Principles of Accounting, Solved Paper 2017 Supplementary, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions

In this post, we are going to solve the paper of Principles of Accounting, Solved Paper 2017 Supplementary, ICOM II of FBISE. Practical problems of Chapter 6 Partnership Accounts Profits Distribution, for ICOM II, DCOM, DBA have already posted. This post will also be helpful for the students of BCOM, ADP Commerce and other disciplines related to business, finance and commerce. In other posts, all other chapters related to partnership will be discussed and also solved papers of Principles of Accounting for ICOM II for FBISE, BISE Lahore, BISE Rawalpindi will be presented to you. Solved Papers of Business Statistics are already posted on the website.

Other Solved Papers of Principles of Accounting II for ICOM II are already posted:

Solved Paper Principles of Accounting II for ICOM II 2017 Annual FBISE

Solved Paper Principles of Accounting II for ICOM II 2018 Annual FBISE

Solved Paper Principles of Accounting II for ICOM II 2018 Supplementary Annual FBISE

Solved by Iftikhar Ali, M.Sc Economics, MCOM Finance Lecturer Statistics, Finance and Accounting

bcfeducation, hub of focused study of Statistics, Accounting, Finance and Economics

Principles of Accounting, Solved Paper 2017 Supplementary, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions

MCQS

Q. 1 Circle the correct option i.e. A / B / C / D. Each part carries one mark.

1)	The opening balance of debtors can be ascertainedby preparing:
	A	Total Creditors account	B	Cash account
	C	Balance sheet	D	Total Debtors account
2)	In increased Net Worth Method, profit or loss is calculated by preparing:
	A	Income and expenditure account	B	Profit and loss account
	C	Statement of profit or loss	D	Balance sheet
3)	General reserve or accumulated profits at the time of dissolution is transferred to:
	A	Realization account	B	Solvent partners’ capital account
	C	Insolvent partners’ capital account	D	All partners’ capital accounts
4)	The end or termination of partnership is called:
	A	Admission	B	Retirement
	C	Death	D	Dissolution
5)	Subscription received relating to current year is:
	A	An income	B	An expense
	C	An asset	D	A liability
6)	Receipts and payments account is a:
	A	Nominal account	B	Personal account
	C	Real account	D	Impersonal account
7)	In the book of consignee, Del-credere commission should be debited to:
	A	Commission account	B	Consignor’s account
	C	Del-credere commission account	D	Cash account
8)	A person to whom the goods are sent is known as:
	A	Consignor	B	Consignee
	C	Drawer	D	Drawee
9)	The debentures which are secured by charge upon the whole or portion of the assets of the company are called:
	A	Naked debentures	B	Unsecured debentures
	C	Mortgage debentures	D	Pledge debentures
10)	The sum of the par value of shares of the company is called:
	A	Share	B	Working capital
	C	Reserve capital	D	Share capital
11)	The decrease in the value of mines, quarries etc. is termed as:
	A	Depreciation	B	Construction
	C	Depletion	D	Amortization
12)	The book value of machinery on January 01^st 2003 is Rs.20, 000/-. Two years later, the book value is Rs.10, 000/-. The straight line depreciation rate of charge each year is:
	A	7½%	B	17½%
	C	25%	D	33½ %
13)	The interest on capital account in partnership is debited to:
	A	Interest on capital account	B	Interest on drawings account
	C	Partner’s capital account	D	Partners loan account
14)	When capital accounts are fixed, then all adjustments are made in:
	A	Partner’s capital account	B	Partner’s current account
	C	Partner’s fixed account	D	Partner’s nominal account
15)	On admission of a partner, the decrease in the value of assets should be debited to:
	A	Revaluation account	B	Realization account
	C	Assets account	D	New partner’s capital account
16)	Accumulated profit on the admission of a new partner should be credited to:
	A	Accumulated profit account	B	All partner’s capital account
	C	New partner’s capital account	D	Old partner’s capital account
17)	The balance of memorandum revaluation account is transferred to capital accounts of all partners in:
	A	Capital ratio	B	Sacrifice ratio
	C	Old profit sharing ratio	D	New profit sharing ratio
18)	Suppose A, B & C are partners, sharing profits in the ratio of 2:2: 1 respectively. What will be the new ratio if “C” retires in the absence of an agreement?
	A	2:2	B	2:1
	C	2:3	D	1:2
19)	Goods sent on consignment is anature of:
	A	Personal account	B	Real account
	C	Nominal account	D	Fixed account
20)	Due to drawings made during the year, the closing capital will:
	A	Increase	B	Decrease
	C	Be Constant	D	Multiply

