Description

Essentials of Financial Accounting
September 2023 Examination

1) Drashti is learning about Accounting as one of the course in her graduation year. She
wants to relate it business organization. She wants to know about the advantages and
limitations of accounting an organization can have if they adopt accounting. List down five
advantages and five limitations of accounting. (10 marks)
Ans:
Introduction
Accounting is a fundamental aspect of any business organization, serving as the language of
financial information. It provides a scientific framework for recording, summarizing, and
analyzing economic transactions and sports. Drashti’s decision to learn about accounting as a part
of her graduation yr is commendable because it equips her with crucial expertise and skills that
will advantage her in various professional settings.
Accounting is crucial in business organizations, serving as the spine of financial control and
selection-making processes. By adopting accounting practices, organizations can gain several
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2) From the following balances you are required to prepare trial balance. (10marks)
Capital 18200
Debtors 5400
Creditors 2800
Machinery 7000
Wages 10000
Purchases 19000
Opening Stock 4000
Bank Balance 3000
Carriage Outwards 300
Salaries 400
Rent and taxes 900
Sales 29000
Break up
Define the term trial balance and limitations of a trial balance. (2+2marks)
Preparing the correct trial balance taking the above mentioned details (6marks)
Ans:
Trial Balance:
A trial balance is a statement that lists all the ledger account balances of a business at a particular
point in time. It is prepared to check the accounting records’ accuracy and ensure that the debits
and credits are identical. The trial balance includes all debts, such as property, liabilities, equity,
sales, and costs. It serves as the foundation for the training of monetary statements.
Concept of Trial balance:
The trial stability concept is based on the fundamental principle of double-access bookkeeping,

3) Following are the particulars for Pradeep tyres Ltd
date Particulars Amount Rs
1-Jan capital introduced in the business via transfer from personal saving
bank account
200000
2-Jan paid from bank account the commission charges for giving business
leads
1500

3-Jan municipal taxes paid for the business property 3000
4-Jan Service revenue received in the bank account directly from the
customer
150000

a. Define the term journal. Discuss the necessary steps of journalizing (2+3 marks)
Ans:
Introduction:
A journal is a chronological report of all economic transactions of a business. It is the initial step
in the accounting process, where transactions are recorded systematically and organized. The
journal offers a whole audit path and forms the muse for preparing financial statements.
Concept & Application:

b. Define the term accounting equation and pass journal entries for the below mentioned.
(1+4 marks)
Ans:
Introduction to Accounting Equation:
Accounting is the language of business. It allows us to file, examine, and communicate financial
records approximately a company’s economic sports. The accounting equation is at the heart of
accounting, which serves as the fundamental framework for recording and balancing financial
transactions.