QUESTION BANK

FINANCIAL ACCOUNTING
M0DULE 1

SINGLE ENTRY SYSTEM OF ACCOUNTING

Two marks questions :

1. What is single entry?

2. What is meant by accounting from incomplete records?
3. Give two merit of single entry system
4. What do you mean by conversion method?
5. What is statement of affairs?
6. What is a memorandum trading account?
7. Name the various types of single entry
8. What do you mean by pure single entry?
9. What the features of incomplete records?
10. What are objectives of single entry?
11. Explain difference between single entry and double entry?
12. How are profits ascertained under single entry system?
13. State merits of single entry system
14. What are the differences between statement of affairs and balance sheet?
15. Explain limitation of single entry system
16. “single entry system is not scientific” explain.
17. Explain the procedure of conversion of single entry into double entry
18. What are the difference between profit and loss account and statement of profit and loss?

Five marks questions:

1. The following transactions are given below relating to M/s Kisan Food Suppliers:
Rs. Opening balance of creditors 40,000 Closing balance of creditors 50,000 Payment made
in cash 85,000 Discount received 2,000. Prepare total creditors account
2. The following information is obtained from the books of Mohanlal Traders : Rs. Debtors on
April 01, 2013 50,000 Debtors on March 31, 2014 70,000 Cash received from debtors 60,000
Discount allowed 1,000 Bills receivable 30,000 Bad debts 3,000. Prepare total debtors
account.
3. The following data available from the records of M/s S.S. Senapati Rs. Opening bills
receivable 5,000 Opening bills payable 37,000 Bills receivable dishonoured 2,000 Bills
payable dishonoured 66,750 Closing bills payable 52,000 Bills collected during the year
12,000 and Closing bills receivable 4,000. Prepare bills receivable and bills payable account.
4. If opening capital is Rs. 60,000, drawings Rs. 5,000, capital introduced during the period Rs.
10,000, closing capital Rs. 90,000. Find the value of profit earned during the period.
5. Compute the amount of total purchases and total sales of Mr. Amit from the following
information for the year ending on March 31,2014. Amount Rs. Total debtors as on April 01,
2013 40,000 Total creditors as on April 01, 2013 50,000 Bills receivable as on April 01, 2013
30,000 Bills payable as on April 01, 2013 45,000 Discount received 5,000 Bad debts 2,000
Return inwards 4,000 Discount allowed 3,000Cash sales 10,000 Cash purchases 8,000 Total
debtors as on March 31, 2014 80,000 Cash received from debtors 1,00,000 Cash paid to
 creditors 80,000 Cash received against bills receivable 25,000 Payment made against bills
receivable 40,000 Total creditors as on March 31, 2014 40,000 Bills payable as on March 31,
2014 50,000 Bills receivable as on March 31, 2014 35,000 .
6. From the following information supplied by Ms. Sudha, calculate the amount of ‘Net Sales’
Rs. Debtors on April 01, 2013 65,000 Debtors on March 31, 2014 50,000 Opening balance of
bills receivable as on April 01, 2013 23,000 Closing balance of bills receivable as on March
03, 2014 29,000 Cash received from debtors 3,02,000 Discount allowed 8,000 Cash received
against bills receivable 21,000 Bad debts 14,000 Bill receivables (dishonoured) 20,000 Cash
sales 2,25,000 Sales return 17,000.
7. Mr. Om Prakash did not keep his books of accounts under double entry system. From the
following information available from his records, prepare profit and loss account for the year
ending on March 31, 2014 and a balance sheet as at that date, depreciating the washing
equipment @ 10%.
Summary of Cash
Dr. Cr.

Receipts Amount Payments Amount

Balance b/d 8,000 Cash purchases 14000

Cash sales 40,000 Paid to creditors 20,000
Received from debtors 30,000 Sundry expenses 6,000
Cartage 2,000
Drawings 8,000
Balance c/d 28,000

78,000 78,000

Other information : March 31, 2014

March 31, 2013 March 31, 2014

Rs. Rs.
Debtors 9,000 12,000
Creditors 14,400 6,800
Stock of materials 10,000 16,000
Washing equipment 40,000 40,000
Furniture 3,000 3,000
Discount allowed during the year 1,400
Discount received during the year 1,700

8. Mrs. Surabhi started business on January 01, 2013 with cash of Rs. 50,000, furniture of Rs.
10,000, goods of 2,000 and machinery worth 20,000. During the year she further introduced
Rs. 20,000 in her business by opening a bank account.

