Principles and Practice of Accounting (Paper-1) - June 2023 | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


PAPER – 1: PRINCIPLES & PRACTICE OF ACCOUNTING 
QUESTIONS  
True and False  
1.  State with reasons, whether the following statements are true or false: 
(i)  Prior period items need not be separately disclosed in the current statement of profit 
and loss.  
(ii)  “Salary paid in advance” is not an expense because it neither reduces assets nor 
increases liabilities.  
(iii)  If the effect of errors committed cancel out, the errors will be called compensating 
errors and the trial balance will disagree.  
(iv)  The sale value of by-product is credited to Trading Account.  
(v)  In case of consignment sale, ownership of goods will be transferred to consignee at 
the time of receiving the goods. 
(vi) The problem of red-ink interest arises when the due date of a transaction falls after 
the closing date of account current.  
(vii)  Net income in case of persons practicing vocation is determined by preparing profit 
and loss account.  
(viii) “Listed company” means a company which has its securities only listed with 
National stock exchange.  
(ix)  Partners can share profits or losses in their capital ratio, when there is no 
agreement.  
Theoretical Framework 
2. (a) Discuss the limitations which must be kept in mind while evaluating the Financial 
Statements.  
(b) Distinguish between Going concern and cost concept.  
Journal Entries 
3. (a) Pass a journal entries in the following cases. 
(i) A running business was purchased by Mohan with following assets and 
liabilities:  
Cash ` 12,000, Land ` 24,000, Furniture ` 6,000, Stock ` 12,000, Creditors  
` 6,000, Bank Overdraft ` 12,000. 
(ii) Goods distributed by way of free samples, ` 6,000. 
(iii) Purchase of goods from Naveen of the list price of ` 12,000.  He allowed 10% 
Page 2


PAPER – 1: PRINCIPLES & PRACTICE OF ACCOUNTING 
QUESTIONS  
True and False  
1.  State with reasons, whether the following statements are true or false: 
(i)  Prior period items need not be separately disclosed in the current statement of profit 
and loss.  
(ii)  “Salary paid in advance” is not an expense because it neither reduces assets nor 
increases liabilities.  
(iii)  If the effect of errors committed cancel out, the errors will be called compensating 
errors and the trial balance will disagree.  
(iv)  The sale value of by-product is credited to Trading Account.  
(v)  In case of consignment sale, ownership of goods will be transferred to consignee at 
the time of receiving the goods. 
(vi) The problem of red-ink interest arises when the due date of a transaction falls after 
the closing date of account current.  
(vii)  Net income in case of persons practicing vocation is determined by preparing profit 
and loss account.  
(viii) “Listed company” means a company which has its securities only listed with 
National stock exchange.  
(ix)  Partners can share profits or losses in their capital ratio, when there is no 
agreement.  
Theoretical Framework 
2. (a) Discuss the limitations which must be kept in mind while evaluating the Financial 
Statements.  
(b) Distinguish between Going concern and cost concept.  
Journal Entries 
3. (a) Pass a journal entries in the following cases. 
(i) A running business was purchased by Mohan with following assets and 
liabilities:  
Cash ` 12,000, Land ` 24,000, Furniture ` 6,000, Stock ` 12,000, Creditors  
` 6,000, Bank Overdraft ` 12,000. 
(ii) Goods distributed by way of free samples, ` 6,000. 
(iii) Purchase of goods from Naveen of the list price of ` 12,000.  He allowed 10% 
2 FOUNDATION EXAMINATION: JUNE, 2023 
trade discount, ` 300 cash discount was also allowed for quick payment. 
(iv) Income tax liability of proprietor ` 10,200 was paid out of petty cash. 
(v) Sumit became an insolvent and could pay only 50 paise in a rupee. Amount 
due from him ` 3,600. 
Capital or revenue expenditure  
(b) Classify the following expenditures as capital or revenue expenditure: 
(i) Insurance claim received on account of inventory damaged by fire.  
(ii) Amount spent as lawyer’s fee to defend a suit claiming that the firm’s factory 
site belonged to the plaintiff’s land. 
