(HOTS) Questions - Basic Accounting Terms Commerce Notes | EduRev

Crash Course of Accountancy - Class 11

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HIGHER ORDER THINKING SKILLS (HOTS) QUESTIONS

Q1. Mr. Jojo started business for buying and selling of readymade garments with Rs.8,00,000 as an initial investment. Out of this he paid Rs.4,00.000 for the purchase of garments and Rs.50,000 for furniture and Rs.50,000 for computers and the remaining amount was deposited into the bank. He sold some of the ladies and kids garments for Rs.3,00,000 for cash and some garments for Rs.1.50.000 on credit to Mr. Rajesh. Subsequently, he bought men's garments of Rs.2,00.000 from Mr. Satish. In the first week of the next month, a fire broke out in his office and stock of garments worth Rs.1,00,000 was destroyed. Later on, some garments which cost Rs.1.20,000 were sold for Rs.1,30,000. Expenses paid during the same period were Rs.15,000. Mr. Jojo withdrew Rs.20,000 from business for his domestic use.

From the above, answer the following:

(i) What is the amount of capital with which Mr. Jojo started the business?

(ii) What fixed assets did he buy?

(iii) What is the value of the goods purchased?

(iv) Who is the creditor and state the amount payable to him?

(v) Who is the debtor and what is the amount receivable from him?

(vi) What is the total amount of expenses?

(vii) What is the amount of drawings of Mr. Jojo?

Ans.: 
(i) Rs.8,00,000;
(ii) Furniture Rs.50,000 and Computer Rs.50,000;
(iii) Rs.4,00,000 + Rs.2,00,000 = Rs.6,00,000;
(iv)Mr. Satish—Rs.2,00,000;
(v) Mr. Rajesh— Rs.1,50,000;
(vi) Rs.15,000;
(vii) Rs.20,000.

Q2. Mr. Badri commenced business of trading in electronic goody with an initial capital of Rs.16,00,000. Out of the said Rs.15,00,000, he paid Rs.10,00,000 towards purchase of electronic goods. He further spent, Rs.2,00,000 on furnishing the shop and Rs.35,000 for purchase of computer and printer. Rs.10,000 is yet to be paid to supplier of computer.

He sold goods costing Rs.5,00,000 for Rs.7,00,000 in cash and goods costing Rs.2,50,000 for Rs.3,10,000 on credit. Goods sold on credit for Rs.25,000 were returned being defective. These goods (costing Rs.20,000) were returned to the supplier. Looking into the response, he decided to trade in home appliances also and further invested Rs.5,00,000. He purchased electronic goody and home appliances for Rs.8,00,000 out of which purchases of Rs.2,00,000 were on credit. Due to an earthquake, 2 LCD Televisions costing Rs.50,000 were completely destroyed. Mr. Badri received an insurance claim of Rs.30,000. A customer purchased goods costing Rs.2,25,000 for Rs.3,00,000 and was allowed discount of Rs.15,000. He was further allowed discount of Rs.5.000 for payment within agreed time.

He paid salary to Shyam of Rs.55,000; Rs.5,000 were yet to be paid. He insured the goody and paid insurance Badriium of Rs.10,000. Out of this. Rs.5,000 are for the next year. Mr. Badri withdrew Rs.30,000 during the year for his personal use. You are required to answer the following questions on the basis of the above:

(i) What is the amount of capital invested in the business by Mr. Badri?

(ii) What is the amount invested by Mr. Badri in fixed assets?

(iii) What is the amount of purchases?

(iv) What is the amount of long-term liabilities?

(v) What is the amount of current liabilities?

(vi) How much expenses did Mr. Badri incur during the year?

(vii) What is the amount of prepaid expenses?

(viii) What is the amount of outstanding expenses?

(ix) What is the income earned by Mr. Badri?

(x) What is the amount due from debtors?

(xi) What is the amount due to creditors?

(xii) What is the value of Closing Stock?

(xiii) What is the value of adjusted purchases?

(xiv) What is the amount of Trade Discount allowed?

(xv) Has Mr. Badri allowed Cash Discount? If yes, what is the amount?

(xvi) What is the amount of Drawings?

(xvii) What is the amount of Sales Return?

(xviii) What is the amount of Purchases Return?

Ans:

(i) Capital invested by Mr. Badri in the business is Rs.20,00,000 (Rs.15,00,000 + Rs.5,00,000).

(ii) Mr. Badri has invested Rs.2,35,000 in the fixed assets (Rs.2,00,000 + Rs.35,000). Out of this amount, Rs.10,000 is payable.

(iii) Purchases made by Mr. Badri are Rs.18,00,000 (Rs.10,00,000 + Rs.8,00,000) during the year.

(iv) Long-term liabilities of Mr. Badri are nil.

