BCA – Previous Year Questions

2 mark questions

1. State any two examples of nominal account.

Ans: Account for expense, revenue, loss
Eg., Salary A/c, Rent A/c, Commission received
2. Explain matching principle
This principle states that costs or expenses of a business of an
accounting period are matched with the revenue of that period in
order to ascertain the profit or loss. In other words, revenue
pertaining to a period should be compared with the expenditure
incurred for earning that revenue.

3. Contra entry: Contra entry represents deposits or withdrawals of

cash from bank or vice-versa. The purpose of contra entry is to
indicate the transactions that affect both cash and bank balances.
4. Journal proper: Journal Proper is the book that is maintained to
record those transactions which are not recorded in the special
books.
5. FFS: A funds flow statement is a statement that comprises the
inflows and outflows of funds. It includes the sources of funds and
application of funds for the particular period.
6. Contribution: It is the difference between total sales and total
variable cost.
7. P/V Ratio: P/V ratio = Contribution/ Sales. It is used to measure
the profitability of the company. Contribution is the excess of sales
over variable cost. So basically P/V ratio is used to measure the
level of contribution made at different volumes of sales.
8. Margin of safety: Margin of safety is the gap between present or
estimated future sales and the break-even point. This is the
minimum sales level needed to prevent loss from selling the
product.
9. Marginal cost: It is the additional cost of producing an additional
unit. Institute of Cost and Management Accountants, London
defines,” amount at any given volume of output by which aggregate
costs are changed if the volume of output is increased or decreased
by one unit.”
10. Master budget: A master budget is a company's central financial
planning document. It typically covers a full fiscal year and
includes “lower-level” budgets — like a sales budget and a labour
budget — cash flow forecasts, financial statements, and a financial
plan
11. Accounting entity concept: This concept seeks to make a
distinction between the business and the proprietor and his dealings
with the business should be regarded as transaction. It is also called
business entity concept.
12. Define accounting :
According to American Institute of Certified Public Accountants
(AICPA - 1941), "Accounting is the art of recording, classifying
and summarizing in a significant manner and in terms of money,
transactions and events which are, in part at least, of a financial
character, and interpreting the results thereof ”.

13. Explain any four objectives of accounting

1. To maintain records of business: Accounting is done to keep a
systematic record of financial transactions.
2. Calculation of profit or loss: Accounting helps in ascertaining
whether the enterprise has earned profit or sustained loss in running
the business.
3. Depiction of financial position: This objective is served by the
Balance Sheet or position statement. The balance sheet is a
statement of assets and liabilities of the business on a particular
date.
4. To make information available to various groups or users:
The accounting information obtained from records be
communicated to interested parties like owners, creditors, bankers,
government, employees, etc.
14. Gross profit: Gross profit is the amount of total revenue minus cost
of goods sold. It is the amount of profit before all interest and tax
payments. It is also known as gross margin.
15. Imprest system: The basic characteristic of an imprest system is
that a fixed amount is reserved, which after a certain period of time
or when circumstances require, because money was spent, will be
replenished.
16. Marginal costing: A technique of costing which differentiates
between fixed costs and variable costs, and charging only variable
costs to products.
17. Variance analysis: Variance analysis is the study of deviations of
actual behaviour versus forecasted or planned behaviour in
budgeting or management accounting.
18. Define flexible budget: A flexible budget adjusts to changes in
actual revenue levels. A flexible budget is a budget that adjusts to
a company's activity or volume levels.
19. Comparative balance sheet: A comparative balance sheet is a
statement that shows the financial position of an organization over
different periods for which comparison is made or required.
20. Name the subdivision of journal: The subdivisions of journal
into various subsidiary journals for recording transactions of similar
nature are called as "Subsidiary Books". subdivision of journals
 are cash book, sales book, purchases book, return inwards book or
sales return, return outwards book or purchase return, bills payable
book, bills receivable book, and journal proper.
21. Purpose of preparing sales returns book: Sales return book also
known as Return Inwards Book is one of the eight subsidiary books
in accounting. It is the original book of entry where transactions
related to return of goods sold are recorded.

5 marks Questions

1. Limitations of standard costing.

1. More Expenses:

2. Frequent Revision of Standard:

3. Unsuitable for Non-Standardized Products:

4. Difficult Process in Setting of Standard

5. Bias in fixing of Responsibility:

6. Fast Changing Technology:

2. Advantages of Marginal costing

1. Constant in nature

While variable costs occasionally change, marginal costs are

stable over the long term. Regardless of the level of production,
margin costs are constant.

