Statement of Affairs

Q.

Identify the correct formula used to ascertain the closing balance of capital:

1. Closing Capial = Opening capital + Net income – Drawings – Assets

2. Closing capital = Opening Capital + Net loss - Drawings

3. Closing Capital = Opening capital + Assets + Incomes – Expenses

4. Closing capital = Opening capital + Net income – Drawings

Q. A company whose accounting year is a financial year, purchased on 1st July, 2014 machinery costing ₹ 30, 000.
It purchased further machinery on 1st January, 2015 costing ₹ 20, 000 and on 1st October, 2015 costing ₹ 10, 000.
On 1st April, 2016, one-third of the machinery installed on 1st July, 2014 became obsolete and was sold for ₹ 3, 000.
Show how Machinery Account would appear in the books of the company. It being given that machinery was depreciated by Fixed Instalment Method at 10% p.a. What would be the value of Machinery Account on 1st April, 2017?

Q.

On 30th September 2016, my cash book (bank column of account number 1) showed a bank overdraft of Rs. 98, 700. Ongoing through the bank passbook for reconciling the balance, I found the following

(i) Out of cheques drawn on 26th September, those for Rs. 7, 400 were cashed by the bankers on 2nd October.

(ii) A crossed cheque for Rs. 1, 500 given to Abdul was returned by him and a bearer cheque was issued to him in lieu on 1st October.

(iii) Cash and cheques amounting to Rs. 6, 800 were deposited in the bank on 29th September, but cheques worth Rs. 2, 600 were cleared by the bank on 1st October and one cheque for Rs. 500 was returned by them as dishonoured on the latter date.

(iv) According to my standing instructions, the bankers have on 30th September, paid Rs.640 as interest to my creditors, paid a quarterly premium on my policy amounting to Rs320 and have paid a second call of Rs. 1, 200 on shares held by me and lodged with the bankers for safe custody. They have also received Rs. 300 as a dividend on my shares and recovered an insurance claim of Rs. 1, 600 and their charges and commission on the above being Rs. 30. On receipt of information of the above transactions, I have passed necessary entries in my cash book on 1st October.

(v) My bankers seem to have given me a wrong credit for Rs. 1, 000 paid in by me in account number 2 and a wrong debit in respect of a cheque for Rs. 600 drawn against my account number 2.

Prepare a bank reconciliation statement as on 30th September 2016.

Q. M/s. P & Q purchased machinery for ₹ 40, 000 on 1st October, 2015. Depreciation is provided @ 10% p.a. on the Diminishing Balance. On 31st January, 2018, one-fourth of the machinery was found unsuitable and disposed off for ₹ 5, 600. On the same date new machinery at a cost of ₹ 15, 000 was purchased. Write up the Machinery account for the years ended 31st March, 2016, 2017 and 2018. Accounts are closed on 31st March each year.

Q.

Opening capital =

1. Closing capital + Profit

2. Closing assets - Closing liabilities

3. Closing liabilities - Closing assets

4. Opening assets - Opening liabilities

Q.

Calculate closing capital from the following information opening capital Rs 70, 000, profit for the year Rs 20, 000, drawings Rs 7, 000. During the year proprietor sold ornaments of his wife for Rs 20, 000 and invested the same in business.

Q. The opening capital is ascertained by preparing opening .

1. cash book
2. creditors account
3. debtors account
4. statement of affairs

Q.

The normal balance of the capital account is

1. Cash

2. None of the above

3. Credit

4. Debit

Q. An asset was purchased for ₹ 10, 500 on 1st April, 2011. The scrap value was estimated to to be ₹ 500 at the end of asset's 10 years' life. Straight Line Method of depreciation was used. The accounting year ends on 31st March every year. The asset was sold for ₹ 600 on 31st March, 2018. Calculate the following.
(i) The Depreciation expense for the year ended 31st March, 2012.
(ii) The net book value of the asset on 31st March, 2016.
(iii) The grain or loss on sale of the asset on 31st March, 2018.

Q. Outstanding electricity bill Rs. 800 is shown on the ___ side of statement of the affairs.

1. Liabilities
2. Debit
3. Credit
4. Assets

Q. Astha Engineering Works purchased a machine on 1^st July, 2015 for ₹ 1, 80, 000 and spent ₹ 20, 000 on its installation.
On 1st April, 2016, if purchased another machine for ₹ 2, 40, 000. On 1st October, 2017, the machine purchased on 1st July, 2015 was sold for ₹ 1, 45, 000. On 1st January, 2018, another machine was purchased for ₹ 4, 00, 000 plus IGST @ 12%.
Prepare the Machinery Account for the years ended 31st March, 2016 to 2018 after charging Depreciation @ 10% p.a. by Diminishing Balance Method.
Accounts are closed on 31st March every year.

Q.

