(Commerce Group Regular/Private) TIME: 3 HOURS MAX. MARKS: 100 General Instructions SECTION "A" It contains 20 Multiple Choice Questions (MCQs) and all of them are to be answered.
SECTION "B" It consists of 6 short answer questions of which 4 questions are to be answered.
SECTION "C" It comprises 1 detailed answer question which is Compulsory. SECTION "A" (MULTIPLE CHOICE QUESTIONS) (20 MARKS) NOTE Attempt all questions from this Section. Q.1. Choose the correct answer for each from the given options.
i. Which of the following statement is incorrect? a) Assets - Capital = Liabilities b) Liabilities + Capital = Assests c) Liabilities + Assets = Capital d) Assets - Liabilities = Capital
ii. Which of the following is a liability? a) Machinery b) Building c) Loan from X d) Cash
iii. Which of the following best describes the meaning of Purchases? a) Items bought b) Goods bought on credit c) Goods bought for resale d) Goods paid for
iv. Which of the following is correct? a) Profit does not alter capital b) Profit reduces capital c) Capital can only come from profit d) Profit increases capital. v. Which of the following best describes a Trial balance? a) Shows the financial position of the business b) It is a special account c) Shows all the entries in the books d) It is a list of balances of the ledger accounts.
vi. Gross profit is a) Excess of sales over cost of goods sold b) Sales less purchases c) Cost of goods sold + opening inventory d) Net profit less operating expenses.
vii. Which is the definition of the Balance Sheet? a) An account proving the book's balance b) A record of closing entries c) A statement of Assets d) Contains balances of Assets and Equities
viii. Which is the best description of fixed Assets? a) They are about to be used in business b) They are an expensive item bought for business c) They are of long, life and are not bought specifically for resale d) They are items which will not wear out quickly.
ix. The sales journal is best described as a) Part of the double entry system b) A list of the credit sales c) Containing asset accounts d) Containing customers account
x. When depositing money in your bank account you should always use a) a cheque book b) a cash book c) a general ledger d) a paying-in slip
xi. A credit balance of Rs. 200 on the cash columns of the cash book would mean a) We have Rs. 200 cash in hand b) Some one has stolen Rs. 200 cash c) We have spent Rs. 200 more than we have received. d) The book keeper has made a mistake
xii. Posting the transactions in accounting means a) making the first record of double entry transaction b) entering items in cash book c) making the second entry of double entry trasaction d) something other than the above
xiii. Sales invoices are first entered in a) The sales account b) The cash book c) The sales journal d) The purchases journal
xiv. Credit notes issued by us will be entered in our a) Sales account b) Purchases returns and allowances journal c) Purchases Journal d) Sales returns and allowances journal
xv. On the date of balance sheet the balance on accumulated depreciation account is a) Transferred to depreciation account b) Simply deducted from the asset in the balance sheet c) Transferred to income summary account d) Transferred to asset account
xvi. All the following accounts normally have debit balance except a) Cash b) expense c) purchase d) purchase returns and allowances
xvii. By adding the purchases during the period to the beginning inventory and deducting the ending inventory we obtain an amount called the a) net sales b) cost of goods sold c) gross profit d) operating expenses
xviii. The purchases journal is a book of original entry used to record the a) purchase of tangible assets on credit b) purchase of merchandise for cash c) purchase of merchandise on credit only d) sales of merchandise on credit
xix. If a journal entry recognizes revenue the other part of the entry might a) increase an Asset account b) increase a Liability account c) decrease an Asset account d) decrease a Capital account
xx. Which expense may be shown in the income statement? a) Prepaid Expense b) Accrued expense c) Salary Expense d) Preliminary expense
SECTION "B" (SHORT ANSWER QUESTIONS) (50 MARKS) NOTE Attempt any Four questions from this Section. All questions carry equal marks. Q.2 The following transactions relate to Mr. Akbar a sole trader.
i. Mr. Akbar invested into the business cash Rs. 10,000 & furniture worth Rs. 5,000. ii. Purchase Merchandise for cash Rs. 5,000 and on credit Rs. 3,000 from Mr. Asif. iii. Sold merchandise for cash Rs. 80,000 and on credit Rs. 4,000 to Mr. Asghar. iv. Returned Merchandise to Mr. Asif Rs. 500. v. Returned Merchandise by Mr. Asghar Rs. 600 vi. Paid shop rent Rs. 600 vii. Withdrew cash for personal use Rs. 2,000 viii. Paid cash to Mr. Asif Rs. 1,000 and collected from Mr. Asghar Rs. 1,200 cash.
Required Make Journal entries in standard form.
Q.3 A trader uses three column cash book. On September 01, 2007 he had cash on hand Rs. 50,000 and cash at Bank Rs. 60,000. During September he completed the following transactions.
