Q.
1 a) Describe
Accounting Cycle. ` (10+10)
b) Explain the difference between
accounting and book-keeping.
a) **Accounting Cycle:**
Ye sample assignment h. Ye bilkul
copy paste h jo dusre student k pass b available h. Agr ap ne university
assignment send krni h to UNIQUE assignment
hasil krne k lye ham c contact kren:
0313-6483019
0334-6483019
0343-6244948
University c related har news c
update rehne k lye hamra channel subscribe kren:
The accounting cycle is a
series of steps that a business follows to record and summarize financial
transactions. It is a systematic process that helps organizations maintain
accurate financial records and produce financial statements. The cycle
typically includes the following steps:
1.
**Identifying and Analyzing Transactions:**
- The cycle begins with the
identification and analysis of business transactions. This involves examining
source documents such as invoices, receipts, and bank statements to understand
the nature of the transactions.
2.
**Journalizing:**
- Once transactions are
identified and analyzed, they are recorded in the journal. The journal is a
chronological record that includes details such as the date of the transaction,
accounts affected, and amounts involved.
3.
**Posting to the Ledger:**
- The next step is to transfer
the information from the journal to the ledger. The ledger is a set of accounts
that categorize transactions by account type (e.g., assets, liabilities,
equity, revenue, and expenses).
4.
**Trial Balance:**
- A trial balance is prepared
to ensure that the total debits equal the total credits. It acts as a
preliminary check on the accuracy of the recording process.
5.
**Adjusting Entries:**
- Adjusting entries are made
at the end of an accounting period to update accounts and bring them to their
proper balances. This includes adjustments for accrued expenses, prepaid items,
and depreciation.
6.
**Adjusted Trial Balance:**
- After adjusting entries,
another trial balance is prepared to ensure that the ledger accounts reflect
all adjustments made.
7.
**Financial Statements:**
- Based on the adjusted trial
balance, financial statements such as the income statement, balance sheet, and
cash flow statement are generated. These statements provide an overview of the
company's financial performance and position.
8.
**Closing Entries:**
- Closing entries are made to
reset temporary accounts (revenue, expense, and dividend accounts) to zero for
the next accounting period.
9.
**Post-Closing Trial Balance:**
- After closing entries, a
post-closing trial balance is prepared to ensure that the total debits and
credits are still equal.
10.
**Reversing Entries (optional):**
- In some accounting systems,
reversing entries may be made at the beginning of the new accounting period to
simplify certain adjusting entries.
11.
**Reporting:**
- The final step involves distributing
financial reports to stakeholders, including management, investors, and
regulatory authorities.
b)
**Difference between Accounting and Bookkeeping:**
**1.
Definition:**
-
**Bookkeeping:** Bookkeeping is the process of recording daily
financial transactions, including purchases, sales, receipts, and payments.
-
**Accounting:** Accounting is a broader process that involves
classifying, interpreting, summarizing, and communicating financial information
derived from bookkeeping.
**2.
Scope:**
-
**Bookkeeping:** It is primarily concerned with the systematic
recording of financial transactions.
-
**Accounting:** It involves a more comprehensive analysis of
financial data, including the preparation of financial statements and the
interpretation of financial information.
**3.
Time Frame:**
- **Bookkeeping:** Focuses
on the day-to-day financial activities and transactions.
-
**Accounting:** Encompasses a broader time frame, including the preparation
of financial statements at the end of an accounting period.
**4.
Objective:**
-
**Bookkeeping:** Aims to maintain accurate and up-to-date
financial records.
- **Accounting:** Aims
to provide insights into the financial health and performance of a business,
enabling better decision-making.
**5.
Decision-Making:**
-
**Bookkeeping:** Provides the raw data necessary for
accounting.
-
**Accounting:** Involves analyzing and interpreting financial
data to support strategic decision-making.
**6.
Analysis and Interpretation:**
-
**Bookkeeping:** Does not involve analysis or interpretation of
financial data.
-
**Accounting:** Requires a deeper understanding of financial
information, involving analysis and interpretation to derive meaningful
insights.
**7.
Skills Required:**
-
**Bookkeeping:** Requires a good understanding of debits and
credits, attention to detail, and data entry skills.
-
**Accounting:** Involves a broader skill set, including
financial analysis, budgeting, and strategic planning.
