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Eco-02 Solved Assignment 2014-15 Tv


2. Unfavourable balance/overdraft balance

(a) Credit balance as per cash book (i.e. overdraft) is given and the balance

as per pass book is to be ascertained. (b) Debit balance as per pass book (i.e. overdraft) is given and the balance

as per cash book is to be ascertained. The following steps are taken to prepare the bank reconciliation statement:

(i) Favourable balances:

When debit balance as per cash book or credit

balance as per pass book is given: (a) Take balance as a starting point say Balance as per Cash Book. (b) Add all transactions that have resulted in increasing the balance

of the pass book. (c) Deduct all transactions that have resulted in decreasing the

balance of pass book. (d) Extract the net balance shown by the statement which should be

the same as shown in the pass book. In case balance as per pass book is taken as starting point all transactions

that have resulted in increasing the balance of the Cash book will be added

and all transactions that have resulted in decreasing the balance of Cash

book will be deducted. Now extract the net balance shown by the statement

which should be the same as per the Cash book. (ii) Unfavourable Balance/Overdraft: Sometimes a businessman withdraws excess amount from the bank account

and the closing bank balance of a month is a debit balance. This balance

amount is called ‘overdraft balance’ as per Pass Book. This is shown in

the cash book as a credit balance.

Overdraft balance is to be shown in the minus column of statement as the starting point. The other steps shall remain the same as mentioned above. The following illustration helps to understand dealing with the unfavourable balance as per cash book and pass book.


 On December 31, 2013, the cash book of the M/s. X shows the credit balance Rs.6, 500. Cheques amounting to Rs.3, 500 deposited into bank but were not collected by the bank. Firm issued cheques of Rs. 1,000 which were not presented for payment. There was a debit in the pass book of Rs.200 for interest and Rs.400 for bank charges. Prepare Bank Reconciliation Statement.

Solution: Bank Reconciliation of M/s. X as on 31


 Dec, 2013


Plus (Amount)Minus (Amount)Overdraft as per cash book

1. Cheque issued but not presented for payment 2. Cheque deposited but not credited by bank 3. Bank charges and Interest charged

Overdraft as per pass book

1,0009,6006,5003,500600 10,60010,600


Prepare Bank Reconciliation Statement of M/s. X on 31


 Dec, 2013, from the

following information: Overdraft as per pass book 16,500



Important Questions for 2017 Examination


Time: 2 hours

Maximum Marks: 50

You have to attempt only four out of total six questions in which Q.N.1 is compulsory

It is advisable to complete at least 4 blocks and current year assignment.

BLOCK 1: Accounting Fundamentals

Unit 1 : Basic Concepts of Accounting

Unit 2 : The Accounting Process

Unit 3 : Cash Book and Bank Reconciliation

Unit 4 : Other Subsidiary Books

Unit 5 : Bills of Exchange

BLOCK 2: Final Accounts

Unit 6 : Concepts Relating to Final Accounts

Unit 7 : Final Accounts – I

Unit 8 : Final Accounts – II

Unit 9 : Errors and their Rectification

BLOCK 3: Consignment and Joint Ventures

Unit 10 : Consignments Accounts – I

Unit 11 : Consignments Accounts – II

Unit 12 : Consignments Accounts – III

Unit 13 : Joint Venture Accounts

BLOCK 4: Accounts from Incomplete Records

Unit 14 : Self Balancing System

Unit 15 : Accounting from Incomplete Records – I

Unit 16 : Accounting from Incomplete Records – II

Unit 17 : Accounting from Incomplete Records – III

BLOCK 5: Accounts of Non-trading Concerns, Depreciation, Provisions and Reserves

Unit 18 : Accounts of Non-trading Concerns – I

Unit 19 : Accounts of Non-trading Concerns – II

Unit 20 : Depreciation – I

Unit 21 : Depreciation – II

Unit 22 : Provisions and Reserves

Selected Questions for Block – 1: (Most Scoring Block)

1. What is accounting? Mention its three objectives, advantages and limitations.

2. Explain the following accounting concept:

a)      Money Measurement concept

b)      Cost Concept

c)       Business Entity concept

d)      Consistency Concepts

e)      Materiality

3. Explain cash basis and accrual basis of accounting.

4. What is BRS? What are the causes of disagreement between cash book and pass book? (Refer my solved assignment)

5. What is Bills of exchange and promissory note? Distinguish between them. Give a specimen of both of them.

6. Why is journal sub-divided? Name the special Journals generally maintained by business and state the type of transactions entered in each of them.

7. Discuss briefly the utility of debit note, credit note and invoice.

8. Learn Preparation of BRS carefully as given in my solved assignment.

Selected Questions for Block – 2:

1. How would you rectify the following errors in books of K and CO?                        12

a)      The sales returns book has been undercast by Rs. 500.

b)      The Purchases returns book has been overcast by Rs. 500.

c)        Sales Book was undercast by Rs. 550.

d)      Purchases Book was undercast by Rs. 550.

e)      The total of the Bill Receivable Book amounting Rs. 4500 has been posted to the credit of Bill Receivable Account.

f)       While posting purchases book to be ledger the personal Account of Kumar has been credited with Rs. 221 instead of Rs. 212.

g)      Rs. 10,000 paid for the purchases of a T.V. set for the proprietors is debited to General exp. A/c

h)      Goods sold to Inder for Rs. 1,200 has been entered in the Purchases Book.