September 02 Purchased merchandise for cash Rs. 5,000 September 05 Cash sales deposited into bank Rs. 8,000 September 08 Received a cheque for Rs. 5,000 for sales September 11 Deposited the cheque received on September 08 September 12 Received a cheque of Rs.3,800 after a discount of 5% and deposited it into Bank. September 15 Issued a cheque for Rs. 2450 in full settlement of Rs. 2,500 September 20 Withdrew from bank for office use Rs. 500 and personal use Rs. 1500 September 25 Purchased merchandise by cheque Rs. 5,000 for cash Rs. 3,000
Required a) Enter the above mentioned information in three column cash book and balance it on 30th September 2007 b) Set up standard ledger accounts for discount # 5003 & 4003 make postings of discounts from cash book Page No. 9
Q.4 The following transactions relates to a trader: May 03 Purchased merchandise on account from Baqi & Co. Rs. 5,000 May 09 Purchased merchandise on credit from Daud Sons Rs. 8,000 May 10 Returned merchandise to Daud Sons Rs. 1,000 and Baqi & Co. Rs. 500 May 15 Purchased furniture on account from Akhtar Sons Rs. 10,000 May 17 Purchased merchandise on account from Iqbal Bros. Rs. 15,000 May 23 Purchase merchandise on account from Mukhtar Co. Rs. 17,000 May 25 Returned merchandise to Iqbal Bros. Rs. 1,500
Required a) Record the above transactions to appropriate Special Journal. b) Post to ledger accounts.
Q.5 A comparison of cash book and bank statement for the month of June 30. 2006 revealed the following:
i. Balance as per Bank Statement | Rs. 8470 ii. Balance as per Cash Book | Rs. 6000 iii. Outstanding Cheques | Rs. 4222 iv. Deposit in transit | Rs. 3837 v. Direct deposit by Customer | Rs. 2000 vi. The bank credits profit | Rs. 90 vii. Collection charges | Rs. 05
Required a) Record the journal entries in proper form to correct the cash balance. b) Prepare a bank reconciliation as on June 30, 2006.
Q.6 Pick up information from Q.2 and show the effect of each transaction on a) Posting in T accounts b) A trial balance in sequence.
Q.7 Give entries in General Journal to correct each of the following errors detected before closing the book. i. Depreciation on furniture Rs. 1,500 was not recorded. ii. Office furniture purchased for Rs. 20,000 was incorrectly debited to office supplies expense account. iii. Purchase of office supplies for Rs. 4,500 cash was recorded and posted as Rs. 5,000 iv. Drawing of Rs. 9,000 for personal use of the proprietor was debited to capital account. v. Rs. 2,500 spent on the repair of old furniture was debited to furniture account. vi. Purchase of equipment Rs. 10,000 was debited to purchase account. vii. Sales of office furniture Rs. 6,000 was credited to sales account. viii. Purchases return of Rs. 2,000 was credited to purchases account. SECTION "C" (DESCRIPTIVE ANSWER QUESTIONS) (30 MARKS) NOTE Attempt the following question. Q.8 The account balances of ABC are as follows: Cash Rs. 10,000, Merchandise Inventory Rs. 8,000, Office Equipment Rs. 30,000, Purchases Rs.52,000, Salaries Expense Rs. 5,500, Rent Expense Rs. 5,000, Office Supplies Rs. 500, Un-expired Insurance Rs. 1,500, Accounts Receivable Rs. 17,000, Sales Returns & Allowances Rs. 500, Furniture Rs. 20,000, ABC Drawings Rs. 5,000, Sales Rs. 75,000, Purchases Returns & Allowances Rs. 500, ABC Capital Rs. 60,000, Accumulated Depreciation-Office Equipment Rs. 2,500, Accounts Payable Rs. 17,000
Adjustments i. Ending Merchandise Inventory Rs. 10,000 ii. Accrued Salaries Rs. 500 iii. Unused Office Supplies Rs. 200 iv. Insurance Expired Rs. 800 v. Provide depreciation charge @ 10% of Cost on office equipment. vi. Provide for bad debts @ 5% of Accounts Receivables.
Required a) Prepare income statement and a classified balance sheet for the year ended 30th June 2006. b) Prepare adjusted trial balance OR Prepare adjusting entries in proper form.
Other Details i. The question on General Journal comprises a maximum of Ten Transactions Only. ii. The question on ledger and trial balance, cash book, petty cash book, Bank Reconciliation, special journals and Correction of errors should comprise a maximum of Eight Transactions only. iii. The Comprehensive question will comprise the contents of 4th, 5th, 6th title of the present syllabus and only the following adjustments will be covered in the paper.
Adjustment for i. Prepayments and supplies initially recorded as Assets. ii. Unearned Revenue initially recorded as liability. iii. Accrued Expense iv. Accrued Revenue v. Depreciation vi. Bad debts computed on the basis of sales (income statement approach). Adjusted Trial Balance.
