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Ahmedabad University: Amrut Mody School of Management Financial Accounting-Fac114

This document contains an assignment for a Financial Accounting course. It includes 4 questions that analyze the effect of business transactions on the accounting equation. Question 5 requires students to apply debit and credit rules to record journal entries for business transactions, balance accounts, and verify the accounting equation for a sole proprietorship security company during its first month of operations. The questions cover key accounting concepts like the accounting equation, double-entry bookkeeping, and completing the accounting cycle.

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Nandini Goyal
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286 views

Ahmedabad University: Amrut Mody School of Management Financial Accounting-Fac114

This document contains an assignment for a Financial Accounting course. It includes 4 questions that analyze the effect of business transactions on the accounting equation. Question 5 requires students to apply debit and credit rules to record journal entries for business transactions, balance accounts, and verify the accounting equation for a sole proprietorship security company during its first month of operations. The questions cover key accounting concepts like the accounting equation, double-entry bookkeeping, and completing the accounting cycle.

Uploaded by

Nandini Goyal
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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AHMEDABAD UNIVERSITY

AMRUT MODY SCHOOL OF MANAGEMENT


2020 MONSOON SEMESTER
FINANCIAL ACCOUNTING-FAC114
EVALUATION TYPE: ASSIGNMENT – 1
TOPIC- Introduction to Accounting
(Accounting equation and Accounting cycle)

Date of announcement: 13th Aug, 2020 Total Marks: 20 Section No: 1 Course Instructor: Binny
Rawat

Q1. The transactions of Kamat Travel Services during a month are as follows: Write the effect of
transactions on accounting equation (2.5 marks)

(a) Bought furniture for cash. (Solved as a sample)


(b) Received an amount due from a customer.
(c) Bought a car on credit.
(d) Paid amount due to a supplier.
(e) Appointed office assistant.
(f) Cash withdrawn by the proprietor for personal purposes.
(g) Received cash for services to be provided next month.
(h) Provided services on credit.
(i) Received interest on bank deposit.
(j) Sold unused equipment at purchase price.
(k) Owner invested cash in the business.

Format of Solution
Activity Assets Liabilities Equity Explanation

a) Equipment(Increa No effect No effect Both the assets are involved in


se) Cash the transaction
(Increase)

(Ques 2 to 4 based on the format of accounting equation , which we discussed during


session)

Q2. On March 1,2020, Rina Motawala established an audit practice as a sole proprietorship and
concluded the following transactions in the first month: (2.5 marks) (a) Rina brought in to the
business her personal laptop costing Rs.50,000.
(b) Provided services for cash, Rs.23,000.
(c) Bought office equipment on credit, Rs.25,000.
(d) Billed clients for services, Rs.16,000.
(e) Paid rent deposit for office, Rs.10,000.
(f) Collected payments from clients in (d), Rs.12,300.
(g) Withdrew cash for personal use, Rs.9,000.
(h) Paid electricity expense, Rs.1,700.
(i) Paid salary to office assistant, 2,000.

Required: Analyze the effect of the transactions on the accounting equation.

Q3. Analyze the effect of the transaction on the accounting equation.


On August 1, 2020, Sriram set up Medi Labs Company. The following transactions took place
during the first month: (2.5 marks)
(a) Sriram invested Rs 50,000 cash in the company’s share capital
(b) Bought equipment on credit, Rs 40,000.
(c) Took a bank loan, Rs 30,000.
(d) Invoiced customers for services, Rs 15,000.
(e) Provided services for cash, Rs 18,000.
(f) Bought supplies for cash, Rs 3,000.
(g) Paid staff salary, Rs 10,000.
(h) Paid electricity charges, Rs 6,000.
(i) Bought equipment for cash, Rs 5,000.
(j) Repaid a part of the bank loan, Rs 10,000.
(k) Paid dividends, Rs.5,000.

Q4. Analyze the effect of the transactions on the accounting equation. First enter the beginning
balances. (2.5 marks) On September 1, 2019, Meera Kumar started Instaprogram Company to
provide computer programming services. On September 30, the company had the following
balances: Cash, Rs.10,000; Trade Receivables, Rs.5,000; Computer Supplies, Rs.1,000; Office
Equipment, Rs.35,000, Trade Payables, Rs.13,300; Share Capital, Rs.24500; Retained Earnings,
Rs.13,200. The following transactions took place in October 2019:

(a) Bought computer supplies for cash, Rs.1,800.


(b) Billed clients for professional services, Rs 59,900.
(c) Purchased office equipment for cash Rs 3,000.
(d) Provided services for cash, Rs 20,000.
(e) Paid suppliers, Rs 11,000.
(f) Paid office rent, Rs 1,100.
(g) Collected from clients billed in September, Rs 4,000.
(h) Bought equipment on credit, Rs 20,000.
(i) Collected from clients in (b), Rs 56,400.
(j) Paid programmers’ salaries, Rs 28,000.
(k) Paid dividends, Rs 6,750.

Required: Analyze the effect of the transactions on the accounting equation. First enter the
beginning balances.

(Ques. 5 based on Accounting cycle)


Q5. Lakshman Singh set up Wide Awake Security Company in January 2019 to provide security
services. The following transactions took place in the first month: (10 marks)
a. Singh invested cash in the company’s share capital, RS. 50,000.
b. Appointed 5 security guards on a monthly salary of RS. 500 each.
c. Rented office space and paid a deposit of RS. 10,000.
d. Paid advertisement charges, RS. 1,800.
e. Received cash from customers for the services to be provided, RS. 11,000.
f. Purchased supplies for cash, RS. 5,000.
g. Purchased equipment on credit, RS. 25,000.
h. Paid rent for the first three months, RS. 3,000.
i. Billed customers for the services provided, RS. 7,300.
j. Paid telephone expense, RS. 775.
k. Provided services for cash, RS. 5,450.
l. Paid security guards’ salaries.
m. Paid for equipment in (g), RS. 6,000.
n. Returned defective supplies and received refund, RS. 1,000.
Analyse the transactions of the company by application of rules of debit and credit,
recording the entry, balancing the accounts through verification of the Accounting
Equation.

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