(Book ID: B1130) Assignment Set -1
Q.1 Explain the Various accounting concepts and principles
Accounting is the language of business. Accounting information has to be suitably recorded classified, summarised and presented. Accountants adopt the following concepts in recording of accounts 1. Business Entity concept
The business unit is treated as a separate and distinct from the persons who owe it. Hence business transactions must be kept completely separate from the private affairs of the owner this concept enables the owner top ascertain the picture of a business. 2. Going concern concept
It is assumed that the business will exist for the future and transactions are recorded from this point of view. A firm is said to be a going concern when there is neither the intention nor the necessity to wind up its operation. In other words, it continues to operation at its present scale in foreseeable future. 3. Money Measurement Concept
All transactions are expressed and interpreted in terms of money. Accounting records only those transaction, which are being expressed in monetary terms through quantitative records are also kept. 4. Accounting period concept
A business is assumed to continue indefinitely. In order to ascertain the state of affairs of the business at different intervals we have to choose the intervals for ascertaining the financial position and operational results at each such interval, which is known as accounting period. 5. Dual Aspect concept
Each transaction has two aspects.
1) Debit aspect.
2) Credit aspect.
If a business has acquired an asset it must have result,
There has been a profit leading to an increase in the amount that the business owes to the proprietor Accounting Principles:
The double entry system of accounting is based on a set of principle which is called generally accepted accounting principles. It incorporates the consensus at a particular time as to: •Which economic resources and obligations should be recorded as assets and liabilities by financial accounting, •Which changes in assets and liabilities should be recorded •When these changes are to be recorded,
•How the assets and liabilities and changes in them should be measured, •What information should be disclosed and
•Which financial statement should be prepared.
Q .2 Pass Journal entries for the following transactions.
Cash A/C Dr To capital A/C
(Being Madan invested in business)
Purchase A/c Dr
To cash A/C
(Being credit purchases)
Drawing A/C Dr
To cash A/C
(Being cash withdrawn for personal use)
Purchase A/C Dr
To cash A/C
(Being cash purchase)
Wages A/C Dr
To cash A/C
(Being wages paid)70000
Q.3Explain the various types of errors disclosed by trial balance Ans:
Those errors that can be disclosed by trial balance can easily be located. As soon as the trial balance does not tally, the accountant can proceed to find out the spots where the errors might have been committed. The total amount of difference in the trial balance is temporarily transferred to a “Suspense Account “so that it can be mitigated as and when the error get rectified. Therefore the suspense account get debited or credited as the case may be on rectification of these types of error. The following are errors:
a) Posting a wrong amount;
This mistake may occur while posting an entry from subsidiary book to ledger. b) Posting to the wrong side of an account: