Financial accounting model question paper 2018
Financial accounting model question paper
BBA | BBA-BI | BBA-TT | BCIS
Level: Bachelor Semester – Fall Year: 2018
Programme: BBA | BBA-BI | BBA-TT | BCIS Full Marks: 100
Course: Financial Accounting I Pass Marks: 45
Candidates are required to give their answers in their own words as far as practicable.
The figures in the margin indicate full marks.
Very Short Answer Questions
10 × 2
Attempt all questions.
- Describe the features of a corporation.
- List out the external users of accounting information.
- What does the going concern mean?
- What is the major weakness of the single-step income statement?
- What are the prepaid expenses? Give some examples.
- What do you mean by double entry-system of accounting?
- Write the purpose of trial balance?
- Burlin Company stars the year with Rs. 100,000 in assets and Rs. 80,000 in liabilities. Net income for the year is Rs. 25,000, and no dividends are paid. How much is the owner’s equity at the end of the year?
- The company paid rent for three months (June, July, and August) on June 15, 2016, of Rs. 6000. Prepare accounting equation on the date of payment of rent and end of each month.
- Differentiate between cash and accrual basis accounting?
Descriptive Answer Questions
6 × 10
Attempt any six questions.
11. Kantipur Delivery Service is incorporated on January 2, 2018, and enters into the following transactions during its first month of operations:
January 2: Field articles of incorporation with the state and issued 100,000 shares of capital stock. Cash of Rs. 100,000 is received from the new owners for the shares.
Jan 3: Purchased a warehouse and land for Rs. 80,000 in cash. An appraiser values the land at Rs. 20,000 and the warehouse at Rs. 60,000.
Jan 4: Signed a three-year promissory note at Third State Bank in the amount of Rs. 50,000.
Jan 6: Purchased five new delivery trucks for a total of Rs. 45,000 in cash.
Jan 15: Performed services on account that amount to Rs. 16,000 during the month.
Jan 25: Cash amounting to Rs. 7,500 was received from customers on the account during the month.
Jan 31: Established an open account at a local service station at the beginning of the month. Purchases of gas and oil from January amounted to Rs. 3000. Kantipur has until the 10th of the following month.
- Prepare journal entries for each transaction.
- Post each transaction to the appropriate T accounts.
- Prepare a trial balance.
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12. A list of accounts for Maple Inc. at 12/31/17 follows.
Income tax expense
Income tax payable
Inventory, Jan, 1
Inventory, Jan, 31
- Prepare income statement for 2017.
- Prepare the statement of Retained Earnings for 2017.
- Prepare a balance sheet dated December 31, 2017.
13. Moon Star Inc. prepares monthly financial statements and therefore adjusts its accounts at the end of every month. Prepare necessary adjusting entries on June 30, 2017.
a. On June 1, 2017, Moon Star received an Rs. 10,000, 12%, 90-days note receivable from a customer for services rendered.
b. Office supplies totaling Rs. 6,000 were purchased during the month. The asset account supplies are increased whenever a purchase is made. A count in the storeroom on June 30, 2017, indicates that supplies on hand amount to Rs. 1,000. The supplies on hand at the beginning of the month total Rs. 2,000.
c. The company purchased machines last year for Rs. 170,000. The machines are expected to be used for four years and have an estimated salvage value of Rs. 2000.
d. The company operates seven days per week with a weekly payroll of Rs. 7,000. Wage earners are paid every Sunday. The last day of the month is Saturday, June 30.
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14. The following transactions are entered into by Auto Car Wash during its first month of operations.
a. Articles of incorporation are filed with the state, and 20,000 shares of capital stock are issued. Cash of Rs. 40,000 is received from the new owners for the shares.
b. A five-year promissory note is signed at the local bank. The received from the loan is Rs. 120,000.
c. An existing car wash is purchased for Rs. 150,000 in cash. The values assigned to the land, building, and equipment are Rs. 25,000, Rs. 75,000, and Rs. 50,000, respectively.
d. Cleaning supplies are purchased on account for Rs. 2,500 from a distributor. None of the supplies are used in the first month.
e. During the first month, Rs. 1,500 is paid to the distributor for the cleaning supplies. The remaining Rs. 1,000 will be paid next month.
f. Gross receipts from car washes during the first month of operations amount to Rs. 7,000.
g. Wages and salaries paid in the first month amount to Rs. 2,000.
h. The utility bill of Rs. 800 for the month is paid.
i. A total of Rs. 1,000 in dividends is paid to the owners.
Prepare a table to summarize the preceding transactions as they affect the accounting equation.
15. What are the qualitative characteristics of accounting information?
16. The trial balance of Everest Trading Concern on January 31, is shown. It was prepared after posting the recurring transaction for the month of January, but it does not reflect any month-end adjustments.
Everest Trading Concern
Unadjusted Trial Balance
Wage and salary expense
The following additional information is available:
a. Office supplies on January 31 were Rs. 25,000.
b. The estimated life of the building is 20 years with an estimated salvage value of Rs. 10,000. The original cost of the equipment was Rs. 250,000.
c. The estimated life of the equipment is ten years with an estimated salvage value Rs. 50,000. The original cost of the equipment was Rs. 650,000.
d. Revenue earned during the month of Rs. 50,000 from unearned revenue.
e. Wages and salaries owed but unpaid to employees at the end of January total Rs. 7,000.
f. Assume a corporate income tax rate of 20%.
Ten column worksheet and closing entries.
17. The company’s book showed the debit balance of Rs. 10,000 on April 30, 2018, but company’s account showed a credit balance of Rs. 11,400.
The following items were found:
- Outstanding check of Rs. 5,000.
- Deposit in transit of Rs. 6,000.
- A bill of Rs. 5,000 and interest of Rs. 500 was directly collected by the bank.
- Service charge of Rs. 200 was charged by the bank.
- NSF check of Rs. 2,000 returned by the bank.
- A check of Rs. 2,100 sent for deposit but the bank was credited of Rs. 1,200.
a. Prepare bank reconciliation statement in good form.
b. Prepare necessary journal entries for adjustment.
Read the case situation given below and answer the questions that follow:
A trading concern had the following financial statements prepared as of December 31, 2017:
For the Period Ended December 31, 2017
Less: Cost of goods sold
Total operating expenses
Loss on sale of land
Income before tax
As of December 31, 2017
Total current assets
Total long-term assets
Income taxes payable
Total current liabilities
Total stockholder’s equity
Total liabilities and stockholder’s equity
a. The land was purchased by issuing notes during the year.
b. A piece of land was sold during the year for Rs. 27,500.
c. The capital stock was issued for cash.
You are required to prepare Statement of Cash Flows and also calculate cash from operating activity under the indirect method.
Also, read management notes
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