(iii) Travelling expenses of the chief financial officer on trips abroad for purchase 
of special machinery.  
(iv) Dividend received from XYZ limited during the year. 
Cash book  
4. (a) Prepare a Triple Column Cash Book for the month of April 2022 from the following 
transactions and bring down the balance for the start of next month: 
Date  ` 
1 Cash in hand 9,000 
1 Cash at bank 36,000 
2 Paid into bank 3,000 
5 Bought furniture and issued cheque 4,500 
8 Purchased goods for cash 1500 
12 Received cash from Ms. Kamini  2,940 
 Discount allowed to her 60 
14 Cash sales 15,000 
16 Paid to Ms. Shikha by cheque 4,350 
 Discount received  150 
19 Paid into Bank 1500 
20 Sales through Credit Card 4,000 
23 Withdrawn from Bank for Private expenses 1,800 
24 Received cheque from Ms. Reema 4,290 
 Allowed her discount  60 
26 Deposited Ms. Reema’s cheque into Bank  
Page 3


PAPER – 1: PRINCIPLES & PRACTICE OF ACCOUNTING 
QUESTIONS  
True and False  
1.  State with reasons, whether the following statements are true or false: 
(i)  Prior period items need not be separately disclosed in the current statement of profit 
and loss.  
(ii)  “Salary paid in advance” is not an expense because it neither reduces assets nor 
increases liabilities.  
(iii)  If the effect of errors committed cancel out, the errors will be called compensating 
errors and the trial balance will disagree.  
(iv)  The sale value of by-product is credited to Trading Account.  
(v)  In case of consignment sale, ownership of goods will be transferred to consignee at 
the time of receiving the goods. 
(vi) The problem of red-ink interest arises when the due date of a transaction falls after 
the closing date of account current.  
(vii)  Net income in case of persons practicing vocation is determined by preparing profit 
and loss account.  
(viii) “Listed company” means a company which has its securities only listed with 
National stock exchange.  
(ix)  Partners can share profits or losses in their capital ratio, when there is no 
agreement.  
Theoretical Framework 
2. (a) Discuss the limitations which must be kept in mind while evaluating the Financial 
Statements.  
(b) Distinguish between Going concern and cost concept.  
Journal Entries 
3. (a) Pass a journal entries in the following cases. 
(i) A running business was purchased by Mohan with following assets and 
liabilities:  
Cash ` 12,000, Land ` 24,000, Furniture ` 6,000, Stock ` 12,000, Creditors  
` 6,000, Bank Overdraft ` 12,000. 
(ii) Goods distributed by way of free samples, ` 6,000. 
(iii) Purchase of goods from Naveen of the list price of ` 12,000.  He allowed 10% 
2 FOUNDATION EXAMINATION: JUNE, 2023 
trade discount, ` 300 cash discount was also allowed for quick payment. 
(iv) Income tax liability of proprietor ` 10,200 was paid out of petty cash. 
(v) Sumit became an insolvent and could pay only 50 paise in a rupee. Amount 
due from him ` 3,600. 
Capital or revenue expenditure  
(b) Classify the following expenditures as capital or revenue expenditure: 
(i) Insurance claim received on account of inventory damaged by fire.  
(ii) Amount spent as lawyer’s fee to defend a suit claiming that the firm’s factory 
site belonged to the plaintiff’s land. 
(iii) Travelling expenses of the chief financial officer on trips abroad for purchase 
of special machinery.  
(iv) Dividend received from XYZ limited during the year. 
