CA Foundation Question Paper with Solution Sep 2024 - ACCOUNTING
Table of Contents
Question - 1 (A) True or False .
(i) Nominal Accounts are balanced at the end of the Accounting Year.
Answer : False
Reason : At the end of the accounting year, all the nominal accounts of the ledger book are totaled and transferred to P&L A/c.
(ii) Overhaul Expenses of a second-hand machinery purchased are Revenue Expenditure.
Answer : False
Reason : Overhaul expenses are incurred to put second-hand machinery in working condition to derive endurable long-term advantage. So it should be capitalised.
(iii) Valuation of inventory at cost or net realizable value is based on Principle of Conservatism.
Answer :True
Reason : True: The conservatism concept states that one shall not account for anticipated profits but shall provide all prospective losses. Valuing inventory at cost or net realisable value whichever is less, therefore is based on principle of Conservatism.
(iv) A Promissory Note can be made payable to the Bearer.
Answer : False.
Reason : A promissory note cannot be made payable to the bearer. According to the Negotiable Instruments Act, a promissory note must be made payable to a specific person or order. Making it payable to the bearer would essentially make it function like a currency, which is not allowed for promissory notes.
(v) The Receipts and payment account for a non-profit organization follows the accrual concept of accounting.
Answer : False
Reason : It depicts the cash system of accounting rather than the accrual system, as the cash receipts and payments pertaining to any year are entered in the Receipts and payments account. The principle of accrual is not followed with regard to the receipts and payments account of a non-profit organization.
(vi) Legal heirs of a deceased partner are entitled to his capital account balance only.
Answer : False
Reason : Legal heirs of a deceased partner are entitled to all the dues of deceased partner.
Question 1 (B)
Differentiate between Book - keeping amd Accounting.
Answer :
Question 1 (C)
Pass the necessary Journal entries to rectify the following errors, using a Suspense Account:
Answer :
Journal
| Particulars | L.F. | Dr. ₹ | Cr. ₹ | ||
| (1) | Sales Account | Dr | 500 | ||
| Sales Returns Account | Dr | 500 | |||
| To Suspense Account | 1,000 | ||||
| (The value of goods returned by Mr. A wrongly posted to Sales and omission of debit to Sales Returns Account, now rectified) | |||||
| (2) | Suspense Account | Dr | 500 | ||
| To Mr. R | 500 | ||||
| (Wrong debit to Mr. R for goods returned by him, now rectified) | |||||
| (3) | Mr. Q | Dr | 700 | ||
| To Mr. R | 70 | ||||
| To Suspense Account | 630 | ||||
| (Omission of debit to Mr. Q and wrong credit to Mr. S for sale of `700, now rectified) | |||||
| (4) | Discount Account | Dr | 350 | ||
| To Suspense Account | 350 | ||||
| (The total of Discount allowed during September not posted from the Cash Book; error now rectified) |
Question 2 (A)
The cash book of Hari showed a debit balance of ₹ 1,36,800 as on 31.12.2023 which was in disagreement with balance as per pass book. Following discrepancies were noticed:
Prepare Bank Reconciliation Statement on 31.12.2023 and ascertain balance as per pass book.
Answer :
| Particulars | Amount (₹) | Amount (₹) |
| Cash Book Balance as on 31.12.2023 | 1,36,800 | |
| Add | ||
| (i) Dividend deposited but not recorded | 18,000 | |
| (ii) Cheque issued to Suresh (overstated) | 90 | |
| (v) Sale to Ajay (after cash discount) | 1,53,600 | |
| (vii) UPI receipt for scrap sale not recorded | 1,000 | |
| (viii) Unrepresented cheques issued | 36,000 | 2,08,690 |
| Less | ||
| (iii) Uncredited cheques deposited | (55,000) | |
| (iv) Mediclaim premium paid but not recorded | (14,160) | |
| (vi) Bank charges for cheque book not recorded | (150) | (69,310) |
| Balance as per the Pass Book | 2,76,180 |
Question 2 (B)
Harry draws a bill on Sejal for ₹ 60,000 on 01.01.2023 for 3 months. Sejal accepts the bill and sends it back to Harry to get it discounted for ₹ 56,000. Harry remits 1/4th amount to Sejal. On the due date, Harry was unable to remit his share to Sejal, rather accepts a bill of ₹ 80,000 for a period of 3 months. This bill was discounted by Sejal for ₹ 74,600. Sejal after making the payment of first bill sent 3/4th of the smount remaining to Harry. On maturity of the bill, Harry became bankrupt and his estate paying 40 paise in the rupee. Give journal entries in the books of Sejal. Also prepare ledger account of Harry. All workings should form part of the answer.
