Rs. 80 each.
30 Dozen Pens @ Rs. 12 per doz.
Trade Discount 10%
Nov.12 Bought from Radha Stationery Shop, Jammu :
Oct. 15 Sold to Bharat & Co. :
10 Gross Note Books at the rate of Rs. 15 per doz.
80 Copies of General English Book @ Rs. 120 each.
10 Gross Rubbers at the rate of Rs. 10 per doz.
Trade Discount @ 15%
Oct. 21 Bought from Ramesh Furniture Co., on credit :
10 Chairs @ Rs. 120 each.
Nov.15 Sold old Furniture for Rs. 250
5 Tables @ 300 each.
Nov.18 Sold to Mahesh Stationery Shop, Rohtak
Oct. 24 Sold to Anita Book Depot :
8 Dozen Note Books at the rate of Rs. 60 per Gross.
30 Copies of Commerce @ Rs. 80 each.
6 Dozen Rubbers at the rate of Rs. 120 per Gross.
20 Copies of Accountancy Books @ 100 each.
Trade Discount @ 20%
Trade Discount @ 10%
(19) (20)

Nov.15 Bought of M/s Best Enterprises for Cash

CA. Naresh Aggarwal’s 10 tins of Oil @ Rs.50 per tin
ACADEMY of ACCOUNTS 20 Bags of Wheat @ Rs.20 per bag
Trade Discount 10%
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Nov.18 Sold to Mahesh & Co.
2 Radio Sets @ Rs.200 each

Nov.24 Amar Singh returned goods : Nov.22 Sold to M/s Gautam Traders
5 Dozen Pencils 20 Tins of Ghee @ Rs.100 per tin
2 Dozen Pens 10 Bags of Pulses @ Rs.30 per bag
Trade Discount 5%
Nov.26 Sold to Ravi Stationers, Agra :
10 Dozen Pencils @ Rs. 2 per piece. Nov.24 Returned by M/s Khosla Brothers
12 Dozen Note Books at the rate of Rs. 5 per piece. 5 tins of Oil
Trade Discount @ 10% 2 Bags of Wheat

AoA
Nov.26 Sold to Amar Singh, Delhi : Nov.26 Returned to M/s Rao & Sons
5 Reams of Paper @ Rs. 40 per Ream 10 Bags of Rice
Trade Discount 15%
Nov. 27 Bought of Hari & Co., Agra on credit
Nov.30 Returned to Radha Stationery Shop : 4 Office Tables @ Rs.500 each.
6 Dozen Note Books
3 Dozen Rubbers Nov.28 Returned by M/s Gautam Traders
[Purchase Book: Rs.2,793; Sales Book: Rs.1,674; 5 Tins of Ghee
Purchase Return Book: Rs.102; Sales Return Book: Rs.74] 4 Bags of Pulses
[Purchase Book: Rs.7,400; Sales Book: Rs.3,325
Q- 4 : Prepare ‘Journal Proper’ from the following transactions : Purchase Return Book: Rs.250; Sales Return Book: Rs.864.50]
Nov.3 Bought of M/s Gupta & Co.
100 tins of Oil @ Rs.50 per tin
50 Bags of Wheat @ Rs.20 per bag
Trade Discount 10% Theoretical Questions
Q-1: What is Cash Book ?
Nov.7 Sold to M/s Khosla Brothers
20 tins of Oil @ Rs.50 per tin Q-2: What is Contra-Entry ?
10 Bags of Wheat @ Rs.20 per bag
Q-3: Explain the imprest system of Petty Cash.
Trade Discount 5%
Q-4: What do you mean by ‘Subsidiary Books’ or ‘Journal Sub-Divided’ ?
Nov.10 Bought of M/s Rao & Sons Q-5: List the major subsidiary books.
40 Bags of Rice @ Rs.25 per Bag
50 Bags of Flour @ Rs.20 per bag Q-6: Show the specimen of ‘Purchase Book’.

•••••••••••••••••••••••••
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

For Eenquiries
Call or whatsapp: 8800215448
(Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)
Bank Reconciliation

AoA
Email: [Link]@[Link]
Statement Website: [Link]
&
Rectification of Errors

Watch us on

[Link]
(1) (2)

cheques to the amount of Rs. 500 paid into the account had not yet been cleared. Find
CA. Naresh Aggarwal’s by means of a Reconciliation Statement the balance shown in thePass Book.
ACADEMY of ACCOUNTS [Balance as per Pass Book: Rs.2,700]

Accounting • Costing • Taxation • Financial Management Q-5: The Cash Book of a Sudhir showed a bank balance of Rs. 3,500 on 31st
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] December, 2012. On going through the Cash Book, it was found that:
(a) Two cheques for Rs. 600 and Rs. 800 deposited in the month of December were
not credited in the Pass Book till January 4, 2013
Bank Reconciliation Statement (b) Three cheques for Rs. 700; Rs. 500 and Rs. 800 issued on December 28 were
not presented for payment till January 3, 2013.
Q-1: Prepare a bank reconciliation statement from the following information: (c) Bank had credited the merchant for Rs. 150 as interest and had debited him for
(a) Cash at bank as shown by Cash Book Rs. 7,500. Rs. 30 as bank charges, for which there were not corresponding entries in the
(b) Cheques drawn but not yet presented Rs. 800. Cash Book.
(c) Cheques paid into bank but not yet credited Rs. 200. Prepare a Bank Reconciliation Statement as on December 31, 2012.
(d) Bank charges not yet entered in Cash Book, Rs. 10. [Balance as per Pass Book: Rs.4,220]
[Balance as per Pass Book: Rs.8,090]
Q-6: Jagdish Kumar has his account at the Punjab National Bank, Delhi. According

AoA
Q-2: The Cash Book shows a balance of Rs. 12,500. On comparing the Cash Book to his Cash Book, his bank balance on 31st December, 2012 was Rs. 4,500. When
with the Pass Book, the following discrepancies were noted : compared with Pass Book, the following facts were discovered:
Rs. (a) He sent cheques for Rs. 900 to his bank for collection but cheques amounting to
(i) Cheques issued but not yet presented for payment 600 Rs. 400 were not collected by that date.
(ii) Cheques deposited in bank but not collected 900 (b) Out of the cheques issued by him in payment of his debts, cheques for Rs. 300
(iii) Bank paid insurance premium 500 were not presented for payment.
(iv) Bank charges 30 Prepare a Bank Reconciliation Statement and find out the balance as shown by his
(v) Directly deposited by a customer 800 Pass Book.
(vi) Interest on investment collected by bank 200 [Balance as per Pass Book: Rs.4,400]
[All India 1986]
[Balance as per Pass Book: Rs.12,670] Q-7: On 31st December 2012, Cash Book of Sanjay showed a debit bank balance of
Rs. 10,500. When compared with Pass Book, the following facts were discovered:
Q-3: The balance of cash at bank, as shown by the Cash Book of Anjali on 31 st (a) On 30th December, two cheques of Rs. 1,500 and Rs. 600 were deposited in the
December, 2012 was Rs. 8,200. On checking the entries with the Pass Book, it was bank but were not realized till the date.
found that: (b) On 28th December, three cheques of Rs. 800, Rs. 400 and Rs. 1,800 were issued
(a) Cheques of Rs. 2,500 paid in on 30th December were not yet credited. but none of these was presented before the bank for payment.
(b) Cheques of Rs. 1,500 issued on 28th December were not presented until 5th of (c) On 31st December, Bank credited Rs. 200 as interest but this was not recorded
January. in the Cash Book.
(c) There was a credit of Rs. 75 for interest in the Pass Book and a debit of Rs. 50 for (d) Bank had charged Rs. 60 but this was not recorded in the Cash Book.
Bank charges which were not entered in the Cash Book. Prepare Bank Reconciliation Statement on 31st December 2012.
Prepare the Bank Reconciliation Statement. [Balance as per Pass Book: Rs.11,540]
[Balance as per Pass Book: Rs.7,225]
Q-8: At the end of the year Sonia’s Cash Book showed a bank balance of Rs. 3,500.
Q-4: On 31st March 2012 the Cash Book showed a balance of Rs. 2,500 as cash at On comparing the same with the Bank Pass Book, she found that:
Bank, but the bank Pass Book made up to the same date showed that cheques for (a) Cheques amounting to Rs. 1,200 had been issued towards the close of the year,
Rs. 200, Rs. 100 and Rs. 400 respectively had not been presented for payment also Rs. 300 of which were presented for payment in January next.
(3) (4)

Bank in January 2013.

CA. Naresh Aggarwal’s (b) Mohan had issued on 24th December three cheques for Rs. 5,000; Rs. 2,000 and
ACADEMY of ACCOUNTS Rs. 4,000. The first two cheques were presented to the Bank for payment in
December, and third cheque in January 2013.
Accounting • Costing • Taxation • Financial Management (c) On 31st December 2012 the Bank had debited Mohan's account with Rs. 100 for
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] interest, and Rs. 20 for charges, but Mohan had not recorded these amounts in
his Books.
(b) She had deposited cash and cheques worth Rs. 750 on 29th December, 2012, of You are required to prepare a Bank Reconciliation Statement as at 31st December
which cheques for Rs. 350 were cleared in January. 2012 and ascertain the balance as per the Bank Pass Book.
(c) The Bank has credited her account with Rs. 40 in the Pass Book in respect of [Overdraft as per Pass Book: Rs.24,120]
interest on Current A/c and has debited her with Rs. 15 as charges for collecting
outstation cheques. Q-12: From the following particulars, prepare a statement showing the balance that
Prepare a Bank Reconciliation Statement as on 31st December 2012. would appear in the Pass Book of Ajay as on 31st December 2012.
[Balance as per Pass Book: Rs.3,475] (a) The overdraft as per Cash Book on 31st December 2012, was Rs. 4,700.
(b) Interest on overdraft for six months ending 31st December 2012, Rs. 120 is debited
Q-9: Prepare Bank Reconciliation Statement from the following particulars on 31 st in the Pass Book but not in cash book.
July, 2012 : (c) Bank charges for the above period also debited in the Pass Book amounted to

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(a) Balance as per Pass Book Rs. 2,500. Rs. 50.
(b) Three cheques for Rs. 600; Rs. 200 and Rs. 100 issued in July, 2012 were (d) Cheques issued but not cashed prior to 31st December 2012, amounted to Rs.
presented for payment at the bank in August, 2012. 1,000.
(c) Two cheques of Rs. 150 and Rs. 250 sent to the bank for collection were not (e) Cheques paid into bank but not cleared before 31st December 2012, were for Rs.
entered in the Pass Book by July 31, 2012. 1,750.
(d) Bank charged Rs. 70 for its commission and allowed interest Rs. 10 which were (f) Interest on investments collected by the bank and credited in the Pass Book
not mentioned in his Cash Book. amounted to Rs. 650.
[Balance as per Cash Book: Rs.2,060] [Overdraft as per Pass Book: Rs.4,970]

Q-10: On 1st January 2013, Mr. Kapoor had an overdraft of Rs. 6,000 as shown by Q-13: On 31st December 2012, the Cash Book of Sangeeta showed an overdraft of
his Cash Book in Bank Column. When compared with Pass Book, the following facts Rs. 5,000. From the following particulars make out a Bank Reconciliation Statement
were discovered: and ascertain the balance as per Bank Pass Book :
(a) Cheques amounting to Rs. 1,600 had been paid in by him but were not collected (a) Cheques drawn but not cashed before 31st December 2012, amounted to
by the Bank by 1st January, 2012. Rs.3,000.
(b) He issued cheques of Rs. 900 which were not presented to the Bank for payment (b) Cheques paid into the Bank but not collected and credited before 31st Dec. 2012
up to that day. amounted to Rs. 4,500.
(c) There was also a debit in his Pass Book of Rs. 90 for interest and Rs. 40 for bank (c) A bill receivable for Rs. 500 discounted from bank had been dishonoured but not
charges. recorded in the cash book at the time of dishonoured.
Prepare a Bank Reconciliation Statement. (d) Debit is also made in the Pass Book for Rs. 150 on account of interest on overdraft
[Overdraft as per Pass Book: Rs.6,830] and Rs. 50 on account of charges for collecting bills and cheques.
(e) The bank has collected interest on investment and credited Rs. 1,400 in the Pass
Q-11: On 31st December 2012, the Cash Book of Mohan showed an overdraft of Rs. Book.
22,000 with the Bank of Punjab. This balance did not agree with the balance as shown [Overdraft as per Pass Book: Rs.5,800]
by the Bank Pass Book. You find that:
(a) Mohan had paid into the Bank on 26th December, four cheques of Rs. 2,000; Rs. Q-14: On 31st December, 2012 the Pass Book of Mr. Bachan’s Current Account
4,000; Rs. 3,000 and Rs. 2,500. Of these the cheque for 6000 was credited by the showed a credit balance of Rs. 8,000. Prepare a Bank Reconciliation Statement with
the following information :
(5) (6)

Q-17: On 31st December, 2012 the Pass Book of a merchant shows a credit balance
CA. Naresh Aggarwal’s of Rs. 4,300.
ACADEMY of ACCOUNTS (a) The cheques and drafts sent to the bank but not collected and credited to Rs.790.
(b) Three cheques drawn for Rs. 250, Rs. 150 and Rs. 200 respectively were not
Accounting • Costing • Taxation • Financial Management presented for payment till 31st January next year.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (c) Bank has paid a bill payable amounting to Rs. 1,200 but it has not been entered in
the Cash Book.
(d) A bill receivable of Rs. 400 which was discounted with the Bank was dishonored
(i) Mr. Bachan issued a cheque of Rs. 500 on 25th of December, but this was not
by the drawee on due date but no entry was made in cash book for dishonor of the
presented for payment whereas this was recorded twice in the Cash Book.
bill.
(ii) A cheque of Rs. 300 drawn on his Saving Deposit Account has been shown as
Prepare a Bank Reconciliation Statement and show the balance as shown by the
drawn on Current Account.
Cash Book.
(iii) A cheque of Rs. 140 issued on 18th December was wrongly taken in the cash
[Balance as per Cash Book: Rs.6,090]
column.
(iv) In the Pass Book a bank charges of Rs. 20 was recorded twice while another
Q-18: In comparing the Bank Pass Book up to 30th June with the Bank Account in
bank charges of Rs. 25 but non of them were recorded in the Cash Book.
the ledger, we find that the Pass Book shows an overdraft of Rs. 1,500.
[Balance as per Cash Book: Rs.6,905]
The following differences are found :

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(a) A charge of Rs.75 has been made by the bank for collecting an outstation cheque.
Q-15: On 31st March, 2012 your Bank Pass Book showed a balance of Rs.10,000 to
(b) Rs. 25 has been credited by the Bank for half-yearly interest.
your credit. Before that date, you issued cheques amounting to Rs. 2,500 of which
(c) Two cheques of Rs. 1,300 and Rs. 250 paid in on 30th June have not been credited
cheques amounting to Rs. 1,000 were presented for payment. A cheque of Rs. 800
in the Book until 1st July.
paid by you into the Bank on March 29 was not yet credited in the pass book. You had
(d) Two cheques of Rs. 320 and Rs. 230 drawn in June have not been presented at
also received a cheque for Rs. 400 which although entered by you in the Bank Column
the Bank until 30th June.
of Cash Book but was omitted to be paid into the Bank. On 15th March, a cheque of
Prepare a Bank Reconciliation statement.
Rs. 250 received by you was paid into the Bank and collected but the same was
[Overdraft as per Cash Book: Rs.450]
omitted to be entered in the Cash Book. There was a credit of Rs. 80 for interest and
a debit of Rs. 20 for Bank charges. Draw up a Reconciliation Statement showing
Q-19: From the following particulars prepare a Bank Reconciliation Statement showing
reconciliation between your Cash Book and the Bank Pass Book.
the balance as per cash book on 31-12-2012 :
[Balance as per Cash Book: Rs.9,390]
(a) The bank balance as per Pass Book was Rs. 50,000 on 31st Dec. 2012.
(b) The following cheques were paid into bank in Dec., 2012 but were credited by
Q-16: From the following particulars, prepare a Bank Reconciliation Statement of
bank in January 2013 : Sujata Rs. 2,500; Anita Rs. 1,500; Kavita Rs. 2,000.
Sunil, on 31 st December 2012 :
(c) The following cheques were issued by the firm in Dec. 2012 but were presented
(a) Balance as per Pass Book on 31st December, 2012 is Rs. 7,500.
in January, 2013 : Ajay Rs. 4,000; Bheem Rs. 4,500.
(b) Cheques for Rs. 3,100 were issued during the month of December but of these
(d) A cheque for Rs. 1,400 which was received from a customer was entered in the
cheques for Rs. 1,700 were presented in the month of January, 2013 and one
bank column of the cash book in December 2012 but was omitted to be banked.
cheque for Rs. 300 was not presented for payment.
(e) The pass book shows a debit balance of Rs. 120 for bank charges and a credit
(c) Cheque and cash amounting to Rs. 4,800 were deposited in Bank during December
balance of Rs. 1,800 for interest.
but credit was given for Rs. 3,800 only.
(f) Interest on investment Rs. 2,200 collected by bank appeared in the Pass Book.
(d) A customer had deposited Rs. 650 into the Bank directly.
[Balance as per Cash Book: Rs.45,020]
(e) The bank has credited the merchant for Rs. 100 as interest and has debited him
for Rs. 30 as bank charges, for which there are no corresponding entries in Cash
Q-20: On 31st December 2012, the Cash Book of a merchant showed a Bank credit
Book.
balance of Rs. 700. On comparing the Cash Book with the Bank Pass Book the
[Balance as per Cash Book: Rs.5,780]
following discrepancies were noted :
(7) (8)

(b) A post-dated cheque for Rs. 350 has been debited in the Bank column of the
CA. Naresh Aggarwal’s Cash Book but under no circumstances it was possible to present it.
ACADEMY of ACCOUNTS (c) Four cheques of Rs. 1,700 sent to the Bank have not been collected so far and a
cheque of Rs. 200 deposited in the Bank has been dishonoured.
Accounting • Costing • Taxation • Financial Management (d) As per instructions, the Bank paid Rs. 550 as Fire Insurance premium but the
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] entry has not been made in the Cash Book.
(e) There was a debit in the Pass Book of Rs. 35 in respect of Bank charges and a
credit of Rs. 25 for interest on Current Account but not recorded in the Cash
(a) Cheques issued for Rs. 400 were not presented in the bank till 7th January. Book.
(b) Cheques amounting to Rs. 350 were deposited in the bank but were not collected. [Overdraft as per Pass Book: Rs.10,290]
(c) A cheque of Rs. 250 received from Mahesh Chand and deposited in the bank
was dishonored before 31st December but not recorded in Cash Book. Q-23: Sohan & Co. find that the bank balance shown by their Cash Book on 31st
(d) Rs. 1,200 being the proceeds of a bill receivable collected appear in the Pass December 2012 is Rs. 2,000 (debit) but the Pass Book shows a difference due to the
Book but not in the Cash Book. following reasons :
(e) Bank charges Rs. 45 and interest on overdraft Rs. 65 appear in the Pass Book (a) A cheque for Rs. 3,700 drawn in favor of Manohar has not yet been presented for
but not in the Cash Book payment.
Prepare a Bank Reconciliation Statement and show what balance the Bank Pass (b) A post-dated cheque for Rs. 1,200 has been debited in the bank column of the

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Book would indicate on 31st December 2012. Cash Book but it could not have been presented in any case.
[Balance as per Pass Book: Rs.190] (c) Cheques totalling Rs. 7,600 deposited with the Bank have not yet been collected
and a cheque for Rs. 3,000 has been dishonoured.
Q-21: On 30th June, 2012 a trader had an credit balance of Rs. 7,500 as shown by (d) A bill for Rs. 8,000 was retired by the Bank under a rebate of Rs. 200 but the full
the bank column of his Cash Book. When compared with Pass Book, the following amount of the bill was taken in the bank column of the Cash Book.
facts were discovered: Prepare a Bank Reconciliation Statement and find out the balance as per
(a) Cheques amounting to Rs. 1,900 had been paid to the bank but of these only Rs. Pass Book.
900 were credited in the Pass Book, up to the 30th June, 2012. [Overdraft as per Pass Book: Rs.5,900]
(b) He had also issued cheques amounting to Rs. 2,500, out of which only Rs. 1,350
worth cheques had been presented for payment. Q-24: On examining the Bank Pass Book of India Ltd. it is found that the balance
(c) It was also found that a cheques for Rs. 600 which he had debited to bank account shown on 31st March 2012, the close of the company's financial year, differs from the
was not sent to bank at all for collection through mistake. bank balance of Rs. 5,000 (credit) shown by the Cash Book on that date. From a
(d) There is a debit in the Pass Book of Rs. 20 for Bank charges and Rs. 40 for detailed comparison of the entries it is found that :
interest. (a) Rs. 2,500 is entered in the Cash Book as paid into Bank on 31st March 2012, but
(e) A customer of the trader had paid directly into his bank Rs. 1,300 for credit of his not credited by the bank until the following day.
account, but it was not shown in the Cash Book. (b) Bank charges Rs. 90 on 31st March 2012, are not entered in the Cash Book.
(f) The Bank paid trader's insurance premium Rs. 450 as per instruction, but this (c) A bill for Rs. 3,250 discounted with the Bank is entered in the Cash Book without
had not been recorded in the trader's Cash Book. recording the discount charge of Rs. 250.
Prepare a Bank Reconciliation Statement on 30th June, 2012 and show the balance (d) Cheques totalling Rs. 15,000 were issued by the company and duly recorded in
the Bank Pass Book will indicate on that day. the Cash Book before 31 st March 2012, but had not been presented at the Bank
[Overdraft as per Pass Book: Rs.7,160] for payment until after that.
(e) On 25th March 2012, a debtor directly paid Rs. 3,000 into the Company’s Bank
Q-22: Prepare a Bank Reconciliation Statement from the following : Account, but no entry was made in the Cash Book.
On 31st December 2012, a merchant's Cash Book showed a credit Bank balance for (f) No entry has been made in the Cash Book to record the dishonor on 25th March,
Rs. 8,200 but due to the following-reasons the Pass Book showed a difference: 2012, of a cheque for Rs. 1,000 received from Mr. Sharma.
(a) A cheque of Rs. 720 issued to Dinesh has not been presented for payment. Prepare a Reconciliation Statement as on 31st March 2012.
[Balance as per Pass Book: Rs.9,160]
(9) (10)

CA. Naresh Aggarwal’s (c) Cheques amounting to Rs. 5,500 had been paid into the bank for collection but of
ACADEMY of ACCOUNTS these only Rs. 2,500 had been credited in the Pass Book.
(d) The Bank has charged Rs. 150 as interest on overdraft and the intimation of
Accounting • Costing • Taxation • Financial Management which has been received on 2nd January 2013.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (e) The Bank Pass Book shows credit for Rs. 1,700 representing Rs. 400 paid by
debtor of Neeru direct into the Bank and Rs. 1,300 collected direct by Bank in
respect of interest on Neeru's investment. Neeru had no knowledge of these
Q-25: Prepare a Bank Reconciliation Statement from the following particulars : items.
(a) On 31st December 2012, Sunil had a debit balance of Rs. 1,250 as shown by his (f) A cheque for Rs. 800 has been debited in bank column of Cash Book by Neeru,
Pass Book. but it was not sent to Bank at all.
(b) He had issued cheques amounting to Rs. 750 of which Rs. 250 worth only seem [Overdraft as per Cash Book: Rs.17,250]
to have been presented for payment.
(c) Cheques amounting to Rs.500 have been paid in by him on the 30th Dec. 2012 Q-28: Prepare a Bank Reconciliation Statement from the following particulars and
but of these only Rs.350 were credited in the Pass Book. show the balance as per Cash Book:
(d) A cheque for Rs. 50 which he had debited to Bank Account in his Books has been (a) Debit balance as per Pass Book on 31st December, 2012 Rs. 12,500.
omitted to be banked. (b) Cheques drawn in the last week of 2012 but not cleared till 3rd January, 2013 Rs.

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(e) There is debit in his Pass Book of Rs. 40 for interest. 3,000.
(f) An entry of Rs. 30 of a payment by a customer direct into the Bank appears in the (c) Interest on Bank overdraft not entered in the Cash Book Rs. 750.
Pass Book. (d) Cheques of Rs. 12,000 lodged in the bank in December 2012 but not collected
(g) His Pass Book also shows a credit of Rs. 100 to his account, being interest on and credited till 3rd January 2013.
his investments collected direct by my bankers. (e) Rs. 700 Insurance Premium paid by the bank under a standing order has not
[Overdraft as per Cash Book: Rs.1,640] been entered in the Cash Book.
[Overdraft as per Cash Book: Rs.2,050]
Q-26: On 31st December 2012, the Bank Pass Book of Shree Devi showed a debit
balance of Rs. 8,300. From the following particulars prepare a Bank Reconciliation Q-29: The Bank Pass Book of Hari showed an overdraft of Rs. 30,000 on 31st March
Statement : 2012. On going through the Pass Book the accountant found the following
(a) Cheques issued before 31-12-2012 but presented for payment after that date (a) A cheque of Rs. 1,500 credited in the Pass Book on March 28, being dishonoured
amounted to Rs. 1,450. is debited again in the Pass Book on 5th April 2012. There was no entry in the
(b) Cheques paid into the Bank but not collected and credited until 31-12-2012 Cash Book about the dishonor of the cheque until 16th April.
amounted to Rs. 1,250. (b) Bankers had credited his account with Rs. 2,800 for interest collected by them on
(c) Interest on overdraft amounting to Rs. 300 did not appear in the Cash Book. his behalf, but the same had not been entered in his Cash Book,
(d) Rs. 5,000 being interest on investments collected by the Bank. (c) Out of Rs. 3,500 paid in by Hari in cash and by cheques on 31st March, cheques
(e) Bank charges of Rs. 150 were not entered in the Cash Book. amounting to Rs. 1,500 were collected on 7th April.
(f) Rs. 500 in respect of dishonoured cheque were entered in the Pass Book but not (d) Out of cheques amounting to Rs. 5,000 drawn by him on 27th March, a cheque
in the Cash Book. for Rs. 1,500 was encashed on 3rd April.
[Overdraft as per Cash Book: Rs.12,550] Prepare Bank Reconciliation Statement on March 31, 2012.
[Overdraft as per Cash Book: Rs.32,800]
Q-27: Prepare Bank Reconciliation Statement on 31st December, 2012 from the
following particulars : Q-30: Prepare Bank Reconciliation Statement on 31st October from the following
(a) Neeru’s overdraft as per Pass Book Rs. 7,500 as at 31st Dec. Cash Book and Pass Book :
(b) On 30th December, Cheques had been issued for Rs. 15,000 of which cheques
worth Rs. 3,000 only had been encashed up to 31st December.
(11) (12)

CA. Naresh Aggarwal’s Q-31: Prepare Bank Reconciliation Statement on 28th February from the following
ACADEMY of ACCOUNTS Cash Book and Pass Book :
Cash Book
Accounting • Costing • Taxation • Financial Management (Bank Column only)
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Date Receipts Amount Date Payments Amount

Cash Book Feb.1 To Balance b/d 9,500 Feb.4 By Nisha 1,200

(Bank Column only) Feb.5 To Shyam 2,400 Feb.6 By Cash A/c 2,000
Feb.10 To Hema 1,200 Feb.11 By Varun 2,200
Date Receipts Amount Date Payments Amount Feb.12 To Cash A/c 3,000 Feb.15 By Sumit 1,500
Oct. 1 To Balance b/d 17,000 Oct. 3 By Neeru 2,000 Feb.15 To Sanjeev 1,600 Feb.18 By Harmeet 1,400
Oct. 10 To Cash A/c 3,600 Oct. 5 By Vijay 1,600 Feb.28 To Mahesh 1,000 Feb.20 By Telephone Exp. 1,800
Oct. 17 To Sumit 2,600 Oct. 8 By Deepak 2,400 Feb.27 By Computer A/c 5,000
Oct. 20 To Ravi 4,400 Oct. 16 By Cash A/c 4,000 Feb.28 By Megha 1,100
Oct. 28 To Sudha 3,200 Oct. 21 By Deepak 2,200 Feb.28 By Balance c/d 2,500
Oct. 28 To Monika 3,000 Oct. 25 By Insurance A/c 2,800

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18,700 18,700
Oct. 30 By Mukesh 900
Oct. 31 By Furniture A/c 2,300 Mar. 1 To Balance b/d 2,500
Oct. 31 By Balance c/d 15,600
Pass Book
33,800 33,800
Date Particulars Withdrawal Deposits Balance
Nov. 1 To Balance b/d 15,600 (Debit) (Credit)

Pass Book Feb.1 By Balance - - 9,500 Cr.

Feb.5 To Nisha 1,200 8,300 Cr.
Date Particulars Withdrawal Deposits Balance Feb.6 To Cash 2,000 - 6,300 Cr.
(Debit) (Credit) Feb.8 By Shyam - 2,400 8,700 Cr.
Oct. 1 By Balance - - 17,000 Cr. Feb.10 By Meera 1,500 10,200 Cr.
Oct. 5 To Neeru 2,000 15,000 Cr. Feb.12 By Cash - 3,000 13,200 Cr.
Oct. 10 By Cash - 3,600 18,600 Cr. Feb.18 To Sumit 1,500 - 11,700 Cr.
Oct. 15 By Ravi - 4,400 23,000 Cr. Feb.20 To Harmeet 1,400 - 10,300 Cr.
Oct. 16 To Vijay 1,600 - 21,400 Cr. Feb.22 To Radha 1,600 - 8,700 Cr.
Oct. 16 To Cash 4,000 - 17,400 Cr. Feb.23 By Sanjeev 1,600 10,300 Cr.
Oct. 24 To Deepak 2,200 - 15,200 Cr. Feb.23 By Hema - 1,200 11,500 Cr.
Oct. 26 To Preeti 900 - 14,300 Cr. Feb.25 To Telephone Nigam 1,800 - 9,700 Cr.
Oct. 28 By Anjali 2,900 17,200 Cr. Feb.28 To M/s Computer World 5,000 - 4,700 Cr.
Oct. 31 To Furniture Shop 2,300 - 14,900 Cr. Feb.28 To Bank Charges 100 - 4,600 Cr.
Oct. 31 To Electricity Bill 1,500 - 13,400 Cr. Feb.28 By Interest - 50 4,650 Cr.
Oct. 31 To Bank Charges 60 - 13,340 Cr.
Oct. 31 By Interest - 160 13,500 Cr.

••••••••••••••••••••••
(13) (14)

Q-5: The following errors were discovered from the books of Mr. Deepak :
CA. Naresh Aggarwal’s (a) On 31st December 2012 goods of the value of Rs.300 were returned by Kavita
ACADEMY of ACCOUNTS and were taken into stock on the same date, but no entry was passed in the
books.
Accounting • Costing • Taxation • Financial Management (b) An amount of Rs.250 due from Monika, which had been written off as bad debt in
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] a previous year, was unexpectedly recovered, and had been posted to the
Personal account of Monika.
(c) New Machinery costing Rs.2,100 purchased during the year had been entered in
Rectification of Errors the Purchases Book.
(d) Repairs to Plant, amounting to Rs.750 had been charged to Plant and Machinery
Q-1: Give Journal entries to rectify the following errors : Account.
(a) A sum of Rs.2,500 paid by way of rent has been debited to landlord’s personal (e) Rs.800 paid to Rajan posted to Rajani’s A/c.
account.
(b) Furniture sold for Rs.1,800 has been posted to Sales Account. Q-6: The following errors affecting the accounts for the year 2012 were detected in
(c) An amount of Rs.1,000 withdrawn by the proprietor for his personal use has been the books of Mr. Shakti :
debited to Trade Expenses Account. (a) Sale of old furniture for Rs.2,500 was treated as sale of goods.
(d) Rs.90 cost of repairing the floor of a room has been charged to Building Account. (b) Rent of proprietor's residence Rs.1,500 was debited to Rent Account.

