Single Entry System

Incomplete Records
Question
Answer

Question
Answer

Question
Answer

Question
Answer

What is Single Entry System?

Single Entry system is a method or a variety of methods, employed for the recording of transactions,
which ignore the two-fold aspect and consequently fails to provide the businessman with the
information necessary for him to be able to ascertain the position.
Kohler defines it as:A system of book-keeping in which, as a rule, only records of cash and of personal accounts are
maintained; it is always incomplete double entry system, varying with circumstances.
The term Single Entry System is popularly used to describe the problems of accounts from incomplete
records. In fact there is no accountants follow some hybrid methods. For some transactions they
complete double entries. For some others they just maintain one entry. Still for some others, they even
do not pass any entry, this is no system of accounting. Briefly, this may be stated as incomplete records.
The task of accountant is to establish linkage among the available information & to finalise the
accounts.
What are the features of Single Entry Systems?
Following are the features of a single entry system:
1. Content: This system is a mixture of; (i) double entry; (ii) Single entry; and (iii) No entry.
2. Suitability: This system is suitable for small businesses where the proprietors or partners can
directly control the affairs of the business.
3. Accounts kept: In this system, generally personal accounts are kept but real & nominal
accounts are ignored. This is because, a single entry takes account only of the personal
transactions & leaves the impersonal transactions of the business unit entirely unrecorded.
4. Absence of two fold aspect: In the absence of record of the two fold aspect of every
transaction, it is not possible to prepare a trial balance & check the arithmetical accuracy of
the books of account. Similarly, no balance sheet can be prepared in the absence of balances
in ledger.
5. Flexibility: This system is highly changeable & flexible & it is not governed by any definite
rules of operation.
6. Profit & Loss: Under this system the profit or loss can be found out but its composition will
not be available.
What are the advantage of single entry system?
Following are the advantage of a single entry system:
1. It is a very simple method
2. It is less expensive
3. It is mainly suited to small business.
4. It does not require any adequate knowledge of the principles of book-keeping.
What are the disadvantage of single entry system?
(1) Preparation of Trial Balance not possible: The method does not record both the aspects of a
transaction. As such, a trial balance cannot be prepared to check the arithmetical accuracy of
the books of accounts. This increases the possibility of frauds and misappropriations.
(2) Incomplete and Unscientific System: The system is incomplete and unscientific due to the fact
both the aspects, debit and credit of a transaction are recorded. Also, no set rules are followed
under this method.
(3) True Profit or Loss cannot be ascertained: Because nominal accounts are not maintained, a
Trading and Profit and Loss Account cannot be prepared and hence, the profit earned or loss
suffered during a particular period cannot be ascertained with reasonable accuracy.
(4) Difficulty in preparing Balance Sheet: Since real accounts are not maintained, Balance Sheet
cannot be prepared to depict the true financial position of the business. Only a statement of
affairs is prepared where in the value of assets and liabilities is written on estimated basis.
(5) No Control on Assets: Since real accounts are not maintained, it is not possible to keep full
control on the assets and as such, the changes of misappropriation of assets cannot be avoided.
(6) No recognition in the assessment of Income Tax and Sales Tax: The system fails to reveal the
true profit and sales of a business. As such, the accounts maintained under the system are not
accepted by tax authorities.
(7) Unsuitable for Planning and Control: The system fails to provide the adequate and reliable
figures required for planning and sound decision-making.

Question
Answer

(8) Difficulty in Comparative Study: Due to incomplete information, the profitability and the
financial position of the current year cannot be compared with that of the previous year and as
such, it becomes quite difficult to know the reasons of improving or deteriorating profitability
and financial position of the business.
(9) Proper valuation of assets not possible at the time of sale of business: It becomes very difficult
to fix the correct price of assets, specially goodwill, at the time of sale of the business.
(10) Internal Check not possible: Because of lack of double entry principles, internal checking is
not possible and hence there are always the chances of errors and frauds. Also, it becomes
very difficult to detect them. Due to the above mentioned defects the system is known as
incomplete, unscientific and unreliable.
Differentiate between Balance Sheet and Statement of Affairs.
Basis of Difference
Balance Sheet
Statement of Affairs
Double or single entry
It is prepared on the basis of It is prepared on the basis of
those books which are kept on those books which are partly
double entry.
kept on the basis of double
entry and partly on the basis of
single entry.
It is prepared only on the It is prepared on the basis of (I)
Basis of preparation
balances of accounts.
balances of accounts, (ii)
valuation, (iii) calculation, (iv)
information and inquiry.
Trial Balance is not prepared
Trial Balance is prepared before preparation of Final
Trial Balance
before preparation of Final Accounts.
Accounts.
Capital
Account is
not
prepared. Excess of assets over
Capital is taken from Capital liabilities is treated as capital.
Capital
Account in Ledger.
Its object is to find out capital.
Its object is to find out
financial position.

Question
Answer

Objects
Differentiate between Double Entry System and Single Entry System
Basis of Difference
Double Entry System
Single entry System
Recording of Both Aspects
Both the aspects of every Under this system, both the
transaction are recorded in it.
aspects
of
very
few
transactions are recorded. For
some other transactions one
aspect and yet for others no
aspect at all is recorded.
Type of Accounts
All accounts personal, real Only personal accounts and a
and nominal are maintained cash book are maintained under
under it.
it.
Trial Balance
Arithmetical accuracy of the Arithmetical accuracy cannot
books of accounts can be be checked in it because a trial
checked in it by preparing a balance cannot be prepared.
trial balance.
True profit or loss cannot be
Net Profit or Loss
True financial position is ascertained because a Balance
ascertained by preparing a Sheet cannot be prepared. Only
Balance Sheet.
a statement of affairs is
prepared based on incomplete
accounts and estimates.
No adjustments are made under
this
system
because
of
incompleteness of a/cs.
Adjustments
Under this system, adjustments Books maintained under this
are made while preparing final system are not accepted as
accounts.
evidence in the court of law.
Books maintained under this This method is suitable only
Proof
system are accepted as for small size business where
evidence in the court of law.
the number of transactions is
This method is suitable for all less and that too mostly of cash

Suitability

Reliability

Que. 1- Mr. Y provides you the following information:

(a) Opening and Closing Balances:
Particulars
Cash in hand
Bank Balance
Debtors
Creditors
Stock

types of business, small or

large.

nature.
Books maintained under this
system are less reliable because
they are based on estimates.

