Financial Accounting I – Spring, 2016
This is the question set along with answers Financial Accounting I Spring 2016, which was taken by the Pokhara University.
Pokhara University – Financial Accounting I Spring 2016
|Level: Bachelor||Semester –Spring||Year: 2016|
|Program:BBA/BBA-BI/BBA-TT/BCIS/BHCM||Full Marks: 100|
|Course: Financial Accounting I||Pass Marks: 45|
Very Short Answer Questions
Attempt all the questions.
- What is Financial Accounting?
- What do you understand by NSF cheques?
- What are revenues?
- Explain the Business Entity Concept of accounting.
- Describe Cash equivalents.
- What do you mean by source document?
- White the purpose of trial balance.
- A company started with Rs.500000 capital. At the end of the year, it has Rs.600,000 total assets Rs.50,000 liabilities and during the year, it earned Rs.200,000 net profit. Find the amount of dividend distributed during the year.
- Prepare closing entry for the following revenue.
Servie revenue Rs.250,000 Interest received Rs.20,000 Dividend received Rs.10,000
- Determine the cash flow from operating activities using the indirect method from the following items of the income statement and comparative balance sheet of a company:
Net Profit for the year Rs.200,000
Depreciation Expenses Rs.20,000
Gain on sale of investment Rs.10,000
Increase in account receivable Rs.15,000
Decrease in Inventories Rs.25,000
Descriptive Answer Questions
Attempt any six questions.
- Presented below the trial Balance of ABC Co. as of Dec 31, 2015.
ABC Co. Ltd. Trial Balance, 31st Dec. 2015
Salaries are 80% selling and 20% administrative.
Rs.15,000 of note payable are payable next year.
Gas and oil expenses are selling expenses.
Retained Earnings at the beginning was Rs.67,800.
a) Income Statement for the end of December 31, 2015.
b) Statement of retained earnings for the end of December 31, 2015.
c) Prepare a balance sheet on December 31, 2015.
- Pokhara Architects incorporated as licensed architects on April 1. 2013. During the first month of its operation, the following transaction occurred:
April 1: Recruited a receptionist in terms of Rs.5,000 per month salary.
April 2: Owners contributed Rs.250,000 cash to incorporate the business.
April 3: Purchased office supplies of Rs.5,000 from Spring Supplier
April 5: Signed promissory note at bank At the rate of 6% payable at end of three years from today Rs.15,000.
April 7: The completed blueprint of a carport and billed client of Rs.50,000.
April 15: Paid loan Rs.6000 and interest of Rs.75.
April 16: Received Rs.10,000 from Customer.
April 21: Paid Amount due Rs.3,000 to Spring Supplier.
April 30: Paid Rs.5,000 to the receptionist for the month’s salary.Required:
Journalize the transaction and post to respective T accounts and then prepare the trial balance of Pokhara Architects dated on April 30, 2013.
- XYZ variety, a leading service firm providing a variety of services in the western region. A trail Balance on 30thAshad 2072, before recording any adjusting entries, provided as follows:
Unadjusted Trial Balance
a) Depreciate fixed assets by 10%
b) Supplies in hand Rs.2,000
c) Outstanding office expenses Rs.2,000
d) Prepaid salaries Rs.3,000
e) Provision for bad debts 5%
a) Adjusting Entries.
b) Prepare a 10-column worksheet.
- The following information has been assembled for the purpose of preparing April 30, 2015, Bank reconciliation statement of XYZ co.
i. The Balance in cash as reported as of April 30, 2015, Bank statement is Rs.5654.98, and as company’s book rivals same as Rs.4,165.66.
ii. XY co. made a deposit of Rs.865 on April 30 that is credited by the bank on the 3rd of May.
iii. The cheques issued on April 15 worth Rs.236.77 and Rs.116.80 were presented for payment only on May 5th, 2015.
iv. XYZ co rents some excess storage space in one of its warehouses, and the tenant pays its monthly rent directly to the bank for deposit in XYZ Co.’s account. The bank statement indicates that a deposit of Rs.1,500 was made during the month of April.
v. Interest earned on the chequing account and added to XYZ co.’s account during April is 11.75.
vi. A Customer cheque for Rs.15 was returned with the bank statement marked “NSF”.
vii. Comparison of cheque counterfoils with the bank statement showed that cheque of Rs.56 paid to the supplier was recorded by the Company’s accountant as a cheque of Rs.560.
Prepare a bank reconciliation statement for ZYZ co. as of 30th April. And also pass necessary journal entries. How much cash would be presented on the balance sheet on 30th April?
- What do you understand by the annual report of a company? Briefly explain the major components of an annual report.
- What are financial statements? Describe their objectives.
- What is the qualitative characteristic of accounting information? Explain.
Read the scenario and answer the question that follows.
- Comprehensive Answer Question
The comparative balance sheets and income statement of Sunrise Trading company are as follows:
For the year ending 2012
a) Prepare cash how statement for the year 2012 using the direct method for cash how for operating activities section.
b) The president of the company has asked you some questions about the year’s result. He is a bit impressed with the profit margin but he is bothered, however, by the not increase enough balance of cash during the year. In this regard write a paragraph to the president to explain why the cash balance is not increasing as much as the net profit earned during the year.
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