University of Sialkot, Pakistan

Mid Term Examination- Spring-2021

Course Code: MGT-1007 Course Title: Financial Accounting I
Total Time: 90 Minutes Total Marks: 20 Marks
Department: FMAS Program: BBA
Instructor Name: Faiza Saleem Awan Instructor Sign.:
Student’s Name: Roll No:

Part 1 : Subjective Section

Question 1: (2 Marks)
A) What is meant by Generally Accepted Accounting Principles, and how do these principles add to
the integrity of financial accounting information?
B) What is meant by the trem Adequate Disclosure, and how do accountants fulfill this requirement
in the prepration of financial statements?
Question 2: (3 Marks)
Ravi Traders (RT) commenced its business on 1st January, 2019. The books of prime entry as
maintained by RT for the month of January 2019 are reproduced below:

Required: Prepare trial balance for the month ended 31 January 2018. (Preparation of ledger accounts
is not necessary)
Question 3: (6 Marks)
Henry Brothers (HB) is engaged in trading of textile products. On 1st July ,2018 HB had cash and
bank balances of Rs. 76,000 and Rs. 286,000 respectively. Following transactions pertain to the
month of July 2018:
4 July Purchased goods on credit amounting to Rs. 250,000 and Rs. 180,000 from Alpha
Enterprises (AE) and Bravo Traders respectively. AE offered 3% discount if payment
was made within 15 days.
6 July Purchased office furniture costing Rs. 90,000 from Lavish Designs and paid Rs.
50,000 through cheque. Rs. 40,000 had already been paid in June 2018 and debited to
Advances.
8 July Sold goods to HRS Garments and received a cheque of Rs. 300,000. Also sold goods
on cash to Shan Garments having list price of Rs. 250,000.
14 July 20% goods sold to Shan Garments on 8 July were returned and the amount was
refunded in cash.
17 July Goods costing Rs. 35,000 were returned to AE and the remaining amount was paid
through cheque.

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26 July Saleh & Co. offered discount of 5% on list price of Rs. 500 per unit if at least 250
units are purchased. HB purchased 200 units and paid through cheque
Required: Record the above transactions in the relevant books of prime entry in a proper format.
(Narrations are not required)

Question 4: (5 Marks)
The following information pertain to Ben Ten Traderfor the month of August 2016:
i. Goods costing Rs. 75000 were sold 100,000 and part payment of Rs. 50,000 received in cash
ii. An amount of Rs.20,000 were received from a debtor and remaining Rs. 30,000 were written off.
iii. Good purchased on credit for Rs. 23,000 were returned.
iv. Investory costing Rs.15000 were withdrawn by owner
v. Equipment having net bookvalue of Rs. 55,000 were sold for cash Rs. 60,000.
vi. Goods costinf Rs. 28,000 and sold on crdit for Rs. 35,000 were returned by a customer.
vii. Payment of Rs. 39,200 was madeto a supplier in settlement of Rs. 40,000.
Required: Show the effects of the above information in the form of accounting equation.

Question 5: (4 Marks)
Following is the trial balance of Tulip Enterprises(TE) for the year ended 31st December, 2017:
Debit Credit
Cash and bank balance 2320 Trade payable 3250
Trade receivables 4400 Accruals and other payable 1320
Stock in Trade (31-12-2017) 3900 Notes payable 220
Prepayments and advances 1740 Accumulated depreciation 4630
Property,plant & equiment - cost 12500 12% Long-term loan 5150
Drawings 490 Capital 6000
Cost of sales 23580 sales 35230
Salaries and wages 2610 Miscellaneous income 940
Fuel and power 450
Bad debts expense 230
Rent and insurance 2900
Repair and maintenance 920
Financial charges 700
56,740 56740
Required
Prepare the followings:
A) Statement of profit or loss for the year ended 31st December, 2017.
B) Statement of financial positon as at 31st December, 2017.

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