Cash book  
4. (a) Prepare a Triple Column Cash Book for the month of April 2022 from the following 
transactions and bring down the balance for the start of next month: 
Date  ` 
1 Cash in hand 9,000 
1 Cash at bank 36,000 
2 Paid into bank 3,000 
5 Bought furniture and issued cheque 4,500 
8 Purchased goods for cash 1500 
12 Received cash from Ms. Kamini  2,940 
 Discount allowed to her 60 
14 Cash sales 15,000 
16 Paid to Ms. Shikha by cheque 4,350 
 Discount received  150 
19 Paid into Bank 1500 
20 Sales through Credit Card 4,000 
23 Withdrawn from Bank for Private expenses 1,800 
24 Received cheque from Ms. Reema 4,290 
 Allowed her discount  60 
26 Deposited Ms. Reema’s cheque into Bank  
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 3 
28 Withdrew cash from Bank for Office use 6,000 
30 Paid rent by cheque 2,400     
30 Bank Charged 1% commission on sale through 
debit/credit card  
Rectification of errors   
(b) Mr. Anirudh was unable to agree the Trial Balance last year and wrote off the 
difference to the profit and loss account of that year. On verifying the old books by a 
Chartered Accountant next year, the following mistakes were found. 
(i)  Purchase account was undercast by ` 16,000. 
(ii) Sale of goods to Mr. Rahim for ` 5,000 was omitted to be recorded. 
(iii) Receipt of cash from Mr. Ashok was posted to the account of Mr. Anubhav  
` 1,200. 
(iv) Amount of ` 4,167 of sales was wrongly posted as ` 4,617. 
(v) Repairs to Machinery was debited to Machinery Account ` 6,100. 
(vi)  A credit purchase of goods from Mr. Paul for ` 3,000 entered as sale.  
 Suggest the necessary rectification entries. 
Bank Reconciliation Statement  
5.  On 31
st
  October, 2022, the Cash Book of Mr. Shankar showed an overdrawn position of  
` 13,530 although his Bank Statement showed only ` 9,600 overdrawn.  An examination 
of the two records showed the following errors: 
(i) The debit side of the Cash Book was undercast by ` 1,200. 
(ii) A cheque for ` 4,800 in favour of Hari suppliers Ltd. was omitted by the bank from 
the statement, the cheque was debited to another customer’s Account.  
(iii) A cheque for ` 561 drawn for payment of telephone bill was recorded in the Cash 
Book as ` 516 but was shown correctly in the Bank Statement. 
(iv) A cheque for ` 1,275 from Mr. Satpal paid into bank was dishonoured and shown as 
such on the Bank Statement, although no entry relating to the dishonoured cheque 
was made in the Cash Book. 
(v) The Bank had debited a cheque for ` 450 to Mr. Shankar Account by mistake, it 
should have been debited by them to Mr. Kar’s Account. 
(vi) A dividend of ` 300 was collected by the bank but not entered in the Cash Book. 
(vii) Cheques totalling ` 3,900 drawn on October was not presented for payment. 
(viii) Cheque for ` 3,600 deposited on 30th October was not credited by the Bank. 
Page 4


PAPER – 1: PRINCIPLES & PRACTICE OF ACCOUNTING 
QUESTIONS  
True and False  
1.  State with reasons, whether the following statements are true or false: 
(i)  Prior period items need not be separately disclosed in the current statement of profit 
and loss.  
(ii)  “Salary paid in advance” is not an expense because it neither reduces assets nor 
increases liabilities.  
(iii)  If the effect of errors committed cancel out, the errors will be called compensating 
errors and the trial balance will disagree.  
(iv)  The sale value of by-product is credited to Trading Account.  
(v)  In case of consignment sale, ownership of goods will be transferred to consignee at 
the time of receiving the goods. 
(vi) The problem of red-ink interest arises when the due date of a transaction falls after 
the closing date of account current.  
(vii)  Net income in case of persons practicing vocation is determined by preparing profit 
and loss account.  
(viii) “Listed company” means a company which has its securities only listed with 
National stock exchange.  
(ix)  Partners can share profits or losses in their capital ratio, when there is no 
agreement.  
Theoretical Framework 
2. (a) Discuss the limitations which must be kept in mind while evaluating the Financial 
Statements.  
(b) Distinguish between Going concern and cost concept.  
Journal Entries 
3. (a) Pass a journal entries in the following cases. 
(i) A running business was purchased by Mohan with following assets and 
liabilities:  
Cash ` 12,000, Land ` 24,000, Furniture ` 6,000, Stock ` 12,000, Creditors  
` 6,000, Bank Overdraft ` 12,000. 