(v) Current liabilities of Mr. Badri are Rs.1,95,000 [Rs.10,000 (Computers) + Rs.2,00,000 (Purchases) + Rs.5,000

(Salaries) - Rs.20,000 (Purchases Return)].

(vi) Mr. Badri incurred total expenses of Rs.11,15,000 [Rs.60,000 (Salaries) + Rs.5,000 (Insurance) + Rs.5,000 (Cash

Discount) + Rs.20,000 (Loss of TV) + Rs.18,00,000 (Purchases) - Rs.7,55,000 (Closing Stock) - Rs.20,000 (Purchases Return)].

(vii) Amount of prepaid expenses is Rs.5,000 being insurance Badriium.

(viii) Outstanding expenses are Rs.5,000 being salary payable.

(ix) Income earned by Mr. Badri is Rs.1,70,000 [Rs.12,85,000 (Sales) - Rs.11,15,000 (Expenses)].

(x) Amount due from debtors is Rs.3,10,000.

(xi) Amount due to creditors is Rs.2,00,000.

(xii) The value of Closing Stock is Rs.7,75,000.

Rs.10,00,000 + Rs.20,000 + Rs.8,00,000 - Rs.5,00,000 - Rs.2,50,000 - Rs.20,000 - Rs.50,000 - Rs.2,25,000 - Rs.7,75,000.

(xiii) The amount of adjusted purchases is Rs.17,80,000.

(xiv) The amount of Trade Discount allowed is Rs.15,000.

(xv) Yes, Mr. Prom has allowed cash discount and the amount is Rs.5,000.

(xvi) The amount of Drawings is Rs.30,000.

(xvii) The amount of Sales Return is Rs.25,000.

(xviii) The amount of Purchases Return is Rs.20,000.

Q3. Mr. Sunrise started a business for buying and selling of stationery with Rs. 5,00,000 as an initial investment. Of which, he paid Rs. 1,00,000 for furniture, Rs. 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid Rs. 5,000 as their salaries. Out of the stationery bought, he sold some stationery for Rs. 1,50,000 for cash and some other stationery for T 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of Rs. 1,50,000 from Mr. Peace. In the first week of next month, there was a fire accident and he lost Rs. 30,000 worth of stationery. A part of the furniture, which cost Rs. 40,000, was sold for Rs. 45,000. From the above, answer the following:

(i) What is the amount of capital with which Mr. Sunrise started business.

(ii) What are the fixed assets he bought?

(iii) What is the value of the goods purchased?

(iv) Who is the creditor and state the amount payable to him?

(v) What are the expenses?

(vi) What is the gain he earned?

(vii) What is the loss he incurred?

(viii) Who is the debtor? What is the amount receivable from him?

(ix) What is the total amount of expenses and losses incurred?

(x) Determine if the following are assets, liabilities, revenues, expenses or none of the these: sales, debtors,

creditors, salary to manager, discount to debtors, drawings by the owner.

Ans:

(i) Mr. Sunrise started business with a capital of ?5,00,000.

(ii) He bought furniture or" ? T,00,000.

(iii) The value of goods purchased is 13,50,000 (= Rs. 2,00,000 + Rs. 1,50,000).

(iv) Mr. Peace is the creditor and amount payable to him is 11,50,000.

(v) The amount of expenses is Rs. 5,000 paid as salaries.

(vi) The gain earned is Rs. 5,000 on sale of furniture.

(vii) The loss incurred is 130,000 due to loss of goods by fire.

(viii) The debtor is Mr. Ravi and the amount receivable from him is Rs. 1,00,000.

(ix) The total amount of expenses and losses is Rs. 35,000 (= Rs. 5,000 (salaries) + Rs. 30,000 (loss by fire)).

(x) Sales: Revenue: Salary to Manager: Expenses

Debtors: Assets; Discount to debtors: Expenses

Creditors: Liabilities; Drawings by the Owner: Liabilities

Q4. God jilla Ltd. imported from Germany one machinery for sale in India and another machinery for production purpose. Will you treat them goods or fixed assets?

Ans: First machinery will be treated as goods, and second machinery will be treated as Fixed Asset. machinery for production purpose

Q5. Mr. Jassi Singh dealing in electronic goods sold 20 TV sets costing 30,000 each at 40,000 each. Out of this 5,00,000 were received in cash and the balance is not yet received. State the amount of revenue.

Ans. Revenue will be 8,00,000 (i.e. 20TV Sets x 40,000) Revenue is the amount either received or receivable from sale of goods and services. Both cash sales and credit sales are included in revenue.

Q6. Mr. Dj who owed us 50,000 became insolvent and paid only 60% of this amount. What is term used for the amount not received?

Ans: Bad Debts.

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