SECTION – B (Marks 30)

Short Questions

Q. 2 Attempt any TEN parts. The answer to each part should not exceed 3 to 4 lines. (10×3=30)

(i) Differentiate between Statement of Affairs and Balance Sheet.

Answer:

In the event that the accounts are lost or incomplete, a Statement of Affair is created. When all accounts are kept up to date and complete in accordance with accounting standards, a balance sheet is created. Because a Statement of Affair is based on unfinished records, it cannot be trusted.

(ii) What is special subscription?

Special Subscription

Subscription that is collected other than regular subscription from members for some special purpose such as to construct a building or charities etc. is called special subscription.

(iii) What do you understand by Proforma Invoice?

Answer:

Proforma Invoice

Performa Invoice is a document which is sent by consignor to consignee containing detail of goods sent for sale, its quality, quantity and price. It is a substitute of invoice.

(iv) Write the three differences between consignment and sales.

Answer:

Ownership

In consignment, only goods are transferred but possession is not transferred till actual sales affected whereas in sales, ownership is transferred.

Relationship

In consignment, the relationship between the consignor and consignee are of principal and agent whereas in sales the relationship is buyer and seller.

Risk

In consignment, risk is always remain with consignor whereas in sales risk transfers to the buyer.

(v) Differentiate between Par value, Book value and Market value of shares.

Par Value

Par value of the share is the value that is decided by the organization, who is issuing the shares.

Book Value

Book value of the share is the value according to the books of the company. It is quotient of Company’s Equity by total number of outstanding shares.

Market Value

Market value of the share is the current value of the share at which stock is being traded on the stock exchange or the value at which buyers and sellers are willing to buy or sell the stock.

(vi) Define the term Amortization.

Answer:

Amortization

Amortization is cost of intangible asset over a period of time besides this it is used to repayment of loan over a period of time.

(vii) Pass journal entry for capital introduced by different partners in partnership.

Answer:

Cash A/c Dr.	100,000
A’s Capital A/c Cr.		50,000
B’s Capital A/c Cr.		50,000

(viii) Define Goodwill.

Answer:

Goodwill

An intangible asset known as goodwill is recorded when a business is bought as a continuing concern. It shows the net value of its other assets plus the premium that the buyer pays.

(ix) Pass the journal entry for interest on capital of deceased partner.

Answer:

Interest on Capital A/c Dr.	XXXX
Deceased Partner’s Capital A/c Cr.		XXXX

(x) Pass journal entry for transferring loss on realization in case of dissolution of firm.

Answer:

Partner’s Capital A/c Dr.	XXXX
Realization A/c Cr.		XXXX

(xi) What is the formula of gaining ratio and how gaining ratio can be calculated?

Answer:

Gaining Ratio

The percentage that the remaining partners in the company share with the retiring or deceased partner is known as the gaining ratio.

It is the difference between Partner’s new profit sharing ratio and old ratio.

Gaining Ratio = New Ratio – Old ratio

(xii) What is difference between donation and subscription?

Answer

Donation

Donation is the amount that is received by the nonprofit motive organization by way of gift. It should be treated as revenue or capital, purely depends on its motive.

Subscription

Subscription is the amount that is received from the members monthly or annually according to the rules in non-trading concerns.