(ii) Goods distributed by way of free samples, ` 6,000. 
(iii) Purchase of goods from Naveen of the list price of ` 12,000.  He allowed 10% 
2 FOUNDATION EXAMINATION: JUNE, 2023 
trade discount, ` 300 cash discount was also allowed for quick payment. 
(iv) Income tax liability of proprietor ` 10,200 was paid out of petty cash. 
(v) Sumit became an insolvent and could pay only 50 paise in a rupee. Amount 
due from him ` 3,600. 
Capital or revenue expenditure  
(b) Classify the following expenditures as capital or revenue expenditure: 
(i) Insurance claim received on account of inventory damaged by fire.  
(ii) Amount spent as lawyer’s fee to defend a suit claiming that the firm’s factory 
site belonged to the plaintiff’s land. 
(iii) Travelling expenses of the chief financial officer on trips abroad for purchase 
of special machinery.  
(iv) Dividend received from XYZ limited during the year. 
Cash book  
4. (a) Prepare a Triple Column Cash Book for the month of April 2022 from the following 
transactions and bring down the balance for the start of next month: 
Date  ` 
1 Cash in hand 9,000 
1 Cash at bank 36,000 
2 Paid into bank 3,000 
5 Bought furniture and issued cheque 4,500 
8 Purchased goods for cash 1500 
12 Received cash from Ms. Kamini  2,940 
 Discount allowed to her 60 
14 Cash sales 15,000 
16 Paid to Ms. Shikha by cheque 4,350 
 Discount received  150 
19 Paid into Bank 1500 
20 Sales through Credit Card 4,000 
23 Withdrawn from Bank for Private expenses 1,800 
24 Received cheque from Ms. Reema 4,290 
 Allowed her discount  60 
26 Deposited Ms. Reema’s cheque into Bank  
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 3 
28 Withdrew cash from Bank for Office use 6,000 
30 Paid rent by cheque 2,400     
30 Bank Charged 1% commission on sale through 
debit/credit card  
Rectification of errors   
(b) Mr. Anirudh was unable to agree the Trial Balance last year and wrote off the 
difference to the profit and loss account of that year. On verifying the old books by a 
Chartered Accountant next year, the following mistakes were found. 
(i)  Purchase account was undercast by ` 16,000. 
(ii) Sale of goods to Mr. Rahim for ` 5,000 was omitted to be recorded. 
(iii) Receipt of cash from Mr. Ashok was posted to the account of Mr. Anubhav  
` 1,200. 
(iv) Amount of ` 4,167 of sales was wrongly posted as ` 4,617. 
(v) Repairs to Machinery was debited to Machinery Account ` 6,100. 
(vi)  A credit purchase of goods from Mr. Paul for ` 3,000 entered as sale.  
 Suggest the necessary rectification entries. 
Bank Reconciliation Statement  
5.  On 31
st
  October, 2022, the Cash Book of Mr. Shankar showed an overdrawn position of  
` 13,530 although his Bank Statement showed only ` 9,600 overdrawn.  An examination 
of the two records showed the following errors: 
(i) The debit side of the Cash Book was undercast by ` 1,200. 
(ii) A cheque for ` 4,800 in favour of Hari suppliers Ltd. was omitted by the bank from 
the statement, the cheque was debited to another customer’s Account.  
(iii) A cheque for ` 561 drawn for payment of telephone bill was recorded in the Cash 
Book as ` 516 but was shown correctly in the Bank Statement. 
(iv) A cheque for ` 1,275 from Mr. Satpal paid into bank was dishonoured and shown as 
such on the Bank Statement, although no entry relating to the dishonoured cheque 
was made in the Cash Book. 
(v) The Bank had debited a cheque for ` 450 to Mr. Shankar Account by mistake, it 
should have been debited by them to Mr. Kar’s Account. 
(vi) A dividend of ` 300 was collected by the bank but not entered in the Cash Book. 
(vii) Cheques totalling ` 3,900 drawn on October was not presented for payment. 
(viii) Cheque for ` 3,600 deposited on 30th October was not credited by the Bank. 
