CA Foundation Question Paper with Solution June 2024 - ACCOUNTING
Table of Contents
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Question 1 (A) : State with reasons, whether the following statements are True or False:
(i) If Closing Stock appears in the Trial Balance then it does not enter in Trading Account. It is shown only in the Balance Sheet.
(ii) If the amount is posted in the wrong account or it is written on the wrong side of the account ,it is called error of principle.
(iii) Accounting Standards can override the statute.
(iv) Prommissory Note is different from Bill of Exchange because the amount is paid by the maker in case of former and by the acceptor in the later.
(v) All errors are rectified by means of journal entries.
(vi) Revaluation Account is also known as Profit and Loss Adjustment account.
Answer :
Question 1 (B) :
(i) Define accounting policy. What are the conditions under which a company can change its accounting policy? ( Chp 1 of CA Foundation Syllabus )
Answer :
Accounting Policies refer to specific accounting principles and methods of applying these principles adopted by the enterprise in the preparation and presentation of financial statements.
A change in accounting policies should be made in the following conditions:
(a) It is required by some statute or for compliance with an Accounting Standard
(b) Change would result in more appropriate presentation of financial statement
Question 1 (B) :
(ii) Explain the following :
(1) Cash Basis of Accounting
(2) Going Concern concept
Answer :
(1) Cash Basis of Accounting is the method of recording transactions by which revenues and costs and assets and liabilities are reflected in the accounts in the period in which actual receipts or actual payments are made
(2) Going Concern concept: The financial statements are normally prepared on the assumption that an enterprise is a going concern and will continue in operation for the foreseeable future. Hence, it is assumed that the enterprise has neither the intention nor the need to liquidate or curtail materially the scale of its operations
Question 1 (C) :
Pass journal entries for the follwoing transactions in the books of Mr Kapil:
(i) Purchased goods from Sonu for ₹1,50,000at a trade discount of 10 % CGST and SGST @ 6% each.
(ii) Sold goods to Mohit for ₹50,000 and charged CGST and SGST @ 5% each. Out of the amount due 40% is received by cheque immediately.
(iii) Goods costing ₹ 25,000 withdrawn for personal use. Such Goods were purchased by paying CGST and SGST @ 6% each.
(iv) Machinery purchased from M/s Bright Industries for ₹ 2,00,000 plus CGST and SGST @ 9% each. Paid ₹1,00,000 immediately by cheque and balance to be paid after two months.
Answer :
Question 2 (A) :
The Trial Balance of Mr. Sarvesh Kumar as on 31st March, 2024 did not tally and the difference was posted to Suspense Account. On a scrutiny of the books, the following errors were detected :
(i)The total of Sales Returns Book for January 2024 has been casted short by ₹ 1,000.
(ii) Freight paid for installation of a Machine ₹6,500 was posted to the Freight accounts as ₹5,600.
(iii) Goods of the value of ₹ 2,500 returned by a customer were entered in the Sales day Book and posted there from o the credit of his account.
(iv) ₹ 18,000 paid for purchase of old Motorcycle for personal use of Mr. Sarvesh Kumar was debited to conveyance account.
(v) A purchase of ₹6,700 had been posted to creditor’s account as ₹6,000.
(vi) Receipt of cash ₹ 5,000 from Mr. Avinash was posted to the debit of his account.
(vii) A cheque for ₹2,500 received from Mr.Alok had been dishonoured and was posted to the debit of Mr. Ashok.
(viii) Sale of ₹8,500 to Mr. Deepak was recorded in the sales book correctly but while posting in ledger credited to his account.
(ix) The total of “Discount Allowed” column in the cash book for the month of December 2023 amounting to ₹3,800 was not posted.
(x) Sale of old office table for ₹ 2,200 treated as sale of goods.
You are required to pass necessary journal entries with narrations to rectify the above errors. ( Chp 2 of CA Foundation Syllabus )
Answer :
Question 2 (B) :
On 1 st April, 2022, LMP Cd. which depreciates its machinery @ 10% p.a. on diminishing balance method, had ₹9,72,000 to the debit of Machinery Account. On 1 st October, 2022, part of machinery purchased on 1 st April, 2020 for ₹80,000 was sold for ₹ 45,000. Also, a new machinery at a cost of ₹ 1,50,000 was purchased on 1 st October,2022 and installed on the same date and installation charges being ₹ 8,000. The company changed the method of depreciation from diminishing balance method to straight line method with effect from 1 st April, 2020 and adjusted the difference on 31s t March, 2023. The rate of depreciation remains the same. Show the Machinery Account and a as certain the amount chargeable to Profit and Loss Account as depreciation in 2022-23.