AoA
(e) Goods worth Rs.300 withdrawn by the proprietor have not been recorded in books. (c) Cash received from Ranjana Rs.2,100 was credited to Sanjana’s.
(d) Rs.1,700 spent for repairs of building has been debited to Building Account.
Q-2: Rectify the following errors : (e) Furniture worth Rs.1,050 purchased from Nisarg on credit omitted to be recorded
(a) Paid wages for the construction of office debited to wages account Rs.1,500. in the books.
(b) Paid Cartage to newly purchased furniture Rs.50 posted to cartage account.
(c) Paid Rs.1,000 for the newly purchased table fan posted to purchases account. Q-7: Give Journal entries to rectify the errors in the following cases :
(d) A sale of furniture of Rs.400 had been credited to sales account (a) Rs.1,000 spent on repairs to the Building was debited to the Building Account.
(e) Rs.1,800 paid as rent to landlord was debited to Landlord’s Account. (b) Legal Expenses of Rs.4,000 paid to Lawyer was debited to his personal A/c.
(f) Rs.2,900 paid for repairs done to the Machine were debited to Machinery A/c. (c) Ravi’s bill for the erection of a godown at a cost of Rs.3,000 has been charged to
Repairs Account.
Q-3: Rectify the following errors (d) Goods of an invoice value of Rs.1,250 had been returned by Sunita and were
(a) Wages paid for construction of building was debited to Wages A/c with Rs.6,500. taken into stock but the returns had not been entered in the books.
(b) Expenses of erection of shed was debited to trade expenses account amounting (e) Goods returned to Ajay were not entered in the books at all Rs.500.
to Rs.3,500.
(c) Wages paid for extension building was debited to wages account amounting to Q-8: Give Journal entries to rectify the errors in the following cases :
Rs.2,000. (a) A purchase of goods from Dinesh amounting to Rs.1,300 has been wrongly passed
(d) Furniture purchased on credit from Rajan for Rs.1,200 was entered in the through the Sales Book.
Purchases Book. (b) A credit sale of goods of Rs.1,250 to Anil has been wrongly passed through the
(e) Rs.2,500 spent on the extension of Buildings was debited to Repairs Account. Purchases Book.
(c) A purchase return of goods to Ravi for Rs. 550 was passed through the Sales
Q-4: Rectify the following errors : Return Book.
(a) Wages paid for the construction of office debited to wages account Rs.3,700. (d) Goods returned by Meenu Rs.1,200 were entered in the Returns Outwards Book.
(b) Machinery purchased for Rs.5,100 was passed through the invoice book.
(c) Old furniture sold for Rs.900 passed through the day book. (e) A Bill Receivable for Rs.1,150 received from Surender was passed through Bills
(d) A sale of old machinery amounting to Rs. 1,650 has been credited to Sales Account. Payable Day Book.
(e) Salary Rs.800 paid to Sudhir was wrongly debited to his personal account. (f) Wages paid Rs.2,100 were recorded in the Cash Book as Rs.2,010.
(15) (16)

CA. Naresh Aggarwal’s Q-13: Give Journal entries to rectify the following errors :
ACADEMY of ACCOUNTS (a) The total of Purchases Book was short by Rs.100.
(b) The Sales Returns Book was overcast by Rs.220.
Accounting • Costing • Taxation • Financial Management (c) The Sales Book for the month was overcast by Rs.80.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (d) Debit side of Ramesh added excess by Rs.180.
(e) Credit side of Sangeeta added short by Rs.50.
Q-9: Give Journal entries to rectify the errors in the following cases
Q-14: How will you rectify the following errors:
(a) A credit sale of goods of Rs.1,200 to Poonam has been wrongly passed through
(a) The total of Returns Inward Book was added Rs.100 instead of Rs.120.
the Purchases Book.
(b) Sales Book was overcast by Rs.70.
(b) A purchase return of goods to Ram for Rs.650 was passed through the Sales
(c) The total of Purchases Book was short by Rs.100.
Return Book.
(d) Rs.750 received from Raju are entered on the debit side of the Cash Book but not
(c) Goods returned by Monu Rs.120 were entered in the Returns Outwards Book.
posted in his A/c.
(d) A purchase of goods from Dhananjay amounting to Rs.450 has been wrongly
passed through the Sales Book.
Q-15: The following errors are discovered in the books of Sh. Ram Lal. Make necessary
(e) Salary paid Rs. 3,500 were recorded in the Cash Book as Rs.3,050.
entries to rectify them :
(f) A Bill Payable issued to Rohit Rs.2,300 was passed through Bills Receivable

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(a) Discount allowed to Sohan of Rs.50 on his payment of Rs.4,450 has not been
Day Book.
entered in the discount column of the Cash Book. The credit to Sohan’s account
stands at Rs.4,500.
Q-10: Rectify the following errors :
(b) Rs. 1,500 received from Keshav were debited to his account.
(a) A purchase of Rs.800 from Ranjana was omitted to be entered in the Purchases
(c) An amount of Rs.1,050 for a credit sale to Mr. Goldy correctly entered in the
Book.
Sales Book, has been debited to his account as Rs.150.
(b) A credit sale of Rs.500 to M/s India & Co. was recorded as Rs.50.
(d) Sales of Rs.250 to Bheem debited to his account as Rs.2,050
(c) A purchase of office furniture for Rs.1,100 from ‘Furniture Mart’ was entered through
(e) Purchases of Rs.1,010 from Sangeeta credited to her account as Rs.110.
the Purchases Book.
(d) An invoice received from Ankit for Rs.1,400 was entered in the books as Rs.140
Q-16: Rectify the following errors :
only.
(a) Purchase from Mohan Rs.450 posted to his account as Rs.540.
(e) A credit sale of goods Rs.350 to Ramesh has been wrongly passed through the
(b) Purchase from Mohan Rs.450 credited to his account as Rs.540.
Purchases Book.
(c) Purchase from Mohan Rs.450 debited to his account as Rs.540.
(d) The total of Bills Receivable Book of Rs.250 has been posted to the credit of Bills
Q-11: Rectify the following errors:
Receivable Account.
(a) The Sales Book of December was added short by Rs.150.
(b) A periodical total of the Purchases Book was cast short by Rs.50
Q-17: Correct the following errors in Pooja’s Books of Accounts :
(c) The total of Purchases Returns Book has been undercast by Rs.300.
(a) The Returns Outward Journal has been overcast by Rs.30.
(d) The Sales Returns Book is added Rs.200 short.
(b) A sum of Rs.750 written off as depreciation on furniture has not been debited to
Depreciation A/c.
Q-12: Rectify the following errors :
(c) Baldev returned goods worth Rs.150 his account but wrongly he was debited by
(a) The Returns Inward Book has been overcast by Rs.210.
this amount.
(b) The Returns Outward Journal has been overcast by Rs.30.
(d) A purchase from Mohan of Rs.1,250 has been debited to his account.
(c) Purchases Book carried forward Rs.75 less.
(e) A payment of Rs.1,500 for salaries been posted twice to Salaries Account.
(d) Goods sold to Gautam were posted as Rs.215 instead of Rs.261.
(e) The Sales Book was overcast by Rs.50.
(17) (18)

Q-22: Rectify the following errors :

CA. Naresh Aggarwal’s (a) Wages paid for the construction of office debited to wages account Rs.1,000.
ACADEMY of ACCOUNTS (b) Cartage paid for the newly purchased furniture Rs.250 posted to cartage account.
(c) Furniture purchased on credit from Deepak for Rs.1,500 posted as Rs.1,050.
Accounting • Costing • Taxation • Financial Management (d) Sales to Raj Rs.650 posted to Raju's account.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (e) Wages paid Rs.1,200 were recorded in the Cash Book as Rs.2,100.

Q-18: Correct the following errors in Mukesh’s Books of Accounts : Q-23: Rectify the following errors :
(a) A credit sale of Rs.1,300 to Rajesh correctly entered in Sales Journal but (a) Purchases from Manjeet Rs.1,900 were omitted from the books.
posted to his account as Rs.3,100. (b) A cheque for Rs.1,200 received from Nidhi was dishonored and had been posted
(b) The total of Bills Payable Journal of Rs.750 has been posted to the debit of Bills to the debit of Sales Returns Account.
Payable A/c. (c) Purchases Book was overcast by Rs.90.
(c) The total of Purchase Journal of Rs.3,500 has been posted to Purchases Account (d) A sale of Rs.230 to Joginder was credited to his account as Rs.310.
as Rs.350. (e) A purchase of Rs.600 to Ram was entered in the day Book as Rs.60.
(d) Rent paid to Landlord Rs.1,000 was debited to his Personal Account.
(e) Purchases Book was undercast by Rs.20. Q-24: Give Journal entries to rectify the following errors and find out the difference in
the trial balance.

AoA
Q-19: Give Journal entries to rectify the following errors : (a) Sales Book was overcast by Rs.20.
(a) Material from store Rs.2,000 and wages Rs.500 had been used in making ‘Tools’ (b) Purchased furniture Rs.320 was passed through invoice book and from there
for use in own factory but no adjustments were made in the books. ‘Furniture Shop’ the supplier was posted as Rs.230.
(b) Material from store Rs.1,600 and wages Rs.400 had been used in making ‘Furniture’ (c) Sale of goods to Rajani Rs. 50 was posted as Rs.500.
for use in own office but no adjustments were made in the books. (d) Purchases Returns Book was carried forward as Rs.570 instead of Rs.750.
(c) Rs.2,700 paid to Sangeeta against our acceptance were debited to Sangeeta’s (e) Sold goods Rs.520, entered in the Sales Book as Rs.250.
personal account.
(d) Bill received from Jeewan for repairs done to Machinery Rs.250 and three table Q-25: The following mistakes were located in the books of a concern after its books
fans supplied for Rs.1,750 was entered in the Invoice Book. were closed and a Suspense Account was created in order to get the Trial Balance
(e) The total of one page of the Sales Book was carried forward to the next page as agreed :
Rs.2,786 instead of Rs.2,687. (a) Sales Day Book was undercast by Rs.90.
(b) A sale of Rs.350 to Anju was wrongly debited to the account of Anuj.
Q-20: Give Journal entries to rectify the following errors : (c) General Expenses Rs.1,850 was posted in the Repairs A/c as Rs.185.
(a) Credit sale to Manjeet Rs.720 credited to his account as Rs.270. (d) Legal Expenses of Rs.1,000 paid to Mr. Vakeel was debited to his personal
(b) Credit purchase from Pramod Rs.230 recorded as Rs.320. account.
(c) Total of discount received column of the Cash Book was undercast by Rs.50. (e) Rs.2,100 paid to Deepa against our acceptance were debited to her Account.
(d) A credit purchase of goods of Rs.750 from Sanjeev posted as Rs.570. Find out the nature and amount of the ‘Suspense Account’ and pass entries for the
(e) An addition in the Returns Inwards Day Book had been cast Rs.80 short. rectification of the above errors in the subsequent year's books.
[Suspense Account opened with a debit of Rs.1575]
Q-21: How would you rectify the following errors :
(a) The total of the Purchases Book has been undercast by Rs.40. Q-26: There was an error in the Trial Balance of Reshma on 31st December 2012
(b) A sum of Rs.450 written off as depreciation on machinery has been debited to and the difference in books was carried to Suspense Account. On going through the
Machinery Account. books you find that :
(c) A bill of Rs.2,550 for old furniture of the business sold to Chetali was entered in (a) Rs.1,500 received from Manoj was posted to the debit side of his account.
the Purchases Day Book. (b) Rs.450 being purchase returns was posted to the debit of Purchases Account.
(d) Goods worth Rs.650 returned by Hemant have not been recorded anywhere. (c) Discount Rs.180 received were posted to the debit of Discount Account.
(e) Rs.300 paid to Seeta posted to Geeta’s A/c.
(19) (20)

Q-29: An accountant while balancing his books found that there was a debit
CA. Naresh Aggarwal’s excess of Rs.1,850 in the Trial Balance. The difference was placed in the Suspense
ACADEMY of ACCOUNTS A/c and the books were closed. The following errors were disclosed afterwards :
(a) Rs.2,700 of sales proceeds of old machinery had been posted to the Sales
Accounting • Costing • Taxation • Financial Management Account.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (b) Rs.950 the price of goods purchased from Raman had been shown in the credit
side of his account as Rs.50.
(d) Rs.350 paid for repairs to motor car was debited to Motor Car A/c as Rs.530. (c) Rs.80 discount allowed by Karma had been shown in his Account but not posted
(e) Rs.880 paid to Deepak was debited to the account of Deepika. to Discount Account.
Give journal entries to rectify the above errors, and state what amount was carried to (d) A sum of Rs.800 owed by Himanshu had not been included in the list of Debtors.
Suspense Account. (e) Account of Vikas had been debited with Rs.180 on account of goods returned by
[Suspense Account opened with a credit of Rs.4,440] him.
Give Journal entries to correct these errors and prepare Suspense Account.
Q-27: The Trial Balance of Sushmita did not agree and the difference in books was [Suspense Account closing balance: Rs.1,310 (Cr.)]
carried to Suspense Account. Pass the entries required to rectify the following errors
which accounted for the difference. Also prepare the Suspense Account : Q-30: The Trial Balance of a firm is out by Rs. 3,150 (excess debit). The following
(a) A Sales Invoice for Rs.1,700 for goods sold on credit to Bharat was entered in the errors were found subsequently. Pass Journal entries to correct them.

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Purchases Book but in the Ledger the amount was correctly debited to the account (a) An amount of Rs. 1,200 was received from Bunti on 31st December 2012, but
of Bharat. had been entered in the Cash Book on 3rd January 2013.
(b) Goods bought on credit from Arun for Rs.1,150 were wrongly debited to his account (b) The Returns Inward Book for December had been cast Rs.50 short.
as Rs.1,510. (c) The purchase of an office table costing Rs.1,400 had been passed through the
(c) A Cash discount of Rs.30 allowed to Geeta remained unposed to her account in Purchases Day Book.
the Ledger from the Cash Book. (d) Rs.750 paid for wages to workmen for making Furniture had been charged to
(d) The Sales Book for the month was overcast by Rs.80. Wages Account.
(e) Rs.570 paid for repairs to building was debited to Building A/c as Rs.750. (e) A purchase of Rs.750 from Shivali had been posted to the debit of her account as
[Suspense Account opened with a credit of Rs.6,190] Rs.570.
[Suspense Account closing balance: Rs.1,880 Cr.]
Q-28: A book-keeper, on taking out a trial balance as on 31.03.2012, found that it did
not agree. He immediately proceeded to check the entries in the books and discovered Q-31: A book-keeper failed to balance his trial balance, the credit side exceeding the
the following errors : debit side by Rs.1,850. This amount was entered in a Suspense Account Later, the
(a) A cheque from Amit for Rs.850 had been correctly entered in Cash Book but had following errors were discovered. Pass Journal entries to correct them.
been posted to the credit of his as Rs.950. (a) The total of the credit side of Mahesh’s account was overcast by Rs.90.
(b) Goods returned to the firm by Rohit amounting to Rs.950 had been recorded in (b) The Sales Book was undercast by Rs.40.
the Sales Returns Book but the entry had not been posted to the personal account. (c) Goods worth Rs.100 purchased from Anjali were wrongly entered in the Sales
(c) A sale of Rs.1,450 to Rajesh had been correctly entered in the Sales Book but Book but her account was correctly credited.
was posted as Rs.1,540. (d) The total of Returns Outward Book amounting to Rs.170 was not posted to the
(d) Kirti's bill for the erection of a godown at a cost of Rs.4,500 has been charged to ledger.
Repairs Account. (e) A credit balance of Rs.650 of Interest Received Account was shown as Rs.560.
(e) Goods of an invoice value of Rs.1,250 had been returned by Ekta and were taken (f) Goods worth Rs.420 sold to Sanjay were correctly entered in the Sales Book, but
into stock but the returns had not been entered in the books. posted to his account as Rs.240.
Give rectifying Journal entries. [Suspense Account closing balance: Rs.1,680 Dr.]
(21) (22)

(d) From the Purchases Book Sohan’s Account was debited with Rs.1,550.
CA. Naresh Aggarwal’s (e) Cash Rs.1,250, received from Manju against debt previously written off, was
ACADEMY of ACCOUNTS credited to her account.
Rectify the errors by means of suitable Journal entries and show the Suspense
Accounting • Costing • Taxation • Financial Management Account.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Q-35: The books of a private firm have been posted upto 31.03.2012, how would you
Q-32: The Trial Balance of a book-keeper shows an excess of debits over credits correct the following errors which were subsequently found therein :
by Rs.1,050. This difference is placed in a Suspense account. Later on the following (a) An amount of Rs.1,300 received from Mohan on 1st April, 2012 had been entered
errors are discovered : in the Cash Book as having been received on 31st March 2012.
(a) A credit purchase of Rs.650 has been debited to a personal account as Rs.560. (b) Rs.2,500 paid for the purchase of Furniture for one of the partners Mr. Suraj had
(b) A sum of Rs.350 written off fixtures as depreciation has not bee posted to been posted to Furniture Account.
Depreciation Account. (c) An addition in the Returns-Inward Book had been cast Rs.180 short.
(c) Rs.4,500 paid for purchase of furniture have been charged to the Purchases (d) A cheque for Rs.100 drawn for Petty Cash Account posted in the account of
Account. cashier Ankur.
(d) A discount allowed to a customer has been credited to him as Rs. 8 in place of (e) Rs.170 appearing in the discount column on the credit side of the cash book for a
Rs.80. settlement with Madan had not been posted to the personal account.

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(e) A sale of Rs.950 was posted as Rs.590 in the Sales Account. Journalize the necessary corrections.
(f) The total of Returns Inward Book has been added Rs.80 short.
Give Journal entries to correct these errors and prepare the Suspense Account. Q-36: You are presented with a Trial Balance showing a difference which has been
[Suspense Account closing balance: Rs.958 Cr.] carried to Suspense Account, and the following errors are subsequently discovered.
Make the necessary correcting entries and show the Suspense A/c.
Q-33: The accountant of a firm finds that the trial balance as on 31st December 2012 (a) Goods amounting to Rs.1,650 sold to Sudesh were correctly entered in the Sales
is out by an excess debit of Rs.2,880. He placed the amount in the Suspense Account. Book but posted to her A/c as Rs.650.
In the first week of January, 2012, he discovered the following errors. Pass Journal (b) A cash sale of Rs.1,050 to Bindu correctly entered in the Cash Book was posted
entries necessary to rectify these errors and show the Suspense Account as it would to the credit of the Personal account.
appear at the end of the week. (c) Goods worth Rs.450 returned by Gulshan entered in the Sales Book were posted
(a) Cash paid to Bharat Rs.750 was posted on the credit of Bharti’s A/c as Rs.570. therefrom to the credit of Gulshan's Personal Account.
(b) Discount allowed by Mohan Rs.75 was not entered in the Cash Book but Mohan’s (d) Goods invoiced at Rs.1,150 and debited on 20th December to Neeru were returned
stands debited correctly. on the 23rd and taken into stock but no entry had been made in the books for
(c) No entry was made for goods worth Rs.450 taken away by proprietor for personal return of goods.
use. (e) The Sales Returns Book was overcast by Rs.220.
(d) Rs.1,500 received from Mr. Gupta for interest on loan to him were recorded in the (f) A Bills Receivable from Hema Rs.600 posted to the credit of Bills Payable Account.
Cash Book. But the entry was not posted in the ledger. [Difference in Trial Balance: Rs.2,880 Dr.]
(e) The total of Returns Outward Book was short by Rs.90.
Q-37: In taking out a Trial Balance, a book-keeper finds Rs.1,860 excess debit. Being
Q-34: The book-keeper of a firm found that his trial balance was out (excess credit) desirous of closing his books, he places the difference to a newly opened Suspense
by Rs.1,750. He placed the amount in the Suspense Account and subsequently found Account which is carried forward. In the next period he discovers that :
the following errors : (a) A credit purchase from Sangeeta of Rs.1,400 has been debited to personal account
(a) The total of the Discount column on the credit side of the Cash Book Rs.120 was as Rs.400 only.
not posted in the Ledger. (b) A sum of Rs.200 written off to Fixtures as depreciation has not been posted to
(b) The total of the Purchases Book was Rs.150 short. Depreciation Account.
(c) A sale of Rs.1,200 to Akshay was entered in the Sales Book as Rs.2,100. (c) Rs.3,500 for Furniture purchased have been charged to the Purchases Account.
(23) (24)

CA. Naresh Aggarwal’s (b) A cash sale of Rs.1,350 to Sumit correctly entered in the Cash Book was
ACADEMY of ACCOUNTS posted to the credit of the personal account in the Ledger.
(c) Goods invoiced to Sudhir at Rs.2,100 on 20th December were returned by him on
Accounting • Costing • Taxation • Financial Management the 23rd and taken into stock but no entries being made in the books.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (d) Bills Receivable from Suresh Rs.2,750 posted to the credit of Bills Payable Account
and credited to Suresh also.
(d) A discount of Rs.35 allowed to customer has been credited to him as Rs.53.
(e) The total of the Inward Returns has been added Rs.75 short. Q-41: You are presented with a Trial Balance showing a difference which has been
(f) An item of sales to Manoj for Rs.80 was posted as Rs.8 in the Sales Account. carried to Suspense Account, and the following errors are revealed :
Give the correcting entries and prepare the Suspense Account. (a) A cheque for Rs.700 received from Keshav has been dishonored on maturity and
was passed to the debit of Allowances Account.
Q-38: A book-keeper while balancing his books finds that he is out excess credit by (b) Goods amounting to Rs.240 had been returned by a customer and were taken
Rs.3,150. Being required to prepare the final accounts, he places the difference to a into stock, but no entry in respect thereof was made in the books.
newly opened Suspense Account which he carries forward to the next year. In the (c) Rs.17,000 paid for the purchase of a motorcycle for Mr. Bhushan (a partner) has
next year the following mistakes were discovered : been charged to Sundry Expenses Account.
(a) Goods bought from Prashant amounting to Rs.580 had been posted to the credit (d) A sale of Rs.2,200 to Varun was credited to his account.

AoA
of his account as Rs.500. (e) A sale of Rs.1,650 has been passed through the Purchases Day Book. The
(b) A dishonored bill of exchange receivable of Rs.200 returned by the firm's Bank customer's account has however been correctly debited.
had been credited to the Bank Account and debited to Bills Receivable Account.
(c) An item of Rs.1,000 entered in the Sales Returns Book had been posted to the
debit of the customer who returned the goods.

Q-39: The book-keeper of a firm, having been unable to agree the Trial Balance raised
a Suspense Account in which he entered the amount by which he was out of balance Theoretical Questions
and prepared final accounts, subsequently the following errors were discovered :
(a) Goods bought from a supplier amounting to Rs.750 had been noted to the credit
of his account as Rs.700 only. 1. What is Bank Reconciliation Statement ? Why does it prepared ?
(b) A dishonored Bill of Exchange (receivable) for Rs.1,400 returned to the firm's 2. Explain the reasons on account of which the balance shown by Cash Book does
Bank had been credited to the Bank Account and debited to Bills Receivable not agree with balance shown by Pass Book.
Account. A cheque was received later from the customer for Rs.1,400 duly
recorded. 3. What is Trial Balance ? Why does it prepared ?
(c) An item of Rs.170 entered in the Sales Return Book bad been posted to the debit 4. Name the types of errors and briefly explain them.
of the customer who returned the goods. 5. What type of errors do not effect the Trial Balance ?
(d) An amount of Rs.2,400 owing by a customer had been received and duly entered or
in his account but not posted to the Cash Account. Is Trial Balance, if agreed, is the proof of accuracy of Accounts ? If not, then Why
Show the Suspense Account as raised by the book-keeper, with the adjusting entries ?
you would find it necessary to make therein. 6. What do you mean by ‘Suspense Account’ ? Why does it prepared ?

Q-40: You are presented with a Trial Balance showing a difference which has been
carried to Suspense Account, and the following errors are revealed : ••••••••••••••••••••••
(a) Rs.2,700 paid in cash for a typewriter was charged to Office Expenses Account.
(25) (26)

CA. Naresh Aggarwal’s For Rectification of Errors

Hints:
ACADEMY of ACCOUNTS Undercast means added short : to rectify (+)
Accounting • Costing • Taxation • Financial Management Overcast means added more : to rectify (-)
For Bank Reconcialation Statement
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Dr. & Dr. = (+) Cr. & Cr. = (+)
Actual effects of some common transactions Dr. & Cr. = (-) Cr. & Dr. = (-)
Cash Pass
Book Book
1. Cheque issued/drawn but not presented for payment -
2. Cheque issued/drawn but not recorded in Cash Book - Traditional Rules of Journal Entries
3. Cheque issued/drawn but dishonored -
Debit what comes in (MSfcV t¨ oLrq vk,)
4. Cheque deposited/Paid into bank but not credited/cleared + Real Accounts :
Credit what goes out (ØSfMV t¨ oLrq tk,)
5. Cheque deposited/Paid into bank but not recorded in Cash Book +
6. Cheque deposited/Paid into bank but dishonored +
7. Interest allowed/collected by the bank + Debit all Losses and Expenses (MSfcV lHkh [kPksZ o gkfu;k¡ )
Nominal Accounts :

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8. Interest and expenses charged by the bank - Credit all Gains and Incomes (ØSfMV lHkh vk; o ykHk)
9. Any direct payment made by the bank -
10. Direct deposits/receipts in the bank by customers/others + Debit the Receiver (MSfcV ysus okyk)
Personal Accounts :
11. Bills Receivable discounted, later dishonored - Credit the Giver (ØSfMV nsus okyk)
12. Debit in Cash Book +
13. Credit in Cash Book - Modern Rules of Journal Entries
14. Debit in Pass Book -
15. Credit in Pass Book + Particulars + - Particulars + -

Assets Dr. Cr. Liabilities Cr. Dr.

Expenses Dr. Cr. Capital Cr. Dr.

In Cash book In Pass book
Dr. = (+) Dr. = (-) Income Cr. Dr.
Cr. = (-) Cr. = (+)
Overdraft in any book = - Journal Entries through Accounting Equation
Simple Balance in any book = +
Capital + Liabilities = Assets

Credit Balance Debit Balance

(+) (-) (+) (-)

Credit Debit Debit Credit
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

For Eenquiries
Call or whatsapp: 8800215448

AoA
Bills of Exchange (Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)

Email: [Link]@[Link]
& Website: [Link]
Accounting for Depreciation

Watch us on

[Link]
(1) (2)

After one month, Ajay sent the bill to his banker for collection. On the due date,
CA. Naresh Aggarwal’s acceptance was duly met. Show entries in the books of Ajay and Vijay.
ACADEMY of ACCOUNTS Q-9: ‘P’ drew a bill of Rs.1,800 on ‘Q’ which was duly accepted by the latter. ‘P’
Accounting • Costing • Taxation • Financial Management sent the bill to bank for collection. On the due ‘Q’ met his acceptance.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Pass journal entries in the books of ‘P’ and ‘Q’.

Q-10: Akber sold goods to Birbal for Rs.4,000. He drew on the latter a bill for the
Bills of Exchange amount payable 3 months after date. He discounted the bill with his bankers for
Rs.3,800. On maturity, the bill is duty met. Make Journal entries in the books of
Q-1: On 01.05.2012, A sold goods to B for Rs.3,000 and drew upon him a bill for the Akber and Birbal.
amount payable two months after date. The bill was duly accepted by B. A retained
the bill till due date. On the due date, the bill was paid by B. Q-11: Sonu received from Monu an acceptance for Rs.1,000 on 15th September,
Pass Journal entries in the books of A and B. 2012 at 3 months. Sonu immediately got the acceptance discounted at 12% per annum
from his bank. On the due date, Monu paid the required amount.
Q-2: On 12.04.2012, A sold goods to B of the value of Rs.2,000 drawing upon him a Give Journal entries in the books of Sonu and Monu.
bill for the amount payable three months after date. B accepted the bill and returned it

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to A. On the due date, A presented the bill to B who honored it. Q-12: On 01.02.2012 Seeta sold goods to Geeta of Rs.4,000 and draw on her a bill
Pass Journal entries in the books of both the parties. for 3 months for the amount due. Geeta accepts the bill and returned it to Seeta. On
4.03.2012 Seeta got the bill discounted from her bank at 12% p.a. On the due date the
Q-3: On 24.02.2012 ‘Veena’ draws on ‘Meena’ a bill at three months for Rs.1,000 bill is duly honored. Pass journal entries in the books of Seeta and Geeta.
which ‘Meena’ accepts immediately and returns to ‘Veena’. The bill is duly honored on
the due date. Pass the necessary journal entries in the books of both parties. Q-13: On 15.07.2012 ‘A’ sold goods to ‘B’ of Rs.3,000 and draw on him a bill for 4
months for the amount due. ‘B’ accepts the bill and returned it to ‘A’. On 18.10.2012
Q-4: ‘X’ sold goods to ‘Y’ for Rs.1,200 on credit. He drew on latter a bill for the ‘A’ got the bill discounted from his bank at 12% p.a. On the due date the bill is duly
amount for 2 months. ‘X’ endorsed the bill in favor of ‘Z’, who got the payment on honored. Pass journal entries in the books of ‘A’ and ‘B.’
maturity from ‘Y’. Give Journal entries in the books of ‘X’, ‘Y’ and ‘Z’.
Q-14: A owed B Rs.6,000. A gave a bill for the same on 1st March 2012 payable after
Q-5: On 15.3.2012, ‘A’ sold goods to ‘B’ for Rs.3,200 and drew upon him at two 3 Months at Delhi. Immediately after receiving the bill, B endorsed it to C in payment
months a bill for the amount. ‘B’ accepted the bill. After one month, ‘A’ endorsed the bill of his debt. On 1st April 2012, C discounted the bill at 10% p.a. The bill was met an
to his creditor ‘C’. On the due date, acceptance is duly met. due date.
Show entries in the books of all the parties. Pass the necessary Journal Entries in the books of A, B and C.

Q-6: Ram drew a bill of Rs.1,000 on Shyam which was duly accepted by the latter. Q-15: Ram sold goods to Laxman for Rs.3,000. Laxman accepted three bills of
Ram endorsed the bill to Mohan in full payment of his own due to him for a like amount. Rs.1,000 each for 3 months. Ram endorsed 1st Bill to his creditor Bharat, 2nd Bill was
Pass journal entries in the books of Ram, Shyam and Mohan. discounted from Bank for Rs.950 and 3rd bill was kept by him till due date. On due
date all the bills were met.
Q-7: On 01.01.2012 Anita sold goods to Sunita of Rs.2,500 on credit. She drew on Pass entries in the books of Ram, Laxman and Bharat.
latter a bill for the amount for 3 months. On 15.01.2012 Anitia deposited the bill with
her banker for collection. On the due date bill was duly honored. Q-16: On 1.7.2012 Nakul sold goods to Sehdev for Rs.6,000. Sehdev accepted four
Give Journal entries in the books of Anita and Sunita. bills of Rs.1,500 each for 2 months. Nakul endorsed 1st Bill to his creditor Arjun; 2nd
Bill was discounted from Bank for Rs.1,400; 3rd bill was sent to bank for collection
Q-8: On 10.2.2012 Ajay sold goods to Vijay for Rs.1,000 and drew upon him at and the 4th bill was kept by him till due date. On due date all the bills were met. Pass
three months a bill for the amount. Vijay accepted the bill and returned that to Ajay. entries in the books of Nakul, Sehdev and Arjun.
(3) (4)

Q-24: On 01.04.2012 Teena sold goods to Meena of Rs. 2,500 on credit. She drew
CA. Naresh Aggarwal’s on latter a bill for the amount for 3 months. On 15.04.2012 Teena deposited the bill
ACADEMY of ACCOUNTS with her banker for collection. On the due date bill was dishonored.
Give Journal entries in the books of Teena and Meena.
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Q-25: On 20.4.2012 Arti sold goods to Bharti for Rs. 1,000 and drew upon her at
three months a bill for the amount. Arti accepted the bill and returned that to Bharti.
After one month, Arti sent the bill to her banker for collection. On the due date,
Q-17: On 1.1.2012 Ajay sold goods to Vijay for Rs.10,000. Vijay accepted four bills acceptance was failed to meet. Show entries in the books of Arti and Bharti.
of Rs.2,500 each for 3 months. Ajay endorsed 1st Bill to his creditor Sanjay; 2nd Bill
was discounted from Bank for Rs.2,350; 3rd bill was sent to bank for collection and Q-26: ‘X’ drew a bill of Rs. 1,500 on ‘Y’ which was duly accepted by the latter. ‘X’
the 4th bill was kept by him till due date. On due date all the bills were met. Pass sent the bill to bank for collection. On the due ‘Y’ could not meet his acceptance.
entries in the books of Ajay, Vijay and Sanjay. Pass journal entries in the books of ‘X’ and ‘Y’.

Dishonor of Bill Q-27: Teena sold goods to Meena for Rs. 2,000. She drew on the latter a bill for the
Q-18: On 01.01.2012, A sold goods to B for Rs.1,500 and drew upon him a bill for the amount payable 3 months after date. Teena discounted the bill with her bankers for
amount payable two months after date. The bill was duly accepted by B. A retained Rs. 1,850. On maturity, the bill was failed to meet. Make Journal entries in the books

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the bill till due date. On the due date, the bill was dishonored by B. of Teena and Meena.
Pass Journal entries in the books of A and B.
Q-28: Rinki received from Pinki an acceptance for Rs. 1,000 on 15th January, 2012
Q-19: On 15.07.2012, Ram sold goods to Shyam of the value of Rs.2,500 drawing at 3 months. Rinki immediately got the acceptance discounted at 12% per annum
upon him a bill for the amount payable three months after date. Shyam accepted the from her bank. On the due date, Pinki failed to pay the required amount.
bill and returned it to Ram. On the due date, Ram presented the bill to Shyam who Give Journal entries in the books of Rinki and Pinki.
failed to pay that.
Pass Journal entries in the books of both the parties. Q-29: On 01.02.2012 Sonu sold goods to Monu of Rs. 3,000 and draw on him a bill
for 3 months for the amount due. Monu accepted the bill and returned it to Sonu. On
Q-20: On 20.03.2012 Meena draws on Preeti a bill at three months for Rs.1,000 which 4.03.2012 Sonu got the bill discounted from his bank at 12% p.a. On the due date the
Preeti accepts immediately and returns to Meena. The bill is not honored on the due bill was dishonored.
date. Pass the necessary journal entries in the books of both parties. Pass journal entries in the books of Sonu and Monu.