SECTION "B" It consists of 6 short answer questions of which 4 questions are to be answered.
SECTION "C" It comprises 1 detailed answer question which is Compulsory. SECTION "A" (MULTIPLE CHOICE QUESTIONS) (20 MARKS) NOTE Attempt all questions from this Section. Q.1. Choose the correct answer for each from the given options.
i. Which of the following statement is incorrect? a) Assets - Capital = Liabilities b) Liabilities + Capital = Assests c) Liabilities + Assets = Capital d) Assets - Liabilities = Capital
ii. Which of the following is a liability? a) Machinery b) Building c) Loan from X d) Cash
iii. Which of the following best describes the meaning of Purchases? a) Items bought b) Goods bought on credit c) Goods bought for resale d) Goods paid for
iv. Which of the following is correct? a) Profit does not alter capital b) Profit reduces capital c) Capital can only come from profit d) Profit increases capital. v. Which of the following best describes a Trial balance? a) Shows the financial position of the business b) It is a special account c) Shows all the entries in the books d) It is a list of balances of the ledger accounts.
vi. Gross profit is a) Excess of sales over cost of goods sold b) Sales less purchases c) Cost of goods sold + opening inventory d) Net profit less operating expenses.
vii. Which is the definition of the Balance Sheet? a) An account proving the book's balance b) A record of closing entries c) A statement of Assets d) Contains balances of Assets and Equities
viii. Which is the best description of fixed Assets? a) They are about to be used in business b) They are an expensive item bought for business c) They are of long, life and are not bought specifically for resale d) They are items which will not wear out quickly.
ix. The sales journal is best described as a) Part of the double entry system b) A list of the credit sales c) Containing asset accounts d) Containing customers account
x. When depositing money in your bank account you should always use a) a cheque book b) a cash book c) a general ledger d) a paying-in slip
xi. A credit balance of Rs. 200 on the cash columns of the cash book would mean a) We have Rs. 200 cash in hand b) Some one has stolen Rs. 200 cash c) We have spent Rs. 200 more than we have received. d) The book keeper has made a mistake
xii. Posting the transactions in accounting means a) making the first record of double entry transaction b) entering items in cash book c) making the second entry of double entry trasaction d) something other than the above
xiii. Sales invoices are first entered in a) The sales account b) The cash book c) The sales journal d) The purchases journal
xiv. Credit notes issued by us will be entered in our a) Sales account b) Purchases returns and allowances journal c) Purchases Journal d) Sales returns and allowances journal
xv. On the date of balance sheet the balance on accumulated depreciation account is a) Transferred to depreciation account b) Simply deducted from the asset in the balance sheet c) Transferred to income summary account d) Transferred to asset account
xvi. All the following accounts normally have debit balance except a) Cash b) expense c) purchase d) purchase returns and allowances
xvii. By adding the purchases during the period to the beginning inventory and deducting the ending inventory we obtain an amount called the a) net sales b) cost of goods sold c) gross profit d) operating expenses
xviii. The purchases journal is a book of original entry used to record the a) purchase of tangible assets on credit b) purchase of merchandise for cash c) purchase of merchandise on credit only d) sales of merchandise on credit
xix. If a journal entry recognizes revenue the other part of the entry might a) increase an Asset account b) increase a Liability account c) decrease an Asset account d) decrease a Capital account
xx. Which expense may be shown in the income statement? a) Prepaid Expense b) Accrued expense c) Salary Expense d) Preliminary expense
SECTION "B" (SHORT ANSWER QUESTIONS) (50 MARKS) NOTE Attempt any Four questions from this Section. All questions carry equal marks. Q.2 The following transactions relate to Mr. Akbar a sole trader.
i. Mr. Akbar invested into the business cash Rs. 10,000 & furniture worth Rs. 5,000. ii. Purchase Merchandise for cash Rs. 5,000 and on credit Rs. 3,000 from Mr. Asif. iii. Sold merchandise for cash Rs. 80,000 and on credit Rs. 4,000 to Mr. Asghar. iv. Returned Merchandise to Mr. Asif Rs. 500. v. Returned Merchandise by Mr. Asghar Rs. 600 vi. Paid shop rent Rs. 600 vii. Withdrew cash for personal use Rs. 2,000 viii. Paid cash to Mr. Asif Rs. 1,000 and collected from Mr. Asghar Rs. 1,200 cash.
Required Make Journal entries in standard form.
Q.3 A trader uses three column cash book. On September 01, 2007 he had cash on hand Rs. 50,000 and cash at Bank Rs. 60,000. During September he completed the following transactions.
