B.Com/BBA Essentials of Financial Accounting April 2024

Description

Essentials of Financial Accounting

April 2024 Examination

 

 

Q1.  Accounting is a process of collecting, organizing, and analyzing information.  It is used in business management to make decisions about products and services, resources, debt and equity, and taxes.  The advantages of accounting are that it helps you understand where your money is coming from and where it’s going however accounting has its own limitations.  Do you agree on that?  Discuss suitable points to support your answer.  (10 marks)

Ans 1.

Introduction:

Accounting serves as a fundamental tool in business management, facilitating the collection, organization, and analysis of financial information critical for decision-making. It plays a pivotal role in understanding various aspects of business operations such as revenue generation, resource allocation, financial structure, and tax obligations. While accounting offers numerous advantages by providing insights into financial performance and aiding in strategic planning, it also possesses inherent limitations that warrant consideration. This essay will explore both the advantages and limitations of accounting, providing a comprehensive analysis of its role in business It is only half solved

 

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Q2. Consider the following transaction pertaining Ammar’s business-   (10 marks)

1. Started business with cash Rs 3 lacs
2. Purchased goods for cash Rs 1.2 lacs
3. Purchased goods on credit Rs 60000
4. Purchased furniture for cash Rs 20000
5. Deposited Rs 50000 in the bank

Present accounting equation for these transactions. Also, define the term accounting equation, discuss the impact of each transaction in the books of accounts.

Ans 2.

Introduction:

The accounting equation is the cornerstone of double-entry bookkeeping and serves as a fundamental principle in financial accounting. It states that the total assets of a business are always equal to the sum of its liabilities and owner’s equity. The equation is expressed as:

Assets = Liabilities + Owner’s Equity

This equation is crucial for maintaining the balance between what a business owns (assets) and what it owes (liabilities), as well as the owner’s investment in the business (owner’s equity). It provides a systematic framework for recording financial transactions accurately and ensures the

 

Q3.  Vijaya Brothers has the following refrigerator in inventory as on March 31, 2023

Item	Quantity	Cost per unit	Net realizable value
Godrej 2 Star	15	20000	28000
Samsung Direct Cool	35	25000	23000
Sony Direct Cool	50	12000	16000
Motorola	100	35000	30000

 

1. a) Discuss the Accounting Standard & applicability of the Accounting Standard, which talks about inventory valuation. (5 Marks)

Ans 3a.

Introduction:

Accounting Standards are guidelines set by regulatory bodies to ensure uniformity and transparency in financial reporting. One such standard relevant to inventory valuation is AS 2: “Valuation of Inventories.” This standard provides guidance on the determination of the cost of inventories and their subsequent valuation, ensuring that inventories are reported at the lower of cost and net realizable value. Let’s explore the applicability and significance of AS 2 in the context of Vijaya Brothers’ inventory valuation.

Concept and application
The