Q-21: ‘X’ sold goods to ‘Y’ for Rs.3,200 on credit. He drew on latter a bill for the Q-30: On 15.03.2012 ‘A’ sold goods to ‘B’ of Rs. 2,000 and draw on him a bill for 4
amount for 2 months. ‘X’ endorsed the bill in favor of ‘Z’, who failed to get the payment months for the amount due. ‘B’ accepts the bill and returned it to ‘A’. On 18.04.2012
on maturity from ‘Y’. Give Journal entries in the books of ‘X’, ‘Y’ and ‘Z’. ‘A’ got the bill discounted from his bank at 12% p.a. On the due date the bill was
dishonored. Pass journal entries in the books of ‘A’ and ‘B.’
Q-22: On 1.3.2012, ‘A’ sold goods to ‘B’ for Rs.1,000 and drew upon him at two
months a bill for the amount. ‘B’ accepted the bill. After one month, ‘A’ endorsed the bill Noting Charges on Dishonor of Bill
to his creditor ‘C’. On the due date, acceptance could not met. Q-31: On 01.06.2012, A sold goods to B for Rs. 5,000 and drew upon him a bill for the
Show entries in the books of all the parties. amount payable two months after date. The bill was duly accepted by B. A retained
the bill till due date. On the due date, the bill was dishonored by B and noting charges
Q-23: On 10.1.2012 A drew a bill of Rs.2,000 for two months on B which was duly paid by A amounted to Rs. 100.
accepted by the latter. On 15.1.2012 A endorsed the bill to C in full payment of his Pass Journal entries in the books of A and B.
own due to him for a like amount. On the due date B failed to pay his acceptance.
Pass journal entries in the books of A, B and C. Q-32: On 10.02.2012, Anil sold goods to Sunil of the value of Rs. 1,500 drawing upon
him a bill for the amount payable three months after date. Sunil accepted the bill and
(5) (6)

acceptance was failed to meet and noting charges paid Rs. 30.
CA. Naresh Aggarwal’s Show entries in the books of Arti and Bharti.
ACADEMY of ACCOUNTS Q-39: Amit drew a bill of Rs. 2,500 on Sumit which was duly accepted by the latter.
Accounting • Costing • Taxation • Financial Management Amit sent the bill to bank for collection. On the due Sumit could not meet his acceptance
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] and noting charges paid were Rs. 50.
Pass journal entries in the books of Amit and Sumit.
returned it to Anil. On the due date, Anil presented the bill to Sunil who failed to pay
Q-40: Raja sold goods to Rani for Rs. 2,000. He drew on the latter a bill for the amount
that and noting charges paid by Anil Rs. 50.
payable 3 months after date. He discounted the bill with his bankers for Rs. 1,850.
Pass Journal entries in the books of both the parties.
On maturity, the bill was failed to meet. Noting charges paid by Bank Rs. 30. Make
Journal entries in the books of Raja and Rani.
Q-33: On 1.03.2012 Sonia draws on Monika a bill at three months for Rs. 2,000 which
Monika accepts immediately and returns to Sonia. The bill is not honored on the due
Q-41: Reena received from Meena an acceptance for Rs. 2,400 on 10.5.2012 at 3
date and noting charges paid amounted to Rs. 20.
months. Reena immediately got the acceptance discounted at 10% per annum from
Pass the necessary journal entries in the books of both parties.
her bank. On the due date, Meena failed to pay the required amount and bank paid
noting charges Rs. 50.
Q-34: ‘A’ sold goods to ‘B’ for Rs. 1,200 on credit. He drew on latter a bill for the

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Give Journal entries in the books of Reena and Meena.
amount for 3 months. ‘A’ endorsed the bill in favor of ‘C’ and ‘C’ endorsed the bill to ‘D’
who failed to get the payment on maturity from ‘B’. ‘C’ paid noting charges Rs. 30.
Q-42: On 01.02.2012 Ram sold goods to Shyam of Rs. 2,000 and draw on him a bill
Give Journal entries in the books of ‘A’, ‘B’ ‘C’ and ‘D’.
for 3 months for the amount due. Shyam accepted the bill and returned it to Ram. On
4.03.2012 Ram got the bill discounted from his bank at 12% p.a. On the due date the
Q-35: On 1.7.2012, ‘P’ sold goods to ‘Q’ for Rs. 2,000 and drew upon him at three
bill was dishonored and bank paid noting charges Rs. 20. Pass journal entries in the
months a bill for the amount. ‘Q’ accepted the bill. After one month, ‘P’ endorsed the
books of Ram and Shyam.
bill to his creditor ‘R’ who endorsed the bill in favor of ‘S’. On the due date, acceptance
could not met and ‘R’ paid noting charges Rs. 50. Show entries in the books of all the
Q-43: On 5.06.2012 ‘A’ sold goods to ‘B’ of Rs. 2,000 and draw on him a bill for 4
parties.
months for the amount due. ‘B’ accepts the bill and returned it to ‘A’. On 8.07.2012 ‘A’
got the bill discounted from his bank at 12% p.a. On the due date the bill was dishonored.
Q-36: On 1.1.2012 Ajay drew a bill of Rs. 1,000 for three months on Vijay which was
On the due date the bill was dishonored and bank paid noting charges Rs. 20. Pass
duly accepted by the latter. On 15.1.2012 Ajay endorsed the bill to Sanjay in full
journal entries in the books of ‘A’ and ‘B.’
payment of his own due to him for a like amount. On 25.02.2012 Sanjay endorsed the
bill to Dinesh. On the due date Vijay failed to pay his acceptance. Noting charges
Renewal of Bill
Rs. 20 paid by Sanjay.
Q-44: On 01.01.2012, A sold goods to B for Rs. 2,000 and drew upon him a bill for the
Pass journal entries in the books of all the parties.
amount payable two months after date. The bill was duly accepted by B. A retained
the bill till due date. On the due date, B request A to renew the bill for two months at
Q-37: On 01.04.2012 Radha sold goods to Meera of Rs. 2,500 on credit. She drew
interest of 12% p.a. The renewed bill was duly met.
on latter a bill for the amount for 3 months. On 15.04.2012 Radha deposited the bill
Pass Journal entries in the books of A and B.
with her banker for collection. On the due date bill was dishonored and noting charges
paid by her Rs. 50.
Q-45: On 15.07.2012, Ram sold goods to Shyam of the value of Rs. 2,000 drawing
Give Journal entries in the books of Radha and Meera.
upon him a bill for the amount payable three months after date. Shyam accepted the
bill and returned it to Ram. On the due date, Ram presented the bill to Shyam who
Q-38: On 10.7.2012 Arti sold goods to Bharti for Rs. 3,000 and drew upon her at
failed to pay that and requested Ram to renew the bill for three months at interest of
three months a bill for the amount. Arti accepted the bill and returned that to Bharti.
10% p.a. The renewed bill was duly met.
After one month, Arti sent the bill to her banker for collection. On the due date,
Pass Journal entries in the books of both the parties.
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Q-52: On 15.06.2012 ‘A’ sold goods to ‘B’ of Rs. 2,000 and draw on him a bill for 4
CA. Naresh Aggarwal’s months for the amount due. ‘B’ accepts the bill and returned it to ‘A’. On 18.07.2012
ACADEMY of ACCOUNTS ‘A’ got the bill discounted from his bank at 12% p.a. On the due date the bill was
dishonored and bank paid noting charges Rs. 20. ‘B’ then paid Rs. 620 to ‘A’ and
Accounting • Costing • Taxation • Financial Management accepted a new bill for 2 months at 10% p.a. The new bill was duly met. Pass journal
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] entries in the books of ‘A’ and ‘B.’

Rebate / Discount on earlier payment of Bill

Q-46: On 20.03.2012 Neha draws on Ritu a bill at three months for Rs. 1,000 which Q-53: On 01.05.2012, A sold goods to B for Rs. 1,800 and drew upon him a bill for the
Ritu accepts immediately and returns to Neha. The bill is not honored on the due date amount payable three months after date. The bill was duly accepted by B. On 01.7.2012
and Noting charges of Rs. 20 paid by Neha. On 01.07.2012 Ritu accepted a new bill B retire his bill by paying amount at 10% p.a.
for amount due with Rs. 50 as interest which was met on maturity. Pass Journal entries in the books of A and B.
Pass the necessary journal entries in the books of both parties.
Q-54: On 10.07.2012, Ram sold goods to Shyam of the value of Rs. 2,500 drawing
Q-47: ‘A’ sold goods to ‘B’ for Rs. 1,200 on credit. He drew on latter a bill for the upon him a bill for the amount payable three months after date. Shyam accepted the
amount for 3 months. ‘A’ endorsed the bill in favor of ‘C’ and ‘C’ endorsed the bill to ‘D’ bill and returned it to Ram. On 10.8.2012 Shyam paid his bill at a rebate of 10% p.a.
who failed to get the payment on maturity from ‘B’. ‘C’ paid noting charges Rs. 30. Pass Journal entries in the books of both the parties.

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Later B accepted a new bill with interest Rs. 80 which was duly met on maturity.
Give Journal entries in the books of ‘A’, ‘B’ ‘C’ and ‘D’. Q-55: On 20.03.2012 Sangeeta draws on Chetali a bill at four months for Rs. 1,000
which Chetali accepts immediately and returns to Sangeeta. On 25.03.2012 Sangeeta
Q-48: ‘X’ sold goods to ‘Y’ for Rs. 3,600 on credit. He drew on latter a bill for the endorsed the bill in favor of Neeru who got the payment from Chetali on 20.06.2012 by
amount for 2 months. ‘X’ endorsed the bill in favor of ‘Z’, who failed to get the payment allowing her a rebate of 12% p.a.
on maturity from ‘Y’. X then received a new bill for Rs. 3,800 from Y which was duly Pass the necessary journal entries in the books of all the parties.
met. Give Journal entries in the books of ‘X’, ‘Y’ and ‘Z’.
Q-56: On 15.4.2012 ‘X’ sold goods to ‘Y’ for Rs. 3,200 on credit. He drew on latter a
Q-49: On 20.4.2012 Arti sold goods to Bharti for Rs. 1,800 and drew upon her at bill for the amount for 3 months. ‘X’ endorsed the bill in favor of ‘Z’. On 15.06.2012 Y
three months a bill for the amount. Arti accepted the bill and returned that to Bharti. retire his bill by paying amount at 10% p.a.
After one month, Arti sent the bill to her banker for collection. On the due date, Give Journal entries in the books of ‘X’, ‘Y’ and ‘Z’.
acceptance was failed to meet. Noting charges paid were Rs. 20. Bharti then gave a
new bill for Rs. 1,900 for two months which was duly met. Insolvency of the Acceptor of the Bill
Show entries in the books of Arti and Bharti. Q-57: On 01.08.2012, A sold goods to B for Rs. 3,000 and drew upon him a bill for the
amount payable two months after date. The bill was duly accepted by B. A retained
Q-50: ‘X’ drew a bill of Rs. 1,500 on ‘Y’ which was duly accepted by the latter. ‘X’ the bill till due date. On the due date, B was insolvent and only 60% amount could be
sent the bill to bank for collection. On the due ‘Y’ could not meet his acceptance. received. Pass Journal entries in the books of A and B.
Noting charges paid were Rs. 30. ‘Y’ then gave a new bill for Rs. 1,600 which was
duly met on maturity. Q-58: On 10.04.2012, Ravi sold goods to Dinesh of the value of Rs. 1,500 drawing
Pass journal entries in the books of ‘X’ and ‘Y’. upon him a bill for the amount payable three months after date. Dinesh accepted the
bill and returned it to Ravi. On the due date, Dinesh is declared insolvent and a
Q-51: Reena received from Meena an acceptance for Rs. 2,400 on 10.5.2012 at 3 compensation of 40% received from his private estate.
months. Reena immediately got the acceptance discounted at 10% per annum from Pass Journal entries in the books of both the parties.
her bank. On the due date, Meena failed to pay the required amount and bank paid
noting charges Rs. 50. Meena then paid 450 and accepted a new bill for 2 months Q-59: On 1.03.2012 Sonia draws on Anita a bill at three months for Rs. 2,000 which
with interest at the rate of 12% p.a. The second bill was duly met. Anita accepts immediately and returns to Sonia. The bill is not honored on the due
Give Journal entries in the books of Reena and Meena. date and noting charges paid amounted to Rs. 40. On 25.07.2012 Anita declared
(9) (10)

CA. Naresh Aggarwal’s Q-65: On 15.06.2012 ‘A’ sold goods to ‘B’ of Rs.2,000 and draw on him a bill for 4
ACADEMY of ACCOUNTS months for the amount due. ‘B’ accepts the bill and returned it to ‘A’. On 18.07.2012
‘A’ got the bill discounted from his bank at 12% p.a. On the due date the bill was
Accounting • Costing • Taxation • Financial Management dishonored and bank paid noting charges Rs.20. ‘B’ then paid Rs.820 to ‘A’ and
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] accepted a new bill for 2 months at 10% p.a. On the due date of the second bill B
declared insolvent and A could received only 40% of his due. Pass journal entries.
insolvent and 25% of the claim is received.
Pass the necessary journal entries in the books of both parties. Miscellaneous Questions
Q-66: Record the following transaction in the Books of Neeru :
Q-60: ‘A’ sold goods to ‘B’ for Rs. 1,200 on credit. He drew on latter a bill for the (a) Neeru’s acceptance in favour of Megha for Rs.1,000 is dishonored.
amount for 3 months. ‘A’ endorsed the bill in favor of ‘C’ who failed to get the payment (b) A bill received from Pooja of Rs.500 and endorsed to Sunita is dishonored on the
on maturity from ‘B’. ‘C’ paid noting charges Rs. 30. After some time B was declared due date.
bankrupt and could pay only 2/3 of his debts. (c) A bill of Rs.2,000 written by Rajani and accepted by Sangeeta, was received from
Give Journal entries in the books of ‘A’, ‘B’ and ‘C’. Anjali is dishonored.
(d) Neeru’s acceptance of Rs.1,200 in favour of Poonam was endorsed by her to
Q-61: On 1.7.2012, ‘P’ sold goods to ‘Q’ for Rs. 2,400 and drew upon him at three Rekha was met on maturity.

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months a bill for the amount. ‘Q’ accepted the bill. After one month, ‘P’ endorsed the (e) Neeru’s acceptance in favour of Shivani for Rs.3,000 is met by giving a bill of the
bill to his creditor ‘R’. On the due date, acceptance could not met and ‘R’ paid noting same amount, which was accepted by Madhu.
charges Rs. 40. After some time Q was declared bankrupt and could pay only 3/4 of (f) A bill received from Rosy was endorsed to Neetu is met on maturity.
his debts. Show entries in the books of all the parties.
Q-67: Record the following transaction in the Books of Sanjay :
Q-62: On 20.4.2012 A sold goods to B for Rs. 2,800 and drew upon her at three (a) Sanjay’s acceptance in favour of Deepak for Rs.1,800 is dishonored.
(b) A bill received from Prem of Rs.1,500 and endorsed to Sameer is dishonored on
months a bill for the amount. B accepted the bill and returned that to A. After one
the due date.
month, A sent the bill to his banker for collection. On the due date, acceptance was
(c) A bill of Rs.1,000 written by Rajesh and accepted by Suresh, was received from
failed to meet. Noting charges paid were Rs. 50. B then gave a new bill for Rs. 3,000
Dinesh is dishonored.
for two months but on 28.08.2012 B declared insolvent and A received 70 paise in
(d) Sanjay’s acceptance of Rs.2,500 in favour of Pramod was endorsed by him to
rupee. Show entries and personal A/cs in the books of A and B.
Ramesh was met on maturity.
(e) Sanjay’s acceptance in favour of Prakash for Rs.1,200 is met by giving a bill of
Q-63: ‘X’ drew a bill of Rs. 1,800 on ‘Y’ which was duly accepted by the latter. ‘X’
the same amount, which was accepted by Mahesh.
sent the bill to bank for collection. On the due ‘Y’ could not meet his acceptance.
(f) A bill of Rs.900 received from Ram was endorsed to Shyam is met on maturity.
Noting charges paid were Rs. 30. ‘Y’ then gave a new bill for Rs. 2,000. Before the
due date of the new bill Y was declared bankrupt and a full and final compensation Q-68: Record the following transaction in Our Book :
was allowed to his creditors @ 75 paise in rupee. (a) A bill received from Ravi of Rs.2,000 and endorsed to Sudhir is dishonored on the
Pass journal entries and personal A/cs in the books of ‘X’ and ‘Y’. due date.
(b) A bill of Rs.3,000 written by Raju and accepted by Pooja, was received from
Q-64: Rashmi received from Kajal an acceptance for Rs.2,400 on 7.5.2012 at 3 Deepak is met on maturity.
months. Rashmi immediately got the acceptance discounted at 10% per annum from (c) Ravi’s acceptance in favour of Sudha for Rs.3,000 is dishonored and noting
her bank. On the due date, Kajal failed to pay the required amount and bank paid charges of Rs.50 are paid by us.
noting charges Rs.50. Kajal then paid Rs.950 and accepted a new bill for 2 months (d) A bill of Rs.2,000 written by Rosy and accepted by us was endorsed to Neha, is
with interest at the rate of 12% p.a. On the due date of the second bill Kajal declared met on maturity.
insolvent and Rashmi could received only 50% of her due. (e) Mohan’s acceptance of Rs.2,500 in favour of Ajay was endorsed by him to us is
Give Journal entries and personal A/cs in the books of Rashmi and Kajal. met on maturity.
(11) (12)

CA. Naresh Aggarwal’s Depreciation

ACADEMY of ACCOUNTS Straight Line Method
Accounting • Costing • Taxation • Financial Management Q-1: On 1.1.2010 a company purchased a machinery costing Rs.47,000 and spent
Rs.5,000 on its installations. After the useful life of 10 years its scrap value is estimated
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
to be Rs.2,000. Show Machinery account for first four years.
Q-69: A bill of Rs.1,000 is drawn by Ajay on Vijay and accepted by the latter, payable [Rs.32,000]
three months after the date. Show what entries should be passed in the books of both
parties in each of the following situations : Q-2: Rajesh Bros. acquired a Machinery on 1.1.2010 costing Rs.18,000 and spent
(a) If Ajay retained the bill till due date and then realised on maturity. Rs.4,000 on its installation and Rs.1,000 on its freight. The scrap value of the machine
(b) If Ajay discounted the bill with his banker for Rs.950. is estimated at Rs.2,000. The life of the machine is assumed to be 7 years and accounts
(c) If Ajay endorsed the bill to Sanjay and the bill met on maturity. are closed on 31st December each year. You are required to show Machine Account
(d) If Ajay sent the bill for collection and met on maturity. upto 2012.
[Rs.14,000]
Q-70: A bill of Rs.3,000 is drawn by Anita on Babita and accepted by the latter, payable
two months after the date. Show what entries should be passed in the books of both Q-3: Best Enterprises bought a Plant and Machinery on 1.7.2010 for Rs.22,000

AoA
parties in each of the following situations : which will have useful life of 5 years at the end of which it will fetch Rs.2,000. Accounts
(a) If Anita retained the bill till due date and then realised on maturity. are closed on 31st December each year. Show Plant and Machine A/c for first 3
(b) If Anita discounted the bill with his banker for Rs.2,800. years.
(c) If Anita endorsed the bill to Sunita and the bill met on maturity. [Rs.12,000]
(d) If Anita sent the bill for collection and met on maturity.
Q-4: Akber and Sons purchased on 1.7.2010 furniture costing Rs.19,500 and spent
Q-71: A bill of Rs.2,000 is drawn by Sonu on Monu and accepted by the latter, payable Rs.500 on its cartage. Depreciation is charged at the rate of 10% p.a. by Straight Line
three months after the date. Show what entries should be passed in the books of both Method on 31st December each year. Show Furniture Account for first 3 years.
parties in each of the following situations,if the bill is dishonored by the drawee on the [Rs.15,000]
due date :
(a) If he retained the bill till due date. Q-5: Satyam Cineplex purchases a projector costing Rs.2,00,000 from a company
(b) If he discounted the bill with his banker for Rs.1,920. in USA. Custom duty of Rs.80,000 is levied by the government and Rs.35,000 were
(c) If he endorsed the bill to Dinesh. spent on its carriage and cartage. Further Rs.25,000 were spent on its installation
(d) If he sent the bill for collection. and erection. The residual value of the projector is estimated to be Rs.40,000.
Depreciation is charged at the rate of 10% p.a. by straight line method. Show Projector
A/c for first 4 years.
Theoretical Questions [Rs.2,20,000]

1. What is a Bills of Exchange? Q-6: Handi Restaurant bought an Air Conditioner on 1.7.2010 costing Rs.20,000. It
2. What is a Promissory Note? is decided to depreciate it at the rate of 15% p.a. under straight line method on 31st
3. Distinguish between Bills of Exchange and Promissory Note. march every year. Show necessary A/c for first 3 years.
4. Write a short note on ‘Discounting of Bill’. [Rs.11,750]
5. Write a short note on ‘Grace Period’.
6. Write a short note on ‘Renewal of Bill’. Q-7: On 01.01.2010 Atal & Co. bought a machine costing Rs.20,000 and spent
7. Write a short note on ‘Endorsement of Bill’. Rs.5,000 on its installation. On 01.07.2011 it purchases another machine costing
8. Show a specimen of a Bills of Exchange. Rs.15,000 having scrap value of Rs.3,000. On 31.03.2012 it purchased third machine
••••••••••••••••••••••
(13) (14)

is charged on machine at the rate of 10% p.a. by original cost method on December
CA. Naresh Aggarwal’s 31st every year. You are required to show Machinery A/c upto 2013.
ACADEMY of ACCOUNTS [Loss on sale: Rs.1,500; Balance: Rs.8,700]

Accounting • Costing • Taxation • Financial Management Q-12: Sangeeta purchased on 01.04.2010, a machine costing Rs. 13,500 and spent
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Rs. 2,500 on its installation and erection. She purchased another machine on 30.09.2011
for Rs. 24,000. On 30.06.2012 she sold the first machine for Rs. 10,000. Depreciation
for Rs.8,000 and spent Rs.2,500 on its erection, having residual value of Rs. 500. All is charged on machine at the rate of 10% p.a. by original cost method on December
the machines are subject to depreciation @ 10% p.a. under straight line method on 31st every year. You are required to show Machinery A/c upto 2013.
31st December each year. [Loss on sale: Rs.2,400; Balance: Rs.18,600]
Show Machinery account for the years upto 2013.
[Rs.35,750 (1st- 15,000; 2nd- 12,000; 3rd- 8,750)] Q-13: On 1st May 2010, Dhirubhai Ltd. purchased a machinery costing Rs. 26,400
and spent Rs. 5,600 on its installation and will have a scrap value of Rs. 2,000 . It
Q-8: On 01.01.2010 Diamond Limited bought a machine costing Rs.40,000 and spent purchased another machine on 30th September 2010 for Rs. 20,000. On 1st January
Rs.10,000 on its installation. On 01.07.2011 it purchases another machine costing 2012 it sold the first machine for Rs. 14,000 and bought a new machinery for Rs.
Rs.30,000 having scrap value of Rs.6,000. On 31.03.2012 it purchased third machine 15,000. Depreciation is charged on machine at the rate of 20% p.a. by fixed instalment
for Rs.16,000 and spent Rs.5,000 on its erection, having residual value of Rs.1,000. method on December 31st every year. You are required to show Machinery A/c for 3

AoA
All the machines are subject to depreciation @ 10% p.a. under straight line method on years.
31st December each year. [Loss on sale: Rs.8,000; Balance: Rs.23,000]
Show Machinery account for the years upto 2013.
[Rs. 71,500 (1st- 30,000; 2nd- 24,000; 3rd- 17,500)] Q-14: On 1st May 2010, Pyare Lal purchased a machinery costing Rs. 53,800 and
spent Rs. 10,200 on its installation and will have a scrap value of Rs. 4,000 . He
Q-9: On 01.07.2010 Seema bought a machine costing Rs.10,000 and spent Rs.5,000 purchased another machine on 30th September 2010 for Rs. 40,000. On 1st January
on its erection having a life of 7 years and estimated to realise Rs.1,000 after that. On 2012 he sold the first machine for Rs. 28,000 and bought a new machinery for Rs.
01.10.2010 she purchases another machine costing Rs.40,000 having scrap value of 30,000. Depreciation is charged on machine at the rate of 20% p.a. by fixed instalment
Rs.4,000 will have a life of 9 years. On 01.01.2012 she purchased third machine for method on December 31st every year. You are required to show Machinery A/c for 3
Rs.26,500 and spent Rs.3,500 on its erection, will work for 10 years. All the machines years.
are subject to depreciation under straight line method on 31st Dec. each year. Show [Loss on sale: Rs.16,000; Balance: Rs.46,000]
Machinery A/c for the years upto 2013.
[Rs.59,000 (1st- 8,000; 2nd- 27,000; 3rd- 24,000)] Q-15: On 01.01.2010, M/s ABC Ltd. purchased a second hand machinery for Rs.
17,000 and spent on its repairs and installation Rs. 2,500 and Rs. 500 respectively.
Q-10: On 01.07.2010 Beena bought a machine costing Rs.19,000 and spent Rs.5,000 On 01.07.2010, it purchased another Machinery for Rs. 8,000. On 30.09.2012 it sold
on its erection having a life of 10 years and estimated to realise Rs.4,000 after that. the first Machinery for Rs. 17,800 and purchased a new machinery for Rs. 30,000 on
On 01.10.2010 she purchases another machine costing Rs.45,000 having scrap value the same day.
of Rs.3,000 will have a life of 7 years. On 01.01.2012 she purchased third machine for Depreciation is charged on machine at the rate of 5% p.a. by fixed instalment method
Rs.20,500 and spent Rs.3,500 on its erection, will work for 6 years. All the machines on December 31st every year. You are required to show Machinery A/c for 3 years.
are subject to depreciation under straight line method on 31st Dec. each year. Show [Profit on sale: Rs.550; Balance: Rs.36,625]
Machinery account for the years upto 2013.
[Rs.58,500 (1st- 17,000; 2nd- 25,500; 3rd- 16,000)] Q-16: On 01.01.2010, M/s Sunder Ltd. purchased a second hand machinery for Rs.
51,000 and spent on its repairs and installation Rs. 7,500 and Rs. 1,500 respectively.
Q-11: Raju purchased on 01.07.2010, a machine costing Rs.17,000 and spent On 01.07.2010, it purchased another Machinery for Rs. 24,000. On 30.09.2012 it sold
Rs.3,000 on its installation and erection. He purchased another machine on 01.04.2011 the first Machinery for Rs. 53,400 and purchased a new machinery for Rs. 90,000 on
for Rs.12,000. On 30.06.2012 he sold the first machine for Rs.14,500. Depreciation the same day.
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Rs.2,000 on its installation and Rs.1,000 on its freight. The scrap value of the machine
CA. Naresh Aggarwal’s is estimated at Rs.5,000. The accounts are closed on 31st December each year and
ACADEMY of ACCOUNTS depreciation is charged @ 5% p.a under Diminishing Balance Method. You are required
to show Machine Account upto 2012.
Accounting • Costing • Taxation • Financial Management [Rs. 25,721]
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Q-21: Sonia bought a Plant and Machinery on 1.7.2010 for Rs. 10,000 which will
have useful life of 8 years. Accounts are closed on 31st December each year and
Depreciation is charged on machine at the rate of 5% p.a. by fixed instalment method
depreciation is charged @ 15% p.a. by written down method. Show Plant and Machine
on December 31st every year. You are required to show Machinery A/c for 3 years.
A/c for first 3 years.
[Profit on sale: Rs.1,650; Balance: Rs.1,09,875]
[Rs. 6,683]

Q-17: A second hand machinery was purchased on 01.07.2010 for Rs. 44,000 and
Q-22: Amar and Sons purchased on 1.7.2010 furniture costing Rs. 29,500 and spent
Rs. 3,500 and Rs. 2,500 were spent on its repairs and installations. On 01.01.2011
Rs. 500 on its cartage. Depreciation is charged at the rate of 20% p.a. by written
another machinery was purchased for Rs. 30,000. On 01.01.2012 the first machinery
down method on 31st December each year. Show Furniture Account for first 3 years.
having become obsolete was disposed off for Rs. 41,000 and on the same day a new
[Rs. 17,280]
machine was purchased for Rs. 25,000. On 31.03.2013 the second machine auctioned

AoA
for Rs. 24,500.
Q-23: PVR Multiplex purchases a projector costing Rs. 2,00,000 from a company in
Depreciation is charged on machine at the rate of 10% p.a. by fixed instalment method
Japan. Custom duty of Rs. 55,000 is levied by the government and Rs. 30,000 were
on December 31st every year. You are required to show Machinery A/c for years
spent on its carriage and cartage. Further Rs. 15,000 were spent on its installation
upto 2013.
and erection. The residual value of the projector is estimated to be Rs.25,000.
[Loss on sale of 1st machine: Rs.1,500; Profit on sale of 2nd machine: Rs.1,250; Balance:
Depreciation is charged at the rate of 12.5% p.a. by reducing installment method.
Rs.20,000]
Show Projector A/c for first three years.
[Rs. 2,00,977]
Q-18: A second hand machinery was purchased on 01.07.2010 for Rs.22,000 and
Rs.1,750 and Rs.1,250 were spent on its repairs and installations. On 01.01.2011
Q-24: On 01.01.2010 Manmohan & Co. bought a machine costing Rs. 20,000 and
another machinery was purchased for Rs.15,000. On 01.01.2012 the first machinery
spent Rs. 5,000 on its installation. On 01.07.2011 it purchases another machine costing
having become obsolete was disposed off for Rs.20,000 and on the same day a new
Rs. 15,000 having scrap value of Rs. 3,000. On 31.03.2012 it purchased third machine
machine was purchased for Rs.12,000. On 31.03.2013 the second machine auctioned
for Rs. 8,000 and spent Rs. 2,000 on its erection, having residual value of Rs. 500. All
for Rs.12,250.
the machines are subject to depreciation @ 10% p.a. under diminishing balance method
Depreciation is charged on machine at the rate of 10% p.a. by fixed instalment method
on 31st December each year.
on December 31st every year. You are required to show Machinery A/c for years
Show Machinery account for the years upto 2012.
upto 2013.
[Rs. 40,300 (1st- 18,225; 2nd- 12,825; 3rd- 9,250)]
[Loss on sale of 1st machine: Rs.1,250; Profit on sale of 2nd machine: Rs.625; Balance: Rs.9,600]
Q-25: On 01.01.2010 Sun Limited bought a machine costing Rs. 40,000 and spent
Diminishing Balance Method
Rs. 10,000 on its installation. On 01.07.2011 it purchases another machine costing
Q-19: On 1.1.2010 a company purchased a machinery costing Rs. 47,500 and spent
Rs. 30,000 having scrap value of Rs. 6,000. On 31.03.2012 it purchased third machine
Rs. 2,500 on its installations. After the useful life its scrap value is estimated to be Rs.
for Rs. 17,000 and spent Rs. 3,000 on its erection, having residual value of Rs. 1,000.
2000. Depreciation is charged under Diminishing Balance Method @ 10% p.a. Show
All the machines are subject to depreciation @ 10% p.a. under diminishing balance
Machinery account for first 3 years.
method on 31st December each year.
[Rs. 36,450]
Show Machinery account for the years upto 2012.
[Rs. 80,600 (1st- 36,450; 2nd- 25,650; 3rd- 18,500)]
Q-20: Sarvodaya Ltd. acquired a Machinery on 1.1.2010 costing Rs.27,000 and spent
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method on December 31st every year. You are required to show Machinery A/c for 3
CA. Naresh Aggarwal’s years.
ACADEMY of ACCOUNTS [Loss on sale: Rs.10,100; Balance: Rs.32,160]

