Xi - Accounting: Private

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2011
XI – ACCOUNTING
PRIVATE
Compiled and Solved by:
S.Hussain
Compiled & Solved by: S.Hussain
A4accounting@hotmail.com
ACCOUNTING – 2011
PRIVATE
Time: 20 Minutes Max. Marks: 20
SECTION “A” (MULTIPLE CHOICE QUESTIONS)
Note: (i) This section contains of 20 part questions and all are to be answered. Each question carries
equal marks. (ii) Do not copy down the part question in your answer book. Write only the answer in
full against the proper number of the question and its part. (iv) The code of your question paper
must be mentioned in bold letters in the beginning.
Q.No.1 Choose the correct answer for each from the given options:
(1) The owner’s equity in the business arises from these two sources:
(a) Net income and cash.
(b) Net profit and drawings.
(c) Net profit and additional investment.
(d) All of these.
(2) This account has a credit balance:

(a) Bank overdraft.
(b) Sales discount.
(c) Office supplies.
(d) Unexpired insurance.
(3) The act of totaling of money columns of an account is called:

(a) Posting.
(b) Ruling.
(c) Footing.
(d) Balancing.
(4) The term “Accounting Period” means the span of time covered by:
(a) Income statement.
(b) Balance sheet.
(c) Cash flow statement.
(d) All of these.
(5) Gross profit is:

(a) Excess of sales revenue over cost of goods sold.
(b) Cost of goods sold plus opening stock.
(c) Sales less ending stock.
(d) Net profit less expenses.
(6) Accounts are un-dated at the end of accounting period by:

(a) Correcting entry.
(b) General entry.
(c) Opening entry.
(d) Adjusting entry.
XI – Accounting – 2011 (Private) Page 2

(7) Bad debts expenses are:

(a) Selling expenses.
(b) Administrative expenses.
(c) Operating expenses.
(d) Preliminary expenses.
(8) Depreciation expense includes:

(a) Non – cash expense.
(b) Cash expense.
(c) Prepaid expense.
(d) All of these.
(9) Supplies on hand on Jan. 1, Rs.140, supplies purchased during the period Rs.530, supplies
consumed Rs.480, supplies at the end were:
(a) Rs.910.
(b) Rs.760.
(c) Rs.670.
(d) Rs.190.
(10) Accounting cycle is a sequence of accounting procedures followed during:

(a) Accounting period.
(b) Two years.
(c) Accounting equation.
(d) One hour.
(11) When gross profit is zero, it implies that:

(a) G.P. < COGS.
(b) COGS > G.P.
(c) Net sales = Gross profit.
(d) Net sales = Cost of goods sold.
(12) When depositor’s book shows a credit bank balance it means:

(a) Amount overdrawn.
(b) Amount deposited.
(c) Outstanding cheques.
(d) Uncleared cheque.
(13) A bank does not pay against cheques if they are:

(a) Over six months old.
(b) Over months old.
(c) Over three months old.
(d) Over two months old.
(14) The following bank account is subject to Zakat deduction:

(a) Current account.
(b) Saving account.
(c) T – Account.
(d) Control account.

(15) Cash book serves the purpose of:

(a) Journal.
(b) Ledger.
(c) Trial balance.
(d) Financial statement.
(16) An accounting book used for small expenses recording is called:

(a) Cash book.
(b) Journal.
(c) Ledger.
(d) Petty cash book.
(17) A cheque is received for Rs.4,000 and recorded in the bank column receipt side of cash book,
the balance of cash will show:
(a) No effect.
(b) Balance.
(c) Overstatement.
(d) Understatement.
(18) Purchase account is:

(a) An asset.
(b) A liability.
(c) An expense.
(d) Revenue.
(19) If sales return is debited to purchase account erroneously by Rs.2,000, the net income will
show:
(a) Increase by Rs.2,000.
(b) Decrease by Rs.2,000.
(c) No effect.
(d) Decrease by Rs.1,000.
(20) N.S.F. stands for:

(a) New Studies Federation.
(b) National Studies Federation.
(c) Net Sufficient Funds.
(d) Non – Sufficient Fund.

