1. (a) What do you understand by classification of accounts? Explain the different types of accounts.
(b) Explain the reasons on account of which the balance shown by the Pass Book does not agree with the balance shown by the bank column of the Cash Book.
2. (a) What is Suspense Account? Why is it opened and how is it closed?
(b) What are the objectives of preparing a Balance Sheet? Distinguish between a Balance Sheet and a Trial Balance.
3. A of Ahmedabad consigned goods to B of Mumbai for sale at performa invoice price or over. B is entitled to have commission on sale at 5% on performa invoice price and 25% of any surplus realized. Goods consigned by A to B during the year 2008, costs A Rs. 20, 900 and invoiced at Rs. 28, 400. A paid Rs. 1,045 as freight and received Rs. 15,000 as advanced from B. 80% of the goods were sold by B for Rs. 26, 000. B remitted the balance of proceeds after deducting the commission. Prepare necessary ledger accounts in the books of A.
4. (a) What is meant by incomplete records? What are their limitations?
(b) What do you understand by self-balancing system? How are ledgers made self-balancing under it? State the advantages of this system.
5 (a) Laxmi Limited purchased a machine for Rs. 400000 on 1st July, 2005. Depreciation is provided @ 10% p.a. on the Diminishing Balance Method. on 1st October, 2007, one fourth of the machine was found unsuitable and disposed off for Rs. 60, 000. On the same date a new machine at a cost of Rs. 1,50, 000 was purchased. Prepare machine account from 2005 to 2008. The accounts are closed on 31st December each year.
(b) What are the different types of Reserves? Explain.