4 FOUNDATION EXAMINATION: JUNE, 2023 
(ix) Interest amounting to ` 900 was debited by the Bank but yet to be entered in the 
Cash Book. 
You are required to prepare a Bank Reconciliation Statement on 31
st
 October, 2022. 
Inventories 
6. Raj Ltd. prepared their accounts financial year ended on 31st March 2022. Due to 
unavoidable circumstances actual stock has been taken on 10th April 2022, when it was 
ascertained at ` 5,00,000. It has been found that; 
(i)   Sales are entered in the Sales Book on the day of dispatch and return inwards in 
the Returns Inward Book on the day of the goods received back. 
(ii)   Purchases are entered in the Purchase Book on the day the Invoices are received. 
(iii)  Sales between 1st April 2022 to 9th April 2022 amounting to ` 80,000 as per Sales 
Day Book. 
(iv)  Free samples for business promotion issued during 1st April 2022 to 9th April 2022 
amounting to ` 16,000 at cost. 
(v)  Purchases during 1st April 2022 to 9th April 2022 amounting to ` 40,000 but goods 
amounts to ` 8,000 not received till the date of stock taking. 
(vi) Invoices for goods purchased amounting to ` 80,000 were entered on 28th March 
2022 but the goods were not included in stock. 
Rate of Gross Profit is 25% on cost. Ascertain the value of Stock as on 31st March, 2022. 
Concept and Accounting of Depreciation 
7. A Plant & Machinery costing ` 10,00,000 is depreciated on straight line assuming 10 
year working life and zero residual value, for four years. At the end of the fourth year, the 
machinery was revalued upwards by ` 40,000. The remaining useful life was reassessed 
at 8 year. Calculate Depreciation for the fifth year.  
Bill of exchange 
8. Priya owed `5,00,000 to Pratika. On 1st October, 2022, Priya accepted a bill drawn by 
Pratika for the amount at 3 months. Pratika got the bill discounted with his bank for 
`4,95,000 on 3rd October, 2022. Being unable to pay the amount on due date, Priya 
approached Pratika for renewal of the bill. Pratika agreed on the conditions that  
` 2,50,000 be paid immediately together with interest on the remaining amount at 10% 
per annum for 3 months and for the balance, Priya should accept a new bill at three 
months. These arrangements were carried out. But afterwards, Priya became insolvent 
and 60% of the amount could be recovered from his estate. 
Pass journal entries (with narration) in the books of Pratika. 
 
Page 5


PAPER – 1: PRINCIPLES & PRACTICE OF ACCOUNTING 
QUESTIONS  
True and False  
1.  State with reasons, whether the following statements are true or false: 
(i)  Prior period items need not be separately disclosed in the current statement of profit 
and loss.  
(ii)  “Salary paid in advance” is not an expense because it neither reduces assets nor 
increases liabilities.  
(iii)  If the effect of errors committed cancel out, the errors will be called compensating 
errors and the trial balance will disagree.  
(iv)  The sale value of by-product is credited to Trading Account.  
(v)  In case of consignment sale, ownership of goods will be transferred to consignee at 
the time of receiving the goods. 
(vi) The problem of red-ink interest arises when the due date of a transaction falls after 
the closing date of account current.  
(vii)  Net income in case of persons practicing vocation is determined by preparing profit 
and loss account.  
(viii) “Listed company” means a company which has its securities only listed with 
National stock exchange.  
(ix)  Partners can share profits or losses in their capital ratio, when there is no 
agreement.  
Theoretical Framework 
2. (a) Discuss the limitations which must be kept in mind while evaluating the Financial 
Statements.  
(b) Distinguish between Going concern and cost concept.  
Journal Entries 
3. (a) Pass a journal entries in the following cases. 
(i) A running business was purchased by Mohan with following assets and 
liabilities:  
Cash ` 12,000, Land ` 24,000, Furniture ` 6,000, Stock ` 12,000, Creditors  
` 6,000, Bank Overdraft ` 12,000. 
(ii) Goods distributed by way of free samples, ` 6,000. 
