MARKING SCHEME

CLASS XI
ANNUAL EXAMINATION (2024- 25)
ACCOUNTANCY
SET B1 & B2
Time Allowed: 3 Hours Max Marks :80
GENERAL INSTRUCTIONS
1. This marking scheme consists of 21 printed pages.
2. There are 34 questions in the question paper. All questions are compulsory.
3. All parts of a question should be attempted at one place.
4. Write the serial number of the question before attempting it.

B1 B2 SUGGESTED ANSWER MARKS

1 2 Assertion (A): Accounting information is sometimes based on estimates. 1
Reason (R): The financial statements always reflect the true position of
the business.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are true but R is not the correct explanation of A.
c. A is true but R is false.
d. A is false but R is true.
Ans C. A is true but R is false
2 3 A businessman dealing in ready-made garments sold the building having 1
a book value of ₹10,00,000 for ₹12,00,000.
In the above transaction, ₹2,00,000 and ₹12,00,000, respectively, will be
termed as ___________ and ____________.

a. Gain, Revenue Receipts

b. Revenue Receipts, Profit
c. Sales, Capital Receipts
d. Gain, Capital Receipts
Ans d. Gain, Capital Receipts
3 4 Which document is sent to a customer when he returns the goods which 1
were sold to him on credit?
(a) Credit Note
(b) Cheque
(c) Debit Note
(d) Performa invoice
Ans (a) Credit note
4 5 The ‘X’ Traders maintains a double column Cash Book. It received a 1
cheque amounting to ₹1,000 from Y Traders. The cheque was not
deposited into bank account on the same date on which it was received.
The amount of the cheque would be written:
(a) in the bank column on the debit side of the cash book
(b) in the bank column on the credit side of the cash book
(c) in the cash column on the debit side of the cash book
(d) in the Journal Proper

Page 1 of 21
Ans (d) in the Journal Proper
5 6 Assertion (A): Assets are future economic benefits, the rights, which are 1
owned or controlled by an organization or individual.
Reason (R): These are the economic resources of an enterprise that cannot
be usefully expressed in monetary terms.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of
(A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Ans c. (A) is true, but (R) is false

6 7 Moon Ltd. distributed goods free of cost among its employees on account
of new year. Which account will be debited in the corresponding journal 1
entry for this?
(a) Charity Account
(b) Sales Promotion Expenses Account
(c) Staff Welfare Expenses Account
(d) Drawings Account
Ans C) Staff Welfare Expenses Account

7 8 A soft drink manufacturing company incurred huge expenditure on 1

advertisement, assuming that benefit will be availed during following
years. The Expenditure incurred is:
(a) Revenue expenditure.
(b) Capital expenditure.
(c) Deferred revenue expenditure.
(d) Partial revenue and partial capital expenditure.
Ans (c) Deferred revenue expenditure.
8 9 Shreya, the manager of Win Traders, was allowed a commission of 5% on 1
the net profit after charging such commission. The net profit for the year
ended 31st March, 2022 amounted to ₹ 84,000. Calculate the amount of
commission to be paid to Shreya.
(a) ₹ 4,000
(b) ₹ 4,200
(c) ₹ 8,400
(d) ₹ 7,636
Ans (a) ₹ 4,000

9 10 Single Entry system can be adopted by: 1

(a) Small Firms
(b) Cooperative Societies
(c) Joint Stock Companies
(d) Partnership Firms
Ans (a) Small Firms
10 Priya sold goods to Arun of list price of ₹ 38,000. She allowed trade 1
discount @ 10%. Arun paid ₹ 10,000 immediately. Soon, Arun was
declared insolvent and only 25% of the amount due could be received from
his estate. Calculate the amount of bad debts.
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 (a) ₹ 28,000
(b) ₹ 6,050
(c) ₹ 18,150
(d) ₹ 7,000
Ans c) ₹ 18,150
11 Calculate the amount of Provision for Discount on Debtors with the 1
information provided:
Sundry Debtors ₹ 52,000; Further Bad Debts to be adjusted ₹ 2,000;
Provision for Doubtful Debts to be created at 5% and Provision for
Discount on Debtors to be created at 2%.
(a) ₹ 1,040
(b) ₹ 1,000
(c) ₹ 2,500
(d) ₹ 950
Ans (d) ₹ 950
11 12 Which of the following is not an example of Revenue Receipts? 1
a) commission received b) Amount received from sale
of goods
c) Fees received from d) Loan taken from bank
providing services