Answer :
Question 3 (A) :
The Receipts and Payments Account of Vandana Sports Club for the year ended 31 stMarch, 2024 are as follows :
Receipts and Payments Account
| Receipts | Amount (₹) | Payment | Amount (₹) |
| To Balance b/d | By Salaries | 1,55,000 | |
| Cash in hand 5,200 | By Rent & Electricity | 69,750 | |
| Cash at Bank 35,500 | 40,700 | By Library Books | 10,500 |
| To Subscriptions | 2,95,000 | By Newspaper & Magazines | 16,600 |
| To Entrance fees | 50,000 | By Sports Equipment | 28,500 |
| To Miscellaneous Income | 19,850 | By Sundry Expenses | 71,050 |
| To Interest on Investments | 8,000 | By Balance c/d | |
| Cash in hand 8,750 | |||
| Cash at Bank 53,400 | 62,150 | ||
| 4,13,550 | 4,13,550 |
Details of other assets and liabilities are furnished as follows :
| Particulars | 31st March 2023 (₹) | 31st March 2024 (₹) |
| Salaries Outstanding | 10,200 | 12,400 |
| Outstanding Rent & Electricity | 6,500 | 7,600 |
| Investment (8% Govt, Bonds) | 1,00,000 | 1,00,000 |
| Interest Accrued on Bonds | 2,000 | 2,000 |
| Subscription receivable | 18,700 | 2,600 |
| Subscription received in advance | 7,000 | 8,400 |
| Furniture | 65,500 | |
| Sports Equipment | 41,500 | |
| Library Books | 22,000 |
The closing values of furniture and sports equipment are to be determined after charging depreciation at 10% and 15% respectively inclusive of additions, if any during the year. The Club’s library books are revalued at the end of every year and the value at the end of 31 st March, 2024 was ₹30,000. 60% of the Entrance fee is to be capitalized.
You arerequired to prepare:
(i) Income and Expenditure Account for the year ended 31 st March, 2024
(ii) Balance Sheet as on 31 st March,2024
Answer :
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Question 3 (B) :
P, Q, and R were partners sharing profit & losses in the ratio of 3:2:1. They decided to dissolve the business as on 31 st March, 2024 when their Balance Sheet was as follows :
| Liabilities | Amount(₹) | Assets | Amount(₹) |
| Capital A/c : | Land & Building | 4,85,000 | |
| P 3,55,000 | Machinery | 1,88,000 | |
| Q 2,20,000 | Furniture | 1,05,000 | |
| R 1,25,000 | 7,00,000 | Stock | 55,800 |
| General Reserve | 1,50,000 | Trade Debtors | 1,56,000 |
| Employees Provident Fund | 60,000 | Cash & Bank | 44,200 |
| Trade Creditors | 1,24,000 | ||
| 10,34,000 | 10,34,000 |
The following information is given to you
(i) There was an unrecorded investment which was sold for ₹30,000.
(ii) One of the creditors agreed to take over some items of furniture of Book value ₹25,000 at ₹ 24,000. The rest of the creditors were paid at a discount of 5%.
(iii) Out of the Debtors ₹ 9,000 proved bad, remaining were fully realized
(iv) The other assets were realised as under:
Land & Building ₹ 5,25,000
Machinery ₹1,70,000
Furniture Remaining taken over by P at ₹ 75,000
Stock ₹60,000
(v) Expenses of dissolution amounted to ₹18.700.
(vi)There was an outstanding bill for repairs which had to be paid for ₹ 3.500.
You are required to prepare
(1) Realisation A/c
(2)Cash & Bank A/c
(3) Partner’s Capital A/c in the books of partnership firm. ( Chp 10 of CA Foundation Syllabus )
Answer :
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Question 4 (A) :
| Liabilities | Amount(₹) | Assets | Amount(₹) |
| Capital Accounts : | Building | 3,80,000 | |
| Anu | 2,80,000 | Machinery | 1,43,000 |
| Manu | 2,50,000 | Furniture | 85,000 |
| Long Term Loan | 2,00,000 | Trade Receivables | 1,64,000 |
| Trade Payables | 1,19,500 | Inventories | 48,400 |
| Outstanding liabilities | 16,200 | Investments | 15,200 |
| Cash & Bank | 30,100 | ||
| 8,65,700 | 8,65,700 |
You are required to prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the ,reconstituted firm as on 1 st April, 2024.
