IGNOU ASSIGNMENT, FINANCIAL ACCOUNTING (BCOC - 131), SOLVED PAPER – (2024 - 25)| (B.COM) (GENERAL/ CBCS)| ENGLISH MEDIUM
TUTOR MARKED ASSIGNMENT
COURSE CODE: BCOC-131
COURSE TITLE: FINANCIAL ACCOUNTING
ASSIGNMENT CODE: BCOC-131/ TMA/ 2024-25
COVERAGE: ALL BLOCKS
Maximum Marks: 100
Note: Attempt all the questions.
Section-A
(Attempt all the questions. Each question carries 10 marks.)
1. Explain the objectives of Accounting and briefly describe the qualitative characteristics of accounting information. 10
Ans:- Objectives of accounting and the qualitative
characteristics of accounting information are essential components of financial
reporting and decision-making processes within businesses.
Objectives of
accounting:
Accounting
serves several fundamental purposes that are important for the effective
management and operation of a business:-
(i)
Recording financial transactions: The primary purpose is to record all
financial transactions systematically. This ensures that each transaction is
documented properly, which is important for the preparation of financial
statements.
(ii)
Determining profit or loss: Accounting helps to calculate the net profit or
loss at the end of an accounting period through the preparation of profit and
loss accounts. This provides insight into the financial performance of the
business.
(iii)
Ascertaining financial position: It is important to assess the financial
position of the business, which is done through the balance sheet. This
statement shows the value of assets, liabilities and equity at a specific point
in time.
(iv)
Assisting management: Accounting provides essential information that
assists management in decision-making, budgeting and forecasting, thereby
increasing operational efficiency.
(v)
Facilitating compliance: Ensuring that financial reports comply with legal
and regulatory requirements is important. This increases trust with
stakeholders and helps avoid legal issues.
(vi)
Detecting errors and fraud: A systematic accounting process helps identify
and prevent errors and fraud, thereby protecting the financial integrity of the
business.
(vii) Communicating information: Accounting serves to communicate financial information to various users, including owners, investors and regulatory authorities, enabling them to make informed decisions.
Qualitative
characteristics of accounting information:
The
qualitative characteristics of accounting information enhance its usefulness to
users. These characteristics include:-
(i)
Reliability: Accounting information should be reliable and verifiable. It
should accurately reflect the financial position and performance of the
business, allowing users to rely on the data presented.
(ii)
Relevance: Information should be relevant to the decision-making needs of
users. It should provide insights that can influence decisions, avoiding
redundant or extraneous data.
(iii)
Comprehensibility: Information should be presented clearly and logically,
so that it is accessible to users who may not have advanced knowledge of
accounting principles.
(iv)
Comparability: Financial statements should allow comparisons to be made
over time and across similar entities. This helps users assess performance
trends and make informed evaluations.
(v) Faithful
presentation: Accounting information should provide a true and fair view of
the financial position of the business, ensuring completeness and accuracy in
reporting.
These
objectives and characteristics are integral to the practice of accounting,
ensuring that it effectively supports business operations and decision-making
processes.
2. What do you mean by principle of double entry? Give
the rules of debit and credit with suitable examples. 10
Ans:- The principle of double entry is a fundamental
concept in accounting that dictates that every financial transaction affects at
least two accounts, thereby ensuring that the accounting equation (Assets =
Liabilities + Equity) remains balanced. This method requires that for every
debit entry made, there is a corresponding credit entry of equal value,
capturing the dual aspect of each transaction.
Rules of
Debit and Credit:
The rules of
debit and credit are classified based on the type of accounts involved. The
three main types of accounts are real, personal and nominal accounts, each of
which has specific rules:-
(i) Real Accounts:
Rule: Debit what comes in; credit what goes out.
Example: If a
company buys machinery, the Machinery account is debited (increased), and if it
sells machinery, the Machinery account is credited (decreased).
(ii)
Personal Accounts:
Rule:
Debit the receiver; credit the giver.
Example:
If a business makes a payment to a creditor, the creditor's account (recipient)
is debited, and the cash account (payer) is credited.
(iii)
Nominal accounts:
Rule: Debit
all expenses and losses; credit all incomes and gains.
Example: If
a business pays rent, the rent expense account is debited, and if it receives
interest income, the interest income account is credited.
Example:-
Here are
practical examples demonstrating the application of the double entry
principle:-
(i) Initial
capital:
Transaction:
Mr Chidera started a business with N10,000.
Entries:
Debit:
Cash account (N10,000)
Credit:
Capital account (N10,000)
(ii) Rent
payment:
Transaction:
Paid N450 cash for rent.
Entries:
Debit: Rent
Expense Account (N450)
Credit:
Cash Account (N450)
(iii)
Purchase of Office Equipment:
Transaction:
Purchased office equipment for N600,000 by cheque.
Entries:
Debit: Office
Equipment Account (N600,000)
Credit:
Bank Account (N600,000)
(iv)
Withdrawal for Personal Use:
Transaction:
Withdrew N2,000 by cheque for personal use.
Entries:
Debit: Drawing
Account (N2,000)
Credit:
Bank Account (N2,000)
(v) Loan
Received:
Transaction:
Received a loan of N20,000 cash.
Entries:
Debit: Cash
Account (N20,000)
Credit:
Loan Account (N20,000)
These examples
demonstrate how each transaction affects two accounts, maintaining the balance
required by the double entry system. By following these principles, businesses
can ensure accurate financial reporting and increase the reliability of their
accounting records.
3. What is meant by convergence to IFRS? Explain and
distinguish between Indian AS and International AS. 10
***
[FULL UP TO DATE COMING SOON]
IGNOU PAGE LINK - CLICK HERE
Also Read: