NCERT Solutions for Class 11 Accountancy Chapter 9 2021: Download PDF

NCERT Solutions for Class 11 Accountancy Chapter 9: We provide NCERT Solutions for Class 11 Accountancy Chapter 9 that are simple to grasp. In the NCERT Solutions For Class 11 Accountancy Chapter 9, our faculty has solved and explained all of the questions in the chapter according to CBSE norms.

To make learning easier, the answers to the questions are supplied in PDF format here. These NCERT Solutions will assist them in thoroughly revising the chapter and achieving good grades in the examinations. 

NCERT Solutions For Class 11 Accountancy Chapter 9 PDF

NCERT solutions for Class 11 Accountancy Chapter 9

 

 

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NCERT Solutions For Class 11 Accountancy Chapter 9 : Overview

1.What Are the Financial Statements? What are the Objectives of Financial Statements?

The accounting and financial information pertaining to the business is depicted in the financial statement reports. This statement is used by a company’s administration to interact with external authorities, stakeholders, investors, creditors, and regulatory agencies, among other things.

The following reports are included in these financial statements.

  • Profit and loss statement
  • Income sheet
  • Statement of cash flow
  • Balance sheet

Objectives of Preparing Financial Statements

Recording – The fundamental goal of financial statement preparation is to record and summaries a company’s transactions on a regular basis. It is critical to have an entity that monitors the organization’s financial transactions.

Decision-Making – The financial statement helps the organizers to make necessary and relevant strategies and decisions.

Planning- Preparing financial statements assists in identifying financial problems and taking essential actions for the organization’s growth.

Accountability – An organization’s financial statement generates liability, allowing them to examine their performance. Throughout the years.

2. What is a Balance Sheet? What Are the Features of a Balance Sheet?

A balance sheet is a statement consisting of books with balances of commercial and personal accounts, rather than an account like a profit and loss account. A balance sheet is used to keep track of an organization’s capital assets and liabilities. The goal of generating a balance sheet is to reflect the organization’s financial status at a certain date in a fair and accurate manner. When the accounting year concludes, each company generates a balance sheet. The following is a definition of a balance sheet.

It is a record of the owner’s liabilities, assets, and capital as of a certain date. It is a statement that discloses aggregate liabilities, aggregate assets, and aggregate equity of the owner on a particular date. To have a better insight on the topic go through the PDF Of NCERT Solutions For Class 11 Accountancy Chapter 9

The Features of the Balance Sheet Are as Follows.

  1. It is not prepared for a complete period but

on a specific date.

  1. The balance comprises both sides, assets, and

liabilities, which must be equivalent.

  1. It depicts the financial situation of the

business.

  1. It is a mere statement and not an account.
  2. It has no debit and credit option.
  3. Before, the names of the account “to” and “by” were not used.

Access NCERT Solutions For Class 11 Accountancy Chapter 9

1. What are the objectives of preparing financial statements?

Financial statements are prepared with the following objective:

  1. Determine the financial position of a business.
  2. Ascertain the financial performance of the business.
  3. To measure the changes in financial position of a business.
  4. To compare financial performance of business both intra and inter farm wise.
  5. What is the purpose of preparing trading and profit and loss account?

Trading account is prepared for the following purpose:

  1. To determine the gross profit or loss in a financial year or period.
  2. Determine the ratio of gross profit to sales.
  3. To determine ratio of direct expense to sales.

Profit and Loss account is prepared for the following purpose:

  1. Determining net profit or loss incurred by the business
  2. To comply with statutory requirements such as Company act or Partnership Act
  3. Explain the concept of cost of goods sold.

3.Costs incurred in production of goods that are sold by company is known as Cost of Goods Sold or COGS

No goods left out: In this case all goods are sold out. Hence, it can be calculated as:

Cost of goods sold = Purchases + Direct Expenses

Presence of a closing stock: There can be some stock that are yet to get sold at the end of accounting period. At that time it can be calculated as:

Cost of goods sold = Purchases + Direct Expenses – Closing Stock

Presence of an Opening stock: Stock that is carried forward at the beginning of the accounting period from the previous accounting period is considered as opening stock and is calculated as:

Cost of goods sold = Opening Stock + Purchases + Direct Expenses – Closing Stock

4. What is a balance sheet? What are its characteristics?

A statement prepared to determine assets and values of a business on a particular date is known as Balance Sheet. Debits represent the assets while credits signify the liabilities.

It has the following characteristics:

  1. Reflects financial position of a business.
  2. It is dependent on other statements such as trading and P & L account.
  3. It is prepared at the end of an accounting period.
  4. The balance of both sides should tally.
  5. Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure:

(a) Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.

(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.

(c) Registration fees paid at the time of purchase of a building

(d) Expenditure incurred in the maintenance of a tea garden which will produce tea after four years.

(e) Depreciation charged on a plant.

(f) The expenditure incurred in erecting a platform on which a machine will be fixed.

(g) Advertising expenditure, the benefits of which will last for four years.

Basis of Difference

Capital Expenditure

Revenue Expenditure

Meaning

Expenditure beared for acquiring or improving an asset.

Expenses beared for running daily business activities

Term

Long Term, can span many accounting periods

Short term limited to an accounting period

Benefits

Benefits can be achieved across many accounting periods

Benefits can be availed only in the current year

Nature

Non-recurring

Recurring

Shown in

It is shown in Income Statement and Balance Sheet

It is shown in Income statement

 

(a) Capital expenditure

(b) Revenue expenditure

(c) Capital expenditure

(d) Capital expenditure

(e) Revenue expenditure

(f) Capital expenditure

(g) Deferred revenue expenditure

6. What is an operating profit?

Operating profit referred to as EBIT, is an accounting metric that measures, the profits a company generates from its core business functions. It does not take into account interest deduction and exclusion of tax from calculation. The following equation is used to calculate the operating profit.

The following equation can be used to represent

Operating Profit = Net Profit + Non-Operating Expenses – Non Operating Incomes

Long Answers for NCERT Accountancy Solutions Class 11 Chapter 9

1. What are financial statements? What information do they provide?

Statements that contain financial information about business which can satisfy the information requirements of internal and external users are known as financial statements. It serve as a source of financial information that caters to diverse information requirement of users. It is prepared with the purpose of representing a true and fair view of business.

To do so it requires the creation of three statements namely, trading and profit and loss account and balance sheet.

The financial statements related to gross/net profit or loss, the assets and liabilities. The users of information can be the following:

Current Owners: These internal users would like to know the profits in the previous accounting period and current position of the assets and liabilities.

Government: Government is an external user and want to know the financial position of a business so that stakeholder’s rights are protected.

Prospective Owner: These external users would like to know the past profits and financial position and also the future performance of the business to make an informed decision whether to invest in the business or not

2. What are closing entries? Give four examples of closing entries.

A journal entry that is made at the end of an accounting period that transfers balances from the temporary accounts to a permanent account is known as closing entries. Some examples are here as follows:

  1. The purchases returns are closed by transferring the balance in purchases account. Following entries are made:

Purchases return A/c

Dr

To Purchases A/c

  1. Sales return account is closed by transfer of balance to sales account. Entries will be

Sales A/c

Dr

To Sales return A/c

  1. Purchases account closed by transferring to debit side of trading and P & L Account

Trading A/c

Dr

To Purchases A/c

  1. Sales account closed by transferring balance to credit side of trading and P & L account.

Sales A/c

Dr.

To Trading A/c

3. Discuss the need of preparing a balance sheet.

Balance sheet needs to be prepared due to following reasons:

  1. To show financial position of business.
  2. To show much assets and liabilities a business has
  3. It serves as information source for internal and external users
  4. It acts as a reference for balances that need to be carried forward
  5. To gather an idea about the liquidity of the firm or business
  6. Helps management in planning and controlling business operations.
  7. What is meant by Grouping and Marshalling of assets and liabilities? Explain the ways in which a balance sheet may be marshalled.

Grouping refers to including assets and liabilities of similar nature under o common heading. For example different types of creditors can be placed in one heading. Similarly work in progress, raw material and finished goods can be placed.

Marshalling refers to arranging of assets and liabilities in order of liquidity and permanence.

In order of Liquidity: It shows how easily an asset can be converted into cash or a liability can be paid off. The asset examples arranged as follows:

  1. Cash
  2. Bank
  3. Debtors

In order of permanence: In this system the most important asset or a liability gets the top position in balance sheet and remaining assets are arranged in reducing level of permanence: For e.g.

  1. Debtors
  2. Bank
  3. Cash

Similarly, liabilities in order of permanence is as follows:

1.Capital

  1. Long term loan
  2. Creditors

Numerical Answers for NCERT Accountancy Solutions Class 11 Chapter 9

From the following balances taken from the books of Simmi and Vimmi Ltd.

for the year ending March 31, 2017, calculate the gross profit.

Closing stock 2,50,000

Net sales during the year 40,00,000

Net purchases during the year 15,00,000

Opening stock 15,00,000

Direct expenses 80,000

The gross profit is calculated below:

Trading Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

15,00,000

Net Sales

40,00,000

Net Purchases

15,00,000

Closing Stock

2,50,000

Direct Expenses

80,000

 

 

Gross Profit

11,70,000

 

 

 

42,50,000

 

42,50,000

 

 

 

 

Therefore, the Gross Profit is ₹ 11, 70,000.

2. From the following balances extracted from the books of M/s Ahuja and Nanda. Calculate the amount of:

(a) Cost of goods available for sale

(b) Cost of goods sold during the year

(c) Gross Profit

 

Opening stock 25,000

Credit purchases 7,50,000

Cash purchases 3,00,000

Credit sales 12,00,000

Cash sales 4,00,000

Wages 1,00,000

Salaries 1,40,000

Closing stock 30,000

Sales return 50,000

Purchases return 10,000

  1. a) Cost of Goods Sold Available for Sales

Or

Cost of Goods Manufactured = Opening Stock + Net Purchases + Wages

= 25,000 + 10, 40,000 + 1, 00,000

= ₹ 11, 65,000

(b) Cost of Goods Sold = Opening Stock + Net Purchases + Wages – Closing Stock

= 25,000 + 10, 40,000 + 1, 00,000 – 30,000

= ₹ 11, 35,000

Or

Cost of Goods Sold = Net Sales – Gross Profit

= 15, 50,000 – 4, 15,000

= ₹ 11, 35,000

(c)

Trading Account

Dr.

 

 

Cr.

Particulars 

Amount

Particulars

Amount

Opening Stock

25,000

Sales

 

Purchases

 

 

Add: Credit Sales

12,00,000

 

 

Add: Credit Purchases

7,50,000

 

 

Add: Cash Sales

4,00,000

 

 

Add: Cash Purchases

3,00,000

 

 

 

16,00,000

 

 

 

10,50,000

 

 

Less: Sales Return

(50,000)

15,50,000

 

Less: Purchases Return

(10,000)

10,40,000

 

 

 

 

Wages

 

1,00,000

 

Closing Stock

 

30,000

Gross Profit

 

4,15,000

 

 

 

 

 

 

 

15,80,000

 

 

 

15,80,000

 

 

 

 

 

 

 

 

3. Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv and Sons for the year ended March 31, 2017.

Opening stock 50,000

Net sales 11,00,000

Net purchases 6,00,000

Direct expenses 60,000

Administration expenses 45,000

Selling and distribution expenses 65,000

Loss due to fire 20,000

Closing stock 70,000

The solution is as follows:

Trading Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

50,000

Net Sales

11,00,000

Net Purchases

6,00,000

Closing Stock

70,000

Direct Expenses

60,000

 

 

Gross Profit

4,60,000

 

 

 

11,70,000

 

11,70,000

 

 

 

 

 

Operating Profit

=

Sales – (Opening Stock + Net Purchases + Direct Expenses + Administration Expenses +

Selling and Distribution Expenses) + Closing Stock

 

=

11,00,000 – (50,000 + 6,00,000 + 60,000 + 45,000 + 65,000) + 70,000

 

=

₹ 3,50,000

  1. Operating profit earned by M/s Arora and Sachdeva in 2016-17 was ₹ 17, 00,000. Its non-operating incomes were ₹ 1, 50,000 and non-operating expenses were ₹ 3, 75,000. Calculate the amount of net profit earned by the firm.

 

Net Profit = Operating Profit + Non-operating Income – Non-operating Expenses

= 17, 00,000 + 1, 50,000 – 3, 75,000

= ₹ 14, 75,000

Net profit earned by M/S Arora and Sachdeva in 2016–17 is ₹ 14, 75,000

  1. The following are the extracts from the trial balance of M/s Bhola and Sons as on March 31, 2017

Account title

Debit

Credit

Opening Stock

2,00,000

 

Purchases

8,10,000

 

Sales

 

10,10,000

 

10,10,000

10,10,000

 

 

 

 

(Only relevant items)

Closing Stock as on date was valued at ₹ 3, 00,000.

You are required to record the necessary journal entries and show how the above items will appear in the trading and profit and loss account and balance sheet of M/s Bhola and Sons.

Books of M/s Bhola and Sons

Journal

Date

 

Particulars

 

L.F.

Debit

Amount

Credit Amount ₹

2017

 

 

 

 

 

 

Mar.31

Trading A/c

Dr.

 

10,10,000

 

 

 

To Opening Stock A/c

 

 

 

2,00,000

 

 

To Purchases A/c

 

 

 

8,10,000

 

(Balances from Purchases Account and Stock Account

transferred to Trading Account)

 

 

 

 

 

 

 

 

 

 

Mar.31

Sales A/c

Dr.

 

10,10,000

 

 

Closing Stock A/c

 

 

3,00,000

 

 

 

To Trading A/c

 

 

 

13,10,000

 

(Balance from sales and closing stock transferred

to Trading Account)

 

 

 

 

 

 

 

 

 

 

Mar.31

Trading A/c

Dr.

 

3,00,000

 

 

 

To Profit and Loss (Gross Profit) A/c

 

 

 

3,00,000

 

(Balance of Trading Account (gross profit) transferred

to Profit and Loss Account)

 

 

 

 

 

 

 

 

 

Trading Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

2,00,000

Sales

10,10,000

Purchases

8,10,000

Closing Stock

3,00,000

Profit and Loss A/c – Gross Profit

3,00,000

 

 

 

 

 

 

 

13,10,000

 

13,10,000

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

 

 

Closing Stock

3,00,000

 

 

 

 

 

 

 

 

6. Prepare trading and profit and loss account and balance sheet, as on March 31, 2017:

Account Title

Amount

Account Title

Amount

Machinery

27,000

Capital

60,000

Sundry debtors

21,600

Bills payable

2,800

Drawings

2,700

Sundry creditors

1,400

Purchases

58,500

Sales

73,500

Wages

15,000

 

 

Sundry expenses

600

 

 

Rent and taxes

1,350

 

 

Carriage inwards

450

 

 

Bank

4,500

 

 

Openings stock

6,000

 

 

 

Closing stock, as on March 31, 2017 ₹ 22,400

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

6,000

Sales

73,500

Purchases

58,500

Closing Stock

22,400

Wages

15,000

 

 

Carriage Inwards

450

 

 

Profit and Loss (Gross Profit)

15,950

 

 

 

95,900

 

95,900

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Sundry Expenses

600

Trading (Gross Profit)

15,950

Rent and Taxes

1,350

 

 

 

 

 

 

Net Profit

14,000

 

 

 

15,950

 

15,950

 

 

 

 

 

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

60,000

 

Fixed Assets 

 

 

Add: Net Profit

14,000

 

Machinery

27,000

 

 

74,000

 

 

 

 

Less: Drawings

2,700

71,300

Current Assets 

 

 

 

 

 

Bank

4,500

Sundry Creditors

 

1,400

Closing Stock

22,400

Bills Payable

 

2,800

Sundry Debtors

21,600

 

 

 

75,500

 

75,500

 

 

 

 

 

 

7.The following trial balance is extracted from the books of M/s Ram on March 31, 2017. You are required to prepare trading and profit and loss account and the balance sheet as on date:

 

Account title

Amount

Account title

Amount ₹

Debtors

12,000

Apprenticeship premium

5,000

Purchases

50,000

Loan

10,000

Coal, gas and water

6,000

Bank overdraft

1,000

Factory wages

11,000

Sales

80,000

Salaries

9,000

Creditors

13,000

Rent

4,000

Capital

20,000

Discount

3,000

 

 

Advertisement

500

 

 

Drawings

1,000

 

 

Loan

6,000

 

 

Petty cash

500

 

 

Sales return

1,000

 

 

Machinery

5,000

 

 

Land and building

10,000

 

 

Income tax

100

 

 

Furniture

9,900

 

 

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017

Dr.

 

 

 

Cr.

Particulars

Amount

Particulars

Amount

Purchases

 

 

50,000

Sales

80,000

 

Coal, Gas and Water

 

 

6,000

 

Less: Sales Return

1,000

79,000

Factory Wages

 

 

11,000

 

 

Profit and Loss (Gross Profit)

12,000

 

 

 

 

79,000

79,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Salaries

9,000

Trading (Gross Profit)

12,000

Rent

4,000

Apprenticeship Premium

5,000

Discount

3,000

 

 

Advertisement

500

 

 

Net Profit

500

 

 

 

 

 

 

 

17,000

 

17,000

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

 

Amount

Assets

 

Amount

Capital

20,000

 

Machinery

 

5,000

 

Add: Profit and Loss (Net Profit)

500

 

Land and Building

 

10,000

 

 

20,500

 

Furniture

 

9,900

 

Less: Drawings

(1,000)

 

Loan (Given)

 

6,000

 

Less: Income Tax

(100)

19,400

Debtors

 

12,000

 

 

 

 

Petty Cash

 

500

Loan (Taken)

 

10,000

 

 

 

 

Creditors

 

13,000

 

 

 

 

Bank Overdraft

 

1,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,400

 

 

 

43,400

 

 

 

 

 

 

 

 

8. The following is the trial balance of Manju Chawla on March 31, 2017. You are required to prepare trading and profit and loss account and a balance sheet as on date:

Account title

Debit Amount ₹

 

Credit Amount ₹

Opening stock

10,000

 

 

Purchases and sales

40,000

 

80,000

Returns

200

 

600

Productive wages

6,000

 

 

Dock and Clearing charges

4,000

 

 

Donation and charity

600

 

 

Delivery van expenses

6,000

 

 

Lighting

500

 

 

Sales tax collected

 

 

1,000

Bad debts

600

 

 

Misc. incomes

 

 

6,000

Rent from tenants

 

 

2,000

Royalty

4,000

 

 

Capital

 

 

40,000

Drawings

2,000

 

 

Debtors and Creditors

6,000

 

7,000

Cash

3,000

 

 

Investment

6,000

 

 

Patents

4,000

 

 

Land and Machinery

43,000

 

 

 

Closing stock ₹ 2,000.

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

10,000

Sales

80,000

 

Purchases

40,000

 

 

Less: Sales Returns

(200)

79,800

 

Less: Purchases Returns

(600)

39,400

 

 

Productive Wages

6,000

Closing Stock

2,000

Dock and Clearing Charges

4,000

 

 

Royalty

4,000

 

 

Profit and Loss (Gross Profit)

18,400

 

 

 

 

 

 

 

 

 

 

 

81,800

 

81,800

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Donation and Charity

600

Trading (Gross Profit)

18,400

Delivery Van Expenses

6,000

Misc. Incomes

6,000

Lighting

500

Rent from Tenants

2,000

Bad Debts

600

 

 

Net Profit

18,700

 

 

 

 

 

 

 

26,400

 

26,400

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

 

Amount

Assets

 

Amount

Capital

40,000

 

Patents

 

4,000

 

Add: Profit and Loss (Net Profit)

18,700

 

Land and Machinery

 

43,000

 

 

58,700

 

Investment

 

6,000

 

Less: Drawings

(2,000)

56,700

Debtors

 

6,700

 

 

 

 

Cash

 

3,000

Sales Tax Collected

 

1,000

Closing Stock

 

2,000

Creditors

 

7,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64,700

 

 

 

64,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9. The following is the Trial Balance of Mr. Deepak as on March 31, 2017. You are required to prepare trading account, profit and loss account and a balance sheet as on date:

 

Account title

Debit Amount ₹

Account title

Credit Amount ₹

Drawings

36,000

Capital

2,50,000

Insurance

3,000

Bills payable

3,600

General expenses

29,000

Creditors

50,000

Rent and taxes

14,400

Discount received

10,400

Lighting (factory)

2,800

Purchases return

8,000

Travelling expenses

7,400

Sales

4,40,000

Cash in hand

12,600

 

 

Bills receivable

5,000

 

 

Sundry debtors

1,04,000

 

 

Furniture

16,000

 

 

Plant and Machinery

1,80,000

 

 

Opening stock

40,000

 

 

Purchases

1,60,000

 

 

Sales return

6,000

 

 

Carriage inwards

7,200

 

 

Carriage outwards

1,600

 

 

Wages

84,000

 

 

Salaries

53,000

 

 

 

Closing stock ₹ 35,000.

The trading account, profit and loss account and a balance sheet are prepared below:

Trading Account as on March 31, 2017

Dr.

 

 

 

 

Cr.

Particulars

 

Amount

Particulars

 

Amount

Opening Stock

 

40,000

Sales

4,40,000

 

Purchases

1,60,000

 

 

Less: Sales Return

6,000

4,34,000

 

Less: Purchases Return

(8,000)

1,52,000

Closing Stock

 

35,000

 

 

 

 

 

 

Lighting (Factory)

 

2,800

 

Carriage Inwards

 

7,200

 

Wages

 

84,000

 

Profit and Loss (Gross Profit)

1,83,000

 

 

4,69,000

4,69,000

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Insurance

 

3,000

Trading (Gross Profit)

 

1,83,000

General Expenses

 

29,000

Discount Received

 

10,400

Rent and Taxes

 

14,400

 

 

 

 

Travelling Expenses

 

7,400

 

 

 

 

Carriage Outwards

 

1,600

 

 

 

 

Salaries

 

53,000

 

 

 

 

Net Profit

 

85,000

 

 

 

 

 

 

 

1,93,400

 

 

 

1,93,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

2,50,000

 

Plant and Machinery

1,80,000

 

Add: Net Profit

85,000

 

Furniture

16,000

3,35,000

 

Sundry Debtors

1,04,000

 

Less: Drawings

(36,000)

2,99,000

Closing Stock

35,000

 

 

Bills Receivable

5,000

Creditors

50,000

Cash in Hand

12,600

Bills Payable

3,600

 

 

 

 

 

3,52,600

3,52,600

 

 

10. Prepare trading and profit and loss account and balance sheet from the following particulars as on March 31, 2017.

 

Account Title

Debit Amount ₹

Credit Amount ₹

Purchases and Sales

3,52,000

5,60,000

Return inwards and Return outwards

9,600

12,000

Carriage inwards

7,000

 

Carriage outwards

3,360

 

Fuel and power

24,800

 

Opening stock

57,600

 

Bad debts

9,950

 

Debtors and Creditors

1,31,200

48,000

Capital

 

3,48,000

Investment

32,000

 

Interest on investment

 

3,200

Loan

 

16,000

Repairs

2,400

 

General expenses

17,000

 

Wages and salaries

28,800

 

Land and buildings

2,88,000

 

Cash in hand

32,000

 

Miscellaneous receipts

 

160

Sales tax collected

 

8,350

 

Closing stock ₹ 30,000.

Trading and profit and loss account and balance sheet for the question is posted below:

Trading Account as on March 31, 2017

Dr.

 

 

 

 

 

 

Cr.

Particulars

 

Amount

Particulars

 

Amount

Opening Stock

 

57,600

Sales

5,60,000

 

Purchases

3,52,000

 

 

Less: Return Inwards

(9,600)

5,50,400

 

Less: Return Outwards

(12,000)

3,40,000

Closing Stock

 

30,000

Carriage Inwards

7,000

 

 

 

 

Fuel and Power

 

24,800

 

 

 

 

Wages and Salaries

 

28,800

 

 

 

 

Profit and Loss (Gross Profit)

 

1,22,200

 

 

 

 

 

 

 

 

 

 

 

 

 

5,80,400

 

 

 

5,80,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Carriage Outwards

3,360

Trading (Gross Profit)

1,22,200

Bad Debts

9,950

Interest on Investment

3,200

Repairs

2,400

Miscellaneous Receipts

160

General Expenses

17,000

 

 

Net Profit

92,850

 

 

 

1,25,560

 

1,25,560

 

 

 

 

 

Balance Sheet as on March 31,2017

Liabilities

 

Amount

Assets

 

Amount

Capital

3,48,000

 

Land and Building

 

2,88,000

 

Add: Net Profit

92,850

4,40,850

Investment

 

32,000

 

 

 

 

Debtors

 

1,31,200

Loan

 

16,000

Closing Stock

 

30,000

Creditors

 

48,000

Cash in Hand

32,000

Sales Tax Collected

 

8,350

 

 

 

 

5,13,200

 

5,13,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11. From the following trial balance of Mr. A. Lal, prepare trading, profit and loss account and balance sheet as on March 31, 2017.


 

Account Title

Debit Amount ₹

Credit Amount ₹

Stock as on April 01, 2016

16,000

 

Purchases and Sales

67,600

1,12,000

Returns inwards and outwards

4,600

3,200

Carriage inwards

1,400

 

General expenses

2,400

 

Bad debts

600

 

Discount received

 

1,400

Bank over draft

 

10,000

Interest on bank overdraft

600

 

Commission received

 

1,800

Insurance and taxes

4,000

 

Scooter expenses

200

 

Salaries

8,800

 

Cash in hand

4,000

 

Scooter

8,000

 

Furniture

5,200

 

Building

65,000

 

Debtors and Creditors

6,000

16,000

Capital

 

50,000

Closing stock ₹ 15,000.

 

Trading and profit and loss account and balance sheet for the question is posted below:

Trading Account as on March 31, 2017

Dr.

 

 

 

 

 

 

Cr.