**8.
Stage in the Accounting Process:**
-
**Bookkeeping:** Is the initial stage of the accounting process,
involving the recording of transactions.
-
**Accounting:** Encompasses the entire accounting process,
including analysis, interpretation, and reporting.
In summary, while bookkeeping
is a crucial part of the accounting process, accounting involves a more
comprehensive set of activities that go beyond the simple recording of
transactions to provide a deeper understanding of a company's financial
position and performance.
Q.
2 Define the following key terms; (20)
i. Debtors
/ Accounting Receivables
ii. Creditors
/ Accounts payable
iii. Sales
& Purchases
iv. Return
in and outward
v. Separate entity concept
vi. Dual aspect concept
vii. Business & proprietor
i. **Debtors / Accounts Receivable:**
-
**Definition:** Debtors, also known as accounts receivable,
refer to individuals or entities who owe money to a business. These are
customers or clients who have purchased goods or services on credit, and the
payment is expected to be received at a later date. Accounts receivable are
recorded as assets on the balance sheet.
ii.
**Creditors / Accounts Payable:**
-
**Definition:** Creditors, or accounts payable, represent the
opposite side of the transaction from debtors. They are individuals or entities
to whom a business owes money. This typically includes suppliers or service
providers from whom the business has purchased goods or services on credit.
Accounts payable are recorded as liabilities on the balance sheet.
iii.
**Sales & Purchases:**
-
**Sales Definition:** Sales refer to the revenue generated by a
business through the sale of goods or services to customers. It is a crucial
component of the income statement and contributes to the overall financial
performance of the company.
-
**Purchases Definition:** Purchases represent the cost of acquiring
goods or services for resale. This can include raw materials, finished goods,
or services that a business buys from external sources. Purchases are also a
significant factor in determining the cost of goods sold and, subsequently, the
company's profitability.
iv.
**Return Inward and Outward:**
-
**Return Inward:** Also known as sales returns or returns in,
this refers to goods that customers return to the business. It could be due to
various reasons such as defects, dissatisfaction, or overstock.
-
**Return Outward:** Also known as purchases returns or returns out,
this represents goods that a business returns to its suppliers. Reasons for
return outward may include receiving defective or damaged goods or
overordering.
v.
**Separate Entity Concept:**
-
**Definition:** The separate entity concept is a fundamental
accounting principle that treats a business as a distinct and separate entity
from its owners or shareholders. According to this concept, the business's
financial transactions and accounts are kept separate from the personal
transactions and accounts of its owners. This concept ensures that the
business's financial position and performance are reported independently of the
individuals who own it.
vi.
**Dual Aspect Concept:**
-
**Definition:** The dual aspect concept, also known as the
duality principle, is a foundational accounting principle that states that
every financial transaction has two aspects: a debit and a credit. In other
words, for every transaction, there is a corresponding give-and-take, where one
account is debited, and another is credited. This concept forms the basis for
the double-entry accounting system, which ensures that the accounting equation
(Assets = Liabilities + Equity) remains in balance.
vii.
**Business & Proprietor:**
-
**Business Definition:** A business is an organization or entity
engaged in commercial, industrial, or professional activities with the primary
goal of earning a profit. It can take various forms, including sole
proprietorships, partnerships, corporations, and limited liability companies.
-
**Proprietor Definition:** A proprietor is an individual who owns
and manages a business. In the context of a sole proprietorship, the proprietor
is the single owner of the business and is personally responsible for its debts
and obligations. In other business structures, such as partnerships or
corporations, the term may refer to a major owner or founder.
In conclusion, these key terms
are essential elements in the field of accounting, providing the framework for
recording, analyzing, and reporting financial transactions. Understanding these
concepts is crucial for individuals involved in financial management,
accounting, or business ownership.
Q.
3 The following transections relate to
the business of Majid: (20)
Feb
1, 2019
Feb
7,2019 Feb 13,2019 Feb 15,2109 Feb 18,2019
Feb 18,2019
Feb
19,2019
Feb
20,2019
Feb
21,2019
Feb
22,2019
Feb
25,2019
Feb
26,2019
Feb
27,2019
Feb
28, 2019
Feb
28,2019 He started a business with cash
Rs. 250,000 and goods worth Rs. 152,000.
He sold goods from Rs. 10,500 on cash.
He sold gold for Rs. 7,315 to
Ahmed on credit basis.
Received cash from Ahmed Rs.