Ans D) Loan taken from Bank

12 13 Mohan purchased goods for ₹15,00,000 and sold 4/5th of goods ₹18,00,000 1
and met expenditure of ₹2,50,000 during the year 2024. He counted net
profit as ₹ 3,50,000. Which of the accounting concepts was followed by
him?
a) Entity
b) Periodicity
c) Matching
d) Conservatism
Ans c) Matching
13 14 Anil purchased goods of ₹50,000 less 20% Trade Discount and 3% Cash 1
Discount if payment is made within 30 days. Anil paid the full amount
within 30 days. Purchases Account will be debited and Discount Received
Account will be credited respectively with:
(a) ₹40,000, Nil
(b) ₹40,000, ₹300
(c) ₹40,000, ₹1,200
(d) ₹40,000, ₹900
Ans (c) ₹40,000, ₹1,200

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14 15 A credit sale of ₹ 1,900 to Sita was recorded as sale to Rita ₹ 9,100. Which 1
of the following entries will rectify this error?

Date Particulas ₹ ₹
(a) Sales A/c Dr. 9,100
To Rita A/c 9,100
(b) Sita’s A/c Dr. 1,900
Rita’sA/c Dr. 9,100
To Sales A/c 11,000
(c) Sita A/c Dr. 1,900
SalesA/c Dr. 7,200
To Rita A/c 9,100
(d) Sita A/c Dr. 1,900
SalesA/c Dr. 9,100
To Rita A/c 11,000

Ans (c) Sita A/c Dr. 1,900

Sales A/c Dr. 7,200
To Rita A/c 9,100
15 16 A machinery which costs ₹2,00,000 is depreciated at 25% per year using the 1
written Down Value Method. At the end of three years, it will have a net
book value of:
(a) ₹1,50,000
(b) ₹1,00,000
(c) ₹84,375
(d) ₹1,12,500
Ans (C)₹84,375

16 17 Given below are two statements, one labelled as Assertion (A) and the other 1
labelled as Reason (R):
Assertion (A): The main difference between the Accounting Standards and
Ind-AS is that Ind-AS are more comprehensive and provide more detailed
guidelines for financial reporting.
Reason (R): AS is the older set of standards, which were issued by the
Institute of Chartered Accountants of India (ICAI) whereas Ind-AS, on the
other hand, are the newer set of standards that are based on the updated IFRS.
Codes:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Ans (a) Both (A) and (R) are true and (R) is the correct explanation of (A).

Page 4 of 21
17 18 Column A Column B 1
(i) A permanent, continuing and gradual 1. Straight Line
shrinkage in the book value of fixed asset Method
(i) Wear and tear of Fixed asset is 2. Written
charged on the book value of the asset Down Value Method
(ii) Wear and tear of Fixed asset is 3. Depreciation
charged on the cost price of the asset
Choose the correct option: -
(a) (i)-3; (ii)-1; (iii)-2
(b) (i)-3; (ii)-2; (iii)-1
(c) (i)-1; (ii)-2; (iii)-3
(d) (i)-1; (ii)-3; (iii)-2
Ans (b) (i)-3; (ii)-2; (iii)-1
18 Sale is recognized as revenue 1
(a) when the contract for sale is entered into.
(b) at the point of sale or performance of service.
(c) after the expiry of credit period allowed to debtors.
(d) after the money collected from the customers.
Ans (b) at the point of sale or performance of service.
19 Which of the following party is interested in looking at financial information 1
with a viewpointof making internal as well as external comparisons in their
attempt to evaluate the performance?
(a) Owners
(b) Managers
(c) Employees
(d) Creditors
Ans. a) Owners

19 20 Read the following statements carefully: 1

(i) Increase in Assets and Expenses are always debited
(ii) Decrease in Liabilities and Incomes are always credited
(iii) Decrease in Assets and Increase in Liabilities are always credited
(iv) Increase in Capital and Increase in Income are always debited.
Choose from the options given below:
(a) (i) and (ii) are correct
(b) (ii) and (iv) are correct
(c) (i) and (iii) are correct
(d) All are correct
Ans (c) (i) and (iii) are correct

