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MBA
Assignme
nt-
Semester
1
Financial and
Management
Accounting
Balance sheet, income statement & Balance sheet and income statement are
funds flow statement are mandatory alone mandatory
Any long term loan repayable is the Long term loans maturing in the current
current financial year is shown financial year need not be disclosed
separately separately
Revenue earned during a period is compared with the expenditure incurred to earn
that income, whether the expenditure is paid during that period or not. This is
matching cost and revenue principle, which is important to find out the profit
earned for that period. Here costs are reported as expenses in the accounting
period in which the revenue associated with those costs is reported. A business
concern should follow this principle to know his actual earnings and growth for the
year.
Q.3 Prove that the accounting equation is satisfied in all the following
transactions of Mr. X
c) Purchase goods for cash Rs. 18000 and Credit Rs. 20000
Dr Cr
Discounts 1000
Additional Information:
Required: Pass the necessary journal entries and show the relevant
accounts including final accounts.
Journal Entries
Date Particulars Dr. Cr.
31/3/2007 Bad Debts a/c Dr 4000
To Debtors a/c 4000
31/3/2007 Provision for Bad Debts a/c Dr 4000
To Bad Debts a/c 4000
Debtors A/c
Particulars Amount Particulars Amount
To Balance b/d 205000 By Dis. On Debtors 1000
By Bad Debts 4000
By Balance c/d 200000
205000 205000
24000 24000
4600 4600
Bad Debts A/c
Particulars Amount Particulars Amount
To Provision for Bad Debts 4000 By Debtors 4000
4000 4000
Discount A/c
Particulars Amount Particulars Amount
To Provision for Discount 1000 By Debtors 1000
1000 1000
P & L A/c
AmountParticulars
To Provision for Bad
DebtsAmountParticulars 14000
To Provision for Discount 2800
Balance Sheet
Particulars Amount Particulars Amount
Debtors 200000
Less: Provision 20000
Less: Provision 3600 176400
Q. 5 (A) Bring out the differences between trade discount and cash
discount.
(B) Explain the term (a) Asset (b) Liability with help of examples.
1. Trade discount is a reduction granted by a supplier from the list price on goods
or services on business consideration such as quantity bought, trade practice
etc while cash discount is a reduction granted from the invoice price in
consideration of immediate payment or payment within a stipulated period.
2. Trade discount is allowed to promote the sales while cash discount is allowed to
encourage early or prompt payment.
3. Trade discount is shown by the way of deduction in the invoice itself. Hence no
further entry is required in the books of accounts. Cash discount is shown as an
expense in Profit and Loss account.
4. Trade discount may vary with the quantity purchased while cash discount
varies with the period.
Assets
Fixed Assets are those which are held for use in the production or supply of
goods and services, Ex. Plant and machinery which is used fairly for long
period.
Current Assets are those which are held or receivable within a year or within
the operating cycle of the business. They are intended to be converted into
cash within a short period of time, Ex. Stock in trade, debtors, bills receivable,
cash at bank etc.
Liquid Assets are those which can be easily converted into cash and for
instance cash in hand, cash at bank, marketable investments etc.
Fictitious Assets are in the form of such expenses which could not be written
off during the period of their incidence For example promotional expenses of a
company which could not be treated as expenditure in the year of incidence
are shown as fictitious assets.
Liability
Current Liability is that obligation which ahs to be satisfied within a year. For
example payment o be made sundry creditors for the goods supplied by them
on credit; bills payable accepted by the businessman; overdraft raised by the
businessman in a bank etc.
Adjustments:
4) Rates and insurance has been paid in advance to the extent of Rs. 40
Capital 7670
Cash in Hand 30
Purchases 8990
Sales 11060
Returns Inward 30
Salaries 1075
Creditors 1890
Debtors 5700
Printing 225
22940 22940
Trading A/c
12830 12830
1710 1710
11470 11470