ACCOUNTING Past Paper 2nd year 2011 (Private) Karachi Board

SECTION “A” (MULTIPLE CHOICE QUESTIONS)

1. Choose the correct answer for each from the given options:

(i) In appearance, the statement of affairs is similar to a:
* Balance Sheet
* Profit & Loss account
* Trading Account
* Statement of Retained Earning

(ii) In Single Entry system, statement of assets, liabilities and capital is called:
* Income statement
* Statement of affairs
* Retained earning statement
* Statement of profit and loss

(iii) Non profit making organizations are established for:
* Profit
* Charitable or Religious purpose
* Manufacturing goods
* Trading Account

(iv) Receipts and payments account is a summary of:
* Cash Book
* Purchase Book
* Sales Book
* Purchase Return Book

(v) Example of Non profit making organization is:
* Fan Factory
* Sugar Industry
* Government college
* Private College

(vi) The partnership agreement in writing is called:
* Partnership Registration
* Partnership Act
* Partnership Deed
* Partnership Certification

(vii) Persons, who have entered into a partnership, are collectively called:
* Agents
* Partners
* a Firm
* Promoters

(viii) Current account of the partners should be opened when the capitals are:
* Fluctuating
* Fixed
* Increasing
* Decreasing

(ix) At the time of Admission of New partner, when the old partners do not agree to reduce their capital, it means:
Goodwill to old partners
* Goodwill to new partners
* Bonus to old partners
* Bonus to new partners

(x) If the partnership makes loss during the financial year, this is:
* Credit to the partners drawing account
* Debit to the partners salaries account
* Debit to the partners current account
* Credit to the partners current account

(xi) Goodwill is:
* Quick Assets
* Current Assets
* Tangible Assets
* None of these

(xii) In the case of retirement of a partner, full goodwill is credited to the account of:
* All partners
* Only Retiring partner
* Only Remaining partners
* None of these

(xiii) The shares of public company are:
* Non-transferable
* Non-refundable
* Transferable
* Allotable

(xiv) If the total amount of capital of a company is divided into small units, these are called:
* Bonds
* Cheques
* Shares
* Revenue

(xv) Under. the diminishing balance method, depreciation is calculated on:
* Fixed cost
* Depreciable cost
* Book value
* Scrap value

(xvi) Under the straight line method of charging depreciation, it:
* Increases every year
* Is constant every year
* Decreases every year
* Fluctuates every year

(xvii) Income and Expenditure account is equivalent to the:
* Receipt & Payment A/c
* Balance sheet
* Cash Book
* Profit and loss account

(xviii) The Credit balance at the end, in income and expenditure, shows:
* Surplus
* Deficit
* Both surplus deficit
* Expenditure

(xix) Excess of Expenditure over income is called:
* Deficit
* Surplus
* Bot the surplus & deficit
* Capital

(xx) At the time of Admission of New partner, when the old partners agree to reduce their capital
* Goodwill to old partners
* Goodwill to new partner
* Bonus to old partners
* Bonus to new partner.

SECTION B (SHORT – ANSWER QUESTIONS)

NOTE: Attempt any Five questions.

2. PARTNERSHIP-ADMISSION:

Mushir and Naseer are partners in profit and losses in the ration of 3:2. Their ledger balance of May 1st , 2011 just before the admission of Qasim is as follows:

 Assets                                          Equities
Cash 50,000                          Accounts Payable 40,000
Other Assets 250,000           Mushir’s capital 160,000
                                              Naseer’s capital 100,000

REQUIRED: Prepare necessary entries in the General Journal and prepare Balance Sheet, if Qasim invest sufficient cash to acquire 1/3 interest in the partnership. After revaluation of other assets, assume that the other assets are to be realized at a value of Rs.220,000.

SOLUTION:

3. NON-PROFIT CONCERN:

The following information is provided by Hamid Sports

3. NON-PROFIT CONCERN

Additional information at December 31, 2010:
(i) Prepaid Salaries 3,000
(ii) Accrued Rent Revenue 5,000
(iii) Accrued Utilities expense 4,000

REQUIRED: Prepare income and expenditure account for the year ended December 31,2010.

SOLUTION:

3. NON-PROFITCONCERN

4. SINGLE ENTRY:

Mr. Shareef started his business on January 1st, 2010, with an investment of Rs.250,000 and kept his business accounting records on single entry basis. On December 31, 2010, the following information is available from the accounting records:

Cash                                60,000
Merchandise Inventory  80,000
Accounts Receivable     70,000
Equipment .                   140,000
Accounts Payable          30,000
Notes Payable                20,000

Supplementary Data for the adjustment On 31.12.2010.
(i) Withdrew Rs.1,000 per month cash from the business for his personal use.
(ii) Depreciation on equipment is Rs.15,000.
(iii) Allowance for Bad Debts at 5%of Accounts Receivable.
(iv) Prepaid salary is Rs.3,000.
(v) Accrued Rent is Rs.4,500.

