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2nd Year Principles of Accounting Full Book Paper

2nd Year · Principles of Accounting · Punjab (PTB)

Name: ____________Roll No: ________Class/Section: ________Date: ________Total marks: 75Time: 2 hours 30 minutes

Q1. Multiple choice questions (Attempt all · 15 × 1 = 15)

The journal entry, for assets taken over by a partner, in case of dissolution will be:
1. Partner’s capital a/c …Dr To realization a/c
2. Realization a/c …Dr To liabilities a/c
3. Cash a/c ..Dr To realization a/c
4. Realization a/c…Dr To assets a/c
The entry for goodwill raised but written off, in case of retirement should be:
1. Retiring partner’s capital A/c….Dr To Goodwill A/c
2. Remaining partner’s capital A/c….Dr To Goodwill A/c
3. Goodwill A/c….Dr To All Partner’s capital A/c
4. All Partner’s capital A/c….Dr To Goodwill A/c
The remuneration which is paid by company to underwriter is called:
1. Commission
2. Del-Credit commission
3. Overriding commission
4. Under-writing commission
The journal entry for depreciation will be:
1. Depreciation account …Dr To asset account
2. Depreciation account …Dr To cash account
3. Depreciation account …Dr To bank account
4. Asset account …Dr To depreciation account
X,Y and Z are partners in a firm, if B is to be admitted as a new partner:
1. Old partnership has to be dissolved
2. Old firm has to be dissolved
3. Both old firm and partnership have to be dissolved
4. Neither firm nor partnership needs to be dissolved
It is prepared by non-profit making organization to determine surplus or deficit:
1. Trading account
2. Profit and loss account
3. Receipts and payment account
4. Income and expenditure account
In the absence of an agreement, interest on loan advanced by a partner to the firm is allowed at the rate of:
1. Six per cent
2. Five per cent
3. Twelve per cent
4. Seven per cent
In increased net worth method, profit or loss is calculated by preparing:
1. Income and expenditure account
2. Profit and loss account
3. Statement of profit or loss
4. Balance sheet
Consignment account is a nature of:
1. Personal account
2. Real account
3. Nominal account
4. “a” and “b”
The journal entry, for sale of various assets for cash, in case of dissolution will be:
1. Liabilities a/c …Dr To cash a/c
2. Cash a/c ..Dr To realization a/c
3. Cash a/c …Dr To asset a/c
4. Asset a/c …Dr To realization a/c
In case of retirement amount of general reserve or any other profit is credited to all the partners in:
1. Old profit sharing ratio
2. New profit sharing ratio
3. Sacrifice ratio
4. Gaining ratio
It is that portion of subscribed capital which has been called up by the company:
1. Called up capital
2. Paid up capital
3. Subscribed capital
4. Issued capital
What will be entry when profit is earned on sale of asset:
1. Cash account …Dr To profit and loss account
2. Profit and loss account …Dr To cash account
3. Asset account …Dr To profit and loss account
4. Profit and loss account …Dr To asset account
Old profit sharing ratio minus new profit sharing ratio is equal to:
1. Sacrificing ratio
2. Gaining ratio
3. Distributing ratio
4. None of these
Income and expenditure account records the transactions of:
1. Revenue nature
2. Capital nature
3. Revenue and capital nature
4. None of these

Q2. Short questions (Attempt any 12 of 18 · 12 × 2 = 24)

Under what conditions a company can issue its shares at discount.
What do you mean by the term depletion?
For goods sold by consignee, pass the entries in consignor and consignee books.
Write the equations to calculate the value of adjusted capital (at the end) and profit or loss under single entry system.
Write three duties of partners in partnership.
What is the treatment of Reserves and undistributed profit in case of retirement of a partner?
What is capital fund?
What is premium method for the treatment of goodwill on the admission of a new partner?
Pass journal entry, for sale of unrecorded asset in case of dissolution of firm.
Define the following: Directors, Promoters, Underwriters, shareholders
What is obsolescence?
Pass the entries for goods taken over by consignee for personal use in consignor and consignee books.
How many methods are available for the determination of profit or loss under single entry system?
What will be the closing entry for interest on capital in partnership?
Pass the journal entry for interest on capital of deceased’s partner.
Write the two differences between “Receipts and payments account” and “income and expenditure account”.
What is memorandum revaluation method for the treatment of goodwill on the admission of a new partner?
Pass journal entry, for transfer of undivided profit in case of dissolution of firm.

