Solution

ANNUAL EXAMINATION 2022-2023

Class 11 - Accountancy

1. (a) Only C is correct

Explanation: According to the Business Entity Concept states that the transactions associated with a business must be
separately recorded from those of its owners or other businesses.
2. (c) Only A is correct
Explanation: Accounting principles and methods should remain consistent from one year to another. If we use one method
than every year we apply the same method and it never changes year to year.
3. (c) Order received for goods
Explanation: According to Revenue Recognition Concept:- The revenue is earned only when the goods are transferred. It
means that profit is deemed to have accrued when the property in goods passes to the buyer. Thus accounting should take into
consideration of profits only when the same have been realized and no anticipated profit should be recorded in the books. Thus
order received is not any generation of revenue. When sale is made it is recorded whether payment is received or not.
4. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
5. (c) A is true but R is false.
Explanation: A is true but R is false.
6. (d) Cheques issued but not yet presented
Explanation: Since the cheques which are not presented to the bank will not reduce our bank balance but we have already
subtracted those cheques from cash book bank column. Hence it will be added to cash book.
7. (a) Bank balance
Explanation: The amount of balance shown in the passbook or the bank statement must tally with the balances shown in the
cash book. It indicates the favorable balance as per the cash book or favorable balance as per the passbook. Hence, the credit
balance in the passbook means bank balance.
8. (c) A is true but R is false.
Explanation: A is true but R is false.
OR
(b) Both A and R are true but R is not the correct explanation of A.
Explanation: Both A and R are true but R is not the correct explanation of A.
9. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
10. (b) Prepaid Expense
Explanation: Prepaid Expense shows a debit balance in the Trial Balance. Because it is a current asset.
11. (c) the Debit of Cash Column and Credit of Bank Column
Explanation: The cash book is used to record receipts and payments of cash. When cash is withdrawn from the bank, both the
entries are recorded in the cash book as the Debit of Cash Column and Credit of Bank Column.
12. (b) Cheques in hand A/c
Explanation: The cheques which are not deposited in the bank on the same day will neither affect bank and cash. So we debit
cheques in hand a/c as cheques received are assets and they are increasing so it is debited and Customer's A/c is credited.
13. (c) expenses and revenue
Explanation: A Nominal account is a General ledger account pertaining to all income, expenses, losses, and gains. An example
of a Nominal Account is an Interest Account.
14. (d) Personal Account
Explanation: An outstanding salary is a personal representative account.
15. (b) Assets and Capital
Explanation: capital is the amount invested by owner. when owner introduce some additional amount it will increase cash or

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 bank balance (which is assets) and Capital.
16. (b) different nature
Explanation: Journal proper is a book of original entry (simple journal) in which miscellaneous transactions are recorded
which do not fit in any other books are recorded.
OR
(a) Rs.6050
Explanation: purchase Return Book Records transaction of credit return of purchase.
So Purchase return Amount= Rs. 1200 + Rs. 2500 +(Rs. 2000- 10% Discount) +Rs. 550
= Rs. 1200+ Rs. 2500 +Rs. 1800 +Rs. 550
= Rs. 6050
17. (d) Journal Proper
Explanation: Goods taken away by the proprietor from the business for his personal use will be recorded in Journal Proper
because in the subsidiary book we record only credit nature of the transaction.
18. (a) Purchase returns account
Explanation: Purchase return book is prepared to record all credit returns of purchases. So the balance of purchase retrun book
is transferred to purchase book on periodical basis.
19. (d) (i), (iii) and (iv)
Explanation: (i), (iii) and (iv)
20. (b) Absorbing the unforeseen losses
Explanation: Secret Reserve :- Heavy unforeseen Losses of extraordinary nature can be met without disclosing them in the
financial statements without affecting the normal business profit. This is not a limitation.
21. TRIAL BALANCE OF
as on ...
Heads of Accounts LF. Dr. Balance ₹ Cr. Balance ₹