Answer :
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Question 4 (B) :
Harshit Traders are carrying on the retail business of electrical goods. They keep their books of account under single entry system. The Balance Sheet as on 31 st March, 2023 was as follows :
| Liabilities | Amount(₹) | Assets | Amount(₹) |
| Capital A/c | 6,05,000 | Motor Vehicle | 1,10,000 |
| Trade creditors | 75,200 | Furniture | 73,500 |
| Salary Payable | 9,000 | Stock in trade | 1,70,800 |
| Trade Debtors | 1,45,400 | ||
| 6% Investments | 60,000 | ||
| Cash in hand & at Bank | 1,29,500 | ||
| 6,89,200 | 6,89,200 |
| Receipts | Amount(₹) | Payments | Amount(₹) |
| Cash in hand & at Bank on 1 st April, 2023 | 1,29,500 | Cash Purchases | 9,48,400 |
| Cash Sales | 10,22,400 | Payment to Trade creditors | 75,45,000 |
| Receipts from Trade Debtors | 85,52,000 | Salaries | 4,12,800 |
| Interest on investments | 3,600 | Rent & taxes | 2,51,600 |
| Sundry Expenses | 1,38,400 | ||
| Drawings | 2,40,000 | ||
| Cash in hand & at Bank on 31 st March 2024 | 1,71,300 | ||
| 97,07,500 | 97,07,500 |
AdditionalInformation :
Answer :
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Question 5 (A) :
Manish closed his books of account on 31stMarch, each year. Inventory taking for the year ended 31stMarch, 2024 was completed by 10 th April, 2024 on which date value of the stock available in godown was of ₹ 4,50,000 at cost.
Following are the details of transactions that took place between 31st March, 2024 and 10 th April, 2024 :
(i) Goods sold to customers ₹1,10,000.
(ii) Sales return ₹ 10,000.
(iii) Purchases ₹ 85,000 (Including Cash Purchases ₹10,000).
(iv) Purchases return amounted to ₹ 2,500.
(v) Goods costing₹ 15,000 received in March, for sale on consignmet basis,out of which 60% of goods had been sold by 10th April. These sales are not included in above sales.
(vi) After the stock was taken it was found that there was certain very old slow-moving items costing ₹14,850, which should be taken at ₹9,500 to ensure disposal to an interested customer.
Goods are sold at a profit margin of 25% on cost. Ascertain the value of inventory for inclusion in the final accounts tor the year ended 31 st March, 2024. ( Chp 4 of CA Foundation Syllabus )
Answer :
Question 5 (B) :
(i) Mr. Prakash runs a factory which produces Pressure Cookers. The following details were obtained about his manufacturing expenses for the year ended 31 st March 2024 :
| Amount(₹) | |
| Opening Work-in-Progress | 6,25,000 |
| Closing Work-in-Progress | 7,15,000 |
| Opening Inventory of Raw material | 5,85,000 |
| Closing Inventory of Raw material | 4,70,000 |
| Purchases | 18,74,000 |
| Purchase Returns | 95,000 |
| Indirect Material | 1,88,000 |
| Direct Wages | 3,97,000 |
| Indirect Wages | 82,000 |
| Power & Electricity | 1,76,000 |
| Repairs and Maintenance | 2,65,000 |
| Depreciation on Factory Shed | 1,44,000 |
| Depreciation on Plant & Machinery | 1,62,000 |
| Sale of scrap | 36,000 |
You are required to prepare Manufacturing Account for the year ended 31st March, 2024.
