Bhagya

Subsidiary Books 11th BK Commerce Chapter 5 Solutions Maharashtra Board

Balbharti Maharashtra State Board Bookkeeping and Accountancy 11th Solutions Chapter 5 Subsidiary Books Textbook Exercise Questions and Answers.

Class 11 Commerce BK Chapter 5 Exercise Solutions

Objective Type Questions & Answers

1. Answer the following questions in one sentence.

Question 1.
What are Subsidiary Books?
Answer:
Subdivision of journals on the basis of nature of transactions is known as Subsidiary Books.

Question 2.
What is a Cash Book?
Answer:
The subsidiary book in which details of cash are received in the form of cash, cheques, drafts, etc., and details of payment made in the form of cash, cheques, drafts, etc. is called a cash book.

Question 3.
State the meaning of ‘Contra entry’.
Answer:
The accounting entries which appear on both the sides of cash book are called contra entries.

Question 4.
State the meaning of the imprest system of Petty Cash Book.
Answer:
Imprest System of Petty cash book is a system in which head cashier gives fixed (imprest) amount to the petty cashier at the beginning of month/fortnight to meet the expenses of that period. Later on the shortfall after meeting the expenses is reimbursed by the head cashier.

Question 5.
Which transactions are recorded in Purchase Book?
Answer:
Goods purchased on credit for resale are only recorded in the Purchase Book.

Question 6.
Which sales are recorded in Sales Book?
Answer:
Credit sales of goods are recorded in Sales Book.

Question 7.
Which transactions are recorded in the Journal Proper?
Answer:
Journal Proper is meant for recording opening entries, closing entries, adjustment entries, transfer entries, and rectification entries.

Question 8.
Who is a Petty Cashier?
Answer:
A cashier in charge of recording transactions in a petty cash book is known as Petty Cashier.

2. Give a word/term or phrase for each of the following statements:

Question 1.
A person who maintains Petty Cash Book.
Answer:
Petty Cashier

Question 2.
A bank account which the businessman prefers to open.
Answer:
Current Account

Question 3.
Petty Cash Book in which the payment side is ruled in suitable columns.
Answer:
Analytical Petty Cash Book

Question 4.
Subsidiary book in which only credit purchases of goods are recorded.
Answer:
Purchase Book

Question 5.
Subsidiary book in which return of goods sold on credit is recorded.
Answer:
Sales Return Book

Question 6.
The entry is recorded on both sides of the cash book.
Answer:
Contra Entry

Question 7.
Name the account which encourages personal savings.
Answer:
Saving Account

Question 8.
A note was issued by the buyer to the seller giving full details of goods returned.
Answer:
Debit Note

Question 9.
A note was issued by the seller on receipt of defective goods from the customer.
Answer:
Credit Note

Question 10.
Name the bank account on which overdraft facility is given to the Account holder.
Answer:
Current Account

3. Select the most appropriate answers from the alternatives given below and rewrite the sentences.

Question 1.
Cash column of Cash Book can never have ____________ balance.
(a) credit
(b) debit
(c) zero
(d) none of the above
Answer:
(a) credit

Question 2.
Any entry recorded on both sides of Cash Book is known as ____________ entry.
(a) opening
(b) rectifying
(c) transfer
(d) contra
Answer:
(d) contra

Question 3.
The source document for recording in Sales book is ____________
(a) Inward Invoice
(b) Outward Invoice
(c) Voucher
(d) Cash Memo
Answer:
(b) Outward Invoice

Question 4.
Credit purchase of Machinery is recorded in the ____________
(a) Purchase Book
(b) Cash Book
(c) Journal Proper
(d) Returns Outward Book
Answer:
(c) Journal Proper

Question 5.
Sub-division of journal is known as ____________ book.
(a) Subsidiary
(b) Purchase Return
(c) Purchase
(d) Journal Proper
Answer:
(a) Subsidiary

Question 6.
Additional cash introduced in business is recorded in ____________
(a) Purchase Book
(b) Cash Book
(c) Journal Proper
(d) Returns Inwards Book
Answer:
(b) Cash Book

Question 7.
Entry for bad debts is recorded in the ____________
(a) Sales Book
(b) Purchase Book
(c) Cash Book
(d) Journal Proper
Answer:
(d) Journal Proper

Question 8.
Direct deposit made by the customer into our bank is recorded in the ____________ side of the Cash Book.
(a) payments
(b) credit
(c) receipts
(d) both
Answer:
(c) receipts

Question 9.
The person who draws the cheque and signs on it is the ____________
(a) drawer
(b) drawee
(c) payee
(d) all of the above
Answer:
(a) drawer

Question 10.
A fixed amount is deposited for a fixed period in ____________ deposit account.
(a) Current
(b) Savings
(c) Fixed
(d) Recurring
Answer:
(c) Fixed

4. State whether the following statements are True or False with reasons:

Question 1.
Journal is a book of secondary entry.
Answer:
This statement is False.
Journal is a book of prime entry.

Question 2.
Assets sold on credit are entered in Sales Journal.
Answer:
This statement is False.
Assets sold on credit are entered in Journal Proper.

Question 3.
Cash and credit purchases are entered in Purchase Book.
Answer:
This statement is False.
Only credit purchases are entered in Purchase Book.

Question 4.
Cash sales are entered in Sales Journal.
Answer:
This statement is False.
Cash sales are entered in the cash book.

Question 5.
Cash Book records transactions relating to receipts and payments of cash.
Answer:
This statement is True.
Cashbook is prepared for cash transactions only. All incomes are receipts and they are recorded on the debit side of Cashbook. All expenses are payments recorded to the credit side.

5. Do you agree with the following statements.

Question 1.
Trade discount is recorded in Cash Book.
Answer:
Disagree

Question 2.
Petty Cash Book is a book with having a record of big payments.
Answer:
Disagree

Question 3.
Cash received is entered on the debit side of the Cash Book.
Answer:
Agree

Question 4.
Transactions recorded on both debit and credit side of Cash Book is known as Contra Entry.
Answer:
Agree

Question 5.
Credit purchase of machinery is entered in Purchase Journal.
Answer:
Disagree

6. Complete the following sentences:

Question 1.
Cash Book is a ____________ Journal.
Answer:
Subsidiary

Question 2.
In Journal Proper, only ____________ discount is recorded.
Answer:
Cash

Question 3.
Return of goods purchased on credit to the suppliers will be entered in ____________ Journal.
Answer:
Purchase return

Question 4.
Assets sold on credit are entered in ____________
Answer:
Journal proper

Question 5.
Double column Cash Book records transactions relating to cash and ____________
Answer:
Bank

Question 6.
Credit purchases of goods are recorded in ____________
Answer:
Purchase Book

Question 7.
Cash Book does not record the ____________ Transactions.
Answer:
Credit

Question 8.
Credit balance shown by a bank column in Cash Book is ____________
Answer:
Overdraft

Question 9.
Petty Cash Book is used for recording ____________ expenses.
Answer:
Petty

Question 10.
In Purchase Book goods purchased on ____________ are recorded.
Answer:
Credit

7. Correct the following sentences and rewrite them the same.

Question 1.
Cash purchases of goods are recorded in the Purchase book.
Answer:
Cash purchases of goods are recorded in Cashbook.

Question 2.
Cash Book records cash transactions as well as credit transactions.
Answer:
Cash Book records only cash transactions.

Question 3.
Small and large business records all transactions in subsidiary books.
Answer:
Large business records all transactions in subsidiary books.

Question 4.
The person who maintains the Petty Cash Book is called Chief Cashier.
Answer:
The person who maintains the Petty Cash Book is called Petty Cashier.

8. Calculate the following.

Question 1.
Cash purchases for ₹ 1,60,000 at 10% T.D. and 5% C.D. What is the amount of Net purchases?
Answer:
Gross Price = ₹ 1,60,000
Less: 10% T.D. = ₹ 16,000
Net Price = ₹ 1,44,000
Less: 5% C.D. = ₹ 7,200
Net Purchases = ₹ 1,36,800

Question 2.
Purchased goods from Harish for ₹ 12,000 @ 7% T.D. What is the amount of Trade discount?
Answer:
Trade Discount = Purchases Price × Percentage of T.D.
= 12,000 × \(\frac{7}{100}\)
= ₹ 840

Question 3.
Sold 50 Shirts at ₹ 300 per shirt and 40 Trousers at ₹ 600 each. What is the amount of sales?
Answer:
(1) 50 Shirts × ₹ 300 = ₹ 15,000
(2) 40 Trousers × ₹ 600 = ₹ 24,000
Total Sales = ₹ 39,000

Question 4.
Sold 30 Jackets at ₹ 500 per Jacket at 8% Trade discount, What is the amount of Trade discount?
Answer:
Sales Value = 30 Jackets × ₹ 500 = ₹ 15,000
Trade Discount = 15,000 × \(\frac{8}{100}\) = ₹ 1,200

9. Complete the following Table.

Question 1.

Answer:
2,000

Question 2.

Answer:
45,000

Question 3.

Answer:
1,84,000

Question 4.

Answer:
1,10,000

Question 5.

Answer:
8,000

Question 6.

Answer:
1,40,000

Question 7.

Answer:
1,10,000

Question 8.

Answer:
1,580

Question 9.

Answer:
1,650

Question 10.

Answer:
600

Practical Problems

Question 1.
Prepare a two-column Cash Book with the help of the following information for January 2018.

January 2018		Amt (₹)
01	Started business with cash	1,20,000
03	Cash paid into Bank of Baroda	50,000
05	Purchased goods from Sakshi on credit	20,000
06	Sold goods to Divakar and received a bearer cheque	20,000
10	Paid to Sakshi cash	20,000
14	Cheque received on December 06, 2018, deposited into Bank
18	Sold goods to Shivaji on credit	12,000
20	Cartage paid in cash	500
22	Received cash from Shivaji	12,000
27	Commission received	5,000
30	Drew cash for personal use	2,000

Solution:
In the books of ____________


Note: Transactions dated 5th and 18th are credit transactions, hence not to be recorded in the cash book.

Question 2.
Prepare a two-column Cash Book from the following transaction for the year July 2018.

