[OBJECTIVE]
Subject: Financial Accounting-I
Time Allowed: 15 Min
Maximum Marks: 10
NOTE: Attempt this Paper on this Question Sheet only. Please encircle the correct option. Division of marks is given in front of each question. This Paper will be collected back after expiry of time limit mentioned above.
Part-I Encircle the right answer, cutting and overwriting is not allowed. (1×10=10)
1. The term 1/10-n/40 indicates that firm is offering cash discount 1% to its customers for making payment within of credit purchases.
a) 15 days b) 20 days
c) 10 days d) 40 days
2. According to International Accounting Standard (IAS) ______ inventory is reported in the balance sheet at lower of the cost or net realizable value.
a) 1 b) 2
c) 16 d) None of these
3. Overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their contents are the objective of IAS ____________.
a) 1 b) 2
c) 7 d) Both b & c
4. A business has indefinite life is based on the accounting assumption _________.
a) Going concern b) Historical Cost
c) Separate entity d) None of these
5. Which of the following accounting record provides detailed information about each customer buying on credit?
a) Debtors Ledger b) Debtors Account
c) Sales Account d) Both b & c
6. Control accounts are maintained in ledger.
a) General Ledger b) Subsidiary Ledger
c) Both a & b d) None of these
7. Sales day book is used to record:
a) Credit Sales b) Cash Sales
c) Both a & b d) Collection from customers
8. Cash book served the purpose of:
a) Cash Account b) Cash Journal
c) Both a & b d) None of these
9. After closing nominal accounts, is prepared by accountants.
a) Adjusted Trial Balance b) Closing Trial
c) Opening Trial Balance d) None of these
10. Statement of cash flows provides information about the cash flows from _______ activities.
a) Operating b) Financing
c) Investing d) All from a to c
[SUBJECTIVE]
Subject: Financial Accounting-I
Time Allowed: 2 Hrs. 45 Min
Maximum Marks: 50
NOTE: ATTEMPT THIS (SUBJECTIVE) ON THE SEPARATE ANSWER SHEET PROVIDED
Part-II Give short answers! (20)
Q#1. What is the difference between cash accounting and accrual accounting?
Q#2. What is the difference between perpetual and periodic inventory system.
Q#3. Define account and list various types of accounts.
Q#4. What is chart of accounts and briefly explain its usefulness. :
Q#5. Briefly explain the difference between cash discount and trade discount.
Q#6. List the usefulness of preparing the trial balance.
Q#7. Illustrate the cost principle with example.
Q#8. What is general journal?
Q#9. What is the purpose of preparing income summary account?
Q#10. Briefly explain the concept “A Business is a Separate Accounting Entity”.
Part-III Lightning, Inc., provides land electrical services. During October, its transaction included the following:
Oct. 1 Paid rent for the month of October, $6,000.
Oct. 4 Billed Tilton Hotels $7,000 for services. The entire amount is due on or before October 28. (Lightning uses an account entitled Service Revenue when billing clients.)
Oct. 8 Provided services to Stone Hill Developments for $2,200. The entire amount was collected on this date.
Oct. 12 Placed a newspaper advertisement in the Daily Star to be published in the October 25 issue The cost of the advertisement was $210. Payment is due in 30 days.
Oct.20 Received a check for $7,000 from Tilton Hotels for the amount billed on October 4.
Oct.24 Provided services to Moore Company for $2,700. Lightning collected $400 cash, with the balance due in 30 days.
Oct. 25 Sent a check to the Daily Star in full payment of the liability incurred on October 12.
Oct. 29 Declared and paid $4,100 cash dividend to the company’s stockholders.
Required: Journalize the above transactions in general journal and post the above transactions in the relevant T accounts.
Part-IV
The retained earnings account of Sheon, Inc at the beginning of 2018 shows a balance of $38, 200. Its records for 2018 show the following information.
Particulars Amount
Dividend declared $35,000
Dividend income $4,000
General & Administrative $75,000
Income taxes, 2018 $25,000
Interest expense $9.000
Interest income $2,000
Purchases $300,000
Purchases discounts $5,000
Sales $5, 00,000
Sales discount $10,000
Sales return $10,000
Selling expenses $60,000
The physical inventory on January 01,2017 was $30,000, and on December 31, 2018 $70,000.
Required:
a) Prepare income statement for the year 2018,
b) Prepare statement of retained earnings for the year 2018. ,
¢) Prepare closing entries December 31, 2018.