(iii) Purchase of goods from Naveen of the list price of ` 12,000.  He allowed 10% 
2 FOUNDATION EXAMINATION: JUNE, 2023 
trade discount, ` 300 cash discount was also allowed for quick payment. 
(iv) Income tax liability of proprietor ` 10,200 was paid out of petty cash. 
(v) Sumit became an insolvent and could pay only 50 paise in a rupee. Amount 
due from him ` 3,600. 
Capital or revenue expenditure  
(b) Classify the following expenditures as capital or revenue expenditure: 
(i) Insurance claim received on account of inventory damaged by fire.  
(ii) Amount spent as lawyer’s fee to defend a suit claiming that the firm’s factory 
site belonged to the plaintiff’s land. 
(iii) Travelling expenses of the chief financial officer on trips abroad for purchase 
of special machinery.  
(iv) Dividend received from XYZ limited during the year. 
Cash book  
4. (a) Prepare a Triple Column Cash Book for the month of April 2022 from the following 
transactions and bring down the balance for the start of next month: 
Date  ` 
1 Cash in hand 9,000 
1 Cash at bank 36,000 
2 Paid into bank 3,000 
5 Bought furniture and issued cheque 4,500 
8 Purchased goods for cash 1500 
12 Received cash from Ms. Kamini  2,940 
 Discount allowed to her 60 
14 Cash sales 15,000 
16 Paid to Ms. Shikha by cheque 4,350 
 Discount received  150 
19 Paid into Bank 1500 
20 Sales through Credit Card 4,000 
23 Withdrawn from Bank for Private expenses 1,800 
24 Received cheque from Ms. Reema 4,290 
 Allowed her discount  60 
26 Deposited Ms. Reema’s cheque into Bank  
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 3 
28 Withdrew cash from Bank for Office use 6,000 
30 Paid rent by cheque 2,400     
30 Bank Charged 1% commission on sale through 
debit/credit card  
Rectification of errors   
(b) Mr. Anirudh was unable to agree the Trial Balance last year and wrote off the 
difference to the profit and loss account of that year. On verifying the old books by a 
Chartered Accountant next year, the following mistakes were found. 
(i)  Purchase account was undercast by ` 16,000. 
(ii) Sale of goods to Mr. Rahim for ` 5,000 was omitted to be recorded. 
(iii) Receipt of cash from Mr. Ashok was posted to the account of Mr. Anubhav  
` 1,200. 
(iv) Amount of ` 4,167 of sales was wrongly posted as ` 4,617. 
(v) Repairs to Machinery was debited to Machinery Account ` 6,100. 
(vi)  A credit purchase of goods from Mr. Paul for ` 3,000 entered as sale.  
 Suggest the necessary rectification entries. 
Bank Reconciliation Statement  
5.  On 31
st
  October, 2022, the Cash Book of Mr. Shankar showed an overdrawn position of  
` 13,530 although his Bank Statement showed only ` 9,600 overdrawn.  An examination 
of the two records showed the following errors: 
(i) The debit side of the Cash Book was undercast by ` 1,200. 
(ii) A cheque for ` 4,800 in favour of Hari suppliers Ltd. was omitted by the bank from 
the statement, the cheque was debited to another customer’s Account.  
(iii) A cheque for ` 561 drawn for payment of telephone bill was recorded in the Cash 
Book as ` 516 but was shown correctly in the Bank Statement. 
(iv) A cheque for ` 1,275 from Mr. Satpal paid into bank was dishonoured and shown as 
such on the Bank Statement, although no entry relating to the dishonoured cheque 
was made in the Cash Book. 
(v) The Bank had debited a cheque for ` 450 to Mr. Shankar Account by mistake, it 
should have been debited by them to Mr. Kar’s Account. 
(vi) A dividend of ` 300 was collected by the bank but not entered in the Cash Book. 
(vii) Cheques totalling ` 3,900 drawn on October was not presented for payment. 
(viii) Cheque for ` 3,600 deposited on 30th October was not credited by the Bank. 
4 FOUNDATION EXAMINATION: JUNE, 2023 
(ix) Interest amounting to ` 900 was debited by the Bank but yet to be entered in the 
Cash Book. 