Books maintained under this

system are reliable because
they are based on scientific
principles.

1.4.20X1
Rs.
150
30,000
100,000
90,000
15,000

31.3.20X2
Rs.
21,000
1,25,000
1,00,000
25,000

(b) Analysis of Pass Book revealed the following:

Withdrawals for petty Cash Expenses Rs. 1,500 p.m. Collection from Debtors Rs. 1,35,000
(c) Uniform Sales Price being Cost + 33-1/3%
(d) Any difference in Cash Account and Bank Account may be treated as personal drawings of Mr. Y.
(e) Petty Cash Expenses during the year Rs. 17,850
(f) All Purchases were made on credit only and were paid by cheques only.
(g) All Sales were effected on credit basis only and were collected by cheques only.
Required: Prepare the Trading and Profit & Loss Account for the year ending 31st March, 20X2 and the Balance Sheet as on that
date.
Que. 2 - Mr. X provides you the following information:
(a) Opening and Closing Balances:
Particulars
1.4.20X1
Rs.
31.3.20X2
Rs.
Cash in hand
320
200
Bank Balance
2,500
(5,000)
Debtors
20,000
30,000
Creditors
20,000
30,000
Stock
10,000
30,000
(b) Analysis of Pass Book revealed the following:
Withdrawal for petty cash expenses Rs. 500 p.m. payment to creditors Rs. 20,000
(c) Uniform Gross Profit being 66-2/3% on sales.
(d) Any Difference in Cash Account and Bank Account may be treated as personal drawings of Mr. X.
(e) Petty Cash Expenses during the year Rs. 5,920.
(f) All Purchases were made on credit only and were paid by cheques only.
(g) All sales were effected on credit basis only and were collected by cheques only.
You are required to prepare the Trading and Profit & Loss Account for the year ending 31 st March 20X2 and the Balance Sheet as
on that date
Que. 3- Mr. Ramji (India) keeps his single entry system. From the following, prepare Trading and Profit and Loss Account for
the year ended 31.3.20X2 together with Balance Sheet as on that date.
Cash book analysis shows the following:

Rs.
100
2,000
8,500
7,900
15,000

Interest charges
Personal withdrawals
Staff salaries
Other business expenses
Payments to creditors

Balance at bank on 31.3.20X2

Cash in hand as on 31.3.20X2
Received from debtors
Cash Sales

Rs.
2,425
75
25,000
15,000

Further details available are:

As on
1.4.20X1

As on
31.3.20X2

As on
1.4.20X1

As on

31.3.20X2
Rs.
Rs.
Rs.
Rs.
Stock on hand
9,000
10,220
Furniture
1,000
1,000
Creditors
8,000
5,500
Office premises
15,000
15,000
Debtors
22,000
30,000
Provide 5 per cent interest on Xs capital balance as on 1.4.20X1. Provide Rs. 1,500 for doubtful debts. 5 per cent
depreciation on all fixed assets 5 per cent group incentive commission to staff has to be provided for on net profit after
meeting all expenses and the commission.
Que. 4- X submits to you following figure relating to his business in respect of the year ending 31st March 20X2. You are
required to prepare a Trading and Profit and Loss Account for the year ended and a Balance Sheet as at 31 st March 20X2. Any
difference in the cash/Bank balance is assumed to be drawings:
Rs.
Rs.
Cash paid into bank
1,50,000 Wages
40,000
Private dividends paid into bank
2,000
Delivery Expenses
7,000
Payment for goods out of Bank
1,22,000 Rent & Rates
2,000
Cash received from debtors
2,50,000 Lighting & Heating
1,000
Payments for goods by cash and
General expenses
4,600
Cheques
1,60,000
The Assets and liabilities are as follows:
01.04.20X1
31.03.20X2
Rs.
Rs.
Stock
20,000
15,000
Bank Balance
8,000
12,000
Cash in hand
300
400
Trade Debtors
14,000
20,000
Trade Creditors
27,300
30,000
Investments
50,000
50,000
Que. 5- Mr. X commenced business on 1st April 20X1, with a capital of Rs. 45,000. He immediately purchased Furniture of Rs.
24,000. During the year he received from his uncle a gift of Rs. 3,000 and he borrowed from his father a sum of Rs. 5,000.
He had withdrawn Rs. 600 per month for his household expenses. He had no Bank account and all dealings were in cash. He
did not maintain any books but following information is given. Sales (including cash sales Rs. 30,000) 1,00,000, Purchases
(including cash purchases Rs. 10,000) Rs. 75,000, Carriage Inwards Rs. 700, Wages Rs. 300, Discount allowed to Debtors
Rs. 800, Salaries Rs. 6,200, Bad debts written off Rs. 1,500, Trade Expenses Rs. 1,200, Advertisement Rs. 2,200. He used
goods worth Rs. 1,300 for personal purposes and paid Rs. 500 to his son for examination and college fees.
On 31st March 20X2, his Debtors were worth Rs. 21,000 and Creditors Rs. 15,000. Stock in trade was valued at Rs.
10,000. Furniture to be depreciated by 10% p.a.
Required: Prepare Trading and Profit and Loss Account for the year ended on 31 st March 20X2 and Balance Sheet as at 31st
March 20X2.
Que. 6- The books of X showed the following figures:
31.3.20X1