July 2018		Amt (₹)
01	Cash in hand	17,500
01	Cash at Bank	5,000
03	Purchased goods for cash	3,000
05	Received cheque from Arun	10,000
08	Sold goods for cash	8,000
10	Arun’s cheque deposited into the bank	–
12	Purchased goods and paid by cheque	20,000
15	Paid establishment expenses through bank	1,000
18	Cash Sales	7,000
20	Deposited into bank	10,000
24	Paid General Expenses	500
27	Received commission by Cross cheque	6,000
29	Paid Rent	2,000
30	Withdrew cash for personal use	1,200
31	Wages paid	6,000

Solution:
In the books of ____________

Question 3.
Record the following transactions in the Cash Book of M/s Kamal Traders. Balance for the month of July 2018: Cash in hand ₹ 2,000 and balance in Bank Current account ₹ 8,000.

July 2018		Amt (₹)
03	Cash Sales	2,300
05	Purchased goods and amount paid by cheque	6,000
08	Cash Sales	10,000
12	Paid General Expenses	700
15	Sold goods and amount received by Cheque and deposited into Bank	20,000
18	Purchased Motor Car paid by Cheque	15,000
20	Cheque received from Mrunal deposited into Bank	10,000
22	Cash Sales	7,000
25	Mrunal’s cheque returned dishonoured
28	Paid Rent	2,000
29	Paid Telephone expenses by cheque	500
31	Cash is withdrawn from Bank for personal use	2,000

Prepare a two-column Cash Book.
Solution:
In the books of M/s Kamal Traders

Question 4.
Prepare Analytical Petty Cash Book from the following transactions in the books of Swarali General Stores, Kolhapur. The imprest amount is ₹ 1,500 received from the main cashier.

2018 January		Amt (₹)
01	Paid Cartage	50
02	Telephone Charges	40
02	Bus Fare	20
03	Postage	30
04	Refreshment to Employees	80
06	Courier Charges	30
08	Refreshment to Customers	50
10	Cartage	35
15	Taxi Fare to Manager	70
18	Purchased Stationery	65
20	Bus Fare	10
22	Xerox Charges	30
25	Internet Charges	35
27	Postage Stamps	200
29	Repair on Furniture	105
30	Cleaning Expenses	115
31	Miscellaneous Expenses	100

Solution:
Analytical Petty Cash Book of Swarali General Stores

Question 5.
From the following information prepare Columnar Petty Cash Book kept on imprest system in the books of Manisha Books Stall, Beed.

2018 April		Amt (₹)
01	Opening petty cash balance	200
02	Received a bearer cheque to make up the imprest amount	1,200
03	Gave a tip to peon	40
04	Purchased stationery	150
05	Paid Taxi Fare	35
06	Purchased Stamp pad	140
07	Paid Cartage	40
08	Paid Bus Fare	30
11	Paid to sweeper	50
13	Purchased a box of pencils	40
14	Paid Mobile charges	35
15	Gave it to Sohan on account	250
19	Paid for Refreshment to staff	150
20	Paid Railway Fare	30
21	Paid Carriage	65

Solution:
Analytical Petty Cash Book of Manish a Books Stall, Beed

Question 6.
Prepare proper Subsidiary Books and post them to the ledger from the following transactions for the month of February 2018.

2018 February		Amt (₹)
01	Goods sold to Virat	5,000
04	Purchased goods from Khushboo Traders	2,480
06	Sold goods to Shankar Traders	2,100
07	Virat returned goods	600
08	Returns goods to Khusboo Traders	280
10	Sold goods to Mahesh	3,300
14	Purchased from Kunti Traders	5,200
15	Furniture purchased from Arun	3,200
17	Bought goods from Kunti Traders	4,060
20	Return goods to Kunti Traders	200
22	Return goods from Mahesh	250
24	Purchased goods from Kirti less 10% T.D.	5,700
25	Sold goods to Shri Surya goods less 5% T.D.	6,600
26	Sold goods to Prakash Brothers	4,000
28	Return goods to Kirti less 10% T.D.	1,000
28	Prakash Brothers returned goods	500

Solution:
In the books of ____________
Purchase Book

Sales Book

Purchase Return Book

Sales Return Book

In the books of ____________

Question 7.
Enter the following transactions in the books of Vijay in Purchase Book, Sales Book, Purchase Returns Book and Sales Returns Book and Journal Proper for the month of August 2018.
2018 August
01 Purchased goods from Vikas Stores ₹ 18,000 at 5% Trade Discount
02 Sold goods of ₹ 9,000 to Prabhakar Traders
05 Veena sold goods of ₹ 16,000 to us at 5% Trade Discount as per our order dated 28th July, 2018.
08 Sent a Debit Note to Vikas Stores ₹ 1,600 (Gross) for goods returned.
10 Sold goods of ₹ 12,000 on credit to Shamal & Sons at 6% Trade Discount.
18 Received Credit Note from Veena ₹ 900 (Gross) for goods returned.
22 Sent Credit Note to Prabhakar Traders for ₹ 1,500 for goods returned. Received Dedit note from Shamal & Sons for ₹ 1,200 (Net) for goods returned.
23 Purchased goods of ₹ 16,600 from Priya Stores and paid for Carriage ₹ 150.
25 Purchased goods from Sadhana Stores ₹ 12,000 and sold the same to Aradhana Stores at a profit of 20% on cost.
28 Aradhana Stores returned goods of ₹ 2,400 as they were defective and the same were returned to Sadhana Stores.
31 Purchased Furniture for office use ₹ 30,000 from Art Furniture Works on credit.
Solution:
In the books of Vijay
Purchase Book

Sales Book

Purchase Return Book

Sales Return Book

Journal Proper

Question 8.
Mr. Akash gives you the following information and asks you to prepare Purchase Book, Sales Book, Purchase Returns Book and Sales Return Book for the month of January 2018.
2018 January
01 Purchased goods on credit from Dhanal Traders for ₹ 15,000 and sold the same to Kunal Traders at a profit of 25% on cost.
05 Placed an order with Sunetra for goods of ₹ 10,000 less 5% Trade discount.
08 Purchased goods of ₹ 20,000 at 10% Trade Discount from Saurabha Traders.
13 Sold goods to Vinayak Stores ₹ 8,000 at 5% Trade Discount.
15 Vinayak Stores returned goods to us ₹ 200.
18 Sunetra executed our order placed on 5th Jan. 2018.
20 Sold goods to Vishnu Traders ₹ 21,000 less 5% Trade Discount.
22 Returned goods to Sunetra ₹ 1,000 (Gross).
28 Kunal Traders returned goods to us ₹ 500
30 Returned goods to Sourabh Traders ₹ 1,500.
Solution:
In the books of Mr. Akash
Purchase Book

Sales Book

Purchase Return Book

Sales Return Book

Question 9.
Enter the following transactions in the Subsidiary Book of Kamal Traders.
2018 April
01 Bought from Suhas goods of ₹ 12,000 as per his Invoice No. 41.
04 Purchased from Virat goods of ₹ 11,870 less 10% Trade Discount vide Bill No. 12.
07 Bought from Kuldip goods of ₹ 11,000 less 25% Trade Discount vide Bill No. 12.
08 Bought from M/s. Art Furniture Works, Furniture for ₹ 13,000 vide Invoice No. 84.
12 Sold to Dhiraj goods of ₹ 11,500 vide Sales Invoice No. 27
13 Sold to Raja goods of ₹ 12,780 less 5% Trade Discount, vide invoice No. 88
21 Sold to Suresh goods of ₹ 8,000 less 20% Trade Discount
23 Dhiraj returned goods of ₹ 500 vide our Credit note No. 14
26 Suresh returned goods of ₹ 150 (gross) vide our Credit Note No. 115
28 Returned to Suhas goods ₹ 1,200 vide our Debit Note No. 09
30 Returned to Virat goods of ₹ 1,300 (Gross) vide our Debit Note No. 10.
30 Returned to Kuldip goods of ₹ 1,100 (Gross) vide our Debit Note No. 11.
Solution:
In the books of Kamal Traders
Purchase Book

Sales Book

Purchase Return Book

Sales Return Book

Journal Proper

Question 10.
Enter the following transactions in the Subsidiary Books of Navyug Traders:
2018 March
01 Sold to Bharat Patil goods ₹ 10,000 at 10% Trade discount.
04 Purchased from Naresh goods of ₹ 11,000 less 10% Trade discount.
06 Purchased Furniture from M/s. Sham Furniture Works, of ₹ 15,000 for office use.
07 Bharat Patil returned 20% of the goods bought by him on 1st March above and we gave him fresh goods in exchange.
08 Sold to Sundar goods of ₹ 13,000 less 15% Trade Discount.
10 Sold to Sumit Computer for ₹ 23,800 with a book value of ₹ 24,000.
12 Placed an order with Sajan for goods of ₹ 12,000.
17 Purchased from Naresh goods of ₹ 14,000 and sold them to Kamesh for ₹ 16,000.
19 Kamesh returned us goods of ₹ 1,600 and immediately returned the same to Naresh.
23 Sold to Rakesh for ₹ 4,500 old Furniture with a book value of ₹ 4,800.
26 Returned to M/s. Sham Furniture Works, office Furniture of ₹ 4,500.
28 Sajan executed our order dated 12th March, 2018.
Solution:
In the books of Navyug Traders
Purchase Book

Sales Book

Purchase Return Book

Sales Return Book

Journal Proper

Class 11 Commerce BK Textbook Solutions Digest

• 11th Bk Chapter 1 Practical Problems
• 11th Bk Chapter 2 Practical Problems
• 11th Bk Chapter 3 Practical Problems
• 11th Bk Chapter 4 Practical Problems
• 11th Bk Chapter 5 Practical Problems
• 11th Bk Chapter 6 Practical Problems
• 11th Bk Chapter 7 Practical Problems
• 11th Bk Chapter 8 Practical Problems
• 11th Bk Chapter 9 Practical Problems
• 11th Bk Chapter 10 Practical Problems

Reconstitution of Partnership (Death of Partner) 12th BK Commerce Chapter 5 Solutions Maharashtra Board

Balbharti Maharashtra State Board 12th Commerce Book Keeping & Accountancy Solutions Chapter 5 Reconstitution of Partnership (Death of Partner) Textbook Exercise Questions and Answers.

Class 12 Commerce BK Chapter 5 Exercise Solutions

1. Objective questions:

A. Select the most appropriate answer from the alternative given below and rewrite the sentences.

Question 1.
Benefit Ratio is the ratio in which _______________
(a) The old partner gain on the admission of a new partner
(b) The Goodwill of a new partner on admission is credited to old partners
(c) The continuing partners’ benefits on retirement or death of a partner
(d) All partners are benefitted.
Answer:
(c) The continuing partner’s benefits on retirement or death of a partner

Question 2.
The ratio by which existing partners are benefitted _______________
(a) gain ratio
(b) sacrifice ratio
(c) profit ratio
(d) capital ratio
Answer:
(a) gain ratio

Question 3.
Profit and Loss Suspense Account is shown in the new Balance Sheet on _______________ side.
(a) debit
(b) credit
(c) asset
(d) liabilities
Answer:
(c) asset

Question 4.
Death is a compulsory _______________
(a) Dissolution
(b) Admission
(c) Retirement
(d) Winding up
Answer:
(c) Retirement

Question 5.
The balance on the Capital Account of a partners, on his death is transferred to _______________ Account.
(a) Relatives
(b) Legal Heir’s Loan/Executors Loan
(c) Partners’ Capital
(d) Partners’ Loan
Answer:
(b) Legal Heir’s Loan/Executors Loan.

B. Write a word, term, phrase, which can substitute each of the following statements.

Question 1.
Excess of credit side over the debit side of Profit and Loss Adjustment Account.
Answer:
Profit

Question 2.
A person who represents the deceased partner on the death of the partner.
Answer:
Legal Heir’s or Executor

Question 3.
Accumulated past profit kept in the form of reserve.
Answer:
Reserve fund or General reserve

Question 4.
The partner who died.
Answer:
Deceased partner

Question 5.
The proportion in which the continuing partners benefit due to the death of a partner.
Answer:
Gain/Benefit ratio

C. State whether the following statements are True or False with reasons.

Question 1.
A deceased partner is not entitled to the Goodwill of the firm.
Answer:
This statement is False.
A deceased partner’s contribution was there in the development of business and goodwill is the value of the business in terms of money. Hence, a deceased partner is entitled to receive goodwill from the firm.

Question 2.
A deceased partner is entitled to his share of General Reserve.
Answer:
This statement is True.
General reserve is created out of past undistributed profit. Past profit is earned due to the efforts and hard work of all the partners including the partner who is now dead. Hence a deceased partner has right on it and therefore a deceased partner is entitled to receive his share of General reserve.

Question 3.
If goodwill is written off, a Deceased Partner’s Capital Account is debited.
Answer:
This statement is False.
When the benefits of goodwill are given to the deceased partner, his capital account is credited and when such goodwill is written off, capital accounts of remaining partners are debited.

Question 4.
After the death of a partner, the entire amount due to the deceased partner is paid to the legal representative of the deceased partner.
Answer:
This statement is True.
After the death of a partner, the entire amount due to the deceased partner is paid to the legal representative of the deceased partner as he is the only person who has the legal right to that amount.

Question 5.
For recording the profit or loss up to the death, the Profit and Loss Appropriation Account is operated.
Answer:
This statement is False.
For recording the profit or loss up to the death, the Profit and Loss suspense Account is created and operated. This is because final accounts cannot be prepared on the date of death of a partner. Till that period a separate account called Profit and Loss Suspense A/c is prepared.

D. Fill in the blanks and rewrite the following sentence.

Question 1.
Deceased Partners’ Executors Account is shown on the _______________ side of the Balance Sheet.
Answer:
Liabilities

Question 2.
On the death of a partner, a ratio in which the continuing partners get more share of profits in future is called as _______________ Ratio.
Answer:
Gain

Question 3.
Deceased partners share of profit up to the death is shown on _______________ side of Balance Sheet.
Answer:
Assets

Question 4.
Benefit Ratio = New Ratio – _______________
Answer:
Old Ratio

Question 5.
When Goodwill is raised at its full value and it is written off _______________ Account is to be credited.
Answer:
Goodwill

E. Answer in one sentence only.

Question 1.
What is Gain Ratio?
Answer:
The profit-sharing ratio which is acquired by the surviving or continuing partners on account of the death of any partner is called gain ratio or benefit ratio.

Question 2.
In which ratio general reserve is distributed on the death of a partner?
Answer:
General reserve is distributed on the death of a partner in their old profit sharing ratio.

Question 3.
To whom do you distribute general reserve on the death of a partner?
Answer:
On the death of a partner general reserve is distributed among all partners in their old profit and loss ratio.

Question 4.
How the death of a partner is a compulsory retirement?
Answer:
After the death of a partner, the business is not able to get any kind of services from the deceased partner and so we can say that the death of a partner is like a compulsory retirement.

Question 5.
To which account profit is to be transferred up to the date of his death?
Answer:
Profit of the deceased partner, up to the date of his death, is transferred to his Legal Heir’s/Executor’s Account.

Practical Problems

Question 1.
Rajesh, Rakesh, and Mahesh were equal Partners on 31st March 2019. Their Balance Sheet was as follows 31st March 2019.
Balance Sheet as of 31st March 2019

Mr. Rajesh died on 30th June 2019 and the following adjustment was agreed as:
1. Furniture was to be adjusted to its market price of ₹ 3,40,000.
2. Land and Building were to be depreciated by 10%.
3. Provide R.D.D. @ 5% on debtors.
4. The profit up to the date of death of Mr. Rajesh is to be calculated on the basis of last year’s profit which was ₹ 1,80,000.
Prepare:
1. Profit and Loss Adjustment A/c
2. Partners’ Capital Account
3. Balance Sheet of the continuing firm.
Solution:
In the books of the Partnership Firm


Balance Sheet as of 1st July 2019

Working Note:
The profit of the firm of last year was ₹ 1,80,000.
Proportionate profit up to the date of death for Rajesh is as follows
= 1,80,000 × \(\frac{3}{12} \times \frac{1}{3}\) (Period) (P & L ratio)
= ₹ 15,000 (Profit and Loss Suspense A/c)

Question 2.
Rahul, Rohit, and Ramesh are in a business sharing profits and losses in the ratio of 3 : 2 : 1 respectively. Their Balance Sheet as of 31st March, 2017 was as follows:
Balance Sheet as of 31st March 2017

On 1st October 2017, Ramesh died and the Partnership deed provided that
1. R.D.D. was maintained at 5% on Debtors.
2. Plant and Machinery and Investment were valued at ₹ 80,000 and ₹ 4,10,000 respectively.
3. Of the creditors an item of ₹ 6,000 was no longer a liability and hence was properly adjusted.
4. Profit for 2017-18 was estimated at ₹ 1,20,000 and Ramesh’s share in it up to the date of his death was given to him.
5. Goodwill of the firm was valued at two times the average profit of the last five years, which were
2012-13 – ₹ 1,80,000
2013-14 – ₹ 2,00,000
2014-15 – ₹ 2,50,000
2015-16 – ₹ 1,50,000
2016-17 – ₹ 1,20,000
Ramesh’s share in it was to be given to him.
6. Salary ₹ 5,000 p.m. was payable to him.
7. Interest on capital at 5% i.e. was payable and on Drawings ₹ 2,000 were charged.
8. Drawings made by Ramesh up to September 2017 were ₹ 5,000 p.m.
Prepare Ramesh’s Capital A/c showing the amount payable to his executors.
Give working of Profit and Goodwill.
Ramesh Capital Balance ₹ 3,41,000
Solution:
In the books of the Partnership Firm

Working Notes:
1. Calculation of share of Goodwill:
(a) Average profit = \(\frac{Total Profit}{No. of years}\)
= \(\frac{1,80,000+2,00,000+2,50,000+1,50,000+1,20,000}{5}\)
= \(\frac{9,00,000}{5}\)
= ₹ 1,80,000

(b) Goodwill = Average profit × No. of years
= 1,80.000 × 2
= ₹ 3,60,000

(c) Share of Goodwill to Ramesh = Goodwill of the firm × Ramesh’s share
= 3,60,000 × \(\frac{1}{6}\)
= ₹ 60,000

2. Calculation of share of profit due to Ramesh:
Share of profit = Last year profit × Share of profit × Period
= 1,20,000 × \(\frac{1}{6} \times \frac{6}{12}\)
= ₹ 10,000 (Profit and Loss Suspense A/c)

3. Interest on Capital is calculated for six months.
∴ Interest = 2,40,000 × \(\frac{6}{12} \times \frac{5}{100}\) = ₹ 6,000

4.

Question 3.
Ram, Madhav, and Keshav are partners sharing profit and losses in the ratio 5 : 3 : 2 respectively. Their Balance Sheet as of 31st March, 2018 was as follows:
Balance Sheet as of 31st March 2018

Keshav died on 31st July 2018 and the following adjustments were agreed by as per the partnership deed.
1. Creditors have increased by ₹ 10,000.
2. Goodwill is to be calculated at 2 years purchase of average profits of 5 years.
3. The profits of the preceding 5 years was
2013-14 – ₹ 90,000
2014-15 – ₹ 1,00,000
2015-16 – ₹ 60,000
2016-17 – ₹ 50,000
2017-18 – ₹ 50,000 (Loss)
Keshav’s share in it was to be given to him.
4. Loose Tools and livestock were valued at ₹ 80,000 and ₹ 1,20,000 respectively.
5. R.D.D. was maintained at ₹ 10,000.
6. Commission ₹ 2,000 p.m. was payable to Keshav. Profit for 2018-19 was estimated at ₹ 45,000 and Keshav’s share in it up to the date of his death was given to him.
Prepare Revaluation A/c, Keshav’s Capital A/c showing the amount payable to his executors.
Solution:
In the books of the Partnership Firm

Working Notes:
1. Calculation of share of Goodwill:
(a) Average profit = \(\frac{\text { Total profit }}{\text { No. of years }}\)
= \(\frac{90,000+1,00,000+60,000+50,000-50,000}{5}\)
= \(\frac{2,50,000}{5}\)
= ₹ 50,000

(b) Goodwill = Average profit × No. of years
= 50,000 × 2
= ₹ 1,00,000

(c) Share of Goodwill to Keshav = Goodwill of the firm × Keshav’s share
= 1,00,000 × \(\frac{2}{10}\)
= ₹ 20,000

2. Calculation of share of profit due to Keshav
Share of profit = Last year profit × Share of Keshav × Period
= 45,000 × \(\frac{2}{10} \times \frac{4}{12}\)
= ₹ 3,000 (Profit and Loss Suspense Account)

Question 4.
Virendra, Devendra, and Narendra were partners sharing profit and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as of 31st March 2019 was as follows.
Balance Sheet as of 31st March 2019

