IGNOU| ACCOUNTANCY-I (ECO - 02)| SOLVED PAPER – (DEC - 2022)| (BDP)| ENGLISH MEDIUM
BACHELOR'S DEGREE PROGRAMME
(BDP)
Term-End Examination
December, 2022
(Elective Course: Commerce)
ECO-02
ACCOUNTANCY-I
Time: 2 Hours
Maximum Marks: 50
Note: Attempt any four questions including question
no. 1 which is compulsory.
हिंदी माध्यम: यहां क्लिक करें
1. From the following transactions, make accounting equation and prepare the Balance Sheet: 14
(i) Ram started
business with cash - 70,000
(ii) Purchased
goods for cash - 25,000
(iii) Purchased
goods on credit - 15,000
(iv) Purchased
furniture for cash - 5,000
(v) Paid rent -
4,000
(vi) Received
commission - 600
(vii) Withdrew
cash for personal use - 2,000
(viii) Sold
goods on credit (cost price 30,000) - 35,000
(ix) Paid to
creditors - 10,000
2. Explain the following concepts with suitable examples:
6, 6
(i)
Consistency concept
Ans:- The
concept of consistency, or consistency principle, states that once a business
decides on a particular method for treating an accounting item, it will treat
all similar items the same way in the future. The purpose of the consistency
concept is to ensure that transactions or events are recorded in the same way
from one accounting year to the next.
The concept
of sustainability applies to various accounting methods, such as:-
(i) Cash versus
accrual accounting
(ii) Using LIFO
vs FIFO methods
The concept of
sustainability is important because it allows users of financial statements to
draw meaningful conclusions from the data. For example, when a company needs to
borrow money, seek investors for expansion, or take their company public, their
financial statements and accounting methods will be reviewed.
The concept of
sustainability is a term that you may come across if your financial statements
are ever audited.
According to
the concept of consistency, once a business decides on a particular method for
treating an accounting item, it will treat all similar items the same way in
the future.
(ii) Full
disclosure concept
Ans:- The
full disclosure principle is a concept that states that a company should
disclose all material information related to finances to its shareholders. It
includes information about their assets, liabilities, revenues and expenses.
The full
disclosure principle suggests that a business should record all necessary
information in its financial statements, so that users who are able to read the
financial information are in a better position to make important decisions
regarding the company.
The
interpretation of this principle is highly judgmental, as the amount of
information that can be provided is potentially very large.
Congress and
the SEC realize that full disclosure laws should not increase challenges to
companies raising capital through offerings of stock and other securities to
the public.
The full
disclosure principle refers to the concept that suggests that a business should
record all necessary information in its financial statements, so that users who
are able to read the financial information are in a better position to make
important decisions regarding the company. Be. Happen.
Full
disclosure is particularly beneficial to creditors and investors. Disclosure of
financial information helps in decision making. The information is readily
available to investors and creditors in the financial statements or as a note
at the end of the financial statements.
A company may
have various stakeholders including creditors, suppliers, customers, investors,
etc. who use financial information to make decisions about actions to be taken
regarding their stance in the business.
Since external
users of financial information have no information about how a business is run,
the full disclosure principle makes it easier to determine how a company is
performing.
Components of
Disclosure of Information:
Following
are some of the information that may be disclosed in the financial statements:-
(i) To accept any
change in accounting standards or principles.
(ii) Accounting
policies that are followed
(iii) Presenting
all financial statements in detail
(iv) Details on
the level of inventory of the business.
(v) The nature of
the relationship between the related party/parties of the business and the
organisation.
(vi) To disclose
the nature of non-monetary transactions.
(vii) Circumstances
mitigating goodwill.
3. Under what circumstances would an accountant prepare
Bills Receivable Account and Bills Payable Account while preparing Final Accounts
from incomplete records? Clarify. 6, 6
Ans:- An accountant will prepare a bills
receivable account to ascertain the balance of bills received while
preparing final accounts from incomplete records.
Accountants
require the following data to prepare accounts:-
(i) Opening
and closing balance of bills receivable
(ii) Bills
receivable received during the year
(iii) Bills
receivable collected during the year
(iv) Bills
receivable dishonored
The opening and
closing balance of bills receivable are usually given.
An accountant
will prepare final accounts from incomplete records when:-
(i) The business
is practicing an unconventional accounting system, such as a single-entry
system
(ii) Accounts
are lost or incomplete
(iii) Loss due
to fire or theft
Accounts
receivable is an asset account on the balance sheet that represents money owed
to a company in the short term. Accounts receivable are created when a company
lets a buyer purchase its goods or services on credit.
An
accountant can prepare a Bills Payable Account to know the balance of bills
payable. A bill payable is a written promise to pay a creditor a certain amount
at a future date. When a business purchases goods or services on credit, it is
recorded in a bills payable account.
Bills Accounts
Payable can also help in locating missing items like:-
(i) Opening or
closing balance of bills payable
(ii) The
amount of B/P honoured
(iii) B/P
dishonoured
An entry on the
credit side of a Bills Payable account increases the company's payment
liability, while a debit liability reduces the amount.
Reasons for
incomplete records include:-
(i) Inadequate
systems
(ii) Loss by
fire or theft
(iii) To assure
the income tax authorities about the computed income
Bills Payable
Account can also help in locating missing items like opening or closing balance
of bills payable, amount of B/P paid, B/P rejected etc. provided data of all
other items including accepted B/P is available.
4. Desai of Delhi consigns goods to Mukherjee of Kolkata to
be sold at or above invoice price. Mukherjee is entitled to a commission of 10%
on sales at invoice price and 30% of any surplus realized beyond invoice price.
Mukherjee accepted a bill of exchange drawn by Desai amounting to 60% of the
invoice price. During the year 2020 goods consigned by Desai were involved at
2,00,000 and the cost of such goods was ` 1,50,000 (including freight) to
Desai.
Sales made by Mukherjee during the year amounted to ` 1,85,000.
On 31st December, 2020, goods unsold with Mukherjee represented at invoice
value of ` 40,000. During the year Desai had received from Mukherjee ` 35,000
by bank drafts, certain remittances being in transit on 31st December, 2020.
Prepare necessary Ledger Accounts in the books of both the parties. 12
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