1. What are the types of account? Give the rules of debit and credit of the three types

of accounts. Explain the reasons of the popularity of double entry system. (20)

2. Exlain how the following transactions would be recorded in a cash book with

Cash and Bank columns ?

i) Deposit of cash into Bank

ii) Withdrawal of money from Bank for office use

iii) Deposit of cheques (received from others) into Bank

3. While preparing Bank Reconciliation Statements will you add or deduct the following to or from

the Cash Book overdraft balance?

i) Cheques deposited but dishonoured

ii) Cheques drawn but not cleared

iii) Interest on overdraft

4. ‘‘Trial Balance is not a conclusive proof of the accuracy of the books of accounts.’’

Explain this statement and explain the errors which are not disclosed inspite of the

4

5. From the following Trial Balance of Seema Garments as on 31st Dec., 2007, prepare Trading

Profit and Loss Account and Balance Sheet:

Opening Stock 15000

Purchases and Sales 109000 180000

Manufacturing Wages 8000

Fuel, Power and Lighting 12000

Salaries 11000

Income Tax 5500

Loan to Mr. X at 10% pa. 5000

Interest on Mr. X’s Loan 300

Apprentice Premium 4500

Rent 4000

Rent Owing 600

Furniture (includes furniture of Rs.1000

purchased on 1st July, 2007) 5000

B/R and B/P 6000 1600

Plant 72000

Debtors and Creditors 28000 13000

Capital 100000

Cash 19500

300000 300000

1. Closing Stock was valued at Rs. 30,000.

2. Goods worth Rs. 5000 was sold on 28th December, but no entry was passed to this effect.

3. Goods costing Rs. 7000 was purchased and included into Stock but no entry was passed to record

the purchases.

4. Create a provision of 2% for discount on debtors.

5. Apprentice premium received on 1st January, 2007 was for 3 years.

6. Depreciate the furniture by 10% p.a.

7. Salaries for the month of December, 2007 are still outstanding. (20)