Mr. Virendra died on 31st August 2019 and the partnership deed provided that the event of the death of Mr. Virendra his executors be entitled to be paid out.
1. The capital to his credit at the date of death.
2. His proportion of Reserve at the date of last Balance Sheet.
3. His proportion of Profits to date of death is based on the average profits of the last four years.
4. His share of Goodwill should be calculated at two years purchase of the profits of the last four years for the year ended 31st March were as follows:
2016 – ₹ 40,000
2017 – ₹ 60,000
2018 – ₹ 70,000
2019 – ₹ 30,000
5. Mr. Virendra has drawn ₹ 3,000 p.m. to date of death, There is no increase and decrease in the value of assets and liabilities.
Prepare Mr. Virendra Executors A/c.
Solution:
In the books of the Partnership Firm

Working Notes:
1. Calculation of share of profit:
(a) Average Profit = \(\frac{\text { Total profit }}{\text { No. of years }}\)
= \(\frac{40,000+60,000+70,000+30,000}{4}\)
= \(\frac{2,00,000}{4}\)
= ₹ 50,000

(b) Goodwill = Average profit × No. of years
= 50,000 × 2
= ₹ 1,00,000

(c) Share of Goodwill to Virendra = Goodwill of the firm × Virendra’s share
= 1,00,000 × \(\frac{3}{6}\)
= ₹ 50,000

2. Share of profit due to Virendra
Share of profit = Last year profit × Share of Virendra × Period
= 50,000 × \(\frac{3}{6} \times \frac{5}{12}\)
= ₹ 10,417 (Profit and Loss Suspense A/c)

Question 5.
The Balance Sheet of Sohan, Rohan, and Mohan who were sharing profits and losses in the ratio of 3 : 2 : 1 is as follows:
Balance Sheet as of 31st March 2019

Mr. Rohan died on 1st October 2019 and the following adjustments were made:
1. Goodwill of the firm is valued at ₹ 30,000.
2. Land and Building and Machinery were found to be undervalued by 20%.
3. Investments are valued at ₹ 60,000.
4. Stock to be undervalued by ₹ 5,000 and a provision of 10% as debtors were required.
5. Patents were valueless.
6. Mr. Rohan was entitled to share in profits up to the date of death and it was decided that he may be allowed to retain his drawings as his share of profit. Rohan’s drawings till the date of death were ₹ 25,000.
Prepare Partners’ Capital Accounts.
Solution:
In the books of the Partnership firm

Working Notes:
1.

2. Firm’s goodwill = ₹ 30,000.
DistrIbute among partners in their profit and loss ratio 3 : 2 : 1.

3. Revised value of Land & Building = \(\frac{\text { Book value }}{(100-20)} \times 100\)
= \(\frac{40,000}{80} \times 100\)
= ₹ 50,000.
∴ Increase In the value of Land & Building = Revised value – Book value
= 50,000 – 40,000
= ₹ 10,000.

4. Revised value of Machinery = \(\frac{\text { Book value }}{(100-20)} \times 100\)
= \(\frac{80,000}{80} \times 100\)
= ₹ 1 ,00,000.
∴ Increase in the value of Machinery = 1,00,000 – 80,000 = ₹ 20,000.

5. Patents were valueless means it is a loss for the business.

6. Rohan’s share In profit is ₹ 25,000 and his drawings are ₹ 25,000. Rohan is allowed to retain his drawings as his share of profit. Means write ₹ 25,000 as drawings on the debit side and write ₹ 25,000 as Profit and Loss Suspense A/c on the Credit side of Partners’ Capital A/c.

Class 12 Commerce BK Textbook Solutions Digest

• 12th Bk Chapter 1 Practical Problems
• 12th Bk Chapter 2 Practical Problems
• 12th Bk Chapter 3 Practical Problems
• 12th Bk Chapter 4 Practical Problems
• 12th Bk Chapter 5 Practical Problems
• 12th Bk Chapter 6 Practical Problems
• 12th Bk Chapter 7 Practical Problems
• 12th Bk Chapter 8 Practical Problems
• 12th Bk Chapter 9 Practical Problems
• 12th Bk Chapter 10 Practical Problems

Analysis of Financial Statements 12th BK Commerce Chapter 9 Solutions Maharashtra Board

Balbharti Maharashtra State Board 12th Commerce Book Keeping & Accountancy Solutions Chapter 9 Analysis of Financial Statements Textbook Exercise Questions and Answers.

Class 12 Commerce BK Chapter 9 Exercise Solutions

Objective Questions

A. Select the most appropriate alternative from those given below and rewrite the sentences:

Question 1.
Gross Profit Ratio indicates the relationship of gross profit to the ____________
(a) Net cash
(b) Net sales
(c) Net purchases
(d) Gross sales
Answer:
(b) Net sales

Question 2.
Current ratio = \(\frac{……………….}{Current liabilities}\)
(a) Quick assets
(b) Quick liabilities
(c) Current assets
(d) None of these
Answer:
(c) Current assets

Question 3.
Liquid assets = ____________
(a) Current assets + Stock
(b) Current assets – Stock
(c) Current assets – Stock + Prepaid Expenses
(d) None of these
Answer:
(b) Current assets – Stock

Question 4.
Cost of goods sold = ____________
(a) Sales – Gross profit
(b) Sales – Net profit
(c) Sales proceeds
(d) None of these
Answer:
(a) Sales – Gross profit

Question 5.
Net profit ratio is equal to ____________
(a) Operating ratio
(b) Operating net profit ratio
(c) Gross profit ratio
(d) Current ratio
Answer:
(a) Operating ratio

Question 6.
The common size statement requires ____________
(a) common base
(b) journal entries
(c) cashflow
(d) current ratio
Answer:
(a) common base

Question 7.
Bill payable is ____________
(a) long-term loan
(b) current liabilities
(c) liquid assets
(d) net loss
Answer:
(b) current liabilities

Question 8.
Generally current ratio should be ____________
(a) 2 : 1
(b) 1 : 1
(c) 1 : 2
(d) 3 : 1
Answer:
(a) 2 : 1

Question 9.
From financial statement analysis the creditors are specially interested to know ____________
(a) Liquidity
(b) Profits
(c) Sale
(d) Share capital
Answer:
(a) Liquidity

B. Give one word/term/phrase for each of the following statements.

Question 1.
The statement showing the profitability of two different periods.
Answer:
Comparative Income Statement

Question 2.
The ratio measures the relationship between gross profit and net sales.
Answer:
Gross Profit Ratio

Question 3.
Critical evaluation of financial statement to measure profitability.
Answer:
Analysis of Financial Statement

Question 4.
A particular mathematical number showing the relationship between two accounting figures.
Answer:
Ratio

Question 5.
An asset that can be converted into cash immediately.
Answer:
Liquid Asset

Question 6.
The ratio measuring the relationship between net profit and ownership capital employed.
Answer:
ROCE

Question 7.
The statement showing financial position for different periods of the previous year and the current year.
Answer:
Comparative Balance Sheet

Question 8.
Statement showing changes in cash and cash equivalent during a particular period.
Answer:
Cash Flow Statement

Question 9.
Activity related to the acquisition of long-term assets and investment.
Answer:
Financing Activities

Question 10.
The ratio that establishes a relationship between Quick Assets and Current Liabilities.
Answer:
Liquid Ratio

C. State true or false with reasons.

Question 1.
Financial statements include only the Balance Sheet.
Answer:
This statement is False.
Financial statements include Balance Sheet and Profit and Loss A/c. This is because financial statements are prepared by business organisations to find out the efficiency, solvency, profitability, growth, strength, and status of the business. For this, they need information from the balance sheet as well as from Profit and Loss A/c.

Question 2.
Analysis of financial statements is a tool but not a remedy.
Answer:
This statement is True.
Based on analysis of the financial statement one can get an idea of the financial strength and weakness of the business. However, based on this one cannot take decisions about the business on various issues. Hence analysis of financial statements is a tool but not a remedy.

Question 3.
Purchase of fixed assets is operating cash flow.
Answer:
This statement is False.
Purchase of fixed assets is cash flow from investing activities. It is not a day-to-day operations activity like office/selling/distribution finance expenses/activities.

Question 4.
Dividend paid is not a source of funds.
Answer:
This statement is True.
The dividend is always paid on shares issued by a company as an expense. Shares itself is a source of funds. In payment of dividends, cash goes out from the company. It is an outflow of cash and not a source of funds.

Question 5.
Gross profit depends upon net sales.
Answer:
This statement is True.
The gross profit ratio discloses the relation between gross profit and total net sales. The gross profit ratio is an income-based ratio, where gross profit is an income. There is a direct relation between net sales and gross profit. Higher the net sales higher the gross profit.

Question 6.
Payment of cash against the purchase of stock is the use of funds.
Answer:
This statement is True.
Cash payment for the purchase of stock is made from cash balance or/and from bank balance which is a part of the business fund. When stock or materials we purchase we use cash for payment.

Question 7.
Ratio Analysis is useful for inter-firm comparison.
Answer:
This statement is True.
The comparison of the operating performance of a business entity with the other business entities is known as an inter-firm comparison. This ratio analysis assists to know-how and to what extent a business entity is strong or weak as compared to other business entities.

Question 8.
The short-term deposits are considered as cash equivalent.
Answer:
This statement is True.
The short-term deposits are liquid assets. It means deposits are kept for some period (usually less than one year) and they are kept with an intention to get money quickly as and when required.
They are as good as cash and considered as cash equivalent.

Question 9.
Activity ratios and Turnover ratios are the same.
Answer:
This statement is True.
Turnover ratio is an efficiency ratio to check how efficiently a company is using different assets to extract earnings from them.
Activity ratios are financial analysis tools used to measure a business’s ability to convert its assets into cash. From both these definitions, we can say that Activity ratios and Turnover ratios are the same.

Question 10.
The current ratio measures the liquidity of the business.
Answer:
This statement is True.
The current ratio shows the relationship between current assets and current liabilities. If the proportion of current assets is higher than current liabilities, the liquidity position of the business entity is considered good. More liquidity means more short-term solvency. From the above, it is proved that the current ratio measures the liquidity of the business.

Question 11.
Ratio analysis measures profitability efficiency and financial soundness of the business.
Answer:
This statement is True.
With the help of profitability ratios (Gross profit, Net profit, and Operating profit) one can get the idea of profitability efficiency of the firm, and with the help of liquidity ratios (Current ratio and liquid ratio) one can get the idea of solvency or financial soundness of the business.