i)        Machine purchased for Rs. 10,000 has been debited to purchases account.

j)        Rs. 3,000 being the sale proceeds of old furniture has been credited to sales account.

k)      Goods purchased from Sanjay for Rs.4, 000 was recorded in purchase book as Rs. 400.

l)        Rs. 5,000 paid to Anil for salary was debited to his personal account.

m)    Rs. 1,000 paid for cartage for the newly purchased machine has been debited to cartage account.

n)      Rs. 5,000 received from 'Ram' has been credited to 'Shyam' account.

o)      Sameer had paid Rs. 1,000 but it was credited to Rahim's account.

p)      Credit Sales of 720 recorded in Sales Journal as Rs. 270.

q)      Credit Sales of 1,500 rupees to Sameer was omitted from being recorded in books.

r)       Discount Allowed column of Cash Book was overcast by Rs. 75.

s)       Goods Rs. 4,000 sold on credit to B, no entry was made in books.

t)       No entry was made for purchases returns of Rs. 3,000.

u)      No entry was made for sales returns of Rs. 5,000.

v)      Goods purchased on credit from S Rs. 5,000, was recorded in purchase book as Rs. 500

w)    Sales of Rs. 6,000 to D were recorded as Rs. 600 in sales Book.

2. From the following Ledger balances and adjoining information, you are required to prepare a Trading and Profit and Loss Account for the year ended on 31st March 2012 and the Balance Sheet as on that date. 12




Opening Stock



Purchases Returns

Sales Returns

Carriage Inward

Carriage outward

Bank Overdraft



Sundry Creditors



Accrued Incomes





Outstanding Expenses

Prepaid Expenses


Discount Received

Discount Allowed

Bad debts


Interest Paid

Interest Received

Provision for Bad debts

Furniture and Fixtures
































Other Information :

(a) Unsold Stock 1,10,000

(b) Depreciate Machinery by 10%

(c) Tax Payable 7,500

(d) Accrued Interest on Investment 1,200

(e) Interest on Capital @5%

3. What is trial Balance? Mention various types of errors. What types of errors not disclosed by trial balance?

4. List the errors which affect and do not affect the trial balance.

Selected Questions for Block – 3:

1. What is Joint Venture? What are its features? Distinguish between Joint venture and consignment.

2. Distinguish between

a. Consignment and Sale

b. Normal and abnormal loss

3. How Stocks are valued in case of normal and abnormal loss in consignment accounts?

4. 3. Radha & Co., Bombay sent on consignment to Krishna & Co., Chennai 100 Fans, invoiced at Rs. 100 each on 5th June, 2009. Radha & Co. paid Rs. 2000 for dispatch of goods to the consignee. Consignee remitted Rs. 6000 as an advance by bank draft on 20th June 2009. The consignee is entitled to a commission of 10% on the sale proceeds. On receipt of goods the consignee paid Rs. 2000 for godown charges. On 30th June, 2009 Krishna & Co. sent an Account sales showing that the fans have realised Rs. 250 each. He remits the amount due to Radha & Co. Pass Journal Entries and Prepare ledger accounts in the books of the consignor and consignee.                         

5. What is invoice price? Give reasons for sending consignments at invoice price.

Selected Questions for Block – 4:

1. What is single entry system? Distinguish between single entry and double entry.

2. What are the drawbacks of single entry? How double entry system overcome such drawbacks?

3. What is self balancing and sectional balancing? Distinguish between them.

4. What are the advantages and limitations of self balancing?

Selected Questions for Block – 5:

1. What is depreciation? What are various causes for providing depreciation? Mention the factors which affects the amount of depreciation.

2. Distinguish between:

a)      Provisions and Reserves

b)      Provision for discount on debtors and provision for discount on creditors

c)       Income and expenditure account and receipts and payments accounts

3. What are secret reserves? How it is created?

4. Write short notes on: Provision for Bad debts.

5. The following information is extracted from the  books of businessman.

Debtors as on 31.12.09 Rs.25000

Bad debts during 2009 Rs. 1,000

Provision for Bad debts is to be maintained at 5% of debtors. A provision for discount on debtors is also to be made at 2% you are required to calculate the amount to be set aside in respect of provision for bad debts and provision for discount on debtors respectively, and give the journal entries thereof.

6. Prepare Machinery Account for the years 2007 to 2011.

On 30th June 2007, a business man purchasedmachinery for Rs. 10,000 and spent on itsinstallation Rs. 1000. It charged depreciation @10% annually according to Fixed Installmentmethod of charging depreciation. On 30-6-2009,he added another machinery costing Rs. 8,000.On 30-6-2011, the machinery purchased on30-6-2007 was sold for Rs. 5,000.

7. Give Five examples of provisions and reserves.

8. Receipts and payment Account of a sports  club showed that Rs 50,000 were received by way of subscription for the year ended 31.12.2010. The additional information was as follows:

(i) Subscription outstanding on 31.12.2009 was Rs. 5000.

(ii) Subscription received in advance on 31.12.2009 was Rs. 3000.

(iii) Subscription outstanding on 31.12.2010 was Rs. 10,000.

(iv) Subscription received in advance on 31.12.2010 was Rs. 6,000.

Show how above information would appear in the final accounts for the year ended 31st December 2010 of Sports Club.