Capital A/c - 2,00,000

Debtors A /c 30,000 -

Fixed Assets A/c 1,92,000 -

Sales A/c - 1,10,000

Returns Outward A/c - 1,000

Bills Payable A/c - 8,000

Bank Overdraft A/c - 11,000

Opening Stock A/c 15,000 -

Creditors A/c - 30,000

Purchases A/c 70,000 -

Returns Inward A/c 2,000 -

Wages and Salaries A/c 30,000 -

Bills Receivable A/c 15000 -

Rent A/c 6,000 -

Total 3,60,000 3,60,000

Tally of trial balance leads to the accuracy of books.
22. TRADING ACCOUNT
for the year ended 31st March, 2019
Dr. Cr.

Particulars ₹ Particulars ₹

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 To Opening Stock 10,000 By Sales 2,00,000

Less: Returns
To Purchases 2,00,000 5,000 1,95,000
Inward

Less: Returns
2,500 1,97,500 By Closing Stock 20,000
Outward

To Wages 11,000 By Gross Loss c/d 7,500

To Carriage Inwards 1,500 (Transferred to Profit and Loss A/c)

To Freight Inwards 2,500

2,22,500 2,22,500
Note: Carriage Outwards, being an indirect expense not debited to trading account and will be debited to Profit and Loss Account
of entity.
23. Adjustment Entries
Dr Cr

Date Particulars Debit Credit

31/03/2013 (i) Wages A/c Dr 6,000

To Outstanding Wages A/c

6,000
(Being wages due)

(ii) Salary A/c Dr 1,500

To Oustanding Salary A/c

1,500
(Being salary due)
Effects on Final Account
Trading Account
Dr Cr

Date Particulars Amt(Rs) Date Particulars Amt(Rs)

31/03/2013 To Wages A/c 66,000 31/03/2013

(+)Outstanding Wages 6,000 72,000

Profit and Loss A/c
Dr Cr

Date Particulars Amt(Rs) Date Particulars Amt(Rs)

31/03/2013 To Salary A/c 16,500

(+)Outstanding Salary 1,500 18,000

Balance Sheet
Liabilities Amt(Rs) Assets Amt(Rs)

Outstanding Wages 6,000

Outstanding salary 1,500

24. Journal Entries
Amount Dr. Amount Cr.
Date Particular L.F.
(Rs) (Rs)

Loss by Fire Account Dr. 4,500

(i) To Purchase Account 4,500

(Being goods destroyed by fire)

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 (ii) Machinery Account Dr. 1,500

To cash Account 1,500

(Being wages paid for installation Machinery)

Purchase Account Dr. 7,500

(iii) To Bank Account 7,500

(Being goods purchased by cheque)

M/s Kalu Sons Dr. 6,270

To Sales Account 6,270

(iv)
(Being goods sold costing Rs 6,000 at on invoice above cost less 5% trade
discount)
OR
BOOK OF HARPREET BROS.
JOURNAL
Date Particulars L.F. Amount Dr. Amount Cr.

S. No. ₹ ₹

(a) Bad Debts A/c Dr. 10,000

To Rohit A/c
(Amoun due from Rohit written off as bad 10,000
debt)

(b) Drawings A/c Dr. 20,000

To purchases A/c
(Goods taken away by the proprietor for 20,000
personal use)

(c) Depreciation A/c Dr. 5,000

To Machine A/c (3,00,000 × 10% ×

2/12) 5,000
(Depreciation charged on the machine)

(d) Interest on Capital A/c Dr. 67,500

To Capital A/c (15,00,000 × 6% × 9/12)

67,500
(Interest provided on Capital)

Bank A/c (20,000 ×

(e) Dr. 12,000
0.60)

Bad Debts A/c (20,000

8,000
- 12,000)

To Rahul A/c
(Cheque received and bad debts are 20,000
written off)

(f) Mohan A/c Dr. 1,00,000

To Sales A/c
1,00,000
(Sold goods on profit)

Total ₹ 2,22,500 2,22,500

25. TRADING ACCOUNT
for the year ended 31st March, 2019

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 Dr. Cr.