Answer :
Question 3 (A)
The following Trial Balance is the Tiral Balance of a Proprietor as on March 31st 2024. Prepare Trading and profit & Loss Account for the year ending March 31st 2024 and a Balance Sheet as at that date.
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| Plants and Machinery | 5,00,000 | Capital | 4,00,000 |
| Office Furniture | 26,000 | Sundry Debtors | 5,20,000 |
| Opening Stock | 4,80,000 | Sales | 48,00,000 |
| Motor Van | 1,20,000 | Bills, Payable | 56,000 |
| Sundry Debtors | 4,57,000 | Provision for Doubtful Debts | 25,000 |
| Cash in hand | 4,000 | Return Outwards | 55,000 |
| Cash at Bank | 65,000 | Discount Received | 37,000 |
| Wages | 15,00,000 | ||
| Salaries | 1,40,000 | ||
| Purchases | 21,35,000 | ||
| Bills Receivable | 72,000 | ||
| Return Inwards | 93,000 | ||
| Drawings | 70,000 | ||
| Advertisements | 60,000 | ||
| Factory Rent | 8,000 | ||
| Insurance | 63,000 | ||
| General Expenses | 10,000 | ||
| Bad debts | 25,000 | ||
| Discount allowed | 65,000 | ||
| 58,93,000 | 58,93,000 |
Additional Information to be considered:
Answer :
Question 3 (B)
The following is the Balance Sheet of Krish and Bala, sharing profit and loss in the ratio 3:2
| Liabilities | Amount | Assets | Amount | ||
| Capital Accounts | Land & Buildings | 28,000 | |||
| Krish | 25,000 | ||||
| Bala | 15,000 | 40,000 | |||
| General Reserve | 30,000 | Plant & Machinery | 15,000 | ||
| Workmen's Compensation Reserve | 10,000 | Stock | 10,000 | ||
| Creditors | 10,000 | Debtors | 25,000 | ||
| Employee's Provident Fund | 8,000 | Less : Provision for doubtful debts | 4,000 | 21,000 | |
| Bank | 20,000 | ||||
| Advertisement expenditure | 4,000 | ||||
| 98,000 | 98,000 |
On admission of Sobha for 1/6th share in the profits, it was decided that:
(1) Value of land and buildings to be increased by ₹ 5,000.
(2) Value of stock to be increased by ₹ 3,500.
(3) Provision of doubtful debts to be increased by ₹ 1,500.
(4) Liabilities of workmen's compensation reserve was determined to be ₹ 8,000.
(5) Sobha was to bring in further cash of ₹ 25,000 as her capital.
(6) Sobha brought in her share of goodwill ₹ 12,000 in cash. Prepare the Revaluation Account, the Capital Account and the Balance Sheet of the new firm.
Answer :
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Question 4 (A)
X ,Y ,Z were in a firm sharing profit and loss as 3 : 2 : 1. Their Balance Sheet on 31st March , 2024 was as follow :
| Liabilities | Amount(₹) | Assets | Amount(₹) | |
| X's Capital | 78,000 | Goodwill | 12,000 | |
| Y's Capital | 42,000 | Patents | 30,000 | |
| Z's Capital | 31,000 | Machinery | 60,000 | |
| Investment Fluctuation Fund | 6,000 | Investment Investment (Market value ₹ 27,600) | 25,000 | |
| Workmen's Compensation | 12,000 | |||
| Trade Creditors | 31,000 | Stock | 30,650 | |
| Employee's Provident Fund Debtors | 12,000 | Debtors | 50,000 | |
| Less: Provision for doubtful debts | 4,000 | 46,000 | ||
| Cash at Bank | 8,350 | |||
| TOTAL | 2,12,000 | TOTAL | 2,12,000 |
Z retired on the above date on the following terms:
(1) Goodwill of the firm was valued at ₹ 60,000.
(2) Value of patents was to be reduced by 20% and that of machinery to 90%.
(3) Provision for doubtful debts was to be raised to 10%
(4) Liability on account of Provident fund was only ₹ 6,000.
(5) Liability for workmen compensation to the extent of ₹ 6,000 is to be created.
(6) Z took over the investment at market value.
(7) Amount due to Z is to be settled on the following basis-
50% on retirement, 50% of the balance within one year and the balance by a bill of exchange (without interest) at 3 months.