31.3.20X2

Rs.
Rs.
Cash in Hand
1,600
3,400
Cash at Bank
12,000
76,400
Stock in Trade
88,000
1,00,000
Sundry Debtors
?
1,40,000
Sundry Creditors
93,600
34,000
Furniture and Fixtures
8,000
Office Car
40,000
The Cash Book analysis showed the following figures amongst others:
Receipts from customers Rs. 5,40,000, Discount allowed to customers Rs. 5,600, Further Capital introduced on 1.10.20X1 Rs.
8,000,
Salaries Rs. 44,000, Office Rent Rs. 8,800, Advertising Rs. 3,600, General Expenses Rs. 2,400, Motor Upkeep Rs. 5,400, Printing
and Stationery Rs. 3,200, Drawings Rs. 26,400, Payment to trade creditors Rs. 4,48,000, Discount allowed by creditors Rs. 4,800,
Traveling Expenses Rs. 4,000. No ready figures are available for total sales but COJJI maintains a steady gross profit rate of 25%
on sales.
There were bills outstanding for petrol Rs. 100, Advertising Rs. 300 and Printing Rs. 180. Provide 5% on Debtors for
doubtful debts and 2.5% on Creditors for discounts. The Motor Car and Furniture are to be depreciated by 20% and 5%
respectively. 5% interest is to be allowed on Capital. Required: Prepare Trading and Profit and Loss Account for the Year
ended 31st March, 20X2 and his Balance Sheet as on that date.
Que. 7- Mr.X does not keep complete records of his business but gives you the following information:
His assets on 31st March, 20X2 consisted of Machineries Rs. 1,50,000. Furniture Rs. 60,000; Motor Car Rs. 40,000;
Stock-in-trade Rs. 50,000; Debtors Rs. 80,000; Cash in hand Rs. 12,000 and Cash at Bank for Rs. 30,000; Creditors on that date
amounted to Rs. 1,20,000. On further information received, you come to know that:
On 1st October, 20X1 he purchased a
new machinery costing Rs. 50,000. Sales are made for cash as well as on credit. There is no cash purchases. He always sells his
goods at cost plus 25%. Cash sales for the year were accounted for Rs. 80,000.
During the year collection from Debtors amounted to Rs. 5,00,000 and a sum of Rs. 4,25,000 was paid to creditors. He
obtained a Bank Loan for Rs. 50,000 on 1st April, 20X1, the entire amount was repaid in February, 20X2 with interest Rs. 2,500.
In November, 20X1 his Life insurance Policy for Rs. 50,000 became matured and the same was invested in the
business. His Drawings were Rs. 2,500 per month all throughout the year.
On 1st April, 20X1 he had Rs. 1,500 as Cash in hand and balance at Bank for Rs. 40,000. Debtors and Creditors on that
date amounted to Rs. 60,000 and Rs. 90,000 respectively. Provide depreciation of Machineries @ 15% p.a. Furniture @ 10% p.a.
and on Motor Car @ 20% p.a. Required: Prepare a Statement of Profit and Loss for the year ended 31 st March, 20X2.
Que. 8- X is tobacco merchant. He follows the practice of paying creditors for goods purchased through his Bank Account and
making payments in cash on all nominal accounts:
Particulars
1st April, 20X1
31st Mar., 20X2
Rs.
Rs.
Cash in Hand
30
Cash at Bank
1,000
Sundry Debtors
1,750
Sundry Creditors
3,410
Investments
6,250
Stock
2,500
Transactions during the year were as follows:
Salaries Paid 1,500; General Expenses Paid 3,500; Payment for Stationary 870; Payment for Rent and Rates 700;
Lighting Charges Paid 250; Cash receipts from Debtors 31,250; Payments to Creditors through Bank and of Trade
Expenses in Cash 20,000; Payments into Bank Business 18,750; Payment into Bank Additional Capital 250; Payment
from Bank Account Personal 3,250; Cash Payments Personal 910; Stock taken for personal use 140.
Required: Prepare Trading and Profit and Loss Account for the year ended 31 st March,
Que. 9- The following facts have been ascertained from the records of X who maintains his books of accounts under the single
entry system:

50
1,500
2,500
3,750
6,250
1,870

Receipts for the year ended 31st March, 20X2: From sundry debtors Rs. 88,125; Cash Sales Rs. 20,625; Paid in by the proprietor
Rs. 12,500.
Payments made during the year ended 31st March, 20X2: New Plant purchased Rs. 3,125; Drawings Rs. 7,500; Wages
Rs. 33,625; Salaries Rs. 5,625; Interest paid Rs. 375; Telephone Rs. 625; Rent Rs. 6,000; Light and power Rs. 2,375; Sundry
expenses Rs. 10,625; Sundry Creditors Rs. 38,125.
It may be noted that he banks all receipts and makes all payments only by means of cheques.
Assets and Liabilities:
As at 31st March, 20X1
As at 31st March, 20X2
Rs.
Rs.
Sundry Creditors
12,625
12,000
Sundry Debtors
18,750
30,625
Bank
3,125
?
Stock
31,250
15,625
Plant
37,500
36,575
Required: Prepare the Trading and Profit and Loss Account for the year ended 31 st March. 20X2 and Balance Sheet as on that
date
Que. 10- You are given the following information for the year 20X1-20X2 from the books of M/s X a firm engaged in Trading
Operations:
Average monthly sales for the year amounted to Rs. 60,000
Goods are sold at cost plus 33.33%
Closing stock in trade on 31-3-20X2 Rs. 58,000
Stock Turnover Ratio 10 Times
Operating Ratio 85% on turnover
Depreciation charged on fixed assets for the year Rs. 20,000
Non-operating income for the year consisted of Bank interest Rs. 3,000 and Dividends received from Investment Rs.
5,000
None operating expenses amounted to Rs. 5,000 towards loss on sale of Fixed Assets.
Required: Prepare the Trading and P/L A/c of the firm for the year ended 31 st March, 20X2 in detail showing Gross Profit,
Operating Profit and Net Profit.
Que. 11- The following is the Balance Sheet of the retail business of Mr. Raja (India) as at 31 st March 20X1:
Liabilities
Rs.
Assets
Rs.
Capital
1,25000
Furniture and fittings
25,000
Creditors for goods
30,000
Stocks
75,000
Outstanding expenses (rent)
1,000
Sundry debtors
20,000
Cash at bank
35,000
Cash in hand
1,000

1,56,000
1,56,000
You are furnished with the following information:
(a) Mr. Raja (India) always sells his goods at a profit of 25% on sales.
(b) Goods are sold for cash and credit. Credit customers pay by cheque only.
(c) Payments for purchases are always made by cheque.
(d) It is the practice of Mr. Raja (India) to send to the bank every week-end the takings of the week after paying every week
salaries of Rs. 250 to the clerk, sundry expenses of Rs. 50 and personal expenses Rs. 100.
(e) Analysis of the bank pass book for the period ending 31st March 20X2 disclosed the following:
Rs.
Payments to creditors
75,000
Payment of rent
4,000
Amount remitted to the bank
1,35,000
(including cheques for Rs. 10,000 received from customers to
whom the goods were sold on credit.)
(f) The following are the balances on 31st March, 20X2.
Rs.