Q3. Long questions (Attempt any 4 of 6 · 4 × 9 = 36)

Prepare necessary ledger accounts in the books of the consignor.
Zaheer & Sons of Karachi dispatched a consignment of 400 cases of Electric bulbs to Hammad of Kohat on 1^st December 2022. The cost price was quoted at Rs. 360,000. On 25^th December Hammad sent an account sales with the following details:
(a) 75% of goods were sold for Rs. 270,000.
(b) Hammad paid unloading charges Rs. 2400.
(c) Advertisement and selling expenses paid by Hammad amounted to Rs. 1400.
(d) Hammad is to receive a commission of 5% on sales.
At the time of dispatch Zaheer & Sons incurred an expenditures of Rs. 4,000 towards freight and insurance charges.

A, B and C are partners, sharing profits equally. The balance sheet on December 31^st 2022 is as follows:

Balance Sheet
Assets	Rs.	Liabilities	Rs.
Cash at bank	4000	Sundry creditors	4000
Bills receivable	3000	Capitals:
Sundry debtors 20000		A	12,000
Less: Reserve for bad debts 1,000	19,000	B	18000
Stock	18,000	C	7500
Fixtures	3500	Reserve	6000
	47,500		47,500

B retires on that date and following adjustments are to be made for the purpose:
(a) Goodwill of the firm is valued at Rs 12,000
(b) Fixtures to be Depreciated by 5%
(c) Stock to be appreciated to be 10%
(d) Reserve for bad debts to be increased by rs. 500.
Draw up the revaluation account, Capital Accounts of partners and opening balance sheet of the continuing partners.

Pass the following entries of debentures in each case:
(i) Debentures issued at Rs. 90 and redeemable at Rs. 100.
(ii) Debentures issued at Rs. 100 and redeemable at Rs. 110.
(iii) Debentures issued at Rs. 110 and redeemable at Rs. 100.
(iv) Debentures issued at Rs. 90 and redeemable at Rs. 110.
(v) Debentures issued at Rs. 100 and redeemable at Rs. 100.

Prepare a Trading Profit and Loss Account for the year ended 31^st December, 2022 and a balance sheet as on that date.
Mr. Tipu keeps his books under single entry system. The position of his business as on 1^st Jan., 2022 was as under:
Sundry creditors Rs. 17,000; Freehold premises, Rs. 50,000; stock Rs. 25,000; Sundry Debtors Rs. 20,000; Furniture Rs. 2,000. An abstract of Cash book is appended below:

Receipts	Rs.	Payments	Rs.
Sundry Debtors	15,000	Overdraft ( 1.1.2016)	10,000
Cash Sales	80,000	Expenses	50,000
		Drawings	3,000
		Sundry creditors	20,000
		Cash in hand	2,000
		Cash at bank	10,000
	95,000		95000

The following additional information is available:
Closing stock Rs. 30,000; Closing Debtors Rs. 25,000; closing creditor Rs. 12,000. No additions were made during the year to premises and Furniture account, but they are to be depreciated at 10% and 15% respectively. A bad debts reserve on 2^1/2%is tobe raised.

A firm purchased a machine for Rs. 420,000 on 1^st July, 2019 and spent Rs. 48,000 as wages and installation charges. Prepare the machine account for the first four years under diminishing balance method of depreciation assuming that the accounting year of the firm ends on 31^st December every year. Rate of deprecation is 10% per annum.

The balance sheet of O, P, Q and R showed the following position on dissolution:

Dr.		Cr.
Assets	Rs.	Liabilities	Rs.
Cash at bank	34,000	Creditors	10,000
Q’s Capital a/c	10,000	O’s capital	15,000
R’s Capital a/c	3000	P’s Capital	10,000
		Realisation profit	12,000
	47,000		47,000

Show the final adjustment among the partners assuming that R is insolvent.