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20 1 Statement I: When a sales book is maintained, there is no need to open Sales 1
account in the ledger
Statement II: When a cash book is maintained, there is no need to open cash
account in the ledger.
a) Statement I is correct but statement II is incorrect.
b) Both statements are incorrect
c) Both statements are correct
d) Statement I is incorrect but statement II is correct
Ans d) Statement I is incorrect but statement II is correct
21 Identify and explain the accounting principles to which each of the 3
following statements are applicable:
(a) Contingent liabilities are shown in the Balance Sheet.
(b) The entire life of business should be divided into time intervals for the
measurement of the profits of business.
21 Identify and explain the two accounting concepts/principles highlighted/
violated in the given case.
On 1st April 2023, Raman started a business for selling stationery items by
investing ₹ 20,00,000. He took a building on rent for his office and
appointed two salesmen and one accountant. His business started
becoming popular. The accountant closed all the books of accounts at the
end of the year for calculating the financial results of the business. For this
purpose, he valued the closing stock and recorded it in the books as
₹ 3,52,000 though the net realizable value was ₹ 3,45,000. The business
earned a profit of ₹ 73,000 in its first year.

Ans (a) Full Disclosure principle- The full disclosure principle is an accounting ½ mark
principle that requires companies to disclose all relevant information about for
their financial statements. The purpose of the full disclosure principle is to identific
ensure that investors and other users of financial statements have all the ation
information they need to make informed decisions. and 1
(b) Accounting Period principle- Accounting period concept is based on mark for
the theory that all accounting transactions of a business should be divided explanat
into equal time periods, which are referred to as accounting periods. ion
The purpose of such a time period is that financial statements can be
prepared and presented to the investors and also help in comparing
performance of the business with each time period.

Ans Highlighted: Accounting Period Principle ½ mark

According to this principle, the life of an enterprise is broken into smaller for
periods so that its performance is measured at regular intervals. identific
Usually, the period considered is one year which is termed as accounting ation
period. It starts from 1st April of a particular year and ends on 31st March of and 1
the next year. mark for
This is required to take decisions and to assess the performance, fund explanat
requirement etc. The financial statements are prepared at the end of the ion

Page 6 of 21
 accounting period to assess the performance and to know the financial
position.
Violated Principle: Prudence / Conservatism
Prudence or Conservatism principle states ‘do not anticipate a profit but
provide for all possible losses. As per this principle, the Closing Stock is
to be valued at cost or market price whichever is lower. This is done to
ensure that the financial statements depict the true picture.
22 26 Journalize in the books of Ganguli Traders of Gujarat assuming CGST@9% 3
and SGST@9%:
(i) Purchased goods of ₹2,00,000 from Suryakant of Jaipur, Rajasthan.
(ii) Sold goods for ₹1,50,000 to Pawar of Mumbai, Maharashtra and banked
the cheque on the same day.
(iii) Purchased office furniture for ₹60,000 by cheque from local market.

Ans Journal

Date Particulars LF Dr. Amt. Cr. Amt.

(₹) (₹)
i Purchases A/c Dr. 2,00,000
Input IGST A/c Dr, 36,000
To Suryakant 2,36,000
(Purchased goods of ₹2,00,000 from
Suryakant of Jaipur, Rajasthan.)
ii. Bank A/c Dr. 1,77,000
To Sales A/c 1,50,000
To Output IGST A/c 27,000
(Sold goods for ₹1,50,000 to Pawar
of Mumbai, Maharashtra and
banked the cheque on the same day.)
iii. Furniture A/c Dr. 60,000
Input CGST A/c Dr, 5,400
Input SGST A/c Dr, 5,400
To Bank A/c 70,800
(Purchased office furniture for
₹60,000 by cheque.)