Stocks
32,500
Creditors for goods
32,500
Sundry debtors
30,000
On the evening of 31st March 20X2 the cashier absconded with the available cash in cash box.
Required: Prepare a Statement showing the amount of cash defalcated by the cashier and also a p/l a/c for the period ended 31 st
March 20X2 and a Balance Sheet as on that date.
Que. 12- Mr. X does not maintain complete records of his business but gives you the following information:
Particulars
31.03.20X1
Rs.

31.03.20X2
Rs.

Machinery
2,00,000
1,50,000
Sundry Creditors
86,000
?
Sundry Debtors
?
93,000
Stock in trade
70,000
70,000
Cash in hand
2,600
1,500
Furniture
27,000
30,000
Cash at Bank
15,600
18,700
His Cash transactions for the year ending on 31st March, 20X2, included the following besides certain other items:
Payments to Creditors Rs. 4,10,000, Cash Sales (25% of total Sales) Rs. 1,70,000, Business Expenses Rs. 82,000, Cash Purchases
Rs. 1,30,000, Collection from Debtors Rs. 5,27,000, Withdrawn for Household expenses Rs. 30,000. He maintains a uniform of
gross profit of 25% on turnover. Outstanding expenses on 31 st March, 2000 amounted to Rs. 5,000. Addition of new machinery
was made on October 1st, 20X1. Some old furniture (Book Value Rs,. 6,000) was sold during the year and the proceeds stands
credited to Furniture Account. Provide depreciation on Machinery @ 15% p.a. and on Furniture @ 10% p.a. (excluding sold
item).
Required: Prepare a Trading and P/L Account for the year ended 31 st March, 20X2 and a Balance Sheet as on that date.
Que. 13- From the following information of M/s X & Co. prepare Trading and Profit and Loss Account for the year ending on
31st March, 20X2 and the Balance Sheet as on that date.
Particulars

31.3.20X1
Rs.
90,000
10,000
70,000
62,000
?
60,000

31.3.20X2
Rs.
90,000
10,000
90,000
46,000
16,000
?

Car
Furniture
Stock
Debtors
Bank
Creditors
The following further information is also available:
(a) M/s X & Co. purchases goods for resale from manufacturers who allow discount of 3% on goods purchased in excess of Rs.
5,00,000 in a year. The discount for the year ended 31 st March, 20X2 was Rs. 12,480.
(b) All goods are sold at a gross profit margin of 30% on selling price.
(c) Bank statement for the year reveals the following payments:
Creditors Rs. 9,03,520, Salaries Rs. 60,000, Car expenses Rs. 23,000, Rent Rs 30,000, Printing and Stationery Rs 6,400,
Rates and Taxes Rs. 3,000, Carriage outward Rs. 18,600, Traveling expenses Rs. 14,900, Delivery Van purchased Rs.
1,70,000, Miscellaneous expenses Rs. 9,580, Drawings Rs. 50,000.
(d) Depreciation on Car and Van @ 20% and Furniture @ 10% is to be provided on Balance as on 31.3.20X2.
Que. 14- From the following information in respect of BHARAT a trader, prepare a Trading, Profit and Loss Account for the
year ended 31st March, 20X2 and a Balance Sheet as on that date.
(a) Liabilities and Assets:
Particulars
31.3.20X1
31.3.20X2
Rs.
Rs.
Stock in trade
80,000
70,000

Debtors for Sales

1,60,00
1,49,500
Bills Receivable
17,500
Creditors for purchases
1,10,000
1,50,000
Fixed Assets (at written down value)
60,000
63,500
Expenses outstanding
20,000
18,000
Prepaid expenses
6,000
7,000
Cash in hand
2,000
1,500
Bank Balance
10,000
4,750
(b) Receipt and Payment during the year
Rs.
Collections from Debtors (after allowing 2.5% discount)
?
Payments to Creditors (after receiving 2% discount)
3,92,000
Proceeds of Bills receivable, discounted at 2%
61,250
Proprietors drawings
70,000
Purchases of Furniture midway through the year
10,000
4% Government Securities purchased (at 96% on 1.10.20X1)
96,000
Expenses
1,75,000
Miscellaneous income
5,000
(c) Sales are effected so as to realize a gross profit of 33-1/3% on the sale proceeds.
(d) Goods costing Rs. 9,000, were issued as advertisement articles.
(e) During the year, Bills Receivable were drawn on debtors. Of these, Bills amounting to Rs. 20,000 were endorsed in favour of
creditors. Of this later amount, a bill for Rs. 4,000 was dishonored by the debtor.
(f) Capital introduced during the year by the proprietor by cheques was omitted to be recorded in Cash Book, though the Bank
balance of Rs. 4,750 on 31st March, 20X2 (as shown above), takes the same into account.
Que. 15- A and B are equal partners. Their books and records showed the following balance as on 31 st March, 20X1:
Rs.
Factory Shed Account
60,000
Bank Overdraft
Due from Customers
1,35,000
Stock at Cost
Advance for machinery
20,000
Bills Payable
(Machinery installed in Oct. 20X1)
Machinery Account
Dues to suppliers
Furniture Account
(including Rs. 5,000 for purchase of
93,000
furniture in March, 20X1)

Rs.
15,000
1,20,000
16,000
90,000
25,000

A fire occurred towards the end of March. 20X2 and a portion of the factory shed (book value Rs. 20,000) was
destroyed. The following further information is furnished:
Cost of machinery delivered and installed in July, 20X1 is Rs. 60,000. The balance amount due was paid in October
20X1. Sales for the year 20X1-20X2 were Rs. 1,00,000 per month of which 15% was cash sales. The firm maintains a steady
gross profit rate of 25% on turnover. Cash purchases amounted to Rs. 25,000.
Rs.
Rs.
Trade Debtors as on 31.03.20X2
Payment to Creditors
(including liability for furniture)
Discount allowed to Debtors Discount received
from Creditors

50,000
7,70,000

Bills Payable as on 31.03.20X2

Bills Payable discharged
A Partners Drawings
B Partners Drawings
Trade Creditors as on 31.03.20X2