ACCOUNTING – 2011
PRIVATE
Time: 2 Hours 40 Minutes Max. Marks: 80
SECTION “B” (SHORT – ANSWER QUESTIONS) (50)
Note: Attempt any Four questions. All questions carry equal marks. The use of calculator is allowed.
Q.No.2 GENERAL JOURNAL
GIVEN Following are the first six transactions of Miqdad Traders, posted in respective ledger account:
Cash (Rs.) Capital – Miqdad (Rs.)
Jan. 1, 2011 50,000 Jan. 20, 2011 1,000 Jan. 1, 2011 50,000
Jan. 25, 2011 3,000
Purchases Accounts Payable – Ahmed

Jan. 4. 2011 5,000 Jan. 4, 2011 5,000
Jan. 25, 2011 1,000
Accounts Receivable – Mansoor Sales

Jan. 15, 2011 4,000 Jan. 15, 2011 4,000
Prepaid Rent Office Supplies

Jan. 20, 2011 1,000 Jan. 25, 2011 4,000
REQUIRED
Record the effects shown in above ledgers (postings) in standard form of General Journal.
SOLUTION 2
MIQDAD TRADERS
GENERAL JOURNAL
FOR THE MONTH OF JANUARY 2011
Date Particulars P/R Debit Credit
Jan. 1 Cash 50,000
Capital 50,000
(To record the cash invested by owner in the business)
Jan. 4 Purchases 5,000
Accounts payable (Ahmed) 5,000
(To record the goods purchased on account)
Jan. 15 Accounts receivable (Mansoor) 4,000
Sales 4,000
(To record the goods sold on credit)
Jan. 20 Prepaid rent 1,000
Cash 1,000
(To record the rent paid in advance)
Jan. 25 Office supplies 4,000
Cash 3,000
Accounts payable (Ahmed) 1,000
(To record the purchase of office supplies)

Q.No.3 LEDGER & TRIAL BALANCE

GIVEN The following is the trial balance of Shah Latif & Co. on March 31, 2011:
Cash Rs.20,000 Accounts payable Rs.30,000
Accounts receivable Rs.50,000 Salaries payable Rs.15,000
Merchandise inventory Rs.60,000 Bank loan Rs.25,000
Equipment Rs.40,000 Capital Rs.100,000
Rs.170,000 Rs.170,000
The following transactions were performed during first fortnight of April:
April 05: Paid outstanding salaries.
April 06: Collected 1/2 of accounts receivable.
April 07: Sold merchandise for cash Rs.20,000 and on account Rs.30,000.
April 10: Paid 1/3 of the accounts payable.
April 14: Made additional investment depositing cash into the bank Rs.25,000.
REQUIRED
Prepare the ledgers with opening balances on April 01, and post the above transactions directly
there-in. Foot and balance the accounts.
SOLUTION 3
SHAH LATIF & CO.
GENERAL LEDGER
Cash
1.Apr.11 Balance 20,000 6.Apr.11 Salaries payable 15,000
6.Apr.11 Accounts receivable 25,000 10.Apr.11 Accounts payable 10,000
7.Apr.11 Sales 20,000 30.Apr.11 c/d balance 40,000
65,000 65,000
1.May.11 b/d balance 40,000
Bank
14.Apr.11 Capital 25,000
30.Apr.11 c/d balance 25,000
25,000 25,000
Accounts Receivable
1.Apr.11 Balance 50,000 6.Apr.11 Cash 25,000
7.Apr.11 Sales 30,000 30.Apr.11 c/d balance 55,000
80,000 80,000
Merchandise Inventory
1.Apr.11 Balance 60,000
60,000 60,000

Equipment
40,000 40,000
Accounts Payable
10.Apr.11 Cash 10,000 1.Apr.11 Balance 30,000
30,000 30,000
Salaries Payable
5.Apr.11 Cash 15,000 1.Apr.11 Balance 15,000
15,000 15,000
Bank Loan
25,000 25,000
Capital
30.Apr.11 c/d balance 125,000 14.Apr.11 Bank 25,000
125,000 125,000
Sales
7.Apr.11 Cash/Acc. receivable 50,000
50,000 50,000
Additional Working:
SHAH LATIF & CO.
GENERAL JOURNAL
FOR THE MONTH OF APRIL 2011
Apr. 05 Salaries payable 15,000
Cash 15,000
(To record the payment of outstanding salaries)
Apr. 06 Cash 25,000
Accounts receivable 25,000
(To record the cash collected from customer)


Apr. 07 Cash 20,000
Accounts receivable 30,000
Sales 50,000
(To record the goods sold for cash and on credit)
Apr. 10 Accounts payable 10,000
Cash 10,000
(To record the payment made to suppliers)
Apr. 14 Bank 25,000
Capital 25,000
(To record the additional investment made by owner)
Q.No.4 CASH BOOK