Question 12.
Usually, the current ratio should be 3 : 1.
Answer:
This statement is False.
Usually, the current ratio should be 2 : 1. It means current assets are double of current liabilities. It shows the short-term solvency of business enterprises.

D. Answer in one sentence only.

Question 1.
Mention two objectives of the comparative statement.
Answer:
Objectives of comparative statements are:

• Compare financial data at two points of time and
• Helps in deriving the meaning and conclusions regarding the changes in financial positions and operating results.

Question 2.
State three examples of cash inflows.
Answer:
Examples of cash inflows are:

• Interest received
• Dividend received
• Sale of asset/investment
• Rent received.

Question 3.
State three examples of cash-out flows.
Answer:
Examples of cash outflows are:

• Interest paid
• Loss on sale of an asset
• Dividend paid
• Repayment of short-term borrowings.

Question 4.
Give the formula of Gross Profit Ratio.
Answer:
Gross profit ratio = \(\frac{\text { Gross profit }}{\text { Net sales }} \times 100\)
Where Gross profit = Net sales – Cost of goods sold.
Cost of goods sold = Opening stock + Purchase – Purchase return + Direct expense – Closing stock
Net sales = Sales – Sales return.

Question 5.
Give the formula of Gross profit.
Answer:
Gross profit = Net sales – Cost of goods sold.
Cost of goods sold = Opening stock + Purchase – Purchase return + Direct expense – Closing stock
Net sales = Sales – Sales return.

Question 6.
Give any three examples of current assets.
Answer:
Cash or cash equivalent short-term lending and advances, expenses paid in advance, taxes paid in advance, etc. are examples of current assets.

Question 7.
Give the formula of the current ratio.
Answer:
Current ratio = \(\frac{\text { Current assets }}{\text { Current liabilities }}\)

Question 8.
Give the formula of quick assets.
Answer:
Quick assets = Current assets – (Stock + Prepaid expense)

Question 9.
State the formula of Cost of goods sold.
Answer:
Cost of goods sold = Opening stock + Purchase – Purchase return + Direct expense – Closing stock

Question 10.
State the formula of Average stock.
Answer:
Average stock = \(\frac{\text { Opentng stock of goods }+\text { Closing stock of goods }}{2}\)

Practical Problems

Question 1.
From the Balance Sheet of Amar Traders as of 31st March 2018 and 31st March 2019 prepare a Comparative Balance Sheet.

Solution:
Comparative Balance Sheet of Amar Traders as of 31st March 2018 and 31st March 2019


Percentage change = \(\frac{\text { Amount of absolute change }}{\text { Amount of previous year }} \times 100\)

Question 2.
From the Balance Sheet of Alpha Limited prepare a Comparative Balance Sheet as of 31st March 2018 and 31st March 2019:
Balance Sheet as of 31st March 2018 and 31st March 2019

Solution:
Comparative Balance Sheet of Alpha Limited as of 31st March 2018 and 31st March 2019

Question 3.
Prepare Comparative Balance Sheet for the year ended 31-3-18 and 31-3-19. Assets & Liabilities as follows:

Solution:
Comparative Balance Sheet as of 31st March 2018 and 31st March 2019

Question 4.
Prepare Comparative Balance Sheet for the year ended 31-3-17 and 31-3-18.

Solution:
Comparative Balance Sheet as of 31st March 2017 and 31st March 2018

Question 5.
Prepare Comparative Income statement of Noha Limited for the year ended 31-3-17 and 31-3-18.

Solution:
Comparative Income Statement of Noha Limited
For the year ended 31st March 2017 and 31st March 2018

Question 6.
Prepare Comparative Income Statement of Sourabh Limited for years ended 31-3-17 and 31-3-18.

Solution:
Comparative Income Statement of Sourabh Limited
For the year ended on 31st March 2017 and 31st March 2018

Question 7.
Following is the Balance Sheet of Sakshi Traders for the year ended 31-3-17 and 31-3-18

Prepare Common Size Balance Sheet for the years 31-03-17 and 31-03-18.
Solution:
Common Size Statement of Balance Sheet of Sakshi Traders as of 31st March 2017 and 31st March 2018

Note: Taking Total borrowed funds and Tota Funds applied as a base (100), Calculation is done.

Question 8.
Prepare Common Size Income Statement for the year ended 31-3-17 and 31-3-18.

Solution:
Common Size Statement for the year ended on 31st March 2017 and 31st March 2018

Note: Taking the amount of sales as base (100) other percentage figures are calculated.

Question 9.
Following is the Balance Sheet of Sakshi Limited. Prepare Cash Flow Statement:

Solution:
Cash Flow Statement
For the year ended 31st March 2017 and 31st March 2018

Question 10.
From the following Balance Sheet of Konal Traders prepare a Cash Flow Statement.

Solution:
Cash Flow Statement
For the year ended on 31st March 2017 and 31st March 2018

Question 11.
A company had following Current Assets and Current Liabilities:
Debtors = ₹ 1,20,000
Creditors = ₹ 60,000
Bills Payable = ₹ 40,000
Stock = ₹ 60,000
Loose Tools = ₹ 20,000
Bank Overdraft = ₹ 20,000
Calculate Current ratio.
Solution:
1. Current Assets = Debtors + Stock + Loose Tools
= 1,20,000 + 60,000 + 20,000
= ₹ 2,00,000

2. Current liabilities = Creditors + Bills payable + Bank overdraft
= 60,000 + 40,000 + 20,000
= ₹ 1,20,000

3. Current ratio = \(\frac{\text { Current assets }}{\text { Current liabilities }}\)
= \(\frac{2,00,000}{1,20,000}\)
= \(\frac{5}{3}\)
= 5 : 3

Question 12.
Current assets of company ₹ 6,00,000 and its Current ratio is 2 : 1. Find Current liabilities.
Solution:
Current ratio = \(\frac{\text { Current assets }}{\text { Current liabilities }}\)
\(\frac{2}{1}=\frac{6,00,000}{\text { Current liabilities }}\)
2 × Current liabilities = 6,00,000 × 1
Current liabilities = \(\frac{6,00,000}{2}\) = ₹ 3,00,000

Question 13.
Current liabilities = ₹ 3,00,000
Working capital = ₹ 8,00,000
Inventory = ₹ 2,00,000
Calculate Quick ratio.
Solution:
Current assets = Current liabilities + Working capital
= 3,00,000 + 8,00,000
= ₹ 11,00,000
Quick assets = Current assets – Inventory
= 11,00,000 – 2,00,000
= ₹ 9,00,000
Quick liability = Current liabilities – Bank O/D = ₹ 3,00,000
Quick ratio = \(\frac{\text { Quick assets }}{\text { Quick liabilities }}\)
= \(\frac{9,00,000}{3,00,000}\)
= \(\frac{3}{1}\)
= 3 : 1

Question 14.
Calculate Gross Profit ratio
Sales = ₹ 2,70,000
Net purchases = ₹ 1,50,000
Sales Ratio = ₹ 20,000
Closing Stock = ₹ 25,000
Operating Stock = ₹ 45,000
Solution:
Net sales = Sales – Sales return
= 2,70,000 – 20,000
= ₹ 2,50,000
Cost of goods sold = Opening stock + Net purchase – Closing stock
= 45,000 + 1,50,000 – 25,000
= ₹ 1,70,000
Gross profit = Net sales – Cost of goods sold
= 2,50,000 – 1,70,000
= ₹ 80,000
Gross Profit ratio = \(\frac{\text { Gross profit }}{\text { Net sales }} \times 100\)
= \(\frac{80,000}{2,50,000} \times 100\)
Gross profit ratio = 32%

Question 15.
Calculate Net Profit ratio from the following:
Sales = ₹ 3,80,000
Cost of goods sold = ₹ 2,60,000
Indirect expense = ₹ 60,000
Solution:
Sales = ₹ 3,80,000
Less: Cost of goods sold = ₹ 2,60,000
Gross profit = ₹ 1,20,000
Less: Indirect expense = ₹ 60,000
Net profit = ₹ 60,000
Net profit ratio = \(\frac{\text { Net profit }}{\text { Sales }} \times 100\)
= \(\frac{60,000}{3,80,000} \times 100\)
= 15.79%

Question 16.
Calculate Operating ratio:
Cost of goods sold = ₹ 3,50,000
Operating expense = ₹ 30,000
Sales = ₹ 5,00,000
Sales return = ₹ 30,000
Solution:
Net sales = Sales – Sales return
= 5,00,000 – 30,000
= ₹ 4,70,000
Operating ratio = \(\frac{\text { Cost of goods sold }+\text { Operating expense }}{\text { Net sales }} \times 100\)
= \(\frac{3,50,000+30,000}{4,70,000} \times 100\)
= \(\frac{3,80,000}{4,70,000} \times 100\)
= 80.85%

Question 17.
Calculate Current ratio.
1. Current assets = ₹ 3,00,000
2. Current liabilities = ₹ 1,00,000
Solution:
Current ratio = \(\frac{\text { Current assets }}{\text { Current liabilities }}\)
= \(\frac{3,00,000}{1,00,000}\)
= \(\frac{3}{1}\)
= 3 : 1

Class 12 Commerce BK Textbook Solutions Digest

• 12th Bk Chapter 1 Practical Problems
• 12th Bk Chapter 2 Practical Problems
• 12th Bk Chapter 3 Practical Problems
• 12th Bk Chapter 4 Practical Problems
• 12th Bk Chapter 5 Practical Problems
• 12th Bk Chapter 6 Practical Problems
• 12th Bk Chapter 7 Practical Problems
• 12th Bk Chapter 8 Practical Problems
• 12th Bk Chapter 9 Practical Problems
• 12th Bk Chapter 10 Practical Problems

Accounts of ‘Not for Profit’ Concerns 12th BK Commerce Chapter 2 Solutions Maharashtra Board

Balbharti Maharashtra State Board 12th Commerce Book Keeping & Accountancy Solutions Chapter 2 Accounts of ‘Not for Profit’ Concerns Textbook Exercise Questions and Answers.