Particulars ₹ Particulars ₹

To Opening Stock 1,50,000 By Sales

To Purchases: Cash Sales 1,60,000

Cash Purchases 1,50,000 Credit Sales 11,00,000

Credit Purchases 9,00,000 12,60,000

Less: Returns
10,50,000 20,000 12,40,000
Inward

Less: Returns
10,000 10,40,000 By Closing Stock 84,000
Outward

To Freight Inwards 3,000

To Carriage Inwards 3,000

To Wages and Salaries 4,000

To Gross Profit c/d 1,24,000

(Transferred to Profit and Loss A/c)

13,24,000 13,24,000
26. PROFIT & LOSS ACCOUNT
for the year ending on 31st March, 2019
Dr. Cr.

Particulars Amount Particulars Amount

₹ ₹

To Trade expenses 10,000 By Gross Profit c/d 10,52,500

To Carriage on sales 50,000 By Commission received 4,200

To Office Salaries 79,000 By Discount 3,000

To Postage 3,600 By Miscellaneous Income 2,500

To Office Rent 37,500

To Legal charges 2,000

To Audit Fee 8,000

To Donation 5,500

To Sundry expenses 1,800

To Selling expenses 26,600

To Discount allowed 15,000

To Lighting 3,900

To Bad-Debts 6,000

To Interest on Loan 11,000

To Stable expenses 7,000

To Export duty 11,500

To Unproductive expenses 20,500

To Travelling expenses 12,500

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 To Net Profit transferred to

Capital Account (b/f) 7,50,800

10,62,200 10,62,200
Profit and loss account records income and expenses of indirect nature.
27. Extract of Profit and Loss Account
for the year ended March 31, 2017
Dr. Cr.

Amount Amount
Particulars Particulars
₹ ₹

To Old Bad Debts 1,400

Add: Further Bad Debts 2,000

Add: New Provision 5,000

Less: Old Provision 3,400 5,000

To Provision for Discount on Debtors 1,900

Extract of Balance Sheet
as on March 31, 2017
Liabilities Amount (₹) Assets Amount (₹)

By Current Assets

By Debtors 1,02,000

Less: Further Bad Debts 2,000

Less: Provision for Doubtful Debts 5,000

Less: Provision for Discount on Debtors 1,900 93,100

Working Note:-
Calculation for Provision for Doubtful Debts:-
Provision Doubtful Debts = Sundry Debtors - Further Bad Debts × Rate
Provision Doubtful Debts = 1,02,000 - 2,000 × 5%
Provision Doubtful Debts = ₹5,000
Calculation of Provision for Discount on Debtors:-
Provision for Discount on Debtors = Debtors - Further Bad Debts - Provision for Doubtful Debts × Rate
Provision for Discount on Debtors = 1,02,000 - 2,000 - 5,000 × 2%
Provision for Discount on Debtors = ₹1,900
Bad debts shown in trial balance will not be deducted from debtors since they are already adjusted.
While bad debts shown after trial balance will be deducted while calculating provision on debtors.
28. Accounting Equation
S.no Particulars Assets = Liabilities + Capital

Cash +Stock +Machinery = Creditors + Capital

1 Started business with cash 70,000 0 +0 = 18,000 + 70,000

2 Purchased goods on credit 0 +18,000 +0 = 0 + 0

New Equation 70,000 +18,000 +0 = 18,000 + 70,000

3 Paid to creditors Rs 17,500 in full settlement (17,500) +0 +0 = (18,000) + 500

New Equation 52,500 +18,000 +0 = 0 + 70,500

4 Purchased machinery for cash (20,000) +0 +20,000 = 0 + 0

New Equation 32,500 +18,000 +20,000 = 0 + 70,500

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 5 Charged depreciation on machinery 0 +0 (2,000) = 0 + (2,000)