GIVEN Mr. Sultan started business by the name of Baaho Enterprises on April 1, 2011 with cash
investment of Rs.50,000. During the month the following transactions were completed:
April 05: Opened an account with the bank depositing cash Rs.10,000.
April 10: Purchased merchandise for cash Rs.5,000 and on account Rs.20,000 from Asif.
April 14: Sold merchandise for cash Rs.9,000 and on credit Rs.16,000 to Adeel.
April 20: Issued a cheque to Asif for Rs.9,800 as part payment.
April 23: Mr. Adeel issued a cheque of Rs.9,800 in favour of Baaho Enterprises as part payment.
April 27: Deposited the above cheque of Adeel into the bank.
REQUIRED
(a) Record the above transactions in three column cash book page No. 51.
(b) Balance the cash book on April 30. Bring down the balance on May 1, 2011.
SOLUTION 4 (a & b)

Date Particulars P/R S.Disc Cash Bank Date Particulars P/R P.Disc Cash Bank
Apr. 01 Capital 50,000 Apr. 05 Bank (c) 10,000

(Deposited)
Apr. 05 Cash (c) 10,000 Apr. 10 Purchases 5,000
(Deposited)
Apr. 14 Sales 9,000 Apr. 20 Accounts 9,800
Payable
Apr. 23 Accounts Apr. 27 (Asif)
Bank (c)
9,800 9,800
receivable (Deposited)
Apr. 27 Cash (c) 9,800
(Deposited)
BAAHO ENTERPRISES
THREE COLUMN CASH BOOK
FOR THE MONTH OF APRIL 2011 (PAGE # 51)
24,800 9,800
Apr. 30 C/D Balance 44,000 10,000
68,800 19,800 68,800 19,800
XI – Accounting – 2011 (Private)

May. 1 B/D Balance 44,000 10,000
Page 9
Q.No.5 SPECIAL JOURNAL

GIVEN Following information for the month of April 2011 is extracted from the books of Sakina
Mariam Co. dealing in various types of new equipments such as typewriters, computers, calculating
machines etc.
April 05: Sold one computer system on account to Apex Stores for Rs.24,000.
April 09: Sold old furniture (used in own office) to Bashir on credit for Rs.14,000.
April 14: Sold a typewriter to Shahzad Associates for Rs.13,000 on account.
April 21: Sold a printer to Ramzan & Co. for cash Rs.7,000.
April 23: Sold ten calculators @ Rs.1,200 each to Husnain Industries on account.
REQUIRED
(a) Prepare a sales journal from above information (Pg No. 51). Total it and pass the entry on April
30, 2011.
(b) Set up accounts receivable account bearing No. 5001 and sales account No. 1005 in standard
form. (Control account).
SOLUTION 5 (a)
SAKINA MARIAM CO.
SALES JOURNAL
FOR THE MONTH OF APRIL 2011 (PAGE # 51)
Date Invoice No. Name of Suppliers P/R Amount
April 05 Apex Stores 24,000
April 14 Shahzad Associates 13,000
April 23 Husnain Industries 12,000
April 30 Accounts receivable Dr. 5001 49,000
Sales Cr. 1005
SOLUTION 5 (b)
GENERAL LEDGER
Accounts Receivable (5001)

Date Particulars P/R Amount Date Particulars P/R Amount
Apr. 30 Sales SJ-51 49,000 Apr. 30 c/d bal 49,000
49,000 49,000
May. 1 b/d bal 49,000
Sales (1005)
Date Particulars P/R Amount Date Particulars P/R Amount
Apr. 30 c/d bal 49,000 Apr. 30 A/R SJ-51 49,000
49,000 49,000
May 1 b/d bal 49,000

Q.No.6 BANK RECONCILIATION STATEMENT

GIVEN Comparison of cash book and bank statement of Naeem & Co. for the month of March
2011 revealed the following:
(i) Balance as per cash book Rs.2,050.
(ii) Bank overdraft Rs.3,500 as per bank statement.
(iii) A deposit of Rs.5,400 was made on March 31, too late to appear in bank statement.
(iv) Cheques outstanding totaled Rs.800.
(v) Cheque drawn for Rs.420 was erroneously charged by the bank as Rs.520.
(vi) Bank service charges of Rs.30 were not recorded by the company.
(vii) A cheque for purchase of office supplies was drawn for Rs.230 but was recorded by the
company as Rs.320.
(viii) A cheque of Rs.110 for travelling expenses was not recorded by the company.
(ix) A cheque of Asif & Co. for Rs.800 marked N.S.F. and returned by the bank.
REQUIRED
Prepare Bank Reconciliation Statement as on March 31, 2011.
SOLUTION 6
NAEEM & CO.
BANK RECONCILIATION STATEMENT
FOR THE MONTH ENDED 31 MARCH 2011
Particulars Cash Book Pass Book
Balance on 31 March 2011 2,050 (3,500)
Add: Late deposit cheque (iii) 5,400
1,900
Less: Outstanding cheques (iv) (800)
1,100
Add: Error by bank (v) 100
1,200
Less: Bank service charges (vi) (30)
2,020
Add: Office supplies (Error) (vii) 90
2,110
Less: Travelling expense (viii) (110,)
2,000
Less: Dishonoured cheque (ix) (800)
Reconcile Balance 1,200 1,200
Q.No.7 CORRECTION OF ERRORS