From the following information extracted from her books, you are required to prepare final
accounts for the ended December 31, 2013

Receipt from debtors 57,500 Cash sales 45,000 Cash purchases 25,000 Wages paid 5,000 Salaries
to staff 17,500 Trade expanses 6,500 Electricity bill of factory 7,500 Drawings of Surabhi 3,000
Cash paid to creditors 42,000 Discount allowed 1,200 Discount received 3,000 Bad debts written-
off 1,300 Cash balance at end of year 20,000 Mrs. Surabhi used goods worth 2,500 for private
purposes, which is not recorded in the books. Charge depreciation on furniture 10% and
machinery 20% p.a. on December 31, 2013 her debtors were worth 70,000 and creditors Rs.
35,000, stock in trade was valued on that date at Rs. 25,000..

9. Mr. Bahadur does not know how to keep books of account. From his various records, the
following particulars have been made available prepare the final Accounts, after providing
for doubtful debts 5 per cent of debtors outstanding and depreciating the motor car @ 20
per cent.
(i) Balance Sheet as on April 1, 2013
Liabilities Amount Assets Amount
Rs. Rs.
Capital 92,500 Motor Car 71,700
Bills payable 32,800 Stock 51,500
Creditors 84,200 Debtors 49,500
Bills receivable 24,400 Cash in hand 12,400

2,09,500 2,09,500

(ii) Cash Transactions during the year

Receipts Amount Payments Amount
Rs. Rs.
Balance b/d 12,400 Furniture 30,000
Receipt from debtors 1,15,000 Wages 9,400
Bills receivable 14,200 Purchases 40,500
Sales 1,03,000 Drawings 24,000
Bills payable 30,700
General expenses 20,700
Payment to creditors 80,800
Balance c/d 8,500
2,44,600 2,44,600
(iii) Other Information Particulars

Bills receivable drawn (received) 6,300 Discount to customers 2,300 Discount from suppliers
700 Credit purchases 29,600 Closing stock 41,700 Closing balance of debtor 55,000 Closing
balance of bills payable 10,200.

10. Dinesh does not keep systematic books of account due to lack of Knowledge about the
double entry system of accounting. He supplies you the following information :
(i) Assets and Liabilities
December 31, 2014
Sundry debtors 45,000 48,600
Sundry creditors 24,000 ?
Cash 4,500 ?
Furniture and Fixtures 15,000 ?
Stock 25,000 ?
Motor Van 16,000 ?
 (ii) Transaction during the year
Cash received from debtors 80,000
Discount allowed to debtors 1,400
Bad debts written off 1,800
Cash paid to creditors 63,000
Discount allowed by creditors 1,000
Sales return 3,000
Purchases return 2,000
Expenses paid 6,000
Drawings 5,000
Rent paid 2,500

(iii) Other Information

Outstanding expenses Rs. 1,200. Charge 10 per cent depreciation on furniture and 5 per cent
on motor van. Dinesh informs that he sells goods at cost plus 40 per cent. A provision of 5
per cent on debtors is to be created. Prepare his trading and profit and loss account and
balance sheet as on December 31, 2014
11. Ascertainment of profit or loss by statement of affairs method
Following information is given below prepare the statement of profit or loss: Rs. Capital at
the end of the year 5,00,000 Capital in the beginning of the year 7,50,000 Drawings made
during the period 3,75,000 Additional Capital introduced 50,000
12. Manveer started his business on January 01, 2013 with a capital of Rs. 4,50,000. On
December 31, 2013 his position was as under: Rs. Cash 99,000 Bills receivable 75,000 Plant
48,000 Land and Building 1,80,000 Furniture 50,000 He owned Rs. 45,000 from his friend
Susheel on that date. He withdrew Rs. 8,000 per month for his household purposes.
Ascertain his profit or loss for this year ended December 31, 2013
13. From the information given below ascertain the profit for the year :
Rs. Capital at the beginning of the year 70,000 Additional capital introduced during the year
17,500 Stock 59,500 Sundry debtors 25,900 Business premises 8,600 Machinery 2,100
Sundry creditors 33,400 Drawings made during the year 26,400
14. From the following information, Calculate Capital at the beginning :Capital at the end of the
year 4,00,000 Drawings made during the year 60,000 Fresh Capital introduce during the year
1,00,000 Profit of the current year 80,000
15. Following information is given below :
calculate the closing capital
Jan. 01, 2013 Dec. 31, 2013
Creditors 5,000 30,000
Bills payable 10,000 —
Loan — 50,000
Bills receivable 30,000 50,000
Stock 5,000 30,000
Cash 2,000 20,000
16. Mrs. Anu started firm with a capital of Rs. 4,00,000 on 1st July 2013. She borrowed from her
friends a sum of Rs. 1,00,000 @ 10% per annum (interest paid) for business and brought a
further amount to capital Rs. 75,000 on Dec. 31, 2013, her position was : Rs. Cash 30,000
Stock 4,70,000 Debtors 3,50,000 Creditors 3,00,000 He withdrew Rs. 8,000 per month for
the year. Calculate profit or loss for the year and show your working clearly.
17. Mr. Arnav does not keep proper records of his business he provided following information,
you are required to prepare a statement showing the profit or loss for the year. Rs. Capital at
the beginning of the year 15,00,000 Bills receivable 60,000 Cash in hand 80,000 Furniture
9,00,000 Building 10,00,000 Creditors 6,00,000 Stock in trade 2,00,000 Further capital
introduced 3,20,000 Drawings made during the period 80,000 [Ans : Loss : Rs. 1,00,000].
Ascertainment of statement of affairs at the beginning and at the end of the year and
calculation of profit or loss.
18. Mr. Akshat keeps his books on incomplete records following information is given below :
April 01, 2013 March 31, 2014
Rs. Rs.
Cash in hand 1,000 1,500
Cash at bank 15,000 10,000
Stock 1,00,000 95,000
Debtors 42,500 70,000
Business premises 75,000 1,35,000
Furniture 9,000 7,500
Creditors 66,000 87,000
Bills payable 44,000 58,000
During the year he withdrew Rs. 45,000 and introduced Rs. 25,000 as further capital in the
business compute the profit or loss of the business
19. Gopal does not keep proper books of account. Following information is given below:
Jan. 01, 2013 Dec. 31, 2013
Rs. Rs.
Cash in hand 18,000 12,000
Cash at bank 1,500 2,000
Stock in trade 80,000 90,000
Sundry debtors 36,000 60,000
Sundry creditors 60,000 40,000
Loan 10,000 8,000
Office equipments 25,000 30,000
Land and Buildings 30,000 20,000
Furniture 10,000 10,000
During the year he introduced Rs. 20,000 and withdrew Rs. 12,000 from the business.
Prepare the statement of profit or loss on the basis of given information
20. Mr. Muneesh maintains his books of accounts from incomplete records. His books provide
the information :
Jan. 01, 2013 Dec. 31, 2013
Rs. Rs.
Cash 1,200 1,600
Bills receivable — 2,400
Debtors 16,800 27,200
Stock 22,400 24,400
Investment — 8,000
Furniture 7,500 8,000
Creditors 14,000 15,200
He withdrew Rs. 300 per month for personal expenses. He sold his investment of Rs. 16,000
at 2% premium and introduced that amount into business
Ten marks questions