New Equation 32,500 18,000 18,000 = 0 + 68,500

The accounting equation (or basic accounting equation) offers us a simple way to understand how assets, liabilities and capital
amounts relate to each other.
29. In the Books of ...
Journal
Debit Credit
Date Particulars L/F Amount Amount
(Rs) (Rs)

1 Depreciation on Furniture Account Dr 2,000

Depreciation on Machinery Account Dr 8,000

To Furniture Account 2,000

To Machinery Account
8,000
(Being depreciation charged on furniture & machinery)

2 Cash Account Dr 4,000

To Bad Debts Recovered Account

4,000
(Being cash received for bad debts written off last year)

3 Bad Debts Account Dr 10,000

To Ajay's Account 10,000

4 Wages Account Dr 80,000

Salaries Account Dr 16,000

To Outstanding Wages Account 80,000

To Outstanding Salaries Account

16,000
(Being wages & salaries outstanding)

5 Drawings Account Dr 24,000

To Bank Account
24,000
(Being furniture purchased for proprietor)

6 Interest on Capital Account Dr 72,000

To Capital Account
72,000
(Being Interest on capital provided at the rate 9% on Rs 8,00,000)

7 Drawings Account Dr 4,000

To Interest on Drawings Account

4,000
(Being interest on drawings charged)

Total 2,20,000 2,20,000

30. A reserve is an appropriation of profits for a specific purpose. A provision is the amount of an expense or reduction in the value of
an asset that an entity elects to recognize now in its accounting system, before it has precise information about the exact amount of
the expense or asset reduction.
Basis Reserve Provision

It is meant for meeting any unknown loss or liability. It is created to meet a specific loss or liability. But the
Purpose
It is created from the profit earned by business. amount of loss or liability cannot be determined exactly.
Effect on
It does not affect profit or loss since it is created after Profit or loss is affected by its creation profit decreases or
Taxable
ascertaining the profit. loss increases.
Profit

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 Element of It can not be created unless there is a sufficient profit. It must be created irrespective of whether there is profit or
Compulsion Its creation is the discretion of management. loss. Its creation is obligatory.
OR
Parameters Provision Reserve

Reserve is formed after evaluating net

Basic Nature The Provision provides future liability which is uncertain.
profit for future.

Purpose To understand liabilities and expected losses Increase in capital employed

Effect on taxable Profit is important to create reserves,

Not required for taxable profits
profits apart from a few types of reserves.

Presentation in the In terms of assets it is displayed from that particular asset, while
Displayed on the liabilities side.
Balance Sheet for liability, it is displayed on the liabilities side.

Element of It is optional except that reserves which

Yes, according to the GAAP
Compulsion are obligatory.

Use of payment of
The dividend is never paid from provisions The dividend can be paid out of reserves.
dividend
31. In the Books of Ramesh
JOURNAL ENTRIES
Date Particulars L.F. Dr.(₹) Cr.(₹)

2019

April 1 Cash A/c ...Dr. 1,00,000

To Capital A/c 1,00,000

(Being the amount invested by Ramesh in the business as capital)

April 2 Bank A/c ...Dr. 70,000

To Cash A/c 70,000

(Being the amount paid into the bank)

April 3 Purchases A/c ...Dr. 5,000

To Cash A/c 5,000

(Being the coods purchased for cash)

April 4 Cash A/c ...Dr. 1,000

To Bank A/c 1,000

(Being the cash withdrawn from the bank)

April 13 Krishna A/c ...Dr. 1,500

To Sales A/c 1,500

(Being the goods sold to Krishna on credit)

April 20 Purchase .A/c ...Dr. 2,250

To Shyam A/c 2,250

(Being the goods bought from Shyam on credit)

April 24 Cash A/c ...Dr. 1,500

To Krishna A/c 1,500

(Being the cash received from Krishna)

