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Part – III

COMMERCE, PAPER – II
MAY– 2008
Time: 3 Hours] [Max. Marks: 100

PART – A
(Marks: 50)
SECTION – A

Answer any two of the following questions in not exceeding 40 lines each :
2 x 10 = 20

1. What is Transport ? What are the functions of it ?

2. What are the powers of District Forum ?
3. Discuss the functions of Stock Exchange ?

SECTION – B
Answer any Four of the following questions in not exceeding 20 lines each
4 x 5 = 20
4. Explain any five principles of Insurance.
5. What are the favourable effects of Advertisement ?
6. What are the differences between Customs Duties and Excise Duties.
7. What is the difference between Speculation and Gambling ?
8. What are the characteristics of an Effective Leader ?
9. What are the advantages of a Computer ?

SECTION – C
Answer any Five of the following questions in not :
5 x 2 = 10
10. Re-insurance
11. Branding
12. Sales promotion
13. Consumerism
14. Bonded warehouses
15. Who is a lame duce ?
16. Motivation
17. Keyboard of a Computer.
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SECTION – D
Answer the following questions :
1 x 20 = 20
18. The following is the Balance sheet of Praveen and Naveen who are sharing
profits and losses in 3 : 1 ratio, as on 31.12.2006.
Liabilities Amount Assets Amount
Rs. Rs.
Sundry creditors 2,00,000 Cash 50,000
Overdraft 2,00,000 Sundry debtors 3,00,000
General Reserve 1,00,000 Stock 1,50,000
Capitals : Buildings 2,00,000
Praveen 3,00,000 Furniture 1,00,000
Naveen 2,00,000 5,00,000 Machinery 2,00,000
10,00,000 10,00,000

They have admitted Kiran on the following conditions :

(a) Firm goodwill valued at Rs.2,00,000
(b) Kiran has to bring Rs.2,50,000 as his capital in cash
(c) Appreciate Building by 20% and Stock by 10%
(d) Depreciate Machinery and Furniture by 10%
(e) Create a reserve of 5% for doubtful debts on debtors
Write necessary journal entries and ledger accounts. Show the new Balance Sheet after
Kiran’s admission.

SECTION – E
Answer Any one of the following questions.
1 x 10 = 10
19. Usha Engineering Company of Hyderabad consigned 100 sewing machines to Yadagiri
& Co. of Nalgonda. The cost of each sewing machine is Rs.600. Usha Engineering
Company paid packing expenses and insurance Rs.1,000 and received Rs.20,000 as
advance from Yadagiri & Co.
Accounts sales was rendered by Yadagiri & Co. with the following particulars. They
sold 80 sewing machines at Rs.750 each and their expenses – Transport Rs.1,500,
Godown rent Rs.500. Their commission is 5% on sales. They sent a draft for the
balance.
Prepare ledger accounts in the books of Usha Engineering Company.
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20. The following is the Receipts and Payment account of Hyderabad Sports Club for the
year ending 31st December 2006.
Receipts Amount Payments Amount
Rs. Rs.
To Cash in hand 500 By Salaries 4,000
To Cash at Bank 4,500 By Grass cutting machine 2,000
To Subscriptions 13,500 By Rent 900
To Tournament fund 500 By Sports expenses 7,000
To Life membership fees 3,000 By Tournament expenses 2,000
To Entrance fees 500 By Office expenses 4,500
To Donations for building 8,000 By Purchase of Sports 3,000
fund material
To Sale of gross 400 By Balance c/d
Cash in hand 1,500
Cash at Bank 10,500 12,000
35,400 35,400

Additional Information :
(a) Subscriptions include Rs.2,100 of previous year and Rs.500 belong to year 2007.
Subscriptions receivable for the year 2006 are Rs.2,000
(b) Depreciate Grass cutting machine by Rs.200
(c) Opening balance of Sports material was Rs.2,000 and Rs.2,500 at the end of the
year
Prepare income and expenditure account for the year ending 31st December 2006.

SECTION – F
Answer any Two of the following questions
2 x 5 = 10
21. Explain different kinds of Errors
22. On March 1, 2005 Srinivas sold goods to Madhav for Rs.10,000 and drew upon a bill for
3 months for the amount which the latter accepted. On the same date Srinivas
discounted the bill with Bank at 6% P.A. On the due date the bill was dishonoured. Show
the entries in the book of Srinivas.

23. Madan purchased a machine on January 1, 2001, for Rs.10,000 which has been sold on
30 June, 2004 for Rs.6,000. Calculate the profit or loss on sale of machine, assuming
10% depreciation P.A. on fixed installment method.

24. Calculate average due date from the following particulars.

Due date Amount Rs.
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July 01 200
August 10 300
September 11 400
October 03 500

SECTION – G
Answer any five of the following questions.
5 x 2 = 10
25. Grace days
26. Red ink interest
27. Del credere commission
28. Write two differences between Receipt and Payments account and Income and
Expenditure account.
29. Cost of asset is Rs.95,000
Installation charges Rs.10,000, Scarp value is Rs.5,000.
Estimated life of asset is 10 years. Calculate annual depreciation.

30. Starting date (Base date) : March 18; Total of products : 30,000; total of transactions :
Rs.2,000. Calculate average due date.
31. Suspense account
32. P, Q are partners sharing profits and losses in the ratio of 3 : 2. They admit R by giving
1/5 share. What is the new profit sharing ratio of P, Q, R ?

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