1. Mr. Girdhari Lal does not keep full double entry records. His balance as on January 01, 2013
is as.
Liabilities Amount Assets Amount
Rs. Rs.
Sundry creditors 35,000 Cash in hand 5,000
Bills payable 15,000 Cash at bank 20,000
Capital 40,000 Sundry debtors 18,000
Stock 22,000
Furniture 8,000
Plant 17,000
90,000 90,000
His position at the end of the year is :
Rs. Cash in hand 7,000 Stock 8,600 Debtors 23,800 Furniture 15,000 Plant 20,350 Bills
payable 20,200 Creditors 15,000 He withdrew Rs. 500 per month out of which to spent Rs.
1,500 for business purpose. Prepare the statement of profit or loss.
2. Mr. Ashok does not keep his books properly. Following information is available from his
books.
Jan. 01, 2013 Dec. 31, 2013
Rs. Rs.
Sundry creditors 45,000 93,000
Loan from wife 66,000 57,000
Sundry debtors 22,500 —
Land and Building 89,600 90,000
Cash in hand 7,500 8,700
Bank overdraft 25,000 —
Furniture 1,300 1,300
Stock 34,000 25,000
During the year Mr. Ashok sold his private car for Rs. 50,000 and invested this amount into
the business. He withdrew from the business Rs. 1,500 per month upto July 31, 2013 and
thereafter Rs. 4,500 per month as drawings. You are required to prepare the statement of
profit or loss and statement of affair as on December 31, 2013
3. Krishna Kulkarni has not kept proper books of accounts prepare the statement of profit or
loss for the year ending December 31, 2013 from the following information:
Jan. 01, 2013 Dec. 31, 2013
(Rs.) (Rs.)
Cash in hand 10,000 36,000
Debtors 20,000 80,000
Creditors 10,000 46,000
Bills receivable 20,000 24,000
Bills payable 4,000 42,000
Car — 80,000
Stock 40,000 30,000
Furniture 8,000 48,000
Investment 40,000 50,000
Bank balance 1,00,000 90,000
 The following adjustments were made : (a) Krishna withdrew cash Rs. 5,000 per month for
private use. (b) Depreciation @ 5% on car and furniture @10% . (c) Outstanding Rent Rs.
6,000. (d) Fresh Capital introduced during the year Rs.30,000.
4. M/s Saniya Sports Equipment does not keep proper records.
From the following information find out profit or loss and also prepare balance sheet for the
year ended December 31, 2013
Dec. 31, 2012 Dec. 31, 2013
Rs. Rs
Cash in hand 6,000 24,000
Bank overdraft 30,000 —
Stock 50,000 80,000
Sundry creditors 26,000 40,000
Sundry debtors 60,000 1,40,000
Bills payable 6,000 12,000
Furniture 40,000 60,000
Bills receivable 8,000 28,000
Machinery 50,000 1,00,000
Investment 30,000 80,000
Drawing Rs.10,000 p.m. for personal use, fresh capital introduce during the year
Rs.2,00,000. A bad debts of Rs.2,000 and a provision of 5% is to be made on debtors.
outstanding salary Rs.2,400, prepaid insurance Rs.700, depreciation charged on furniture
and machine @ 10% p.a.

