ACCOUNTS QUESTION PAPER WITH SOLUTIONS FOR HSC

Omtex classes	1st PRELIMINARY EXAMINATION	BOOK KEEPING & ACCOUNTANCY	GROUP: B
TIME: - 3 HRS	DATE: -	DAY - Tuesday	MARKS: -100

Q1. Attempt any four of the following. (20 marks)

A. Answer in one sentence each. (5 marks)

1. Which types of expenses are debited to trading account?

   Ans. The direct expenses related to purchase of goods are debited to trading account.

2. What is Reserve Fund?

   Ans. Reserve fund is the accumulated profit which is kept aside as a reserve to serve the firm for the future needs.

3. Who is an endorser?

   Ans. A person who endorses the ownership of the bill he is known as endorser.

4. What is goodwill?

   Ans. Goodwill is the monetary value of the reputation of the business expressed in terms of money.

5. Why is Joint Bank Account opened?

   Ans. Joint bank account is opened to record the co-venturers' bank transactions relating to the joint venture business.

B. Write the word/term/phrase which can substitute each of the following statements: (5 marks)

1. A statement showing financial position of the business.

   Ans. Balance sheet

2. Making the payment of bill before its due date.

   Ans. Retirement of the bill of exchange

3. List of debit and credit balances of the ledger accounts.

   Ans. Trial balance

4. The relationship between persons who have agreed to share profit or loss in Joint Venture Business.

   Ans. Co-venturers

5. A Partner who only lends his name to the firm.

   Ans. Nominal partner

C. Match the following pairs. (5 marks)

Group A	Group B
Partnership deed Fixed capital method. Unexpired expenses Temporary Partnership Pure Single Entry System	Written agreement between the partners Current a/c of partners Assets Joint venture Only personal account

Answers:
1 - a (Partnership deed - Written agreement between the partners)
2 - b (Fixed capital method - Current a/c of partners)
3 - c (Unexpired expenses - Assets)
4 - d (Temporary Partnership - Joint venture)
5 - e (Pure Single Entry System - Only personal account)

D. Select the most appropriate alternative from those given below each statement. (5 marks)

1. Reserve for discount on ______________ has a debit balance.
   • Debtors
   • Creditors
   • Bills Receivable
   • Loan advanced.
2. Income Statements and Balance Sheet are prepared in a systematic and scientific manner under ________________
   • Double Entry System.
   • Single Entry System
   • Partial Entry System.
   • Indian System.
3. Before accepting a bill, it is called a _________
   • Note
   • Draft
   • Hundi
   • Request.
4. Valuation of goodwill depends upon ________ capacity of business.
   • Normal
   • Repaying
   • Earning
   • Capital
5. If two or more persons come together to carry on a business activity for a short period, it is known as ___________
   • Joint venture
   • Consignment
   • Partnership
   • Stock exchange

E. State with reason whether the following statements are true or false. (5 marks)

1. Scrap value of asset reduces the amount of annual depreciation.

   Ans. The above statement is true because of the following reasons.

   • When we calculate the depreciation amount the expected scrap value of the asset is reduced from the total cost of the assets.
   • Therefore, the total amount of depreciation per annum will also get reduced.
2. When the amount of the bill is paid on the due date, it is said to be retired.

   Ans. The above statement is false because of the following reasons.

   • When the amount of the bill is paid on the due date, then it is called as honour of the bill of exchange.
   • When the amount of the bill is paid before the due date, then it is called as retirement of the bill of exchange.

F. Prepare bill of exchange from the following details. (5 marks)

Drawer - Shekhar Desai, Shastri Road, Mahad.
Drawee – Sharad Verma, Narayan Peth, Pune.
Amount - Rs. 3500/-
Period - 3 months.
Payee - Mukund Pande, Panvel
Date of Bill Drawn – 21st June, 2007
Date of Acceptance - 23^rd June, 2007

Q2.

