(A) Answer one sentence only.
1. What is Balance Sheet?
Ans. Balance sheet is a statement which shows financial position of all assets and liabilities of the business on a particular date.
2. State the meaning of debit balance of Trading Account?
Ans. Debit balance of trading account indicates gross loss of the business for a particular year.
3. When is partner’s current account opened?
Ans. partner’s capital account is opened if partners adopt fixed capital method.
4. To which account Gross Profit transferred?
Ans. Gross profit is transferred to the credit side of profit & loss account.
5. What is closing stock?
Ans. Stock of goods in hand at the end of the accounting year is called as closing stock.
6. What is Final Accounts?
Ans. Final accounts are accounts which are prepared at the end of the financial year by the partnership firm, consisting of trading a/c, profit & loss a/c and balance sheet
7. How is closing stock valued?
Ans. Closing stock is valued at cost price or market price whichever is less.
8. What do you mean by direct expenses?
Ans. Expenses which are directly related to production of goods and purchases of goods are called as direct expenses.
9. What do you mean by indirect expenses?
Ans. Expenses which are not directly related to production of goods and purchases of goods are called as indirect expenses.
10. What do you mean by accrued income?
Ans. Income which is due for current accounting year but not yet received is known as outstanding income.
11. What is Trial balance?
Ans. A list of debit and credit balances of all ledger accounts is called as Trial balance.
12. What is bad debts?
Ans. The amount which is irrecoverable from debtor is called as bad debts.
13. In the absence of partnership deed, what is profit sharing ratio of the partners?
Ans. In the absence of partnership deed, profit and losses are shared equally by the partners.
14. What do you mean by carriage inward?
Ans. Transport expenses incurred to carry the goods purchased by the firm are called as carriage inward.
15. What do you mean by freight?
Ans. Expenses which are paid to railways or airways for carrying goods are called as freight.
16. What are tangible assets?
Ans. Tangible assets are those which are of permanent nature and can be seen by our eyes.
17. What are intangible assets?
Ans. Intangible assets are those which can not be seen by our eyes but have realisable value.
18. What are contingent liabilities?
Ans. A liability which may or may not occur in future, depending on happening of certain events is called as contingent liabilities.
19. What do you mean by Pre- received incomes?
Ans. Income which is not related to the current accounting year but related to the future period is known as pre-received incomes.
20. What are fictitious assets?
Ans. Fictitious assets are those which are intangible in nature and do not have realisable value.
21. What are outstanding expenses?
Ans. Expenses which are due but not paid in the current accounting year is known as outstanding expenses
(B) Write a word or a term or a phrase which can substitute each of the following statements.
1. A statement showing financial position of the business on a particular date. Balance Sheet
2. The amount which is not recoverable from debtors. Bad debts
3. Stock in hand at the end of the accounting year. Closing stock
4. The transport expenses incurred to carry the goods purchased by the firm. Carriage inward
5. Income which is received before its due date. Pre-received income
6. The debit balance of Trading Account. Gross Loss
7. The credit balance of Trading Account. Gross Profit
8. A provision which is created on sundry debtors. Reserve for Doubtful Debts
9. The amount withdrawn by the partners from the business for their personal use. Drawings
10. The accounts which are prepared at the end of each financial year. Final Accounts
11. Expenses which are paid before due. Prepaid expenses
12. The statement showing list of all ledger balances. Trial Balance
13. The credit balance of Profit and Loss Account. Net profit
14. Expenses which are due but not paid at the end of the year. Outstanding expenses
15. Assets which are held in the business for a long period. Fixed assets
16. Goods returned to suppliers Purchase returns
17. An amount paid for the permission to use patents & copyrights Royalty
18. An account to which net loss is transferred in a partnership firm. Partners capital a/c
19. Concession given by firm to customer. Discount allowed
20. Concession given by suppliers to firm Discount received
21. Example of fictitious asset. Preliminary expenses
22. An account prepared by producer to find cost of production. Manufacturing a/c
23. Expenses which are paid off in one year but benefit is availed for number of years Deferred expenses
24. Assets which are not real assets of the business. Fictitious assets
(C) Fill in the blanks with appropriate alternative given in the brackets.
