BBA208 – Financial Accounting

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Bachelor of Business Administration- BBA Semester 1

BBA208 – Financial Accounting

Set - 1

Q1.  ABC Ltd Purchased Plant and Machinery costing Rs 40000 on 1st April 2013. It has been decided to depreciate it at the rate of 30% p.a on the written down value method. Show the Plant and Machinery account till 31st March 2017.

Answer. ABC Ltd. Plant and Machinery Account:

Q2. Mita, Vikash and Preetha are partners sharing profit and losses in the ratio of 3:2:1. Their Balance Sheet was as follows.

Balance Sheet of Mita, Vikas, Preetha as on April 31st, 2016

Liabilities	Amount	Asset	Amount
Creditors	10000	Cash in hand	7000
Bills Payable	7000	Machinery	13000
Capital		Stock	26000
M	40000	Debtors	26000
V	30000	Investments	15000
P	20000	Building	20000

Preetha retires on 01.05.2017 and as a result the assets are revalued and liabilities reassessed as follows:

1. Goodwill of the firm valued at Rs 30000

2. Machinery is depreciated at 10%

3. Creditors were underestimated by Rs 500

4. Building and Investment are appreciated by 20%

5. Create a provision for doubtful debt on debtors at Rs 800

Prepare necessary ledger accounts and show the balance sheet of new firm after adjustments.

Answer. Working Note:

1)      It is assumed that Mita & Vikash gaining ratio remains 3:2.

              New Profit sharing ratio between Mita & Vikash is 3/5 : 2/5.

Q3. Prepare a Banks reconciliation statement from the following particulars as on 31st April 2016

1. Balance as Per Pass Book Rs 8620

2. Cheques for Rs 4860 were deposited into bank but credited only Rs 3260 up to 31st April, 2016

3. A customer directly deposited into bank Rs 470

4. Interest credited by bank Rs 230

5. Bank Charges Rs 30

6. Balance as per Cash Book Rs 9550

Answer. Bank Reconciliation Statement as on 31st April 2006:

Balance as per cash book (given)		9550
Add: ●          Customer directly deposited into bank ●          Interest Credited by Bank	470 230	700
		10250

Set – 2

Q1. Elucidate how accounting information is beneficial to various users.

Answer.  Various users of Accounting Information

Different categories of users need different kinds of information for making decisions. These users can be divided into:

1. Internal Users

2. External Users.

1. Internal Users:

These are the persons who manage the business, i.e. management at the top, middle, and lower levels. Their requirements of information are different because they make

Q2. Explain the features of final account.

Answer. Features of Final Accounts

Qualitative characteristics of financial statements include:

Ø  Relevance

Ø  Understandability

Ø  Reliability

Ø  Comparability

Ø  True and Fair View/Fair Presentation

The qualitative characteristics of useful financial reporting identifies the types of information that are likely to be most useful to users in making decisions about the reporting entity on the basis of information in its financial report. The qualitative characteristics apply equally to the financial information in general purpose financial reports as well as to the

Q3. X and Y are in partnership, sharing profits and losses in the ratio of 3:5. They admit Z into partnership and the new-profit sharing ratio is 4:3:3. Value of Goodwill is agreed at Rs 30000. Z contributes Rs 20000 as capital and necessary amount of premium, half of which is retained in the business. Show the Journal Entries

Answer.

Cash/Bank A/c                                                                          Dr. 50,000

To Goodwill A/c                                                                      30,000

To Z’s Capital A/c                                                                    20,000

           

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