On 1^st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On 1^st October, 2004 they purchased one more computer for Rs. 40,000. On 1^st October, 2006 they sold one of the computers, which was purchased on 1^st April, 2004 for Rs. 18780.

Depreciation on computers was provided @ 10% p.a. on Diminishing Balance Method and the financial year closes on 31^st March every year.

Prepare: computer A/c and Depreciation A/c for years 2004 – 2005, 2005 – 2006, 2006 – 2007. (September, 2008 board exam question)

Ans.

M/s Saikripa enterprises

Computer Account

Date	Particulars	J.F.	Amount (Rs.)	Date	Particulars	J.F.	Amount (Rs.)
1.4.2004	To Cash/Bank A/c (Computer 1)		40,000	31.3.2005	By Depreciation A/c		10,000
1.4.2004	To Cash/Bank A/c (Computer 2)		40,000
1.10.2004	To Cash/Bank A/c (Computer 3)		40,000	31.3.2005	By Balance c/d		1,10,000
			1,20,000				1,20,000
1.4.2005	To Balance b/d		1,10,000	31.3.2006	By Depreciation A/c		11,000
				31.3.2006	By Balance c/d		99,000
			1,10,000				1,10,000
1.4.2006	To Balance b/d		99,000	1.10.2006	By Depreciation A/c (on computer sold)		1,620
				1.10.2006	By Cash/Bank A/c (Computer sold)		18,780
				1.10.2006	By Profit & Loss A/c (Loss on sale)		12,000
				31.3.2007	By Depreciation A/c (on remaining)		6,660
				31.3.2007	By Balance c/d		59,940
			99,000				99,000
1.4.2007	To Balance b/d		59,940

Depreciation Account

Date	Particulars	J.F.	Amount (Rs.)	Date	Particulars	J.F.	Amount (Rs.)
31.3.2005	To Computer A/c		10,000	31.3.2005	By Profit & Loss A/c		10,000
			10,000				10,000
31.3.2006	To Computer A/c		11,000	31.3.2006	By Profit & Loss A/c		11,000
			11,000				11,000
1.10.2006	To Computer A/c (on computer sold)		1,620	31.3.2007	By Profit & Loss A/c (Balancing figure)		8,280
31.3.2007	To Computer A/c (on remaining)		6,660
			8,280				8,280

OR

Q2. (A)

For the purpose of valuation of goodwill it was agreed to consider net profits of the last 4 years and goodwill is to be calculated at one year’s purchase of average net profits of last 4 years. The profits were:

IST YEAR	IIND YEAR	IIIRD YEAR	IVTH YEAR
Rs. 80,000	Rs. 90,000	Rs. 1,05,000	Rs. 1,10,000

Ans.

&

Q2. (B)

Explain the importance of computer in modern age.

Ans.

Today computers are put to a variety of uses. They have been designed with highly improved performances. Computers can be used to process voluminous data at a high speed. As regards its application in the field of accounting, a computer should be able to deal with routine accounting. It means all normal accounting processes such as financial transactions should be dealt with the use of a computer. All cash and bank transactions, handling of accounts of debtors and creditors and calculation of wages and salaries etc should be handled with the use of computer. In addition, computers can be put to other popular uses such as production, programming and control, flexible budgetary control, variance analysis, sales and forward trends etc.

Following points explain the importance of computer in modern age.

SPEED - In the modern world, the desire of a man to complete tasks within the stipulated time limits has been, to a large extent, fulfilled by using a computer. Computers enable us to do arithmetical computations with a high degree of speed and ease. It has enables us to do things, which would have been almost impossible earlier. The speed which computers functions are measured in Pico seconds (1/1000 of Nano – second). Thus, computers are capable of making millions of computations per second. Hence, a powerful computer is capable of completing the tasks in less than an hour, which could have taken a year for a group of people to compute.