Class 12 Commerce BK Chapter 2 Exercise Solutions

1. Objective Type Questions:

A. Select the most appropriate alternatives from the following and rewrite the sentences:

Question 1.
Not for Profit concern renders ___________ services to public at large.
(a) commercial
(b) social
(c) individual
(d) group
Answer:
(b) social

Question 2.
Donation for Scholarship Fund is ___________
(a) Capital Receipt
(b) Revenue Receipt
(c) Capital Expenditure
(d) Revenue Expenditure
Answer:
(a) Capital Receipt

Question 3.
Income and Expenditure Account is a ___________ Account.
(a) Capital
(b) Real
(c) Personal
(d) Nominal
Answer:
(d) Nominal

Question 4.
Outstanding subscription at the end of the Accounting Year represents ___________
(a) Liability
(b) an Expenditure
(c) an Asset
(d) Capital Fund
Answer:
(c) an Asset

Question 5.
Subscription received in advance during the accounting year is ___________
(a) an Income
(b) an Expense
(c) an Asset
(d) a Liability
Answer:
(d) a Liability

Question 6.
Excess of Income over Expenditure is termed as ___________
(a) Deficit
(b) Profit
(c) Surplus
(d) Loss
Answer:
(c) Surplus

Question 7.
Not for Profit concern prepares ___________ Account instead of Profit and Loss Account to know the result.
(a) Trading
(b) Income and Expenditure
(c) Cash
(d) Receipt and Payments
Answer:
(b) Income and Expenditure

Question 8.
The closing balance of Receipts and Payments Account usually represent ___________
(a) Closing stock
(b) Cash and Bank Balance
(c) Surplus
(d) Deficit
Answer:
(b) Cash and Bank Balance

Question 9.
Not for Profit organization is also called ___________ organization.
(a) service
(b) trading
(c) profit-making
(d) commercial
Answer:
(a) service

Question 10.
Expenditure on Purchase of Building is a ___________ Expenditure.
(a) Capital
(b) Revenue
(c) General
(d) Recurring
Answer:
(a) Capital

B. Write the Word/Phrase/Term, which can substitute each of the following Statements.

Question 1.
The Form of Organization providing services to the society only.
Answer:
Not for Profit concern

Question 2.
An account which is prepared by Not for Profit concern instead of Profit and Loss Account.
Answer:
Income and Expenditure Account

Question 3.
Donations are received for a specific purpose.
Answer:
Specific donation/Capital Receipt

Question 4.
The Receipts are not recurring in nature.
Answer:
Capital Receipt

Question 5.
An Account that records only revenue items in case of Not a for-profit concern.
Answer:
Income and Expenditure Account

Question 6.
Accounts which records only cash transactions in case of Not for Profit concerns.
Answer:
Receipts and Payments Account

Question 7.
The income is earned during the year but not received during the year.
Answer:
Outstanding income

Question 8.
The credit balance of Income and Expenditure Account.
Answer:
Surplus

Question 9.
To excess of total assets over total liabilities of a Not for Profit concern.
Answer:
Capital Fund

Question 10.
All such receipts are non-recurring in nature and not forming a part of a regular flow of income.
Answer:
Capital Receipts

C. State whether the following statements are True or False with reasons.

Question 1.
Not for Profit concerns do not have a profit motive.
Answer:
This statement is True.
Not for profit concerns, the main aim is to give services to its members or to the society at large. They do not carry any Trading activity or Manufacturing activity so there is no question of having a profit motive for ‘Not for Profit’ concerns.

Question 2.
Charitable Institutions prepare Profit and Loss Accounts at the end of every financial year.
Answer:
This statement is False.
Charitable Institutions, Not for Profit concerns, do not undertake any trading activities and hence instead of Profit and Loss Account prepare Income-Expenditure Account to record all revenue expenses/losses and revenue incomes/gains of the current year.

Question 3.
There is no difference between Receipts and Payments Account and Income and Expenditure Account.
Answer:
This statement is False.
In the Receipts and Payments Account, all receipts and payments transactions in cash or through the bank are recorded irrespective of the current year, previous year, or next year while in Income-Expenditure Account, only the current year’s incomes and expenses (Revenue) are recorded.

Question 4.
Income and Expenditure Account represents either surplus or deficit.
Answer:
This statement is True.
In the Income and Expenditure Account, all revenue incomes and expenses are recorded and at the end of the specified period, the difference is found out which is known as ‘Surplus’ (Revenue incomes are more than Revenue expenses) or ‘Deficit’ (Revenue expenses are more than Revenue incomes).

Question 5.
Receipts and Payments Accounts do not have any opening balance.
Answer:
This statement is False.
Receipts and Payments Account is just like a cash book of trading concern and opening balance (Cash or Bank or Cash and Bank) must be there to start recording of transactions.

Question 6.
Not for Profit concerns do not prepare a Balance Sheet.
Answer:
This statement is False.
To know the financial position of the organization, at the end of the particular period, Not for Profit concerns prepare Balance Sheet.

Question 7.
Purchases of Sports Equipments is a Capital Expenditure.
Answer:
This statement is True.
Generally, the life span of sports equipment is more than one year, so the purchase of sports equipment is considered a capital expenditure.

Question 8.
Income and Expenditure Account is a Real Account.
Answer:
This statement is False.
In the Income and Expenditure Account, all the revenue incomes and revenue expenses are recorded and therefore it is a Nominal Account and not a Real Account.

Question 9.
The Receipts and Payments Account contains only the transactions relating to the current year.
Answer:
This statement is False.
In the Receipts and Payments Account, transactions of not only the current year but of the previous year or of the next year are also recorded.

Question 10.
Excess of Assets over liabilities is called Capital Fund.
Answer:
This statement is True.
For ‘Not for Profit’ concerns in the Balance Sheet, when a total of Assets is more than the total of Liabilities, the difference of amount is considered as ‘Capital Fund’.

D. Fill in the blanks.

Question 1.
Not for Profit organization is never engaged in ___________ activities.
Answer:
trading

Question 2.
Not for Profit organization is called ___________ organization.
Answer:
service

Question 3.
Receipts and Payments Account falls under the category of ___________ Account.
Answer:
Real

Question 4.
In Receipts and Payment Account the summary of ___________ transactions are recorded.
Answer:
cash

Question 5.
Income and Expenditure Account is similar to the ___________ Account of Trading concern.
Answer:
Profit and Loss

Question 6.
Credit side of Receipts and Payments Account shows cash ___________
Answer:
payments

Question 7.
Income and Expenditure Account is a ___________ Account.
Answer:
Nominal

Question 8.
Mumbai University prepares ___________ Account instead of a Profit and Loss account.
Answer:
Income and Expenditure

Question 9.
Subscription received from the members is considered as ___________ receipts.
Answer:
revenue

Question 10.
The transactions recorded in the Income and Expenditure Account related only to the ___________ year.
Answer:
current

E. Answer in one sentence only.

Question 1.
What do you mean by ‘Not for Profit’ Concern?
Answer:
A concern or organization which is formed and established to serve its members and society or the general public by undertaking various activities without any profit motive is called a ‘Not for Profit’ concern.

Question 2.
Which organizations prepare Income and Expenditure Account?
Answer:
‘Not for profit’ concern prepares Income and Expenditure Account.

Question 3.
What is Receipts and Payments Account?
Answer:
An account that is prepared by a ‘Not for Profit Concern’ to record a summary of all types of cash receipts and cash payments inclusive of bank transactions is called Receipts and Payments Account.

Question 4.
Why Income and Expenditure Account is prepared?
Answer:
Income and Expenditure Account is prepared to ascertain, whether the concern has sufficient income to meet its expenses, or not.

Question 5.
What is Capital Fund?
Answer:
Excess of Assets over Liabilities is known as Capital Fund which also consists of contributions, subscription, entrance fees, surplus income, etc.

Question 6.
What is a Subscription?
Answer:
Subscription is the periodical payment made by the members to the ‘Not for Profit’ concern for maintaining their membership.

Question 7.
What is ’Legacy’?
Answer:
Any asset, property, or amount of cash which ‘Not for Profit’ concern receives as per the provisions made in the will of the donor after his death is called Legacy.

Question 8.
What is Surplus?
Answer:
Excess of income over expenditure shown by Income and Expenditure Account represents Surplus for the financial year.

Question 9.
What do you mean by Non-recurring Expenses?
Answer:
Non-recurring expenses are the expenses that are made for the acquisition of fixed assets that gives benefits for a long period.

Question 10.
To which account ‘Surplus’ or ‘Deficit’ is transferred?
Answer:
‘Surplus’ or ‘Deficit’ is transferred to the Balance Sheet by adding it or subtracting it from Capital Fund.

F. I. Complete the Table:

Question 1.

Sr. No.	Income (₹)	Expenditure (₹)	Surplus/Deficit (₹)
1	10,000	?	5,000 (Deficit)
2	8,000	?	4,000 (Surplus)
3	?	15,000	8,000 (Surplus)
4	7,500	9,000	?
5	15,000	11,300	?

Solution:

Sr.No.	Income (₹)	Expenditure (₹)	Surplus/Deficit (₹)
1	10,000	15,000	5,000 (Deficit)
2	8,000	4,000	4,000 (Surplus)
3	23,000	15,000	8,000 (Surplus)
4	7,500	9,000	1,500 (Deficit)
5	15,000	11,300	3,700 (Surplus)

II. Salaries paid during the year:

Question 1.

Sr.No.	Total (₹)	Prepaid/Outstanding	₹	Expenditure for the year
1	1,100	Prepaid	100	?
2	2,700	Prepaid	?	2,000
3	8,250	Prepaid	?	6,650
4	1,200	Outstanding	200	?
5	?	Outstanding	600	5,100
6	1,800	Outstanding	?	2,200

Solution:

Sr. No.	Total (₹)	Prepaid/Outstanding	₹	Expenditure for the year
1	1,100	Prepaid	100	1,000
2	2,700	Prepaid	700	2,000
3	8,250	Prepaid	1,600	6,650
4	1,200	Outstanding	200	1,400
5	4,500	Outstanding	600	5,100
6	1,800	Outstanding	400	2,200

III. Rent received during the year:

Question 1.

Sr.No.	Total Received (₹)	Rent Received in Advance/Accrued	₹	Income for the year (₹)
1	1,300	Received in Advance	200	?
2	?	Received in Advance	400	1,400
3	2,650	Received in Advance	?	2,000
4	?	Accrued	290	3,190
5	1,700	Accrued	?	2,150
6	2,600	Accrued	500	?