7,200 and allowed discount Rs. 115.
He paid wages Rs. 700,
salaries Rs. 500 and business miscellaneous expenses of the business Rs. 850.
He purchased Furniture with
cash Rs. 200,000/-
He purchased goods from Miss
Zara Rs. 150,000/-
He sold goods to Mr. Furqan
Rs. 80,000/-
Goods returned to Miss Zara
Rs. 5,000/-
Machinery purchased Rs.
100,000/-
He returned goods from Mr.
Furqan Rs. 3,000/-
Paid Utility bills Rs.
40,000/-
Paid Rent Rs. 40,000/-
(i) Journalize these transactions.
(ii)
Post them into ledger accounts.
(iii)
Prepare Trail Balance
**i.
Journalize these transactions:**
1.
Feb 1, 2019:
- Cash Account (Dr)
250,000
- Goods Account (Dr)
152,000
- Capital Account (Cr)
402,000
2.
Feb 7, 2019:
- Cash Account (Dr)
10,500
- Sales Account (Cr)
10,500
3.
Feb 13, 2019:
- Accounts Receivable (Ahmed)
(Dr) 7,315
- Sales Account (Cr)
7,315
4.
Feb 15, 2019:
-
Cash Account (Dr) 7,200
- Discount Allowed Account
(Dr) 115
- Accounts Receivable (Ahmed)
(Cr) 7,315
5.
Feb 18, 2019:
- Wages Expense Account (Dr)
700
- Salaries Expense Account
(Dr) 500
- Business Miscellaneous
Expenses Account (Dr) 850
- Cash Account (Cr) 2,050
6.
Feb 19, 2019:
- Furniture Account (Dr)
200,000
- Cash Account (Cr)
200,000
7.
Feb 20, 2019:
- Goods Account (Dr)
150,000
- Accounts Payable (Miss Zara)
(Cr) 150,000
8.
Feb 21, 2019:
- Accounts Receivable (Mr.
Furqan) (Dr) 80,000
- Sales Account (Cr)
80,000
9.
Feb 22, 2019:
- Goods Returns Account (Dr)
5,000
- Accounts Payable (Miss Zara)
(Cr) 5,000
10.
Feb 25, 2019:
- Machinery Account (Dr)
100,000
- Cash Account (Cr)
100,000
11.
Feb 26, 2019:
- Accounts Payable (Mr.
Furqan) (Dr) 3,000
- Goods Returns Account (Cr)
3,000
12.
Feb 27, 2019:
- Utility Bills Expense
Account (Dr) 40,000
- Cash Account (Cr)
40,000
13.
Feb 28, 2019:
- Rent Expense Account (Dr)
40,000
- Cash Account (Cr)
40,000
**ii.
Post them into ledger accounts:**
**Assets:**
1.
Cash Account:
-
Feb 1: +250,000
-
Feb 7: +10,500
-
Feb 15: +7,200
-
Feb 27: -40,000
-
Feb 28: -40,000
2.
Goods Account:
-
Feb 1: +152,000
-
Feb 20: +150,000
-
Feb 22: -5,000
3.
Furniture Account:
-
Feb 19: +200,000
4.
Machinery Account:
-
Feb 25: +100,000
**Liabilities:**
1.
Accounts Payable (Miss Zara):
- Feb 20: +150,000
- Feb 22: -5,000
2.
Accounts Payable (Mr. Furqan):
-
Feb 26: -3,000
**Equity:**
1.
Capital Account:
-
Feb 1: +402,000
**Revenue:**
1.
Sales Account:
-
Feb 7: +10,500
-
Feb 13: +7,315
-
Feb 21: +80,000
**Expenses:**
1.
Wages Expense Account:
-
Feb 18: -700
2.
Salaries Expense Account:
-
Feb 18: -500
3.
Business Miscellaneous Expenses Account:
-
Feb 18: -850
4.
Discount Allowed Account:
-
Feb 15: -115
5.
Utility Bills Expense Account:
-
Feb 27: -40,000
6.
Rent Expense Account:
-
Feb 28: -40,000
**iii.
Prepare Trial Balance:**
| **Account Title** | **Debit (Rs.)** | **Credit
(Rs.)** |
|------------------------------------|-----------------|------------------|
| Cash | 198,700 | - |
| Goods | 297,000 | - |
| Furniture | 200,000 | - |
| Machinery | 100,000 | - |
| Accounts Receivable
(Ahmed) | 115 | - |
| Accounts Receivable (Mr.