Answer :
Question 5 (B) :
(ii) From the following particulars, prepare the Bank Reconciliation Statement of businessman as on 31st March, 2024 .
| SI.No. | Particulars | ₹ |
| 1 | Bank Overdraft as per cash book | 24,000 |
| 2 | Cheque deposited as per bank statement but not recorded in cash book | 4,000 |
| 3 | Cash received from Exe was entered in bank column of cash book. | 3,150 |
| 4 | Debit side of the bank column casted short | 1,000 |
| 5 | A cheque for ₹ 9,000 deposited but collection as per bank statement | 8,950 |
| 6 | Bills sent to the bank for collection, collected by the bank but not recorded in cash book | 4,200 |
| 7 | Bank charges recorded twice in cash book | 40 |
| 8 | Noting charges debited in Pass Book for Discounted bill dishonored | 60 |
| 9 | Cheques deposited on 25th March, 2024 but collected by Bank on 5th April, 2024 | 4,800 |
| 10 | Cheques issued on 26 th March, 2024 but presented for encashment on 6 th April, 2024 | 3,000 |
Answer :
| Particular | Amount | |
| Bank O/D as per cash book | (24,000) | |
| a) | cheque Deposit in bank but not record in cash book | +4,000 |
| b) | Cash rec from exe was entered in bank column of cash book | (3,150) |
| c) | Debit side of bank column short | +1,000 |
| d) | Cheque deposit 9,000 but collected bank (9,000-8,950) | (50) |
| e) | Bill sent to bank for collection | +4,200 |
| f) | Bank charges twice cash book | +40 |
| g) | Noting charges in passbook for bank discounted bill dishonored | (60) |
| h) | Cheque deposted on 24-3-24 but collected on 5-4-24 | (4,800) |
| i) | Cheque issued on 26-03-24 but presented for encashment on 06-04-21 | +3,000 |
| Balance as per Passbook |
(19,820) Overdraft |
Question 5 (C) :
The following is the abstract of Balance Sheet of Happy Ltd. as on 31stMarch, 2024 :
| ₹ | |
| Issued and paid-up capital | |
| 90,000 Equity shares of ₹10 each fully paid - up 9,00,000 | |
| Less : Calls-in-arrear (10,000 Equity shares of ₹ 2 each) 20,000 | 8,80,000 |
| 40,000 Equity shares of ₹ 10 each, ₹4 cash paid up | 1,60,000 |
| Reserves and Surplus : | |
| Capital Reserve (realized in cash) | 60,000 |
| Capital Redemption Reserve | 1,60,000 |
| Securities Premium | 1,00,000 |
| General. Reserve | 1,20,000 |
| Profit and Loss Account | 7,00,000 |
On 1 st April, 2024, the company makes final call @ 6 each on 40000 equity shares. The call money is duly received by 30 th April, 2024. On 1stMay, 2024, the Board of Directors of the company decided:
(i) To forfeit the share on which final call of ₹2 each is due ;
(ii) To re- issue the forfeited share @ ₹11 each as fully paid up ;
(iii) To issue fully paid bonus shares in the ratio of one fully paid bonus share for every two fully paid shares held ; and
(iv) To use minimum balance of Profit and Loss Account.
Pass necessary journal entries in the books of the company on the basis of the above decisions.
Answer :
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Question 6 (A) :
The following balances appeared in the Books of Mac Ltd. as on 31'* December, 2023 :
| Amount(₹) | |
| 80,000, 10% Preference shares of ₹100 each ₹75 paid up | 60,00,000 |
| 2,00,000 Equity share of ₹100 each fully paid up | 2,00,00,000 |
| Securities Premium | 6,50,000 |
| Capital Redemption Reserve | 42,00.000 |
| General Reserve | 85,00,000 |
Under the terms of their issue, the preference shares are redeemable on 31 st March. 2024 at a premium of 5%. In order to finance the redemption, the company makes a right issue of 60,000 equity shares of ₹100 each at a premium of 10%,,₹25 being payable on application, ₹45 (including premium) on allotment and the balance on 1 st August, 2024. The issue was fully subscribed and the allotment made on 1 stMarch, 2024. The amount due on allotment was duly received bv 25 th March, 2024.
The preference shares were redeemed after fulfilling the necessary conditions of section 55 of the Companies Act, 2013.
You are required to pass the necessary Journal Entries (including narrations) to give effect to the above arrangement. Also prepare the Notes to accounts on Share Capital,Reserves and Surplus relevant to the Balance sheet immediately after the redemption of prefrences shares as on 31st March,2024.Ignore date column in Journal.
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Question 6 (B) :
What are the advantages of Subsidiary Books? ( Chp 2 of CA Foundation Syllabus )
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