REQUIRED: Prepare statement of profit and loss for the period ended on 31.12.2010

SOLUTION:

4. SINGLE ENTRY
5. CORPORATION  – ISSUANCE OF SHARES AND DEBENTURE:

The following transactions were completed by Amjad Co. Ltd. (the per value of share is Rs.10 each).
(i) Company offered to’ public 50,000 ordinary shares at per. The company received applications for 70,000 shares at Rs.15 per share. Company allotted the shares offered and refunded the amount received in excess.
(ii) The company purchased machinery for Rs.130,000 and in consideration issued to the vendor, its own 11,000 ordinary shares of Rs.10 each.
(iii) The company issued 8,000 Debentures of Rs.100 each, redeemable after five years at Rs.110 each. All debentures were subscribed.
(iv) Paid for preliminary expenses Rs.25,000.

REQUIRED: Give entries in General Journal of the Company to record the above transactions.

SOLUTION:

5. CORPORATION  - ISSUANCE OF SHARES AND DEBENTURE

6. COMPANY – RETAINED EARNING:
The following balances appeared in the ledger of Aqeel Company. Ltd. On December 31,2010.
500,000.Ordinary shares of Rs.10 each 50,00,000
Retained Earning un-appropriated 14,00,000
On this date, the CompOany decided as under:
(i) To declare cash dividend at 15% on ordinary shares.
(ii) To declare stock dividend at 10% on ordinary shares.
(iii) To appropriate Rs.70,000 for contingencies.
(iv) The Company’ was informed by its banker that cash dividend was collected by .400,000 ordinary shareholders on December 31,2010.

REQUIRED: Give entries in General Journal in proper form on the books of Aqeel Company Ltd. to give effect to the above decisions.

6. COMPANY - RETAINED EARNING

7. DIVISION OF NET INCOME OR LOSS:
Tariq, Shams and shahab are partners with fixed capitals of Rs.160,000, Rs.180,QOOand Rs.260,000 respectively,
The partnership agreement provides as under:
(i) Commission paid to Tariq Rs.50,000 per annum.
(ii) Salary is allowed to Shams Rs.70,000 per annum.
(iii) Interest on beginning capital of partner is to be charged @ 12% per annum.
(iv) Remaining profit or loss to be distributed equally. The income statement for the year ended December 31, 2010 showed a Net loss of Rs.138,000.

REQUIRED: Prepare Income distribution Summary and
also record the necessary journal entries.

SOLUTION:

7. DIVISION OF NET INCOME OR LOSS

8. PARTNERSHIP – LIQUIDATION:

Akhter and Hafeez are partners sharing profit and losses in the ratio of 2:1 respectively. On January 5th , 2011 they decided to dissolve their firm. On this date, their balance sheet showed as follows:

Assets                                              Equities
Cash 60,000                           Accounts Payable 50,000
Merchandise Inv. 40,000       Notes Payable 10,000
Supplies  50,000                    Akhter Capital 140,000
Fixed Assets 150,000            Hafeez Capital 100,000

The partners realized RS.90,000 from the sales of assets (Except Cash) and paid the liabilities in full,

REQUIRED: Make necessary entries in general journal relating to the liquidation of the firm till final settlement of accounts of the liabilities and payment of partners.

SOLUTION

8. PARTNERSHIP - LIQUIDATION

SECTION C (DETAILED -ANSWER QUESTION)

NOTE: Attempt any Two part questions.

9. DEPRECIATION:
(a) On January 5th 2011 Zain Company purchased a machine having list price of Rs.200,000, subject to a trade discount of 4%. The credit terms were 2110, n/30. The payment was made on January 12th 2011 and the following expenditure was incurred:
Sales Tax                                1,840

Trans ortation in                     4,000
Insurance in-transit               10,000
Two years fire insurance       6,000
Installation Cost                     15,000
During the installation work, the machine was damaged and repair cost                                        9,000
REQUIRED: Compute the cost of machine and prepare General Journal entries.
SOLUTION:

TOTAL COST

List price                                                     2,00,000
Less: Trade Discount (200,000 x 4%)              8,000
Invoice Cost                                                1,92000
Less: Cash Discount (192,000 x 2%)             3,840
1,88,160

Add: Sales tax                                              1,840      
Net cash price                                            1,90,000
Add: Other Expenses:
Transportation                               4,000
Insurance in Transit                     10,000
Installation cost                            15,000
Total Other Expenses                                    29,000
Total cost of Machine                                  2,19,000

9. DEPRECIATION
(b) On April 5th, 2009 Aziz Company Ltd. purchased equipment Rs.220,000 with useful life ten,years. The company applies 20% rate for charging depreciation under straight line.

REQUIRED: (i) Calculate the amount of depreciation on December 31, 2009 and 2010.
(ii) Make Entries in General Journal for depreciation on December 31,2009 and 2010.

SOLUTION:

9. DEPRECIATION

(c) Wazeer Company purchased Machinery on July 1, 2008 at a cost of Rs.400,000. It is estimated that the machinery will have scrap value Rs.40,000. It is also estimated that the machinery will produce approximately 450,000 units. During the year 2008, 30,000 units produced.

During the year 2009, 60,000 units produced.
During the year 2010,80,000 units produced.

REQUIRED:
(i) Compute the depreciation expenses for the year ended on December 31,2008,2009, and 2010.

(ii) Set up T-accounts Depreciation Expenses and Allowances for Depreciation for the year 2008, 2009 and 2010. Close and balance the account.

SOLUTION:

9. DEPRECIATION

Posted on December 29, 2015 in 2nd Year 2011 Karachi Board Past Papers

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