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

SECTION “A” (MULTIPLE CHOICE QUESTIONS)

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

(i) Capital at end – Gross Profit + Drawings := :
* Capital at start
* Interest on Loan
* Net Profit
* interest on Capital

(ii) Negative Retained Earning means:
* Net loss
* Gross Profit
* Net Profit
* None of these

(iii) The periodic distribution of profit, by a company in the form of cash, is called;
* Stock Dividend
* Cash Dividend
* Liquidating Dividend
* Property Dividend

(iv) In admission of new partner:
* the partnership agreement is amended
* nature of business is changed
* the partnership agreement remains the same
* None of these

(v) General reserves is/are classified as:
* Assets
* Liabilities
* None of these
*. Share holder’s equity

(vi) The amount mentioned in Memorandum of Association is called:
* Authorized Capital
* Subscribed Capital
* Issued Capital
* Reserve Capital

(vii) This is/These are Natural Resource(s):
* Machinery
* Patents
* Trade marks
* Fisheries

(viii) This account is not included in newly formed business:
* Cash
* Allowance for bad debts
* A/c. receivable
* Allowance for depreciation

(ix) Accumulated depreciation in accounting is called:
* Reserve
* Contra asset
* Surplus
* Expense

(x) This item is not an income in non-profit concerns:
* Government grant
* Donation
* Interest on Loan
* Subscription

(xi) Revaluation means:
* Assets are revalued
* Liabilities are revalued
* Assets and Liabilities are revalued
* Equities are revalued,

(xii) The statement of affairs shows:
* Capital
* Purchases
* Sales
* All of these

(xiii) This account is not closed at the end of accounting
* period:
* Retained Earning
* Purchases Sales
* None of these

(xiv) Debentures are the certificate of:
* Receipts of loan acknowledgement
* Medical for company’s employees
* Ownership
* None of these

(xv) This is not shown in the shareholder’s equity section of balance sheet:
* Ordinary Share Premium
* Ordinary Share Capital
* Retained Earning
* Dividend Payable

(xvi) Realization Account, operated by partnership business, is called: .
* Asset
* Temporary Account
* Contra asset
* None of these

(xvii) This is/ these are Intangible Asset(s):
* Automobile
* Tools
* Goodwill
* Fixtures

(xviii) The entire amount of new partner’s investment is to be credited by:
* Bonus Method
* Goodwill Method
* Purchase Method
* Revaluation Method

(xix) This is prepared under the fixed capital method:
* Capital Account
* Current Account
* Capital Account & Current Account
* None of these

(xx) The deficit balance in terms of Income and Expenditure account is best indicated by:
* Excess on Income over Expenditure
* Excess of Receipt over Payment
* Excess of Payment over Receipt
* Excess of Expenditure over Income

SECTION B (SHORT- ANSWER QUESTIONS)

NOTE: Attempt any Five questions.

2. Single Entry:
Mr. Asim started a business with cash investment of Rs.900,000. He keeps his accounting record in single entry basis. On December 31, 2010 the following information was obtained from his accounting records:
Cash at Bank                                   Rs. 100,000
Accounts Receivable                       Rs. 450,000
Merchandise Inventory                    Rs. 320,000
Building                                            Rs.1500,000
Account Payable                              Rs. 370,000

Additional information on December 31.2010:
(i) He paid utility bills Rs.15.000 per month for his residence.
(ii) He sold a personal flat costing Rs.4,50,000 for Rs.12,00,000 cash and invests into business.
(iii) Bad debts were estimated at 5% of Alc. Receivable.
(iv) Depreciation was estimated at 10%on building.

REQUIRED:
Prepare Statement of Affairs as on December 31,2010.
(Adjusted loss of Asim Traders for the year ended December 31,2010 was Rs.92,500).

SOLUTION:

2. Single Entry

3. Accounting for Non-Profit Concerns:

Following is the information provided by Khalid Sports Club:
Cash in hand RS.5,000,Cash at bank Rs.50,000,Ground Rent Rs.40,000, Entrance fee Rs.10,000, Miscellaneous expenses Rs,3,000, General expenses Rs.21,000, Postages and Printing Rs.7000, Closing Cash Balance Rs.2,000, Subscription Rs.35,000, Donation Rs.100,000; taxes Rs.8,000, Secretary’s Salary Rs.65,000, Utility expense Rs.9,000, Sale of tickets Rs.72,000.
REQUIRED: Prepare Income and Expenditure Account.