Particulars

 

Amount

Particulars

 

Amount

Opening Stock

 

16,000

Sales

1,12,000

 

Purchases

67,600

 

 

Less: Sales Return Inwards

(4,600)

1,07,400

 

Less: Return Outwards

(3,200)

64,400

Closing Stock

 

15,000

Carriage Inwards

1,400

 

 

 

 

Profit and Loss (Gross Profit)

 

40,600

 

 

 

 

 

 

 

 

 

 

 

 

 

1,22,400

 

 

 

1,22,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

General Expenses

2,400

Trading (Gross Profit)

40,600

Bad Debts

600

Discount Received

1,400

Interest on Bank Overdraft

600

Commission Received

1,800

Insurance and Taxes

4,000

 

 

Scooter Expenses

200

 

 

Salaries

8,800

 

 

Net Profit

27,200

 

 

 

43,800

 

43,800

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

50,000

 

Building

 

65,000

 

Add: Net Profit

27,200

77,200

Furniture

 

5,200

 

 

 

 

Scooter

 

8,000

Creditors

 

16,000

Debtors

 

6,000

Bank Overdraft

 

10,000

Closing Stock

 

 

15,000

 

 

 

 

Cash in Hand

 

 

4,000

 

 

 

1,03,200

 

 

 

1,03,200

 

 

 

 

 

 

 

 

12. Prepare trading and profit and loss account and balance sheet of M/s Royal Traders from the following balances as on March 31, 2017.

 

Debit balances

Amount ₹

Credit balances

Amount ₹

Stock

20,000

Sales

2,45,000

Cash

5,000

Creditors

10,000

Bank

10,000

Bills payable

4,000

Carriage on purchases

1,500

Capital

2,00,000

Purchases

1,90,000

 

 

Drawings

9,000

 

 

Wages

55,000

 

 

Machinery

1,00,000

 

 

Debtors

27,000

 

 

Postage

300

 

 

Sundry expenses

1,700

 

 

Rent

4,500

 

 

Furniture

35,000

 

 

 

Closing stock ₹ 8,000.

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

20,000

Sales

2,45,000

Purchases

1,90,000

Closing Stock

8,000

Carriage on Purchases

1,500

Profit and Loss (Gross Loss)

13,500

Wages

55,000

 

 

 

 

 

 

 

2,66,500

 

2,66,500

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Trading (Gross Loss)

13,500

 

 

Postage

300

 

 

Sundry Expenses

1,700

 

 

Rent

4,500

Net Loss

20,000

 

 

 

 

 

20,000

 

20,000

 

 

 

 

 

Balance Sheet of M/s Royal Traders as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

2,00,000

 

Machinery

 

1,00,000

 

Less: Net Loss

(20,000)

 

Furniture

 

35,000

 

Less: Drawings

(9,000)

1,71,000

Debtors

 

27,000

 

 

 

 

Closing Stock

 

8,000

Creditors

 

10,000

Bank

 

10,000

Bills Payable

 

4,000

Cash

 

 

5,000

 

 

 

 

 

 

 

 

 

 

 

1,85,000

 

 

 

1,85,000

 

 

 

 

 

 

 

 

13. Prepare trading and profit and loss account from the following particulars of M/s Neema Traders as on March 31, 2017.

Account Title

Debit Amount

Account Title

Credit Amount

Buildings

23,000

Sales

1,80,000

Plant

16,930

Loan

8,000

Carriage inwards

1,000

Bills payable

2,520

Wages

3,300

Bank overdraft

4,720

Purchases

1,64,000

Creditors

8,000

Sales return

1,820

Capital

2,36,000

Opening stock

9,000

Purchases return

1,910

Machinery

2,10,940

 

 

Insurance

1,610

 

 

Interest

1,100

 

 

Bad debts

250

 

 

Postage

300

 

 

Discount

1,000

 

 

Salaries

3,000

 

 

Debtors

3,900

 

 

Stock on March 31, 2017 ₹ 16,000.

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017

Dr.

 

 

 

 

 

 

Cr.

Liabilities

Amount

Assets

Amount

Opening Stock

 

9,000

Sales

1,80,000

 

Purchases

1,64,000

 

 

Less: Sales Return

(1,820)

1,78,180

 

Less: Purchases Return

(1,910)

1,62,090

Closing Stock

 

16,000

 

 

 

 

 

 

 

 

Carriage Inwards

 

1,000

 

 

 

 

Wages

 

3,300

 

 

 

 

Profit and Loss (Gross Profit)

18,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,94,180

 

 

 

1,94,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Insurance

1,610

Trading (Gross Profit)

18,790

Interest

1,100

 

 

Bad Debts

250

 

 

Postage

300

 

 

Discount

1,000

 

 

Salaries

3,000

 

 

Net Profit

11,530

 

 

 

18,790

 

18,790

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

2,36,000

 

Building

23,000

 

Add: Net Profit

11,530

2,47,530

Plant

16,930

 

 

 

 

Machinery

2,10,940

Loan

 

8,000

Debtors

3,900

Creditors

 

8,000

Closing Stock

16,000

Bills Payable

 

2,520

 

 

Bank Overdraft

 

4,720

 

 

 

 

 

 

 

 

 

 

 

2,70,770

 

2,70,770

 

 

 

 

 

 

 

 

 

 

 

 

 

14. From the following balances of M/s Nilu Sarees as on March 31, 2017. Prepare trading and profit and loss account and balance sheet as on date.

 

Account Title

Debit Amount ₹

Account Title

Credit Amount

Opening stock

10,000

Sales

2,28,000

Purchases

78,000

Capital

70,000

Carriage inwards

2,500

Interest

7,000

Salaries

30,000

Commission

8,000

Commission

10,000

Creditors

28,000

Wages

11,000

Bills payable

2,370

Rent and taxes

2,800

 

 

Repairs

5,000

 

 

Telephone expenses

1,400

 

 

Legal charges

1,500

 

 

Sundry expenses

2,500

 

 

cash in hand

12,000

 

 

Debtors

30,000

 

 

Machinery

60,000

 

 

Investments

90,000

 

 

Drawings

18,000

 

 

 

Closing stock, as on March 31, 2017 ₹ 22,000.

Trading Account of M/s Nilu Sarees as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

10,000

Sales

2,28,000

Purchases

78,000

Closing Stock

22,000

Carriage Inwards

2,500

 

 

Wages

11,000

 

 

Profit and Loss (Gross Profit)

1,48,500

 

 

 

 

 

 

 

2,50,000

 

2,50,000

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Salaries

30,000

Trading (Gross Profit)

1,48,500

Commission

10,000

Interest

7,000

Rent and Taxes

2,800

Commission

8,000

Repairs

5,000

 

 

Telephone Expenses

1,400

 

 

Legal Charges

1,500

 

 

Sundry Expenses

2,500

 

 

Net Profit

1,10,300

 

 

 

 

 

 

 

1,63,500

 

1,63,500

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

70,000

 

Machinery

60,000

 

Add: Net Profit

1,10,300

 

Investments

90,000

 

 

1,80,300

 

Debtors

30,000

 

Less: Drawings

(18,000)

1,62,300

Closing Stock

22,000

 

 

 

 

Cash in Hand

12,000

Creditors

 

28,000

 

 

Bills Payable

 

2,370

 

 

Suspense

 

21,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,14,000

 

2,14,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15. Prepare trading and profit and loss account of M/s Sports Equipments for the year ended March 31, 2017 and balance sheet as on that date:

Account Title

Debit Amount

Credit Amount

Opening stock

50,000

 

Purchases and sales

3,50,000

4,21,000

Sales returns

5,000

 

Capital

 

3,00,000

Commission

 

4,000

Creditors

 

1,00,000

Bank overdraft

 

28,000

Cash in hand

32,000

 

Furniture

1,28,000

 

Debtors

1,40,000

 

Plants

60,000

 

Carriage on purchases

12,000

 

Wages

8,000

 

Rent

15,000

 

Bad debts

7,000

 

Drawings

24,000

 

Stationery

6,000

 

Travelling expenses

2,000

 

Insurance

7,000

 

Discount

5,000

 

Office expenses

2,000

 

 

Closing stock as on March 31, 2017 ₹ 2,500

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017

Dr.

 

 

 

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

 

 

50,000

Sales

4,21,000

 

Purchases

 

 

3,50,000

 

Less: Sales Return

5,000

4,16,000

Carriage on Purchases

 

 

12,000

Closing Stock

2,500

Wages

8,000

Profit and Loss (Gross Loss)

1,500

 

 

 

4,20,000

 

4,20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account as on March 31, 2017

Dr.

 

 

Cr.

Particulars

Amount

Particulars

Amount

Trading (Gross Loss)

1,500

Commission

4,000

Rent

15,000

Net Loss

41,500

Bad Debts

7,000

 

 

Stationery

6,000

 

 

Travelling Expenses

2,000

 

 

Insurance

7,000

 

 

Discount

5,000

 

 

Office Expenses

2,000

 

 

 

 

 

 

 

45,500

 

45,500

 

 

 

 

 

Balance Sheet as on March 31, 2017

Liabilities

 

Amount

Assets

 

Amount

Capital

3,00,000

 

Plants

 

60,000

 

Less: Net Loss

(41,500)

 

Furniture

 

1,28,000

 

Less: Drawings

(24,000)

2,34,500

Debtors

 

1,40,000

 

 

 

 

Closing Stock

 

2,500

Creditors

 

1,00,000

Cash in Hand

 

32,000

Bank Overdraft

 

28,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,62,500

 

 

 

3,62,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16.The objectives of preparing financial statements?