SECTION – C (Marks 50)

(Part I)

Note: Attempt any one question (1×20=20)

Q.3 Umar and Ali are partners sharing profits as 2:1. The position of the firm as on 31^st December 2015, when they decide to dissolve the business was as follow.

Assets	Rs.	Liabilities	Rs.
Plant and Machinery	25,000	Sundry Creditors	15,000
Furniture	4,000	General Reserve	10,000
Stock	10,000	Capital accounts:
Sundry Debtors	20,000	Mr. Umar 22,000
Cash at bank	10,000	Mr. Ali 22,000	44,000
	69,000		69,000

The realization shows the following result:

Mr. Umar took over plant, machinery and furniture at book value less 10%.
Mr. Ali took over the stock and goodwill at Rs.17 ,500/-
Sundry debtors realized Rs.18,500/-
Sundry creditors were settled at a discount of 5%

Requirement: Close the Books of the firm.

Solution:

Realization Account

Reference	Dr. Rs.	Reference	Cr. Rs.
Plant and Machinery A/c	25,000	Sundry Creditors	15,000
Furniture A/c	4,000	Umar’s Capital (Plant):
Stock A/c	10,000	25000 x 0.10 = 2500
Sundry Debtors A/c	20,000	(25000 – 2500)	22500
Cash A/c Creditors:		Umar’s Capital (Furniture):
(15000 x 0.05=750)		4000 x 0.10 = 400
(15000 – 750)	14250	(4000 – 400)	3600
		Ali’s Capital:
Umar’s Capital A/c W:1	2567	Stock & Goodwill	17500
Ali’s Capital A/c W:1	1283	Cash A/c Debtors	18500

	77,100		77,100

Umar’s Capital Account

Reference	Dr. Rs.	Reference	Cr. Rs.
Realization A/c	26100	Balance b/d	22,000
Cash (Balancing Figure)	5134	Realization A/c	2567
		General Reserve A/c W:2	6667

	31,234		31,234

Ali’s Capital Account

Reference	Dr. Rs.	Reference	Cr. Rs.
Realization A/c	17500	Balance b/d	22,000
Cash (Balancing Figure)	9116	Realization A/c	1283
		General Reserve A/c W:2	3333

	26,616		26,616

Cash Capital Account

Reference	Dr. Rs.	Reference	Cr. Rs.
Balance b/d	10,000	Realization A/c	14250
Realization A/c	18,500	Umar’s Capital A/c	5134
Cash (Balancing Figure)		Ali’s Capital A/c	9116

	28,500		28,500

W: 1 Calculation of Revaluation for Partners Capital Accounts

$\mathbf{Umar'}\mathbf{s\ Share = 3850 \times}\frac{\mathbf{2}}{\mathbf{3}}\mathbf{= 2567}\$

$\mathbf{Ali}\mathbf{'s\ Share = 3850 \times}\frac{\mathbf{1}}{\mathbf{3}}\mathbf{= 1283}\$

W:2 Calculation of General Reserve

$\mathbf{Umar'}\mathbf{s\ Share = 10000 \times}\frac{\mathbf{2}}{\mathbf{3}}\mathbf{= 666}\mathbf{7}\$

$\mathbf{Ali'}\mathbf{s\ Share = 3850 \times}\frac{\mathbf{1}}{\mathbf{3}}\mathbf{= 3333}\$

Q.4 Noman and Khalid are partners sharing profits and losses in the proportion of 3:2 with capitals of Rs.1,00,000/- each. Each partner is entitled to 5% interest on his capital. Noman is entitled to a salary of Rs.1500/- per month. During the year 2015, the drawings of the partners in anticipation of their shares of profit and salary are Noman-Rs.10,000/- and Khalid-Rs.10,000/-. The profits for the year prior to calculation of interest on capital but after charging salary of partner amounted to Rs.80,000/- The above figure of profit is before charging depreciation at 7 ½ % on furniture valued at Rs.50,000/- and writing off a bad debts of Rs.1500/-.