Accounting • Costing • Taxation • Financial Management Q-31: On 1st May 2010, Sangeeta purchased a machinery costing Rs. 92,800 and
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] spent Rs. 27,200 on its installation and will have a scrap value of Rs. 9,000 . She
purchased another machine on 30th September 2010 for Rs. 40,000. On 1st January
2012 she sold the first machine for Rs. 73,000 and bought a new machinery for Rs.
Q-26: On 01.07.2010 Karishna bought a machine costing Rs. 10,000 and spent Rs.
50,000. Depreciation is charged on machine at the rate of 20% p.a. by reducing
5,000 on its erection . On 01.10.2010 it purchases another machine costing Rs. 40,000
instalment method on December 31st every year. You are required to show Machinery
having scrap value of Rs. 4,000. On 01.01.2012 it purchased third machine for Rs.
A/c for 3 years.
26,500 and spent Rs. 3,500 on its erection. All the machines are subject to 10%
[Loss on sale: Rs.10,200; Balance: Rs.64,320]
depreciation under written down value method on 31st March each year. Show
Machinery account for the years upto 31st March 2013.
Q-32: On 01.01.2010, M/s XYZ Ltd. purchased a second hand machinery for Rs.
[Rs. 68,343 (1st- 11,238; 2nd- 30,780; 3rd- 26,325)]
17,000 and spent on its repairs and installation Rs. 2,500 and Rs. 500 respectively.
On 01.07.2010, it purchased another Machinery for Rs. 8,000. On 30.09.2012 it sold
Q-27: On 01.07.2010 Kamal bought a machine costing Rs. 19,000 and spent Rs.5,000
the first Machinery for Rs. 18,000 and purchased a new machinery for Rs. 30,000 on

AoA
on its erection, estimated to realize Rs. 4,000 after its useful life. On 01.10.2010 he
the same day.
purchases another machine costing Rs. 40,000 having scrap value of Rs. 3,000. On
Depreciation is charged on machine at the rate of 5% p.a. by diminishing balance
01.01.2012 it purchased third machine for Rs. 20,500 and spent Rs. 3,500 on its
method on December 31st every year. You are required to show Machinery A/c for 3
erection. All the machines are subject to 10% depreciation under reducing balance
years.
method on 30th June each year. Show Machinery account for the years upto 30th
[Profit on sale: Rs.627; Balance: Rs.36,664]
June 2013.
[Rs. 67,986 (1st- 17,496; 2nd- 29,970; 3rd- 20,520)]
Q-33: On 01.01.2010, M/s Best Ltd. purchased a second hand machinery for Rs.
51,000 and spent on its repairs and installation Rs. 7,500 and Rs. 1,500 respectively.
Q-28: Raju purchased on 01.07.2010, a machine costing Rs. 17,000 and spent Rs.
On 01.07.2010, it purchased another Machinery for Rs. 24,000. On 30.09.2012 it sold
3,000 on its installation and erection. He purchased another machine on 01.04.2011
the first Machinery for Rs. 54,000 and purchased a new machinery for Rs. 90,000 on
for Rs. 30,000. On 30.06.2012 he sold the first machine for Rs. 14,500. Depreciation
the same day.
is charged on machine at the rate of 10% p.a. by written down value method on
Depreciation is charged on machine at the rate of 5% p.a. by diminishing balance
December 31st every year. You are required to show Machinery A/c upto 2013.
method on December 31st every year. You are required to show Machinery A/c for 3
[Loss on sale: Rs.1,745; Balance: Rs.22,477]
years.
[Profit on sale: Rs.1,881; Balance: Rs.1,09,992]
Q-29: Anita purchased on 01.04.2010, a machine costing Rs. 12,500 and spent Rs.
2,500 on its installation and erection. She purchased another machine on 30.09.2011
Q-34: A second hand machinery was purchased on 01.07.2010 for Rs. 44,000 and
for Rs. 20,000. On 30.06.2012 she sold the first machine for Rs. 11,000. Depreciation
Rs. 3,500 and Rs. 2,500 were spent on its repairs and installations. On 01.01.2011
is charged on machine at the rate of 10% p.a. by written down value method on
another machinery was purchased for Rs. 30,000. On 01.01.2012 the first machinery
December 31st every year. You are required to show Machinery A/c upto 2013.
having become obsolete was disposed off for Rs. 32,300 and on the same day a new
[Loss on sale: Rs.863; Balance: Rs.15,795]
machine was purchased for Rs. 25,000. On 31.03.2013 the second machine auctioned
for Rs. 28,700.
Q-30: On 1st May 2010, Ambani Ltd. purchased a machinery costing Rs. 54,400 and
Depreciation is charged on machine at the rate of 10% p.a. by diminishing balance
spent Rs. 5,600 on its installation and will have a scrap value of Rs. 2,000 . It purchased
method on December 31st every year. You are required to show Machinery A/c for
another machine on 30th September 2010 for Rs. 20,000. On 1st January 2012 it sold
years upto 2013.
the first machine for Rs. 31,500 and bought a new machinery for Rs. 25,000.
[Loss on sale of 1st machine: Rs.10,450; Profit on sale of 2nd machine: Rs.5008; Balance:
Depreciation is charged on machine at the rate of 20% p.a. by reducing instalment
Rs.20,250]
(19) (20)

December each year. Show Plant and Machinery Account upto 2013.
CA. Naresh Aggarwal’s [Loss on sale: Rs.1,397; Balance: Rs.19,683]
ACADEMY of ACCOUNTS Q-40: On 01.07.2010, Mahesh purchased plant and machinery costing Rs. 80,000.
Accounting • Costing • Taxation • Financial Management On 01.01.2011, he purchased another machine for Rs. 15,000 and spent Rs. 5,000 on
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] its erection and installation. On 30.06.2012 he sold a part of machinery for Rs. 18,000
which was purchased for Rs. 30,000 on 01.07.2010.
Depreciation is charged at the rate of 10% p.a. under diminishing balance method on
Q-35: A second hand machinery was purchased on 01.07.2010 for Rs.22,000 and 31st December each year. Show Plant and Machinery Account upto 2012.
Rs.1,750 and Rs.1,250 were spent on its repairs and installations. On 01.01.2011 [Loss on sale: Rs.6,367; Balance: Rs.54,675]
another machinery was purchased for Rs.15,000. On 01.01.2012 the first machinery
having become obsolete was disposed off for Rs.19,200 and on the same day a new Q-41: On 01.07.2010, Anamika purchased plant and machinery costing Rs.20,000.
machine was purchased for Rs.12,000. On 31.03.2013 the second machine auctioned On 01.01.2011, she purchased another machine for Rs.4,200 and spent Rs.800 on its
for Rs.13,850. erection and installation. On 30.06.2012 she sold a part of machinery for Rs.4,500
Depreciation is charged on machine at the rate of 10% p.a. by diminishing balance which was purchased for Rs.7,500 on 01.07.2010.
method on December 31st every year. You are required to show Machinery A/c for Depreciation is charged at the rate of 10% p.a. by written down value method on 31st
years upto 2013. December each year. Show Plant and Machinery Account upto 2012.

AoA
[Loss on sale of 1st machine: Rs.2,175; Profit on sale of 2nd machine: Rs.2,004; Balance: Rs.9,720] [Loss on sale: Rs.1,592; Balance: Rs.13,668]

Sale of a Part (Diminishing Balance Method) Sale of a Part (Straight Line Method)
Q-36: A company bought a machinery for Rs. 1,00,000 including a boiler worth Rs. Q-42: On 01.01.2010 Amit bought a machine costing Rs. 26,000 and spent Rs. 500
20,000. The Machinery Account had been credited at the rate of 10% p.a. each year on its freight and Rs. 3,500 on its installation. On 31.03.2012, 1/3 of the machine
by diminishing balance method. At the beginning of the 4th year, the boiler become become useless and disposed off for Rs. 6700.
useless and sold for Rs. 10,000. Show Machinery Account for four years. Depreciation is charged at the rate of 10% p.a. by Straight line method on 31st
[Loss on sale: Rs.4,580; Balance: Rs.52,488] December each year. Show Plant and Machinery Account upto 2013.
[Loss on sale: Rs.1,050; Balance: Rs.12,000]
Q-37: A company bought a machinery for Rs. 3,00,000 including a generator worth
Rs. 60,000. The Machinery Account had been credited at the rate of 10% p.a. each Q-43: On 01.01.2010 Atal purchased a machine costing Rs. 93,000 and spent Rs.
year by diminishing balance method. At the beginning of the 4th year, the generator 1,500 on its freight and Rs. 5,500 on its installation. On 30.06.2012, 1/4 of the machine
become useless and sold for Rs. 30,000. Show Machinery Account for four years. become useless and disposed off for Rs.16,000.
[Loss on sale: Rs.13,740; Balance: Rs.1,57,464] Depreciation is charged at the rate of 10% p.a. by Straight line method on 31st
December each year. Show Plant and Machinery Account upto 2013.
Q-38: Nakul bought a machine costing Rs. 56,000 on 01.01.2010 and spent Rs. 1,000 [Loss on sale: Rs.2,750; Balance: Rs.45,000]
on its freight and Rs. 3,000 on its installation. On 31.03.2012, 1/3 of the machine
become useless and disposed off for Rs. 13,500. Q-44: On 01.01.2010 Ram bought a machine costing Rs. 50,000. On 01.07.2012, a
Depreciation is charged at the rate of 10% p.a. by reducing instalment method on 31st part of the machine become useless and disposed off for Rs.13,000; its original cost
December each year. Show Plant and Machinery Account upto 2013. was Rs. 20,000 on 01.01.2010.
[Loss on sale: Rs.2,295; Balance: Rs.26,244] Depreciation is charged at the rate of 15% p.a. by Straight line method on 31st
December each year. Show Plant and Machinery Account upto 2012.
Q-39: Sehdev bought a machine costing Rs. 36,000 on 01.01.2010 and spent Rs. [Profit on sale: Rs.500; Balance: Rs.16,500]
1,000 on its freight and Rs. 3,000 on its installation. On 31.03.2012, 1/4 of the machine
become useless and disposed off for Rs. 6,500. Q-45: On 01.01.2010 Rajrani bought a machine costing Rs. 70,000. On 01.07.2012,
Depreciation is charged at the rate of 10% p.a. by reducing instalment method on 31st a part of the machine become useless and disposed off for Rs.19,000; its original cost
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CA. Naresh Aggarwal’s Depreciation is charged at the rate of 5% p.a. by Straight Line Method on 31st December
each year. Show Furniture Account and Provision for Depreciation A/c for first 3
ACADEMY of ACCOUNTS years.
Accounting • Costing • Taxation • Financial Management [Machine A/c- Rs.35,000; Prov. for Dep. A/c- Rs.4,000]

West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

Q-50: Anjali purchased on 01.07.2010, a machine costing Rs.17,000 and spent
Rs.3,000 on its installation and erection. She purchased another machine on 01.04.2011
was Rs. 30,000 on 01.01.2010.
for Rs.12,000. On 30.06.2012 she sold the first machine for Rs.14,500. Depreciation
Depreciation is charged at the rate of 15% p.a. by Straight line method on 31st
is charged on machine at the rate of 10% p.a. by original cost method on December
December each year. Show Plant and Machinery Account upto 2012.
31st every year. You are required to show Machinery A/c and Provision for
[Profit on sale: Rs.250; Balance: Rs.22,000]
Depreciation A/c upto year 2013.
[Loss on sale: Rs.1,500; Machine A/c: Rs.12,000; Prov. for Dep. A/c: Rs.3,300]
Asset purchased on installments
Q-46: Ram purchased on 1.7.2010 a Machine on hire purchase from Laxman. The
Q-51: Neha purchased on 01.04.2010, a machine costing Rs.13,500 and spent
payment schedule was decided as follows:
Rs.2,500 on its installation and erection. She purchased another machine on 30.09.2011
Down payment on 01.07.2010 - Rs. 9,000
for Rs.24,000. On 30.06.2012 she sold the first machine for Rs.10,000. Depreciation
1st Instalment on 30.06.2011 - Rs. 8,000 (including interest Rs. 1,000)

AoA
is charged on machine at the rate of 10% p.a. by original cost method on December
2nd Instalment on 30.06.2012 - Rs. 7,800 (including interest Rs. 800)
31st every year. You are required to show Machinery A/c and Provision for Depreciation
3rd Instalment on 30.06.2013 - Rs. 7,500 (including interest Rs. 500)
A/c upto yea 2013.
Depreciation is charged at the rate of 20% p.a. by Straight Line Method on 31st
[Loss on sale: Rs.2,400; Machine A/c: Rs.24,000; Prov. for Dep. A/c: Rs.5,400]
December each year. Show Machinery Account for first 3 years.
[Rs. 15,000]
Preparation of Disposal Account
Q-52: On 01.01.2010, M/s ABC Ltd. purchased a second hand machinery for Rs.
Q-47: Seeta purchased on 1.7.2010 a Machine on hire purchase from Geeta. The
17,000 and spent on its repairs and installation Rs. 2,500 and Rs. 500 respectively.
payment schedule was decided as follows:
On 01.07.2010, it purchased another Machinery for Rs. 8,000. On 30.09.2012 it sold
Down payment on 01.07.2010 - Rs. 20,000
the first Machinery for Rs. 17,800 and purchased a new machinery for Rs. 30,000 on
1st Instalment on 30.06.2011 - Rs. 11,500 (including interest Rs. 1,500)
the same day.
2nd Instalment on 30.06.2012 - Rs. 11,000 (including interest Rs. 1,000)
Depreciation is charged on machine at the rate of 5% p.a. by fixed instalment method
3rd Instalment on 30.06.2013 - Rs. 10,500 (including interest Rs. 500)
on December 31st every year. You are required to show Machinery A/c, Machine
Depreciation is charged at the rate of 10% p.a. by Straight Line Method on 31st
Disposal A/c and Provision for Depreciation A/c for 3 years.
December each year. Show Machinery Account for first 3 years.
[Profit on sale: Rs.550; Machine A/c: Rs.38,000; Prov. for Dep. A/c: Rs.1,375]
[Rs. 37,500]

Q-53: On 01.01.2010, M/s Sunder Ltd. purchased a second hand machinery for
Preparation of Provision for Depreciation (SLM)
Rs.51,000 and spent on its repairs and installation Rs.7,500 and Rs.1,500 respectively.
Q-48: Rich Enterprises bought a Plant and Machinery on 1.7.2010 for Rs. 43,000
On 01.07.2010, it purchased another Machinery for Rs.24,000. On 30.09.2012 it sold
which will fetch at Rs. 3,000 after its useful life. On 1.1.2011 it purchases another
the first Machinery for Rs.53,400 and purchased a new machinery for Rs.90,000 on
machine for Rs. 30,000. Depreciation is charged @ 10% p.a. under Fixed Instalment
the same day.
Method and accounts are closed on 31st December each year. Show Plant and
Depreciation is charged on machine at the rate of 5% p.a. by fixed instalment method
Machine A/c and Provision for Depreciation A/c for first 3 years.
on December 31st every year. You are required to show Machinery A/c, Machine
[Machine A/c- Rs.73,000; Prov. for Dep. A/c- Rs. 16,000]
Disposal A/c and Provision for Depreciation A/c for 3 years.
[Profit on sale: Rs.1,650; Machine A/c: Rs.,1,14,000; Prov. for Dep. A/c: Rs.4,125]
Q-49: Amar Singh purchased on 1.4.2010 furniture costing Rs. 19,500 and spent Rs.
500 on its cartage. On 30.4.2011 he purchased another furniture for Rs. 15,000.
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CA. Naresh Aggarwal’s Preparation of Provision for Depreciation (DBM)

ACADEMY of ACCOUNTS Q-58: Diamond Ltd. bought a Plant and Machinery on 1.7.2010 for Rs.40,000. On
1.1.2011 it purchases another machine for Rs.30,000. Depreciation is charged @
Accounting • Costing • Taxation • Financial Management 10% p.a. under Diminishing Balance Method and accounts are closed on 31st December
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] each year. Show Plant and Machine A/c and Provision for Depreciation A/c for first 3
years.
Q-54: On 1st May 2010, Alfa Ltd. purchased a machinery costing Rs.26,400 and [Machine A/c- Rs.70,000; Prov. for Dep. A/c- Rs.14,920]
spent Rs.5,600 on its installation and will have a scrap value of Rs.2,000. It purchased
another machine on 30th September 2010 for Rs.20,000. On 1st January 2012 it sold Q-59: Surender Singh purchased on 1.4.2010 furniture costing Rs.19,200 and spent
the first machine for Rs.14,000 and bought a new machinery for Rs.15,000. Depreciation Rs.800 on its cartage. On 30.6.2011 he purchased another furniture for Rs.15,000.
is charged on machine at the rate of 20% p.a. by fixed instalment method on December Depreciation is charged at the rate of 10% p.a. by Diminishing Balance Method on
31st every year. Show Machinery A/c, Provision for Depreciation A/c and Machine 31st December each year. Show Furniture Account and Provision for Depreciation A/
Disposal A/c for 3 years. c for first 3 years.
[Loss on sale: Rs.8,000; Machine A/c: Rs.35,000; Prov. for Dep. A/c: Rs.12,000] [Machine A/c- Rs.35,000; Prov. for Dep. A/c- Rs.7,190]

Q-55: On 1st May 2010, Beeta Ltd. purchased a machinery costing Rs.53,800 and Q-60: Anita purchased on 01.07.2010, a machine costing Rs.17,000 and spent

AoA
spent Rs.10,200 on its installation and will have a scrap value of Rs.4,000. It purchased Rs.3,000 on its installation and erection. She purchased another machine on 01.04.2011
another machine on 30th September 2010 for Rs.40,000. On 1st January 2012 it sold for Rs.12,000. On 30.06.2012 she sold the first machine for Rs.13,000. Depreciation
the first machine for Rs.28,000 and bought a new machinery for Rs.30,000. Depreciation is charged on machine at the rate of 10% p.a. by Diminishing Balance Method on
is charged on machine at the rate of 20% p.a. by fixed instalment method on December December 31st every year. You are required to show Machinery A/c and Provision
31st every year. Show Machinery A/c, Machine Disposal A/c and Provision for for Depreciation A/c upto year 2013.
Depreciation A/c for 3 years. [Loss on sale: Rs.3,245; Machine A/c: Rs.12,000; Prov. for Dep. A/c: Rs.3,009]
[Loss on sale: Rs.16,000; Machine A/c: Rs.70,000; Prov. for Dep. A/c: Rs.24,000]
Q-61: Sonia purchased on 01.04.2010, a machine costing Rs.13,500 and spent
Q-56: A company which charges depreciation @ 10% p.a. by straight line method Rs.2,500 on its installation and erection. She purchased another machine on 30.09.2010
had the following balances on 01.01.2010 for Rs.24,000. On 30.06.2012 she sold the first machine for Rs.10,000. Depreciation
Machinery A/c : Rs.80,000 is charged on machine at the rate of 10% p.a. by Diminishing Balance method on
Provision for Depreciation A/c : Rs.25,000 December 31st every year. You are required to show Machinery A/c and Provision
On 01.01.2010 the company sold a part of the machine costing Rs.15,000 and for Depreciation A/c upto yea 2013.
accumulated depreciation Rs.5,000 for Rs.7,000. On the same day it purchased another [Loss on sale: Rs.2,654; Machine A/c: Rs.24,000; Prov. for Dep. A/c: Rs.6,941]
machinery for Rs.35,000
Show Machinery A/c and Provision for Depreciation A/c for the year 2010.
[Loss on sale: Rs.3,000; Machine A/c: Rs.1,00,000; Prov. for Dep. A/c: Rs.30,000] Theoretical Questions
Q-57: A company which charges depreciation @ 20% p.a. by straight line method 1. What is Depreciation? Why is it charged?
had the following balances on 01.01.2010 2. What are the causes of Depreciation?
Machinery A/c : Rs.20,000 3. Distinguish between Straight Line Method and Diminishing Balance Method.
Provision for Depreciation A/c : Rs.5,000 4. What do you mean by Reserves and Provisions?
On 01.01.2010 the company sold a part of the machine costing Rs.8,000 and 5. Distinguish between Reserves and Provisions.
accumulated depreciation Rs.2,000 for Rs.4,500. On the same day it purchased another 6. Distinguish between Capital Reserves and Revenue Reserves.
machinery for Rs.35,000
Show Machinery A/c and Provision for Depreciation A/c for the year 2010. ••••••••••••••••••••••
[Loss on sale: Rs.1,500; Machine A/c: Rs.47,000; Prov. for Dep. A/c: Rs.12,400]
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CA. Naresh Aggarwal’s

Hints for Depreciation
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
Journal Entries
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
When Asset is purchased : When Asset is Sold :
Asset’s Name A/c (Cost + Expense) Dr. Cash / Bank A/c Dr.
To Cash / Bank A/c To Asset’s Name A/c

When Depreciation is charged : For Profit on Sale of Asset :

Depreciation A/c Dr. Asset’s Name A/c Dr.
To Asset’s Name A/c To Profit on Sale of Asset A/c

If Provision for Depreciation is created : For Loss on Sale of Asset :

Profit & Loss A/c Dr. Loss on Sale of Asset A/c Dr.
To Depreciation A/c To Asset’s Name A/c

AoA
Depreciation A/c Dr.
To Provision for Depreciation A/c

Calculation of Annual Depreciation

Straight Line Method / Original Cost Method / Fixed Instalment Method :

Cost + Expense on Purchase/Installation - Scrap Value

No. of Years of Life of the Asset

or

(Cost + Expense on Purchase/Installation - Scrap Value) x Rate

100

Diminishing Balance Method / Written Down Value Method /

Reducing Instalment Method :

Opening Balance of Each Year x Rate

100
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

For Eenquiries
Call or whatsapp: 8800215448

AoA
(Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)

Email: [Link]@[Link]
Final Accounts Website: [Link]

Watch us on

[Link]
(1) (2)

CA. Naresh Aggarwal’s Trial Balance

ACADEMY of ACCOUNTS Particulars

(as on 31.12.2012)
Dr. Amt. Cr. Amt.
Accounting • Costing • Taxation • Financial Management
Stock (01-01-2012) .................................................. 10,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Cash in Hand .................................................. 8,400
Creditors .................................................. 15,000
Furniture & Fittings .................................................. 20,000
Final Accounts Loan .................................................. 18,000
(Without Adjustments) Debtors .................................................. 14,000
Capital .................................................. 1,17,500
Q-1 : From the following Trial Balance, prepare Trading A/c, Profit & Loss A/c and Drawings .................................................. 10,000
Balance Sheet as on that date. Purchases .................................................. 85,000
Trial Balance Return Outwards .................................................. 2,500
(as on 31.12.2010) Sales .................................................. 1,60,000
Return Inwards .................................................. 5,000
Particulars Dr. Amt. Cr. Amt. Investments .................................................. 14,500
Stock on 01.01.2012 .................................................. 50,000 Wages .................................................. 11,000

AoA
Bills Payable .................................................. 4,400 Salaries .................................................. 5,000
Cash in Hand .................................................. 5,200 Carriage .................................................. 8,500
Creditors .................................................. 50,000 Power .................................................. 5,900
Furniture & Fixture .................................................. 7,500 Electricity .................................................. 4,500
Loan .................................................. 40,000 Building .................................................. 48,000
Debtors .................................................. 80,100 Discount Allowed .................................................. 1,500
Capital .................................................. 1,04,300 Discount Received .................................................. 800
Purchases .................................................. 70,000 Plant and Machinery .................................................. 25,000
Return Outward .................................................. 2,500 Bills Receivable .................................................. 6,000
Sales .................................................. 1,40,000 Bills Payable .................................................. 4,500
Return Inward .................................................. 4,000 3,00,300 3,00,300
Cash at Bank .................................................. 4,200
Wages .................................................. 15,000 Closing stock valued at Rs.15,000.
Salaries .................................................. 5,000 [Gross Profit: Rs. 52,100; Net Profit: Rs. 41,900; Balance Sheet: Rs. 1,68,900]
Carriage Inward .................................................. 8,000
Carriage Outward .................................................. 6,000 Q-3 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
Power .................................................. 5,700 Balance Sheet.
Electricity .................................................. 4,500 Trial Balance
Building .................................................. 40,000 (as on 31.12.2012)
Plant and Machinery .................................................. 20,000
Particulars Dr. Amt. Cr. Amt.
Bills Receivable .................................................. 6,000
Drawings .................................................. 10,000 Cash .................................................. 8,400
3,41,200 3,41,200 Bank .................................................. 4,500
Capital .................................................. 1,06,900
Closing stock valued at Rs.28,000. Creditors .................................................. 7,000
[Gross Profit: Rs. 17,800; Net Profit: Rs. 2,300; Balance Sheet: Rs. 1,91,000] Furniture & Fittings .................................................. 20,000
Bank Loan .................................................. 14,000
Q-2 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and Debtors .................................................. 16,000
Balance Sheet. Stock .................................................. 10,000
(3) (4)

Cash in Hand .................................................. 3,000

CA. Naresh Aggarwal’s Wages .................................................. 7,500

ACADEMY of ACCOUNTS Loan

Debtors
..................................................
.................................................. 14,700
6,000

Accounting • Costing • Taxation • Financial Management Rent .................................................. 3,500

Stock .................................................. 6,500
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Commission .................................................. 850
Cartage In .................................................. 1,200
Drawings .................................................. 5,000 Cartage Out .................................................. 950
Purchases .................................................. 85,000 Factory Rent .................................................. 5,000
Purchases Return .................................................. 2,500 Factory Lighting .................................................. 3,200
Sales .................................................. 1,45,000 Office Lighting .................................................. 2,800
Sales Return .................................................. 5,000 Water & Gas .................................................. 1,500
Investments .................................................. 14,500 Electricity .................................................. 1,200
Wages .................................................. 11,000 Excise Duty .................................................. 4,650
Commission .................................................. 5,000 Octroi .................................................. 500
Freight In .................................................. 3,500 Postage & Telegram .................................................. 750
Freight Out .................................................. 2,800 Telephone Charges .................................................. 1,900
Factory Rent .................................................. 3,700 Bad Debts .................................................. 1,700

AoA
Office Rent .................................................. 2,600 Trade Expenses .................................................. 1,600
Coal and Gas .................................................. 5,900 Brokerage .................................................. 1,000
Electricity .................................................. 4,500 Legal Charges .................................................. 1,700
Postage & Telegram .................................................. 650 Bad Debts Recovered .................................................. 580
Telephone Charges .................................................. 1,350 Building .................................................. 60,000
Bad Debts .................................................. 800 Discount .................................................. 1,200 750
Bad Debts Recovered .................................................. 500 Plant and Machinery .................................................. 20,000
Building .................................................. 48,000
2,68,450 2,68,450
Discount .................................................. 1,800 2,100
Plant and Machinery .................................................. 28,000 Closing stock valued at Rs.7,500.
2,83,000 2,83,000 [Gross Profit: Rs. 25,400; Net Profit: Rs. 14,580; Balance Sheet: Rs. 1,19,200]

Closing stock valued at Rs.12,000. Q-5 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
[Gross Profit: Rs. 35,400; Net Profit: Rs. 28,500; Balance Sheet: Rs. 1,51,400] Balance Sheet.
Trial Balance
Q-4 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
(as on 31.12.2012)
Balance Sheet.
Trial Balance Debit Balances Rs. Credit Balances Rs.
(as on 31.12.2012)
Opening Stock 30,000 Bills Payable 3,400
Particulars Dr. Amt. Cr. Amt.
Cash in Hand 1,200 Creditors 60,200
Bank .................................................. 6,000 Furniture & Fixture 7,500 Loan 40,000
Capital .................................................. 1,22,120 Debtors 80,100 Capital 1,52,000
Creditors .................................................. 10,500 Purchases 75,000 Sales 1,20,000
Furniture .................................................. 8,000 Sales Return 7,000 Purchases Return 2,000
Drawings .................................................. 34,000
Cash at Bank 4,800 Sales Tax 10,000
Purchases .................................................. 75,000
Sales .................................................. 1,25000 Wages 12,000
Sales Return .................................................. 2,050 Salaries 15,000
Carriage Inward 5,000
(5) (6)

Closing stock valued at Rs.15,000.

CA. Naresh Aggarwal’s [Gross Profit: Rs. 57,500; Net Profit: Rs. 37,400; Balance Sheet: Rs. 1,72,000]
ACADEMY of ACCOUNTS Q-7 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
Accounting • Costing • Taxation • Financial Management Balance Sheet.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Trial Balance
(as on 31.12.2012)
Carriage Outward 8,000
Debit Balances Rs. Credit Balances Rs.
Power 3,500
Electricity 2,000 Purchases 84,000 Discount Received 500
Building 50,000 Discount Allowed 1,350 Sundry Creditors 20,000
Plant and Machinery 60,000 Stock (01-01-2012) 13,500 Capital 1,44,900
Drawings 22,000 Salaries 7,400 Sales 1,27,000
Bills Receivable 4,000 Plant and Machinery 70,000 Purchases Returns 1,200
Interest on Loan 500 Bank Charges 850 Bills Payable 5,000
Sundry Debtors 32,000 Rent 8,000
3,87,600 3,87,600
Loan 10,000 Interest 300

AoA
Closing stock valued at Rs.62,000. General Expenses 14,000 Commission 1,700
[Gross Profit: Rs. 51,500; Net Profit: Rs. 26,000; Balance Sheet: Rs. 2,69,600] Wages 20,000
Packing Matarial 2,500
Q-6 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and Investments 12,000
Balance Sheet. Freight 3,200
Trial Balance Conveyance 2,600
(as on 31.12.2012) Rent, Rates and Taxes 2,400
Advertisements 3,800
Debit Balances Rs. Credit Balances Rs.
Dock Charges 1,300
Opening Stock 3,500 Capital 1,24,600 Octroi 1,400
Salaries 7,000 Sales 1,27,000 Cash at Bank 2,300
Plant and Machinery 90,000 Purchases Returns 1,200 Drawings 20,000
Purchases 60,000 Discount Received 500 Fixed Deposits 4,000
Discount Allowed 350 Sundry Creditors 20,000
3,08,600 3,08,600
Bank Charges 150 Bills Payable 5,000
Sundry Debtors 45,000 Interest 300 Closing stock valued at Rs.5,500.
General Expenses 7,000 [Gross Profit: Rs. 7,800; Net Loss: Rs. 14,100; Balance Sheet: Rs. 1,35,800]
Wages 20,000
Investments 15,000 Q-8 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
Freight In 2,200 Balance Sheet.
Freight Out 1,400 Trial Balance
Rent, Rates and Taxes 2,000 (as on 31.12.2012)
Advertisements 3,000
Debit Balances Rs. Credit Balances Rs.
Cash at Bank 7,000
Drawings 15,000 Stock 12,600 Bills Payable 13,500
Cash 10,200 Creditors 25,000
2,78,600 2,78,600
Furniture & Fixture 16,500 Loan 40,000
(7) (8)

Bank Charges 2,850 Bills Payable 5,000

CA. Naresh Aggarwal’s Sundry Debtors 32,000 Rent 6,000
ACADEMY of ACCOUNTS Loan
General Expenses
15,000
12,000
Interest
Commission
1,300
2,700
Accounting • Costing • Taxation • Financial Management Advertisements 3,800
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Dock Charges 1,300
Octroi 5,400
Cash at Bank 2,300
Debtors 40,500 Capital 1,84,150
Drawings 25,000
Purchases 95,600 Sales 1,15,000
Fixed Deposits 4,000
Returns Inward 4,500 Returns Outward 2,000
Wages 16,000
Cash at Bank 6,800 Brokerage 1,400
Packing Matarial 3,500
Wages 11,000 Discount 900
Investments 7,000
Salaries 18,000
Freight 2,200
Carriage 3,500
Conveyance 1,600
Power 4,800
Rent, Rates and Taxes 3,400
Commission 750
Sales Tax 6,000

AoA
Audit Fees 1,500
General Expenses 2,300 3,19,600 3,19,600
Depreciation 2,500
Closing stock valued at Rs.5,500.
Repairs 3,400
[Gross Profit: Rs. 7,800; Net Loss: Rs. 20,100; Balance Sheet: Rs. 1,35,800]
Electricity 2,000
Building 55,000
Plant and Machinery 40,000
Bills Receivable 14,000
Interest on Loan 1,500
Sales Tax 10,000 •••••••••••••••••••••••••
Drawings 25,000

3,81,950 3,81,950
Closing stock valued at Rs.12,000.
[Gross Loss: Rs. 3,000; Net Loss: Rs. 42,650; Balance Sheet: Rs. 1,95,000]

Q-9 : From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
Balance Sheet.
Trial Balance
(as on 31.12.2012)

Debit Balances Rs. Credit Balances Rs.