GIVEN Following errors were found before closing of books of Daniyal Brothers. You are
required to make improper form of General Journal to rectify the errors.
(a) A cheque of Rs.5,000 was received from Irfan Sons and deposited in the bank but in the cash
book receipt was recorded as Rs.500.
(b) The invoice of Rs.8,000 was paid to Akram after discount period but payment was recorded
with discount of 2%.
(c) Bad debts expense was overstated by Rs.2,000.
(d) Accrued interest on overdraft of Rs.4,000 was overlooked.
(e) Accrued commission revenue was understated by Rs.5,000.

SOLUTION 7
DANIYAL BROTHERS
CORRECTING ENTRIES
1 Bank 4,500
Accounts receivable (Irfan Sons) 4,500
(To correct the cheque deposited into bank)
2 Purchase discount 160
Cash 160
(To correct the payment after discount period)
3 Allowance for bad debts 2,000
Bad debts expense 2,000
(To correct the overstatement of bad debts)
4 Interest expense 4,000
Interest payable 4,000
(To correct the omission of accrued interest expense)
5 Commission receivable 5,000
Commission income 5,000
(To correct the understatement of accrued commission)
SECTION “C” (DETAILED – ANSWER QUESTIONS) (30)

Note: Attempt the following questions:
Q.No.8 FINANCIAL STATEMENTS
GIVEN The balances taken from the pre-closing trial balance of Usra & Co. as of December 31,
2010 are as follows:
Debit Balances:
Cash Rs.40,000, Accounts receivable Rs.35,000, Merchandise inventory (opening) Rs.30,000, Unexpired
insurance Rs.20,000, Purchases Rs.130,000, Transportation – in Rs.5,000, Sales discount Rs.5,000, Sales
equipment Rs.40,000, Drawings Rs.12,000, Rent expense Rs.25,000.
Credit Balances:
Accounts payable Rs.25,000, Sales revenue Rs.105,000, Commission income Rs.7,000, Purchase return
Rs.5,000, Long-term loan Rs.80,000, Capital Rs.120,000.
Data for Adjustments on December 31, 2010:
(i) Merchandise inventory at December 31, 2010 Rs.60,000.
(ii) Unpaid rent Rs.2,000.
(iii) Insurance expired Rs.12,000.
(iv) Depreciation on sales equipment estimated at Rs.4,000.
REQUIRED
(a) Prepare income statement for the year ended December 31, 2010.
(b) Prepare balance sheet as of December 31, 2010 in classified form.
(c) Prepare closing entries in General Journal. OR Adjusted Trial Balance.

SOLUTION 8 (a)
USRA & CO.
INCOME STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2010
Sales revenue 105,000
Less: Sales discount (5,000)
Net sales 100,000
Less: Cost of Goods Sold:
Merchandise inventory (beg) 30,000
Add: Net Purchases:
Purchases 130,000
Add: Transportation – in 5,000
Delivered purchases 135,000
Less: Purchase return and allowances (5,000)
Net purchases 130,000
Merchandise available for sale 160,000
Less: Merchandise inventory (end) (60,000)
Cost of goods sold (100,000)
Gross profit ---
Less: Operating Expenses:
Rent expense (25,000 + 2,000) 27,000
Insurance expense 12,000
Depreciation expense 4,000
Total operating expenses (43,000)
Loss from operation (43,000)
Add: Other Income:
Net loss (36,000)
SOLUTION 8 (b)
USRA & CO.
BALANCE SHEET
AS ON 31 DECEMBER 2010
ASSETS EQUITIES
Current Assets: Liabilities:
Cash 40,000 Current Liabilities:
Accounts receivable 35,000 Accounts payable 25,000
Merchandise inventory 60,000 Rent payable 2,000
Unexpired insurance 8,000 Total current liabilities 27,000
Total current assets 143,000
Long – Term Liabilities:
Fixed Assets: Long term loan 80,000
Sales equipment 40,000 Total liabilities 107,000
Less: All for depreciation (4,000)
Total fixed assets 36,000 Owner’s Equity:
Capital 120,000
Less: Net loss (36,000)
Less: Drawings (12,000)
Total owner’s equity 72,000
Total assets 179,000 Total equities 179,000