Requirement: Prepare Partners Accounts when capitals are fixed.

Solution:

When capitals are fixed

Profit & Loss Appropriation Account
Particulars	Rs.	Particulars	Rs.
Depreciation on Furniture 50000 x 0.075	3750	Balance b/d	80,000
Bad Debts	1500
Interest on Capital:
Noman: (100,000 x 0.05)	5000
Khalid: (100,000 x 0.05)	5000
Net Profit transferred to capital accounts:
A’s Profit W:1	38850
B’s Profit W:1	25900

	80,000		80,000

Noman’s Capital Account
Date	Particulars	Rs.	Date	Particulars	Rs.
2015			2015
Dec. 31	Cash Drawings	10,000	Dec. 31	Balance b/d	100,000
Dec. 31	Balance c/d	151,850		P&L Appr. A/C:
				Net profit	38850
				Interest on Capital	5000
				Salary	18,000
		161,850			161,850

Khalid’s Capital Account
Date	Particulars	Rs.	Date	Particulars	Rs.
2015			2015
Dec. 31	Cash Drawings	10,000	Dec. 31	Balance b/d	100,000
Dec. 31	Balance c/d	120,900		P&L Appr. A/C:
				Net Profit	25900
				Interest on Capital	5000

		130,900			130,900

Working 1: Calculations of Profit of Noman & Khalid

$\mathbf{Noman}^{\mathbf{'}}\mathbf{s\ Profit = 64750\ \times}\frac{\mathbf{3}}{\mathbf{5}}\mathbf{= 38850}\$

$\mathbf{Khalid's\ Profit = 64750 \times}\frac{\mathbf{2}}{\mathbf{5}}\mathbf{= 25900}\$

Principles of Accounting, Solved Paper 2017 Supplementary, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions

(PART- II)

Note: Attempt any THREE questions. (3 x 10 = 30)

Q.5 Given below is the Receipts & Payments Account of the National Club for the year ending 31^st December 2015…..

Q.5 Given below is the Receipts & Payments Account of the National Club for the year ending 31^st December 2015:

Receipts	Rs.	Payments	Rs.
Balance b/d	10250	Salaries	6000
Subscription:		General Expenses	750
2014	400	Drama Expenses	4500
2015	20500	Newspaper etc.	1500
2016	600	Municipal Taxes	400
Donations	5400	Charity	3500
Proceeds of Drama Tickets	9500	Investments	20,000
Sale of waste papers	450	Electricity Charges	1450
		Balance c/d	9000
	47100		47100

Prepare the Club’s Income and Expenditure Account for the year ended 31^st December, 2015 and its Balance sheet as on that date, after taking the following information into account:-

There are 500 members, each paying an annual subscription of Rs. 50.
Municipal taxes amounting to Rs. 400 per annum have been paid up to 31st March 2015 and Rs. 500 for salaries is outstanding.
Buildings stood in the books at Rs. 50,000 and it is required to write off depreciation at 5 percent.
3% percent interest has accrued on Investments for five months.

Solution:

National Club

Income & Expenditure Account

Year ended 31^st December 2015

Expenditure	Amount	Income	Amount
Salaries 6000		Annual Subscription 20500
Add outstanding 500	6500	Add Outstanding this year 4500	25000
Municipal Taxes 400		500 x 50 = 25000 – 20500
Less Prepaid (400/12) x 3 (100)	300	Proceeds of Drama Tickets	9500
General Expenses	750	Sale of waste papers	450
Drama Expenses	4500	Investment interest:
Newspaper etc.	1500	20,000 x 0.03 x 5/12	250
Charity	3500
Depreciation on Building
50,000 x 0.05	2500
Electricity Charges	1450