Purchases 74,000 Discount Received 500
Discount Allowed 2,350 Sundry Creditors 20,000
Stock (01-01-2012) 13,500 Capital 1,55,900
Salaries 6,400 Sales 1,17,000
Plant and Machinery 70,000 Purchases Returns 1,200
(9) (10)

Q-3: Sohan’s books show the following balances. You are asked to prepare his Trading
CA. Naresh Aggarwal’s and Profit and Loss A/c and Balance Sheet from the following information:
Final of
ACADEMY Accounts
ACCOUNTS Dr. Balances: Rs. Dr. Balances (Contd.) Rs.
(With Adjustments) Stock 12,000 Office Expenses 950
Accounting • Costing • Taxation • Financial Management Purchases 25,500 Interest 250
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Carriage Inward 650 Bills Receivable 2,800
Q-1 : From the following Trial Balance of Ravinder as on December 31 2012, prepare Carriage Outward 800 Legal Charges 1,700
Trading and Profit and Loss Account and a Balance Sheet : Wages 4,700 Plant and Machinery 14,000
Cr. Balances Rs. Dr. Balances (Contd.) Rs. Motive Power 4,500 Tools 5,000
Capital 38,000 Bad Debts 450 Lighting 600 Cr. Balances
Creditors 8,500 Interest 300 Printing and Stationery 2,600 Sales 38,500
Bills Payable 2,000 Insurance 600 Sundry Debtors 24,000 Reserve Fund 1,200
Sales 95,000 Machinery 12,000 Furniture and Fixtures 6,000 Loan 10,000
Loan 15,000 Stock (1-1-2012) 5,000 Investments 5,000 Discount 750
Dr. Balances Purchases 58,000 Freehold Premises 12,000 Sundry Creditors 7,600
Debtors 4,500 Wages 4,500 Travelling Expenses 650 Capital A/c 65,650
Salaries 4,200 Buildings 18,000 Adjustments:

AoA
Discount 700 Fixtures & Fittings 10,000 Depreciate Furniture and Fixtures 10%, Plant and Machinery 20%. Tools were valued
Postage 250 Land 40,000 at Rs.4,000. Outstanding for Power was Rs. 500 and for Lighting Rs.400. Stock in
Charge depreciation on Machinery 10% and on Buildings 5%. Outstanding Salaries hand was Rs.15,000.
and wages were Rs. 300 and Rs. 500 respectively. Stock on 31-12-2012, were Rs. [Gross Profit: Rs. 5,650; Net Loss: Rs. 5,950; Balance Sheet: Rs.79,400]
8,000
[Gross Profit: Rs. 35,000; Net Profit: Rs. 26,100; Balance Sheet: Rs.90,400] Q-4: The following are the balances extracted from the books of Shankar on 31st
December, 2012:
Q-2 : From the following balances of Mr. Rampal, prepare Trading and Profit and Debit Balances : Rs. Debit Balances (Contd.) Rs.
Loss Account and the Balance Sheet as on 31st December 2012. Furniture and Fittings 7,000 Discounts 1,700
Credit Balances : Rs. Debit Balances (Contd.) Rs. Business Premises 15,000 General Expenses 3,000
Capital 17,950 Cash and Bank 2,000 Stock at beginning 7,000 Salaries and Wages 8,500
Sundry Creditors 3,500 Drawings 2,500 Debtors 20,000 Credit Balances :
Sales 14,300 Purchases 7,400 Purchases 40,800 Capital 38,300
Bills Payable 2,200 Bad Debts 300 Taxes and Insurance 2,400 Commission 1,200
Debit Balances : Printing & Stationery 400 Bad Debts written off 1,400 Creditors 8,800
Salaries 1,500 Manufacturing Expenses 750 Drawings 6,000 Discount 900
Plant and Machinery 10,000 Repairs 250 Sales Return 2,500 Bank Overdraft 3,500
Furniture 5,000 Stock 1,100 Stationery 1,000 Sales 62,200
Sundry Debtors 4,200 Rent 600 Carriage on Purchases 1,100 Rent from Tenants 2,500
Wages 1,800 Carriage 150 Depreciate Furniture by 10%. Outstanding Salaries were Rs.500. Interest due on
The Closing Stock was Rs.4,800. Depreciate Plant and Machinery by 10% and overdraft amounted to Rs.200. Commission due but not received Rs.300. Closing
Furniture by 15%. Unpaid rent amounted to Rs.100 and Outstanding Wages were stock valued at Rs.8,000.
Rs.200. Salaries due but not paid Rs.400. Prepare Trading and Profit and Loss Account for the year and a Balance Sheet as on
[Gross Profit: Rs. 7,700; Net Profit: Rs. 2,400; Balance Sheet: Rs.24,250] that date.
[Gross Profit: Rs. 18,800; Net Profit: Rs. 4,300; Balance Sheet: Rs.49,600]
(11) (12)

CA. Naresh Aggarwal’s Cash at Bank 1,200 Bills Payable 1,500

Cash in Hand 800 Purchases Returns 1,000
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management Value of stock in hand on 31st December 2012 was Rs.6,000. Provide or depreciation
on Buildings at 5%. Outstanding Commission and Fees were Rs.100 and Rs.50
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] respectively. Salaries due but not paid amounted to Rs.300.
[Gross Profit: Rs. 6,600; Net Profit: Rs. 4,150; Balance Sheet: Rs. 21,450]
Q-5 : Prepare Trading and Profit & Loss Account and Balance Sheet from the following
balances, relating to the year ending 31st March, 2012 Q-7 : The following Trial Balance has been extracted from the books of Accounts on
Cr. Balances: Rs. Dr. Balances (Contd.) Rs. 31st December 2012.
Capital 17,200 Wages and Salaries 3,200 Debit Balances Rs. Credit Balances Rs.
Creditors 2,000 Bank 4,400
Sales 24,200 Stock (1-4-2011) 1,200 Machinery 15,000 Capital 26,300
Bills Payable 1,500 Repairs 150 Cash at Bank 3,200 Sales 18,000
Rent 1,400 Sales Returns 700 Cash in hand 1,500 Sundry Creditors 5,500
Purchase Returns 500 Furniture 5,000 Wages 4,000 Interest 800

AoA
Commission 2,000 Fuel and Power 500 Purchases 8,700 Rent 450
Dr. Balances : Audit Fees 900 Stock on 1st Jan. 2012 3,000 Commission 250
Plant and Machinery 8,000 Manufacturing Expenses 1,500 Sundry Debtors 4,800 Purchases Returns 500
Sundry Debtors 3,000 Trade Expenses 1,700 Bills Receivable 1,200
Drawings 2,500 Bad Debts 300 General Expenses 1,800
Purchases 15,500 Carriage 250 Salaries 2,500
Adjustments : Royalty on Production 800
(a) The closing stock was valued at Rs.2,900. Carriage 300
(b) Depreciate Plant and Machinery by Rs.1,000 and Furniture by Rs.500. Drawings 5,000
(c) A sum of Rs.50 is due for repairs. 51,800 51,800
(d) Outstanding Manufacturing Expenses were Rs.300.
(e) Rent and Commission due but not received Rs.200 and Rs.400 respectively. Depreciate Machinery at 10 percent. Rent due but not received amounts to Rs.100.
[Gross Profit: Rs. 4,450; Net Profit: Rs. 3,850; Balance Sheet: Rs.22,400] Commission outstanding Rs.50 and accrued interest was Rs.200. Stock on 31.12.2012
amounts to Rs.1,500. Prepaid wages are Rs.400 and Salaries paid in advance Rs.300.
Q-6 : From the following Trial Balance, prepare a Trading and Profit & Loss Account Prepare Trading and Profit and Loss Account for the year ending 31st December,
for the year ended 31st December 2012 and also draw the Balance Sheet as on that 2012 and Balance Sheet as on the last date of the year.
date. [Gross Profit: Rs. 3,600; Net Loss: Rs. 50; Balance Sheet: Rs. 26,750]
Dr. Balances : Rs. Dr. Balances (Contd.) Rs.
Stock 4,500 Sundry Debtors 2,000 Q-8 : From the following Trial Balance of Satender as on December 31 2012, prepare
Purchases 15,550 Carriage and Freight 750 Trading and Profit and Loss Account and a Balance Sheet :
Building 10,000 Insurance 200 Cr. Balances Rs. Dr. Balances (Contd.) Rs.
Packing Material 850 Cr. Balances : Capital 48,000 Bad Debts 450
Salaries 1,650 Capital 14,400 Creditors 7,500 Interest 300
Sales Returns 250 Fees 300 Bills Payable 3,000 Insurance 600
Bills Receivable 1,800 Sundry Creditors 1,100 Sales 90,000 Machinery 12,000
General Expenses 350 Commission 900 Loan 10,000 Stock (1-1-2012) 5,000
Rent and Taxes 800 Sales 21,500
(13) (14)

(a) Depreciate Land and Buildings by 5% and Motor Vehicles by 15%.

CA. Naresh Aggarwal’s (b) Salaries paid in advance Rs.400.
ACADEMY of ACCOUNTS (c)
(d)
Prepaid Insurance Rs.200.
Rent received in advance Rs.500.
Accounting • Costing • Taxation • Financial Management (e) Unearned / Advance commission was Rs.900
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (f) Stock on 31st December, 2012 was valued at Rs.17,000.
[Gross Profit: Rs. 19,600; Net Profit: Rs. 10,500; Balance Sheet: Rs. 81,300]
Dr. Balances Purchases 58,000
Debtors 4,500 Wages 4,500 Q-10: Sohan’s books show the following balances. You are asked to prepare his
Salaries 4,200 Buildings 18,000 Trading and Profit and Loss A/c and Balance Sheet from the following information:
Discount 700 Furniture 10,000 Dr. Balances: Rs. Dr. Balances (Contd.) Rs.
Postage 250 Land 40,000 Stock 12,000 Office Expenses 950
Depreciate Machinery and Furniture by 10%. Accrued interest on loan is amounted to Purchases 25,500 Interest 850
Rs.200. Stock on 31.12.2012 amounts to Rs.2,500. Prepaid wages are Rs.500; Carriage Inward 650 Bills Receivable 2,800
Salaries paid in advance Rs.1,200 and unexpired Insurance is Rs.100. Carriage Outward 800 Legal Charges 1,700
[Gross Profit: Rs.25,500; Net Profit: Rs.17,900; Balance Sheet: Rs.86,600] Wages 4,700 Plant and Machinery 14,000
Motive Power 4,500 Tools 5,000

AoA
Q-9 : On 31st December, 2012 the following trial balance was extracted from the Travelling Expenses 650 Cr. Balances :
books of Sudershan: Printing and Stationery 2,600 Sales 38,500
Sundry Debtors 24,000 Reserve Fund 1,200
Debit Balances: Rs. Credit Balances: Rs. Furniture and Fixtures 6,000 Loan 10,000
Drawings 7,000 Capital 42,400 Patents & Copyrights 5,000 Fees 750
Debtors 15,000 Creditors 9,000 Leasehold Premises 12,000 Sundry Creditors 7,600
Interest on Loan 450 Loan 19,000 Capital A/c 65,650
Cash 3,500 Commission 3,400 Write off Patents & Copyrights by 20%. Tools were valued at Rs.4,000. Stock in hand
Stock (1-1-2012) 7,000 Sales 64,000 was Rs.15,000. Prepaid for Wages and Interest were Rs.700 and Rs.350 respectively.
Motor Vehicles 22,000 Purchase Returns 2,000 Fees received in Advance Rs.150. O/s audit fees was Rs.1,200.
Bank 4,500 Discount 850 [Gross Profit: Rs. 6,850; Net Loss: Rs. 2,950; Balance Sheet: Rs. 82,850]
Land and Buildings 20,000 B/P 6,000
Bad Debts 1,500 Rent Received 1,400 Q-11: The following trial balance was extracted from the books of Rosy as on 31st
Purchases 48,000 December 2012 :
Sales Returns 5,000 Debit Balances: Rs. Credit Balances: Rs.
Carriage Outward 1,500
Carriage Inward 3,400 Drawings 5,000 Capital 70,000
Rent and Insurance 2,200 Purchases 50,200 Purchases Returns 1,600
Advertising 1,600 Sales Returns 1,800 Sales 74,400
Salaries & Wages 2,400 Stock on 01.01.2012 4,400 Bad Debts Recovered 1,100
B/R 3,000 Salaries 6,800 Discount 600
Wages 8,200 10% Loan (On 1.1.2012) 12,000
1,48,050 1,48,050 Leasehold Premises 20,000
Prepare Trading Account and Profit and Loss Accounts for the year ended 31st Rent, Rates and Insurance 6,400
December 2012 and Balance Sheet as on that date after taking into account the Carriage Inwards 2,800
following: Plant & Machinery 12,000
Gas & Water 4,900
(15) (16)

CA. Naresh Aggarwal’s Sundry Debtors 15,000

ACADEMY of ACCOUNTS Interest 1,000

Accounting • Costing • Taxation • Financial Management 1,95,000 1,95,000

West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Taking into account the following adjustments prepare Trading and Profit & Loss
Account and the Balance Sheet :
(a) Stock in hand on 31st December 2012 is Rs. 13,500.
Sundry Debtors 18,000 (b) Machinery is to be depreciated @ 10% and patents @ 20%.
Cash at Bank 12,000 (c) Salaries are paid for 9 months while wages are paid as 2 month in advance.
Office furniture 4,500 (d) Insurance include a premium of Rs. 200 for 2013.
Interest on Loan 900 (e) Allow interest on capital @10%
Bad Debts 1,800 (f) Advances Commission amounted to Rs. 300.
[Gross Profit: Rs.33,100; Net Loss: Rs.15,100; Balance Sheet: Rs.96,700 or Rs.97,100]
1,59,700 1,59,700
Prepare a Trading and Profit & Loss Account for the year ended 31st December and Q-13: Prepare Trading and Profit & Loss Account and Balance Sheet from the following
a Balance Sheet as at that date after taking into account the following: balances, relating to the year ending 31st December 2012 :

AoA
(a) Depreciation is to be written off as follows Leasehold premises 5%, Plant & Cr. Balances: Rs. Dr. Balances (Contd.) Rs.
Machinery 10%. Capital 21,250 Wages 3,200
(b) Wages amounting to Rs.700 has become due but had not been paid. 8% Bank Loan (1.7.2009) 10,000 Bank 4,400
(c) The value of stock on 31st December 2012 was Rs.17,500. Sales 24,200 Stock (01.01.2012) 1,200
(d) Unexpired Insurance amounting to Rs.600 is to be carried forward to the next Bills Payable 1,500 Repairs 650
year. Rent 1,400 Sales Returns 700
(e) Allow interest on Capital at the rate of 5% p.a. Purchase Returns 500 Furniture 5,000
[Gross Profit: Rs. 20,500; Net Profit: Rs. 900; Balance Sheet: Rs. 82,400] Commission 2,000 Fuel and Power 500
Interest on Sumit’s Loan 300 Interest on Bank Loan 500
Q-12: The following is the Trial Balance of Divya on 31st December 2012. Dr. Balances : Sumit’s Loan (01.04.2012) 5,000
Plant and Machinery 14,000 Manufacturing Expenses 1,500
Debit Balances Amount Credit Balances Amount Sundry Debtors 3,000 Trade Expenses 1,700
Drawings 7,400 Sales Account 87,100 Drawings 4,000 Bad Debts 300
Patents 5,000 Returns Outward 1,500 Purchases 15,500
Purchases 42,000 Capital 87,000 Adjustments :
Returns Inward 1,300 Sundry Creditors 7,600 (a) The closing stock was valued at Rs.2,400.
Wages 14,000 Commission 1,800 (b) Charge interest on drawings @ 5%
Fuel and Power 4,400 12% Loan (on 1.7.2012) 10,000 (c) A sum of Rs.50 is due for repairs.
Carriage on Sales 5,200 (d) Sumit’s Loan is subject to interest at the rate of 12% p.a.
Carriage on Purchases 2,800 (e) Rent and Commission due but not received Rs.200 and Rs.400 respectively.
Stock (01.01.2012) 6,500 [Gross Profit: Rs.4,500; Net Profit: Rs.5,650; Balance Sheet: Rs.34,550]
Freehold Land 30,000
Machinery 20,000 Q-14: From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
Salaries 18,000 Balance Sheet as on 31.12.2012 :
Goodwill 14,000
General Expenses 6,700
Insurance 1,700
(17) (18)

CA. Naresh Aggarwal’s Debit Balances Rs. Credit Balances Rs.

ACADEMY of ACCOUNTS Drawings

Purchases
5,000
50,200
Capital
Purchases Returns
87,400
1,200
Accounting • Costing • Taxation • Financial Management Sales Returns 1,800 Sales 74,400
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Stock on 01.01.2012 4,400 Bad Debts Provision 2,200
General Expenses 6,800 Discount Received 600
Wages 8,200 S. Creditors 12,000
Leasehold Premises 20,000
Debit Balances Amount Credit Balances Amount
Rent, Rates and Insurance 6,400
Purchases 84,000 Discount Received 500 Carriage Inwards 2,800
Discount Allowed 1,350 Sundry Creditors 20,000 Plant & Machinery 12,000
Stock (01-01-2012) 13,500 Capital 1,25,700 Gas & Water 4,900
Salaries 10,400 Sales 1,12,000 Sundry Debtors 20,500
Plant and Machinery 70,000 Purchases Returns 1,200 Cash at Bank 12,000
Bank Charges 850 Bills Payable 5,000 Office furniture 4,500
12% Loan 10,000 Interest on Loan 700 Travellers' salaries 6,500

AoA
Wages 20,000 Bad Debts 1,800
Packing Material 2,500 5% Investments (1.1.2012) 10,000
Investments 12,000
1,77,800 1,77,800
Freight 3,200
Conveyance 2,600 Prepare a Trading and Profit & Loss Account for the year ended 31st December and
Rent 4,200 a Balance Sheet as at that date after taking into account the following:
Advertisements 3,800 (a) The value of stock on 31st Dec. was Rs.7,500.
Dock Charges 1,300 (b) Wages amounting to Rs.500 has become due but had not been paid.
Octroi 1,400 (c) Unexpired premium amounting to Rs.400 is to be carried forward to next year.
Drawings 20,000 (d) Write off a further Rs.500 as bad debt and make a provision for doubtful debts at
Fixed Deposits 4,000 the rate of 5%. Also provide a povision for discount on debtors @ 2%.
[Gross Profit: Rs. 10,300; Net Loss: Rs.9,380; Balance Sheet: Rs.85,520]
2,65,100 2,65,100
(a) Closing stock valued at Rs.5,000. Q-16: The following trial balance was of Rosy as on 31st December :
(b) Salaries to employees are Rs.1,000 per month while Rent is paid at the rate of Debit Balances Rs. Credit Balances Rs.
Rs.300 per month.
(c) Loan was given to a friend three year ago. Drawings 8,000 Capital 90,400
(d) Fixed Deposits made on 01.07.2012 and is allowed interest @ 5% p.a. Purchases 52,200 Purchases Returns 3,200
(e) Charge interest on drawings at the rate of 6%. Sales Returns 2,800 Sales 75,400
[Gross Loss: Rs. 7,700; Net Loss: Rs. 28,900; Balance Sheet: Rs. 1,02,200] Stock on 01.01.2012 5,400 Bad Debts Provision 3,200
General Expenses 4,800 Discount Received 600
Q-15: The following trial balance was extracted from the books of Rosy as on 31st Wages 7,200 Bank Overdraft 12,000
December : Leasehold Premises 20,000
Rent, Rates and Insurance 8,400
Carriage Inwards 2,800
Plant & Machinery 12,000
Packing Matrerial 4,900
(19) (20)

CA. Naresh Aggarwal’s Insurance 1,700

ACADEMY of ACCOUNTS Sundry Debtors 10,700

1,98,500 1,98,500
Accounting • Costing • Taxation • Financial Management
Taking into account the following adjustments prepare Trading and Profit & Loss
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Account and the Balance Sheet :
(a) Stock in hand on 31.12.2012 is of Rs.8,500 and stock in transit is of Rs.3,000.
Sundry Debtors 20,500 (b) Machinery is to be depreciated @ of 10% and patents @ 20%.
Cash in hand 12,000 (c) Salaries for the month of December was unpaid.
Office furniture 4,500 (d) Insurance include a premium of Rs.300 for year 2013.
Salaries 6,500 (e) A provision for Bad and Doubtful Debts is to be created to the extent of 5% on
Bad Debts 2,800 Sundry Debtors and a provision of 2% created for discount to debtors.
5% Fixed Deposit (1.1.2012) 10,000 (f) Further Bad Debts are amounted to Rs.700.
1,84,800 1,84,800 [Gross Profit: Rs.23,550; Net Loss: Rs.17,740; Balance Sheet: Rs.85,310]

Prepare a Trading and Profit & Loss Account for the year ended 31st December and Q-18: Poonam’s books show the following balances. You are to prepare her Trading
a Balance Sheet as at that date after taking into account the following:

AoA
and Profit and Loss A/c and Balance Sheet from the following information:
(a) The value of stock on 31st Dec. was Rs.17,500. Dr. Balances: Rs. Dr. Balances (Contd.) Rs.
(b) Unexpired premium amounting to Rs.400 is to be carried forward to next year. Stock 12,000 Office Expenses 650
(c) Wages amounting to Rs.500 has become due but had not been paid. Purchases 25,500 Interest 850
(d) Write off a further Rs.500 as bad debt and make a provision for doubtful debts at Carriage Inward 650 Bills Receivable 2,800
the rate of 5%. Also provide a povision for discount on debtors @ 2%. Fraight Outward 800 Legal Charges 1,700
[Gross Profit: Rs. 20,300; Net Profit: Rs.620; Balance Sheet: Rs.95,520] Wages 4,700 Plant and Machinery 14,000
Motive Power 4,500 Investments 5,000
Q-17: The following is the Trial Balance of Divya on 31st December 2012. General Expenses 300 Cr. Balances :
Debit Balances Rs. Credit Balances Rs. Printing and Stationery 4,400 Sales 38,500
Sundry Debtors 25,000 Provision for Doubtful Debts 4,000
Drawings 7,400 Sales Account 85,550 Furniture and Fixtures 6,000 Loan 10,000
Cash at Bank 5,000 Returns Outward 1,500 Patents & Copyrights 5,000 Fees 750
Purchases 42,000 Capital 1,00,850 Leasehold Premises 12,000 Sundry Creditors 7,600
Returns Inward 1,300 Sundry Creditors 7,600 Travelling Expenses 650 Capital A/c 65,650
Wages 18,000 Commission 1,800 Write off Patents & Copyrights by 20%. A provision for Bad and Doubtful Debts is to
Fuel and Power 4,400 Provision for Doubtful Debts 1,200 be created to the extent of 5% on Sundry Debtors and a provision of 1% created for
Carriage on Sales 5,200 discount to debtors. Further Bad Debts are amounted to Rs.1,000. Closing Stock in
Carriage on Purchases 2,800 hand was valued at Rs.5,000 and stock in transit is of Rs.2,200
Stock (1-1-2012) 6,500 [Gross Loss: Rs.1,650; Net Loss: Rs.9,678; Balance Sheet: Rs.73,572]
Freehold Land 30,000
Machinery 20,000 Q-19 : From the following Trial Balance of Ravinder as on December 31 2012, prepare
Salaries 22,000 Trading and Profit and Loss Account and a Balance Sheet :
Patents 14,000 Cr. Balances Rs. Dr. Balances (Contd.) Rs.
Bad Debts 800 Capital 38,500 Bad Debts 450
General Expenses 6,700 Creditors 8,000 Interest 300
Bills Payable 2,000 Insurance 600
(21) (22)

Wages 4,700 Plant and Machinery 14,000

CA. Naresh Aggarwal’s Motive Power 4,500 Tools 5,000
ACADEMY of ACCOUNTS Lighting
Printing and Stationery
600 Cr. Balances
2,600 Sales 38,500
Accounting • Costing • Taxation • Financial Management Sundry Debtors 24,000 Reserve Fund 1,200
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Furniture and Fixtures 6,000 Loan 10,000
Investments 5,000 Discount 750
Sales 95,000 Machinery 12,000 Freehold Premises 12,000 Sundry Creditors 7,600
Loan 15,000 Stock (1-1-2012) 5,000 Travelling Expenses 650 Capital A/c 65,650
Dr. Balances Purchases 58,000 Adjustments:
Debtors 4,500 Wages 4,500 Outstanding for Power was Rs.500 and for Lighting Rs.400. Stock in hand was
Salaries 4,200 Buildings 18,000 Rs.15,000. On 01.01.2012 goods damaged in the flood Rs.1,000 and Machine
Discount 700 Fixtures & Fittings 10,000 damaged by Rs.4,000. Depreciate Furniture and Fixtures at the rate of 10% and
Postage 250 Land 40,000 Plant & Machine by 20%.
Stock in hand on 31.12.2012, is of Rs.6,500 and stock still in transit is of Rs.1,500 . [Gross Profit: Rs. 6,650; Net Loss: Rs. 8,150; Balance Sheet: Rs. 77,200]
Make 5% provision for discount on creditors. A fire occurred in the premises resulted
loss of goods worth Rs.3,000 and Loss of Machine Rs.4,000. The claim lodged with Q-22: The following are the balances extracted from the books of Shankar on 31st
December, 2012:

AoA
the insurance company was of Rs.2,500 for goods and Rs.3,000 for Machine.
[Gross Profit: Rs. 38,500; Net Profit: Rs. 30,900; Balance Sheet: Rs. 94,000] Debit Balances : Rs. Debit Balances (Contd.) Rs.
Furniture and Fittings 7,000 Discounts 1,700
Q-20 : From the following balances of Mr. Rampal, prepare Trading and Profit and Business Premises 15,000 General Expenses 3,000
Loss Account and the Balance Sheet as on 31st December 2012. Stock at beginning 7,000 Salaries 8,500
Credit Balances : Rs. Debit Balances (Contd.) Rs. Debtors 20,000 Credit Balances :
Capital 17,950 Cash and Bank 2,000 Purchases 40,800 Capital 38,300
Sundry Creditors 3,500 Drawings 2,500 Taxes and Insurance 2,400 Commission 1,200
Sales 14,300 Purchases 7,400 Bad Debts written off 1,400 Creditors 8,800
Bills Payable 2,200 Bad Debts 300 Drawings 6,000 Discount 900
Debit Balances : Printing & Stationery 400 Sales Return 2,500 Bank Overdraft 3,500
Salaries 1,500 Manufacturing Expenses 750 Stationery 1,000 Sales 62,200
Plant and Machinery 10,000 Repairs 250 Carriage on Purchases 1,100 Rent from Tenants 2,500
Furniture 5,000 Stock 1,100 Interest due on overdraft amounted to Rs.200. Commission due but not received
Sundry Debtors 4,200 Rent 600 Rs.300. Closing stock valued at Rs.8,000. On 30.06.2012 Goods lost in fire amounted
Wages 1,800 Carriage 150 to Rs.1,800 and Furniture lost of Rs.2,000. Depreciate Premises by 5% p.a. and
The Closing Stock was Rs.4,800. Depreciate Plant and Machinery by 10%. On Furniture by 10% p.a.
01.01.2012 goods damaged in an accident of Rs.500 and Furniture destroyed by fire Prepare Trading and Profit and Loss Account for the year and a Balance Sheet as on
of Rs.1,000. Insurance claim admitted for total Rs.900. that date.
[Gross Profit: Rs. 8,400; Net Profit: Rs. 3,750; Balance Sheet: Rs.24,900] [Gross Profit: Rs. 20,600; Net Profit: Rs. 2,150; Balance Sheet: Rs.46,950]

Q-21: Sohan’s books show the following balances. You are asked to prepare his Q-23: From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
Trading and Profit and Loss A/c and Balance Sheet from the following information: Balance Sheet.
Dr. Balances: Rs. Dr. Balances (Contd.) Rs. Debit Balances Amount Credit Balances Amount
Stock 12,000 Office Expenses 950
Purchases 25,500 Interest 250 Drawings 7,400 Sales Account 87,100
Carriage Inward 650 Bills Receivable 2,800 Patents 5,000 Returns Outward 1,500
Carriage Outward 800 Legal Charges 1,700 Purchases 42,000 Capital 92,000
(23) (24)

Cr. Balances : Dr. Balances :

CA. Naresh Aggarwal’s Commission 2,000 Fuel and Power 500
ACADEMY of ACCOUNTS Interest on Ajay’s Loan
Dr. Balances :
300 Interest on Bank Loan
Ajay’s Loan
500
5,000
Accounting • Costing • Taxation • Financial Management Plant and Machinery 14,000 Manufacturing Expenses 1,500
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Sundry Debtors 3,000 Trade Expenses 1,700
Drawings 4,000 Bad Debts 300
Returns Inward 1,300 Sundry Creditors 7,600 Purchases 15,500
Wages 15,000 Commission 1,800 Adjustments :
Fuel and Power 4,400 Loan 6,500 (a) The closing stock was valued at Rs.2,400.
Carriage on Sales 5,200 Sales Tax 1,500 (b) Manager is entitled to a commission of 10% on net profit after charging his
Carriage on Purchases 2,800 commission.
Stock (01.01.2012) 6,500 (c) A sum of Rs.50 is due for repairs.
Freehold Land 30,000 (d) Rent and Commission due but not received Rs.200 and Rs.400 respectively.
Machinery 20,000 [Gross Profit: Rs.4,500; Net Profit: Rs.5,091; Balance Sheet: Rs.34,400;
Salaries 20,000 Rough Net Profit: Rs.5,600; Manager’s Commission: Rs.509]
Goodwill 14,000

AoA
General Expenses 6,700 Q-25: From the following Trial Balance, prepare a Trading A/c, Profit & Loss A/c and
Insurance 1,700 Balance Sheet as on 31.12.2012 :
Sundry Debtors 15,000 Debit Balances Amount Credit Balances Amount
Interest 1,000
Purchases 64,000 Discount Received 500
1,98,000 1,98,000 Discount Allowed 1,350 Sundry Creditors 20,000
Adjustments: Stock (01-01-2012) 13,500 Capital 95,700
(a) Stock in hand on 31st December 2012 is Rs.33,500. Salaries 10,400 Sales 1,42,000
(b) Machinery is to be depreciated @ 10% and patents @ 20%. Plant and Machinery 70,000 Purchases Returns 1,200
(c) Salaries are paid for 10 months while wages are paid as 3 month in advance. Bank Charges 850 Bills Payable 5,000
(d) Insurance include a premium of Rs.700 for 2013. Loan 10,000 Interest on Loan 700
(e) Advances Commission amounted to Rs.300. Wages 20,000
(f) Manager is entitled to 10% commission on Net Profit before charging his Packing Material 2,500
commission. Investments 12,000
[Gross Profit: Rs.53,100; Net Profit: Rs.12,330; Balance Sheet: Rs.1,18,200; Excise Duty 3,200
Rough Net Profit: Rs.13,700; Manager’s Commission: Rs.1,370] Conveyance 2,600
Rent 4,200
Q-24: Prepare Trading and Profit & Loss Account and Balance Sheet from the following Advertisements 3,800
balances, relating to the year ending 31st December 2012 : Dock Charges 1,300
Cr. Balances: Rs. Dr. Balances: Rs. Octroi 1,400
Capital 21,250 Wages 3,200 Drawings 20,000
Bank Loan 10,000 Bank 4,400 Fixed Deposits 24,000
Sales 24,200 Stock (1-4-2012) 1,200 2,65,100 2,65,100
Bills Payable 1,500 Repairs 650
Rent 1,400 Sales Returns 700 (a) Closing stock valued at Rs.5,000.
Purchase Returns 500 Furniture 5,000 (b) Salaries to employees are Rs.1,000 per month while Rent was to be paid at the
rate of Rs.300 per month.
(25) (26)

CA. Naresh Aggarwal’s Adjustments:

(a) The Closing Stock was Rs.4,800.
ACADEMY of ACCOUNTS (b) Salaries due but not paid Rs.1,000.
Accounting • Costing • Taxation • Financial Management (c) 2/3 of the carriage related with sales.
(d) Make 2% Provision for discount on debtors and 5% Provision for Doubtful Debts.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
(e) Write off 2/5th of the advertisement.
(c) Allow manager a commission of 5% on Gross Profit. (f) Goods costing Rs.500 given to a customer on sale or return condition at Rs.600;
(d) Purchase includes Rs.10,000 for a Machinery purchased on 01.01.2012. though he had not yet approved but wrongly recorded as actual sales.
(e) Depreciate Plant and Machinery by 10% [Gross Profit: Rs. 8,700; Net Profit: Rs. 1,874; Balance Sheet: Rs.24,024]
[Gross Profit: 52,300; Net Profit: 18,685; Balance Sheet: 1,23,600; Manager’s Commission: 2,615]
Q-28: Sudhir’s books show the following balances. You are asked to prepare his
Q-26 : From the following Trial Balance of Rajni as on December 31 2012, prepare Trading and Profit and Loss A/c and Balance Sheet from the following information:
Trading and Profit and Loss Account and a Balance Sheet : Dr. Balances: Rs. Dr. Balances (Contd.) Rs.
Cr. Balances Rs. Dr. Balances (Contd.) Rs. Power 4,700 Plant and Machinery 14,000
Sales 95,000 Furniture 12,000 Wages 4,500 Books 5,000
Creditors 15,000 Stock (1-1-2012) 5,000 Closing Stock 12,000 Office Expenses 950

