Accountancy (224)

Tutor Marked Assignment (2021-22)

20% Marks Of Theory

1. Answer any one of the following questions in about 40-60 words.

(a) Accounting information is useful to potential investors and customers. How?

Ans- Accounting is of primary importance to the proprietors and the managers. There are many more parties who use the accounting information

Investors and Potential Investors:

A person who wants to invest in business will like to know about its profitability and financial position. Basically, investors are interested in the amount of dividends they are likely to get from the business. Hence, they would like to know the profitability of the enterprise which they can get from the income statements of the enterprise for a number of years.

Customers:

They are interested in knowing whether a company will continue to honor product warranties and continue to provide its products in future, and how much profit is made by a company by providing goods and services to them.

2. Answer any one of the following questions in about 40-60 words.

(a) Explain the Dual aspect concept with the help of an example.

Ans- Dual aspect is the foundation or basic principle of accounting. It provides the very basis of recording business transactions in the books of accounts. This concept assumes that every transaction has a dual effect

.

it affects two accounts in their respective opposite sides. Therefore, the transaction should be recorded at two places. It means, both the aspects of the transaction must be recorded in the books of accounts. The duality concept is commonly expressed in terms of fundamental accounting equation.

Assets = Liabilities + Capital

The knowledge of dual aspect helps in identifying the two aspects of a transaction which helps in applying the rules of recording the transactions in books of accounts. The implication of dual aspect concept is that every transaction has an equal impact on assets and liabilities in such a way that total assets are always equal to total liabilities.

The interpretation of the Dual aspect concept is that every transaction has an equal effect on assets and liabilities in such a way that total assets are always equal to total liabilities of the business.

For example:

Goods purchased for cash.

It effects the two aspect of accounts one is Purchase and the other is cash.

3. Answer any one of the following questions in about 40-60 words.

(a) Write short notes on tangible and intangible assets.

Ans- Tangible Assets:

The assets which can be seen and touched or have physical existence. For example – building, machinery, furniture, computer etc.

Intangible Assets:

The assets which cannot be seen and touched or which do not have physical existence. For example – goodwill, trade mark, patents etc.

4. Answer any one of the following questions in about 100 to 150 words.

(b) Explain the meaning and significance of Convention of Conservatism.

Answer = Convention of Conservatism:

This convention is based on the principle that “Anticipate no profit, but provide for all possible losses”. It provides guidance for recording transactions in the books of accounts. It is based on the policy of playing safe in regard to showing profit. The main objective of this convention is to show minimum profit. Profit should not be overstated. If more profit is shown than the actual, it may lead to distribution of dividend out of capital. This is not a fair policy and it will lead to the reduction in the capital of the enterprise.

Thus, this convention clearly states that profit should not be recorded until it is earned. But if the business anticipates any loss in the near future, provision should be made in the books of accounts for the same. For example, valuing closing stock at cost or market price whichever is lower, creating provision for doubtful debts, discount on debtors, writing off intangible assets like goodwill, patent, etc. The convention of conservatism is a very useful tool in situation of uncertainty and doubts.

Significance:

The following point highlight the significance of convention of conservatism. It helps in ascertaining actual profit. It is useful in the situation of uncertainties and doubts. • It helps in maintaining the capital at its real value.

5. Answer any one of the following questions in about 100 to 150 words.

(a) Prepare Accounting Equation on the basis of the following:

(i) Ankit started business with cash Rs. 1,80,000.

(ii) He purchased furniture for cash Rs. 20,000.

(iii) He purchased goods on credit Rs. 25,000.

(iv) He sold goods costing Rs. 18,000 for Rs. 40,000 for cash.

Ans- 

6. Prepare any one project out of the given below:

(a) Prepare Credit Vouchers from the source vouchers of M/s G. K. Computers, South Ex, New Delhi

based on the following transactions: 2020.

(i) April 4 Sold pen drives for cash vide Cash Memo No. 10 –Rs. 55,000

(ii) April 15 Sold old Computer Monitor for cash vide cash Memo No. 39–Rs. 19,000

(iii) April 30 Withdrawn cash from Bank for office use vide cheque No. 500417 –Rs. 15,000

Ans (i)

Ans (ii)

Ans (iii)