Mahinda Rajapakshe College Homagama

Second Term Test March 2013

Accounting

Grade 12

Time: 03
Hours

Ndex Number

Index
Number
Answer
All Questions

Paper I
1. Trainee Accountant has made the following statements:
I.
II.
III.

The profit & loss account reports the financial performance of a

business for a given period.
The balance sheet always indicates that a business is well
established and is a going concern.
Providing financial information for economic decisions of
various users is the objective of financial accounting.

Out of these, correct statements are:

a. (i) & (ii) only.
b. (i) & (iii) only.
c. (ii) & (iii) only.
d. All the three (i) (ii) and (iii).

2. A firm bought a machine for Rs 50000. It is expected to be used for 5 years,

and residual value is Rs 5000. Depreciation rate is 20%. Using reducing
balance method, what will be the depreciation for year 2?
a.
b.
c.
d.

Rs 7000
Rs 8000
Rs 7500
Rs 6750

Sandun Liyanapathirane
B.B. Mgt (Accountancy) Sp. CC (TMI-USA).

1|Page

3. A machine costs Rs 120000 and has accumulated depreciation of Rs 72400.

The machine is sold for Rs 46500. What is the loss or profit on disposal?
a.
b.
c.
d.

Loss of Rs 1100
Loss of Rs 73500
Profit of Rs 1100
Profit of Rs 73500

4. A business has a provision for doubtful debts of Rs 300 and debtors of Rs

3600. The provision is to be made equal to 5% of debtors. What is the entry in
the profit and loss Account?
a. Credit Rs 120
b. Credit Rs 180
c. Debit Rs 120
d. Debit Rs 180
5.

Which of the following transactions would affect the capital of the business?
a.
b.
c.
d.

Goods for resale purchased on credit

A receipt from a debtor of Rs 2000
A sale of goods, which cost Rs1500 on credit for Rs 2000
A purchase of a machine for Rs 3500

6. Bank Reconciliation statement is prepared by

a.
b.
c.
d.

Bankers
Accountant of the business
Auditors
Owners of the business

7. Which one of the statement is correct about Reconciliation Statement?

a.
b.
c.
d.

Part of the double entry accounting records

Not part of the double entry accounting records
Prepared by the firm and then sent to its bank
Posted to the nominal (general) ledger

8. Long term liability of a firm can be classified as:

a. An amount payable by the firm, within six months of the date of the
Balance Sheet
b. An amount payable by the firm, within nine months of the date of the
Balance Sheet
c. An amount payable by the firm, after more than one year from the
Balance Sheet date.
d. None of the above

Sandun Liyanapathirane
B.B. Mgt (Accountancy) Sp. CC (TMI-USA).

2|Page

9. The following information relates to a retail business for the year ended 31st
December 2012
Sales of the year Rs 240000
Purchase for the year Rs 186000
Stock 1st January 2012 Rs 10300
If mark-up 33.3% what was the closing stock at 31st December 2012?
a.
b.
c.
d.

Rs 4300
Rs 26300
Rs 36300
Rs 16300

Explain the following terms, with examples

10.
a. Substance Over Form
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------b. Going concern
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

c. Convention of conservatism
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sandun Liyanapathirane
B.B. Mgt (Accountancy) Sp. CC (TMI-USA).

3|Page

Part II
1. Bindu Traders had fixed assets of Rs 40000, total assets of 82000 and total
Liabilities of Rs 28000 as at 1st Jan 2012, Bindu Traders maintains a gross
profit margin of 20% on sales. Bindu Traders has no credit Sales.
Bindu Traders has recorded the following transactions for the month of Jan
2012:
i. Paid for the new computer 2000
ii. Sales 10000
iii.
Purchases on credit 6000
iv. Cash Purchases 2000
v. Paid to creditors 8900
vi. Rent Paid 1100
vii.
Goods lost 200
viii.
Sales proceeds of old computer 600
ix. Repayment of loan 500
x. Drawings 300
The old computer was purchased at Rs 1500 five years ago. All the fixed
assets are depreciated at 25% per annum on the straight-line basis.
You are required to:
Present the impact of each of the above transactions in the following format of the
accounting equation
Revenue
- Expenses
+ Capital
+ Liabilities
= Assets
Calculate the owners equity at the end of January 2012.
(20Marks)
2. The following information for the month of Jan 2013 relates to Mervin
Traders.
Debtors
Credit
Cash
Discount
Sales
Bad debts
Sales Rs
Ranil
Mahinda
Sarath

78000
65000
16000
159000

Received
Rs
50000
60000
3000
113000

allowed
Rs
1000
500
1500

returns
Rs
17000
3500
20500

Rs
5000
5000

Required to prepare:
i.

Sales journal and Sales return Journal

ii.

Sales account and Debtors control account in the general ledger.

(20 Marks)

Sandun Liyanapathirane
B.B. Mgt (Accountancy) Sp. CC (TMI-USA).

4|Page

3. From the following details, prepare a bank Reconciliation statement on 30th

June, 2012.
Bank Statement
Date

Particulars

Withdrawals

Deposits

Rs

Dr. or Balanc
Cr

e
Rs

2012
June 01
June 04
June 07
June 10
June 15
June 20
June 23
June 26
June 30
June 30
June 30

By balance b/d
By Bindus Cheques
By Sindus Cheques
To Landu
To cash
By Randu (Cash)
To Kandu
To insurance Premium
To Bank Charges
By interest
By interest on investments

750
1000
850
2400
500
700
500
50
110
640

Cr
Cr
Cr
Cr
Cr
Cr
Cr
Cr
Cr
Cr

11500
12250
13250
12400
10000
10500
9800
9300
9250
9360
10000

Cash Book (Bank Column only)

Date

Particulars

Amount

Date

Particulars

Amount

Rs
2012
June 01
June 01
June 05
June 18
June 26

To Balance b/d
To Bindu
To Sindu
To Saan
To Daan

Rs

11500
750
1000
600
400

2012
June 10
June 12
June 15
June 18
June 25
June 28
June 30

By kaan
By Landu
By Cash
By Kandu
By laan
By Maan
Balance c/d

900
850
2400
700
440
660
8300
14250

14250
July 01

To Balance b/d

8300

(20 Marks)
4. Following trial balance after the adjustment is, as extracted from the ledger of
Lanka Traders business. As at 31st December 2012
Inventory 01.01.2012
Purchases and sales
Debtors
Creditors
Cash Balance
Bank Balance
Rates and Insurance
Electricity
Sandun Liyanapathirane
B.B. Mgt (Accountancy) Sp. CC (TMI-USA).

10000
145000
20000

176000
17000

10000
5000
2000
1500
5|Page

Bank Chargers
Land and Buildings at cost
Furniture at cost
Provision for Depreciation 01.01.2012
Lands and Buildings
Furniture
Drawings
Salaries
Wages
Capital

200
200000
60000
20000
15000
1000
1500
1700
457900

229900
457900

Additional information:
1. Stock as at 31 December 2012 was valued at Rs. 23000
2. Accrued Rates Rs 500
3. Electricity paid in advance Rs 400.
4. Fixed assets should be depreciated 5% on cost.
5. Further Rs 500 should be written off as bad debts. Provision for doubtful debts
should be adjusted to 5% of the remaining debtors.
Required:
1. Income statement for the year ended 31st Dec 2012.
2. Balance Sheet as at 31st Dec 2012.
(20 Marks)

Sandun Liyanapathirane
B.B. Mgt (Accountancy) Sp. CC (TMI-USA).

6|Page