September 02 Purchased merchandise for cash Rs. 5,000 September 05 Cash sales deposited into bank Rs. 8,000 September 08 Received a cheque for Rs. 5,000 for sales September 11 Deposited the cheque received on September 08 September 12 Received a cheque of Rs.3,800 after a discount of 5% and deposited it into Bank. September 15 Issued a cheque for Rs. 2450 in full settlement of Rs. 2,500 September 20 Withdrew from bank for office use Rs. 500 and personal use Rs. 1500 September 25 Purchased merchandise by cheque Rs. 5,000 for cash Rs. 3,000
Required a) Enter the above mentioned information in three column cash book and balance it on 30th September 2007 b) Set up standard ledger accounts for discount # 5003 & 4003 make postings of discounts from cash book Page No. 9
Q.4 The following transactions relates to a trader: May 03 Purchased merchandise on account from Baqi & Co. Rs. 5,000 May 09 Purchased merchandise on credit from Daud Sons Rs. 8,000 May 10 Returned merchandise to Daud Sons Rs. 1,000 and Baqi & Co. Rs. 500 May 15 Purchased furniture on account from Akhtar Sons Rs. 10,000 May 17 Purchased merchandise on account from Iqbal Bros. Rs. 15,000 May 23 Purchase merchandise on account from Mukhtar Co. Rs. 17,000 May 25 Returned merchandise to Iqbal Bros. Rs. 1,500
Required a) Record the above transactions to appropriate Special Journal. b) Post to ledger accounts.
Q.5 A comparison of cash book and bank statement for the month of June 30. 2006 revealed the following:
i. Balance as per Bank Statement | Rs. 8470 ii. Balance as per Cash Book | Rs. 6000 iii. Outstanding Cheques | Rs. 4222 iv. Deposit in transit | Rs. 3837 v. Direct deposit by Customer | Rs. 2000 vi. The bank credits profit | Rs. 90 vii. Collection charges | Rs. 05
Required a) Record the journal entries in proper form to correct the cash balance. b) Prepare a bank reconciliation as on June 30, 2006.
Q.6 Pick up information from Q.2 and show the effect of each transaction on a) Posting in T accounts b) A trial balance in sequence.
Q.7 Give entries in General Journal to correct each of the following errors detected before closing the book. i. Depreciation on furniture Rs. 1,500 was not recorded. ii. Office furniture purchased for Rs. 20,000 was incorrectly debited to office supplies expense account. iii. Purchase of office supplies for Rs. 4,500 cash was recorded and posted as Rs. 5,000 iv. Drawing of Rs. 9,000 for personal use of the proprietor was debited to capital account. v. Rs. 2,500 spent on the repair of old furniture was debited to furniture account. vi. Purchase of equipment Rs. 10,000 was debited to purchase account. vii. Sales of office furniture Rs. 6,000 was credited to sales account. viii. Purchases return of Rs. 2,000 was credited to purchases account. SECTION "C" (DESCRIPTIVE ANSWER QUESTIONS) (30 MARKS) NOTE Attempt the following question. Q.8 The account balances of ABC are as follows: Cash Rs. 10,000, Merchandise Inventory Rs. 8,000, Office Equipment Rs. 30,000, Purchases Rs.52,000, Salaries Expense Rs. 5,500, Rent Expense Rs. 5,000, Office Supplies Rs. 500, Un-expired Insurance Rs. 1,500, Accounts Receivable Rs. 17,000, Sales Returns & Allowances Rs. 500, Furniture Rs. 20,000, ABC Drawings Rs. 5,000, Sales Rs. 75,000, Purchases Returns & Allowances Rs. 500, ABC Capital Rs. 60,000, Accumulated Depreciation-Office Equipment Rs. 2,500, Accounts Payable Rs. 17,000
Adjustments i. Ending Merchandise Inventory Rs. 10,000 ii. Accrued Salaries Rs. 500 iii. Unused Office Supplies Rs. 200 iv. Insurance Expired Rs. 800 v. Provide depreciation charge @ 10% of Cost on office equipment. vi. Provide for bad debts @ 5% of Accounts Receivables.
Required a) Prepare income statement and a classified balance sheet for the year ended 30th June 2006. b) Prepare adjusted trial balance OR Prepare adjusting entries in proper form.
Other Details i. The question on General Journal comprises a maximum of Ten Transactions Only. ii. The question on ledger and trial balance, cash book, petty cash book, Bank Reconciliation, special journals and Correction of errors should comprise a maximum of Eight Transactions only. iii. The Comprehensive question will comprise the contents of 4th, 5th, 6th title of the present syllabus and only the following adjustments will be covered in the paper.
Adjustment for i. Prepayments and supplies initially recorded as Assets. ii. Unearned Revenue initially recorded as liability. iii. Accrued Expense iv. Accrued Revenue v. Depreciation vi. Bad debts computed on the basis of sales (income statement approach). Adjusted Trial Balance.