21,000

45,000
25,000
25,000
1,22,000
st
Cash and Bank Balance as on 31 March, 20X2 amounted to Rs. 2,10,000 and there was no bank overdraft on that date.
The figure of Cash and Bank on 1st April, 20X1 is not readily available. Net Profit for the year may be assumed at Rs. 90,000
after providing for depreciation on Machinery Rs. 15,000 and on Furniture Rs. 25,000.
Required: Prepare Trading and Profit and Loss Account for the year ended 31 st March, 20X2 and the Balance Sheet as on that
date.
5,000
6,000

Que. 16- the following is the Balance Sheet of Sri CAMHG as on 31 st March, 20X1:

Liability
Capital Account
Loan
Creditors

Rs.
96,000
30,000
62,000

1,88,000

Assets
Building
Furniture
Motor Car
Stock
Debtors
Cash in hand
Cash at bank

Rs.
65,000
10,000
18,000
40,000
34,000
4,000
17,000
1,88,000

A riot occurred on the night of 31st March, 2002 in which all books and records were lost. The cashier had absconded with the
available cash. He gives you the following information.
(a) His sales for the year ended 31st March, 20X2 were 20% higher than the previous years. He always sells his goods at cost plus
25%; 20% of the total sales for the year ended 31st March, 20X2 were for cash. There were no cash purchases.
(b) On 1st April, 20X1, the stock level was raised to Rs. 60,000 and stock was maintained at this new level all throughout the year.
(c) Collection from debtors amounted to Rs. 2,80,000 of which Rs. 70,000 was received in cash. Business expenses amounted to
Rs. 40,000 of which Rs. 10,000 was outstanding on 31st March, 20X2 and Rs. 12,000 was paid by cheques.
(d) Analysis of the pass book revealed the payment to creditors Rs. 2,75,000, Personal Drawings Rs. 15,000, Cash deposited in
Bank Rs. 1,43,000, Cash withdrawn from Bank Rs. 24,000.
(e) Gross profit as per last years audited accounts was Rs. 60,000. Provide depreciation on Building and Furniture at 5% and
Motor Car at 20%.
The amount defalcated by the cashier may be treated as recoverable from him.
Required: Prepare the Trading and P/L Account for the year ended 31 st March, 20X2 and the Balance Sheet as on that date.
Que. 17- From the following particulars, prepare Trading and Profit & Loss Account for the year ending on 31 st March 20X2 and
the balance Sheet as on that date:
Balance Sheet as at 31st March, 20X1
Liabilities
Rs.
Assets
Rs.
Capital
1,72,000
Machinery
70,000
Creditors for goods
62,500
Furniture
15,000
Expenses outstanding
5,000
Stock
35,000
Debtors
1,00,000
Cash
5,000
Bank
15,000
2,40,000
2,40,000
Total
Total
Information: Debtors Velocity 2 months, Creditors Velocity 1.5 month, Stock level uniform, Gross Profit Ratio 33-1/3%, Sales
are 20% in cash and 80% on Credit. Sales for the current year is 20% more than the previous year. Receipt from debtors cash
Rs. 50,000, balance cheques, Depreciation rate 10%, Machinery Rs. 40,000, Payment out of Bank: Furniture Rs. 5,000,
Investments Rs. 40,000, Drawings Rs. 17,500, Business Expenditure Rs. 60,000, Cash Payments: Business Expenditure Rs.
90,000, Cash deposited into Bank 1,00,000.
Que. 18- The following is the Balance Sheet of A and B as on 1 st April 20X1:
Liabilities
Rs.
Assets
Rs.
Capitals:
Building
65,000
A
1,00,000
Machinery
50,000
B
50,000
Stock
30,000
Creditors for goods
20,000
Debtors
40,000
Creditors for expenses
30,000
Bank
15,000
2,00,000
2,00,000
Information: Creditors velocity 1 month, Debtors Velocity 1-1/2 months, Stock level uniform in value, Trade Expenses Rs.
75,000, Depreciation on machinery 10%, Depreciation on building 5%, In the current year, cost price will go up by 10%.
Sales in the current year will increase by 20% in volume. Rate of gross profit no change, Drawings B Rs. 5,000,
Required: Prepare Projected Trading, Profit and loss Account and Balances Sheet.

Que. 19- The following is the Balance Sheet of X a small trader as on 31.3.20X1.
Liabilities
Rs. 000
Assets
Capital
200
Fixed Assets
Creditors
50
Stock
Debtors
Cash in Hand
Cash at Bank
250
A fire destroyed the accounting records as well as the closing cash of the trader on 31.3.20X2. However, the
information was available.
(a) Debtors and creditors on 31.3.20X2 showed an increase of 20% as compared to 31.3.20X1.
(b) Credit Period:
Debtors 1 month : Creditors 2 months
(c) Stock was maintained at the same level throughout the year.
(d) Cash sales constituted 20% of total sales.
(e) All purchases were for credit only.
(f) Current ratio as on 31.3.20X2 was exactly 2.
(g) Total expenses excluding depreciation for the year amounted to Rs. 2,50,000.
(h) Depreciation was provided at 10% on the closing value of fixed assets.
(i) Bank and Cash transactions:
(1) Payments to creditors included Rs. 50,000 by cash.
(2) Receipts from debtors included Rs. 5,90,000 by way of cheques.
(3) Cash deposited into the bank Rs. 1,20,000.
(4) Personal drawings from bank Rs. 50,000.
(5) Fixed assets purchased and paid by cheques Rs. 2,25,000.
You are required to prepare:
(a) The Trading and Profit and Loss Account for the year ended 31.3.20X2 and
(b) A Balance Sheet on that date.
For your exercise, assume cash destroyed by fire is written off in the Profit and Loss Account.