Surplus	14200

	35200		35200

National Club

Balance Sheet

As on year ended 31^st December, 2015

Assets	Rs.	Liabilities	Rs.
Cash	9000	Capital W1 60650
Prepaid Municipal Tax	100	Add Donation 5400
Building 50,000		Add Surplus 14200	80250
Less Depreciation (2500)	47500
Investment 20,000		Salaries Outstanding	500
Add Accrued 250	20250	Subscription received in advance for 2016	600
Subscription Receivable	4500
	81350		81350

Working 1 Opening Balance Sheet on 1-1-2015

Assets	Rs.	Liabilities	Rs.
Cash Balance	10250	Capital Fund (Balancing Figure)	60650
Building	50,000
Subscription Receivable	400
	60650		60650

Q.6 A firm purchased a second hand truck for Rs.5,00,000/- on 1st January, 2012 and spent Rs.2,00,000/- on its overhauling. Depreciation is written off 10% p.a on the reducing balance. On 30th June, 2015 the truck was sold for Rs.3,00,000/- being unsuitable……

Q.6 A firm purchased a second hand truck for Rs.5,00,000/- on 1st January, 2012 and spent Rs.2,00,000/- on its overhauling. Depreciation is written off 10% p.a on the reducing balance. On 30th June, 2015 the truck was sold for Rs.3,00,000/- being unsuitable.

Requirement: Prepare the truck account from 2012 to 2015 assuming that accounts are closed on 31^st December every year.

Solution:

Truck Account

Date	Detail	Rs.	Date	Detail	Rs.
1^st Jan, 2012	Cash A/C	500,000	31^st Dec, 2012	Depreciation A/C W:2	70,000
1^st Jan, 2012	Cash A/C	200,000	31^st Dec, 2012	Balance c/d	630,000
		700,000			700,000
1^st Jan 2013	Balance b/d	630,000	31^st Dec, 2013	Depreciation A/C W:2	63,000
			31^st Dec, 2013	Balance c/d	567,000
		630,000			630,000

1^st Jan 2014	Balance b/d	567,000	31^st Dec, 2014	Depreciation A/C W:2	56,700
			31^st Dec, 2014	Balance c/d	510,300
		567,000			567,000

1^st Jan 2015	Balance b/d	510,300	30^th Jun, 2015	Depreciation A/C W:2	25,515
			30^th Jun, 2015	Cash A/C	300,000
			30^th Jun, 2015	P&L A/C (Loss) W:1	184785
		510,300			510,300

W:1 Calculation of Profit or Loss

Cost	700,000
Less Depreciation for 2012	(70,000)
Less Depreciation for 2013	(63,000)
Less Depreciation for 2014	(56,700)
Less Depreciation for 2015	(25,515)
Book Value at the time of Sale	484785
Selling Price Realized	(300,000)
Loss	184,785

W:2 Calculation of Yearly Depreciation

$2012 = 700,000 \times \frac{10}{100} = 70,000\$

$2013 = 630,000 \times \frac{10}{100} = 63,000\$

$2014 = 567,000 \times \frac{10}{100} = 56,700\ \$

$2015 = 510,300 \times \frac{10}{100} \times \frac{6}{12} = 25515\ \$

Q.7 Saleem of Lahore consigned 100 cases of candles to Aslam of Multan which cost him Rs.50 per case. He incurred the following costs: Packing Rs.100/-, Carriage Rs.150/- and Railway freight Rs.200/-. Some of the cases were damaged in transit and Aslam took delivery of 90 cases only….

Q.7 Saleem of Lahore consigned 100 cases of candles to Aslam of Multan which cost him Rs.50 per case. He incurred the following costs: Packing Rs.100/-, Carriage Rs.150/- and Railway freight Rs.200/-. Some of the cases were damaged in transit and Aslam took delivery of 90 cases only. Aslam spent Rs.50/- for cartage and Rs.300/- for Godown rent and sold the consignment at Rs.60/- per case. He sent the net amount to Saleem after deducting his expenses and commission at the rate of 5% on the sale proceeds together with his account sales. Saleem also received Rs.300/- from the railway for damages.

