Lovely Professional University

MGT154 MODREN FINANCIAL ACCOUNTING B

TIME: 1 hr 30 min Max Marks: 50

This paper contains 4 questions

Answer all questions.

Q1. All questions are compulsory:

(a) Difference between Liabilities and Assets
(b) How Book-keeping is different from Accounting?
(c) Accounting Equation
(d) Difference between Balance Method & Total Method.
(e) Pass the journal entry.
(i) Purchased goods worth Rs.5000 less 20% trade discount and 5% cash
discount.
(ii) Paid Income Tax Rs.3000 (5*4=20)

Q2. “Accounting Principles are a general law or rule adopted or professed as a guide
to action, a settled ground or basis of conduct or practice.” Keeping in view this
statement discusses the various Accounting principles. (1*10=10)

Q3.”In Trial Balance, the balances of all accounts are accurate arithmetically but it is
a not a conclusive proof of correctness of accounts.” Comment. (1*10=10)

Q4. X Ltd. started business with the following assets and liabilities:
Rs.
Jan 1 Cash in Hand 20,000
Stock in Hand 25,000
Debtors: Khanna Bros. 20,000
Nirman & Co. 15,000
Creditors: Kirpal Bros. 10,000
Mitra & co. 5,000
Jan 2 Sold goods to Mr. Sudhir subject to a trade discount of 10% 10,000
Jan 4 Received from Nirman & Co. in full settlement 14,500
Jan 8 Settled Mitra Sen & Co’s account deducting 5% for cash discount 5000
Jan 10 Purchased Stationary articles 100
Jan 12 Returned goods to kirpal Bros. and received their credit note 2000
Jan 16 Withdrawn cash for household expense 400
Jan 21 Cash withdrawn from bank for office use 200
Jan 25 Rs.300 were written off as bad debts last year but this year Rs.150 out of that
were received.
Jan 28 Salaries paid 300
Rent paid 150
(1*10=10)