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AGA KHAN UNIVERSITY EXAMINATION BOARD

HIGHER SECONDARY SCHOOL CERTIFICATE

CLASS XI EXAMINATION 2009

Principles of Accounting Paper II

Time allowed: 2 hours 20 minutes Marks 70

INSTRUCTIONS

Please read the following instructions carefully.

1. Check your name and school information. Sign that it is correct.

I agree that this is my name and school.

Candidate's signature

2. RUBRIC. There are 9 questions. Answer ALL questions. Choices are specified inside the
paper.

3. When answering the questions:

Read each question carefully.

Use a black pencil for diagrams. DO NOT use coloured pencils.
DO NOT use staples, paper clips, glue, correcting fluid or ink erasers.
Complete your answer in the allocated space only. DO NOT write outside the answer box.

4. The marks for the questions are shown in brackets ( ).

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Q.1. (Total 8 Marks)

a. Show the effect of increase and decrease in columns of debit and credit and write the normal
balance form of the account. (4 Marks)

Account Type Debit Credit Normal Account Balance

Assets
Liabilities
Revenue
Expenses

b. State any FOUR functions of accounting. (4 Marks)

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(ATTEMPT ANY TWO PARTS OF QUESTION 2)

Q.2. (Total 12 Marks)

a. Prepare the general journal entries for the petty cash book of ABC Co.

ABC Co. established the petty cash fund by issuing a cheque for Rs 25,000/=. The following
expenditure occurred during the month:

stationery Rs 2,500, postage and telegram Rs 1,450, cartage Rs 3,500, entertainment Rs 2,500,
conveyance Rs 2,000, sundries Rs 3,000.

Required: pass the general journal entry

1. for establishment of petty cash fund.

2. for expenditure of petty cash fund.
3. for replenishment of petty cash book. (6 Marks)

Date Particulars P/R Debit Credit

PLEASE TURN OVER THE PAGE

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b. Ascertain which account titles will be debited and credited from the following transactions in the
general journal. (6 Marks)

1. Bought goods for cash.

2. Bought goods from Ali & Co. on credit.
3. Sold goods for cash.
4. Sold goods to Ahmed & Co. on credit.
5. Returned merchandise to the supplier Ali & Co.
6. Receive returned merchandise from Ahmed and Co.

S.No Debit Account Title Credit Account Title

c. During the month of May the following transactions were completed by Ghulam traders. Prepare
the two column cash book. (6 Marks)

1 May 08 Opening balance cash in hand Rs 5,600 and cash in bank Rs 16,200.
6 May 08 Received cheque from ABC Co. of Rs 1,450 and deposited into bank.
10 May 08 Issued Cheque to Mr. Ali Rs 7,580 and paid Rs 3,000.
15 May 08 Withdraw cash for personal use Rs 850 and withdraw from bank for office used
Rs 3,250.
22 May 08 Deposited cheques of Rs 2,500 into bank.
25 May 08 Bank deducted tax Rs 100.
Receipts Payments
Date Particulars P/R Cash Bank Date Particulars P/R Cash Bank

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Q.3. (Total 5 Marks)

Distinguish between capital and revenue expenditures from the following transactions.

These transactions are extracted from the record of a hospital.

i. Change of driving seat of ambulance driver of the hospital.
ii. Printing charges of hospital logo on ambulance.
iii. Replacement of engine of the ambulance.
iv. Monthly maintenance charges of the ambulance.
v. Cost of replacement of emergency lights of the ambulance.

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Q.4. (Total 8 Marks)

a. Distinguish between purchase journal and purchase account. (Give FOUR differences) (4 Marks)

Purchase Journal Purchase Account

PLEASE TURN OVER THE PAGE

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b. Differentiate between general journal and journal ledger. (Give FOUR differences) (4 Marks)

Journal Ledger

Q.5. (Total 7 Marks)

a. Define unpresented cheques and uncleared cheques. (2 Marks)

Unpresented cheques ________________________________________________________________

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Uncleared cheques___________________________________________________________________

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b. Prepare a bank reconciliation statement (5 Marks)

Balance as per cash book Rs 80,000.

Cheques recorded for collection but not sent to the bank Rs 10,000.
Bank charges recorded twice in cash book Rs 500.
Customer’s cheque returned as per bank statement Rs 4,000.
Bills collected by the bank directly Rs 5,000.

Particulars Amount

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Q.6. (Total 8 Marks)

a. The following errors are declared in the books of a firm. Correct the errors. (4 Marks)

A. Rs 100 for the purchase of office stationery has been wrongly debited to drawing account.
B. A sale of Rs 350 was made to Akram and entered correctly in the sales book but posted to
his account as Rs 35.
C. A duplicate invoice for the purchase of merchandise for Rs 1,300 from Ahmed had been
erroneously passed through the purchase book.
D. An employee was on leave and had received his salary in advance for Rs 4,000 by mistake.

Date Particulars P/R Debit Credit

PLEASE TURN OVER THE PAGE

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b. Differentiate between Income Statement and Balance Sheet. (Give FOUR differences) (4 Marks)

Income Statement Balance Sheet

(ATTEMPT ANY ONE PART OF QUESTION 7)

Q.7. (Total 8 Marks)
a. Prepare an income statement (8 Marks)
The following data is taken from Mars International:
merchandise inventory (opening) Rs 8,000, purchases Rs 24,000, carriage in Rs 500,
sales return Rs 500, advertising expense Rs 2,500, miscellaneous expense Rs 1,500,
office supplies expense Rs 1,600, delivery expense Rs 500, salaries expenses Rs 23,000,
shop rent Rs 4,000, bad debts expense Rs 1,000, depreciation expense Rs 2,000, sales Rs 68,000,
purchase return Rs 200, purchase discount Rs 1,000, commission income Rs 10,000,
merchandise inventory (closing) Rs 10,000.

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PLEASE TURN OVER THE PAGE

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b. The following balances are taken from Silver Star Co. (8 Marks)

Cash in hand Rs 1,50,000, cash at bank Rs 4,50,000, Account receivable Rs 1,00,000,

office supplies Rs 5,000, office equipment Rs 10,000, machinery Rs 2,55,000,
building Rs 5,00,000, prepaid insurance Rs 15,600, prepaid rent Rs 4,500,
commission income Rs 1,20,000, Capital Rs 500,000 account payable Rs 3, 25,000.
Additional data:
• Outstanding salaries Rs 15,000,
• Unearned commission Rs 10,000,
• Prepaid rent is expired Rs 2,000,
• Prepaid insurance Rs 5,600,
• Allowance for bad debts 10% of Account receivable,
• Allowance for depreciation 10%.
Required:
Prepare a Balance Sheet and compute the net income.

Assets Equities

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Q.8. (Total 9 Marks)

a. Define Suspense Account and its application. (3 Marks)

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b. Prepare the closing entries for the following account titles. (3 Marks)

1. Closing entry for sales, sales return and discount

2. Closing entry for purchase, purchase return and discount
3. Closing operating expenses

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PLEASE TURN OVER THE PAGE

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c. Prepare the adjusting entries for the following provisions. (3 Marks)

1. Provision of bad debts.
2. Provision of ending inventory or stock.
3. Provision of depreciation.

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Q.9. (Total 5 Marks)

a. Who are the parties in a bill of exchange? (3 Marks)

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b. Define discounting of a bill. (1 Mark)

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c. Define endorsement of a bill. (1 Mark)

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END OF PAPER
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