BBA208 - FINANCIAL ACCOUNTING

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DRIVE

SPRING 2017

PROGRAM

BBA

SEMESTER

II

SSUBJECT CODE & NAME

BBA208 - FINANCIAL ACCOUNTING

Assignment Set -1

1. X, Y & Z were partners sharing profits and losses as 4:3:2. Their Balance Sheet as on 31.03.2016 were as under :

Liabilities	Rs.	Assets	Rs.
Capital: A 80,000 B 60,000 C 40,000	1,80,000	Freehold Premises Building Machinery	90,000 45,000 90,000
Reserves	90,000	Investments	18,000
Overdraft	18,000	Inventories	27,000
Creditors	9,000	Receivables	27,000
Bills Payable	9,000	Cash	9,000
	3,06,000		3,06,000

Z expired on 1st April 2016. So, the assets are revalued and liabilities re-assessed as follows:

i)                   Create a provision for doubtful debt Rs. 800.

ii)                Building & investment is to be appreciated by 10 %.

iii)              Machinery is to be depreciated by 5 %.

iv)               Goodwill of the firm is to be valued at Rs. 27,000.

The balance due to Z will be transferred to his executor’s loan account which will carry an interest of 10 % p.a. Prepare Revaluation Account, Capital Accounts and the Balance Sheet of new firm after adjustments.

Answer: Revaluation Account

Particulars	Amount	Particulars	Amount
To provision for doubtful debt	800	By Building	4500
To Machinery	4500	By Investment	1800

2. How will you differentiate between Trade discount and Cash discount ?

Narrate the main divisions and classes of share capital.

Answer: Differences between trade discount and cash discount

Trade discount

Cash discount

3. Write short notes on :

i) Issue of Bonus shares

ii) Re-issue of forfeited shares at a discount

iii) Buy back of shares

iv) Alteration of share capital or share split

v) Redemption of preference shares

Answer: i) Issue of Bonus Shares

As an alternative to cash dividends, companies at times give away free shares to their shareholders when they are short of cash and don't want to upset shareholders that expect a regular income. Shareholders can then sell the bonus shares to meet their liquidity requirements. Bonus shares are also issued to restructure company reserves. Issuing bonus shares does not

Assignment Set -2

1 From the ledger balances as on 31st March 2016 show treatments in Profit and Loss Account and in Balance Sheet.

Debtors: 50,000; Bad Debts: 3,000; Discount Allowed: 2,000;

Creditors: 30,000; Provision for Discount on Creditors: 400; Discount Received 300

Adjustments:

i)                   Create a provision for Bad Debts @ 10 % on Debtors

ii)                Create a provision for Discount on Debtors @ 5 %

iii)              Additional discount given to Debtors Rs. 1,000

iv)               Create a provision for discount on Creditors @ 2 %.

From the ledger balances and adjustments as above, show treatments in:

Profit and Loss Account and Balance Sheet

Answer: Profit and loss account for the year ended 31st March, 2016

Particulars

Amount (Rs)

Particulars

Amount (Rs)

2. Explain Bill of exchange and the procedure for recording bills in the books of drawer and accepter when the bill is : Accepted and discharged.

i) Explain bill of exchange

ii) Journal entries in the books of drawer

iii) Journal entries in the books of acceptor

Answer: Bill of exchange: It is a written documentary evidence that contains an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or the bearer of the instrument.

In the Books of the Drawer:

When a bill is drawn

3. Explain the Depreciation Accounting procedure and concept taking AS-6 into consideration.

Answer: Accounting Standard-6 deals with depreciation accounting and applied to all depreciable assets. As per Paragraph 3.1 of the Standard, Depreciation is defined as “a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effusion of time or obsolescence though

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