Requirement: Show how the consignment account would appear in books of Saleem.

Solution:

Consignment to Multan Account
Date	Particulars	Amount	Date	Particulars	Amount
	Goods Sent on Consignment	5000		Aslam’s A/C (Sales)	5400
	Cash A/C (Consignor’s Expenses)	450		Profit & Loss (Abnormal Loss W:1)	245
	Aslam’s A/C (Consignee’s Expenses)	350		Cash A/c (Insurance)	300
	Aslam’s A/C (Consignee’s Commission) (5400 x 0.05)	270		P&L A/C (Loss)	125


		6070			6070

Q.8 X company Ltd purchased the business of Naeem Bros. for a purchase consideration of Rs.7,70,000/-. The book value of the assets were Rs.782,000/- and those of liabilities Rs.30,000/-. The company issued debentures of Rs.100/- each to Naeem Bros…..

Q.8 X company Ltd purchased the business of Naeem Bros. for a purchase consideration of Rs.7,70,000/-. The book value of the assets were Rs.782,000/- and those of liabilities Rs.30,000/-. The company issued debentures of Rs.100/- each to Naeem Bros.

Pass the Journal entries in the books of the company If:

(a) Debentures were issued at Par.

(b) Debentures were issued at 10% discount

Solution:

Journal

Date	Detail	L.F	Dr.	Cr.
	Sundry Assets A/c		782,000
	Goodwill A/c		18,000
	Sundry Liabilities A/c			30,000
	Naeem Bros.			770,000
	(Assets & liabilities acquired for purchase consideration)

(a)	Debentures issued at par
	Naeem Bros A/c		770,000
	Debentures A/c			770,000
	(7700 Debentures issued at par for purchase consideration)

(b)	Debentures issued at 10% discount
	Naeem Bros. A/c		770,000
	Discount on issuance of Debentures A/c		85,550
	Debentures A/c			855,500
	Cash A/c			50
	(8555 Debentures issued at 10% discount for purchase consideration W:1)

(c)	Debentures issued at 10% premium
	Naeem Bros. A/c		770,000
	Premium on issuance of Debentures A/c			70,000
	Debentures A/c			700,000
	(7000 Debentures issued at 10% premium for purchase consideration W:2)

Working 1: Issuance of Debentures at 10% discount

$\frac{\mathbf{770,}\mathbf{000}}{\mathbf{10}\mathbf{0}\mathbf{- 1}\mathbf{0}}\mathbf{=}\mathbf{8555}\$

$\mathbf{Debentures = 8555 \times 100 = 855,500}\$

$\mathbf{Discount = 855,500 \times}\frac{\mathbf{10}}{\mathbf{100}}\mathbf{= 85,550}\$

Working 2: Issuance of Debentures at 10% premium

$\frac{\mathbf{770,000}}{\mathbf{100}\mathbf{+}\mathbf{10}}\mathbf{=}\mathbf{7000}\$

$\mathbf{Debentures =}\mathbf{7000}\mathbf{\times 100 =}\mathbf{700,000}\$

$\mathbf{Premium}\mathbf{=}\mathbf{700,000}\mathbf{\times}\frac{\mathbf{10}}{\mathbf{100}}\mathbf{=}\mathbf{70,000}\$

You may also interested in the following:

W:1 Calculation of Abnormal Loss
Cost of lost Machine 10 x 50	500
Proportionate Expenses of Consignor:
$450\ \times \frac{10}{100}\$	45
Abnormal Loss	545
Less Insurance Claim	(300)
Total Abnormal Loss	245

Principles of Accounting, Solved Paper 2017 Supplementary, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions

Table of Contents

Principles of Accounting, Solved Paper 2017 Supplementary, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions

MCQS

Q. 1 Circle the correct option i.e. A / B / C / D. Each part carries one mark.

SECTION – B (Marks 30)

Short Questions