ACCURACY - Computers are not only fast in completing a job at a great speed, but it is also performed with a high degree of accuracy. Sometimes, it is common to say that there is a “Computer error”. As a matter of fact, it is “Human error” and not a “Computer error” since a computer carries out the instructions efficiently given by the programmer. As such, if the instructions are faulty, the errors creep in the computer’s output.

DILIGENCE - By doing similar job continuously, human beings get tired which results into some mistakes. As against this, a computer is capable of doing the same job continuously error free. A computer takes the same time to complete the first calculation as well as the 10000^th calculation. Thus, the degree of diligence possessed by a computer is impossible in case the same job is done by human beings.

STORAGE - Another advantage offered by a computer is that of its enormous capability to store data. A computer is capable of storing data along with the instructions given by the programmer in the primary (main) memory. In case, the primary memory is not sufficient it can be stored in its secondary (auxiliary) memory. There are various devices used for storing the secondary memory. Some of the common devices used in secondary memory are Compact Disks, Tapes, Drums, pen Drives etc. Having large capacity to store data.

VERSATILITY - A computer possesses great versatility, which is capable of performing arithmetic calculations, logic operation of comparison and moving data within different sections of the computer and in input and output operations. Although, a computer lacks a brain of its own, it can be put to a varied uses such as preparation of mark – lists, financial accounting, share analysis etc.

MISCELLANEOUS - In addition to the above – mentioned advantages, a computer can offer economies in the form of effective managerial control, saving in labour cost because it is fully automatic.

Q3.

Anjali of Nagpur sold goods worth Rs. 25,000 to Rupali of Amaravati. On next day Rupali paid Rs. 10,000 in cash and accepted two months bill for the balance drawn by Anjali. Anjali discounted the bill at 12% p.a. with her bank. Before due date, Rupali finds herself unable to make payment of the bill; and requests Anjali to renew it. Anjali accepts the proposal on the condition that Rupali should pay Rs. 5,000 in cash and accept new bill for one month along with interest Rs. 200 for the balance. These arrangements were carried through. The new bill was met on due date. Give journal entries in the books of Anjali.

Journal of Anjali

Sr. No.	Particulars	L.F.	Debit (Rs.)	Credit (Rs.)
1	Rupali’s A/c Dr.     To Sales A/c (Being goods sold to Rupali)		25,000	25,000
2	Cash/Bank A/c Dr. Bills Receivable A/c Dr.     To Rupali’s A/c (Being part payment received and bill drawn for balance)		10,000 15,000	25,000
3	Cash/Bank A/c Dr. Discount A/c Dr.     To Bills Receivable A/c (Being bill discounted with bank, Discount = 15000 * 12% * 2/12 = 300)		14,700 300	15,000
4	Rupali’s A/c Dr.     To Cash/Bank A/c (Being discounted bill dishonoured on due date)		15,000	15,000
5	Cash/Bank A/c Dr.     To Rupali’s A/c (Being part payment received for renewal)		5,000	5,000
6	Rupali’s A/c Dr.     To Interest A/c (Being interest charged for renewal)		200	200
7	Bills Receivable A/c Dr.     To Rupali’s A/c (Being new bill drawn for balance Rs. 10,000 + Interest Rs. 200)		10,200	10,200
8	Cash/Bank A/c Dr.     To Bills Receivable A/c (Being new bill honoured on due date)		10,200	10,200

OR

Q3.

Journalize the following transactions in the books of M/s Tirupati:

1. Kailas informed Tirupati that Ameet’s acceptance for Rs. 1,000/- endorsed to him, has been dishonoured. Noting Charges amounted Rs. 40/-.
2. Vilas renews his acceptance to Tirupati for Rs. 800/- by paying Rs. 400/- in cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3 months.
3. Kalpana’s acceptance to Tirupati for Rs. 6,000 retired one month before due date at a discount of 10% p.a.
4. Bank informs Tirupati the dishonor of Kavita’s acceptance of Rs. 2,500 discounted with Bank. Noting charges Rs. 50/-.