SOLUTION 8 (c)
USRA & CO.
CLOSING ENTRIES
1 Expense and revenue summary 213,000
Merchandise inventory 30,000
Purchases 130,000
Transportation – in 5,000
Sales discount 5,000
Rent expense 27,000
Insurance expense 12,000
Depreciation expense 4,000
(To close the various expenses accounts)
2 Sales revenue 105,000
Purchase return and allowances 5,000
Merchandise inventory 60,000
Expense and revenue summary 177,000
(To close the various income accounts)
3 Capital 36,000
(To transfer the net loss to the capital account)
4 Capital 12,000
Drawings 12,000
(To close the drawings account)
OR

USRA & CO.

ADJUSTED TRIAL BALANCE
NO. PARTICULARS P/R DEBIT CREDIT
1 Cash 40,000
2 Accounts receivable 35,000
3 Merchandise inventory 30,000
4 Unexpired insurance 8,000
5 Purchases 130,000
6 Transportation – in 5,000
7 Sales discount 5,000
8 Sales equipment 40,000
9 Drawings 12,000
10 Rent expenses 27,000
11 Accounts payable 25,000
12 Sales revenue 105,000
13 Commission income 7,000
14 Purchase return 5,000
15 Long – term loan 80,000
16 Capital 120,000
17 Rent payable 2,000
18 Insurance expense 12,000
19 Depreciation expense 4,000
20 Allowance for depreciation – S. Equipment 4,000
Total 348,000 348,000
Additional Working:
USRA & CO.
ADJUSTING ENTRIES
1 Merchandise inventory 60,000
(To adjust the merchandise inventory)
2 Rent expense 2,000
Rent payable 2,000
(To adjust the unpaid rent)
3 Insurance expense 12,000
Unexpired insurance 12,000
(To adjust the insurance expense)
4 Depreciation expense 4,000
Allowance for depreciation – Sales equipment 4,000
(To adjust the depreciation expense)

Xi - Accounting: Private

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The workings under the heading of “Additional Working”

are not required according to the requirement of the examiner.

Compiled and Solved by:

(2) This account has a credit balance:

(3) The act of totaling of money columns of an account is called:

(5) Gross profit is:

(6) Accounts are un-dated at the end of accounting period by:

XI – Accounting – 2011 (Private) Page 2

(7) Bad debts expenses are:

(8) Depreciation expense includes:

(10) Accounting cycle is a sequence of accounting procedures followed during:

(11) When gross profit is zero, it implies that:

(12) When depositor’s book shows a credit bank balance it means:

(13) A bank does not pay against cheques if they are:

(14) The following bank account is subject to Zakat deduction:

XI – Accounting – 2011 (Private) Page 3

(15) Cash book serves the purpose of:

(16) An accounting book used for small expenses recording is called:

(18) Purchase account is:

(20) N.S.F. stands for:

XI – Accounting – 2011 (Private) Page 4

Purchases Accounts Payable – Ahmed

Accounts Receivable – Mansoor Sales

Prepaid Rent Office Supplies

XI – Accounting – 2011 (Private) Page 5

Q.No.3 LEDGER & TRIAL BALANCE

XI – Accounting – 2011 (Private) Page 6

XI – Accounting – 2011 (Private) Page 7

Date Particulars P/R Debit Credit

Q.No.4 CASH BOOK

XI – Accounting – 2011 (Private) Page 8

Apr. 01 Capital 50,000 Apr. 05 Bank (c) 10,000

Apr. 30 C/D Balance 44,000 10,000

68,800 19,800 68,800 19,800

XI – Accounting – 2011 (Private)

Q.No.5 SPECIAL JOURNAL

Accounts Receivable (5001)

XI – Accounting – 2011 (Private) Page 10

Q.No.6 BANK RECONCILIATION STATEMENT

Q.No.7 CORRECTION OF ERRORS

XI – Accounting – 2011 (Private) Page 11

SECTION “C” (DETAILED – ANSWER QUESTIONS) (30)

XI – Accounting – 2011 (Private) Page 12

XI – Accounting – 2011 (Private) Page 13

XI – Accounting – 2011 (Private) Page 14

USRA & CO.

XI – Accounting – 2011 (Private) Page 15

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