Financial statements are prepared with the following objective:

  1. Determine the financial position of a business.
  2. Ascertain the financial performance of the business.
  3. To measure the changes in financial position of a business.
  4. To compare financial performance of business both intra and inter farm wise.
  5. What is the purpose of preparing trading and profit and loss account?

Trading account is prepared for the following purpose:

  1. To determine the gross profit or loss in a financial year or period.
  2. Determine the ratio of gross profit to sales.
  3. To determine ratio of direct expense to sales.

Profit and Loss account is prepared for the following purpose:

  1. Determining net profit or loss incurred by the business
  2. To comply with statutory requirements such as Company act or Partnership Act
  3. Explain the concept of cost of goods sold.

Costs incurred in production of goods that are sold by company is known as Cost of Goods Sold or COGS

No goods left out: In this case all goods are sold out. Hence, it can be calculated as:

Cost of goods sold = Purchases + Direct Expenses

Presence of a closing stock: There can be some stock that are yet to get sold at the end of accounting period. At that time it can be calculated as:

Cost of goods sold = Purchases + Direct Expenses – Closing Stock

Presence of an Opening stock: Stock that is carried forward at the beginning of the accounting period from the previous accounting period is considered as opening stock and is calculated as:

Cost of goods sold = Opening Stock + Purchases + Direct Expenses – Closing Stock

4. What is a balance sheet? What are its characteristics?

A statement prepared to determine assets and values of a business on a particular date is known as Balance Sheet. Debits represent the assets while credits signify the liabilities.

It has the following characteristics:

  1. Reflects financial position of a business.
  2. It is dependent on other statements such as trading and P & L account.
  3. It is prepared at the end of an accounting period.
  4. The balance of both sides should tally.
  5. Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure:

(a) Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.

(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.

(c) Registration fees paid at the time of purchase of a building

(d) Expenditure incurred in the maintenance of a tea garden which will produce tea after four years.

(e) Depreciation charged on a plant.

(f) The expenditure incurred in erecting a platform on which a machine will be fixed.

(g) Advertising expenditure, the benefits of which will last for four years.

Basis of Difference

Capital Expenditure

Revenue Expenditure

Meaning

Expenditure beared for acquiring or improving an asset.

Expenses beared for running daily business activities

Term

Long Term, can span many accounting periods

Short term limited to an accounting period

Benefits

Benefits can be achieved across many accounting periods

Benefits can be availed only in the current year

Nature

Non-recurring

Recurring

Shown in

It is shown in Income Statement and Balance Sheet

It is shown in Income statement

 

(a) Capital expenditure

(b) Revenue expenditure

(c) Capital expenditure

(d) Capital expenditure

(e) Revenue expenditure

(f) Capital expenditure

(g) Deferred revenue expenditure

5. What is an operating profit?

Operating profit referred to as EBIT, is an accounting metric that measures, the profits a company generates from its core business functions. It does not take into account interest deduction and exclusion of tax from calculation. The following equation is used to calculate the operating profit.

The following equation can be used to represent

Operating Profit = Net Profit + Non-Operating Expenses – Non Operating Incomes

Long Answers for NCERT Accountancy Solutions Class 11 Chapter 9

1. What are financial statements? What information do they provide?

Statements that contain financial information about business which can satisfy the information requirements of internal and external users are known as financial statements. It serve as a source of financial information that caters to diverse information requirement of users. It is prepared with the purpose of representing a true and fair view of business.

To do so it requires the creation of three statements namely, trading and profit and loss account and balance sheet.

The financial statements related to gross/net profit or loss, the assets and liabilities. The users of information can be the following:

Current Owners: These internal users would like to know the profits in the previous accounting period and current position of the assets and liabilities.

Government: Government is an external user and want to know the financial position of a business so that stakeholder’s rights are protected.

Prospective Owner: These external users would like to know the past profits and financial position and also the future performance of the business to make an informed decision whether to invest in the business or not

2. What are closing entries? Give four examples of closing entries.

A journal entry that is made at the end of an accounting period that transfers balances from the temporary accounts to a permanent account is known as closing entries. Some examples are here as follows:

  1. The purchases returns are closed by transferring the balance in purchases account. Following entries are made:

Purchases return A/c

Dr

To Purchases A/c

  1. Sales return account is closed by transfer of balance to sales account. Entries will be

Sales A/c

Dr

To Sales return A/c

  1. Purchases account closed by transferring to debit side of trading and P & L Account

Trading A/c

Dr

To Purchases A/c

  1. Sales account closed by transferring balance to credit side of trading and P & L account.

Sales A/c

Dr.

To Trading A/c

  1. Discuss the need of preparing a balance sheet.

Balance sheet needs to be prepared due to following reasons:

  1. To show financial position of business.
  2. To show much assets and liabilities a business has
  3. It serves as information source for internal and external users
  4. It acts as a reference for balances that need to be carried forward
  5. To gather an idea about the liquidity of the firm or business
  6. Helps management in planning and controlling business operations.
  7. What is meant by Grouping and Marshalling of assets and liabilities? Explain the ways in which a balance sheet may be marshalled.

Grouping refers to including assets and liabilities of similar nature under o common heading. For example different types of creditors can be placed in one heading. Similarly work in progress, raw material and finished goods can be placed.

Marshalling refers to arranging of assets and liabilities in order of liquidity and permanence.

In order of Liquidity: It shows how easily an asset can be converted into cash or a liability can be paid off. The asset examples arranged as follows:

  1. Cash
  2. Bank
  3. Debtors

In order of permanence: In this system the most important asset or a liability gets the top position in balance sheet and remaining assets are arranged in reducing level of permanence: For e.g.

  1. Debtors
  2. Bank
  3. Cash

Similarly, liabilities in order of permanence is as follows:

1.Capital

  1. Long term loan
  2. Creditors

Numerical Answers for NCERT Accountancy Solutions Class 11 Chapter 9

1. From the following balances taken from the books of Simmi and Vimmi Ltd.

for the year ending March 31, 2017, calculate the gross profit.

Closing stock 2,50,000

Net sales during the year 40,00,000

Net purchases during the year 15,00,000

Opening stock 15,00,000

Direct expenses 80,000

The gross profit is calculated below:

Trading Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

15,00,000

Net Sales

40,00,000

Net Purchases

15,00,000

Closing Stock

2,50,000

Direct Expenses

80,000

   

Gross Profit

11,70,000

   
 

42,50,000

 

42,50,000

       

Therefore, the Gross Profit is ₹ 11, 70,000.

  1. From the following balances extracted from the books of M/s Ahuja and Nanda. Calculate the amount of:

(a) Cost of goods available for sale

(b) Cost of goods sold during the year

(c) Gross Profit

 

Opening stock 25,000

Credit purchases 7,50,000

Cash purchases 3,00,000

Credit sales 12,00,000

Cash sales 4,00,000

Wages 1,00,000

Salaries 1,40,000

Closing stock 30,000

Sales return 50,000

Purchases return 10,000

  1. a) Cost of Goods Sold Available for Sales

Or

Cost of Goods Manufactured = Opening Stock + Net Purchases + Wages

= 25,000 + 10, 40,000 + 1, 00,000

= ₹ 11, 65,000

(b) Cost of Goods Sold = Opening Stock + Net Purchases + Wages – Closing Stock

= 25,000 + 10, 40,000 + 1, 00,000 – 30,000

= ₹ 11, 35,000

Or

Cost of Goods Sold = Net Sales – Gross Profit

= 15, 50,000 – 4, 15,000

= ₹ 11, 35,000

(c)

Trading Account

Dr.

   

Cr.

Particulars 

Amount

Particulars

Amount

Opening Stock

25,000

Sales

 

Purchases

   

Add: Credit Sales

12,00,000

 
 

Add: Credit Purchases

7,50,000

   

Add: Cash Sales

4,00,000

 
 

Add: Cash Purchases

3,00,000

     

16,00,000

 
   

10,50,000

   

Less: Sales Return

(50,000)

15,50,000

 

Less: Purchases Return

(10,000)

10,40,000

       

Wages

 

1,00,000

 

Closing Stock

 

30,000

Gross Profit

 

4,15,000

       
     

15,80,000

     

15,80,000

               

3. Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv and Sons for the year ended March 31, 2017.