Solution:

Sr.No.	Total Received (₹)	Rent received in Advance/Accrued	₹	Income for the year (₹)
1	1,300	Received in Advance	200	1,100
2	1,800	Received in Advance	400	1,400
3	2,650	Received in Advance	650	2,000
4	2,900	Accrued	290	3,190
5	1,700	Accrued	450	2,150
6	2,600	Accrued	500	3,100

G. Calculate the following:

Question 1.
10 % p.a. Depreciation on Furniture ₹ 50,000 (for three months)
Solutions:
Depreciation = Cost of Asset × Rate × Period
= 50,000 × \(\frac{10}{100}\) × \(\frac{3}{12}\)
= ₹ 1250 Depr. for 3 months
Thus, Depreciation on furniture @ 10 % on ₹ 50,000 for 3 months = ₹ 1250.

Question 2.
12 % p.a. Interest on Bank loan ₹ 80,000 for 1 year.
Answer:
I = \(\frac{\mathrm{PRN}}{100}\)
= 80,000 × \(\frac{12}{100}\) × 1
= ₹ 9600.
Thus, interest on a Bank loan ₹ 80,000 for 1 year = ₹ 9600.

Question 3.
Opening stock of stationery ₹ 5,000, purchases of stationery ₹ 7000, outstanding stationery bill ₹ 12,000, closing stock ₹ 1000. What is the amount of stationery consumed?
Answer:

Question 4.
Salary ₹ 10,000, outstanding salary ₹ 5,000. Calculate the salary to be debited to the Income and Expenditure Account.
Answer:

Question 5.
Library Books ₹ ……………? Less 10% Depreciation ₹ 5,000 = ₹ 45,000.
Answer:
Library books ₹ 50,000. Less 10% Depreciation ₹ 5,000 = ? 45,000

H. Find odd one:

Question 1.
Trading Account, Profit and Loss Account, Receipts and Payments Account, Balance Sheet.
Answer:
Receipts and Payments Account

Question 2.
Machinery, Furniture, Computers, Salaries.
Answer:
Salaries

Question 3.
Subscription, Stationery, Interest Received, Locker Rent received.
Answer:
Stationery

Question 4.
Reliance Industries, Venna Vidya Mandir, Laxmi Hospital, Manoj Sports club.
Answer:
Reliance Industries

Question 5.
Surplus, Deficit, Net Profit, Capital fund.
Answer:
Net Profit

Practical Problems

Question 1.
Calculation of stationery consumed during the year

Adjustments:
1. ₹ 1,000 outstanding for the stationery bill.
2. Stock of Stationery as of 31 – 03 – 2019 was valued at ₹ 1,800.
With the above information, calculate the amount of Stationery consumed during the year and show its presence in final Accounts of a concern.
Solution:
In the books of ___________________

Balance Sheet as of 31 – 03 – 2019

Question 2.
Presentation of Subscription only

Adjustments:
The outstanding subscription for 2018-19 is ₹ 32,000.
With the above information, present the item Subscription in Income and Expenditure Account for the year ended 31 -03-2019 and Balance Sheet as on the date.
Solution:
In the books of ___________________

Balance Sheet as of 31st March 2019

Working Note:
Outstanding subs, given in the balance sheet as on 01-04-2018 are ₹ 26,000 (for 2016-17) and ₹ 35,000 (for 2017-18). Against that, as shown in Receipt – Payment A/c ₹ 23,000 and ₹ 30,000 are received respectively. Means ₹ 3,000 and ₹ 5,000 are still outstanding which are known in the current year balance sheet.

Question 3.

Adjustments:
Subscription outstanding for the year 2017-18 is ₹ 6,000.
During the previous year subscription received in advance for 2017-18 is ₹ 2,000.
The outstanding subscription of 2016-17 is ₹ 2,500.
With the help of the above information present the item Subscription in Income and Expenditure Account for the year ending 31-03-2018 and Balance Sheet as on that date.
Solution:
In the books of ___________________

Balance Sheet as of 31st March 2018

Question 4.
Preparation of Income and Expenditure Account only
Following is the Receipts and Payments Account of “Satara Sports Club” Satara.
Prepare Income and Expenditure Account for the year ending 31-03-2019.

Adjustments:
1. Outstanding subscription for the current year is ₹ 4,500.
2. Outstanding rent for the current year amounted to ₹ 1,000.
3. Entrance fees are to be treated as Revenue Income.
4. Stock of sports material as of 01-04-2018 ₹ 6,000 and on 31 – 03 – 2019 ₹ 14,000.
Solution:
In the books of ‘Satara Sports Club’ Satara

Working Notes:
1. Entrance fees are to be treated as Revenue income. Therefore entire amount is recorded on the income side.
2. Since the selling price of Furniture ₹ 4,500 is lower than its cost price of ₹ 8,000, there is a Loss in the sale of furniture.
It is calculated as follows:
Loss on sale of furniture = Book value (cost) – Selling price
= 8,000 – 4,500
= ₹ 3,500
It is debited to Income and Expenditure A/c.

Question 5.
“Bhartiya Kala Kendra”, Solapur gives you the following information for the year ended on 31-03-2018. Prepare Income and Expenditure Account for the year ending 31-03-2018.

Additional Information:
1. Legacies are to be capitalized.
2. Outstanding salary ₹ 200.
3. 50% of Entrance fees are to be capitalized.
Solution:
In the books of Bhartiya Kala Kendra, Solapur

Question 6.
Accounts of a Charitable Hospital
From the following particulars relating to “Radha-Krishna Charitable Hospital”, Pune.
Prepare Income and Expenditure Account for the year ending 31-03-2020 and Balance Sheet as of that date.

Additional Information:

Provide Depreciation on Equipments ₹ 1,900 and on Building ₹ 1,500.
Solution:
In the Books of Radha-Krishna Charitable Hospital, Pune

Balance Sheet as of 31st March 2020

Working Notes:
1. To find medicines consumed, here in the opening stock, purchases are added and the closing stock of medicine is subtracted.
2. For equipment, in opening balance, add equipment purchased during the year and subtract depreciation to get the closing balance of equipment.
3. Interest ₹ 10,000 is received on 10% investments means there is no outstanding interest.

Question 7.
From the following transactions of Receipts and Payments Account of “Pavan-putra Hanuman Vyayamshala”, Parbhani and the adjustments are given, you are required to prepare Income and Expenditure Account and Balance Sheet as of 31st March 2019.

Adjustments:
1. There are 500 members paying an annual subscription of ₹ 50 each.
2. Outstanding salary was ₹ 1,200.
3. The Assets on 01-04-2018 were as follows:
Building ₹ 50,000, Furniture ₹ 15,000
4. Provide depreciation on Building and Furniture at 5% and 10% respectively.
5. 50% Entrance fees are to be capitalized.
6. Interest on investment at 5% p.a. has accrued for 6 months.
7. Capital fund ₹ 70,000 on 01-04-2018.
Solution:
In the Books of Pavan-putra Hanuman Vyayamshala, Parbhani

Balance Sheet as of 31st March 2019

Working Notes:
1. Interest on investment is receivable for 6 months:
I = \(\frac{\text { PRN }}{100}\)
= 15,000 × \(\frac{5}{100} \times \frac{6}{12}\)
= ₹ 375 (outstanding interest on investment)
2. 50 % of entrance fees (i.e. \(\frac{6200}{2}\) = ₹ 310o) is to be capitalised means add it to capital fund.
3. Total subscription of current year = 500 members × ₹ 50 = ₹ 25,000
But actual subscription received = ₹ 18,000
means difference (25,000 – 18,000) of ₹ 7,000 is outstanding subscription.

Question 8.
Newly Started Art Circle
“Jeevan Jyoti Art Circle” a newly established concern has presented the following information:

Adjustments:
1. Subscription outstanding for the year was ₹ 5,000.
2. Depreciate Furniture @ 10% p.a.
3. Full amount of admission fees and 50% donations are to be capitalized.
You are required to prepare an Income and Expenditure Account for the year ending 31-03-2018 and a Balance Sheet as of that date.
Solution:

Balance Sheet as of 31st March 2018

Working Notes:
The full amount of admission fees and 50% of donations are added to the surplus amount to get capital funds. (Opening balance of the capital fund is not given.)

Question 9.
Given below is the Receipts and Payments Account of “Vithai Mahila Mandat”, Pandharpur for the year ending 31-03-2018. Prepare an Income and Expenditure Account for the year ended 31-03-2018 and Balance Sheet as of that date.

Adjustments:
1. Capital fund on 01-04-2017 was ₹ 90,000.
2. Outstanding subscription ₹ 4,000.
3. Entrance fees are to be capitalized.
4. Rent paid includes ₹ 800 paid for April 2018.
5. They have the following Assets and Liabilities as of 01-04-2017:
Furniture ₹ 9,000, Building ₹ 70,000, and Outstanding Expenses ₹ 12,000.
Solution:
In the books of Vithai Mahila Mandal, Pandharpur

Balance Sheet as of 31st March 2018

Working Notes:
1. Outstanding subscription of ₹ 4,000 is first added to subscription received on the credit side of Income and Expenditure A/c and then it is shown on the Assets side of Balance Sheet.
2. Entire amount of entrance fees ₹ 3,500 is added to the capital fund.
3. Prepaid ₹ 800 is first deducted from rent paid on the debit side of Income & Expenditure A/c and then shown on the Assets side of the Balance Sheet.
4. Outstanding expenses ₹ 12,000 is directly shown on the Liabilities side of the Balance Sheet.

Question 10.
From the following Receipts and Payments Account “K.B.P. Engineering College”, Nashik for the year ending on 31 – 03 – 2019 and additional information, prepare Income and Expenditure Account for the year ending 31-03-2019 and Balance Sheet as on that date.

Additional Information:

1. 50% of donations are for the Building funds and the balance is to be treated as Revenue income.
2. Outstanding subscription ₹ 5,300.
3. Life membership fees are to capitalize.
Solution:
In the books of K.B.P. Engineering College, Nashik

Balance Sheet as of 31st March 2019

Working Notes:
1. Life membership fees are to be capitalized, which means add the entire amount to the capital fund.

2. 50% of Donations of ₹ 7,00,000 i.e., ₹ 3,50,000 is to be added to the Building Fund, and the remaining amount of donation i.e., ₹ 3,50,000 is credited to Income and Expenditure A/c.

