ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Commerce)

PRINCIPLES OF ACCOUNTING (438)

CHECKLIST

SEMESTER: AUTUMN, 2019

This packet comprises the following material:

1. Text Book (One)

2. Assignment No. 1 & 2
3. Assignment Forms ( 2 sets )
4. Schedule for submitting assignments and tutorial meetings

In this packet, if you find anything missing out of the above mentioned material, please
contact at the address given below:

The Mailing Officer

Allama Iqbal Open University
H-8, Islamabad
Ph: 051-9057611-12

ASIA BATOOL
(Course Coordinator)

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 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.
Course: Principles of Accounting (438) Semester: Autumn, 2019
Level: Bachelor/B.A/B.Com (Renamed as Associate Degree 2 Year) Total Marks: 100
Pass Marks: 50
ASSIGNMENT No. 1
(Units 1–4)
Note: You are required to solve all questions if you are unable to understand any
question of assignment, do seek help from your concerned tutor. But keep in
mind that tutors are not supposed to solve the assignment questions for you.
Q. 1 i. Define Accounting and describe its branches. (10+10=20)
ii. Demonstrate how certain business transactions affect the elements of the
accounting equation: assets= Liabilities + Owner’s Equity.
Q. 2 Mr. Furqan started a sole proprietorship business. The business is newly
established and Mr. Furqan hired an accountant for keeping the journal updated.
Suppose you are the accountant of Mr. Furqan business, prepare the journal book
for the month of June, 2019. You are also required to post journal entries into the
ledger and prepare the trial balance. Detail of the transactions during June, 2019 are
given as follows (20)

June .1. Mr. Furqan commenced business with Cash of Rs. 2,200,000/- Building
Rs.7, 500, 000/-
3. Purchased Goods with cash Rs. 400,000/-
6. Purchased furniture from Miss HareemRs.220, 000/-
8. Sold goods to Mr. Majid Rs. 220,000/-
17. Goods returned to Miss HareemRs.10, 000/-
18. Stationery Purchased Rs.20, 000/-
22. Returned goods to Mr. Majid Rs.12, 000/-
28. Utility bills paid for the month Rs.70, 000/-
31. Salaries paid for the month Rs.70, 000/-
Q. 3 Define journal and also explain in detail the objectives and importance of journal in
daily life of business. (20)
Q. 4 On 1st July 2015, Zahid purchased Machinery for Rs. 600,000. Depreciation is to
be charged @10% on Straight line method and Reducing balance method each
year. On 31st October, 2017 Machinery was sold for Rs. 140,000 as they became

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 useless. On the same date he purchased new machinery for Rs.200, 000. (20)
Required: Prepare machinery Accounts from 2015 to 2018. Accounts are closed
on 31st December every year.

Q. 5 i. Define partnership and discuss kinds of partners. (20)

ii. If the profit earned during the last five years Rs. 60,000, Rs. 62,000,
Rs.61,000, Rs. 55,000 and Rs. 60,000. Calculate the value of good will,
under the average profit method and 3-year purchase of the average profits of
the last five years?

(20)

ASSIGNMENT No. 2
(Units 5–9)
Total Marks: 100
Pass Marks: 50
Q. 1 Akwash &Co. keeps his books by single entry system. He gives you the financial
information from which you are required to ascertain his profit or loss during 2018.
Jan.1, 2018 Dec.31, 2018
Cash in hand 100,000 80,000
Sundry debtor 157,500 200,000
Furniture 100,000 100, 000
Building 200,000 196,000
Plant & machinery 75,000 72,500
Overdraft in Bank 80,000 65,200
Sundry Creditor 130,600 140,500
During the year Akwash & Co. had withdrew Rs.30, 000. He brought the money
Rs. 25,000 in to business on 1-7-2018. (20)
Ascertain the profit or loss made by him after considering the following
adjustment.
i. Depreciation on Furniture @ 10% p. a.
ii. Charge Interest on Capital @5% p .a.
iii. Write off Rs. 5000 From Sundry Debtor.
Requirement; Prepare A Statement of Profit and Loss.

Q. 2 From the following Receipt & Payment account of Students Foundation and the
subjoined information Prepare the income and Expenditures account for the year
ended 31st December 2018 and a Balance Sheet as on that date from it and
subjoined information. (20)

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 Date Receipt Amount Date Expenditure Amount
2018 Endowment fund 14,460 2018 Payment of salaries 15,300
Donations 20,720 Rent (31-3-2019) 1,200
Subscription 8,020 Office expenses 5,700
Legacies’ 10,000 Commission 940
Miscellaneous fees 3,600 Printing 720
Interest on 3,680 Postage 560
Investment 600 Purchase of Govt. 80,00
Interest on deposit securities
Balance of c/d 28,660
Total 61,080 Total 61,080
Additional Information
i. The legacies and donations are capitalized.
ii. A quarter’s rent is prepaid which amount is Rs.300 full yearly charges of rent is Rs.
1,200.
iii. Subscription is outstanding for 2013 RS. 500.
iv. Interest on Government securities Rs.800 had accrued but was not received.
v. Postage Rs.240 is outstanding :

Q. 3 Mr. Usman is an owner of sole proprietorship business. During the month of

December 2018, he opened a current account with Allied Bank Ltd. following
transactions were recorded you are required to enter the transaction in cash Book
and in the pass book. (20)
2018.
December 1. Mr. Zahid opened current account with Allied Bank Ltd. for Rs.
6,000,000.
December 5. A cheque received from Noman Rs.50, 000 and deposited into bank same
day
December 11. Purchased furniture Rs. 70,000 paid by Cheque.
December 17. Cash drew from bank for office use Rs. 45,000.
December 19. Paid rent by chequeRs. 35,000.
December 21. Misc. expense debited by bank Rs. 40,000
December 25. Purchased goods from Mr. Asfer paid by cheque Rs. 95,000.
December 30. Interest received from bank Rs. 35,000.

Q.4 State with reasons whether the following items should be classified as” Capital or
Revenue” expenditure: (20)

a) Wages paid on erection of machinery.

b) Repair of machinery for keeping it in working condition.
c) Brokerage and stamp duty on purchase of building.
d) Interest paid on loan during construction of a plant.
e) Amount incurred for providing uniform to staff.
f) Annual fee paid for renewal of patents.
g) Loss arising from sale of fixed assets.
h) Book value of assets discarded or totally damaged or destroyed by fire.
i) Cost of goodwill.

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 j) Actual additions and extension to existing plant.

Q. 5 Rectify the following errors by passing the necessary journal entries. (20)
a) The sales book has been under-cast by Rs.8, 000.
b) A cheque drawn for wages for Rs.1, 500 was wrongly posted to wages A/c as
Rs.1, 400.
c) Furniture purchased for Rs.1, 040 has been debited to purchase A/c as Rs.
1,640.
d) Rs. 550 received from Rahim debited to his account.
e) Discount received Rs. 200 was posted to the wrong side of Discount A/C
f) Rs 7,000 paid in cash for a typewriter was charged to office expenses account
g) Stationery purchased for Rs. 890 but debited to stationery a/c as Rs. 980
AIOU-AS-730(19)PPU-2911-2019-200