Opening stock 50,000

Net sales 11,00,000

Net purchases 6,00,000

Direct expenses 60,000

Administration expenses 45,000

Selling and distribution expenses 65,000

Loss due to fire 20,000

Closing stock 70,000

The solution is as follows:

Trading Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

50,000

Net Sales

11,00,000

Net Purchases

6,00,000

Closing Stock

70,000

Direct Expenses

60,000

   

Gross Profit

4,60,000

   
 

11,70,000

 

11,70,000

       

 

Operating Profit

=

Sales – (Opening Stock + Net Purchases + Direct Expenses + Administration Expenses +

Selling and Distribution Expenses) + Closing Stock

 

=

11,00,000 – (50,000 + 6,00,000 + 60,000 + 45,000 + 65,000) + 70,000

 

=

₹ 3,50,000

4. Operating profit earned by M/s Arora and Sachdeva in 2016-17 was ₹ 17, 00,000. Its non-operating incomes were ₹ 1, 50,000 and non-operating expenses were ₹ 3, 75,000. Calculate the amount of net profit earned by the firm.

 

Net Profit = Operating Profit + Non-operating Income – Non-operating Expenses

= 17, 00,000 + 1, 50,000 – 3, 75,000

= ₹ 14, 75,000

Net profit earned by M/S Arora and Sachdeva in 2016–17 is ₹ 14, 75,000

  1. The following are the extracts from the trial balance of M/s Bhola and Sons as on March 31, 2017

Account title

Debit

Credit

Opening Stock

2,00,000

 

Purchases

8,10,000

 

Sales

 

10,10,000

 

10,10,000

10,10,000

 

 

 

 

(Only relevant items)

Closing Stock as on date was valued at ₹ 3, 00,000.

You are required to record the necessary journal entries and show how the above items will appear in the trading and profit and loss account and balance sheet of M/s Bhola and Sons.

Books of M/s Bhola and Sons

Journal

Date

 

Particulars

 

L.F.

Debit

Amount

Credit Amount ₹

2017

       

 

 

Mar.31

Trading A/c

Dr.

 

10,10,000

 

   

To Opening Stock A/c

     

2,00,000

   

To Purchases A/c

     

8,10,000

 

(Balances from Purchases Account and Stock Account

transferred to Trading Account)

     
             

Mar.31

Sales A/c

Dr.

 

10,10,000

 
 

Closing Stock A/c

   

3,00,000

 
   

To Trading A/c

     

13,10,000

 

(Balance from sales and closing stock transferred

to Trading Account)

   

 

             

Mar.31

Trading A/c

Dr.

 

3,00,000

 
   

To Profit and Loss (Gross Profit) A/c

     

3,00,000

 

(Balance of Trading Account (gross profit) transferred

to Profit and Loss Account)

     
         

 

Trading Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

2,00,000

Sales

10,10,000

Purchases

8,10,000

Closing Stock

3,00,000

Profit and Loss A/c – Gross Profit

3,00,000

   
       
 

13,10,000

 

13,10,000

       

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

   

Closing Stock

3,00,000

       
       

6. Prepare trading and profit and loss account and balance sheet, as on March 31, 2017:

Account Title

Amount

Account Title

Amount

Machinery

27,000

Capital

60,000

Sundry debtors

21,600

Bills payable

2,800

Drawings

2,700

Sundry creditors

1,400

Purchases

58,500

Sales

73,500

Wages

15,000

 

 

Sundry expenses

600

 

 

Rent and taxes

1,350

 

 

Carriage inwards

450

 

 

Bank

4,500

 

 

Openings stock

6,000

 

 

 

Closing stock, as on March 31, 2017 ₹ 22,400

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

6,000

Sales

73,500

Purchases

58,500

Closing Stock

22,400

Wages

15,000

   

Carriage Inwards

450

   

Profit and Loss (Gross Profit)

15,950

   
 

95,900

 

95,900

       

 

Profit and Loss Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Sundry Expenses

600

Trading (Gross Profit)

15,950

Rent and Taxes

1,350

   
       

Net Profit

14,000

   
 

15,950

 

15,950

       
         

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

60,000

 

Fixed Assets 

 
 

Add: Net Profit

14,000

 

Machinery

27,000

   

74,000

     
 

Less: Drawings

2,700

71,300

Current Assets 

 
       

Bank

4,500

Sundry Creditors

 

1,400

Closing Stock

22,400

Bills Payable

 

2,800

Sundry Debtors

21,600

     

75,500

 

75,500

           

7. The following trial balance is extracted from the books of M/s Ram on March 31, 2017. You are required to prepare trading and profit and loss account and the balance sheet as on date:

 

Account title

Amount

Account title

Amount ₹

Debtors

12,000

Apprenticeship premium

5,000

Purchases

50,000

Loan

10,000

Coal, gas and water

6,000

Bank overdraft

1,000

Factory wages

11,000

Sales

80,000

Salaries

9,000

Creditors

13,000

Rent

4,000

Capital

20,000

Discount

3,000

 

 

Advertisement

500

 

 

Drawings

1,000

 

 

Loan

6,000

 

 

Petty cash

500

 

 

Sales return

1,000

 

 

Machinery

5,000

 

 

Land and building

10,000

 

 

Income tax

100

 

 

Furniture

9,900

 

 

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017

Dr.

     

Cr.

Particulars

Amount

Particulars

Amount

Purchases

   

50,000

Sales

80,000

 

Coal, Gas and Water

   

6,000

 

Less: Sales Return

1,000

79,000

Factory Wages

   

11,000

   

Profit and Loss (Gross Profit)

12,000

 
     

79,000

79,000

         
                   

 

Profit and Loss Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Salaries

9,000

Trading (Gross Profit)

12,000

Rent

4,000

Apprenticeship Premium

5,000

Discount

3,000

   

Advertisement

500

   

Net Profit

500

   
       
 

17,000

 

17,000

       

 

Balance Sheet as on March 31, 2017

Liabilities

 

Amount

Assets

 

Amount

Capital

20,000

 

Machinery

 

5,000

 

Add: Profit and Loss (Net Profit)

500

 

Land and Building

 

10,000

   

20,500

 

Furniture

 

9,900

 

Less: Drawings

(1,000)

 

Loan (Given)

 

6,000

 

Less: Income Tax

(100)

19,400

Debtors

 

12,000

       

Petty Cash

 

500

Loan (Taken)

 

10,000

       

Creditors

 

13,000

       

Bank Overdraft

 

1,000

       
               
     

43,400

     

43,400

               

8. The following is the trial balance of Manju Chawla on March 31, 2017. You are required to prepare trading and profit and loss account and a balance sheet as on date:

Account title

Debit Amount ₹

 

Credit Amount ₹

Opening stock

10,000

 

 

Purchases and sales

40,000

 

80,000

Returns

200

 

600

Productive wages

6,000

 

 

Dock and Clearing charges

4,000

 

 

Donation and charity

600

 

 

Delivery van expenses

6,000

 

 

Lighting

500

 

 

Sales tax collected

 

 

1,000

Bad debts

600

 

 

Misc. incomes

 

 

6,000

Rent from tenants

 

 

2,000

Royalty

4,000

 

 

Capital

 

 

40,000

Drawings

2,000

 

 

Debtors and Creditors

6,000

 

7,000

Cash

3,000

 

 

Investment

6,000

 

 

Patents

4,000

 

 

Land and Machinery

43,000

 

 

 

Closing stock ₹ 2,000.

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

10,000

Sales

80,000

 

Purchases

40,000

   

Less: Sales Returns

(200)

79,800

 

Less: Purchases Returns

(600)

39,400

   

Productive Wages

6,000

Closing Stock

2,000

Dock and Clearing Charges

4,000

   

Royalty

4,000

   

Profit and Loss (Gross Profit)

18,400

   
       
       
 

81,800

 

81,800

       
               

 

Profit and Loss Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Donation and Charity

600

Trading (Gross Profit)

18,400

Delivery Van Expenses

6,000

Misc. Incomes

6,000

Lighting

500

Rent from Tenants

2,000

Bad Debts

600

   

Net Profit

18,700

   
       
 

26,400

 

26,400

       

 

Balance Sheet as on March 31, 2017

Liabilities

 

Amount

Assets

 

Amount

Capital

40,000

 

Patents

 

4,000

 

Add: Profit and Loss (Net Profit)

18,700

 

Land and Machinery

 

43,000

   

58,700

 

Investment

 

6,000

 

Less: Drawings

(2,000)

56,700

Debtors

 

6,700

       

Cash

 

3,000

Sales Tax Collected

 

1,000

Closing Stock

 

2,000

Creditors

 

7,000

       
               
     

64,700

     

64,700

               
                   

10. The following is the Trial Balance of Mr. Deepak as on March 31, 2017. You are required to prepare trading account, profit and loss account and a balance sheet as on date:

 

Account title

Debit Amount ₹

Account title

Credit Amount ₹

Drawings

36,000

Capital

2,50,000

Insurance

3,000

Bills payable

3,600

General expenses

29,000

Creditors

50,000

Rent and taxes

14,400

Discount received

10,400

Lighting (factory)

2,800

Purchases return

8,000

Travelling expenses

7,400

Sales

4,40,000

Cash in hand

12,600

 

 

Bills receivable

5,000

 

 

Sundry debtors

1,04,000

 

 

Furniture

16,000

 

 

Plant and Machinery

1,80,000

 

 

Opening stock

40,000

 

 

Purchases

1,60,000

 

 

Sales return

6,000

 

 

Carriage inwards

7,200

 

 

Carriage outwards

1,600

 

 

Wages

84,000

 

 

Salaries

53,000

 

 

 

Closing stock ₹ 35,000.