Page 7 of 21
23 25 Rujuta, a legal consultant, during the financial year 2023-24, earned 3
₹8,00,000, out of which she received ₹7,45,000. She incurred an expense of
₹3,00,000, out of which ₹50,000 are outstanding. She also received
consultancy fee relating to previous year ₹45,000 and also paid ₹20,000
expenses of last year.
You are required to determine her income of 2023-24, if:
a. she follows Cash Basis of Accounting
b. she follows Accrual Basis of Accounting.
OR
Distinguish between Cash and Accrual basis of accounting on the following
basis:
a. Recording of transactions
b. Ascertainment of Profit or Loss
c. Legal Position
Ans a. Cash Basis of Accounting:
Income = Revenue – Expenses
= 7,45,000-2,50,000+ 45,000- 20,000= ₹5,20,000
b. Accrual Basis of Accounting:
Income= Revenue – Expenses
= 8,00,000 – 3,00,000= ₹ 5,00,000.
OR
BASIS CASH BASIS ACCRUAL
BASIS
Recording of Only cash Both cash and
transactions transactions are credit transactions
recorded. are recorded.
Ascertainment Correct profit or Correct profit or
of Profit or loss is not loss is ascertained
Loss ascertained because because it records
it records only cash both cash and
transactions. credit
transactions.
Legal Position Cash basis of Accrual basis of
accounting is not accounting is
recognized by the recognized by the
companies companies
Act,2013. Act,2013.

24 23 Calculate Closing Stock from the following details: 3

Opening Stock ₹ 20,000;
Cash Sales ₹ 60,000;
Credit Sales ₹ 40,000;
Purchases ₹ 70,000.
1
Rate of Gross Profit on Cost 33 %.
3

Page 8 of 21
Sol Total Sales = Cash Sales + Credit Sales = ₹ 1,00,000
1 1
Let cost be ₹ 100, Gross Profit = 33 on Cost; Sales = 133
3 3
1
33
Gross Profit on Sales = 3= 1
1 4
133
3
1
Gross Profit = ₹ 1,00,000 x = ₹25,000
4
Cost of Goods Sold = Sales - Gross Profit
= ₹ 1,00,000 - ₹ 25,000
= ₹ 75,000
Cost of Goods Sold = Opening Stock + Purchases - Closing Stock
₹ 75,000 = ₹ 20,000 + ₹ 70,000 - Closing Stock
Closing Stock = ₹ 20,000 + ₹ 70,000 - ₹ 75,000 = ₹15,000.
25 Give Journal entries for the following adjustments in final accounts for the 3
year ended March, 2024:
(a) Closing stock valued on 31st March, 2024: ₹80,000; Net realizable value
₹75,000.
(b) Loan of ₹10,000 was given to X @ 18% p.a. on 1st August, 2023. Interest
collected so far ₹200.
(c) Debtors as on 31st March, 2024: ₹60,000; Provision for doubtful debts
₹2,000. Increase Provision for doubtful debts by 8%.
Ans
Date Particulars L.F. Dr.Amt Cr.Amt
(₹) (₹)
2024 Stock A/c Dr. 75,000
Mar31 To Trading A/c
(Closing stock recorded.) 75,000

Mar31 Accrued Interest A/c Dr. 1,000

To Interest Received A/c 1,000
(Accrued interest recorded.)
Mar31 Profit and Loss A/c Dr. 4800
To Provision for Doubtful Debts A/c 4800
(Provision for doubtful debts
created.)

Page 9 of 21
 22 Sunny purchased goods worth ₹ 3,50,000. While transporting the goods, the
vehicle met with an accident. 50% of the goods got damaged. Since the
goods were insured, Sunny filed for compensation. After assessing the
losses, the insurance company paid ₹ 1,00,000 only.
Pass necessary journal entries related to loss of goods.

Ans In the Books of Sunny

Journal
Date Particulars LF DR. (₹) CR. (₹)
Goods Loss by accident A/c Dr. 1,75,000
To Purchases A/c 1,75,000
(Goods damaged due to accident)
Insurance Company A/c Dr. 1,75,000
To Goods Loss by accident A/c 1,75,000
(Claim made)

Bank A/c Dr. 1,00,00

Profit and loss A/c Dr. 75,000
To Insurance Company 1,75,000
(Part claim received)

26 24 From the following transactions of Harish, a textile trader, prepare Purchases 3

Book.

2022 Transactions
January
2. Bought from Manan Bros., Punjab.100 metres of cotton cloth @ ₹
400 per metre less 12% Trade Discount
8. Mohan, Sonipat sold silk material worth ₹ 25,000 to us.
15. Purchased Air Conditioner worth ₹ 55,000 for office from TK
Electronics, Delhi.
22. Karan, Mumbai purchased from us goods of list price of ₹ 32,000
less 10% Trade Discount.
25. Purchased woollen garments worth ₹ 60,000 from AVR Garments,
Gurgaon and paid half the amount by cheque immediately.