Journal entries in the books of Tirupati

Sr. No.	Particulars	L.F.	Debit (Rs.)	Credit (Rs.)
1	Ameet’s A/c Dr.     To Kailas’s A/c (Being endorsed bill of Ameet dishonoured, noting charges paid by Kailas)		1,040	1,040
2 (i)	Vilas's A/c Dr.     To Bills Receivable A/c (Being Vilas's acceptance dishonoured for renewal)		800	800
2 (ii)	Cash/Bank A/c Dr.     To Vilas's A/c (Being part payment received from Vilas)		400	400
2 (iii)	Vilas's A/c Dr.     To Interest A/c (Being interest charged on balance amount for 3 months; 400 * 12% * 3/12 = 12)		12	12
2 (iv)	Bills Receivable A/c Dr.     To Vilas's A/c (Being new bill drawn on Vilas for balance Rs. 400 + interest Rs. 12)		412	412
3	Cash/Bank A/c Dr. Rebate/Discount A/c Dr.     To Bills Receivable A/c (Being Kalpana’s acceptance retired one month before due date; Rebate = 6000 * 10% * 1/12 = 50)		5,950 50	6,000
4	Kavita’s A/c Dr.     To Cash/Bank A/c (Being discounted bill of Kavita dishonoured and noting charges paid by bank)		2,550	2,550

Q4.

Harsha and Varsha entered into a joint venture to buy and sell computers and share the profit or loss in the proportion of 2:1 respectively. Harsha purchased 10 computers @ Rs. 40000 each and paid Rs. 12,000 for transport charges, insurance charges, etc. Varsha bought 8 computers @ 42000 each and spent Rs. 10000 on freight and insurance. Harsha sold 8 computers @ 48,000 each and paid selling expenses Rs. 2000 and took over one computer at an agreed price of Rs. 32000 for personal use. Remaining computer were sold by Varsha @ Rs. 45000 each and spent Rs. 2500 on miscellaneous expenses. The co-venturers closed their venture and settled their accounts. Prepare the Joint venture A/c and the co-venture’s account in the books of Harsha.

In the books of Harsha

Joint Venture Account

Particulars	Amount (Rs.)	Amount (Rs.)	Particulars	Amount (Rs.)	Amount (Rs.)
To Bank A/c (Purchase by Harsha: 10 x 40000)		4,00,000	By Bank A/c (Sales by Harsha: 8 x 48000)		3,84,000
To Bank A/c (Expenses by Harsha)		12,000	By Goods Taken Over A/c (Harsha)		32,000
To Varsha’s A/c (Purchase by Varsha: 8 x 42000)		3,36,000	By Varsha’s A/c (Sales by Varsha: 9 x 45000*)		4,05,000
To Varsha’s A/c (Expenses by Varsha)		10,000
To Bank A/c (Selling expenses by Harsha)		2,000
To Varsha’s A/c (Misc. expenses by Varsha)		2,500
To Profit on Joint Venture transferred to:
Harsha’s Capital A/c (2/3)	39,000
Varsha’s A/c (1/3)	19,500	58,500
		8,21,000			8,21,000

*Remaining computers: Total purchased = 10 (Harsha) + 8 (Varsha) = 18. Sold by Harsha = 8. Taken by Harsha = 1. Remaining = 18 - 8 - 1 = 9 computers.

Varsha’s Account

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Joint Venture A/c (Sales by Varsha)	4,05,000	By Joint Venture A/c (Purchases)	3,36,000
		By Joint Venture A/c (Expenses)	10,000
		By Joint Venture A/c (Misc. Expenses)	2,500
		By Joint Venture A/c (Profit Share)	19,500
To Bank A/c (Final Settlement - Balancing Figure)	37,000
	4,42,000		4,42,000

Q5.

