Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev

TS Grewal Solutions - Class 11 Accountancy

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Commerce : Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev

The document Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev is a part of the Commerce Course TS Grewal Solutions - Class 11 Accountancy.
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Page No 18.62:

Question 1: State whether the following expenses are capital or revenue in nature:
(i) Expenses on whitewashing and painting of a building purchased to make it ready for use.
(ii) ₹ 10,000 spent on constructing platform for a new machine.
(iii) Repair expenses of ₹ 25,000 incurred for whitewashing of factory building.
(iv) Insurance premium paid as renewal premium.
(v) Purchased a new car.
ANSWER:
(1) Capital Expenditure: Paid to make an asset ready to use
(2) Capital Expenditure: Paid to make an asset ready to us
(3) Revenue Expenditure: Made for the maintenance of asset
(4) Revenue Expenditure: Part of normal operating cost
(5) Capital Expenditure: Used in business for a number of years


Page No 18.62:

Question 2: State with reasons whether the following are Capital or Revenue Expenses:
(i) Excise duty paid on purchase of new machine.
(ii) Wages paid to install a machine.
(iii) Repairs carried out on existing car.
(iv) Office block of building repainted for ₹ 50,000.
(v) Paid telephone bill ₹ 2,500.

ANSWER:
(1) Capital Expenditure: Paid for the acquisition of new asset
(2) Capital Expenditure: Paid to make the asset ready to use
(3) Revenue Expenditure: Paid for the running and maintenance of car
(4) Revenue Expenditure: Paid for the maintenance of Building
(5) Revenue Expenditure: Part of normal operating cost



Page No 18.62:

Question 3: From the following information, determine Gross Profit for the year ended 31st March, 2019:
Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev

ANSWER:

Gross Profit

= Sales + Closing Stock – (Opening Stock + Freight and Packing + Goods Purchased)

=1,90,000 + 30,000 – (25,000 + 10,000 + 1,40,000)
=2,20,000 – 1,75,000 = ₹45,000
Alternatively,
Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev
Note: Packing Expenses (Rs 6,000) on Sales is an Indirect Expense, therefore it is not considered to compute the amount of Gross Profit

Page No 18.62:

Question 4: Calculate Closing Stock from the following details:
Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev
ANSWER:
Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev


Page No 18.62:

Question 5: Prepare Trading Account from the transactions givne below:
Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev
Also pass the Journal entries.
ANSWER:
Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev
NoteDepreciation is an Indirect Expense, therefore it is not shown in the Trading Account.
Financial Statements Of Sole Proprietorship - (Part - 1) Commerce Notes | EduRev 

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