SOLUTION:

3. Accounting for Non-Profit Concern

4. Partnership – Formation:

Shahrukh & Shahzib formed the partnership on January 1,2007. The partners invest the following assets:
                                                   Shahrukh           Shahzaib
Cash                                          Rs.140,000         Rs.170,000
Land                                          Rs. 20,000           Rs. —-
Building                                    Rs.   —-               Rs.180,000
Equipment                                Rs. 80,000           Rs. —-  

REQUIRED:
Record the above transactions in General Journal.

SOLUTION:

4. Partnership - Formation

5. Partnership – Admission and Division of Net profit:

On Jan. 1, 2010 the capital balances of Amjad were Rs.26,000 and Shehzad Rs.24,000. The net income was Rs.30,000 for 2010. The salary was Rs.12,000 for Amjad and Rs.10,000 for Shehzad. The remaining balance was distributed equally. On January 5, 2011, Rahim is admitted with 35% capital interest by cash investment of Rs.40,000.

REQUIRED:
(i) Prepare Income Distribution Summary.
(ii) Record admission of Rahim (use Bonus method).

SOLUTION:

5. Partnerthip - Admission and Division of of Net profit

 

6. Company. Issuance of Shares and Debentures:

Umer Company Ltd. issued the following Share and Debentures having par value of Rs.10 and Rs.100 each.
(i) The company received applications for 200,000 ordinary share of Rs.10 each. Allotment letters were issued for 150,000 shares and the excess subscription amount was refunded.
(ii) The promoters paid Rs.20,000 for printing of Memorandum of Association of the company.
(iii) A computer was acquired by issuing 4,000 ordinary shares of Rs.10 each fully paid up. The market price per share was Rs.18.
(iv) Issued 3000, 14% 5 years debentures of Rs.100 each at per redeemable after 5 years at Rs.105.

REQUIRED:
Give entries in the General Journal of the Company.

SOLUTION:

6. Company. Issuance of Shares and Debentures

7.Partnership – Liquidation:

Erum & Company’s balance sheet on September 30,2010 was as under:

7.Partnership - LiquidationErum and Kiran share profit/losses in the ratio of 3:2 respectively. On September. 30, 2010 they liquidated their partnership business. Other assets are sold for Rs.150,000 . cash.
REQUIRED: Prepare the necessary entries to record the

Liquidation of the partnership.

SOLUTION:

7.Partnership - Liquidation

8. Company – Retained Earnings:
Few transactions were posted in Retained Earnings Accounts of Irfan & CO.

8. Company - Retained Earnings

REQUIRED: Prepare journal entries from above ledger.

SOLUTION:

8. Company - Retained Earnings

SECTION “C” (DETAILED -ANSWER QUESTION)

NOTE: Attempt any Two pa,rt questions

9. DEPRECIATION:
(a) Shamim Ltd. purchased a machine on February 28,2007 at a price of Rs.400,000. Its residual value was estimated @20%. The life is to be estimated in 5 years, in units 32000 and in hours 64000. The company’s year ended Dec. 31, each year:

REQUIRED: Determine the depreciation on machine for 2007,2008 and 2009 under the following:

(i) Working hours operated: (year 2007, 1500 hours, year 2008, 2500 hours and year 2009, 2000 hours).
(ii) Production units; (Year 2007, 7500 units, year 2008,8500 units and year 2009, 6700 units).
Note: Present year data separately for each method in the foIIowing form.

9. DEPRECIATION

SOLUTION:

9. DEPRECIATION

(b) On April 5, 2011 the Hamdam & Co. purchase a machine. It has estimated useful life of 6 years with salvage value Rs.10,000. The company uses Straight Line Method for the year ended June 30. The following expenditures were incurred on it.
(i) Invoice price 550,000
(ii) Clearing and Forwarding Charges 10,500
(Iii) Transit Insurance 7,500
(iv) Sales Tax @ 17%
(v) Federal Excise duty @ 2.5%
(vi) Income tax @ 5%
(vii) Custom duty @25%
REQUIRED:
(i) Compute the total cost of machine.
(ii) Set up machine cost account.

SOLUTION:

9. DEPRECIATION

(c) On Oct, 1, 2007 Naeem & Company purchased a machine at a cost of Rs.200,000 which y.tas expected to be sold for Rs.40,000 after its estimated useful life of 4 years. The company follows calendar year as its accounting period.

REQUIRED:
(i) Compute annual depreciation expenses from 2007 to 2010 by 30% diminishing balance method.
(ii) Prepare adjusting journal entries on Dec.31, 2007 & 2009
(iii) Prepare closing journal entries for the depreciation on Dec. 31, 2008 , 2010.
(iv) Prepare partial Balance sheet on Dec. 31, 2010.

SOLUTION:

9. DEPRECIATION

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

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