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VIDYA SAGAR
CAREER INSTITUTE LIMITED
CA FOUNDATION
ACCOUNTING
MINOR TEST - 1
Time : 1½ Hours Maximum Marks: 50
(1 - 25% Course) Date : 25.05.
Batch (6 – 7) Attempt : SEPT. 2025
Questions 1 is compulsory, attempt any 4 from the remaining
1(a) State with reasons whether the following statements are True or False: 2x3 =
(i) The nature of business is not an important criteria in separating an expenditure
between capital and revenue
(ii) Overhaul expenses of second-hand machinery purchased are Revenue
Expenditure
(iii) ‘Profit & Loss adjustment account’ is opened to rectify the errors detected in the
current accounting period
(b) Write short note on: Depletion method of depreciation 2
(c) A Machinery costing ₹ 20,00,000 is depreciated on straight line assuming 10 years
working life and nil salvage value for four years. At the end of the fourth year, the
machinery was revalued upwards by ₹ 80,000. The remaining useful life of the
machinery was also reassessed as 8 years at the end of the fourth year. Calculate the
depreciation for 5th Year.
2 On 30th September, 2022, the bank account of X, according to the bank column of the
Cash- Book, was overdrawn to the extent of ` 4,062. On the same date the bank
statement showed a credit balance of ` 20,758 in favour of X. An examination of the
Cash Book and Bank Statement reveals the following:
- A cheque for ` 13,14,000 deposited on 29th September, 2022 was credited by
the bank only on 3rd October, 2022.
- A payment by cheque for ` 16,000 has been entered twice in the Cash Book.
- On 29th September, 2022, the bank credited an amount of ` 1,17,400 received
from a customer of X, but the advice was not received by X until 1st October,
- Bank charges amounting to ` 580 had not been entered in the Cash Book.
- On 6th September, 2022, the bank credited ` 20,000 to X in error.
- A bill of exchange for ` 1,40,000 was discounted by X with his bank. This bill was
dishonoured on 28th September, 2022 but no entry had been made in the books
of X.
- Cheques issued upto 30th September, 2022 but not presented for payment upto
that date totalled ` 13,26,000.
You are required :
(a) to show the appropriate rectifications required in the Cash Book of X, to arrive
at the correct balance on 30th September, 2022 and
(b) to prepare a bank reconciliation statement as on that date.
3 The Machinery Account of a Factory showed a balance of ` 19,00,000 on 1st January,
- Its accounts were made up on 31st December each year and depreciation is
written off at 10% p.a. under the Diminishing Balance Method.
On 1st June 2022, a new machinery was acquired at a cost of ` 2,80,000 and installation
charges incurred in erecting the machine works out to ` 8,920 on the same date. On 1st
June, 2022 a machine which had cost ` 4,37,400 on 1st January 2020 was sold for
75,000. Another machine which had cost 4,37,000 on 1st January, 2021 was
scrapped on the same date and it realised nothing.
Write a machinery account for the year 2022, allowing the same rate of depreciation as
in the past, calculating depreciation to the nearest multiple of a Rupee.
4 (a) From the following information, ascertain the value of Closing Stock as on 31st
March,2023.
Particulars
(`)
Opening Stock 1,47,
Cash Sales 5,50,
Credit Sales 4,00,
Purchases 8,85,
Manufacturing Expenses 1,35,
Advertisement Expenses 43,
Rate of Gross Profit on Cost 25 %
At the time of valuing inventory as on 31st March,2022, a sum of ` 12,500 was written
off on a particular item, which was originally purchased for ` 50,000 and was sold
during the year for ` 40,000.
(b) Physical verification of stock in a business was done on 23rd June, 2022. The value of
the stock was
`
48,00,000. The following transactions took place between 23rd
June to 30th June, 2022:
(i) Out of the goods sent on consignment, goods at cost worth
`
were unsold.
(ii) Purchases of
`
4 ,00,000 were made out of which goods worth
`
were delivered on 5th July, 2022.
(iii) Sales were
`
13,60,000, which include goods worth
`
3,20,000 sent on
approval. Half of these goods were returned before 30th June, 2022.
(iv) Goods are sold at cost plus 25%. However, goods costing
`
2,40,000 had
been sold for
`
Determine the value of stock on 30th June, 2022.
(b) A merchant’s trial balance as on June 30, 2022 did not agree. The difference was put to
a Suspense Account. During the next trading period, the following errors were
discovered:
(i) The total of the Purchases Book of one page, `4,539 was carried forward to the
next page as `4,593.
(ii) A sale of 573 was entered in the Sales Book as753 and posted to the credit of
the customer.
(iii) A return to a creditor, `510 was entered in the Returns Inward Book; however,
the creditor’s account was correctly posted.
(iv) Cash received from C. Dass, `620 was posted to the debit of G. Dass.
(v) Goods worth `840 were despatched to a customer before the close of the year
but no invoice was made out.
(vi) Goods worth `1,000 were sent on sale or return basis to a customer and entered
in the Sales Book. At the close of the year, the customer still had the option to
return the goods. The sale price was 25% above cost.
You are required to give journal entries to rectify the errors in a way so as to show the
current year’s profit or loss correctly.