Page 10 of 21
Sol Purchases Book
Date Particulars Inv. Details Amt. ₹
no
2022
Jan. 2 Manan Bros., Punjab
100 m of cotton cloth @ ₹ 400 per m 40,000
Less: Trade Discount @ 12% (4,800) 35,200
Jan. 8 Mohan, Sonipat
Silk material 25,000
Jan. 25 AVR Garments, Gurgaon
Woollen Garments 30,000
Jan.31 Purchases A/c Dr. 90,200

27 29 (a)X, who keeps his books on Single Entry System, informs you that his 2+2=4
capital on 31st December, 2024 is ₹18,700 and his capital on 1st January,
2023 was ₹19,200. He further informs that during the year, he withdrew
for his household purposes ₹8,420. He sold his investment of ₹2,000 at
2% premium and brought that money in the business.
You are required to prepare a Statement of Profit or Loss.
(b) Classify the following transactions into capital expenditure and
revenue expenditure:
(i) Legal expenses of ₹1,20,000 were spent for purchasing a piece of
land.
(ii) ₹5,000 spent on repairs of an existing machine
(iii) ₹10,000 salary paid to an employee.
(iv) Cost of annual taxes paid and the annual insurance premium
paid on company’s car.
Sol Statement of Profit & Loss 2+2=4
(a)
Particulars Amount

Closing Capital 18,700

Add - Drawings 8,420

27,120

Less- Additional Capital (2,040)

25,080

Less- Opening Capital (19,200)

Profit 5,880

Page 11 of 21
(b) (i) Capital expenditure
(ii) Revenue Expenditure
(iii) Revenue Expenditure
(iv) Revenue Expenditure

28 28 Pass journal entries to rectify the following errors detected while preparing 4
the Trial Balance of Raghu Traders and prepare Suspense Account.

i) Goods worth ₹ 3,200 returned to Ram was recorded in

Purchases Return Book but not posted to Ram’s account.
ii) Cash paid to Parul ₹ 3,800 was debited to Rahul as ₹ 800.
iii) The total of one page of Purchases Book was carried forward to
the next page as ₹ 17,300 instead of ₹ 13,700

Sol Rectifying journal entry

3+1=4
Date Particulars LF Dr. ₹ Cr. ₹
1. Ram A/c Dr. 3,200
To Suspense A/c 3,200
(Omission of posting rectified)
2. Parul A/c Dr. 3,800
To Suspense A/c 3,000
To Rahul A/c 800
(Wrong credit to Rahul’s Account
rectified)
3. Suspense A/c Dr. 3,600
To Purchases A/c 3,600
(Wrong amount carried forward
rectified)
. Suspense A/c Cr.
Particulars ₹ Particulars ₹
To difference in Trial 2,600 By Ram 3,200
Balance By Parul 3,000
(Balancing figure)
To Purchases 3,600
6,200 6,200

29 27 Vinod maintains his account on Single Entry System. Calculate his profit on 4
31st March, 2023 from the following information:
Particulars April 1,2022 March 31,2023
Cash in hand 6,000 2,000
Bank balance 18,000 14,000
Furniture 8,000 8,000
Stock 4,000 12,000
Creditors 16,000 12,000
Debtors 12,000 16,000
During the year his drawings were ₹4,000 and additional capital invested
₹8,000.

Page 12 of 21
 OR
Differentiate between Single entry system and Double entry system
on the basis of:
(i) Trial Balance
(ii) Financial Position
(iii) Authenticity
(iv) Suitability

Ans

Calculation of profit:
Capital at the end + Drawings – Additional capital – opening capital
40,000 + 4,000 – 8,000 – 32,000 = 4,000
OR
SINGLE ENTRY DOUBLE ENTRY
BASIS SYSTEM SYSTEM
Trial balance Trial balance cannot be Trial balance is prepared and
prepared due to incomplete therefore, arithmetical
set of accounting. accuracy of the accounting is
Therefore, arithmetical verified.
accuracy of the accounting
cannot be verified.
Financial Balance Sheet is not Correct financial position is
Position prepared. Only statement of ascertained by preparing
affairs is prepared. Hence, balance Sheet.
financial position is only
estimated.
Authenticity This system does not This system is considered
consider it authentic by the authentic by the court.
court.