MODULE 2

COMPANY ACCOUNTS – ISSUE OF SHARES

Two marks questions :

1. What is shares?
2. What is reserve capital?
3. Define equity shares
4. Define minimum subscription
5. What is security premium reserve?
6. What is pro rata allotment?
7. What is forfeiture of shares?
8. What is calls in arrears?
9. What is call in advance?
10. What is surrender of shares?
11. What is lien on shares?
12. How will you treat balance in the forfeited shares account after the reissue of forfeited
shares?
13. What is discount on issue of shares?
14. What is employees stock option scheme?
15. What is capital reserve?
16. What is fraction shares?
17. What is private placement of shares?
 18. What is right issue?
19. What is public issues?
20. What is preference shares?

Five marks questions:

1. Explain the categories of share capital?

2. Distinguish between reserve capital and capital reserve
3. Distinguish between equity capital and preference capital
4. Distinguish between stock and shares
5. What is securities premium ? state the purpose for balance of securities premium
6. What is the difference in calls in advance and calls in arrears?
7. What are steps involved in annulment of forfeiture?
8. What is surrender of shares? Is it different from forfeited of shares?
9. Distinguish between surrender of shares and forfeiture of shares?
10. How to calculate the profit on reissue of forfeited shares?
11. A ltd forfeited 30 shares of Rs 10 each fully called up held by A, for non payment of
allotment money of Rs 3 per share and final call of Rs 4 per share. He had paid the
application money of Rs 3 per share . These shares were reissued to B for Rs 8 per shares
12. Mona Earth Mover Limited decided to issue 12,000 shares of Rs.100 each payable at Rs.30
on application, Rs.40 on allotment, Rs.20 on first call and balance on second and final call.
Applications were received for 13,000 shares. The directors decided to reject application of
1,000 shares and their application money being refunded in full. The allotment money was
duly received on all the shares, and all sums due on calls are received except on 100 shares.
Record the transactions in the books of Mona Earth mover ltd
13. Eastern Company Limited issued 40,000 shares of Rs. 10 each to the public for the
subscription out of its share capital, payable as Rs. 4 on application, Rs. 3 on allotment and
the balance on Ist and final call. Applications were received for 40,000 shares. The company
made the allotment to the applicants in full. All the amounts due on allotment and first and
final call were duly received. Give the journal entries in the books of the company.
14. Cronic Limited issued 10,000 equity shares of Rs. 10 each payable at Rs. 2.50 on application,
Rs. 3 on allotment, Rs. 2 on first call, and the balance of Rs. 2.50 on second and final call. All
the shares were fully subscribed and paid except of a shareholder having 100 shares who
could not pay for second and final call. Give journal entries to record these transactions.
15. Konica Limited registered with an authorised equity capital of Rs. 2,00,000 divided into 2,000
shares of Rs. 100 each, issued for subscription of 1,000 shares payable at Rs. 25 per share on
application, Rs. 30 per share on allotment, Rs. 20 per share on first call and the balance as
and when required. Application money on 1,000 shares was duly received and allotment was
made to them. The allotment amount was received in full, but when the first call was made,
one shareholder failed to pay the amount on 100 shares held by him and another
shareholder with 50 shares, paid the entire amount on his shares. The company did not
make any other call. Give the necessary journal entries in the books of the company to
record these share capital transactions
16. Rohit & Company issued 30,000 shares of Rs.10 each payable Rs.3 on application, Rs.3 on
allotment and Rs.2 on first call after two months. All money due on allotment was received,
but when the first call was made a shareholder having 400 shares did not pay the first call
and a shareholder of 300 shares paid the money for the second and final call of Rs.2 which
had not been made as yet. Give the necessary journal entries in the books of the company
17. Jupiter Company Limited issued 35,000 equity shares of Rs. 10 each at a premium of Rs.2
payable as follows: On Application Rs. 3 On Allotment Rs. 5 (including premium) Balance on
First and Final Call The issue was fully subscribed. All the money was duly received. Record
journal entries in the books of the Company
18. Fine Arts Limited issued to the public for subscription of 10,000 shares of Rs.10 each at a
discount of 10% payable at Rs. 4 on application, Rs. 3 on allotment and Rs.2 on Ist and the
final call. The issue was fully subscribed and all the money was duly received. Record journal
entries for the above in the books of the company.
19. Jindal and Company purchased a machine from High Life Machine Limited for Rs.3,80,000.
As per purchase agreement, Rs. 20,000 were paid in cash and balance by issue of shares of
Rs.100 each. What will be the entries passed if the shares are issued : (a) at par (b) at 10%
discount (c) at 20% premium
20. Honda Limited issued 10,000 equity shares of 100 each payable as follows: Rs. 20 on
application, Rs. 30 on allotment, Rs. 20 on first call and Rs. 30 on second and final calls
10,000 shares were applied for and allotted. All money due was received with the exception
of both calls on 300 shares held by Supriya. These shares were forfeited. Give necessary
journal entries. Sahil, a share holder, failed to pay the money for second and final call of Rs.
20 on 1,000 shares issued to him at Rs. 120 (face value of Rs. 100 per share). His shares
were forfeited after the second and final call. Give the necessary journal entry for forfeiture
of the shares
21. Sunena, a shareholder holding 500 shares of Rs.10 each, did not pay the allotment money of
Rs. 4 per share (including a premium of Rs. 2) and the first and final call of Rs. 3. Her shares
were forfeited after the first and final call. Give journal entry for forfeiture of the shares.
22. The director of Poly Plastic Limited resolved that 200 equity shares of Rs.100 each be
forfeited for non-payment of the second and final call of Rs.30 per share. Out of these, 150
shares were re-issued at Rs.60 per share to Mohit. Show the necessary journal entries Life
Machine Tools Limited issued 50,000 equity shares of Rs.10 each at Rs.12 per share, payable
at to Rs.5 on application (including premium), Rs.4 on allotment and the balance on the first
and final call.
23. Applications for 70,000 shares had been received. Of the cash received, Rs.40,000 was
returned and Rs.60,000 was applied to the amount due on allotment. All shareholders paid
the call due, with the exception of one shareholder of 500 shares. These shares were
forfeited and reissued as fully paid at Rs.8 per share. Journalise the transactions.
24.

Ten marks questions:

1. Unique Pictures Limited was registered with an authorised capital of Rs. 5,00,000 divided
into 20,000, 5% preference shares of Rs. 10 each and 30,000 equity shares of Rs. 10 each.
The company issued 10,000 preference and 15,000 equity shares for public subscription.
Calls on shares were made as under
Equity Shares Preference Shares
Application 2 2
Allotment 3 3
First Call 2.50 2.50
Second and Final Call 2.50 2.50
 All these shares were fully subscribed. All the dues were received except the second and
final call on 100 equity shares and on 200 preference shares. Record these transactions in
the journal. You are also required to prepare the cash book and balance sheet.

2. Janta Papers Limited invited applications for 1,00,000 equity shares of Rs. 25 each payable as
under: On Application Rs. 5.00 per share On Allotment Rs. 7.50 per share On First Call Rs.
7.50 per share (due two months after allotment) On Second and Final Call Rs. 5.00 per share
(due two months after First Call)
Applications were received for 4,00,000 shares on January 01, 2014 and allotment was made
on February 01, 2014.
Record journal entries in the books of the company to record these share capital
transactions under each of the following circumstances:
1 The directors decide to allot 1,00,000 shares in full to selected applicants and the
applications for the remaining 3,00,000 shares were rejected outright.
2 The directors decide to make a pro-rata allotment of 25 per cent of the shares applied for
to every applicant; to apply the balance of application money towards amount due on
allotment; and to refund the amount remaining thereafter.
3 The directors totally reject applications for 2,00,000 shares, accept full applications for
80,000 shares and make a pro-rata allotment of the 20,000 shares to remaining applicants
and the excess application money is to be adjusted towards allotment and calls to be made.
3. Ashok Limited issued 3,00,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share,
payable as Rs. 3 on application, Rs. 5 on allotment (including premium) and the balance in
two calls of equal amount. Applications were received for 4,00,000 shares and pro-rata
allotment was made to all the applicants. The excess application money was adjusted
towards allotment. Mukesh who was allotted 800 shares failed to pay both the calls and his
shares were forfeited after the second call. Record necessary journal entries in the books of
Ashok Limited and also show the balance sheet
4. High Light India Ltd. invited applications for 30,000 Shares of Rs. 100 each at a premium of
Rs. 20 per share payable as follows :
On Application Rs. 40 (including Rs.10 premium)
On Allotment Rs. 30 (including Rs.10 premium)
On First Call Rs. 30
On Second and Final Call Rs. 20
Applications were received for 40,000 shares and pro-rata allotment was made on the
application for 35,000 share. Excess application money was utilised towards allotment.
Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares
were forfeited immediately after allotment.Aman who applied for 1,050 shares failed to pay
first call and his share were forfeited immediately after first Call.Second and final call was
made. All the money due on second call have been received. Of the shares forfeited, 1,000
share were reissued as fully paid-up for Rs. 80 per share, which included the whole of
Aman’s shares. Record necessary journal entries in the books of High Light India Ltd.
5. X Ltd. issued for public subscription 40,000 equity shares of Rs. 10 each at premium of Rs. 2
per share payable as under : On application Rs. 4 per share On Allotment Rs. 5 per share
(including premium) On Call Rs. 3 per share
Applications were received for 60,000 shares. Allotment was made pro-rata to the applicants
for 48,000 shares, the remaining applications being rejected. Money overpaid on application
was applied towards sums due on allotment. Shri Chitnis, to whom 1,600 shares were
allotted, failed to pay the allotment money and Shri Jagdale, to whom 2,000 shares were
 allotted, failed to pay the call money. These shares were subsequently forfeited. Record
journal entries in the books of the company to record the above transactions.
6. On January 1, 2015, the Director of X Ltd. issued for public subscription 50,000 equity
shares of Rs. 10 each at Rs. 12 per share payable as to Rs. 5 on application (including
premium), Rs. 4 on allotment and the balance on call on May 01, 2015. The lists were closed
on February 10, 2015 by which date applications for 70,000 shares were received. Of the
cash received Rs. 40,000 was returned and Rs.60,000 was applied to the amount due on
allotment, the balance of which was paid on February 16, 2015. All the shareholders paid the
call due on May 01, 2015 with the exception of an allottee of 500 shares. These shares were
forfeited on September 29, 2015 and reissued us fully paid at Rs. 8 per share on November
01, 2015. The company, as a matter of policy, does not maintain a calls-in-arrears account.
Give journal entries to record these share capital transactions in the books of X. Ltd.
7. A limited company forfeited 1,000 equity shares of Rs. 10 each, issued at a discount of 10
per cent, for non-payment of first call of Rs. 2 and second call of Rs. 3 per share. These
shares were reissued to Kamal upon payment of Rs. 7,000 credited as fully paid. The
company maintains calls-in-arrears account. Record journal entries in the books of the
company relating to forfeiture of 1,000 shares and their reissue.
8. O Limited issued a prospectus offering 2,00,000 equity shares of Rs. 10 each, at a premium
of Rs. 2 per share, payable as follows: On Application Rs. 2.50 per share On Allotment Rs.
4.50 per share (including premium) On First Call (three months from allotment) Rs. 2.50 per
share On Second Call (three months after first call) Rs. 2.50 per share Subscriptions were
received for 3,17,000 shares on April 23, 2014 and the allotment made on April 30, was as
under : Shares Allotted (i) Allotment in full (two applicants paid in 38,000 full on allotment in
respect of 4,000 shares each) (ii) Allotment of two shares for every 1,60,000 three shares
applied for (iii) Allotment of one share for every 2,000 four shares applied for Cash
amounting to Rs. 77,500 (being application money received with applications on 31,000
shares upon which no allotments were made) was returned to applicants on May 6, 2014.
The amounts called from the allottees were received on the due dates with the exception of
the final call on 100 shares. These shares were forfeited on November 15, 2014 and reissued
to Aman on November 16 for payment of Rs. 9 per share. Record journal entries other than
those relating to cash, in the books of O Limited, and also show how the transactions would
appear in the balance sheet, assuming that the Company paid interest due from it on
October 31, 2014.
9. Garima Limited issued a prospectus inviting applications for 3,000 shares of Rs. 100 each at a
premium of Rs.20 payable as follows: On Application Rs.20 per share On Allotment Rs.50
per share (Including premium) On First call Rs.20 per share On Second call Rs.30 per shar
Applications were received for 4,000 shares and allotments made on prorata basis to the
applicants of 3,600 shares, the remaining applications being rejected, money received on
application was adjusted on account of sums due on allotment. Renuka to whom 360 shares
were allotted, failed to pay allotment money and calls money, and her shares were forfeited.
Kanika, the applicant of 200 shares failed to pay the two calls, her shares were also
forfeited. All these shares were sold to Naman as fully paid for Rs.80 per share. Show the
journal entries in the books of the company.

MODULE 3
COMPANY ACCOUNTS -ISSUE OF DEBENTURES

Two marks questions:

1. Define debentures
2. What is registered debentures?
3. What is a bearer debentures?
4. Define secured debentures
5. Define convertible debentures
6. Define redeemable debentures
7. Define irredeemable debentures
8. What is bond
9. Define debenture as collateral security
10. Define non convertible debentures

Five marks questions

1. What are debentures? Explain the need for issuing debentures?
2. What are different kinds of debentures?
3. Distinguish between registered debenture and bearer debentures?
4. Distinguish between convertible and non convertible debentures
5. Differentiate between equity shares and debentures
6. Can debentures be issued for consideration other than cash? Give journal entries
7. Explain the meaning and accounting treatment of debentures issued as collateral security
8. What do you mean by discount on issue of debentures? How would you treat the discount
on issue of debentures
9. Explain the treatment of fraction debentures with the help of an example.

Ten marks questions

1. X Ltd took a loan from a bank for Rs 100000 against a collateral security of Rs 150000 12%
mortgage debentures. Show entries and the balance sheet under method 1 and method 2
2. Blue Prints Ltd., purchased building worth Rs 1,50,000, machinery worth Rs 1,40,000 and
furniture worth Rs 10,000 from XYZ Co., and took over its liabilities of Rs 20,000 for a
purchase consideration of Rs 3,15,000. Blue Prints Ltd., paid the purchase consideration by
issuing 12% debentures of Rs 100 each at a premium of 5%. Record necessary journal
entries.
3. A Limited took over the assets of Rs 3,00,000 and liabilities of Rs 10,000 from B & Co. Ltd. for
an agreed purchase consideration of Rs 2,70,000 to be satisfied by issue of 15% debentures
of Rs 100 at 20% premium. Show the journal entries in the journal of A Limited Amrit
Company Limited purchased assets of the value of Rs 2,20,000 from another company and
agreed to make the payment of purchase consideration by issuing 2,000, 10% debentures of
Rs 100 each at a premium of 10%. Record necessary journal entries.
4. A company purchased assets of the value of Rs 1,90,000 from another company and agreed
to make the payment of purchase consideration by issuing 2,000, 10% debentures of Rs 100
each at a discount of 5%. Record necessary journal entries. 3. Rose Bond Limited purchased
a business for Rs 22,00,000. Purchase Price was paid by 6% debentures. Debentures of Rs
20,00,000 were issued at a premium of 10% for the purpose. Record necessary journal
entries.
5. Nikhil and Ashwin Limited bought business of Agarwal Limited consisting sundry assts of Rs
3,60,000, sundry creditors Rs 1,00,000 for a consideration of Rs 3,07,200. It issued 14%
debentures of Rs 100 each fully paid at a discount of 4% in satisfaction of purchase
consideration. Record necessary journal entries.
 6. Suvidha Ltd. purchased machinery worth Rs 1,98,000 from Suppliers Ltd. The payment was
made by issue of 12% debentures of Rs 100 each. Pass the necessary journal entries for the
purchase of machinery and issue of debentures when: (i) Debentures are issued at par; (ii)
Debentures are issued at 10% discount; and (iii) Debentures are issued at 10% premium
7. Give Journal entries for the following:
1. Issue of Rs 1,00,000, 9% debentures of Rs 100 each at par and redeemable at par.
2. Issue of Rs 1,00,000, 9% debentures of Rs 100 each at premium of 5% but redeemable at
par.
3. Issue of Rs 1,00,000, 9% debentures of Rs 100 each at discount of 5% repayable at par.
4. Issue of Rs 1,00,000, 9% debentures of Rs 100 each at par but repayable at a premium of
5%.
5. Issue of Rs 1,00,000, 9% debentures of Rs 100 each at discount of 5% but redeemable at
premium of 5%.
6. Issue of Rs 1,00,000, 9% debentures of Rs 100 each at premium of 5% and redeemable at
premium of 5%.

8. A Ltd., issued 2,000, 10% debentures of Rs 100 each on January 01, 2014 at a discount of 10%
redeemable at a premium of 10%. Give journal entries relating to the issue of debentures and
debenture interest for the period ending December 31, 2014 assuming that interest was paid half
yearly on June 30 and December 31 and tax deducted at source is 10%. A Ltd., follows calendar year
as its accounting year.

MODULE 4

CONVERGENCE TO IFRS

Two marks questions:

1. Define accounting standard

2. What are international accounting standard?
3. Define IFRS
4. What is the main function of IASB?
5. What is IFRS adoption?
6. What is IFRS convergence?
7. Distinguish between IFRS adoption and IFRS convergence
8. What are Ind Ass?
9. What do you mean by conceptual frame work for accounting standards/IFRS?
10. Define financial elements
11. Define term LIABILITY
12. Define term ASSET as per IASB frame work
13. Define term equity
14. Define term INCOME /REVENUE
15. Define term EXPENSES
16. What is recognition of financial elements

Five marks questions:

1. Define accounting standards. What are the objectives of accounting standards?

 2. What are the advantages and disadvantages of accounting standards?
3. Write note on the development of accounting standards in India
4. What are the objectives and functions of ASB
5. What are the functions of IASB
6. What are functions of FASB?
7. What are the benefits of IFRS convergence ?
8. What are criteria for recognition of assets?
9. What are the criteria for recognition of liabilities?
10. Discuss the need and importance of global accounting standards?
11. What is the role of IFRS interpretation committee?
12. What is the role of NFRA?
13. State the process of setting IFRS
14. State the standard setting process in India
15. State the IFRS implementation plan in India

Ten marks questions :

1. Discuss the role of NFRA . what is the need for NFRA. Which companies are covered by
NFRA.
2. Discuss the role IFRS interpretation committee
3. Discuss the principles of presentation and disclosure of financial elements
4. Discuss the principles of recognition and measurement of financial element?
5. Compare IFRS with Indian accounting standards
6. Discuss the benefits of IFRS adoption or convergence
7. What are the function of IASB. Discuss its role of IASB in developing IFRSs.

MODULE 5

FINANCIAL STATEMENTS OF JOINT STOCK COMPANIES

Two marks questions :

1. What are contingent liabilities?

2. What are contingent assets?
3. What are preliminary expenses?
4. What are divisible profit?
5. What are reserves?
6. What are provisions?
7. What do you mean by capital reserve
8. What do you mean by revenue reserve?
9. What is scrip dividend
10. What is interim dividend
11. What is final dividend
12. What is proposed dividend?

Five marks questions:

1. Distinguish between reserve and provision
2. What are contingent liabilities and give example?
3. What are contingent asset ?
4. Give proforma B/S of a company under schedule 111 of companies act 2013
5. Explain the treatment of provision for tax under companies act
6. How are preference shares treated in final accounts of a company?
Ten marks questions:
1. Show the following items in the balance sheet of Amba Ltd. as per revised schedule VI as
on March 31, 2013:
Rs. 8% Debentures 10,00,000 Equity share capital 50,00,000 Securities premium 20,000
Preliminary expenses 40,000 Statement of Profit & Loss (cr.) 1,50,000 Discount on issue
of 8% debentures 40,000 (Amount to be written in next 4 years approx.) Loose tools
20,000 Bank balance 60,000 Cash in hand 38,000
2. From the given particulars of Shine and Bright Co. Ltd. as at March 31, 2013, prepare
balance sheet in accordance to the (revised) :
Particulars Amount Particulars Amount Rs.
Preliminary expenses 2,40,000 Goodwill 30,000
Discount on Issue of shares 20,000 Loose Tools 12,000
10% Debentures 2,00,000 Motor vehicles 4,75,000
Stock in trade 1,40,000 Provision for tax 16,000
Cash at bank 1,35,000
Bills receivables 1,20,000
3. From the following information prepare the balance sheet of Jam Ltd.
: Inventories Rs. 7,00,000; Equity Share Capital Rs. 16,00,000; Plant and Machinery Rs.
8,00,000; Preference Share Capital Rs. 6,00,000; General Reserves Rs. 6,00,000; Bills
payable Rs. 1,50,000; Provision for taxation Rs. 2,50,000; Land and Building Rs.
16,00,000; Noncurrent Investments Rs. 10,00,000; Cash at Bank Rs. 5,00,000; Creditors
Rs. 2,00,000; 12% Debentures Rs. 12,00,000
4. Sun ltd have authorised capital of Rs 5 lakh dividend into 50000 equity shares of Rs 10
each. The following is the trial balance of the company as on march 31 2019
Particulars Dr Cr
Opening stock 66500
Discount and rebates 3000
Carriage inwards 5750
Patterns 37500
Rates, taxes and insurances 5500
Furnitures and fixtures 15000
Purchases 123250
Freehold land 136800
Plant and machinery 125000
Engineering tools 75000
Goodwill 15000
Sundry debtors 37500
Bills receivables 26600
Advertisement 13450
Commission and brokerage 1500
Business expenses 6750
Bank current account 5600
Cash in hand 2000
Debentures interest paid 800
Interest on bank overdraft 1000
Preliminary expenses 9100
Calls in arrear @ Rs 2 per share 1000
Equity share capital(20000 share of shares Rs 10 each) 200000
4 percent debentures(repayable after 10 years) 50000
Bank overdraft 75700
Sundry creditors 24050
Sales 361700
Rent (cr) 3000
Transfer fees received 650
Profit and loss account (cr) 6700
Repairs to building 4650
Bad debts 2550
-----------------------------------------
721800 721800

Additional informations:
1. The stock valued at cost or market value whichever is lower as on march 31 2019
was Rs 70800
2. Outstanding liabilities for wages Rs 2500 and business expenses Rs 3600
3. Dividend declared at 20 percent on paid up capital

Adjustments:
1. Charge depreciation plant and machinery at 5 percent, engineering tools at 20
percentage pattern at 10 and furniture and fixture at 10 percent
2. Provide 10 percent on debtors as doubtful debts after writing off Rs 1600 as bad
debts
3. Write off preliminary expenses
4. Create debentures redemption reserve at 10 percent of debentures
5. Transfer to general reserve at 2.5 percent
6. Provide for income tax at 30 percent, dividend distribution tax rate Rs 17.472
Prepare statement of profit and loss for the year ended march 31 2019. And
balance sheet as on that date.