Rs. 000
145
40
50
5
10
250
following

Que. 20- A and B started a business on April 1,20X1 with Rs. 50,000 as capital, contributed equally but the profit sharing ratio
was 3:2. Their drawings were Rs. 300 and 200 per month respectively. They had kept no accounts but given you the
following information:
Particulars
31.3.20X2
31.3.20X3
Rs.
Rs.
Machinery at cost
20,000
25,000
Stock in trade
30,000
30,000
Debtors
50,000
60,000
Cash
2,000
500
Creditors
30,000
20,000
Outstanding Expenses
4,000
3,000
Bank Balance (as per Pass Book)
6,000
8,000
Provision is to be made for depreciation at 10 per cent on the cost of machinery as at the end of each year. Debtors on
31.03.20X2 include Rs. 5,000 for goods sent out on consignment at 25 per cent above cost, and the goods were sold only in
20X3. A cheque for Rs. 1,000 had been deposited on 31.03.20X2 but was credited on 2.4.20X2. A cheque for Rs. 2,000
issued on 26.03.20X3 was presented on 3.4.20X3. A cheque for Rs. 1,000 was directly deposited by a customer on
27.03.20X3 but no entry is made either in Pass book or in Cash Book. A cheque for Rs. 500 deposited in march, 20X3 was
dishonored but no adjustment for this was made.
Required: Determine the profit for 20X2 20X2 and draw up a Balance Sheet as at 31st March, 20X3.
Que. 21- S.K. Mittal does not maintain proper books of accounts. He provides you with the following details:

(a) Sales and Purchases Policy: Total Sales during 2000 Rs. 6,00,000. Volume of sales during 2nd half of 2000 was one third
that of 1st half. Volume of credit sales was twice of Cash Sales evenly throughout the year. All purchases were on credit and
made evenly throughout the year.
(b) Credit Policy: Closing Debtors represent last two months sales whereas Closing Creditors represent last 3 months purchases
(c) Price Policy: Goods were sold at 10% profit on credit sales. Cash selling price was always at a profit of 5% of Sales.
(d) Inventory Policy: First 2 months requirements were held as Opening Stock whereas last months requirements was held as
Closing Stock.
Required: ascertain the (i) Opening Stock as on 1.1.20X1, (ii) Closing Stock as on 31.12.20X1, (iii) Total Purchases during
20X1, (iv) Closing Debtors and Creditors as on 31.12.20X1
Que. 22- Shri Rashid furnishes you with the following information relating to his business:
(a) Assets and liabilities as on
1.1.20X1
31.12.20X1
Rs.
Rs.
Furniture (w.d.v.)
6,000
6,350
Stock at cost
8,000
7,000
Sundry debtors
16,000
?
Sundry creditors
11,000
15,000
Prepaid expenses
600
700
Unpaid expenses
2,000
1,800
Cash in hand and at bank
1,200
625
(b) Receipts and Payments during 20X1:
Collection from debtors, after allowing discount of Rs. 1,500 amounted to Rs. 58,500. Collections on discounting of bills of
exchange, after deduction of discount of Rs. 125 by the bank, totaled to Rs. 6,12.
Creditors of Rs. 40,000 were paid Rs. 39,200 in full settlement of their dues.
Payment for freight inwards Rs. 3,000
Amounts withdrawn for personal use Rs. 7,000
Payments for office furniture Rs. 1,000
Investment carrying annual interest of 4% were purchased at Rs. 96 on 1 st July, 20X1 and payment made therefore.
Expenses including salaries paid Rs. 14,500.
Miscellaneous receipts Rs. 500.
(c) Bills of exchange drawn on and accepted by customers during the year amounted to Rs. 10,000. Of these, bills of exchange of
Rs. 2,000 were endorsed in favour of creditors. An endorsed bill of exchange of Rs. 400 was dishonoured.
(d) Goods costing Rs. 900 were used as advertising materials.
(e) Goods are invariably sold to show a gross profit of 33.1/3% on sales.
(F) Difference in cash book, if any, is to be treated as further drawing or introduction by Shri Rashid.
(g) Provide at 2.5% for doubtful debts on closing debtors.
Required: Prepare Trading and Profit and Loss Account for the Year ended 31 st December, 20X1 and the Balance Sheet as on
that date.
Que. 23- A and B who had conducted separate business of merchants as sole traders agreed on 28 th February, 20X2 to enter into
partnership as from 1st April, 20X2. B had not kept proper records and in order to establish the interests of the partners on 1st
April, 20X2, it was arranged that B should carry on business for the month of March, 20X2 and upon the results of that
month, their respective interests in the partnership would be determined.
The following is a summary of Bs transactions for the month of March, 20X2.
Rs.
Cash at Bank on 28th February, 20X2 as per Bank statement
5,200
Unpresented cheque at the date.
6,150
Furniture as per valuation
22,000
Sundry debtors 28th February, 20X2
19,000
Sundry creditors 28th February, 20X2
18,900
Cash at bank on 31st March, 20X2 as per Bank statement
11,840
Unpresented cheques 31st March, 20X2
2,080
Credit sales during the month, the cost of which was Rs. 4,520, amounted
To Rs. 7,100. Included in these sales was a sale at Rs., 3,200, the cost of

which Was Rs. 1,800 and these goods were not delivered until 3 rd April,
20X2. Credit purchases including goods received on 2nd April, 20X2 and
costing Rs. 2,500
11,240
Stock in hand, taken on 31st March, 20X2 and priced at cost, amounted to
30,000
A credit note was issued on 9th March, 20X2 for an overcharge in an
Invoice dated 27th February, 20X2
800
Cash receipts were:
Debtors
13,000
Cash sales (cost of goods sold Rs. 9,600)
13,450
Cash disbursement were:
Commission
1,800
Salaries and expenses
1,600
Rent
400
Creditors (after deduction Rs. 100 discount)
9,900
Drawings
2,000
Bank charges and interest
40
Required: Prepare Bs statement of Assets and Liabilities and Capital as at 31st March, 20X2 and Revenue statement for the
month then. Depreciation may be disregarded.
Que. 24- Mr. X, a sole trader, does not keep proper accounting records
regarding his assets and liabilities on 31st March, 20X1 is available:
Assets
Rs.
Stock
75,000
Debtors
69,800
Cash
4,800
Bank balance
66,000
Premises
3,00,000
Motor vehicles
61,000
The cash book entries reveal the following:
Cash Rs.
Bank Rs.
Opening balance
4,800
66,000
Collection from customers
deposited
7,06,000

for his business transactions. The following information

Liabilities
Creditors
Term loan
Furniture and fittings
Outstanding expenses

Rs.
85,000
80,000
1,10,000
2,700

Cash Rs.
Payment to suppliers
Salaries & Wages
Motor expenses
Cash purchases
(paid by cheques,
General expenses
Drawings

9,200
960

1,720

Bank Rs.
4,42,800
26,400
14,800
1,49,600
18,680
85,120

Further information is given below:

