Generally Accepted Accounting Principles and Cash

Encircle the correct answer. Marks (20*1) (Time Allowed 20 Min) 1. Resources owned by business are known as: a.

Assets b. Expenses c. Liabilities d. Income 2. Amount withdrawn from business is recorded as: e.

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Drawings f. Capital g. Liabilities h. none 3.

Assets minus capital equals to: i. Assets j. Capital k. Liability l. None 4. The payment of business debts: m.

Has no effect on owners’ equity n. Increase assets o. Decrease liabilities p. none of the above 5.

Which of the following is not an asset: q. cash r. equipment s. notes receivable t. all are assets 6. Both assets and owner’s equity would be increased by: u.

Drawings v. Purchase of machinery on credit w. Payment of creditors x. Profit earned retained in business 7. The amount brought in by the proprietor in the business should be credited to: y. Cash account z. Salaries account {.

Capital account |. Drawings account 8. Sales made to mahmood for cash should be debited to : }. Cash account ~.

Mahmood account . Sales account . None 9. Balance sheet shows the : . Financial position of business . Financial performance of business .

Profit of business . none of the above 10. Income statement shows the : . Financial position of business Financial performance of business . Profit of business . None 11. sales are equal to: .

CGS + profit . CGS – G. P . G. P – CGS . None 12. G. P is equal to: .

Sales – closing stock . Purchases – closing stock . Sales – CGS . none 13. Cost of goods sold is equal to: . Sales – G. P . Sales – Purchases .

Sales – closing stock . None 14. Cash account will show : .

Debit or credit balance . Debit balance . Credit balance . none of the above 15.

Cash sales are recorded in : . Cash book . Sales book . journal . none 16. A three column cash book records: . All cash transactions only . Both cash and bank transactions Both cash and bank transactions including discount .

None 17. Journal is called : . Book of cash transactions . Book of original transactions .

Book of credit transactions . None 18. The returned of goods by customer should be debited to: .

Customer account . Sales returns account . Goods account .

None 19. Double entry means: . Entry in two sets of books . Entry at two dates . Entry of two aspects of the transaction . none of the above 20.

Withdrawals by proprietor would: . Reduce owner’s equity . Reduce assets .

Reduce both assets and owner’s equity . None Part II: short Questions Q. No. 2.

(A). Short question.Marks (10*2) 1. What is the difference between the trade discount and cash discount? 2. What is debit and credit? What are the rules of debit and credit? 3. What is GAAP? 4.

Explain types of statements? 5. What are prepaid expenses how do you treat them in accounts? 6. Explain gross profit and net profit? 7. What is balance sheet? What is the difference between trial balance and balance sheet? 8. What do you understand by three column cash book? 9. Differentiate between journal and ledger? 10. What is an accounting cycle? Part III: Long Questions Attempt any two questions out of four Q. No.

3 Marks (10*1)From the following transactions prepares three column cash book: 1984 Dec: 1 Rs 10000 paid in by proprietor on start of business of which Rs 2000 were banked. 6 Dec: an amount due to qasim Rs 500 for goods purchased on credit were settled by cheque after deducting 5% cash discount. 10 Dec: purchases goods Rs 1200, less trade discount 5% and paid cash for the same. 15 Dec: cash sales Rs1400 of which Rs 1200 were banked. 18 Dec: Karim who owned Rs 500 on an invoice subject to cash discount settled his account by cheque which was lodged into bank.

23 Dec: paid rent by cheque Rs 100. 27 Dec: purchases for cash an office safe Rs 500 1 Dec: paid cash for private expanses of the proprietor. Q. No. 4 Marks (10*1) Debit| Rs. | Credit| Rs| opening stock| 30000| biils payable| 6000| Purchases| 45000| sundary creditors| 20000| Rent| 5000| Sales| 74000| audit fees| 1500| capital| 80000| interest paid| 1000|  | 180000| salaries | 15000|  |  | Repairs| 6500|  |  | Machinery| 20000|  |  | Premises| 35000|  |  | sundary debtors| 12000|  |  | Furniture| 9000|  |  | | 180000|  |  | Adjustments; 1. Stock on 31 December was valued at Rs 45000 2.

Rent still unexpired Rs 105. 3. Interest on capital Rs 2000. 4.

Premises were depreciated @ 10% p. a. . Goods Rs 500 have been taken away by the owner for personal use. Requirement: Prepare trading and profit & loss account and balance sheet as on 31 December, 2002 after carrying out the adjusting entries. Q. No. 5.

Long questionMarks (10*1) Started business with Rs. 25000. Bought equipment on credit Rs. 8640 Services performed on credit Rs. 1200. Bought supplies for Rs. 690.

Paid rent for the month Rs. 800 Paid an account payable Rs 5000 Services performed on credit Rs. 1800 Collected Rs 1200 on account receivable. Received electricity bill but not paid Rs. 210 Withdraw Rs 1300 for personal use.Account of supplies show supplied costing Rs. 430 are still on hand.

Requirement: Prepare the statement of equation. Q. No. 6.

Long question Marks (10*1) March 1 Mr. Bilal invested Rs 200000 into the business. Deposited Rs 50000 into the bank Paid rent for office building Rs.

2000 Purchased supplies from tariq on credit Rs. 15000 Bought furniture for Rs 5000 paid Rs 2000 remaining on credit from akhter Paid Rs 7000 in partial payment of an account payable to tariq Paid utility expense Rs 2000 Paid salary Rs 5000 Paid advertisement expense Rs 3500 Requirement: Prepare general journal, ledger and trial balance?