You are required to prepare a Bank Reconciliation Statement on 31
st
 October, 2022. 
Inventories 
6. Raj Ltd. prepared their accounts financial year ended on 31st March 2022. Due to 
unavoidable circumstances actual stock has been taken on 10th April 2022, when it was 
ascertained at ` 5,00,000. It has been found that; 
(i)   Sales are entered in the Sales Book on the day of dispatch and return inwards in 
the Returns Inward Book on the day of the goods received back. 
(ii)   Purchases are entered in the Purchase Book on the day the Invoices are received. 
(iii)  Sales between 1st April 2022 to 9th April 2022 amounting to ` 80,000 as per Sales 
Day Book. 
(iv)  Free samples for business promotion issued during 1st April 2022 to 9th April 2022 
amounting to ` 16,000 at cost. 
(v)  Purchases during 1st April 2022 to 9th April 2022 amounting to ` 40,000 but goods 
amounts to ` 8,000 not received till the date of stock taking. 
(vi) Invoices for goods purchased amounting to ` 80,000 were entered on 28th March 
2022 but the goods were not included in stock. 
Rate of Gross Profit is 25% on cost. Ascertain the value of Stock as on 31st March, 2022. 
Concept and Accounting of Depreciation 
7. A Plant & Machinery costing ` 10,00,000 is depreciated on straight line assuming 10 
year working life and zero residual value, for four years. At the end of the fourth year, the 
machinery was revalued upwards by ` 40,000. The remaining useful life was reassessed 
at 8 year. Calculate Depreciation for the fifth year.  
Bill of exchange 
8. Priya owed `5,00,000 to Pratika. On 1st October, 2022, Priya accepted a bill drawn by 
Pratika for the amount at 3 months. Pratika got the bill discounted with his bank for 
`4,95,000 on 3rd October, 2022. Being unable to pay the amount on due date, Priya 
approached Pratika for renewal of the bill. Pratika agreed on the conditions that  
` 2,50,000 be paid immediately together with interest on the remaining amount at 10% 
per annum for 3 months and for the balance, Priya should accept a new bill at three 
months. These arrangements were carried out. But afterwards, Priya became insolvent 
and 60% of the amount could be recovered from his estate. 
Pass journal entries (with narration) in the books of Pratika. 
 
 PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING 5 
Consignment 
9. Katen of Pilani consigns 1000 cases of goods costing ` 1,500 each to Bharat of Jaipur. 
Katen pays the following expenses in connection with the consignment:  
Particulars ` 
Carriage 30,000 
Freight 90,000 
Loading Charges 30,000 
Bharat sells 700 cases at ` 2,100 per case and incurs the following expenses: 
Clearing charges 47,500 
Warehousing and Storage charges 25,000 
Packing and selling expenses 7,000 
It is found that 200 cases were lost in transit (which is an abnormal loss) and another 50 
cases were in transit. Bharat is entitled to a commission of 10% on gross sales. Draw up 
the Consignment Account and Bharat's Account in the books of Katen. 
Sales of goods on approval or return basis   
10.  Anupam supplied goods on sale or return basis to customers, the particulars of which are 
as under: 
Date of dispatch Party’s name Amount ` Remarks 
10.12.2022 M/s PQR Co. 20,000 No information till 31.12.2022 
12.12.2022 M/s XYZ Co 25,000 Returned on 16.12.2022 
15.12.2022 M/s STV Co 22,000 Goods worth ` 12,000 returned on 
20.12.2022 
20.12.2022 M/s XYZ Co 26,000 Goods Retained on 24.12.2022 
25.12.2022 M/s PQR Co 21,000 Good Retained on 28.12.2022 
30.12.2022 M/s STV Co 23,000 No information till 31.12.2022 
 Goods are to be returned within 15 days from the dispatch, failing which it will be treated 
as sales. The books of ‘Anupam’ are closed on the 31
st
 December, 2022. 
 Prepare the following account in the books of ‘Anupam’. 
 Goods on “sales or return, sold and returned day books”. 
 Goods on sales or return total account.