April 28 Shyam A/c (2,150+100) ...Dr. 2,250

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 To Cash A/c 2,150

To Discount Received A/c 100

(Being the discount allowed by Shyam on payment being made to him in cash

April 30 Cash A/c ...Dr. 8,000

To Sales A/c 8,000

(Being the goods sold for cash)

April 30 Rent A/c ...Dr. 500

Salaries A/c ...Dr. 3,000

To Cash A/c (500+3,000 3,500

(Being the amount paid for rent and salary)

Total 1,95,000 1,95,000

Ledger
Dr. CASH ACCOUNT Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹

2019 2019

April 1 To Capital A/c 1,00,000 April 2 By Bank A/c 70,000

April 4 To Bank A/c 1,000 April 3 By Purchases A/c 5,000

April 24 To Krishna 1,500 April 28 By Shyam 2,150

April 30 To Sales A/c 8,000 April 30 By Rent A/c 500

April 30 By Salaries A/c 3,000

April 30 By Balance c/d 29,850

1,10,500 1,10,500

May 1 To Balance b/d 29,850

Dr. CAPITAL ACCOUNT Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹

2019 2019

April 30 To Balance c/d 1,00,000 April 1 By Cash A/c 1,00,000

Dr. BANK ACCOUNT Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹

2019
2019 By Cash A/c 1,000
To Cash A/c 70,000 April 4
April 2 By Balance c/d 69,000
April 30

70,000 70,000

May 1 To Balance b/d 69,000

Dr. PURCHASES ACCOUNT Cr.

Date Particulars J.F ₹ Date Particulars J.F. ₹

2019
To Cash A/c 5,000
April 3

April 20 To Shyam 2,250

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 Dr. SALES ACCOUNT Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹

2019

April 13 By Krishna 1,500

April 30 By Cash A/c 8,000

Dr. KRISHNA Cr.

Date Particulars J.F. ₹ Date Particulars J.F.

2019 2019

April 15 To Sales A/c 1,500 April 24 By Cash A/c 1,500

1,500 1,500

Dr. SHYAM Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹

2019 2019

April 28 To CashA/c 2,150 April 20 By Purchases A/c 2,250

April 28 To Discount Received A/c 100

2,250 2,250

Dr. DISCOUNT RECEIVED ACCOUNT Cr.

Date Particulars J.F. Date Particulars J.F. ₹

2019
By Shyam 100
April 28

Dr. RENT ACCOUNT Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹

2019

April 30 To CashA/c 500

Dr. SALARIES ACCOUNT Cr.

Date Particulars J.F. ₹ Date Particulars J.F. ₹

2019
To CashA/c 3,000
April 30
First journal entries are recorded and on the basis of such entries, ledger posting is done in various accounts. From such ledger
posting trial balance is prepared and various account balances are recorded.On such basis further financial statements are prepared
to report and analyse.
32. BANK RECONCILIATION STATEMENT
as on 31st December 2013
Amount Amount
Particulars
(Rs) (Rs)

Overdraft as per Cash Book 30,000

Add:Cheques issued but not encashed 6,450

Interest on investments collected by bank directly 1,800 8,250

Less: Bank Charges charged by bank 300

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 Interest on Overdraft charged by Bank 1,140

