Questions on Finance and Accounts
Question 1- Analyze the following transaction under traditional approach.
18.1.2011 Received a cheque from a customer, Sanjay at 5 p.m. Rs.20,000
19.1.2011 Paid Ramu by cheque Rs.1,50,000
20.1.2011 Paid salary Rs. 30,000
20.1.2011 Paid rent by cheque Rs. 8,000
21.1.2011 Goods withdrawn for personal use Rs. 5,000
25.1.2011 Paid an advance to suppliers of goods Rs. 1,00,000
26.1.2011 Received an advance from customers Rs. 3,00,000
31.1.2011 Paid interest on loan Rs. 5,000
31.1.2011 Paid instalment of loan Rs. 25,000
31.1.2011 Interest allowed by bank Rs. 8,000
Analysis of transaction –with accounts involved-nature of account-affects and debit/credit
Solution:
Date
Accounts Involved
Nature of Account
Affects
Debit/credit
18.1.2011
Cash a/c
Sanjay a/c
Real
Personal
Cash is coming in
Sanjay is the giver
Debit
Credit
19.1.2011
Ramu’s a/c
Bank a/c
Personal
Personal
Ramu is the receiver
Bank is the giver
Debit
Credit
20.1.2011
Salary a/c
Cash a/c
Nominal
Real
Salary is an expense
Cash is going out
Debit
Credit
20.1.2011
Rent a/c
Bank a/c
Nominal
Personal
Rent is an expense
Bank is the giver
Debit
Credit
21.1.2011
Drawings a/c
Purchase a/c
Personal
Nominal
Owner is the receiver
Decrease is stock
Debit
Credit
25.1.2011
Advance to Suppliers a/c
Cash a/c
Personal
Real
Suppliers are the receivers
Cash is going out
Debit
Credit
26.1.2011
Cash a/c
Advance from customers a/c
Real
Personal
Cash is coming in
Customers are givers
Debit
Credit
31.1.2011
Interest on loans a/c
Cash a/c
Nominal
Real
Interest is expense
Cash is going out
Debit
Credit
31.1.2011
Loan a/c
Cash a/c
Personal
Real
Lender is the receiver
Cash is going out
Debit
Credit
31.1.2011
Bank a/c
Bank interest a/c
Personal
Nominal
Bank is the receiver
Bank interest is an income
Debit
Credit
Question 2: The trial balance of Evergreen Co Ltd., as taken on 31st December, 2002 did not tally and the difference was carried to suspense account. The following
18.1.2011 Received a cheque from a customer, Sanjay at 5 p.m. Rs.20,000
19.1.2011 Paid Ramu by cheque Rs.1,50,000
20.1.2011 Paid salary Rs. 30,000
20.1.2011 Paid rent by cheque Rs. 8,000
21.1.2011 Goods withdrawn for personal use Rs. 5,000
25.1.2011 Paid an advance to suppliers of goods Rs. 1,00,000
26.1.2011 Received an advance from customers Rs. 3,00,000
31.1.2011 Paid interest on loan Rs. 5,000
31.1.2011 Paid instalment of loan Rs. 25,000
31.1.2011 Interest allowed by bank Rs. 8,000
Analysis of transaction –with accounts involved-nature of account-affects and debit/credit
Solution:
Date
Accounts Involved
Nature of Account
Affects
Debit/credit
18.1.2011
Cash a/c
Sanjay a/c
Real
Personal
Cash is coming in
Sanjay is the giver
Debit
Credit
19.1.2011
Ramu’s a/c
Bank a/c
Personal
Personal
Ramu is the receiver
Bank is the giver
Debit
Credit
20.1.2011
Salary a/c
Cash a/c
Nominal
Real
Salary is an expense
Cash is going out
Debit
Credit
20.1.2011
Rent a/c
Bank a/c
Nominal
Personal
Rent is an expense
Bank is the giver
Debit
Credit
21.1.2011
Drawings a/c
Purchase a/c
Personal
Nominal
Owner is the receiver
Decrease is stock
Debit
Credit
25.1.2011
Advance to Suppliers a/c
Cash a/c
Personal
Real
Suppliers are the receivers
Cash is going out
Debit
Credit
26.1.2011
Cash a/c
Advance from customers a/c
Real
Personal
Cash is coming in
Customers are givers
Debit
Credit
31.1.2011
Interest on loans a/c
Cash a/c
Nominal
Real
Interest is expense
Cash is going out
Debit
Credit
31.1.2011
Loan a/c
Cash a/c
Personal
Real
Lender is the receiver
Cash is going out
Debit
Credit
31.1.2011
Bank a/c
Bank interest a/c
Personal
Nominal
Bank is the receiver
Bank interest is an income
Debit
Credit
Question 2: The trial balance of Evergreen Co Ltd., as taken on 31st December, 2002 did not tally and the difference was carried to suspense account. The following