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Ques 1: Mr. Gopal started business for buying and selling of readymade garments with Rs. 8,00,000 as an initial investments . 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. Gopal 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. Gopal started the business ?
(ii) What fixed assets did he buy?
(iii) What is the value of 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. Gopal?
Ans:
(i) Rs. 8,00,000 is the amount of capital which Mr. Gopal started the business.
(ii) Total Purchases of Fixed Assets
Furniture = Rs. 50,000
Computer= Rs. 50,000
Total Fixed Assets = Furniture + Computer
= 50,000+50,000 =1,00,000
(iii) Total Value of goods purchased = Cash Purchase +Credit Purchase
= 4,00,000 + 2,00,000
= Rs 6,00,000
(iv) Mr. Satish is the Creditor andthe total payable amount to Creditor (Mr. Satish) is Rs. 2,00,000.
(v) Mr. Rajesh is the debtor and total receivable amount from Debtor (Mr. Rajesh) is Rs. 1,50,000.
(vi) Total Expenses = Rs 15,000.
(vii) Total amount of drawings by Mr. Gopal is Rs 20,000.
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FAQs on Basic Accounting Terms - Accountancy Class 11 - Commerce
| 1. What is the meaning of the term "accounts receivable" in basic accounting? |  |
Ans. Accounts receivable refers to the money owed to a company by its customers for goods or services that have been sold on credit. It represents the company's right to receive payment from its customers in the future.
| 2. How are accounts payable different from accounts receivable in basic accounting? | |
Ans. Accounts payable and accounts receivable are two different terms used in basic accounting. While accounts receivable represents the money owed to a company by its customers, accounts payable refers to the money that a company owes to its suppliers or creditors for goods or services received on credit.
| 3. What does the term "depreciation" mean in accounting? | |
Ans. Depreciation is an accounting method used to allocate the cost of an asset over its useful life. It represents the decrease in the value of an asset over time due to wear and tear, obsolescence, or other factors. Depreciation expense is recorded in the income statement to reflect the decrease in the asset's value.
| 4. How is the term "gross profit" calculated in basic accounting? | |
Ans. Gross profit is calculated by subtracting the cost of goods sold (COGS) from the total revenue generated from sales. It represents the profit a company makes after deducting the direct costs associated with producing or purchasing the goods or services sold.
| 5. What is the significance of the term "liquidity ratio" in accounting? | |
Ans. Liquidity ratio is a financial metric used to assess a company's ability to meet its short-term obligations. It measures the company's ability to convert its assets into cash quickly to cover its current liabilities. A higher liquidity ratio indicates a better ability to pay off debts and is generally considered favorable by investors and creditors.
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