Following is the records of Mr. Raj were kept on single entry system. (March 2009 board exam questions)

Particulars	31.3.2006 (Rs.)	31.3.2007 (Rs.)
Stock	15,000	14,000
Furniture	53,500	44,000
Plant and machinery	42,500	55,500
Loan taken	21,000	21,000
Bank balance	1,900	2,100
Debtors	43,000	35,000
Creditors	18,000	14,900

Mr. Raj invested Rs. 4000 in the business. Also he had withdrawn Rs. 15000 for his private expenses from business. Rs. 500 to be provided for bad debts. Depreciate plant and machinery @5% and furniture @ 5%.

Prepare : (1) statement of affairs as on 31.3.2006. (2) statement of affairs as on 31.3.2007. (3) statement of profit and loss for the year ended on 31.3.2007.

In the books of Mr. Raj

Statement of Affairs as on 31^st March, 2006

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
Loan taken	21,000	Stock	15,000
Creditors	18,000	Furniture	53,500
Capital (Balancing Figure)	1,16,900	Plant and machinery	42,500
		Bank balance	1,900
		Debtors	43,000
Total	1,55,900	Total	1,55,900

Statement of Affairs as on 31^st March, 2007

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
Loan taken	21,000	Stock	14,000
Creditors	14,900	Furniture	44,000
Capital (Balancing Figure)	1,14,700	Plant and machinery	55,500
		Bank balance	2,100
		Debtors	35,000
Total	1,50,600	Total	1,50,600

Statement of Profit or Loss for the year ended 31^st March, 2007

Particulars	Amount (Rs.)
Capital at the end of the year (as on 31.3.2007)	1,14,700
Add: Drawings during the year	15,000
	1,29,700
Less: Additional capital introduced during the year	(4,000)
Adjusted Capital at the end of the year	1,25,700
Less: Capital at the beginning of the year (as on 31.3.2006)	(1,16,900)
Gross Profit before adjustments	8,800
Less: Adjustments:
Depreciation on Plant & Machinery (55500 * 5%)	(2,775)
Depreciation on Furniture (44000 * 5%)	(2,200)
Provision for Bad Debts	(500)
Net Profit for the year	3,325

Q6.

Ashok, Kishor and Anup undertook the construction of office building at a contract price of Rs. 10,00,000. The contract price is to be received in cash Rs. 6,00,000 and Rs. 4,00,000 in shares of that company. They opened a Joint bank account and contributed the following amounts: Ashok – Rs. 3,00,000, Kishor – Rs. 3,00,000 and Anup Rs. 2,00,000. Ashok pays Rs. 10,000 towards an Architect’s fee, Kishor brings into the venture mixer of Rs. 25,000. Anup brings into venture a truck worth Rs. 55,000. The following transactions were made from the joint bank account: 1. Purchase of material Rs. 4,50,000. 2. Payment of wages Rs. 1,50,000. 3. Purchase of plant Rs. 30,000. At the close of the venture. Ashok took over the unused material worth Rs. 8,000. Kishor took back the mixer worth Rs. 15,000. Anup took back truck worth Rs. 35,000. The scrap value of plant realised Rs. 6,000. The contract price was received as agreed and Kishor took over shares at a value of Rs. 4,10,000. Prepare : (1) Joint venture account (2) Joint bank account (3) Co – venturer’s account. (October 2006, board exam questions)

In the books of Joint Venture

Joint Venture Account

Particulars	Amount (Rs.)	Amount (Rs.)	Particulars	Amount (Rs.)	Amount (Rs.)
To Joint Bank A/c:			By Joint Bank A/c (Contract Price - Cash)		6,00,000
Materials	4,50,000		By Shares A/c (Contract Price - Shares)		4,00,000
Wages	1,50,000		By Joint Bank A/c (Plant Sold)		6,000
Plant	30,000	6,30,000	By Ashok’s A/c (Materials taken over)		8,000
To Ashok’s A/c (Architect fees)		10,000	By Kishor’s A/c (Mixer taken over)		15,000
To Kishor’s A/c (Venture mixture)		25,000	By Anup’s A/c (Truck taken over)		35,000
To Anup’s A/c (Truck)		55,000
To Profit on Joint Venture transferred to:
Ashok (1/3)	1,18,000
Kishor (1/3)	1,18,000
Anup (1/3)	1,18,000	3,54,000
Total		10,74,000	Total		10,74,000