(a) The total receipts from customers have not been fully recorded. The figure of Rs. 7,06,000 has been taken from the bank
statement.
(b) The opening bank balance includes private investment income of Rs. 2,880.
(c) Goods costing Rs. 38,400 have been sold by adding 10% profit. In respect of other goods, the mark up has been 25%.
(d) A discount of Rs. 10,800 has been received from suppliers for early settlement of bills.
(e) Interest on long-term loan is payable at 12% per annum. Half years interest remained outstanding on 31 st March, 20X2.
(f) Rs. 2,000 was owing for salaries and wages and Rs. 1,560 was owing for general expenses at 31st March, 20X2.
(g) Depreciation is to be provided on motor vehicles for the year at 10% of the book value and on furniture and fittings at 5% of
the book value.
(h) Other balance on 31st March, 20X2. were: Debtors Rs. 73,280, Creditors Rs. 82,280, Stock Rs. 71,400.
You are required to prepare:
(a) a Trading and Profit and Loss Account for the year ended 31 st March, 20X2; and
(b) a Balance Sheet as at 31st March, 20X2.

Que. 25- Radha keeps her books in single entry system. From the following, prepare the Trading and Profit and Loss Account for
the year ended 31st March, 20X2 together with the balance sheet on that date.
Rs.
Rs.
Interest charges
1,000
Received from debtors
2,50,000
Personal withdrawals
20,000
Cash sales
1,50,000
Staff salaries
85,000
Other business expenses
79,000
Payments to creditors
1,50,000
Balance in bank on 31.3.20X2
24,250
Cash in hand on 31.3.20X2
750
Further details available are:
On 1.4.20X1
On 31.3.20X2
Stock
90,000
1,02,200
Creditors
80,000
55,000
Debtors
2,20,000
3,00,000
Furniture
10,000
10,000
Premises
1,50,000
1,50,000
Provide 5% interest on Radhas capital balance as on 1.4.20X1. Provide Rs. 15,000 for doubtful debts, 5% depreciation
on all fixed assets. 5% group incentive commission to staff has to be provided for on net profit after meeting all expenses and
the commission.
Que. 26- Mr. X is a small trader, and is financially incapable of ingaging the services of an accountant. He keeps no books but
only an account with a Bank in which all takings are lodged after meeting business expenses and his personal drawings and
through which all payments for business purchases are passed.
You are required to ascertain his trading result for the year ended 31st March, 20X3 and the financial position of his
business as on that date from the following information supplied by him:
(a) The Bank statement shows deposits during the year of Rs. 12,020 and withdrawals of Rs. 11,850.
(b) Rs. 1,000 had been placed in fixed deposit account on 31 st December, 20X1 at 10% per annum and withdrawn with interest on
30th June, 20X2.
(c) The assets and liabilities on 31st March, 20X3 were: Stock Rs. 1,100; Book Debts Rs. 11,150; Bank Balance Rs. 320; Furniture
Rs. 2,000 and Trade creditors Rs. 400.
(d) In the absence of reliable information, estimates are supplied on the following matters.
(i) The Stock and Book Debts have each increased by Rs. 100 during the year.
(ii) The Trade creditors were Rs. 200 on 1st April, 20X2.
(iii) During the year personal expenses amounted to Rs. 800 and business expenses Rs. 700. Ignore fractions.
Que. 27- K.Azad, who is in business as a wholesaler in sunflower oil, is a client of your accounting firm. You are required to draw
up his final accounts for the year ended 31.3.20X2. From the files, you pick up his Balance Sheet as at 31.3.20X1 reading as
below:
Balance Sheet as at 31.3.20X1
Liabilities
Rs. Assets
K.Azads Capital
1,50,000 Cash and Bank Balance
Creditors for Oil Purchases
2,00,000 Debtors
12% Security Deposit from Customers
50,000 Stock of Oil (125 tins)
Creditors for Expenses:
Furniture
30,000
Rent
Less: Depreciation
3,000
Salaries
6,000
_________
Commission
4,000 Rent Advance
20,000 Electricity Deposit
3-Wheeler Tempo Van
40,000
Less: Depreciation
10,000
_________
4,30,000

Rs.
75,000
1,60,000
1,25,000

27,000
12,000
1,000

30,000
4,30,000

A Summary of the rough Cash Book K.Azad for the year ended 31.3.20X2 is as below:
Cash and Bank Summary
Rs.
Receipts
Cash Sales
Collections from Debtors
Payments
To Landlord
Salaries
Miscellaneous Office Expenses
Commission
Personal Income Tax
Transfer on 1.10.20X1 to 12% Fixed Deposit
To Creditors for Oil Supplies

5,26,500
26,73,500
79,000
48,000
12,000
20,000
50,000
6,00,000
24,00,000

A scrutiny of the other records gives you the following information:

(i) During the year oil was purchased at 250 tins per month basis at a unit cost of Rs. 1,000. 5 tins were damaged in transit in
respect of which insurance claim has been preferred. The surveyors have since approved the claim at 80%. The damaged ones
were sold for Rs. 1,500 which is included in the cash sales. One tin has been used up for personal consumption. Total number
of tins sold during the year was 3,000 at a unit price of Rs. 1,750.
(ii) Rent until 30.9.20X1 was Rs. 6,000 per month and was increased thereafter by Rs. 1,000 per month. Additional advance rent
of Rs. 2,000 was paid and this is included in the figure of payments to landlord.
(iii) Provide depreciation at 10% and 25% of WDV on furniture and tempo van respectively.
(iv) It is further noticed that a customer has paid Rs. 10,000 on 31.03.20X2 as security deposit by cash. One of the staff has
defaulted. The claim against the Insurance Company is pending.
Required: Prepare final account for the year ended 31.3.20X2.
Que. 28- The following is the Balance Sheet of the retail business of Sri X as at 31st December, 20X1.
Liabilities
Rs.
Assets
Rs.
Sri Srinivass Capital
1,00,000
Furniture
10,000
Liabilities for goods
20,500
Stock
70,000
Rent
1,000
Debtors
25,000
Cash at bank
14,500
Cash in hand
2,000
1,21,500
1,21,000
Total
Total
You are furnished with the following information:
(i) Sri X sells his goods at a profit of 20% on sales.
(ii) Goods are sold for cash and credit. Credit customers pay by cheques only.
(iii) Payments for purchases are always made by cheques.
(iv) It is the practice of Sri X to send to the bank every weekend the collections of the week after paying every week, salary of
Rs. 300 to the clerk, Sundry expenses of Rs. 50 and personal expenses Rs. 100.
Analysis of the Bank Pass-Book for the 13 week period ending on 31st March, 20X2 disclosed the following:
Rs.
Payments to creditors
75,000
Payments of rent upto 31.3.20X2
4,000
Amounts deposited into the bank
1,25,000
(include Rs. 30,000 received from debtors by cheques)
The following are the balance on 31st March, 20X2:
Stock
40,000
Debtors
30,000
Creditors for goods
36,500
On the evening of 31st March, 20X2 the Cashier absconded with the available cash in the cash box. There was no cash deposit
in the week ended on that date.