AoA
Capital 38,000 Bad Debts 450 Purchases 25,500 Interest 250
Overdraft 8,500 Insurance 300 Carriage Inward 650 Salaries 2,800
Bills Payable 2,000 Interest 600 Carriage Outward 900 Legal Charges 1,700
Dr. Balances Purchases 58,000 Drawings 4,000 Income Tax 1,000
Bills Receivable 4,500 Wages and Salaries 4,500 Return Inward 500 Cr. Balances
Advertisements 4,000 Debtors 18,000 Stationery 2,600 Sales 38,500
Postage 900 Machinery 10,000 Sundry Debtors 24,000 Outstanding Wages 750
Discount 250 Leasehold 40,000 Furniture and Fixtures 6,000 Rent Received 10,000
The Closing Stock was Rs.7,500. 2/3 of wages and salaries related to manufacturing. Investments 5,000 Apprentice Premium 1,200
Write off 1/4 th of the advertisement. Goods costing Rs.4,000 sent on approval at Freehold Premises 12,000 Sundry Creditors 7,600
Rs.5,000 but wrongly recorded as sales. Make a provision for Bad Debts at the rate Prepaid Expenses 650 Capital A/c 70,650
of 5% on debtors. Adjustments:
[Gross Profit: Rs. 35,500; Net Profit: Rs. 29,850; Balance Sheet: Rs.93,350] (a) Apprentice premium received for three years.
(b) Stock of stationery remaining at the end of the year was of Rs.500.
Q-27 : From the following balances of Mr. Mohan, prepare Trading and Profit and (c) Manager is entitled to a commission on sales at the rate of 5%.
Loss Account and the Balance Sheet as on 31st December 2012. (d) Debtors of Rs.2,000 are also included in the list of creditors at Rs.1,600.
Credit Balances : Rs. Debit Balances (Contd.) Rs. (e) Goods sold worth Rs.4,000 was omitted to be recorded.
Sales 14,300 Purchases 7,400 [Gross Profit: 6,650; Net Profit: 6,250; Balance Sheet: 81,550; Manager’s Commission: 2,100]
General Reserve 2,200 Bad Debts 300
Capital 17,950 Cash 2,000 Q-29: The following are the balances extracted from the books of Shankar on 31st
Sundry Creditors 3,500 Drawings 2,500 December, 2012:
Debit Balances : Stationery 400 Debit Balances : Rs. Debit Balances (Contd.) Rs.
Salaries 1,500 Fuel 150 Furniture and Fittings 7,000 Discounts 1,700
Plant and Machinery 10,000 Repairs 250 Business Premises 15,000 General Expenses 3,000
Advertisements 5,000 Stock 1,100 Stock at the end 7,000 Salaries 8,500
Sundry Debtors 4,600 Rent 600 Excise Duty 6,000 Income Tax 2,000
Wages 1,400 Carriage 750
(27) (28)

Cost of Goods Sold Rs.3,00,000

CA. Naresh Aggarwal’s Gross Profit 20% above Cost
ACADEMY of ACCOUNTS [Gross Profit: Rs.60,000; Sales: Rs.3,60,000]

Accounting • Costing • Taxation • Financial Management Q-34: Calculate Gross Profit and Cost of Goods Sold from the following information:
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Net Sales Rs.3,20,000
Gross Profit 25% on Sales
Dr. Balances (Contd.) Rs. Cr. Balances Rs. [Gross Profit: Rs.80,000; Cost of Goods Sold: Rs.2,40,000]
Debtors 20,000 Loan 8,000
Purchases 40,800 Capital 30,300 Q-35: Calculate Gross Profit and Cost of Goods Sold from the following information:
Prepaid Taxes 2,400 Commission 1,200 Net Sales Rs.4,00,000
Drawings 4,000 Advance Commission 900 Gross Profit ¼ on Sales
Bad Debts written off 1,400 Creditors 8,800 [Gross Profit: Rs.1,00,000; Cost of Goods Sold: Rs.3,00,000]
Sales Return 2,500 Apprentice Premium 1,500
Stationery 1,000 Sales 70,200 Q-36: Calculate Gross Profit and Cost of Goods Sold from the following information:
Carriage on Purchases 1,100 Rent 2,500 Net Sales Rs.5,00,000
(a) Apprentice premium received for three years. Gross Profit ¼ on Cost

AoA
(b) Stock of stationery remaining at the end of the year were of Rs.300. [Gross Profit: Rs.1,00,000; Cost of Goods Sold: Rs.4,00,000]
(c) Goods destroyed by fire amounted to Rs.600.
(d) Goods purchased worth Rs.3,000 was omitted to be recorded. Q-37: Calculate Gross Profit and Cost of Goods Sold from the following information:
(e) Debtors of Rs.2,500 are also included in the list of creditors at Rs.3,200. Net Sales Rs.3,00,000
Prepare Trading and Profit and Loss Account for the year and a Balance Sheet as on Gross Profit 20% on Cost
that date. [Gross Profit: Rs.50,000; Cost of Goods Sold: Rs.2,50,000]
[Gross Profit: Rs. 17,400; Net Profit: Rs. 5,700; Balance Sheet: Rs. 49,200]
Q-38: Calculate Gross Profit and Sales from the following information:
Q-30: A new firm commenced business on 01.01.2012 and purchased goods costing Cost of Goods Sold Rs.2,70,000
Rs.2,70,000 during the year. A sum of Rs.18,000 was spent on freight inwards. At the Gross Profit ¼ of Sales
end of the year, the cost of the goods still unsold was Rs.36,000. Sales during the [Gross Profit: Rs.90,000; Sales: Rs.3,60,000]
year were Rs.3,20,000. What is the gross profit earned by the firm?
[Gross Profit: Rs.68,000] Q-39: Calculate Gross Profit and Cost of Goods Sold from the following information:
Cost of Goods Sold Rs.3,00,000
Q-31: The following information was taken from the income statement : Gross Profit 331/3% of Sales
Opening stock Rs.20,000; Sales Rs.64,000; Carriage inward Rs.4,000; Sales returns [Gross Profit: Rs.1,50,000; Sales: Rs.4,50,000]
Rs.4,000; Gross profit Rs.24,000; Purchases Rs.40,000; and Purchases returns
Q-40: Ascertain Cost of Sold Goods, Gross Profit and Net Profit from the following
Rs.3,600. Calculate the closing stock and the cost of goods sold.
information: Rs.
[Closing Stock: Rs.24,400; Cost of goods sold: Rs.36,000]
Opening Stock 17,000
Purchase 60,000
Q-32: Calculate gross profit and Sales from the following information:
Direct expenses 11,000
Cost of Goods Sold Rs.1,60,000
Indirect expenses 15,000
Gross Profit 25% on Cost
Closing stock 18,000
[Gross Profit: Rs.40,000; Sales: Rs.2,00,000]
Sales1,00,000
Sales Returns 5,000
Q-33: Calculate gross profit and cost of goods sold from the following information:
[Cost of goods sold: Rs.70,000; Gross Profit: Rs.25,000; Net Profit: Rs.10,000]
(29) (30)

CA. Naresh Aggarwal’s Particulars Dr. Amt. Cr. Amt.

ACADEMY of ACCOUNTS Bad Debts

Sundry Debtors
2,000
83,000
Accounting • Costing • Taxation • Financial Management Provision for Doubtful Debts 6,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
Further Bad Debts are Rs.3,000 and it is desired to maintain a provision of 5% for
Doubtful Debts. Prepare Bad Debts A/c and Provision for Bad Debts A/c.
Q-41: The annual sales of a business were as under:
Cash Sales Rs.75,000 Q-47: The following is the extract from the Trial Balance of Vijay as on 31.12.2012:
Credit Sales Rs.45,000
Particulars Dr. Amt. Cr. Amt.
Cost of Goods Sold Rs.80,000
Selling Expenses Rs.10,000 Bad Debts 11,000
Calculate Gross Profit and Net Profit. Sundry Debtors 1,07,000
[Gross Profit: Rs.40,000; Net Profit: Rs.30,000] Provision for Doubtful Debts 10,000

Q-42: Calculate Closing Stock, Cost of Goods Sold and Gross Profit income from the Additional Information:

AoA
following information : (a) After preparing the Trial Balance, it is that a customer has become insolvent and
Purchases (1,000 units) Rs.50,000 nothing could be recovered from him therefore, the entire amount of Rs.7,000 due
Freight and Carriage Rs.15,000 from him was irrecoverable.
Sales (900 units) Rs.75,000 (b) Create 5% provision for doubtful debts.
[Closing Stock: Rs.6,500; Cost of Goods Sold: Rs.58,500; Gross Profit: Rs.16,500] Pass the necessary journal entries and show the relevant accounts.

Q-43: Calculate Closing Stock, Cost of Goods Sold and Gross Profit income from the Q-48: Following are the extracts from the Trial Balance of a firm as on 31.03.2012:
following information :
Particulars Dr. Amt. Cr. Amt.
Purchases (500 units) Rs.40,000
Freight and Carriage Rs.4,000 Bad Debts 4,000
Sales (400 units) Rs.50,000 Sundry Debtors 56,000
[Closing Stock: Rs.8,800; Cost of Goods Sold: Rs.35,200; Gross Profit: Rs.14,800] Provision for Doubtful Debts 7,000

Q-44: Calculate Closing Stock, Cost of Goods Sold and Gross Profit income from the Additional Information:
following information : (a) Additional bad debts Rs.6,000
Purchases (750 units) Rs.65,000 (b) Maintain the provision for doubtful debts @ 10% on debtors.
Freight and Carriage Rs.10,000 Pass the necessary journal entries and prepare and Provision for Doubtful Debts
Sales (500 units) Rs.70,000 Account.
[Closing Stock: Rs.25,000; Cost of Goods Sold: Rs.50,000; Gross Profit: Rs.20,000]
Q-49: An extract of Balance Sheet of Gopal shows following information relating to
Q-45: Calculate closing stock from the following information : Sundry Debtors :
Opening stock Rs.20,000; Purchases Rs.95,000; Purchases Returns Rs.5,000; Wages Particulars Dr. Amt. Cr. Amt.
Rs.7,000; Sales Rs.1,10,000; Gross Profit Rs.15,000; Freight Rs.8,000.
[Closing Stock: Rs.30,000] Bad Debts 6,500
Sundry Debtors 60,000
Q-46: The following is the extract from the Trial Balance of Ajay as on 31.12.2012: Discount Allowed 2,500
(31) (32)

CA. Naresh Aggarwal’s

ACADEMY of ACCOUNTS Theoretical Questions
Accounting • Costing • Taxation • Financial Management 1. What are Financial Statements? Why do they are prepared?
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 2. Distinguish between Trial Balance and Balance Sheet.
3. Distinguish between Trading Account and Profit & Loss Account.
4. What do you mean by ‘Adjustment Entry’. Why are the made while preparing Final
Additional Information: Accounts?
(a) Create a provision for doubtful debts @ 5% on debtors. 5. What is Operating Profit? How is it calculated?
(b) Create a provision for discount on debtors @ 2% on debtors. 6. Explain the following terms with suitable examples :
Pass the necessary journal entries and show the relevant accounts. (i) Fixed Assets, (ii) Current Assets, (iii) Fictitious Assets, (iv) Wasting Assets,
(v) Current Liabilities, (vi) General Reserve
Q-50: An extract of Balance Sheet of Gopal shows following information relating to
Sundry Debtors :
Particulars Dr. Amt. Cr. Amt. ••••••••••••••••••••••

AoA
Bad Debts 13,000
Sundry Debtors 1,20,000
Discount Allowed 5,000

Additional Information:
(a) Create a provision for doubtful debts @ 5% on debtors.
(b) Create a provision for discount on debtors @ 2% on debtors.
Pass the necessary journal entries and show the relevant accounts.
(33)

Adjustments
S.N. Types of Adjustments Journal Entries Effects

1. Closing Stock or Stock A/c Dr. Assets in Balance Sheet

Stock at the end To Trading A/c Credit in Trading A/c

2. Accrude or Outstanding or Expense (Name) A/c Dr. Add: in related Expense (Dr. Side of Trading / P&L A/c)
Due / Unpaid Expenses To O/s Expense (Name) A/c Show as Liabilities in Balance sheet

3. Accrude or O/s Income or O/s Income (Name) A/c Dr. Assets in Balance Sheet
Income due but not received To Income (Name) A/c Add: in related income (Cr. Side of P&L A/c)

4. Prepaid/Advance Exp. or Prepaid / Unexpired Expense A/c Dr. Assets in Balance Sheet
Unexpired Expenses To Expense (Name) A/c Less: in related Expense (Dr. Side of Trading / P&L A/c)

5. Advance Income or Income (Name) A/c Dr. Less: in related Income (Cr. Side of Trading / P&L A/c)
Unearned Income To Advance Income (Name) A/c Show as Liabilities in Balance sheet
CA. Naresh Aggarwal’s

6. Depreciation on Assets Depreciation A/c Dr. Debit in Profit & Loss A/c
To Assets (Name) A/c Less: in related Assets (in Balance Sheet)

7. Interest on Capital Interest on Capital A/c Dr. Debit in Profit & Loss A/c
To Capital A/c Add: in Capital (Balance Sheet)

8. Interest on Drawings Drawings A/c Dr. Add: in Drawings or Less: in Capital (Balance sheet)
To Interest on Drawings A/c Credit in Profit & Loss A/c
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management

9. Interest on Loan Interest on Loan A/c Dr. Debit in Profit & Loss A/c
(If Loan has Cr. Balance) To Loan A/c Add: in Loan (Liabilities in Balance Sheet)

10. Interest on Loan Loan A/c Dr. Add: in Loan (Assets in Balance Sheet)
(If Loan has Dr. Balance) To Interest on Loan A/c Credit in Profit & Loss A/c

11. Bad Debts or Bad Debts A/c Dr. Add: in Bad Debts or Dr. in Profit & Loss A/c
Further Bad Debts To Debtors A/c Less: in Debtors (Assets in Balance Sheet)

12. Provision / Reserve for Profit & Loss A/c Dr. Debit in Profit & Loss A/c
Bad Debts / Doubtful Debts To Prov. for Doubtful Debts A/c Less: in Debtors (Assets in of Balance Sheet)

13. Provision / Reserve for Profit & Loss A/c Dr. Debit in Profit & Loss A/c
Discount on Debtors To Prov. for Discount on Debtors Less: in Debtors (Assets in Balance Sheet)

14. Provision / Reserve for Prov. for Discount on Creditors A/c Dr. Less: in Creditors (Liabilities in Balance Sheet)
Discount on Creditors To Profit & Loss A/c Credit in Profit & Loss A/c

15. Deferred Revenue Expenditure Profit & Loss A/c Dr. Debit in Profit & Loss A/c
(Exp. for more then one year) To Expenditure (Name) A/c Less: in Expenditure (Assets in Balance Sheet)

16. Loss by Fire / Theft Loss by fire / Theft A/c Dr. Debit in Profit & Loss A/c
To Purchases A/c (for goods) Less: in Purchases (Trading A/c) or Trading A/c Cr.
To Assets A/c (for other Assets) Less: in Assets (Balance Sheet)

17. Insurance Claim for Insurance Company’s A/c Dr. Assets in Balance Sheet
Loss by Fire / Theft To Insurance Claim A/c Less: in Loss by fire or Cr. in P&L A/c

18. Manager’s Commission Manager’s Commission A/c Dr. Debit in Profit & Loss A/c
(Calculated on Sales/G.P./N.P.) To Manager (O/s Comm.) A/c Liabilities in Balance Sheet

19. Sales on Approval Sales A/c (selling price) Dr. Less: in Sales (Trading A/c)
(If wrongly recorded as sales) To Debtors A/c (selling price) Less: in Debtors (Balance Sheet)

If not yet included in closing stock Stock A/c (cost amount) Dr. Add: in Closing Stock (Assets in Balance Sheet)
or question is silent about that To Trading A/c (cost amount) Add: in Closing Stock (Credit in Trading A/c)
AoA
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

For Eenquiries
Call or whatsapp: 8800215448

AoA
Accounts from Incomplete Records (Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)

Email: [Link]@[Link]
(Single Entry) Website: [Link]

Watch us on

[Link]
(1) (2)

Q-3: Mr. A, a trader, does not keep proper books of accounts. However, he provides
CA. Naresh Aggarwal’s the following particulars :
ACADEMY of ACCOUNTS 31.12.2012 31.12.2013
Rs. Rs.
Accounting • Costing • Taxation • Financial Management Debtors 72,000 120,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Equipment 30,000 30,000
Creditors 1,80,000 1,20,000
Furniture 24,000 24,000
Part-1 Cash at Bank 27,000 18,000
Cash in Hand 1,800 24,000
Q-1: Mr. A, a trader, does not keep proper books of accounts. However, he Stock 2,40,000 2,70,000
provides the following particulars : During the year 2013, Mr. A introduced Rs.36,000 as additional capital and withdrew
31.12.2012 31.12.2013 Rs.8,000 as drawings. He writes off 10% on furniture and 5% on equipment as
Rs. Rs. depreciation. Prepare a statement showing the profit or loss made by him for the
Debtors 60,000 90,000 year ended 31.12.2013.
Equipment 30,000 30,000 [Capital on 31.12.2012: Rs.2,14,800; Capital on 31.12.2013: Rs.3,62,100; Profit: Rs.1,19,300]
Creditors 18,000 13,000

AoA
Furniture 24,000 24,000 Q-4: Ravi, a trader, does not keep proper books of accounts. However, he provides
Cash at Bank 27,000 18,000 the following particulars :
Cash in Hand 18,000 24,000 31.12.2012 31.12.2013
Stock 24,000 27,000 Rs. Rs.
During the year 2013, Mr. A introduced Rs.20,000 as additional capital and withdrew Equipment 15,000 15,000
Rs.35,000 as drawings. Prepare a statement showing the profit or loss made by Creditors 90,000 60,000
him for the year ended 31.12.2013. Furniture 12,000 12,000
[Profit: Rs.50,000; Capital (opening): Rs.1,65,000; Capital (end): Rs.2,00,000] Cash at bank 13,500 9,000
Cash in hand 900 12,000
Q-2: Ravi, a trader, does not keep proper books of accounts. However, he provides Stock in trade 1,20,000 1,35,000
the following particulars : Debtors 36,000 60,000
31.12.2012 31.12.2013 During the year 2013, Ravi introduced Rs.18,000 as additional capital and withdrew
Rs. Rs. Rs.12,000 as drawings. Write off depreciation on Furniture at 10% and on
Equipment 20,000 15,000 equipment at 5%.
Bills Payable 15,000 17,000 Prepare a statement showing the Profit or Loss made by him for the year ended
Furniture 12,000 12,000 31.12.2013.
Cash at bank 13,000 9,000 [Profit: Rs.67,650; Capital (opening): Rs.107,400; Capital (end): Rs.1,81,050]
Cash in hand 2,000 12,000
Stock in trade 12,000 13,000 Q-5: Anil keeps his book on the Single Entry System and the following information
Debtors 36,000 60,000 is available :
During the year 2013, Ravi introduced Rs.10,000 as additional capital and withdrew 01.01.2013 31.12.2013
Rs.12,000 as drawings. Prepare a statement showing the Profit or Loss made by Rs. Rs.
him for the year ended 31.12.2013. Furniture 1,200 1,200
[Profit: Rs.26,000; Capital (opening): Rs.80,000; Capital (end): Rs.1,04,000] Stock 16,800 18,300
Debtors 12,600 20,400
Cash 900 1,200
(3) (4)

Equipment 10,000 10,000

CA. Naresh Aggarwal’s Creditors 60,000 40,000
ACADEMY of ACCOUNTS Stock 80,000
During the year 2013, Mr. A introduced Rs.12,000 as additional capital and withdrew
90,000

Accounting • Costing • Taxation • Financial Management Rs.8,000 as drawings. He writes off 10% on furniture and 5% on equipment as
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] depreciation. Prepare a statement showing the profit or loss made by him for the
year ended 31.12.2013.
[Capital on 31.12.2012: Rs.71,600; Profit: Rs.45,100]
Creditors 10,500 11,400
Bills Payable - 1,800
Q-8: Sonu, a trader, does not keep proper books of accounts. However, he
Loan - 3,000
provides the following particulars :
Investments - 6,000
31.12.2012 31.12.2013
He has drawn out of the business Rs.3,000 during the year. Prepare a Statement
Rs. Rs.
showing his profit for the year ended 31st December 2013 after writing off 10%
Furniture 8,000 8,000
depreciation of Furniture and making a provision for bad debts at 10% on Sundry
Cash at bank 9,000 6,000
Debtors.
Cash in hand 600 8,000
[Capital on 01.01.2013: Rs.21,000; Capital on 31.12.2013: Rs.28,740; Net profit: Rs.10,740]
Equipment 10,000 10,000

AoA
Creditors 60,000 40,000
Q-6: Mr. Kumar keeps his books by single entry system. His assets and liabilities
Stock in trade 80,000 90,000
were as under:
Debtors 24,000 40,000
01.01.2013 31.12.2013
During the year 2013, Sonu introduced Rs.12,000 as additional capital and
Rs. Rs.
Withdrew Rs.8,000 as drawings. Write off depreciation on Furniture at 10% and on
Cash at Bank 6,000 -
equipment at 5%.
Sundry Debtors 3,000 4,500
Prepare a statement showing the Profit or Loss made by him for the year ended
Bank (Overdraft) - 3,000
31.12.2013.
Office Equipment 3,000 3,000
[Profit: Rs.45,100; Capital (opening): Rs.71,600; Capital (end): Rs.1,20,700]
Sundry Creditors 2,100 4,200
Furniture 3,000 3,000
Q-9: Deepak keeps his book on the Single Entry System and the following
Cash in Hand 7,500 750
information is available :
Expenses Outstanding - ,600
01.01.2013 31.12.2013
Mr Kumar has withdrawn Rs.750 per month for personal use. He had introduced
Rs. Rs.
Rs.3,000 as additional capital on 10th August 2013. Provision for Doubtful Debts
Debtors 4,200 6,800
at the rate of 5% on Sundry Debtors is to be provided. Charge depreciation @10%
Cash 300 400
on Furniture and Office Equipment. Ascertain the profit or loss for the year.
Creditors 3,500 3,800
[Capital on 01.01.2013: Rs.20,400; Capital on 31.12.2013: Rs.2,625; Net Loss: Rs.11,775]
Furniture 400 400
Stock 5,600 6,100
Q-7: Mr. A, a trader, does not keep proper books of accounts. However, he
Investments - 2,000
provides the following particulars :
Bills Payable - 600
31.12.2012 31.12.2013
Loan - 1,000
Rs. Rs.
He has drawn out of the business Rs.1,000 during the year. Prepare a Statement
Furniture 8,000 8,000
showing his profit for the year ended 31st December 2013 after writing off 10%
Cash at Bank 9,000 6,000
depreciation of Furniture and making a provision for bad debts at 10% on Sundry
Cash in Hand 600 8,000
Debtors.
Debtors 24,000 40,000
[Capital on 01.01.2013: Rs.7,000; Capital on 31.12.2013: Rs.9,580; Net profit: Rs.3,580]
(5) (6)

Q-12: Ramesh keeps his books by single entry. On 31.12.2013, his position was
CA. Naresh Aggarwal’s as follows :
ACADEMY of ACCOUNTS 31.12.2012 31.12.2013
Rs. Rs.
Accounting • Costing • Taxation • Financial Management Stock 5,000 6,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Plant 10,000 22,500
Sundry Creditors 10,000 17,500
Cash and Bank 5,400 11,250
Q-10: Suresh keeps his books by single entry system. His assets and liabilities
Sundry Debtors 20,000 24,500
were as under:
He drew Rs.250 at the end of every month. He introduced Rs.12,500 as additional
01.01.2013 31.12.2013
capital. Depreciate plant at 10% per annum. Additional plant was purchased on
Rs. Rs.
01.07.2013.
Cash at Bank 12,000 -
Prepare a statement of profit and loss for the year 2013.
Sundry Debtors 6,000 9,000
[Capital on 31.12.2012: Rs.30,400; Capital on 31.12.2013: Rs.45,125; Net profit: Rs.5,225]
Bank (Overdraft) - 6,000
Office Equipment 6,000 6,000
Q-13: Ram commenced business on 01.01.2013 with a capital of Rs.40,000. He
Sundry Creditors 4,200 8,400
immediately bought furniture and fixture for Rs.8,000. On 30.06.2013 he borrowed
Furniture 6,000 6,000

AoA
Rs.20,000 from his wife @9% p.a. (interest not yet paid) and introduced a further
Cash in Hand 15,000 1,500
capital of his own amounting to Rs.4,600. Ram drew at the rate of Rs.1,200 per
Expenses Outstanding - 1,200
month at the end of the month for his household expenses. On 31.012.2013 his
Suresh has withdrawn Rs.1,500 per month for personal use. He had introduced
position was as follows :
Rs.6,000 as additional capital on 10th August 2013. Provision for Doubtful Debts
Rs.
at the rate of 5% on Sundry Debtors is to be provided. Charge depreciation @10%
Bills Receivable 6,400
on Furniture and Office Equipment. Ascertain the profit or loss for the year.
Creditors 2,000
[Capital on 01.01.2013: Rs.40,800; Capital on 31.12.2013: Rs.5,250; Net Loss: Rs.23,550]
Owing for Rent 600
Cash in hand 11,200
Q-11: Mohan had not kept proper books of accounts, but from the following details,
Sundry Debtors 19,200
you are required to ascertain the Profit and Loss for the year ended 31.03.2013
Stock 27,200
and also to prepare his Statement of Affairs as at that date:
Furniture and Fixtures to be depreciated by 10%. Ascertain the profit or loss made
01.04.2012 31.03.2013
by Ram during 2013.
Rs. Rs.
[Capital (Closing): Rs.47,700; Profit: Rs. 17,500]
Stock 8,350 9,050
Sundry Creditors 7,700 8,100
Q-14: Mr. Shyam keeps his book on the Single Entry System and the following
Sundry Debtors 5,600 5,300
information is available :
Cash in Hand 125 700
01.01.2013 31.12.2013
Bank Overdraft 9,600 Nil
Rs. Rs.
Bills Receivable 8,000 2,500
Stock in Hand 37,400 46,800
Fixtures & Fittings 750 750
Debtors 24,000 28,000
Scooter 950 Nil
Creditors 18,000 3,000
Bank Balance Nil 1,450
Bills Receivable 8,000 10,000
The drawings during the year amounted to Rs.1,200. Depreciate Fixtures and
Bills Payable 2,000 400
Fittings by 10%. Rs.300 is irrecoverable from Debtors. Provide 5% Reserve for
Furniture 1,200 1,200
Doubtful Debts and a Reserve of Rs.100 in respect of Bills Receivable.
[Capital on 01.04.2012: Rs.6,475; Capital on 31.03.2013: Rs.10,925; Net profit: Rs.5,650]
(7) (8)

01.04.2012 31.03.2013
CA. Naresh Aggarwal’s Rs. Rs.
ACADEMY of ACCOUNTS Stock in Trade
Fixed Assets
18,500
3,00,000
19,000
3,27,000
Accounting • Costing • Taxation • Financial Management Creditors 28,500 33,500
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Cash in Hand and at Bank 20,000 15,000
Bills Receivable 10,000 17,500
Sundry Debtors 75,000 1,25,000
Building 24,000 24,000 The partners share profits in the ratio of 3 : 2 after charging interest on capital in the
Bank Balance 8,700 6,700 beginning at the rate of 5% p.a. and after providing for interest on drawings at the
(Overdraft) rate of 5%. Drawings on an average of 6 months are Rs.40,000 for A and Rs.30,000
You are also given the following information : for B. Calculate profits and prepare statement of affairs at the end.
(a) A provision of Rs.2,900 is required for bad and doubtful debts. [Capital on 01.04.2012: A-Rs.2,37,000; B-Rs.1,58,000;
(b) Depreciation @ 5% is to be written off on building and furniture. Combined capital on 31.03.2013: Rs.4,70,000, Net Profit:Rs. 1,45,000]
(c) Wages outstanding Rs.6,000, salaries outstanding Rs.2,400.
(d) Prepaid insurance has been provided to the extent of Rs.500. Q-17: The statement of affairs of M/s A, B and C as on 01.04.2012 is as follows :
(e) Legal expenses outstanding Rs.1,400. Statement of Affairs

AoA
(f) Drawings of Mr. Shyam during the year were Rs.15,040.
You are required to find out Profit. Liabilities Amount Assets Amount
[Opening Capital: Rs.83,300; Closing Capital: Rs.86,440; Profit: Rs.18,180] Bills Payable 6,400 Stock 19,400
Sundry Creditors 18,000 Cash 1,000
Q-15: Mohan, a retailer, has not kept proper books of account but it has been Capitals : Sunday Debtors 24,000
possible to obtain the following details : A 36,000 Plant and Machinery 36,000
30.06.2012 30.06.2013 B 24,000 60,000 C’s Capital Overdrawn 4,000
Rs. Rs.
Cash in Hand 5,700 6,500 84,400 84,400
Fittings 72,500 78,000 During the year 2012-2013, A withdrew Rs.1,200 p.m., B withdrew Rs.1,000 p.m.
Trade Debtors 52,800 45,600 and C withdrew Rs.800 p.m. On 31.03.2013 their assets were as follows :
Trade Creditors 62,700 58,900 Cash Rs.2,760; Stock Rs.20,400; Sundry Debtors Rs.23,200 and Plant & Machinery
Loan from Bank 50,000 50,000 after 10% depreciation. The Creditors were Rs.12,000 and Bills Payable Rs.2,360.
Stock 1,23,500 1,19,800 Interest on capitals is allowed and charged on overdraft at the rate of 5%. But
Bank Balance 39,900 41,300 current drawings being ignored for the purpose of interest. Profits are divided in
Calculate the net profit for this year and draft the Statement of Affairs at the end of the partners A, B and C in the ratio of 5 : 3 : 2.
the year after noting that : Prepare the Statement of Affairs on 31.03.2013 and calculate profit of the firm.
(a) Shop Fittings are to be depreciated by Rs.7,800. [Capital on 01.04.2013: Rs.64,400; Net profit: Rs.44,400; Divisible Profit: Rs.41,600]
(b) Mohan has drawn Rs.1,000 per week for his own use.
(c) Included in the Trade Debtors is an irrecoverable balance of Rs.2,700.
(d) Interest at 5% per annum is due on the Bank Loan, but has not been paid for
the year.
[Net Profit: Rs.39,600, Total of Statement of Affairs: Rs. 2,80,700]

Q-16: A and B started business on 1st April, 2012 with capital in the ratio of 3 : 2.
Their assets and liabilities on 1st April, 2012 and 31st March, 2013 were :
(9) (10)

Q-3: Anil keeps his book on the Single Entry System and the following information
CA. Naresh Aggarwal’s is available :
ACADEMY of ACCOUNTS 01.01.2013
Rs.
31.12.2013
Rs.
Accounting • Costing • Taxation • Financial Management Furniture 400 400
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Stock 5,600 6,100
Debtors 4,200 6,800
Cash 300 400
Part-2
Creditors 3,500 3,800
Bills Payable - 600
Q-1: Mr. A, a trader, does not keep proper books of accounts. However, he provides
Loan - 1,000
the following particulars :
Investments - 2,000
31.12.2012 31.12.2013
He has drawn out of the business Rs.1,000 during the year. Prepare a Statement
Rs. Rs.
showing his profit for the year ended 31st December 2013 after writing off 10%
Debtors 60,000 90,000
depreciation of Furniture and making a provision for bad debts at 10% on Sundry
Equipment 30,000 30,000
Debtors.
Creditors 18,000 13,000
[Capital on 01.01.2013: Rs.7,000; Capital on 31.12.2013: Rs.9,580; Net profit: Rs.3,580]

AoA
Furniture 24,000 24,000
Cash at Bank 27,000 18,000
Q-4: Mr. Kumar keeps his books by single entry system. His assets and liabilities
Cash in Hand 18,000 24,000
were as under:
Stock 24,000 27,000
01.01.2013 31.12.2013
During the year 2013, Mr. A introduced Rs.20,000 as additional capital and withdrew
Rs. Rs.
Rs.35,000 as drawings.
Cash at Bank 12,000 -
Prepare a statement showing the profit or loss made by him for the year ended
Sundry Debtors 6,000 9,000
31.12.2013.
Bank (Overdraft) - 6,000
[Profit: Rs.50,000; Capital (opening): Rs.1,65,000; Capital (end): Rs.2,00,000]
Office Equipment 6,000 6,000
Sundry Creditors 4,200 8,400
Q-2: Ravi, a trader, does not keep proper books of accounts. However, he provides
Furniture 6,000 6,000
the following particulars :
Cash in Hand 15,000 1,500
31.12.2012 31.12.2013
Expenses Outstanding - 1,200
Rs. Rs.
Mr Kumar has withdrawn Rs.1,500 per month for personal use. He had introduced
Equipment 20,000 15,000
Rs.6,000 as additional capital on 10th August 2013. Provision for Doubtful Debts
Bills Payable 15,000 17,000
at the rate of 5% on Sundry Debtors is to be provided. Charge depreciation @10%
Furniture 12,000 12,000
on Furniture and Office Equipment. Ascertain the profit or loss for the year.
Cash at bank 13,000 9,000
[Capital on 01.01.2013: Rs.40,800; Capital on 31.12.2013: Rs.5,250; Net Loss: Rs.23,550]
Cash in hand 2,000 12,000
Stock in trade 12,000 13,000
Q-5: A Retail Trader had not kept proper books of accounts, but from the following
Debtors 36,000 60,000
details, you are required to ascertain the Profit and Loss for the year ended
During the year 2013, Ravi introduced Rs.10,000 as additional capital and withdrew
31.03.2013 and also to prepare his Statement of Affairs as at that date:
Rs.12,000 as drawings.
01.04.2012 31.03.2013
Prepare a statement showing the Profit or Loss made by him for the year ended
Rs. Rs.
31.12.2013.
Stock 16,700 18,100
[Profit: Rs.26,000; Capital (opening): Rs.80,000; Capital (end): Rs.1,04,000]
Sundry Creditors 15,400 16,200
Sundry Debtors 11,200 10,600
(11) (12)

Cash in hand 56,000

CA. Naresh Aggarwal’s Sundry Debtors 96,000
ACADEMY of ACCOUNTS Stock
Furniture and Fixtures to be depreciated by 10%. Ascertain the profit or loss made
1,36,000

Accounting • Costing • Taxation • Financial Management by Ram during 2013.

