Accounting Process (CA Foundation Principles of Accounting): Questions 36 - 39 of 68

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Question number: 36

» Accounting Process » Books of Accounts - Capital and Revenue Receipts

Essay Question▾

Describe in Detail

Explain the terms capital and revenue profits briefly?

Explanation

  • When an enterprise prepares its financial statements, a clear distinction is made between the capital and revenue profits earned by the firm.

  • Revenue profit: The profit that arises in the normal course of business activities such as sale of goods.

Meaning of revenue profits

Meaning of Revenue Profits

Meaning and examples of revenue profits

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Question number: 37

» Accounting Process » Books of Accounts - Fundamental Errors

Essay Question▾

Describe in Detail

  • Mr. Tendulkar’s trial balance showed a suspense A/C of Rs. 32600 on the debit side. On rechecking the books, the following errors were discovered:

  • An amount of Rs. 10000 received from Mr. Ganguly was posted to the debit side of Mr. Ashwin as Rs. 12000.

  • Salary paid to driver Rs. 4000 was debited to his personal A/C as Rs. 2400

  • Drawings of Rs. 2000 was credited to sales A/C as Rs. 3200

  • An amount of Rs. 6000 accounting for depreciation on car was posted as Rs. 600

  • Sale of an old bat Rs. 20000 was credited to sales A/C as Rs. 12000.

Assuming that the Mr. Tendulkar has made all the rectification required in his books with respect to the above errors identified. Will the trial balance of Mr. Tendulkar tally? Justify your answer

Explanation

  • No, Mr. Tendulkar’s trial balance does not tally even after the rectification of the discovered errors. After the preparation of suspense account Mr. Tendulkar realizes that there still exists a debit balance in the suspense A/C of Rs. 20400. This may be due to the reason that there may be
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Question number: 38

» Accounting Process » Books of Accounts - Fundamental Errors

Short Answer Question▾

Write in Short

Identify the errors and show the rectification affect made

  1. Purchase book overcast by 500
  2. Purchase return book overcast by Rs. 50

  3. Sales book under cast by Rs. 250

  4. Sales return book under cast by Rs. 100

Question number: 39

» Accounting Process » Books of Accounts - Preparation of Trial Balance

Essay Question▾

Describe in Detail

Calculate total equity and owner’s equity of Monish Ltd. , at the end of year if

  • Owner’s equity in the beginning is Rs. 50000,

  • Equity of the creditors at the end of year is Rs. 20000

  • Revenue during the year is Rs. 30000

  • Expenses during the same year is Rs. 25000

Explanation

Owner’s equity:

Owner’s equity = Opening of owner’s equity + Revenue – Expenses

Formula for Owner’s equity

Formula for Owner’S Equity

Formula for calculating the owner’s equity for the given period

Given:

Opening Owner’s equity = Rs. 50000

Revenue = Rs. 30000

Expense = Rs. 25000

= 50000 + 30000 – 25000

= Rs.

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