The trading account, profit and loss account and a balance sheet are prepared below:

Trading Account as on March 31, 2017

Dr.

       

Cr.

Particulars

 

Amount

Particulars

 

Amount

Opening Stock

 

40,000

Sales

4,40,000

 

Purchases

1,60,000

   

Less: Sales Return

6,000

4,34,000

 

Less: Purchases Return

(8,000)

1,52,000

Closing Stock

 

35,000

           

Lighting (Factory)

 

2,800

 

Carriage Inwards

 

7,200

 

Wages

 

84,000

 

Profit and Loss (Gross Profit)

1,83,000

 
 

4,69,000

4,69,000

   
                 

 

Profit and Loss Account as on March 31, 2017

Dr.

Cr.

Particulars

Amount

Particulars

Amount

Insurance

 

3,000

Trading (Gross Profit)

 

1,83,000

General Expenses

 

29,000

Discount Received

 

10,400

Rent and Taxes

 

14,400

       

Travelling Expenses

 

7,400

       

Carriage Outwards

 

1,600

       

Salaries

 

53,000

       

Net Profit

 

85,000

       
     

1,93,400

     

1,93,400

               
                 

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

2,50,000

 

Plant and Machinery

1,80,000

 

Add: Net Profit

85,000

 

Furniture

16,000

3,35,000

 

Sundry Debtors

1,04,000

 

Less: Drawings

(36,000)

2,99,000

Closing Stock

35,000

   

Bills Receivable

5,000

Creditors

50,000

Cash in Hand

12,600

Bills Payable

3,600

   
     

3,52,600

3,52,600

   

11. Prepare trading and profit and loss account and balance sheet from the following particulars as on March 31, 2017.

 

Account Title

Debit Amount ₹

Credit Amount ₹

Purchases and Sales

3,52,000

5,60,000

Return inwards and Return outwards

9,600

12,000

Carriage inwards

7,000

 

Carriage outwards

3,360

 

Fuel and power

24,800

 

Opening stock

57,600

 

Bad debts

9,950

 

Debtors and Creditors

1,31,200

48,000

Capital

 

3,48,000

Investment

32,000

 

Interest on investment

 

3,200

Loan

 

16,000

Repairs

2,400

 

General expenses

17,000

 

Wages and salaries

28,800

 

Land and buildings

2,88,000

 

Cash in hand

32,000

 

Miscellaneous receipts

 

160

Sales tax collected

 

8,350

 

Closing stock ₹ 30,000.

Trading and profit and loss account and balance sheet for the question is posted below:

Trading Account as on March 31, 2017

Dr.

           

Cr.

Particulars

 

Amount

Particulars

 

Amount

Opening Stock

 

57,600

Sales

5,60,000

 

Purchases

3,52,000

   

Less: Return Inwards

(9,600)

5,50,400

 

Less: Return Outwards

(12,000)

3,40,000

Closing Stock

 

30,000

Carriage Inwards

7,000

       

Fuel and Power

 

24,800

       

Wages and Salaries

 

28,800

       

Profit and Loss (Gross Profit)

 

1,22,200

       
           
     

5,80,400

     

5,80,400

               
                           

 

Profit and Loss Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Carriage Outwards

3,360

Trading (Gross Profit)

1,22,200

Bad Debts

9,950

Interest on Investment

3,200

Repairs

2,400

Miscellaneous Receipts

160

General Expenses

17,000

   

Net Profit

92,850

   
 

1,25,560

 

1,25,560

       

 

Balance Sheet as on March 31,2017

Liabilities

 

Amount

Assets

 

Amount

Capital

3,48,000

 

Land and Building

 

2,88,000

 

Add: Net Profit

92,850

4,40,850

Investment

 

32,000

       

Debtors

 

1,31,200

Loan

 

16,000

Closing Stock

 

30,000

Creditors

 

48,000

Cash in Hand

32,000

Sales Tax Collected

 

8,350

   
   

5,13,200

 

5,13,200

           
               

12. From the following trial balance of Mr. A. Lal, prepare trading, profit and loss account and balance sheet as on March 31, 2017.

 

Account Title

Debit Amount ₹

Credit Amount ₹

Stock as on April 01, 2016

16,000

 

Purchases and Sales

67,600

1,12,000

Returns inwards and outwards

4,600

3,200

Carriage inwards

1,400

 

General expenses

2,400

 

Bad debts

600

 

Discount received

 

1,400

Bank over draft

 

10,000

Interest on bank overdraft

600

 

Commission received

 

1,800

Insurance and taxes

4,000

 

Scooter expenses

200

 

Salaries

8,800

 

Cash in hand

4,000

 

Scooter

8,000

 

Furniture

5,200

 

Building

65,000

 

Debtors and Creditors

6,000

16,000

Capital

 

50,000

Closing stock ₹ 15,000.

 

Trading and profit and loss account and balance sheet for the question is posted below:

Trading Account as on March 31, 2017

Dr.

           

Cr.

Particulars

 

Amount

Particulars

 

Amount

Opening Stock

 

16,000

Sales

1,12,000

 

Purchases

67,600

   

Less: Sales Return Inwards

(4,600)

1,07,400

 

Less: Return Outwards

(3,200)

64,400

Closing Stock

 

15,000

Carriage Inwards

1,400

       

Profit and Loss (Gross Profit)

 

40,600

       
           
     

1,22,400

     

1,22,400

               
                       

 

Profit and Loss Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

General Expenses

2,400

Trading (Gross Profit)

40,600

Bad Debts

600

Discount Received

1,400

Interest on Bank Overdraft

600

Commission Received

1,800

Insurance and Taxes

4,000

   

Scooter Expenses

200

   

Salaries

8,800

   

Net Profit

27,200

   
 

43,800

 

43,800

       

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

50,000

 

Building

 

65,000

 

Add: Net Profit

27,200

77,200

Furniture

 

5,200

       

Scooter

 

8,000

Creditors

 

16,000

Debtors

 

6,000

Bank Overdraft

 

10,000

Closing Stock

   

15,000

       

Cash in Hand

   

4,000

     

1,03,200

     

1,03,200

               

13. Prepare trading and profit and loss account and balance sheet of M/s Royal Traders from the following balances as on March 31, 2017.

 

Debit balances

Amount ₹

Credit balances

Amount ₹

Stock

20,000

Sales

2,45,000

Cash

5,000

Creditors

10,000

Bank

10,000

Bills payable

4,000

Carriage on purchases

1,500

Capital

2,00,000

Purchases

1,90,000

 

 

Drawings

9,000

 

 

Wages

55,000

 

 

Machinery

1,00,000

 

 

Debtors

27,000

 

 

Postage

300

 

 

Sundry expenses

1,700

 

 

Rent

4,500

 

 

Furniture

35,000

 

 

 

Closing stock ₹ 8,000.

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

20,000

Sales

2,45,000

Purchases

1,90,000

Closing Stock

8,000

Carriage on Purchases

1,500

Profit and Loss (Gross Loss)

13,500

Wages

55,000

   
       
 

2,66,500

 

2,66,500

       

 

Profit and Loss Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Trading (Gross Loss)

13,500

   

Postage

300

   

Sundry Expenses

1,700

   

Rent

4,500

Net Loss

20,000

       
 

20,000

 

20,000

       

 

Balance Sheet of M/s Royal Traders as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

2,00,000

 

Machinery

 

1,00,000

 

Less: Net Loss

(20,000)

 

Furniture

 

35,000

 

Less: Drawings

(9,000)

1,71,000

Debtors

 

27,000

       

Closing Stock

 

8,000

Creditors

 

10,000

Bank

 

10,000

Bills Payable

 

4,000

Cash

   

5,000

               
     

1,85,000

     

1,85,000

               

14. Prepare trading and profit and loss account from the following particulars of M/s Neema Traders as on March 31, 2017.

Account Title

Debit Amount

Account Title

Credit Amount

Buildings

23,000

Sales

1,80,000

Plant

16,930

Loan

8,000

Carriage inwards

1,000

Bills payable

2,520

Wages

3,300

Bank overdraft

4,720

Purchases

1,64,000

Creditors

8,000

Sales return

1,820

Capital

2,36,000

Opening stock

9,000

Purchases return

1,910

Machinery

2,10,940

 

 

Insurance

1,610

 

 

Interest

1,100

 

 

Bad debts

250

 

 

Postage

300

 

 

Discount

1,000

 

 

Salaries

3,000

 

 

Debtors

3,900

 

 

Stock on March 31, 2017 ₹ 16,000.

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017

Dr.

           

Cr.

Liabilities

Amount

Assets

Amount

Opening Stock

 

9,000

Sales

1,80,000

 

Purchases

1,64,000

   

Less: Sales Return

(1,820)

1,78,180

 

Less: Purchases Return

(1,910)

1,62,090

Closing Stock

 

16,000

               

Carriage Inwards

 

1,000

       

Wages

 

3,300

       

Profit and Loss (Gross Profit)

18,790

       
               
     

1,94,180

     

1,94,180

               
                       

 

Profit and Loss Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Insurance

1,610

Trading (Gross Profit)

18,790

Interest

1,100

   

Bad Debts

250

   

Postage

300

   

Discount

1,000

   

Salaries

3,000

   

Net Profit

11,530

   
 

18,790

 

18,790

       

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

2,36,000

 

Building

23,000

 

Add: Net Profit

11,530

2,47,530

Plant

16,930

       

Machinery

2,10,940

Loan

 

8,000

Debtors

3,900

Creditors

 

8,000

Closing Stock

16,000

Bills Payable

 

2,520

   

Bank Overdraft

 

4,720

   
           
     

2,70,770

 

2,70,770

           
             

15. From the following balances of M/s Nilu Sarees as on March 31, 2017. Prepare trading and profit and loss account and balance sheet as on date.

 

Account Title

Debit Amount ₹

Account Title

Credit Amount

Opening stock

10,000

Sales

2,28,000

Purchases

78,000

Capital

70,000

Carriage inwards

2,500

Interest

7,000

Salaries

30,000

Commission

8,000

Commission

10,000

Creditors

28,000

Wages

11,000

Bills payable

2,370

Rent and taxes

2,800

 

 

Repairs

5,000

 

 

Telephone expenses

1,400

 

 

Legal charges

1,500

 

 

Sundry expenses

2,500

 

 

cash in hand

12,000

 

 

Debtors

30,000

 

 

Machinery

60,000

 

 

Investments

90,000

 

 

Drawings

18,000

 

 

 

Closing stock, as on March 31, 2017 ₹ 22,000.

Trading Account of M/s Nilu Sarees as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

10,000

Sales

2,28,000

Purchases

78,000

Closing Stock

22,000

Carriage Inwards

2,500

   

Wages

11,000

   

Profit and Loss (Gross Profit)

1,48,500

   
       
 

2,50,000

 

2,50,000

       

 

Profit and Loss Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Salaries

30,000

Trading (Gross Profit)

1,48,500

Commission

10,000

Interest

7,000

Rent and Taxes

2,800

Commission

8,000

Repairs

5,000

   

Telephone Expenses

1,400

   

Legal Charges

1,500

   

Sundry Expenses

2,500

   

Net Profit

1,10,300

   
       
 

1,63,500

 

1,63,500

       

 

Balance Sheet as on March 31, 2017

Liabilities

Amount

Assets

Amount

Capital

70,000

 

Machinery

60,000

 

Add: Net Profit

1,10,300

 

Investments

90,000

   

1,80,300

 

Debtors

30,000

 

Less: Drawings

(18,000)

1,62,300

Closing Stock

22,000

       

Cash in Hand

12,000

Creditors

 

28,000

   

Bills Payable

 

2,370

   

Suspense

 

21,330

   
         
           
     

2,14,000

 

2,14,000

           
               

16. Prepare trading and profit and loss account of M/s Sports Equipments for the year ended March 31, 2017 and balance sheet as on that date:

Account Title

Debit Amount

Credit Amount

Opening stock

50,000

 

Purchases and sales

3,50,000

4,21,000

Sales returns

5,000

 

Capital

 

3,00,000

Commission

 

4,000

Creditors

 

1,00,000

Bank overdraft

 

28,000

Cash in hand

32,000

 

Furniture

1,28,000

 

Debtors

1,40,000

 

Plants

60,000

 

Carriage on purchases

12,000

 

Wages

8,000

 

Rent

15,000

 

Bad debts

7,000

 

Drawings

24,000

 

Stationery

6,000

 

Travelling expenses

2,000

 

Insurance

7,000

 

Discount

5,000

 

Office expenses

2,000

 

 

Closing stock as on March 31, 2017 ₹ 2,500

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017

Dr.

     

Cr.

Particulars

Amount

Particulars

Amount

Opening Stock

   

50,000

Sales

4,21,000

 

Purchases

   

3,50,000

 

Less: Sales Return

5,000

4,16,000

Carriage on Purchases

   

12,000

Closing Stock

2,500

Wages

8,000

Profit and Loss (Gross Loss)

1,500

     

4,20,000

 

4,20,000

           
                 

 

Profit and Loss Account as on March 31, 2017

Dr.

   

Cr.

Particulars

Amount

Particulars

Amount

Trading (Gross Loss)

1,500

Commission

4,000

Rent

15,000

Net Loss

41,500

Bad Debts

7,000

   

Stationery

6,000

   

Travelling Expenses

2,000

   

Insurance

7,000

   

Discount

5,000

   

Office Expenses

2,000

   
       
 

45,500

 

45,500

       

 

Balance Sheet as on March 31, 2017

Liabilities

 

Amount

Assets

 

Amount

Capital

3,00,000

 

Plants

 

60,000

 

Less: Net Loss

(41,500)

 

Furniture

 

1,28,000

 

Less: Drawings

(24,000)

2,34,500

Debtors

 

1,40,000

       

Closing Stock

 

2,500

Creditors

 

1,00,000

Cash in Hand

 

32,000

Bank Overdraft

 

28,000

       
               
     

3,62,500

     

3,62,500

               
                 



Access Other Chapters and NCERT Solutions For Class 11 Accountancy Chapter 8

You can download the PDF of NCERT Solutions Class 11 Accountancy for Chapter 8 other chapters:

Chapter 1 Introduction to Accounting 

Chapter 2 Theory Base of Accounting 

Chapter 3 Recording of Transactions 1 

Chapter 4 Recording of Transcations 2 

Chapter-5 Bank Reconciliation Statement

Chapter-6 Trial Balance And Rectification Of Errors

Chapter-7 Depreciation, Provisions And Reserves

Chapter-8 Bill Of Exchange

Chapter-10 Financial Statements – 2

Chapter-11 Accounts From Incomplete Records

Chapter-12 Applications of Computers in Accounting

Chapter-13 Computerised Accounting System

Chapter-14 Depreciation

Chapter-15 Bank Reconciliation Statement

 

We have provided all the important above in the article regarding the CBSE NCERT Solutions For Class 11 Accountancy Chapter-8. If you have any queries, you can mention them in the comment section.

FAQ (Frequently Asked Questions): NCERT Solutions For Class 11 Accountancy Chapter 9

When does the passbook and cash book not tally with each other? Give reasons.

The following are the reasons for this:
Because the transactions are separated by a period of time.
Due to errors committed during the transaction’s recording.
Any direct debit made by the bank from the customer’s account.
Paid a bank check that hasn’t cleared yet.
The deposited check, as well as any discounts, applied, and so on.

Why is it mandatory to prepare a bank reconciliation statement?

A bank reconciliation statement is required because: 
Mistakes might occur during transactions, which are detected by the reconciliation statement. It facilitates their correction. 
It simplifies the process of preparing revised cash. 
For example, previously missing direct payments and interest allowed by the bank on a customer’s account will now be recorded by the cash book

What are financial statements? What information do they provide?

Statements that contain financial information about business which can satisfy the information requirements of internal and external users are known as financial statements. It serve as a source of financial information that caters to diverse information requirement of users. It is prepared with the purpose of representing a true and fair view of business.
To do so it requires the creation of three statements namely, trading and profit and loss account and balance sheet.
The financial statements related to gross/net profit or loss, the assets and liabilities. The users of information can be the following:
Current Owners: These internal users would like to know the profits in the previous accounting period and current position of the assets and liabilities.
Government: Government is an external user and want to know the financial position of a business so that stakeholder’s rights are protected.
Prospective Owner: These external users would like to know the past profits and financial position and also the future performance of the business to make an informed decision whether to invest in the business or not

What are closing entries? Give four examples of closing entries.

A journal entry that is made at the end of an accounting period that transfers balances from the temporary accounts to a permanent account is known as closing entries. Some examples are here as follows:
1. The purchases returns are closed by transferring the balance in purchases account. Following entries are made:
Purchases return A/c
Dr
To Purchases A/c
2. Sales return account is closed by transfer of balance to sales account. Entries will be
Sales A/c
Dr
To Sales return A/c
3. Purchases account closed by transferring to debit side of trading and P & L Account
Trading A/c
Dr
To Purchases A/c
4. Sales account closed by transferring balance to credit side of trading and P & L account.
Sales A/c
Dr.
To Trading A/c

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