West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] [Capital (Closing): Rs.2,38,500; Profit: Rs. 87,500]

Q-8: Find out Credit sales from the following :

Cash in Hand 250 1,400
Rs.
Bank Overdraft 19,200 Nil
Balance of Debtors on 1st April 2012 24,000
Bills Receivable 16,000 5,000
Returns Inward 10,000
Fixtures & Fittings 1,500 1,500
Cash received from Customers 90,000
Scooter 1,900 Nil
Discount allowed to them 6,000
Bank Balance Nil 2,900
Bills Receivable received from Customers 34,000
The drawings during the year amounted to Rs.2,400. Depreciate Fixtures and
Bad Debts 3,000
Fittings by 10%. Rs.600 is irrecoverable from Debtors. Provide 5% Reserve for
Bills Receivable Dishonored 7,000
Doubtful Debts and a Reserve of Rs.200 in respect of Bills Receivable.
Balance of Debtors on 31st March 2013 20,000

AoA
[Capital on 01.04.2013: Rs.12,950; Capital on 31.03.2013: Rs.21,850; Net profit: Rs.11,300]
[Rs.1,32,000]

Q-6: Ramesh keeps his books by single entry. On 31.12.2013, his position was as
Q-9: Find out Credit Purchases from the following :
follows :
Rs.
31.12.2012 31.12.2013
Balance of Creditors on 1st January 2013 15,200
Rs. Rs.
Returns Outward 4,800
Stock 20,000 24,000
Cash paid to Creditors 40,000
Plant 40,000 90,000
Bills accepted 9,200
Sundry Creditors 40,000 70,000
Discount allowed by them 1,000
Cash and Bank 21,600 45,000
Balance of Creditors on 31st December 2013 19,000
Sundry Debtors 80,000 98,000
[Rs.58,800]
He drew Rs.1,000 at the end of every month. He introduced Rs.50,000 as additional
capital. Depreciate plant at 10% per annum.
Q-10: Following figures drawn from the books of a trader, who maintains his
Prepare a statement of profit and loss for the year 2013 on the assumption that
accounts as per Single Entry System, you are required to calculate Credit Sales
additional plant was purchased on 01.07.2013.
and Total Sales : Rs.
[Capital on 31.12.2012: Rs.1,21,600; Capital on 31.12.2013: Rs.1,80,500; Net profit: Rs.20,900]
Bills Receivable in the beginning of the year 7,800
Debtors in the beginning of the year 30,800
Q-7: Ram commenced business on 01.01.2013 with a capital of Rs.2,00,000. He
Bills Receivable encashed during the year 20,900
immediately bought furniture and fixture for Rs.40,000. On 30.06.2013 he borrowed
Cash Received from debtors 70,000
Rs.1,00,000 from his wife @9% p.a. (interest not yet paid) and introduced a further
Bad Debts written off 2,800
capital of his own amounting to Rs.23,000. A drew at the rate of Rs.6,000 per
Returns Inwards 8,700
month at the end of the month for his household expenses. On 31.012.2013 his
Bills Receivable Dishonored 1,800
position was as follows :
Bills Receivable at the end of the year 6,000
Rs.
Debtors at the end of the year 25,500
Bills Receivable 32,000
Cash Sales as per Cash Book 28,000
Creditors 10,000
[Credit Sales: Rs.95,300; Total Sales: Rs.1,23,300]
Owing for Rent 3,000
(13) (14)

Q-13: From the following particulars extracted from the books of Mr. Lazy kept
CA. Naresh Aggarwal’s under Single Entry System, you are required to find out the figures for credit sales
ACADEMY of ACCOUNTS and credit purchases by showing the Total Debts A/c and Total Creditors A/c also
show Total Bills Receivables A/c and Bills Payable A/c.
Accounting • Costing • Taxation • Financial Management Rs.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Total Debts on 1st January 44,250
Total Creditors on 1st January 26,910
Bills Receivable on 1st January 16,000
Q-11: Find out the amount of Balance of Debtors on 1st January : Bills Payable on 1st January 5,000
Rs. Cash received from Debtors 1,72,350
Sales during the year (Including cash sales of Rs.20,000) 80,000 Discount allowed to customers 1,740
Bills Receivable received from Debtors during the year 20,000 Bad Debts written off 2,550
Cash received from Debtors 60,000 Returns Inward 3,450
Discount allowed to the Debtors 10,000 Bills Receivable accepted by customers 28,800
Bad Debts 6,000 Cash paid to Creditors 89,340
Returns Inward 10,000 Discount allowed by Creditors 1,290
Bad Debts previously written off, now received 4,000 Cash received against Bills Receivable 30,000

AoA
Bills Receivable Dishonored 10,000 Returns to Suppliers 1,560
Balance of Debtors on 31st December 30,000 Bills Payable accepted 19,200
[Rs.66,000] Payments made against Bills Payable 14,000
Total Debtors on 31st December 41,670
Q-12: Find out the amount paid to Creditors and the amount received from Sundry Total Creditors on 31st December 28,350
Debtors from the following: [Credit Sales: Rs.2,06,310; Credit Purchase: Rs.1,12,830;
Rs. Bills Receivable Closing Balance: Rs.14,800; Bills Payable Closing Balance: Rs.10,200]
Sundry Debtors on 31.03.2013 32,800
Sundry Creditors on 31.03.2013 36,805 Q-14: Ram had not kept proper books of accounts. From the following particulars
Total Sales 1,99,900 extracted from his books of accounts ascertain the credit purchases made and
Total Purchases 1,79,400 also the credit sales effected during the year 2013:
Discount Earned 5,200 Rs.
Discount Allowed 4,800 Sundry Debtors on 1st January 2013 80,000
Return Outwards 7,440 Sundry Debtors on 31st December 2013 1,20,000
Returns Inwards 6,444 Sundry Creditors on 1st January 2013 60,000
Bills Received 26,400 Sundry Creditors on 31st December 2013 80,000
Bills Accepted 39,800 Cash Received from Debtors 2,40,000
Bad Debts 4,480 Cash paid to Creditors 2,00,000
Bills Receivable Dishonored 3,800 Discount Received 8,000
Bills Endorsed to Creditors 5,200 Discount Allowed 6,000
Cash Sales 34,000 Bills Receivable on 31st December 2013 1,40,000
Cash Purchases 28,000 Bills Payable on 31st December 2013 1,00,000
Debtors as on 01.04.2012 28,680 Returns Inwards 10,000
Creditors as on 01.04.2012 41,810 Returns Outwards 12,000
[Received from Debtors: Rs.1,23,456; Paid to Creditors: Rs.98,765] Bad Debts 2,000
[Credit Sales: Rs.4,38,000; Credit Purchase: Rs.3,40,000]
(15) (16)

Q-17: From the following particulars, calculate:

CA. Naresh Aggarwal’s (a) Cash paid to sundry creditors during the year.
ACADEMY of ACCOUNTS (b) Cash received from sundry debtors during the year.
Rs.
Accounting • Costing • Taxation • Financial Management Opening Creditors 20,600
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Closing Creditors 34,800
Opening Debtors 66,400
Q-15: From the following information, find out credit sales and credit purchases of Closing Debtors 37,400
Anil Kumar, who keeps his books under single entry system: Opening Stock 50,000
(a) An analysis of cash book for the year reveals the following: Rs. Closing Stock 40,000
Payment to Creditors 1,05,550 Purchases during the year 1,40,000
Receipts from debtors 52,050 Discount allowed by creditors 800
Cash Sales 65,460 Discount allowed to customers 1,000
Bills Payable Paid 16,000 Bills payable issued to creditors 20,000
Bills Receivable Collected 15,000 Bills receivable received from customers 35,000
Discounts allowed 550 Bills receivable dishonored 2,000
Discounts earned 350 The rate of Gross Profit is 25% on selling price. Of the total sales Rs.35,000 were

AoA
(b) Other Information: As on 1.1.2013 As on 31.12.2013 for cash.
Sundry Creditors 4,570 25,640 [Cash received from debtors: Rs.1,60,000; Paid to creditors: Rs.1,05,000; Credit sales Rs.1,65,000]
Sundry debtors 20,000 15,620
Bills receivable 25,400 30,450 Q-18: From the following particulars, calculate the amount of credit sales and
Bills payable 22,470 13,240 credit purchases:
[Credit Sales: Rs.68,270; Credit Purchase: Rs.1,33,740; 01.04.2012 31.03.2013
Bills Receivable Received: Rs.20,050; Bills Payable Issued: Rs.6,770] Rs. Rs.
Bills Payable 6,000 12,000
Q-16: From the following particulars, ascertain the opening balance of sundry Bills Receivable 18,000 9,000
debtors and closing balance of sundry creditors : Debtors 30,000 36,000
Rs. Creditors 24,000 18,000
Sundry Creditors (31.03.2012) 20,600 Transactions during 2012-06 : Rs.
Sundry Debtors (31.03.2013) 37,400 Discount allowed 4,200
Stock (31.03.2012) 50,000 Discount received 2,700
Stock (31.03.2013) 40,000 Bills Receivable matured 13,200
Transactions of 2012-13 Rs. Bills Payable met 6,000
Purchases 1,40,000 Bills Receivable dishonored 3,000
Discount allowed by creditors 800 [Credit sales Rs.14,400; Credit purchases Rs.8,700]
Discount allowed to customers 1,000
Cash paid to sundry creditors 1,05,000 Q-19: Sumit keeps his accounts on single entry. From the following information,
Bills payable issued to them 20,000 you are required to ascertain total purchases during 2013 :
Bills receivable received from customers 35,000 Bills Payable as on 01.01.2013 40,000
Cash received from them 1,60,000 Creditors as on 01.01.2013 48,000
Bills receivable dishonored 2,000 Creditors as on 31.12.2013 32,000
The rate of gross profit is 25% on selling price. Of the total sales Rs.35,000 is for Bills payable as on 31.12.2013 56,000
cash. Cash paid to the creditors 2,41,600
[Credit sales: Rs.1,65,000; Opening Debtors: Rs. 66,400; Closing Creditors: Rs. 34,800]
(17) (18)

CA. Naresh Aggarwal’s Q-21: A small trader does not maintain proper books of accounts. From the following

ACADEMY of ACCOUNTS information, prepare Trading and Profit & Loss Account for the year ended
31.12.2013 and a Balance Sheet as on that date:
Accounting • Costing • Taxation • Financial Management 31.12.2012 31.12.2013
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Rs. Rs.
Furniture 1,500 2,250
Creditors 9,000 6,750
Cash received from debtors 2,00,000 Debtors 27,000 37,500
Cash purchases 2,06,400 Stock 14,700 19,800
Bills payable discharged during the year 71,200 Other transactions are as follows : Rs.
Returns outwards 9,600 Drawings 4,500
Returns inwards 56,000 Fresh Capital Introduced 3,000
[Bills payable accepted: Rs.87,200; Credit purchases: Rs.3,22,400; Total purchases: Rs.5,28,800] Cash Collected from Debtors 91,200
Cash Paid to Creditors 66,000
Q-20: Ajay keeps his books on Single Entry System. From the following information Salaries 18,000
provided by him, prepare a Trading and Profit & Loss Account for the year ended Rent 2,250

AoA
31.12.2013 and Balance Sheet as on that date: Office Expenses 2,700
01.01.2013 31.12.2013 Cash Sales 2,250
Rs. Rs. Cash Purchases 7,500
Creditors 8,000 ? Discount Received 1,050
Bills Payable 7,000 4,000 Discount Allowed 450
Debtors 24,000 28,000 Returns Inwards 1,500
Bills Receivable 5,000 14,000 Returns Outwards 1,200
Building 25,000 25,000 Bad Debts 300
Outstanding Expenses 2,400 4,000 New Furniture Purchased 750
Cash 5,000 23,000 He had Rs. 7,500 cash at the beginning of the year.
Furniture 20,000 24,000 [Credit purchases: Rs.66,000; Cash in hand (closing): Rs.2,250; Opening capital: Rs.41,700
Stock 12,000 4,000 Gross profit: Rs.37,500; Net profit: Rs.14,850; Balance sheet: Rs. 61,800; Credit sales: Rs.1,03,950]
Other information: Rs.
Receipts from Debtors 84,000 Q-22: Sonia keeps her books on Single Entry System. From the following
Bills Receivable Dishonored 2,000 information provided by him, prepare a Trading and Profit & Loss Account for the
Bills Receivable Matured 18,000 year ended 31.12.2013 and Balance Sheet as on that date :
Bills Payable Matured 15,000 31.12.2012 31.12.2013
Paid to Creditors 40,000 Rs. Rs.
Carriage Inwards 8,000 Cash 8,800 2,400
Drawings 24,000 Furniture 40,000 48,000
Sundry Expenses Paid (Including Outstanding of last year) 28,000 Prepaid Expenses - 16,000
Furniture purchased 4,000 Creditors 16,000 ?
There were considerable amount of cash sales. Credit purchase during the year Stock 24,000 8,000
amounted to Rs.50,000. Provide a provision for doubtful debts to the extent of 10% Debtors 48,000 56,000
on debtors. Depreciate Furniture at the rate of 10% and Building at the rate of 5%. Outstanding Expenses 4,800 8,000
[Closing Creditors: 6,000; Cash Sales: 35,000; Opening capital: 73,600; Gross profit: 84,000; Other Information : Rs.
Net profit: Rs.47,950; Closing Balance sheet: Rs.1,11,550; Credit sales: Rs.1,15,000]
(19) (20)

Q-24: The following information is supplied by Mr. Mohan :

CA. Naresh Aggarwal’s Assets and Liabilities 31.3.2012 31.3.2013
ACADEMY of ACCOUNTS Fixed Assets
Rs.
36,000
Rs.
40,000
Accounting • Costing • Taxation • Financial Management Debtors 38,000 ?
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Stock 28,000 38,000
Cash in Hand 16,400 9,600
Cash at Bank 4,400 16,000
Drawings 48,000 Creditors 44,000 39,600
Sundry Expenses 56,000 Oustanding Salaries 2,000 1,200
Furniture purchased 8,000 Transactions of the year 2012-2013 were :
Receipts from Debtors 1,68,000 Rs.
Paid to Creditors 80,000 Receipts from Debtors deposited in Bank 4,86,000
Carriage Inwards 16,000 Returns from Debtors 12,000
There were considerable amount of cash sales. Credit purchases during the year Discount allowed 4,000
amounted to Rs.92,000. Provide a provision for doubtful debts to the extent of 10% Bad Debts 4,000
on debtors. Total Sales 6,00,000

AoA
[Closing Creditors: Rs.28,000; Cash Sales: Rs.33,600; Opening capital: Rs.1,00,000 Cash Sales ?
Gross profit: 85,600; Net profit: 36,800; Balance sheet (Closing): 1,24,800; Credit sales: 1,76,000] Returns to Creditors 6,000
Payments to Creditors by cheque 4,72,400
Q-23: On 01.01.2013, Suraj commenced his business as a with a capital of Cash Purchases 20,000
Rs.5,00,000. On the same day, he purchased Machinery for Rs.1,50,000. He kept Salary and wages paid out of Bank 36,000
his books of account according to the single entry system. Following are the Miscellaneous expenses paid in Cash 10,000
particulars of transactions during the year ended 31.12.2013 : Drawings by Cash 18,800
Rs. Cash withdrawals from Bank 42,000
Purchases (including cash purchases, Rs.2,00,000) 7,50,000 Discount allowed by Creditors 8,000
Sale (including cash sales, Rs.3,50,000) 8,50,000 [Credit Purchase: 4,82,000; Cash Sales: 80,000; Closing Debtors: 52,000; Gross profit: 1,02,000
Sundry expenses paid In cash 35,000 Net profit: Rs.56,800; Balance sheet (Closing): Rs.1,55,600; Opening Capital: Rs.76,800]
Bad debts 2,500
Drawings in cash 70,000 Q-25: The following information is supplied from which you are required to prepare
Salaries paid in cash 1,00,000 the Trading and Profit and Loss Account for the year ended 31.12.2013 and a
Wages paid in cash 22,500 Balance Sheet as on the date :
On 31.12.2013, his sundry debtors were Rs.2,82,500 and his sundry creditors 1.1.2013 31.12.2013
were Rs.1,80,000. Stock in hand was Rs.3,25,000. Goods withdrawn by Suraj for Rs. Rs.
his personal use was of Rs.2,500. Sundry Assets 18,000 20,000
Prepare Trading and Profit and Loss account for the year ended 31.12.2013 with Cash in Hand 8,200 4,800
Balance Sheet as on that date. Stock 14,000 19,000
[Paid to Creditors: Rs.3,70,000; Received from Debtors: Rs.2,15,000; Gross profit: Rs.4,05,000 Cash at Bank 2,200 8,000
Net profit: Rs.2,67,500; Balance sheet: Rs.8,75,000; Closing Cash Balance: Rs.1,17,500] Debtors ? 26,000
Creditors 12,000 9,800
Sundry Expenses Outstanding 1,000 600
(21) (22)

Closing Debtors on 31.12.2013 were Rs.9,500 and closing Creditors Rs.6,400.

CA. Naresh Aggarwal’s No inventory of the Stock on 31st December 2013 was taken, but it was stated that
ACADEMY of ACCOUNTS a Gross Profit at uniform rate of 40% on turnover was made during the year.
Prepare a Bank Account, Trading Account, Profit and Loss Account for the year
Accounting • Costing • Taxation • Financial Management ended 31st December 2013 and a Balance Sheet as on that date.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] [Credit Purchases: Rs.20,900; Credit sales: Rs.35,500; Closing Bank Balance: Rs.2,600;
Closing Stock: 3,600; Gross profit: Rs.14,200; Net profit: Rs.9,300; Closing Balance sheet: 17,700]

Further transactions relating to the year are : Rs.

Q-27: A Trader, who has not kept a complete set of books, asks you to prepare his
Receipts in the year and discounts credited to Debtors A/c 2,45,000
final accounts for the year ended 31st December 2013. You are, however, able to
Complete amounts from Debtors deposited into bank 2,43,000
obtain the following information :
Returns from Debtors 6,000
Summary of his cash Transactions : Rs.
Bad Debts 1,000
Balance of Cash on 1st January 2013 5,170
Sales - Cash and Credit 3,00,000
Takings (Collections) 42,050
Returns to Creditors 3,000
Personal Drawings 3,000
Payments to Creditors by cheque 2,36,200
Purchases 32,400
Cash purchases 10,000
Salaries 2,500

AoA
Salary and wages paid out of Bank 18,000
Rent 1,200
Sundry expenses paid by cash 5,000
Electricity Charges 350
Drawings by cash 9,400
Printing and Stationery 350
Purchase of sundry assets by cheque 2,000
Advertising 450
Cash withdrawn from Bank 21,000
His other assets and liabilities were : 01.01.2013 31.12.2013
Cash sales ?
Debtors 3,350 5,100
Discount allowed by creditors 4,000
Creditors 1,400 3,500
[Credit Purchases: Rs.2,41,000; Cash Sales: Rs.40,000; Opening Debtors: Rs.18,000;
Rent Outstanding 100 100
Gross profit: 51,000; Net profit: 29,400; Opening Capital: 47,400; Closing Balance sheet: Rs.77,800]
Electricity Outstanding 20 15
Advertising Outstanding - 250
Q-26: The books of Mr Goldy on 01.01.2013, disclosed the following position :
The stock on 31st December 2013 was valued at Rs.4,500 but the trader has no
Particulars Rs. Particulars Rs. record of the stock on 1st January 2013. He however informs that he sells his
goods at cost plus 33 1/3%.
Capital 8,000 Furniture 2,000
[Credit Purchases: 2,100; Credit Sales: 43,800; Opening Capital: 9,850; Closing Cash Balance: 6,970;
Sundry Creditors 7,500 Sundry Debtors 9,000
Opening Stock: 2,850; Gross profit: Rs.10,950; Net profit: Rs.5,855; Closing Balance sheet: 16,570]
Stock 4,000
Cash at Bank 500
Q-28: From the information given below, prepare Trading and Profit and Loss
15,500 15,500 Account for the year ended 31.03.2013 and a Balance Sheet as at that date :
01.04.2012 31.03.2013
During the year 2013, the books were very imperfectly kept, but an analysis of the
Rs. Rs.
bank transactions, revealed the following : Rs.
Debtors 8,000 7,400
Receipts from Debtors 35,000
Creditors for purchases 3,000 2,400
Drawings for personal expenses 6,000
Rent Payable 50 30
Payment of salaries 3,000
Cash 750 3,250
Payment to Creditors 22,000
Stock 7,500 8,000
Payment to Rent 1,500
Plant 5,000 6,000
Miscellaneous expenses 400
(23) (24)

(a) Cost of goods sold during the year Rs.1,05,300.

CA. Naresh Aggarwal’s (b) Hema maintains a steady gross profit at the rate of 25% on sale.
ACADEMY of ACCOUNTS (c) Bad debts written off during the period Rs.500 and past bad debts
(already written off) recovered Rs.200.
Accounting • Costing • Taxation • Financial Management You are required to prepare :
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (a) Trading and Profit and Loss Account for the year ending 31.03.2013.
(b) Balance Sheet as on that date.
Cash transactions : Rs. [Credit Purchases: Rs.1,03,300; Total Sales: Rs.1,40,400; Cash Sales: Rs.14,600;
Cash sales 500 Credit Sales: 1,25,800; Gross profit: Rs.35,100; Net profit: Rs.23,350; Opening Debtors: Rs.45,700;
Received from Debtors 35,500 Opening Creditors: Rs.28,400; Opening Capital: Rs.43,700; Closing Balance sheet: Rs.82,950]
Purchase of plant 1,000
Rent Paid 620 Q-30: Sanjay keeps his books on single entry system. He gives you the following
Cash Purchases 1,000 information :
Payment to Creditors 15,600 31.12.2012 31.12.2013
Salaries 6,000 Rs. Rs.
Office Expenes 4,000 Furniture and Fittings 5,000 6,000
Wages 3,000 Stock of materials 3,000 1,000

AoA
Electricity 1,000 Sundry debtors 6,000 7,000
Shortage of Cash to be treated as drawings. Sundry creditors 2,000 -
Other Information : Prepaid expenses - 200
Bad Debts already written off Rs.100. Unpaid expenses 600 1,000
Depreciation on Plant had to be provided at 10%. Cash in Hand 1,100 300
[Credit Purchases: Rs.15,000; Credit sales: Rs.35,000; Drawings: Rs.1,280; Gross profit: Rs.17,000; Receipts and payments during the year : Rs.
Net profit: Rs.4,700; Opening Capital: Rs.18,200; Closing Balance sheet: Rs.24,050] Receipts from debtors 21,000
Paid to creditors 10,000
Q-29: The books of Hema showed the following figures : Cartage 2,000
31.03.2012 31.03.2013 Drawings 12,000
Rs. Rs. Sundry expenses 16,000
Cash in hand and at Bank 3,400 19,950 Furniture purchased for Cash 1,000
Stock in trade 20,000 25,000 Prepare a Trading and Profit & Loss Account for the year ended 31.12.2013 and a
Trade Debtors ? 35,000 Balance Sheet as on date, after providing for bad debts at 10%. There was a
Trade Creditors ? 18,500 considerable amount of cash sales.
Sundry Assets 3,000 3,000 [Credit Purchases: Rs.8,000; Cash Sales: Rs.19,200; Credit Sales: Rs.22,000;
The cash book showed the following figures : Rs. Gross profit: 29,200; Net profit: 12,300; Opening Capital: 12,500; Closing Balance sheet: Rs.13,800]
Receipts from Debtors 1,36,000
Private Dividends paid in 2,000 Q-31: Sumit Sharma who keeps his books by single entry system instructs you to
Direct Expenses 7,000 prepare his Balance Sheet an on 31st December 2013 together with the Trading
Indirect Expenses 12,650 and Profit and Loss Account for the year ended on that date.
Drawings 4,600 Upon analysing his cash book for that year you find the following : Rs.
Payments to Creditors 1,12,000 Balance of cash at Bank 01.01.2013 8,700
Discount allowed by them 1,200 Cash received from Debtors 76,800
Additional information : Cash received on Bills Receivable 24,000
Commission received 3,000
(25) (26)

CA. Naresh Aggarwal’s

Cash transactions : Rs.
ACADEMY of ACCOUNTS Cash sales 2,500
Cash Purchases 5,000
Accounting • Costing • Taxation • Financial Management
Received from Debtors 1,77,500
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] Payment to Creditors 78,000
Purchase of plant & Machinery 5,000
Rent Paid 3,100
Cash sales 17,200 Salaries 30,000
Payment to Creditors 54,200 Office Expenes 20,000
Drawings 15,040 Wages 15,000
Paid Bills Payable 18,600 Electricity 5,000
Wages 24,000 Shortage of Cash to be treated as drawings.
Salaries 13,000 Other Information :
Rent, Rates and Taxes 11,560 Bad Debts already written off Rs.500.
Particulars of his other assets and liabilities are as follows : Depreciation on Plant & Machinery had to be provided at 10%.
01.01.2013 31.12.2013 [Credit Purchases: Rs.75,000; Credit sales: Rs.1,75,000; Drawings: 6,400; Gross profit: Rs.85,000;

AoA
Rs. Rs. Net profit: Rs.23,500; Opening Capital: Rs.91,000; Closing Balance sheet: Rs.1,20,250]
Capital 83,300 ?
Stock 37,400 46,800
Debtors 24,000 28,000
Creditors 18,000 3,000 •••••••••••••••••••••••••
Bills Receivable 8,000 10,000
Bills Payable 2,000 400
Furniture 1,200 1,200
Buildings 24,000 24,000
Bank 8,700 ?
Make Reserve for Doubtful Debts amounted to Rs.2,000 and write off 5%
depreciation on Buildings and Furniture. Rs.3,000 are outstanding for wages.
[Credit Purchases: Rs.56,200; Credit sales: Rs.1,06,800; Closing Bank (Overdraft): Rs.6,700;
Bills Receivable Received: Rs.26,000; Bills Payable Accepted : Rs.17,000;
Gross profit: Rs.50,200; Net profit: Rs.25,380; Closing Balance sheet: Rs.1,06,740]

Q-32: From the information given below, prepare Trading and Profit and Loss
Account for the year ended 31.03.2013 and a Balance Sheet as at that date :
01.04.2012 31.03.2013
Rs. Rs.
Stock 37,500 40,000
Debtors 40,000 37,000
Creditors for purchases 15,000 12,000
Plant & Machinery 25,000 30,000
Rent Payable 250 150
Cash 3,750 16,250
(27) (28)

Hints
CA. Naresh Aggarwal’s
Cash Account
ACADEMY of Account
Total Debtors ACCOUNTS Particulars Rs. Particulars Rs.
Accounting • Costing • Taxation
Particulars Rs. • Financial ManagementRs.
Particulars
To Balance b/d (Opening Balance) xxx By Purchases (Cash) xxx
To West Patelb/d
Balance Nagar, New Balance)
(Opening Delhi. Ph:8800215448.
xxx ByWebsite: [Link] xxx
Cash (Collection) To Sales (Cash) xxx By All Expenses (Paid) xxx
To Sales (Credit) xxx By Bad Debts xxx To Bills Receivables (Collected) xxx By Bills Payable (Paid) xxx
To Bills Receivables (Dishonored)2 xxx By Discount Allowed xxx To Sundry Assets (Sold) xxx By Sundry Assets (Purchased) xxx
By Bills Receivables (Drawn)1 xxx To Capital (Additional Capital) xxx By Drawings xxx
By Sales Returns xxx By Balance c/d (Closing Balance) xxx
By Balance c/d (Closing Balance) xxx
xxxx xxxx
xxxx xxxx

Total Bills Receivables Account

Total Purchases = Cash Purchases + Credit Purchases
Particulars Rs. Particulars Rs. Total Sales = Cash Sales + Credit Sales
To Balance b/d (Opening Balance) xxx By Cash (Bill Collected) xxx Cost of Goods Sold = Opening Stock + Purchases + Direct Exp. - Closing Stock

AoA
To Debtors (Bills Drawn)1 xxx By Bank (Bills Discounted) xxx
or Sales - Gross Profit
By Discount (Charged by Bank) xxx
By Debtors (B/R Dishonored)2 xxx
By Creditors (B/R Endorsed)3 xxx
By Balance c/d (Closing Balance) xxx Calculations of Profit or Loss
xxxx xxxx

Total Creditors Account Capital at the end / Closing Capital xxxx

Particulars Rs. Particulars Rs. Add: Drawings xxx

Less: Additional / Further Capital xxx
To Cash (Collection) xxx By Balance b/d (Opening Balance) xxx
To Discount Received xxx By Purchases (Credit) xxx Less: Capital at the beginning / Opening Capital xxx
To Purchases Returns xxx By Bills Payables (Dishonored)5 xxx
To Bills Receivables (Endorsed)3 xxx ------------
Profit (+) / Loss (-) xxxx
To Bills Payables (Accepted)4 xxx ------------
To Balance c/d (Closing Balance) xxx
xxxx xxxx

Total Bills Payables Account

Particulars Rs. Particulars Rs.

To Cash (Bills Paid) xxx By Balance b/d (Opening Balance) xxx
To Bills Payables (Dishonored)5 xxx By Creditors (B/P Accepted)4 xxx
To Balance c/d (Closing Balance) xxx
xxxx xxx
CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

For Eenquiries
Call or whatsapp: 8800215448

AoA
(Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)
Revision Exercise Email: [Link]@[Link]
Website: [Link]

Watch us on

[Link]
(1) (2)

1. Started business with Rs. 12,000.

CA. Naresh Aggarwal’s 2. Bought goods on credit Rs. 1,000.
ACADEMY of ACCOUNTS 3.
4.
Bought Machinery for Rs. 2,000.
Paid Rent Rs. 2,500 and Security deposit Rs. 1,000.
Accounting • Costing • Taxation • Financial Management 5. Paid to creditors Rs. 380 in settlement of claim of Rs.400.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 6. Depreciate Machine by Rs. 300.
7. Rent due but not paid Rs. 2,500.
[Capital Rs.6,720; Creditors Rs.600; O/s Expenses Rs.2,500 =
Accounting Equations Cash Rs.6,120; Goods Rs.1,000; Machine Rs.1700; Deposit Rs.1,000]

Q-1: Make the ‘Accounting Equation’ of the following transactions: Q-5: Make the ‘Accounting Equation’ of the following transactions:
1. Suresh started business with cash Rs. 30,000. 1. Started business with cash Rs. 15,000.
2. Cash deposited into bank Rs. 12,000. 2. Paid Rent Rs. 1,000 including Rs. 400 as advance.
3. Purchased goods worth Rs. 5,000 and paid by cheque. 3. Paid salaries Rs. 1,500 and outstanding salaries were Rs. 500.
4. Purchased Furniture of Rs. 2,500. 4. Received commission Rs. 2,500 and remain outstanding Rs. 500.
5. Sold goods for cash Rs. 2,500 (cost Rs. 2,000). 5. Received fees in advance Rs. 1,200 to complete an assignment.
6. Suresh withdrawn Rs. 3,000 for personal use in cash. 6. Paid son’s school fees Rs. 500 from office cash.

AoA
7. Paid Salaries Rs. 3,500. 7. Bought Furniture for personal use Rs. 3,000.
8. Paid Electricity Bill Rs. 1,000 by cheque. 8. Assignment could not be completed therefore all fees returned.
[Capital Rs.23,000 = Cash Rs.11,500; Bank Rs.6,000; Goods Rs.3,000; Furniture Rs.2,500] [Capital Rs.11,900; O/s Exp Rs.500 = Cash Rs.11,500; Adv. Exp Rs.400; O/s Incomes Rs.500]

Q-2: Make the ‘Accounting Equation’ of the following transactions: Q-6: Megha started business on 01.04.2011 with capital of Rs.1,00,000. On 31.03.2012
1. Deepak started business with Rs. 45,000 in bank and Rs. 25,000 in cash. her assets were Rs.1,50,000 and liabilities were Rs.20,000. Find out her closing capital
2. Purchased goods for cash costing Rs. 9,000 and profits earned during the year.
3. Sold goods costing Rs. 2,500 for Rs. 2,000 received by cheque. [Capital: Rs.1,30,000; Profit: Rs.30,000]
4. Purchased Machine costing Rs. 5,000 and paid by cheque.
5. Withdrawn Rs. 4,000 from bank for private use. Q-7: Calculate total equity and amount of owner’s equity at the end, if:
6. Rs. 10,000 taken from Neha as loan. Owner’s equity at the beginning is Rs. 40,000.
7. Received commission Rs. 2,000. Equity of creditors is Rs. 10,000.
8. Paid to Neha for loan Rs. 4,000 and for interest Rs. 500. Revenue during the period is Rs. 15,000.
9. Paid General Expenses Rs. 2,600 and for Stationery Rs. 400. Expenses during the same period are Rs. 12,500.
[Capital Rs.64,000; Loan Rs.6,000 = Cash Rs.20,500; Bank Rs.38,000; Goods Rs.6,500; Machine Rs.5,000] [Total Equity: Rs.52,500; Owner’s Equity: Rs.42,500]

Q-3: Make the ‘Accounting Equation’ of the following transactions: Q-8: Pankaj started a business on 01.04.2011 with a capital of Rs.1,80,000 and he
1. Started business with Rs. 15,000. borrowed Rs.60,000 from a friend which is not yet paid. He earned a profit of Rs.30,000
2. Purchased goods costing Rs. 4,000 from Sonu on credit. during the financial year 2011-2012 and withdrew cash Rs.20,000 for his private use.
3. Sold goods to Mona costing Rs. 1,200 for Rs. 1,500 on credit. What is amount of his capital and total assets on 31.03.2012.
4. Sold good costing Rs. 800 for cash Rs. 1,000. [Capital: Rs.1,90,000; Total Assets: Rs.2,50,000]
5. Received from Mona Rs. 1,400 in full settlement.
6. Received Rent from tenant Rs. 1,200. Q-9: Reshma started a business on 01.07.2011 with a capital of Rs.90,000 and a
7. Paid to Sonu Rs. 3,950 in full settlement. loan of Rs.30,000 borrowed from Bank. During the year she had paid Rs.10,000 of
[Capital Rs.16,650 = Cash Rs.14,650; Goods Rs.2,000] loan. On 30.06.2012 her assets were Rs.1,60,000. Find out her capital as on 30.06.2012
and profit/loss made by her during the year ending 30.06.2012.
Q-4: Make the ‘Accounting Equation’ of the following transactions: [Capital: Rs.1,40,000; Profit: Rs.50,000]
(3) (4)

12. Paid for salary Rs. 2,500 and for advance salary Rs. 500.
CA. Naresh Aggarwal’s 13. Neha recovered and received half of the remaining money.
ACADEMY of ACCOUNTS 14. Furniture purchased for Rs. 6,000.
15. Deposited into Bank Rs. 3,000
Accounting • Costing • Taxation • Financial Management 16. Machinery purchased of Rs. 5,000 and paid by cheque.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 17. Bank allowed interest Rs. 150.
18. Insurance premium of Ranjeet (proprietor) paid by firm’s Bank A/c Rs. 1,250.
Journal, Ledgers & Trial Balance 19. Ram introduced further capital Rs. 7,000 and deposited into Bank.
20. Customer directly deposited into Bank Rs. 1,150.
Q-1: Show the Journal Entries of the following transactions : 21. Depreciate Furniture by 10% and Machinery by 20%
1. Ramesh started business with cash Rs. 35,000. 22. Interest allowed to capital @ 5% on opening Balance.
2. Cash purchases Rs. 2,000. 23. Rent Received Rs. 1,200 and security deposit Rs. 3,000.
3. Sold goods to Sujata on credit Rs. 3,000. 24. Bank charged for outstation cheque Rs. 45.
4. Cash deposited into Bank Rs. 7,000. 25. Interest charged on drawings Rs. 30.
5. Sujata become insolvent and received only 60% of total debt. 26. Discounted a Bill from bank of Rs. 2,000 at 2%.
6. Purchased machinery of Rs.9,000 and paid half in cash and balance by cheque. 27. Fees received in advance Rs. 1,800.
7. Sujata recovered and paid the half of the bad debts. 28. Paid to Anita Rs. 980 by cheque in full settlement of his claim of Rs. 1,000.

AoA
8. Received fees Rs. 1,500 and remain outstanding Rs. 300.
9. Paid Salary Rs. 1,200 including Rs. 200 as advance. Q-3: Show the Journal Entries, Ledger Posting and Trial Balance of the following
10. Wages due but not paid Rs. 750. transactions :
11. Rent due but not received Rs. 850 Feb.1 Hema started business with cash Rs. 35,000 and goods worth Rs. 5,000.
12. Prepaid Insurance Rs. 550. Feb.4 Cash purchases Rs. 6,000.
13. Received Commission in advance Rs. 950. Feb.7 Sold goods to Neha for Rs. 4,000.
14. Bank allowed interest Rs. 75. Feb.14 Purchased furniture of Rs. 5,000 from Mahesh for Cash.
15. Bank charges are Rs. 25. Feb.18 Received from Neha Rs. 3950 in full settlement.
16. Goods of Rs. 600 and Cash Rs. 1,500 given in charity. Feb.20 Hema (proprietor) brought further cash in business Rs. 7,500.
17. Goods lost by fire Rs. 750. Feb.24 Cash sales Rs. 3,500.
18. Sold goods to Vijay of Rs.5,000 at 20% trade discount and 5% cash discount. Feb.28 Depreciate Furniture at the rate of 5%.
[Debit Balances: Cash Rs.38,950; Purchases Rs.11,000; Furniture Rs.4,750; Discount Rs.50;
Q-2: Show the Journal Entries of the following transactions : Depreciation Rs.250; Credit Balances: Capital Rs.47,500; Sales Rs.7,500]
1. Opening Balances of Assets: Cash Rs.30,000; Machinery Rs.15,000; Stock
Rs.5,000; Ramesh Rs.4,000; Sunil Rs.1,000. Liabilities: Bank Loan Rs.10,000;
Outstnading Salaries Rs.4,000; Deepak Rs.3,000; Rajesh Rs.3,000. Cash Book
2. Purchased goods form Minakshi worth Rs. 6,000.
3. Sold goods 2,500 for cash to Dinesh. Q-1: Enter the following transactions in a Bank Column Cash Book :
4. Purchased goods from Rajesh Rs. 4,000 for cash Apr. 1 Started business with cash Rs. 35,000.
5. Paid wages Rs. 2,000 and outstanding remained Rs. 400. ” 2 Opened an account with Bank by deposit of Rs. 13,000.
6 Received commission form Rekha Rs.1,000 and outstanding remained Rs.500. ” 4 Bought office building worth Rs. 9,000 and paid by cheque.
7. Sold goods to Neha worth Rs. 5,000 at 20% trade discount. ” 8 Bought goods in cash Rs. 3,000.
8. Paid to Minakshi Rs. 5,900 in full settlement. ” 11 Sold goods to Tripti on credit Rs. 1,200.
9. Sold goods to sanjay at Rs. 4,000. ” 14 Paid wages Rs. 500.
10. Cash received from sanjay and allowed him 5% cash discount. ” 21 Bought goods from Himanshu on credit Rs. 1,800.
11. Neha become insolvent and received only 60% in total debt. ” 22 Bought office Computer Rs. 5,000.
” 22 Cash received from Tripti in full settlement Rs. 1160.
(5) (6)

” 15 Hari (a bad debts earlier) paid Rs. 500.

CA. Naresh Aggarwal’s 16 Withdrawn for office use Rs. 3,000.
”
ACADEMY of ACCOUNTS ”
”
17
17
Purchased Machinery and paid by cheque Rs. 7,000.
Cheque received from Reena Rs. 2,000.
Accounting • Costing • Taxation • Financial Management ” 18 Depreciation on Machinery is Rs. 700.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] ” 19 Reena’s Cheque endorsed to Mukesh in full settlement of his debt Rs.2,050.
” 20 Outstanding repairs are amounted Rs. 500.
” 24 Cash deposited into Bank Rs. 3,000. 21 Received a cheque from Kumar of Rs. 1,000 in full settlement of Rs. 1,020.
”
” 25 Paid rent by cheque Rs. 700. 22 Kumar’s Cheque is deposited into Bank.
”
” 26 Paid to Himanshu by cheque Rs. 1750 in full settlement. 23 Kumar’s Cheque returned dishonored.
”
” 28 Drew from Bank for office use Rs. 1,000. 28 Sold goods to Kavita on credit costing Rs. 1,500 for Rs. 2,000.
”
” 30 Drew from Bank for personal use Rs. 350. 29 Kavita become insolvent and paid only 25 paise in Rupee.
”
[Cash: Rs.12,660; Bank: Rs.3,200] 30 Cash withdrawn from Bank for personal use Rs. 1,500.
”
” 30 Bank charged interest on overdraft Rs. 50.
Q-2: Enter the following transactions in a Two Column Cash Book : [Cash: Rs.16,310; Bank Overdraft: Rs.4,100]
Jan. 1 Cash in hand Rs. 6,500 and at Bank Rs. 8,800.
” 2 Cash received from Bhagat Rs. 1,000 and half deposited into Bank. Q-4: Prepare a simple and columnar petty cash book for one week from the following

AoA
” 4 Cheque received from Sonia Rs. 850, discount allowed her Rs. 50. information using imprest system :
” 6 Paid to Sanjay Rs. 980 by cheque, discount allowed by him Rs. 20. Jan. 1 Cash received from main cashier Rs. 100.
” 7 Sonia’s Cheque deposited into Bank. ” 1 Paid for stationery Rs. 5.
” 7 Purchased goods form Laxmi Traders Rs. 1,500 and paid by cheque. ” 2 Paid conveyance Rs. 12.
” 11 Sold goods to Meenu worth Rs. 1,000 at 10% trade discount on credit. ” 3 Paid for refreshment Rs. 3.
” 14 Paid Salary in cash Rs. 400. ” 3 Paid for postage stamps Rs. 2.
” 15 Cash withdrawn form Bank for office use Rs. 1,500. ” 5 Paid for Photocopies Rs. 4.
” 17 Cheque received from Meenu Rs. 880 in full settlement. ” 6 Paid for Tea Rs. 2.
” 21 Cash withdrawn for personal use Rs. 1,000. ” 6 Paid for Telephone calls Rs. 8.
” 26 Cash withdrawn from Bank for personal use Rs. 700. ” 6 Paid for courier charges Rs. 15.
” 27 Meenu’s cheque deposited into Bank. ” 6 Paid for Cold drinks Rs. 13.
” 31 Bank allowed interest Rs. 50. [Cash Balance Rs. Rs.36]
[Cash: Rs.7,100; Bank: Rs.6,400]
Q-5: Prepare a simple and columnar petty cash book for ‘ten days’ from the following
Q-3: Enter the following transactions in a Two Column Cash Book : information using imprest system :
Jan.1 Cash in hand Rs. 12,000. Feb. 11 Cash in hand Rs. 150.
” 1 Overdraft at Bank Rs. 2,200. ” 12 Conveyance paid Rs. 15.
” 2 Purchased goods from Ramesh on credit Rs. 1,000. ” 12 Paid for pen and pencils Rs. 10.
” 4 Cash paid to Ramesh Rs. 990 in full settlement of his debt. ” 14 Purchased postage stamps Rs. 8.
” 5 Cash Sales Rs. 7,000. ” 15 Paid for cartage Rs. 5.
” 6 Cash deposited into Bank Rs. 5,000. ” 16 Bought plain papers Rs. 4.
” 7 Sold goods to Mohan on Credit Rs. 4,000. ” 17 Paid for tea and coffee Rs. 12.
” 8 Received commission from Neha Rs. 1,200 through cheque. ” 18 Paid for photocopies Rs. 6.
” 9 Neha’s cheque deposited into Bank. ” 19 Bus fare Rs. 5.
” 10 Cheque received from Mohan Rs.3,950 in full settlement. ” 19 Paid to laborers Rs. 15.
” 11 Paid for wages Rs. 500 by cheque and Rs. 700 in Cash. ” 20 Paid cash for Repairs Rs. 18.
[Cash Balance Rs. Rs.52]
(7) (8)

Jan. 30 Suresh Stationery House, Delhi returned goods :

CA. Naresh Aggarwal’s 2 Dozen Pencils
ACADEMY of ACCOUNTS 3 Dozen Pens

Accounting • Costing • Taxation • Financial Management Jan. 31 Returned to Murari Stationery Mart, Noida :
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 2 Gross Note Books
6 Dozen Rubbers
[Purchase Book: Rs.4,305; Sales Book: Rs.1,668
Subsidiary Books & Journal Proper Purchase Return Book: Rs. 432; Sales Return Book: Rs.85.50]

Q- 1 : Enter the following transactions in the Subsidiary Books of M/s Rich Ltd.: Q- 2 : Prepare ‘Journal Proper’ from the following transactions :
Jan. 2 Purchased from Sanjay Stationers, Agra : July 1 Purchased from Sonia & Co. on credit :
60 Dozen Pencils @ Rs. 10 per doz. 100 copies of Accountancy Books @ Rs. 50 each.
30 Dozen Pens @ Rs. 15 per doz. 50 copies of Management Books @ Rs. 20 each.
Trade Discount 10% Trade Discount 20%

Jan. 3 Sold to Suresh Stationery House, Delhi : July 6 Sold to Dhiraj Book Depot, for cash :

AoA
40 Dozen Pencils @ Rs. 15 per doz. 80 Copies of Economics Books @ Rs. 60 each
20 Dozen Pens @ Rs. 20 per doz. 60 Copies of Commerce Books @ Rs. 50 each
Trade Discount 5% Trade Discount 15%

Jan. 6 Bought from Murari Stationery Mart, Noida : July 10 Bought from Ravi Furniture Co., on credit :
10 Gross Note Books at the rate of Rs. 20 per doz. 20 Chairs @ Rs. 120 each.
15 Gross Rubbers at the rate of Rs. 10 per doz. 10 Tables @ 300 each.
Trade Discount @ 20%
July 14 Bought from Sangeeta Book House :
Jan. 12 Sold old newspapers for Rs. 250 200 Copies of Mathematics Books @ Rs. 50 each.
150 Copies of Commerce Books @ Rs. 40 each.
Jan. 19 Sold to Mehta Stationery Shop, Kanpur
6 Dozen Note Books at the rate of Rs. 240 per Gross. Trade Discount 10%
20 Dozen Rubbers at the rate of Rs. 180 per Gross.
Trade Discount @ 10% July 20 Sold to ‘Ramu Kabari’ on credit :
8 Kg. old News Papers @ Rs. 5 per Kg.
Jan. 21 Sold to Mohan Stationery House, Lucknow for Cash 2 old chairs @ Rs. 30 each.
2 Dozen Pencils @ Rs. 2 per piece.
3 Dozen Note Books at the rate of Rs. 3 per piece. July 25 Sold to Ankit Book Depot :
Trade Discount @ 10% 30 Copies of Commerce @ Rs. 40 each.
20 Copies of Accountancy Books @ 50 each.
Jan. 28 Sold to Amar & Sons, Allahabad: Trade Discount @ 10%
10 Reams of Paper @ Rs. 40 per Ream
Trade Discount 15% July 25 Returned to Sangeeta Book House :
15 Copies of Mathematics Books
Jan. 28 Sold to Gulab & Co., Allahabad on credit 20 Copies of Commerce Books
2 Chairs @ Rs. 1,200 each.
(9) (10)

Cash Book but it could not have been presented in any case.
CA. Naresh Aggarwal’s (c) Cheques totalling Rs.7,600 deposited with the Bank have not yet been collected
ACADEMY of ACCOUNTS and a cheque for Rs.3,000 has been dishonored.
(d) A bill for Rs.8,000 was retired by the Bank under a rebate of Rs.200 but the full
Accounting • Costing • Taxation • Financial Management amount of the bill was taken in the bank column of the Cash Book.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (e) A bill for Rs.3,250 discounted with the Bank is entered in the Cash Book without
recording the discount charge of Rs.250.
(f) A bill receivable of Rs.400 which was discounted with the Bank was dishonored
July 27 Sold to Brijesh & Co. :
on due date but no entry was made in cash book for dishonor of the bill.
80 Copies of General English Book @ Rs. 60 each.
[Balance as per Cash Book: Rs.12,850]

July 28 Sold to Sunrise Book Store, on credit

Q-3: Prepare Bank Reconciliation Statement on 31st December, 2011 from the
2 Dozen Parker Pen @ Rs. 30 per Pen
following particulars :
5 Dozen Note Books @ Rs. 5 per Note Book
(a) Mahima’s overdraft as per Pass Book Rs. 7,500 as at 31st Dec.
8 Dozen Pencils @ Rs. 10 per Dozen
(b) On 30th December, Cheques had been issued for Rs. 15,000 of which cheques
worth Rs. 3,000 only had been encased up to 31st December.
July 28 Returned by Brijesh & Co. :
(c) Cheques amounting to Rs. 5,500 had been paid into the bank for collection but of

AoA
5 Books
these only Rs. 2,500 had been credited in the Pass Book.
(d) The Bank has charged Rs. 150 as interest on overdraft and the intimation of
July 29 Received cash from Ankit Book Depot Rs. 1,500.
which has been received on 2nd January 2012.
(e) The Bank Pass Book shows credit for Rs. 1,700 representing Rs. 400 paid by
July 30 Returned by Ankit Book Depot :
debtor of Mahima direct into the Bank and Rs. 1,300 collected direct by Bank in
2 Copies of Accountancy Books
respect of interest on Mahima's investment. Mahima had no knowledge of these
[Purchase Book: Rs.19,200; Sales Book: Rs.7,880
items.
Purchase Return Book: Rs. 1,395; Sales Return Book: Rs.390]
(f) A cheque for Rs. 800 has been debited in bank column of Cash Book by Mahima,
but it was not sent to Bank at all.
[Overdraft as per Cash Book: Rs.17,250]
Bank Reconciliation Statement
Q-4: On 31st December 2011, the Cash Book of Rohit showed an overdraft of
Q-1: The Cash Book shows a balance of Rs. 10,500. On comparing the Cash Book
Rs.12,000; which did not agree with the balance of the Pass Book. You find that:
with the Pass Book, the following discrepancies were noted :
(a) Rohit had paid into the Bank on 28th December, four cheques of Rs.2,000;
Rs.
Rs.4,000; Rs.3,000 and Rs.2,500. Of these the cheque for Rs.6000 was credited
(i) Cheques issued but not yet presented for payment 1,600
by the Bank in January 2012.
(ii) Cheques deposited in bank but not collected 2,900
(b) Rohit had issued on 27th December three cheques for Rs.5,000; Rs.2,000 and
(iii) Bank paid insurance premium 550
Rs.4,000. The first two cheques were presented to the Bank for payment in
(iv) Bank charges 120
December, and third cheque in January 2012.
(v) Directly deposited by a customer 1,800
(c) A cheque of Rs.500 drawn on his Saving Deposit Account has been shown as
(vi) Interest on investment collected by bank 300
drawn on Current Account.
[Balance as per Pass Book: Rs.10,630]
(d) A cheque issued and presented for payment of Rs.150 on 28th December was
wrongly taken in the cash column of the Cash Book.
Q-2: On 31st December, 2011 the Pass Book of a merchant shows a credit balance
(e) In the Pass Book a bank charges of Rs.20 was recorded twice while another
of Rs.4,300.
bank charges were of Rs.25 but non of them were recorded in the Cash Book.
(a) A cheque for Rs.3,700 drawn by him has not yet been presented for payment.
You are required to prepare a Bank Reconciliation Statement as 31.12.2011.
(b) A post-dated cheque for Rs.1,200 has been debited in the bank column of the
[Overdraft as per Pass Book: Rs.13,715]
(11) (12)

CA. Naresh Aggarwal’s

ACADEMY of ACCOUNTS Rectification of Errors
Accounting • Costing • Taxation • Financial Management Q-1: Rectify the following errors
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (a) Wages paid for construction of building was debited to wages account with
Rs.6,500.
Q-5: Prepare Bank Reconciliation Statement on 31st January from the following (b) Wages paid for extension building was debited to wages account amounting to
Cash Book and Pass Book : Rs.2,000.
Cash Book (c) Salary Rs.800 paid to Sudhir was wrongly debited to his personal account.
(Bank Column only) (d) Furniture purchased on credit from Rajan for Rs.1,200 was entered in the
Purchases Book.
Date Receipts Amount Date Payments Amount
(e) Rs.2,500 spent on the extension of Buildings was debited to Buildings Repairs
Jan.1 To Balance b/d 8,500 Jan.3 By Bhavna 1,000 Account.
Jan.10 To Cash A/c 1,800 Jan.5 By Sunil 800 (f) Rs.1,700 spent for repairs of building has been debited to Building Account.
Jan.17 To Anil 1,300 Jan.8 By Deepak 1,200
Jan.20 To Rajan 2,200 Jan.16 By Cash A/c 2,000 Q-2: How would you rectify the following errors :

AoA
Jan.28 To Geeta 1,600 Jan.21 By Dinesh 1,100 (a) The total of the Purchases Book has been undercast by Rs. 40.
Jan.28 To Sonia 1,500 Jan.25 By Insurance A/c 1,400 (b) A sum of Rs.450 written off as depreciation on machinery has been debited to
Jan.30 By Mr. Verma 450 Machinery Account.
Jan.31 By Furniture A/c 1,150 (c) A credit sale of goods Rs.350 to Ramesh has been wrongly passed through the
Jan.31 By Balance c/d 7,800 Purchases Book.
(d) Goods worth Rs.650 returned by Hemant have not been recorded anywhere.
16,900 16,900 (e) Sale of old furniture for Rs.2,500 was treated as sale of goods.
Feb.1 To Balance b/d 7,800 (f) Rent of proprietor's residence Rs.1,500 was debited to Rent Account.

Pass Book Q-3: How will you rectify the following errors:
(a) Rs.300 paid to Seeta posted to Geeta’s A/c.
Date Particulars Withdrawal Deposits Balance
(b) Furniture worth Rs.1,050 purchased from Nisarg on credit omitted to be recorded
(Debit) (Credit)
in the books.
Jan. 1 By Balance - - 8,500 Cr. (c) The total of Returns Inward Book was added Rs.100 instead of Rs.120.
Jan. 5 To Bhavna 1,000 7,500 Cr. (d) Sales Book was undercast by Rs.70.
Jan. 10 By Cash - 1,800 9,300 Cr. (e) A sale of old machinery amounting to Rs.1,650 has been credited to Sales Account.
Jan. 15 By Rajan - 2,200 11,500 Cr. (f) Cash received from Ranjana Rs.2,100 was credited to Sanjana’s.
Jan. 16 To Sunil 800 - 10,700 Cr.
Jan. 16 To Cash 2,000 - 8,700 Cr. Q-4: Rectify the following errors :
Jan. 24 To Dinesh 1,100 - 7,600 Cr. (a) An invoice received from Ankit for Rs.1,400 was entered in the books as Rs.140
Jan. 26 To Kirti 450 - 7,150 Cr. only.
Jan. 28 By Neha 1,450 8,600 Cr. (b) A bill of Rs.2,550 for old furniture of the business sold to Chetali was entered in
Jan. 31 To Furniture Mart 1,150 - 7,450 Cr. the Purchases Day Book.
Jan. 31 To Telephone Bill 750 - 6,700 Cr. (c) Bill received from Jeewan for repairs done to Machinery Rs.250 and three table
Jan. 31 To Bank Charges 30 - 6,670 Cr. fans supplied for Rs.1,750 was wrongly entered in the Invoice Book.
Jan. 31 By Interest - 80 6,750 Cr. (d) Rs.2,900 paid for repairs done to the Building were debited to Building Account.
(13) (14)

(a) The total of the Discount column on the credit side of the Cash Book Rs. 120 was
CA. Naresh Aggarwal’s not posted in the Ledger.
ACADEMY of ACCOUNTS (b) The total of the Purchases Book was Rs. 150 short.
(c) A sale of Rs. 1,200 to Akshay was entered in the Sales Book as Rs. 2,100.
Accounting • Costing • Taxation • Financial Management (d) From the Purchases Book Sohan’s Account was debited with Rs. 1,550.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] (e) Cash Rs. 1,250, received from Manju against debt previously written off, was
credited to her account.
(f) Purchase of office furniture Rs. 1,650 on credit from ‘Bhumika Furnitures’ was
(e) Rs.1,750 paid for Rent were debited to Landlord’s Account
entered in the Purchases Book.
(f) Rs.2,100 paid to Deepa against our acceptance were debited to her Account.
(g) While carrying forward the total of the Sales Book from one page to another, the
amount of Rs. 7,450 was written as Rs. 7,540.
Q-5: The Trial Balance of Radhika did not agree and the difference in books was
Rectify the errors by means of suitable Journal entries and show the Suspense
carried to Suspense Account. Pass the entries required to rectify the following errors
Account.
which accounted for the difference. Also prepare the Suspense Account :
[Suspense Account Closing Balance Rs.4,730 Dr. Excess]
(a) A Sales Invoice for Rs.2,700 for goods sold on credit to Bharat was entered in the
Purchases Book but in the Ledger the amount was correctly debited to the account
of Bharat.

AoA
(b) Goods bought on credit from Arun for Rs.1,150 were wrongly debited to his account
as Rs.1,510.
Theoretical Questions
(c) A Cash discount of Rs.30 allowed to Geeta remained unposed to her account in
Chapter 1 (Meaning and Objectives of Accounting)
the Ledger from the Cash Book.
(d) The Sales Book for the month was overcast by Rs.80.
1. What is Accounting ? What are its main objectives ?
(e) Rs.570 paid for repairs to building was debited to Building Account as Rs.750.
2. What are the main characteristics of Accounting ?
[Suspense Account opened with a credit of Rs.8,190]
3. Explain the advantages and limitations of Accountancy ?
4. Which parties are interested in Accountancy and Why ?
Q-6: The accountant of a firm finds that the trial balance as on 31st December 2011
5. How does Accounting Differ with Book Keeping ?
is out by an excess debit of Rs. 2,880. He placed the amount in the Suspense Account.
6. Explain the followings :
In the first week of January, 2012, he discovered the following errors. Pass Journal
Capital, Assets, Liabilities, Drawings, Capital Expenditure, Fixed Assets, Revenue
entries necessary to rectify these errors and show the Suspense Account as it would
Expenditure, Debtors, Creditors, Revenue, Wasting Assets, Current Assets.
appear at the end of the week.
(a) Cash paid to Bharat Rs. 750 was posted on the credit of Bharti’s Account as Rs.
570.
Chapter 2 (Accounting Assumptions and Principles)
(b) Discount allowed by Mohan Rs. 75 was not entered in the Cash Book but Mohan’s
stands debited correctly.
1. What do you mean by Accounting Assumptions ?
(c) No entry was made for goods worth Rs. 450 taken away by proprietor for personal
2. Briefly Explain the following Assumptions:
use.
(a) Business Entity Assumption.
(d) Rs. 1,500 received from Mr. Gupta for interest on loan to him were recorded in the
(b) Money Measurement Assumption.
Cash Book. But the entry was not posted in the ledger.
(c) Going on Concern Assumption.
(e) The total of Returns Outward Book was short by Rs. 90.
(d) Accounting Period Assumption.
[Suspense Account Closing Balance Rs.2,535 Cr. Excess]
3. Briefly Explain the following Principles of Accounting :
(a) Duality Principle
Q-7: The book-keeper of a firm found that his trial balance was out (Debit short) by
(b) Verifiable Objective or Evidence Principle.
Rs. 1,750. He placed the amount in the Suspense Account and subsequently found
(c) Historical Cost Principle.
the following errors :
(15) (16)

CA. Naresh Aggarwal’s Chapter 6 (Subsidiary Book)

ACADEMY of ACCOUNTS 1. What do you mean by Subsidiary Books ? Why does they prepared ?
Accounting • Costing • Taxation • Financial Management 2. Show the specimen of ‘Purchase Book’.
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link]

Chapter 7 (Ledger)
(d) Revenue Recognition Principle.
(e) Matching Principle
1. What do you mean by Ledger or Account ?
(f) Full Disclosure Principle
2. What are the advantages of Ledger ?
4. Briefly Explain the following Modified Accounting Principles :
(a) Materiality Principle
(b) Consistency Principle
Chapter 8 (Bank Reconciliation Statement)
(c) Prudence or Conservatism Principle
(d) Principle of Timeliness.
1. What is Bank Reconciliation Statement ? Why does it prepared ?
5. What do you mean by ‘Accounting Standards’ ? Who does issue them ?
2. Explain the reasons on account of which the balance shown by Cash Book does

AoA
not agree with balance shown by Pass Book.

Chapter 3 (Accounting Equations)

Chapter 9 (Trial Balance and Rectification of Errors)
1. What do you understand by Accounting Equation ? Explain with the help of an
example.
1. What is Trial Balance ? Why does it prepared ?
2. What do you mean by Source Documents or Vouchers ? Name few of them.
2. Name the types of errors and briefly explain them.
3. What type of errors do not effect the Trial Balance ?
Chapter 4 (Double Entry System and Journal Entries)
or
Is Trial Balance, if agreed, is the proof of accuracy of Accounts ? If not, then Why
1. What is Double-Entry System ?
?
2. What do you mean by Journal Entry ?
4. What do you mean by ‘Suspense Account’ ? Why does it prepared ?
3. Name the three type of Accounts and their rules.
4. What is the difference between Cash Discount and Trade Discount ?
5. Classify following Accounts in Real, Nominal and Personal A/cs :
Cash, Suresh, Bank, Rent, Capital, Commission, Machine, Stock, Debtors,
Creditors, Drawings, Wages, O/s Expenses, Advance Incomes, Deepak.
••••••••••••••••••••••
Chapter 5 (Cash Book)

1. What is Cash Book ?

2. What do you mean by Contra-Entry ?
3. What is imprest system of Petty Cash Book ?
(17) (18)

CA. Naresh Aggarwal’s For Subsidiary Books

Hints:
ACADEMY of ACCOUNTS 1 Ream = 500 Sheets
1 Dozen = 12 Pieces
AccountingFor Bank Reconcialation
• Costing Statement
• Taxation • Financial Management 1 Gross = 12 Dozen
West Patel Nagar, New Delhi. Ph:8800215448. Website: [Link] 1 Quintal = 100 Kgs.
In Cash book In Pass book 1 Ton = 1000Kgs.
Dr. = (+) Dr. = (-)
Cr. = (-) Cr. = (+) Traditional Rules of Journal Entries
Overdraft in any book = -
Debit what comes in (MSfcV t¨ oLrq vk,)
Simple Balance in any book = + Real Accounts :
Credit what goes out (ØSfMV t¨ oLrq tk,)

For Rectification of Errors Debit all Losses and Expenses (MSfcV lHkh [kPksZ o gkfu;k¡ )
Nominal Accounts :
Credit all Gains and Incomes (ØSfMV lHkh vk; o ykHk)
Undercast means added short : to rectify (+)

AoA
Overcast means added more : to rectify (-)
Debit the Receiver (MSfcV ysus okyk)
Personal Accounts :
Dr. & Dr. Credit the Giver (ØSfMV nsus okyk)
= (+)
Dr. & Cr. = (-)
Cr. & Cr. = (+)
Cr. & Dr.
Modern Rules of Journal Entries
= (-)
Particulars + - Particulars + -

For Accounting Equations Assets Dr. Cr. Liabilities Cr. Dr.

Assets : Cash, Bank, Furniture, Machine, Goods, Debtors, Prepaid Expenses,
Expenses Dr. Cr. Capital Cr. Dr.
Outstanding Incomes, Bills Receivable, Loan (if given to others) etc.
Income Cr. Dr.
Liabilities : Creditors, Outstanding Expenses, Advance Incomes, Bills Payable, Loan
(if taken) etc.

Income/Expenses : Rent, Interest, Commission, Brokerage, Fees, Discount, Wages,

Journal Entries through Accounting Equation
Salaries, Depreciation, Printing & Stationery, Electricity, Telephone etc.

Capital + Liabilities = Assets Capital + Liabilities = Assets

Total Equities = Total Assets
External Equities = Outside Liabilities Credit Balance Debit Balance
Net Worth = Owners Equity = Capital

Opening Capital/Capital at the Beginning + Additional/Further Capital

(+) (-) (+) (-)
- Drawings + Profit - Loss = Closing Capital/Capital at the End Credit Debit Debit Credit