Cheques deposited but not collected by bank 3,300 4,740

Overdraft as per Pass Book 33,510

33. Plant & Machinery Account
Dr. Cr.

Amount Amount
Date Particulars Date Particulars
₹ ₹

2010 Apr. 01 To Bank A/c 2011 Mar. 31 By Depreciation A/c

M1 20,000 M1 2,000

M2 1,00,000 1,20,000 M2 10,000

Oct. 01 To Bank A/c (M3) 50,000 M3 (for 6 months) 2,500 14,500

Mar. 31 By Balance c/d

M1 18,000

M2 90,000

M3 47,500 1,55,500

1,70,000 1,70,000

2011 Apr. 01 To Balance b/d 2012 Mar. 31 By Depreciation A/c

M1 18,000 M1 2,000

M2 90,000 M2 10,000

M3 47,500 1,55,500 M3 5,000

July 01 To Bank A/c (M4) 25,000 M4 (for 9 months) 1,875 18,875

Mar. 31 By Balance c/d

M1 16,000

M2 80,000

M3 42,500

M4 23,125 1,61,625

1,80,500 1,80,500

2012 Apr. 01 To balance b/d 2013 Jan. 01 By Depreciation A/c (M1) 1,500

M1 16,000 By Bank A/c (Sale of M1) 6,000

By Profit and Loss A/c

M2 80,000 8,500
(Loss on Sale of M1)

M3 42,500 Mar. 31 By Depreciation A/c

M4 23,125 1,61,625 M2 10,000

M3 5,000

M4 2,500 17,500

Mar. 31 By Balance c/d

M2 70,000

M3 37,500

M4 20,625 1,28,125

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 1,61,625 1,61,625
Working Note:-
Calculation of Profit and Loss:-
Particulars Amount

Value of Machinery on Apr. 01, 2013 16,000

Less: Depreciation for 9 months 1,500

Value of Machinery on Jan.01, 2013 14,500

Less: Sale Value 6,000

Loss on Sale of Machinery 8,500

Depreciation is charged @ 10% each year on origial value of asset each year i.e., same amount of depreciation charged each
year.If some expenses are incur while purchasing asset the it is capitalised in value of asset.
34. Trading and Profit and loss Account
for the year ended 31st March, 2014
Dr Cr

Particulars Amount (₹) Particulars Amount (₹)

To Opening Stock 10,000 By Sales 80,000

To purchases 40,000 (-)Sales return 200 79,800

(-)Purchases return 600 39,400 By Closing Stock 2,000

To Wages 6,000

To Dock and clearing Charges 4,000

To Gross Profit c/d 22,400

81,800 81,800

To Donation and Charity 600 By Gross Profit b/d 22,400

To Interest on capital 2,000 By Interest on Drawings 140

To Depreciation on furniture 565 By Interest on investment 360

To Depreciation on Land and Machinery 2,150 By Miscellaneous Income 6,000

To Lighting 500 By Rent received 2,000

To Net Profit 24,985 (-)Unexpired Rent 100 1,900

30,800 30,800
Balance Sheet
as at 31st March, 2014
Liabilities Amount (₹) Assets Amount (₹)

Capital 40,000 Furniture 11,300

(+)Interest on capital 2,000 (-)Depreciation @ 5% 565 10,735

42,000 Plant and Machinery 43,000

(+)Net Profit 24,985 (-)Depreciation @ 5% 2,150 40,850

66,985 Investment 6,000

(-)Drawings 2,000 (+)Interest on 6% 360 6,360

(-)Interest on Drawings 140 64,845 Debtors 6,000

Unexpired Rent 100 Cash 3,000

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Sales tax Collected 1,000 Patents 4,000

Creditors 7,000 Closing Stock 2,000

72,945 72,945
Working Notes
W.N.1. Calculation of Interest on Drawings
Drawings = ₹2,000
Rate of interest = 7%
7
2,000 × 100
= ₹140
W.N.2. Calculation of Interest on capital
Capital = Rs. 40,000
Rate of interest @ 5%
₹40,000 @ 5% = ₹2000
W.N.3. Calculation of Interest on investment
Investment = ₹6,000
Rate of interest = 6%
6,000 @ 6% = ₹360
W.N.4. Value of Furniture = Rs. 11,300
Rate of depreciation = 5% P.a.
Depreciation = 13,600 @ 5% = 565
Depreciation on Plant & Machinery = 43,000 × 5% = ₹2,150
W.N.5.
Rent = 2,000
Less unexpired rent = 100
= 2,000 - 100 = 1,900
W.N.6
Sales Tax Collected is a liability hence shown in the balance sheet not in Trading & Profit & Loss A/c.

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