Page 13 of 21
 Suitability This system is practically Suitable for small traders only.
suitable for all types of
firms.

30 34 Prepare Ledger Accounts of Ramesh and Machinery from the 3+3=6

following journal entries:
DATE PARTICULARS L.F. DR. (₹) CR. (₹)
Purchases A/c Dr 1,44,000
Input CGST A/c Dr 12,960
InputSGST A/c Dr 12,960
To Ramesh A/c 1,69,920
Ramesh Dr. 1,69,920
To Bank A/c 1,60,000
To Discount Received A/c 9,920
Machinery A/c Dr. 50,000
Input IGST A/c Dr. 9,000
To Lal & Sons 59,000
Depreciation A/c Dr. 5,000
To Machinery A/c 5,000
(a) Prepare a Trial balance from the following information as on 31st
March,2024:
S.no. Particulars Amount (₹)
1 Cash in hand 5,000
2 Bank Overdraft 200
3 Creditors 4,000
4 Discount Received 1,000
5 Bills payables 5,000
6 Short term loan from bank 3,800
7 Carriage Outward 800
8 Trade Receivables 3,200
9 Salaries 15,000
10 Office Equipment 4,000
11 Furniture 6,000
12 Capital 20,000

Page 14 of 21
Sol (a)Ramesh A/c (2 marks)

B) TRIAL BALANCE AS ON 31.3.24

S.no. Particulars L.F. Dr. Amount Cr. Amount
(₹) (₹)
1 Cash in hand 5,000 ---
2 Bank Overdraft --- 200
3 Creditors ---- 4,000
4 Discount Received --- 1,000
5 Bills payables --- 5,000
6 Short term loan from bank --- 3,800
7 Carriage Outward 800 --
8 Trade Receivables 3,200 --
9 Salaries 15,000 --
10 Office Equipment 4,000 --
11 Furniture 6,000 --
12 Capital ---- 20,000
TOTAL 34,000 34,000

31 33 On 31st March, 2023, the Bank Pass Book of Surya Enterprises showed a 6
balance of ₹7,700. On the basis of the following particulars, prepare Bank
Reconciliation Statement:
(i) Cheques issued before 31st March, 2023 but not presented for
payment amounted to ₹3,500.
(ii) Cheques paid into the Bank but a cheque amounting to ₹ 2,600,
has not been collected yet.
(iii)Interest on Loan amounting to ₹554, debited by the Bank was not
recorded in the Cash Book.
(iv) A debtor deposited 4,800 directly into the bank but the information
was received on 3rd April, 2023.
(v) Payment side of Cash Book was totalled 1,000 short.

Page 15 of 21
Sol Bank Reconciliation Statement as on March 31, 2023
Particulars Plus, Minus
Amount amount
Balance as per Bank Pass Book 7,700
Add: Cheque deposited into bank but not 2,600
collected 554
Interest on Bank Loan debited by bank 1,000
Payment side of Cash Book totalled Short 3,500
Less: Cheque issued but not presented for 4,800
payment 3,554
Directly deposited by the customer
BALANCE AS PER CASH BOOK
11,854 11,854
32 32 Record the following transactions in Double Column Cash Book of Suresh 6

2022 ₹
Feb. 1 Cash in hand 56,250
Cash at bank 1,24,500
Feb. 5 Paid to Arun, a creditor, by cheque 21,600
Discount received from Arun 400
Feb. 7 Purchased goods at list price ₹ 40,000.
Trade discount 10%. Paid by cheque.
Feb. 9 Withdrawn from bank 2,300
Feb. 16 Received a cheque from Varun, a 36,700
debtor.
Feb. 17 Deposited Varun’s cheque into bank
Feb. 22 Sold goods to Ashok 20,000
Feb. 25 Paid salaries 13,000
Paid rent 6,500
Feb. 28 Deposited into bank 25,000

In the books of Suresh

Dr. Double Column Cash Book Cr.