Furqan) | 3,000 | - |
| Accounts Payable (Miss
Zara) | - | 145,000 |
| Capital | - | 402,000 |
| Sales | - | 97,815 |
| Wages Expense | 700 | - |
| Salaries Expense | 500 | - |
| Business Miscellaneous
Expenses | 850 | - |
| Discount Allowed | - | 115 |
| Utility Bills Expense | 40,000 | - |
| Rent Expense | 40,000 | - |
In a trial balance, the total
of the debit column should equal the total of the credit column, ensuring that
the accounting equation (Assets = Liabilities + Equity) is in balance.
Q.
4 a) Define
General Journal. What is meant by entry? Explain with three
examples.
b) What
is Bank? Describe the features of pass book and cash book.
(20)
a)
**General Journal:**
**Definition:**
The
general journal is a fundamental accounting tool used to record financial
transactions in chronological order. It is a book or electronic document where
business transactions are initially entered before being transferred to the
ledger. The general journal provides a complete record of all transactions,
including information such as the date, accounts involved, and amounts.
**Entry:**
An entry in accounting refers
to the recording of a financial transaction in the general journal. Each entry
typically consists of at least two parts: a debit and a credit. This reflects
the dual aspect concept in accounting, where every transaction affects at least
two accounts.
**Example
1: Sale of Goods for Cash:**
-
Date: February 1, 2023
-
Accounts:
-
Debit: Cash (increasing assets)
-
Credit: Sales (increasing revenue)
-
Description: Record the sale of goods for cash.
**Example
2: Purchase of Office Supplies on Credit:**
-
Date: February 10, 2023
-
Accounts:
-
Debit: Office Supplies (increasing assets)
-
Credit: Accounts Payable (increasing liabilities)
-
Description: Record the purchase of office supplies on
credit.
**Example
3: Payment of Wages:**
-
Date: February 15, 2023
-
Accounts:
-
Debit: Wages Expense (increasing expenses)
-
Credit: Cash (decreasing assets)
-
Description: Record the payment of wages to employees.
In each example, the dual
aspect is evident. For example, in the first entry, the increase in cash is
balanced by the increase in sales revenue. This ensures that the accounting
equation (Assets = Liabilities + Equity) remains in balance.
b)
**Bank and Features of Pass Book and Cash Book:**
**Bank:**
A bank is a financial
institution that accepts deposits from the public and provides various
financial services, including loans, mortgages, and investment products. Banks
play a crucial role in the economy by facilitating the flow of money and
providing a secure place for individuals and businesses to store their funds.
**Features
of Pass Book:**
1.
**Record of Transactions:**
- The pass book serves as a
record of all transactions related to a bank account. It includes deposits,
withdrawals, and other transactions made by the account holder.
2.
**Statement of Account:**
- It provides a summary or
statement of the account holder's financial transactions with the bank over a
specific period. This statement helps account holders reconcile their own
records with the bank's records.
3.
**Balance Information:**
- The pass book shows the current
balance in the account. This information is crucial for account holders to
monitor their financial position and plan their expenditures.
4.
**Authorized by the Bank:**
- The pass book is an official
document authorized by the bank, providing a level of security and authenticity
to the account holder. It is updated by the bank and can be used as proof of
transactions.
**Features
of Cash Book:**
1.
**Recording Cash Transactions:**
- The cash book is an
accounting ledger that records all cash transactions, including cash receipts
and cash payments. It serves as a primary source for maintaining cash-related
accounts.
2.
**Double-Entry System:**
- Like the general journal,
the cash book follows the double-entry accounting system. Each transaction
recorded in the cash book affects at least two accounts – one account is
debited, and another is credited.
3.
**Bank and Cash Columns:**
- The cash book typically has
separate columns for cash and bank transactions. This segregation allows for a
clear distinction between cash transactions and those involving the bank.
4.
**Real-Time Recording:**
- Unlike the pass book, which
is updated by the bank, the cash book is maintained by the account holder in
real-time. This enables businesses and individuals to have an up-to-date record
of their cash transactions.
In summary, the pass book and
cash book are essential tools in financial management. The pass book provides
an official record of bank transactions, while the cash book allows for the
real-time recording of cash-related transactions, facilitating effective cash
management. Both are integral components of the broader accounting process,
ensuring accuracy and transparency in financial reporting.