The opening capital is ascertained by preparing:

1. Cash book

2. Creditors account

3. Debtors account

4. Opening statement of affairs

Q. Modern Ltd. purchased a machinery on 1st August, 2015 for ₹ 60, 000. On 1st October, 2016, it purchased another machine for ₹ 20, 000 plus CGST and SGST @ 6% each. On 30th June, 2017, it sold the first machine purchased in 2015 for ₹ 38, 500 charging IGST @ 12%. Depreciation is provided @ 20% p.a. on the original cost each year. Accounts are closed on 31st March every year. Prepare the Machinery A/c for three years.

Q. A boiler was purchased from abroad for ₹ 10, 000; shipping and forwarding charges ₹ 2, 000, Import duty ₹ 7, 000 and expenses of installation amounted to ₹ 1, 000.
Calculate the depreciation for the first three years (separately for each year) @ 10% on Diminishing Balance Method.

Q. On 1st April, 2014, A Ltd. purchased a machine for ₹ 2, 40, 000 and spent ₹ 10, 000 on its erection. On 1st October, 2014 an additional machinery costing ₹ 1, 00, 000 was purchased. On 1st October, 2016, the machine purchased on 1st April, 2014 was sold for ₹ 1, 43, 000 and on the same date, a new machine was purchased ata cost of ₹ 2, 00, 000.

Q. On 1st July, 2015, Sohan Lal & Sons purchased a plant costing ₹ 60, 000. Additonal plant was purchased on 1st January, 2016 for ₹ 40, 000 and on 1st October, 2016, for ₹ 20, 000, paying CGST and SGST @ 6% each. On 1st April, 2017, one-third of the plant purchased on 1st July, 2015, was found to have become obsolete and was sold for ₹ 6, 000, charging CGST and SGST @ 6% each.
Prepare the Plant Account for the first three years in the books of Sohan Lal & Sons. Depreciation is charged @ 10% p.a. on Straight Line Method. Accounts are closed on 31st March each year.

Q.

Give two examples of Fictitious Assets.

Q. The normal balance of the capital account is .

1. credit
2. debit
3. cash
4. nil

Q.

Drawings Rs 15, 000, profit for the year Rs 25, 000, closing capital Rs 70, 000. Calculate the opening capital.

Q.

Opening capital = Rs. 1, 00, 000 , Drawings = Rs. 20, 000 , Loss for the year = Rs. 30, 000 , Additional capital introduced during the year = Rs. 20, 000. What shall be the closing capital ?

1. Rs. 80, 000

2. Rs. 1, 00, 000

3. Rs. 90, 000

4. Rs. 70, 000

Q.

What is a statement of financial position produced from incomplete accounting record known as?

Q. Mayank does not keep proper records of his business, he gives you the following information:

	₹
Opening Capital	1, 00, 000
Closing Capital	1, 25, 000
Drawings during the year	30, 000
Capital added during the year	37, 500

Calculate the profit or loss for the year.

Q.

Opening capital = Rs. 2, 00, 000 , Closing capital = Rs. 3, 00, 000 , Profit for the year = Rs. 1, 20, 000 , Additional capital introduced during the year = Rs. 1, 60, 000. What shall be the drawings ?

1. Rs. 1, 00, 000

2. Rs. 1, 80, 000

3. Rs. 4, 80, 000

4. Rs. 4, 20, 000

Q.

What do you understand by statement of affairs ?

Q.

Total opening balances of assets and liabilities are Rs. 10, 000 and Rs. 5, 000 respectively.
Find out the opening capital of the business?

1. Rs. 10, 000

2. Rs. 15, 000

3. None of these

4. Rs. 5, 000

Q. Pass the Opening Entry from the following Balance Sheet as at 31st March, 2018 of Vikas:

Liabilities		₹	Assets	₹
Capital A/c:			Land and Building	1, 50, 000
Opening Balance	5, 05, 115		Plant and Machinery	2, 50, 750
Add: Profit for the year	1, 20, 115		Chandra & Sons	71, 270
	6, 25, 230		Closing Stock	56, 250
Less: Drawings	60, 000	5, 65, 230	Cash in Hand	15, 700
Salary Payable		15, 000	Cash at Bank	75, 250
Magic Trades		27, 220
Babbar & Co.		11, 770
		6, 19, 220		6, 19, 220

Q.

Closing capital= Rs. 2, 00, 000, Profit = Rs. 50, 000, Drawings = Rs. 5, 000, what will be the opening capital ?

1. Rs. 1, 50, 000

2. Rs. 1, 00, 000

3. Rs. 1, 45, 000

4. Rs. 1, 55, 000

Q. Vikas maintains his books of account on Single Entry System. He provides following information from his books. Find out additional capital introduced in the business during the year 2017–18.
Opening Capital–₹ 1, 30, 000 Drawing during the year ₹ 50, 000
Closing Capital–₹ 2, 00, 000 Profit made during the year ₹ 1, 00, 000

Q.

What are examples of current liabilities?

Q. Statement of affairs has two sides: Right-hand side for assets and left-hand side for ___.

1. Income
2. Capital
3. Liabilities
4. Expenses