Page 16 of 21
33 31 On 1st April, 2019 a firm bought a second-hand machinery for ₹ 2,50,000 6
and spent ₹ 12,000 on its repairs and ₹ 8,000 on installation. In the same
year, on 1st July, another machine was purchased for ₹ 50,000. On 31st
March, 2022, the machine that was bought on 1st April, 2019 was sold at a
loss of ₹ 32,000. A new machine for ₹ 80,000 was bought on the same
date. Depreciation is provided @ 10% per annum on Written Down Value
Method and the books are closed on 31st March every year.

Show Machinery Account for three years ending 31st March, 2022.

OR

(A) Differentiate between Provisions and reserves on the basis of:

Nature
Purpose
Investment
(B) State any three advantages of straight-line method of charging
depreciation.

Page 17 of 21
Dr. Machinery A/c Cr.
Date Particulars ₹ Date Particulars ₹
2019 2020
Ap.1 To Bank A/c – M1 Mar By Depreciation A/c
(2,50,000+12,000+8,000) 2,70,000 .31 M1(2,70,000x10/100)
27,000
July1 To bank A/c M2 50,000 M2(50,000x10/100x9/12)
3,750 30,750
By balance c/d
M1 2,43,000
M2 46,250 2,89,250
3,20,000 3,20,000

2020 To balance b/d

Ap.1 M1 2,43,000 2021 By Depreciation A/c
M2 46,250 Mar.31 M1 24,300
2,89,250
M2 4,625
28,925
By balance c/d
M1 2,18,700 2,60,325
M2 41,625
2,89,250 2,89,250
2021
Ap.1 To balance b/d 2022 By Depreciation A/c
M1 2,18,700 Mar.31 M1 21,870
M2 41,625 2,60,325 M2 4,163 26,033
By Bank A/c 1,64,830
2022 By loss on sale of machine 32,000
Mar.31 To Bank A/c M3 80,000 A/c

By balance c/d
M2 37,462
M3 80,000 1,17,462
3,40,325 3,40,325
2022
Ap.1 To Balance b/d
M2 37,462
M3 80,000 1,17,462

Working notes:
Book value of M1 on 31st March = 2,18,700 – 21,870 = 1,96,830
Loss on sale = 32,000
Sale price = 1,96,830 – 32,000 = 1,64,830
(1.5 +1.5+ 3=6 marks for 2019,2020 and 2021 respectively

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 OR
(A

(A) Basis Provision Reserves

Nature Charge against profits Appropriation of Profits
Purpose It is made to meet It is created to strengthen the
known liability or financial position or to meet
losses, if the amount is unforeseen liabilities or losses.
not certain.
Investment It may not be invested It may be invested outside the
outside the business business.

(B)Straight Line method has certain advantages which are stated below (any
three):
i. It is very simple, easy to understand and apply. Simplicity makes it a popular
method in practice;
ii. Asset can be depreciated upto the net scrap value or zero value. Therefore, this
method makes it possible to distribute full depreciable cost over useful life of the
asset;
iii. Every year, same amount is charged as depreciation in profit and loss account.
This makes comparison of profits for different years easy;
iv. This method is suitable for those assets whose useful life can be estimated
accurately and where the use of the asset is consistent from year to year such as
leasehold buildings.

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34 30 Prepare Trading and Profit and Loss A/c for the year ending December31, 6
2023
Trial Balance for the year ending 31st Dec, 2023
Particulars Dr. Cr.
Stock 50,000
Wages 3,000
Salary 8,000
Purchases 1,75,000
Sales 1,80,000
Purchase Return 2,000
Sundry Debtors 82,000
Discount Received 500
Rent, Rates and Taxes 4,300
Sales Return 5,000
Bills Receivable 45,000
Building 1,10,000
Bills payable 22,000
Bad Debts 5,000
Capital 3,00,000
Commission received 6,000
Furniture 20,000
Cash in hand 16,500
Loan @ 5% p.a. 13,300
5,23,800 5,23,800
Additional information:
a. Salary Outstanding ₹1,000 and wages outstanding ₹8,000
b. Closing stock ₹32,000
c. Depreciation on Building @6% and on Furniture @5%
d. Further bad debts ₹1,000 and provision for bad debts @5% on
debtors.
e. Commission received in advance ₹700.

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Sol
Trading and Profit and Loss A/c for the year ending on December 31,2023

Dr. Cr.

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