You are required the following:
(1) Show entries for the treatment of goodwill,
(2) Prepare Revaluation Account,
(3) Parmer Capital Account &
(4) Balance Sheet
Answer :
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Question 4 (B)
From the following Receipts and Payments Account of Delhi Club, prepare Income & Expenditure Account for the year ended 31.12.2023 and its Balance Sheet as on that date.
| Receipts | Amount(₹) | Receipts | Amount(₹) |
| Cash in hand (Opening) | 8,100 | Salary | 3,000 |
| Cash in Bank (Opening) | 15,000 | Repair Expenses | 500 |
| Donations | 7,000 | Purchase of furniture | 7,000 |
| Subscriptions | 10,000 | Miscellaneous Expenses | 500 |
| Entrance fees | 1,500 | Purchase of Investments | 6,000 |
| interest on Investments | 100 | Insurance Premium | 300 |
| Interest received from Bank | 400 | Billiards Table | 10,000 |
| Sale of Old Newspaper | 250 | Paper, Ink, etc | 250 |
| Sale of Drama Tickets | 1,250 | Drama Expenses | 500 |
| Cash in hand (Closing) | 4,500 | ||
| Cash at Bank (Closing) | 11,050 | ||
| 43,600 | 43,600 |
Information:
(1) Subscriptions in Arrear for 2023 ₹ 1,200, subscription in advance for 2024 550.
(2) Insurance Premium ontstonding ₹ 80. Miscellaneous Expenses prepaid ₹ 90.
(3) 50% of Donation is to be capitalized.
(4) Entrance fee are to be treated as Revenue Income.
(5) 8% Interest has accrued on Investments for 5 months.
(6) Billiards Table costing ₹ 30,000 were purchased during the last year and ₹ 20,000 were paid for it.
Answer :
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Question 5 (A)
Physical verification of stock in a business was done on 23rd June, 2023. The value of the stock was ₹ 4,80,000. The following transactions took place between 23rd June, 2023 and 30th June, 2023:
(i) Out of the Goods sent on consignment, Goods at cost worth ₹ 24,000 were unsold.
(ii) Purchase of ₹ 40,000 were made out of which Goods worth ₹ 16,000 were delivered on 5th July, 2023
(iii) Sales were ₹ 1,36,000 which include Goods worth ₹ 32,000 sent on approval. Half of these Goods were returned before 30th June 2023, but no information is available regarding the remaining goods.
(iv) Goods are sold at cost plus 25%. However, Goods costing ₹ 24,000 had been sold for ₹ 12,000. Determine the value of stock on 30 June, 2023.
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Question 5 (B)
(i) PQR associates bought a computer set on 01.04.2020 for ₹ 2,00,000 and charged depreciation @ 20% p.a. on diminishing balance method. They made further additions as follows:
| Date | Amount |
| 01.04.2021 | ₹ 1,50,00 |
| 01.04.2023 | ₹ 1,00 000 |
On 01.04.2023 it was decided to change the method to straight line basis and charge depreciation assuming the expected life of all the computers to be 8 years from 01.04.2023. Prepare Computers A/c for year ending 31.03.2024.
Answer :
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OR
Question 5 (B)
Following information relates to Mr. Prem who maintains his books under single entry system. He is not able to ascertain the amount of bad debts incurred by him and seeks your help.
| Debtors as on 01.04.2023 | ₹ 6,50,000 |
| Debtors as on 31.03.2024 | ₹ 8,50,000 |
Sale for FY 2023-2024 is 16,00,000 out of which 80% is on credit.
Payment received during the year is ₹ 7,50,000 out of which cheques of ₹ 18,000 were dishonored. Bills of exchange accepted by customers ₹ 2,90,000
Discount allowed is 1% of the credit sale.
Answer :
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Question 5 (C)
XYZ Ltd. an unlisted company issued 6000, 12% debentures of ₹ 100 each at a discount of 5% on 01.04.2021. Interest is payable annually on 31st March every year. The debentures are redeemable at premium of 10% in 3 equal annual installments begining from 31.03.2022 The company invested in specified securities for the redemption of debentures. Entire loss on issue to be booked in the 1st year. You are required to pass journal entries for all the 3 years.
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Question 6 (A)
P Limited issued 6,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share, payable as ₹ 3 on application, ₹ 5 on allotment (including premium) and the balance in two calls of equal amount.
Applications were received for 8,00,000 shares and pro-rata allotment was made to all the applicants. The excess application money was adjusted towards allotment. Harish to whom 1600 shares were allotted failed to pay both calls and his shares were subsequently forfeited after second call. You are required to pass journal entries in the books of P Limited and prepare bank account.
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Question 6 (B)
Differentiate between Periodic Inventory System and Perpetual Inventory System.
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