I. Given here are a few situations:

a.Personal and business transactions are separately maintained.

b.Inventory is recorded at its purchase price.

c.The death of the chief executive officer of the company is not recorded in accounts.

d.In case of doubt, it is considered better to understate rather than overstate income.

e.Assets are not stated at their liquidation value.

f.Financial Statements are prepared on an annual basis.

g.Expenses are recognized in the same period as the related revenues.

h.Revenue is recognized when it is earned and expense is recognized when it is incurred.

i.The accounting records only events that affect the financial position of the entity and at the same time can be reasonably determined in monetary terms.

j.Same treatment is given to comparable transactions from period to period.

REQUIRED

State the accounting assumption or principle that describes each of the given situations.

II.The manager of a company who did not have proper accounting knowledge prepared the following balance sheet. He has wrongly classified the items under assets, liabilities and owners equity.

Owners Equity and Liabilities

Rs

Assets

Rs

Share Capital

10,00,000

Retained Earnings

5,00,000

Equipment

9,00,000

Land and Buildings

7,00,000

Cash

2,00,000

Long term loan

4,00,000

Accounts Payable

2,00,000

Accounts Receivables

3,00,000

21,00,000

21,00,000

REQUIED:

Prepare the correct Balance sheet.

III.Using Accounting Equation, Answer the following independent Questions.

a)New Companys assets are Rs 250 lakh and its external liabilities are of Rs 100 lakh, determine the amount of owners Equity.

b)Royal Industries has total assets of Rs 100 lakh and owners Equity of Rs70 lakh, Compute the amount of external liabilities.

c)Small Enterprise has following amounts appearing in Balance Sheet as at 31^stDecember, 2015:

Capital Rs 50 lakh,Reservesand undistributed profits Rs 15 lakh, and total external liabilities Rs 35 lakh, Determine the amount of total assets.

IV.Journalize the following transactions, Post them into ledger account and Prepare a Trial Balance

2015

March 1 Commenced business with cash Rs.1,00,000

March 2 Purchased goods for cash Rs. 25,000

March 3 Purchased furniture for cash Rs. 6,000

March 5 Purchased goods from Suresh on credit Rs. 5,000

March 7 Sold goods for cash Rs. 30,000

March 10 Sold goods to Mahesh on credit Rs. 25,000

March 12 Returned goods to Suresh Rs. 500

March 13 Mahesh returned us goods worth Rs. 500

March -15 Paid Rs. 4,450 to Suresh by cheque in full settlement of his account

March 20 Received a cheque of Rs. 24,450 from Mahesh and gave a discount of Rs. 50

March 25 Withdrew cash for personal use Rs. 2,500

March 28 Paid rent of Rs. 5,000 and Salary Rs. 6,000 by cheque

I. Given here are a few situations: a. Personal and business transactions are separately maintained. b. Inventory is recorded at its purchase price. c. The death of the chief executive officer of the company is not recorded in accounts. d. In case of doubt, it is considered better to understate rather than overstate income. e. Assets are not stated at their liquidation value. f. Financial Statements are prepared on an annual basis. g. Expenses are recognized in the same period as the related revenues. h. Revenue is recognized when it is earned and expense is recognized when it is incurred. i. The accounting records only events that affect the financial position of the entity and at the same time can be reasonably determined in monetary terms. j. Same treatment is given to comparable transactions from period to period. REQUIRED State the accounting assumption or principle that describes each of the given situations. II. The manager of a company who did not have proper accounting knowledge prepared the following balance sheet. He has wrongly classified the items under assets, liabilities and owners' equity. Owner's Equity and Liabilities Rs Assets Rs Share Capital 10,00,000 Retained Earnings 5,00,000 Equipment 9,00,000 Land and Buildings 7,00,000 Cash 2,00,000 Long - term loan 4,00,000 Accounts Payable 2,00,000 Accounts Receivables 3,00,000 21,00,000 21,00,000 REQUIED: Prepare the correct Balance sheet. III. Using Accounting Equation, Answer the following independent Questions. a) New Company's assets are Rs 250 lakh and its external liabilities are of Rs 100 lakh, determine the amount of owner's Equity. b) Royal Industries has total assets of Rs 100 lakh and owners' Equity of Rs 70 lakh, Compute the amount of external liabilities. c) Small Enterprise has following amounts appearing in Balance Sheet as at 31 st December, 2015: Capital Rs 50 lakh, Reserves and undistributed profits Rs 15 lakh, and total external liabilities Rs 35 lakh, Determine the amount of total assets. IV. Journalize the following transactions, Post them into ledger account and Prepare a Trial Balance 2015 March - 1 Commenced business with cash Rs.1,00,000 March - 2 Purchased goods for cash Rs. 25,000 March - 3 Purchased furniture for cash Rs. 6,000 March - 5 Purchased goods from Suresh on credit Rs. 5,000 March - 7 Sold goods for cash Rs. 30,000 March - 10 Sold goods to Mahesh on credit Rs. 25,000 March - 12 Returned goods to Suresh Rs. 500 March - 13 Mahesh returned us goods worth Rs. 500 March -15 Paid Rs. 4,450 to Suresh by cheque in full settlement of his account March - 20 Received a cheque of Rs. 24,450 from Mahesh and gave a discount of Rs. 50 March - 25 Withdrew cash for personal use Rs. 2,500 March - 28 Paid rent of Rs. 5,000 and Salary Rs. 6,000 by cheque