1. The gross profit is transferred to __________ account. (a) trading (b) profit and loss (c) capital (d) current
profit and loss
2. Wages paid for installation of machinery should be debited to __________ account. (a) machinery (b) wages (c) trading (d) profit and loss
3. All indirect expenses are debited to ___________ account. (a) trading (b) capital (c) profit and loss (d) current
profit and loss
4. A statement showing finacial position of the business is called as __________. (a) Balance sheet (b) trial balalnce (c) capital (d) trading a/c
5. To find out net profit or net loss of the business ___________ account is prepared. (a) trading (b) capital (c) current (d) profit and loss
profit and loss
6. A _____________ is an intangible asset. (a) goodwill (b) stock (c) building (d) cash
7. Trading account is prepared on the basis of ____________ expenses. (a) indirect (b) direct (c) revenue (d) other
8. The interest on drawings is transferred to __________ side of the profit and loss account. (a) debit (b) credit (c) asset (d) liability
9. Final accounts are prepared on the basis of __________ and adjustments. (a) trial balance (b) capital a/c (c) trading A/c (d) profit & loss A/c
10. ____________ is the list of all ledger balances. (a) balance sheet (b) trial balance (c) trading A/c (d) profit & loss A/c
11. Return outward are deducted from _____________. (a) purchases (b) sales (c) capital (d) debtors
12. The withdrawals of partner from the business for their personal use is called as _________. (a) capital (b) profit (c) drawings (d) cash
13. Income received in advance is shown on the ___________. (a) debit (b) credit (c) asset (d) liability
14. Prepaid expenses are shown on the _________ side of the Balance sheet. (a) assets (b) l iability (c) debit (d) credit
15. Profit & Loss Account is _____________ account (a) Real (b) nominal (c) income (d) Personal
16. _____________ is a financial statement (a) Income (b) Trading a/c (c) balance sheet (d) Profit & loss a/c
17. A provision made for debts irrecoverable from the debtors is called _____________. (a) bad debts (b) reserve for discount on debtors (c) reserve for doubtful debts (d) additional new bad debts
reserve for doubtful debts
18. _____________ is notional loss of the business. (a) uninsured goods (b) goods destroyed by fire (c) depreciation (d) loss from sale of asset
19. _____________ a/c prepared by producers to find cost of production. (a) Manufacturing (b) Trading (c) Purchase (d) Profit & loss
20. Wages & salaries are debited to _____________ account (a) Profit & loss (b) trading a/c (c) expense a/c (d) salary a/c
21. _____________ a/c & _____________ a/c are recorded to balance sheet (a) profit & loss (b) nominal, personal (c) real, nominal (d) real, personal
22. _____________ are intangible assets and do not have realisable value. (a) Good will (b) profit & loss (dr bal) (c) Trade-mark (d) Copy right.
Profit & loss (dr bal)
(D) State whether the following statements are TRUE/FALSE
1. All direct expenses are debited to Trading account. True
2. The Balance Sheet is a nominal account. False
3. Discount allowed to debtors is called as bad debts. False
4. Profit and loss account is a nominal account True
5. The interest on drawings is an income of the firm. True
6. The interest on capital is an income of the firm. False
7. Trading account is a nominal account. True
8. Prepaid expenses are shown on the asset side of the Balance sheet. True
9. Closing stock is always valued at market price. False
10. Outstanding expenses are shown on the liability side of the Balance sheet. True
11. Partners must share profits and losses equally. False
12. Trial Balance is the base of Final account. True
13. Debit balance of Trading account shows gross profit. False
14. Credit balance of profit and loss account shows net profit of the business. True
15. Return inward is deducted from purchases. False
16. Unproductive wages are debited to trading a/c. False
17. Royalty is debited to profit & loss a/c. False
18. Wages & salaries is treated as indirect expense. False
19. Balance sheet is not an account. True
20. Fictitious assets are intangible assets. True
21. Current assets are also called as floating assets. True
22. Income received, but not earned is an asset. False
23. Outstanding wages is a nominal a/c. False
24. Final accounts are prepared end of the accounting year. True
TEXTUAL PROBLEMS WITH COMPLETE SOLUTION.
1. From the following Trial Balance of M/s. Ajay and Vijay, you are required to prepared Trading and Profit and Loss Account for the year ended 31st March, 2009 and Balance Sheet as on that date. [Text Book Problem No. 1]
2. Sanjay and Sudhir are partners sharing profit and losses in the ratio 3:2. The Trial Balance of the firm on 31st March, 2010 was as follows: [Text Book Problem No. 2]
3. Rohan and Roshan are partners in ‘Shan Traders’ sharing profits and losses in the ratio of 2:1[Text Book Problem No. 3]
5. From the following Trial Balance of M/s. Kale and Gore, you are required to prepare. [Textual Problem No. 5]
6. Given below is the Trial Balance of M/s. Seeta and Geeta as on 31st March, 2010. [Textual Problem No. 6].
ADDITIONAL PROBLEMS WITH COMPLETE SOLUTION .
1. Jitesh and Lailesh are in partnership sharing profits and losses in the ratio of 2:1.  [October 2014 Board Question]
10. Sachin & Ganguly
18. Ashok and Tanaji
23. Sharma and Varma
25. Kamesh and Mani
27. Devi & Jaya
28. Dalal & Raja
30. Asha and Nisha
35. Mano and Prakash
36. Mani and Sonu
37. Meena and Reena
39. Devi and Sridevi
42. Ravi and Magesh