Q.
5 Akram sold goods to Khalid worth Rs.
500,000/-. He drew a bill on Khalid for Rs. 500,000/- on the same date payable
after 3 months. Khalid accepted the bill and returned it to Akram. On the due
date bill was dishonored. (20)
Required:
Pass Journal entries in the book of Akram and Khalid.
**Journal
Entries in the Book of Akram:**
1.
**When Goods are Sold to Khalid:**
- Date: [Date of sale]
-
Accounts:
- Debit: Accounts Receivable
(Khalid) - Rs. 500,000
-
Credit: Sales - Rs. 500,000
-
Description: Record the sale of goods to Khalid.
**Journal Entry:**
Date| Accounts Receivable (Khalid) | Sales
[Date]| 500,000| 500,000
2. **When a Bill is Drawn on Khalid:**
-
Date: [Date of drawing the bill]
- Accounts:
- Debit: Bills Receivable (Khalid) - Rs.
500,000
- Credit: Accounts Receivable (Khalid) -
Rs. 500,000
- Description: Record the creation of a bill
receivable.
**Journal Entry:**
Date| Bills Receivable (Khalid) | Accounts
Receivable (Khalid)
[Date]| 500,000| 500,000
3.
**When the Bill is Accepted by Khalid:**
- Date: [Date of acceptance by
Khalid]
- Accounts:
- Debit: Bills
Receivable (Khalid) - Rs. 500,000
- Credit:
Accounts Payable (Akram) - Rs. 500,000
- Description:
Record the acceptance of the bill by Khalid.
**Journal Entry:**
Date| Bills Receivable (Khalid) | Accounts
Payable (Akram)
[Date]| 500,000| 500,000
4.
**When the Bill is Dishonored on Due Date:**
-
Date: [Due date when the bill is dishonored]
- Accounts:
- Debit: Accounts Payable
(Akram) - Rs. 500,000
- Credit: Bills
Receivable (Khalid) - Rs. 500,000
- Description:
Record the dishonor of the bill.
**Journal Entry:**
Date| Accounts Payable (Akram) | Bills
Receivable (Khalid)
[Due Date] | 500,000| 500,000
**Journal
Entries in the Book of Khalid:**
1.
**When the Bill is Received from Akram:**
- Date: [Date when Khalid
receives the bill]
- Accounts:
- Debit: Bills Payable (Akram)
- Rs. 500,000
- Credit:
Accounts Payable (Akram) - Rs. 500,000
- Description:
Record the receipt of the bill from Akram.
**Journal Entry:**
Date| Bills Payable (Akram) | Accounts
Payable (Akram)
[Date]| 500,000| 500,000
2. **When the Bill is Accepted
by Khalid:**
- Date: [Date of acceptance by
Khalid]
- Accounts:
- Debit: Accounts Payable
(Akram) - Rs. 500,000
-
Credit: Bills Payable (Khalid) - Rs. 500,000
- Description:
Record the acceptance of the bill by Khalid.
**Journal Entry:**
Date| Accounts Payable (Akram) | Bills
Payable (Khalid)
[Date]| 500,000| 500,000
3. **When the Bill is
Dishonored on Due Date:**
- Date: [Due date when the bill
is dishonored]
- Accounts:
-
Debit: Bills Payable (Khalid) - Rs. 500,000
- Credit:
Accounts Payable (Akram) - Rs. 500,000
- Description:
Record the dishonor of the bill.
**Journal Entry:*
Date| Bills Payable (Khalid) | Accounts
Payable (Akram)
[Due Date] | 500,000| 500,000
In these journal entries, the key accounts
involved are Accounts Receivable (Khalid), Sales, Bills Receivable (Khalid), Accounts
Payable (Akram), Bills Payable (Akram), and Bills Payable (Khalid). These
entries accurately represent the sequence of events related to the sale,
creation, acceptance, and subsequent dishonor of the bill between Akram and
Khalid.
Dear Student,
Ye sample assignment h. Ye bilkul
copy paste h jo dusre student k pass b available h. Agr ap ne university
assignment send krni h to UNIQUE assignment
hasil krne k lye ham c contact kren:
0313-6483019
0334-6483019
0343-6244948
University c related har news c
update rehne k lye hamra channel subscribe kren: