FUNDAMENTALS OF ACCOUNTING I

Fundamentals of Accounting I_DCM1103-BCOM_Sem1

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SET-I

QUES: – 1: –

ANS: – 1: – A

Explanation:

• 2018-01-01:When Ananth started his business, he invested ₹. 70,000 in cash. This is recorded by debiting the Cash account and crediting the Capital account.
• 2018-01-02:Ananth purchased goods from X and Co. on credit. This is recorded by debiting the Purchases account and crediting the X and Co. A/c account.
• 2018-01-03:Ananth deposited ₹. 40,000 in cash into his bank account. This is recorded by debiting the Bank A/c account and crediting the Cash account.

QUES: -2: – 

ANS: -2: –  Cash books are essential financial records that businesses use to track cash transactions. There are various types of cash books, each designed to serve specific purposes. The different types of cash books include:

1. Single Column Cash Book: This is the most basic type of cash book. It contains only one column to record cash transactions. It is primarily used by small businesses to record cash receipts and payments.

2. Double Column Cash Book: This cash book has two columns: one for cash transactions and another for bank transactions. It allows businesses to record both cash and bank transactions in a single book, providing a comprehensive view of the company’s financial activities.

3. Triple-Column Cash Book: In addition to cash and bank columns, the triple column cash book includes a third column for discount. This type of cash book is helpful for businesses that want to track cash, bank, and discount-related transactions in one place.

QUES: – 3: –

ANS: -3: – Accounting Concepts and Conventions are fundamental principles and guidelines that govern the field of accounting. They provide a framework for recording, reporting, and interpreting financial transactions to ensure consistency, accuracy, and reliability in financial statements. Below is an explanation of these concepts and conventions.

Accounting Concepts:

• Going Concern Concept: This concept assumes that an entity will continue to operate indefinitely. Therefore, financial statements are prepared with the expectation that the business will continue to function in the foreseeable future. It influences the valuation of assets and liabilities.

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SET-II

QUES: – 4: –

ANS: – 4: –

Bank Reconciliation Statement as of March 31, 2006

QUES:- 5:-

ANS:- 5:-  Depreciation is a fundamental accounting concept that refers to the systematic allocation of the cost of a tangible fixed asset over its useful life. This allocation is made to reflect the gradual reduction in the asset’s value as it ages and is used in a company’s operations. It is a non-cash expense that recognizes the wear and tear, obsolescence, or decrease in the asset’s value over time. Depreciation is recorded in a company’s financial statements to ensure that the carrying value of the asset on the balance sheet accurately represents its current economic value.

Causes of Depreciation:

• Wear and Tear: Over time, tangible assets such as machinery, vehicles, and buildings naturally experience physical wear and tear due to regular use. This reduces their value and utility.

• Obsolescence: Rapid technological advancements can render existing assets obsolete. Equipment or technology that was once cutting-edge may become outdated, decreasing its value.

• Deterioration: Environmental factors, like exposure to harsh weather conditions, can lead to the deterioration of assets. For example, buildings may experience structural damage over time.

• Limited Useful Life: Most assets have a finite useful life. For instance, a car will eventually become unusable or require significant repairs as it accumulates mileage.

QUES: – 6: –

ANS: – 6: –    Trading and Profit and Loss Account for the Year Ended 31st March 2016:

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