Co-venturers’ Accounts

Particulars	Ashok (Rs.)	Kishor (Rs.)	Anup (Rs.)	Particulars	Ashok (Rs.)	Kishor (Rs.)	Anup (Rs.)
To Joint Venture A/c (Assets taken)	8,000	15,000	35,000	By Joint Bank A/c (Capital)	3,00,000	3,00,000	2,00,000
To Shares A/c (Taken over by Kishor)		4,10,000		By Joint Venture A/c (Contribution/Expenses)	10,000	25,000	55,000
To Joint Bank A/c (Final Settlement)	4,20,000	(18,000)*	3,38,000	By Joint Venture A/c (Profit)	1,18,000	1,18,000	1,18,000
Total	4,28,000	4,07,000	3,73,000	Total	4,28,000	4,43,000	3,73,000

*Kishor's account shows a debit balance for final settlement, meaning he brings in cash. Or, the 410,000 shares value implies a loss on shares taken over which might be adjusted differently. Given original, (-18000) means cash received by venture / paid to venture for settlement. Here, it means Kishor owes 18,000 to the venture for final settlement since debits (15000 + 410000 = 425000) are less than credits (300000+25000+118000 = 443000). So, Kishor receives 18,000. The original table showed "To joint bank a/c 18000" under Kishor's debit. This means Kishor is being paid Rs 18,000. Correcting this representation: The Dr side for Kishor (410000+15000) = 425000. Cr side (300000+25000+118000) = 443000. Cr > Dr by 18000. So Kishor gets 18000. "To Joint Bank A/c" on debit side for Kishor is correct and means payment to Kishor.

Joint Bank Account

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Ashok’s A/c (Capital)	3,00,000	By Joint Venture A/c (Expenses)	6,30,000
To Kishor’s A/c (Capital)	3,00,000	By Ashok’s A/c (Final Settlement)	4,20,000
To Anup’s A/c (Capital)	2,00,000	By Kishor’s A/c (Final Settlement)	18,000
To Joint Venture A/c (Contract Price - Cash)	6,00,000	By Anup’s A/c (Final Settlement)	3,38,000
To Joint Venture A/c (Plant Sold)	6,000
Total	14,06,000	Total	14,06,000

Shares Account

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Joint Venture A/c (Contract Price)	4,00,000	By Kishor’s A/c (Taken over)	4,10,000
To Profit on Shares (transferred to JVA or P&L Appropriation - here, implied to be part of JVA profit)	10,000
Total	4,10,000	Total	4,10,000

Q7.

Following is the Trial Balance of Kalavati and Lilavati as on 31^st March, 2005 who share profits and losses in the ratio of 3:2. Interest on capital was allowed @5% p.a.

Trial Balance as on 31^st March, 2005

Particulars (Debit Balances)	Amount (Rs.)	Particulars (Credit Balances)	Amount (Rs.)
Opening stock	10,000	Return outwards	1,250
Sundry debtors	14,100	Sundry creditors	15,800
Purchases	20,000	Sales	35,000
Wages	4,250	R.D.D.	200
Salaries	1,350	Capital accounts:
Office expenses	1,223	Kalavati	35,000
Discount	650	Lilavati	10,000
Rent, rates and taxes	900	Loan @ 9% p.a. (taken on 1-10-2004)	2,000
Plant and machinery	15,000	Bills payable	12,000
Return inwards	1,750
Land and buildings	32,000
Cash at bank	4,327
Current account: Kalavati	2,100
Current account: Lilavati	600
Government bonds (Investment)	3,000
Total	1,11,250	Total	1,11,250

Additional information:

1. Closing stock was valued at Rs. 20,500.
2. Unpaid wages Rs. 750; outstanding salary Rs. 657.
3. Write off Rs. 100 as bad debts and provide R.D.D. at 5% on debtors.
4. Provide depreciation and plant and machinery at 10% p.a. and on Land and building at 5% p.a.
5. Rent, Rates & Taxes were prepaid Rs. 100.
6. Bills payable included a dishonoured bill of Rs. 3000.

Prepare Trading account and profit and loss account for the year ending 31^st March, 2005 and a balance sheet as on that date.

In the books of Kalavati & Lilavati

Trading Account for the year ended 31^st March, 2005

Particulars	Amount (Rs.)	Amount (Rs.)	Particulars	Amount (Rs.)	Amount (Rs.)
To Opening Stock		10,000	By Sales	35,000
To Purchases	20,000		Less: Return Inwards	(1,750)	33,250
Less: Return Outwards	(1,250)	18,750	By Closing Stock		20,500
To Wages	4,250
Add: Outstanding	750	5,000
To Gross Profit c/d		20,000
Total		53,750	Total		53,750

Profit and Loss Account for the year ended 31^st March, 2005

Particulars	Amount (Rs.)	Amount (Rs.)	Particulars	Amount (Rs.)	Amount (Rs.)
To Salaries	1,350		By Gross Profit b/d		20,000
Add: Outstanding	657	2,007
To Office Expenses		1,223
To Discount Allowed		650
To Rent, Rates & Taxes	900
Less: Prepaid	(100)	800
To Bad Debts (New)	100
Add: New R.D.D. (5% on 14000)	700
	800
Less: Old R.D.D.	(200)	600
To Depreciation on:
Plant & Machinery (10% on 15000)	1,500
Land & Buildings (5% on 32000)	1,600	3,100
To Interest on Loan (2000 * 9% * 6/12)		90
To Interest on Capital:
Kalavati (5% on 35000)	1,750
Lilavati (5% on 10000)	500	2,250
To Net Profit transferred to Current A/c:
Kalavati (3/5)	5,568
Lilavati (2/5)	3,712	9,280
Total		20,000	Total		20,000

Partners’ Current Accounts

Particulars	Kalavati (Rs.)	Lilavati (Rs.)	Particulars	Kalavati (Rs.)	Lilavati (Rs.)
To Balance b/d	2,100	600	By Interest on Capital	1,750	500
To Balance c/d (Balancing figure)	5,218	3,612	By P & L A/c (Net Profit)	5,568	3,712
Total	7,318	4,212	Total	7,318	4,212

Balance Sheet as on 31^st March, 2005

Liabilities	Amount (Rs.)	Amount (Rs.)	Assets	Amount (Rs.)	Amount (Rs.)
Capital Accounts:			Land & Buildings	32,000
Kalavati	35,000		Less: Depreciation @5%	(1,600)	30,400
Lilavati	10,000	45,000	Plant & Machinery	15,000
Current Accounts:			Less: Depreciation @10%	(1,500)	13,500
Kalavati	5,218		Government Bonds (Investment)		3,000
Lilavati	3,612	8,830	Closing Stock		20,500
Sundry Creditors	15,800		Sundry Debtors	14,100
Add: B/P Dishonoured	3,000	18,800	Less: Bad Debts (New)	(100)
Bills Payable	12,000			14,000
Less: Dishonoured Bill	(3,000)	9,000	Less: New R.D.D. @5%	(700)	13,300
Loan @ 9% p.a.	2,000		Prepaid Rent, Rates & Taxes		100
Add: Outstanding Interest	90	2,090	Cash at Bank		4,327
Outstanding Expenses:
Wages	750
Salaries	657	1,407
Total		85,127	Total		85,127

Difficult Words and Meanings

Preliminary

Introductory or preparatory.

Debited

An entry recording a sum owed or an expense, listed on the left-hand side or column of an account.