2. Effective cost control

It divides cost into fixed and variable. Fixed cost is excluded

from product. As such, management can control marginal cost
effectively.

3. Simplified treatment of overheads

By separating fixed overheads from production costs, it lessens

the degree to which overheads are over or under recovered.

4.Uniform and realistic valuation

As the fixed overhead costs are excluded from product costs, the
valuation of work-in-progress and finished goods becomes more
realistic.

5. Helpful to management

Management finds it helpful because it makes it possible to

launch a profitable new production line.
3. What is BEP? Why should it be calculated?
A break-even point or BEP is a financial calculation that
determines which point in the production processes the total
revenue equals the total expenses.
A breakeven analysis can help with finding missing expenses,
limiting decisions based on emotions, establishing goals,
securing funding, and setting appropriate prices.
4. Advantages of accounting.

a. It serves as a historical record.

b. It facilitates the preparation of financial statements
c. It supplies information to all those who are interested in
the business, i.e., owners, creditors, employees, etc.
d. It helps the management in taking important business
decisions
e. It facilitates comparative study of the performance of the
business
f. It provides evidence in case of disputes.

5. Limitations of accounting

1. Accounting is historical in nature.

2. It provides information about the concern as a whole.
 3. It records information which can be quantitatively
measured. Qualitative information which is also important to
business is ignored.
4.Accounting records show only actual cost figures. The real
value may vary from time to time.
5. Use of different accounting methods reduces the reliability
of accounts.

6. Explain accounting concepts

a. Accounting entity concept
b.Going concern concept
c. Accounting period concept
d.Money measurement concept
e. Dual aspect concept
f. Revenue realization concept
g.Matching principle
h.Verifiable objective principle
7. Advantages of double entry system.

Scientific method: This method follows the rules of debit and

credit, thus this system is a scientific method of recording
business transactions.
 Helps in the comparative study: This method helps in the
comparative study of the results of two financial years because
it prepares a systematic record of all the business transactions.

Helps in bringing arithmetical accuracy: Double Entry

Bookkeeping System helps in bringing numerical accuracy to
accounting work.

Maintains a complete record of transactions: Under this

system, both aspects of a transaction are recorded, which means
it results in showing the true position of assets and liabilities.

Assistance to management: This system assists management in

decision making as it maintains complete records of business
transactions and provides relevant information to the
management which helps in making rational decisions.

8. Journalise the following transactions

i. Started business with cash Rs 500000

j. Purchased goods Rs 41000

k. Purchased furniture for cash Rs 20000

l. Sold goods for cash Rs 23000

m.Paid wages Rs5000

n. Paid Rent Rs 10000

o. Received commission Rs 2500

p. Sold goods to Raju Rs 8000

q. Purchased goods on credit from Sujoy Rs3000

r. Open a bank account Rs 12000

Date Particulars LF Dr. Cr.

Amount Amount

A Cash A/c …. Dr 500000

To Capital A/c 500000

(Started business with

cash)

Purchases A/c …..Dr

B 41000
To Cash A/c
41000

C 20000
Furniture A/c . ……..Dr
20000
To Cash
D Cash A/c … Dr 23000

To Sales A/c 23000

Wages A/c ……Dr 5000

To Cash A/c 5000

F 10000

Rent A/c 10000

G To Cash 2500

2500

H Cash A/c Dr 8000

To Commission Received 8000

I 3000

Raju A/c … Dr 3000

J To Sales 12000

Purchases A/c … Dr 12000

To Sujoy
Bank A/c ………..Dr

To Cash A/c
Calculation
1.Administration Exps (5%) variable - Rs 10
Variable portion = 10*5/100= .5 (variable)
Fixed portion = 10- .5 = 9.5 (for 5000 units)

Therefore , 7000 units = 9.5*5000/7000 = 6.78

Total admini.expense /unit = .5 + 6.78 = 7.28

2.Selling Expense (20%) fixed - 6

Fixed portion = 6*20/100 = 1.2 (for 5000 units)
Variable portion = 6 – 1.2 = 4.8
Therefore, fixed portion for 7000 units = 1.2*5000/7000
= .857
Total selling expense/ unit = .857 + 4.8 = 5.66

Material Variance problems

Labour Variance