Required: Prepare a Account showing the amount of cash defalcated by the Cashier and also a Trading & Profit and Loss
Account for the period ended 31st March, 20X2 and a Balance Sheet as on that date.
Que. 29- Mr. Pranlal is a dealer in fertilizers. He purchases some chemicals and mixes them to manufacture the fertilizers. He has
prepared the following statements He requires you to examine them, and prepare Trading Account, Profit & Loss Account
and Balance Sheet, after taking into account the additional information furnished:
Dr.
(a) Trading and Profit & Loss Account as on 31.3.20X2
Cr.
Particulars
Rs.
Particulars
Rs.
To Stock as on 31.3.20X2
8,00,000
By Sales
5,00,000
To Purchases
8,00,000
By Creditors
10,00,000
To Expenses
7,00,000
By Stock as on 1 .4.20X1
2,00,000
By Other income
1,00,000
By Net loss
5,00,000
23,00,000
23,00,000
Balance Sheet for the year ended 31.3.20X2
Particulars
Rs.
Particulars
Rs.
To Capital as on 1.4.20X1
By Debtors
2,50,000
3,00,000
By Cash
20,000
Less: Loss
5,00,000
8,00,000
By Bank
80,000
----------By Closing stock
10,00,000
To Loans taken on 1.4.20X1 at 12%
To Surpluses (Differences)
1,00,000
4,50,000
13,50,000
13,50,000
He is entitled to a rebate of 10 per cent on the listed price of a chemical. The purchases during the year ended 31st
March, 20X2 of the said chemicals at the listed price, included in the purchases, amounted to Rs. 4,00,000
(b) The details of the expenses are as under : Mixing wages Rs. 2,00,000 Administration and selling expenses Rs.
2,00,000, Mixing equipments purchased Rs. 1,00,000, Construction of factory sheds Rs. 1,00,000, Advance for materials Rs.
1,00,000.
(c) A certain raw material was received on 2nd April, 20X2, the invoice for which amounting to Rs. 1,00,000 is
included in the purchases.
(d) A customer who purchased the goods for Rs. 1,00,000 has not taken delivery. The value of such stock was
inadvertently included in the closing stock as on 31st March. 20X2.
(e) He had entered into a joint venture with Mr. Babu Ram, The sales made on account of the joint venture was
included in the sales for Rs. 2,00,000. He had paid Rs. 1,00,000. for the purchase of raw materials. It has been included in the
expenses. His share of profit in the venture was determined at Rs. 50,000. The amount paid for setting the account was
wrongly debited to Debtors Account.
(f) Sums received for cash sales of Rs. 5,00,000 was included in the Creditors.
(g) An invoice for Rs. 50,000 for the goods received on 25th March, 20X2 and included in the stock was received only
st
on 1 April, 20X2.
(h) Other out standings as on 31st March, 20X2 were:
(i) For the erection of factory sheds Rs. 50,000 (b) Adm. & Selling expenses Rs. 25,000
(j) Provide depreciation at 5 per cent on the factory sheds and fat 10 per cent on the equipments on the closing
balances.
(k) The Bank Balance of Rs. 80,000 includes the encashment of his personal deposit of Rs. 50,000 with the bank. He
had forgotten to credit his Capital Account with this amount.
Que. 30- You have been provided with following information of M/s Sybal Enterprises as on 31 st December 20X1
(a) Summarised Balance Sheet as at 31st December, 20X1
Liabilities
Rs. Assets
Capital
2,37,474 Fixed Assets:
Loan
1,00,000 (Cost less Depreciation)
Expenses Creditors
12,050 Land

Rs.

25,000

Trade Creditors

2,47,903

Building (Rs. 1,42,000 Rs.

27,500)
Fixture & Fittings (Rs. 21,405 Rs.
11,214)
Motor Vehicles (Rs. 24,690 Rs.
18,690)
Current Assets:
Stock in trade
Sundry Debtors
Cash at Bank
Cash in hand

1,14,500
10,191
6,000
2,37,423
1,95,115
7,048
2,150
5,97,247

5,97,247
(b) During the year ended 31st Dec. 20X2 the following trading transactions took place:
Cash Sales Rs. 4,27,042, Receipt from Debtors Rs. 10,07,401, Payment to trade Creditors Rs. 9,28,213, Wages paid Rs.
2,04,111, Overhead Expenses paid Rs. 57,410, Interest on loan paid Rs. 5,000, Salaries Rs. 1,50,000
(c) Depreciation, on the reducing balance method, is to be provided @ 4% p.a. on buildings, 15% p.a. on fixtures & fittings and
25% p.a. on the motor vehicles.
(d) On 1st June 20X2 the enterprise acquired a vehicle on hire purchase terms which provided for the payment of a deposit of Rs.
1,000 and 24 monthly installments of Rs 200 commencing on 30th June, 20X3. The cash price of the vehicle is Rs. 5,200 The
only other movement in fixed assets was the scrapping of the old vehicle which originally cost of Rs. 1,960 and had
accumulated depreciation of Rs. 1,699.
(e) On 31st Dec. 20X2 Stock at cost Rs. 2,47,628, Debtors Rs. 1,89,400, Creditors Rs. 2,58,107 Cash in hand amounted to Rs.
1,945, Expenses Creditors Nil
(f) On 30th June, 20X2 the loan was repaid at a discount of 14%
(g) The proprietor has withdrawn during the year Rs. 1,000
Required: Prepare: (A) Joint Cash & Bank Account Trading and Profit & Loss Account for the year ended 20X2 and the Balance
Sheet as on that date.