Trading Account

An account prepared to find out the gross profit or gross loss of a business during a specific period.

Reserve Fund

A part of profit set aside for a specific or general purpose to strengthen the financial position of the business.

Accumulated

Gathered or collected over a period of time.

Endorser

A person who signs their name on the back of a bill of exchange, thereby transferring ownership or guaranteeing payment.

Goodwill

The good reputation and established connections of a business, considered as a sellable asset.

Monetary

Relating to money or currency.

Co-venturers

Partners in a joint venture (a temporary business undertaking).

Balance Sheet

A statement of the assets, liabilities, and capital of a business at a particular point in time.

Retirement of a Bill

Payment of a bill of exchange before its due date, often for a discount (rebate).

Trial Balance

A list of all the debit and credit balances of ledger accounts to check the arithmetical accuracy of bookkeeping.

Nominal Partner

A partner who lends their name to the firm but does not invest capital or take active part in management, yet is liable to third parties.

Unexpired Expenses (Prepaid Expenses)

Expenses paid in advance whose benefit is yet to be received; treated as an asset.

Debtors

Persons or entities who owe money to the business.

Creditors

Persons or entities to whom the business owes money.

Bills Receivable

Bills of exchange for which the business is due to receive payment.

Systematic

Done or acting according to a fixed plan or system; methodical.

Draft (Bill of Exchange)

An order in writing from one person to another to pay a specified sum of money to a third person; a bill of exchange before it is accepted.

Hundi

An indigenous (native to India) financial instrument used for trade and credit purposes, similar to a bill of exchange.

Valuation

An estimation of something's worth, especially one carried out by a professional valuer.

Consignment

An arrangement where goods are sent by their owner (consignor) to an agent (consignee) to sell on their behalf.

Scrap Value

The estimated value of an asset at the end of its useful life.

Depreciation

The decrease in the value of an asset over time due to use, wear and tear, or obsolescence.

Honour (of a bill)

Payment of a bill of exchange on its due date.

Drawer (of a bill)

The person who makes or writes the bill of exchange, ordering payment.

Drawee (of a bill)

The person on whom the bill of exchange is drawn and who is ordered to pay.

Payee (of a bill)

The person to whom the amount of the bill is payable.

Diminishing Balance Method

A method of calculating depreciation where a fixed percentage is applied each year to the asset's net book value (cost less accumulated depreciation).

Voluminous

Large in volume or quantity.

Stipulated

Required as part of an agreement; specified.

Arithmetical Computations

Mathematical calculations involving numbers.

Pico seconds / Nano-second

Extremely small units of time (a picosecond is one trillionth of a second; a nanosecond is one billionth of a second).

Faulty

Having errors or defects.

Diligence

Careful and persistent work or effort; ability to work continuously without losing accuracy.

Auxiliary

Providing supplementary or additional help and support.

Versatility

Ability to adapt or be adapted to many different functions or activities.

Miscellaneous

Consisting of various things that are not Geda related or are of different kinds.

Economies

Savings or efficiencies.

Renewed (a bill)

The process of cancelling an old bill (that the drawee is unable to pay on time) and drawing a new bill for a further period, often with interest.

Noting Charges

Fees paid to a notary public for formally recording the fact that a bill of exchange has been dishonoured.

Rebate (on a bill)

A discount allowed for early payment of a bill of exchange.

Freight

Charges for transporting goods.

Realised

Converted into money (e.g., assets sold and cash received).

Affairs (Statement of Affairs)

A statement showing assets and liabilities, similar to a balance sheet, often used in single-entry systems or insolvency.

R.D.D. (Reserve for Doubtful Debts)

A provision made for potential bad debts (amounts unlikely to be recovered from debtors).

Outstanding (expenses)

Expenses that have been incurred but not yet paid.

Prepaid (expenses)

Expenses paid in advance for benefits to be received in a future period.

Dishonoured Bill

A bill of exchange that the drawee fails or refuses to pay on the due date.