3. The depreciation on Fixed assets is calculated by using the following formula:
Depreciation = Opening balance + Purchases – Closing value
∴ Depreciation on Books = 6,00,000 + 61,000 – 6,00,000
= 6,61,000 – 6,00,000
= ₹ 61,000
∴ Depreciation on Furniture = 3,19,000 + 51,000 – 3,00,000
= 3,70,000 – 3,00,000
= ₹ 70,000

4. Fixed deposit: Opening balance given = ₹ 9,10,000
Fixed deposit (31-03-2019) = ₹ 8,50,000
(Newly purchased)
∴ Total fixed deposits = ₹ 17,50,000

5. Admission Fees ₹ 60,000 are recorded on the credit side of Income and Expenditure A/c because it is taken as Revenue income.

Question 11.
Account of a School
From the following Balance Sheet and Receipts and Payments Account of “New English School”, Barshi, prepare Income and Expenditure Account for the year ending 31 – 03 – 2020 and a Balance Sheet as on that date.


Additional Information:
1. Outstanding salary of ₹ 9,000.
2. Outstanding tuition fees ₹ 15,000.
3. Depreciate library books by ₹ 9,000 and Furniture by ₹ 10,000.
Solution:
In the books of New English School, Barshi

Balance Sheet as of 31st March 2020

Working Notes:
1. Donation (Capital) is added to the Capital fund.
2. Government Grant ₹ 1,20,000 is recorded on the credit side of Income & Expenditure A/c because it is the revenue income of the organization.
3. Outstanding tuition fees ₹ 15,000 and outstanding salary ₹ 9,000 are added to the respective head of Account and then they are shown separately on the Assets side and Liabilities side of the Balance Sheet respectively.

Question 12.
Account of a Library
Following is the Receipts Payments Account of “Dhananjay Library”, Mumbai for the year ending 31-03-2020.

You are required to prepare an Income and Expenditure Account for the year ended 31-03-2020 and a Balance Sheet as of that day.
The following information is also made available to you.
1. On 31 -03-2019, the library had the following Assets also; Books ₹ 50,000, Furniture ₹ 6,500, and Machinery of ₹ 30,000.
2. Subscription received in advance amounted to ₹ 500.
3. Outstanding salaries ₹ 1300 and Rent ₹ 950.
4. 50% of the admission fees should be capitalized.
5. Furniture to be depreciated at 10% p.a.
6. Library books were purchased on 1st April 2019 charge depreciation at 10% p.a.
7. The Investments were purchased on 01-04-2019 and they carry interest at 20% p.a.
Solution:
In the books of Dhananjay Library, Mumbai

Balance Sheet as of 31st March 2020

Working Notes:
1. Opening Balance Sheet is prepared to find out opening capital fund:
Balance Sheet as of 31st March 2019

2. Outstanding expenses of the previous year, paid in the current year so no entry for outstanding expenses (2018-19)

3. Interest on Investment @ 20% on ₹ 6,000 = ₹ 1,200
Interest on Investment received = ₹ 900
Outstanding interest on investment = ₹ 300

4. Depreciation on library books at 10% p.a.
On opening balance of ₹ 50,000 (for whole year) = ₹ 5,000
On purchases on 01-04-2019 (for whole year) = ₹ 500
Total Depreciation = ₹ 5,500

5. Subscriptions received in advance ₹ 500 is deducted from subscription received on the credit side of Income and Expenditure A/c and then subscription received in advance is shown separately on the Liabilities side of Balance Sheet.

6. Outstanding salaries and outstanding rent are added to the respective head of Account on the debit side of the Income & Expenditure Account and both the outstanding items are recorded on the Liabilities side of the Balance Sheet.

Question 13.
Outstanding Expenses and Prepaid Expenses
From the following information supplied to you, prepare Income and Expenditure Account for the year ending 31-03-2020 and Balance Sheet as on that date for “Morya Sports Club”, Thane.
Balance Sheet as on 01-04-2019


Adjustments:
1. Subscription received includes ₹ 3,000 for 2018-19 and outstanding subscription for 2019-20 was ₹ 14,000.
2. On 31-03-2020, the Prepaid insurance premium was ₹ 2,500.
3. Depreciate Furniture by ₹ 3,000.
4. Locker rent outstanding for 2019-20 is ₹ 400.
Answer:
In the books of ‘Morya Sports Club’ Thane

Balance Sheet as of 31st March 2020

Working Notes:
1. Outstanding subscription (2018-19) ₹ 8,000 given in b/s against that ₹ 3,000 received in 2019-20.
Means still receivable subscription = ₹ 5,000 (8,000 – 3,000).

2. Prepaid insurance premium (2018-19) ₹ 2,000 is for the current year. Therefore, in the current year’s insurance premium, ₹ 2,000 is to be added and then subtract the current year’s prepaid insurance premium.

3. Outstanding salary of (2018-19), ₹ 4,000 of the previous year is to be subtracted from current year’s salary.

4. Total amount of donations and entrance fees are to be capitalized so add the entire amount of both the items to Capital fund.

5. Outstanding locker’s rent (2018-19) ₹ 500 is given in the Balance Sheet. It is to be subtracted from the current year’s locker’s rent and then adds the current year’s outstanding locker rent.

Question 14.
Charitable Hospital
Following information has been provided by “Vivekanand Charitable Hospital”, Latur. You are required to prepare an Income and Expenditure Account for the year ending 31-03-2019 and the Balance Sheet as of that date.


Adjustments:
1. On 31-03-2019 stock of drugs was valued at ₹ 22,000.
2. Depreciation on Building at 5% p.a. and on Ambulance ₹ 30,000.
3. Life membership fees are to be capitalized.
Answer:
In the books of Vivekanand Charitable Hospital, Latur

Balance Sheet as of 31st March 2019

Working Notes:
1. Purchase of drugs ₹ 2,00,000 includes ₹ 40,000 of 2017-18 and in the Balance Sheet of 2017-18, the outstanding bill of drugs is ₹ 50,000 given. So, ₹ 10,000 is still outstanding.

2. Consumption of drugs:
Opening stock (2017-18) = ₹ 42,000
Add: Purchase of drugs = ₹ 1,60,000
Total = 1,60,000 + 42,000 = ₹ 2,02,000
Less: Closing stock of drugs = ₹ 22,000
Consumption of drugs = 1,80,000

Class 12 Commerce BK Textbook Solutions Digest

• 12th Bk Chapter 1 Practical Problems
• 12th Bk Chapter 2 Practical Problems
• 12th Bk Chapter 3 Practical Problems
• 12th Bk Chapter 4 Practical Problems
• 12th Bk Chapter 5 Practical Problems
• 12th Bk Chapter 6 Practical Problems
• 12th Bk Chapter 7 Practical Problems
• 12th Bk Chapter 8 Practical Problems
• 12th Bk Chapter 9 Practical Problems
• 12th Bk Chapter 10 Practical Problems

Final Accounts of a Proprietary Concern 11th BK Commerce Chapter 9 Solutions Maharashtra Board

Balbharti Maharashtra State Board Bookkeeping and Accountancy 11th Solutions Chapter 9 Final Accounts of a Proprietary Concern Textbook Exercise Questions and Answers.

Class 11 Commerce BK Chapter 9 Exercise Solutions

1. Answer in One Sentence.

Question 1.
What is Trading Account?
Answer:
An account in which direct expenses are compared with direct incomes to find out gross profit or gross loss for a given period is known as Trading Account.

Question 2.
What do you mean by Profit and Loss Account?
Answer:
An account in which indirect expenses are compared with indirect incomes to find out net profit or net loss for a given period is known as the Profit and Loss Account.

Question 3.
Why Balance Sheet is prepared?
Answer:
The balance sheet is prepared to ascertain the financial position of the business on a specific date usually at the end of the accounting year.

Question 4.
State the meaning of Final Accounts.
Answer:
Final Accounts are the group of Trading Account, Profit and loss account and Balance sheet prepared to know the results of business for a given period.

Question 5.
What is Net Profit?
Answer:
When the total credit side of Profit and Loss A/c is greater than the total of debit side, it indicates credit balance which is known as net profit.

Question 6.
What do you mean by Gross Profit?
Answer:
When the total credit side of Trading A/c is greater than the total of debit side, it indicates credit balance, which is called gross profit.

Question 7.
State the meaning of Accrued Income?
Answer:
Income that is due and accumulated but not yet actually received during the current accounting year is called accrued income.

Question 8.
State the meaning of Outstanding Expenses?
Answer:
The expenses which are incurred in the current year, but not paid partly or fully during the current accounting year are termed as outstanding expenses.

Question 9.
What is Depreciation?
Answer:
Depreciation means a continuous reduction in the value of property or asset due to wear and tear, accident, fall in the market price, the passage of time, etc.

Question 10.
What do you mean by Prepaid Expenses?
Answer:
The expense which is paid in advance before they are due for payment is called prepaid expenses.

2. Give a word, term, or phrase which can substitute each of the following statements:

Question 1.
Expenses are paid before it is due.
Answer:
Prepaid Expenses

Question 2.
Income due but not yet received.
Answer:
Accrued Income

Question 3.
Carriage paid on the sale of goods.
Answer:
Carriage Outwards

Question 4.
Statement of Assets and liabilities.
Answer:
Balance Sheet

Question 5.
Account prepared to know Net Profit or Net loss.
Answer:
Profit and Loss A/c

Question 6.
Value of goods remaining unsold at the end of the year.
Answer:
Closing Stock

Question 7.
The provision was made to compensate the loss on account of likely debts.
Answer:
Provision for Bad and Doubtful Debts

Question 8.
The accounts are prepared at the end of the accounting year to know the profit or loss and financial position of the business.
Answer:
Final Accounts

Question 9.
An amount spent on promoting the sale of goods.
Answer:
Selling Expenses

Question 10.
Additional information is provided below the Trial Balance.
Answer:
Adjustments

3. Select the most appropriate alternatives given below and rewrite the sentence:

Question 1.
_____________ is excess of assets over liabilities.
(a) Goodwill
(b) Capital
(c) Investments
(d) Drawings
Answer:
(b) Capital

Question 2.
Discount earned is transferred to credit side of _____________ account.
(a) Current
(b) Profit and Loss
(c) Trading
(d) Capital
Answer:
(b) Profit and Loss

Question 3.
_____________ is a statement which shows the financial position of business on a specific date.
(a) Trading Account
(b) Trial Balance
(c) Profit and Loss A/c
(d) Balance Sheet
Answer:
(d) Balance Sheet

Question 4.
Outstanding expenses are shown on the _____________ side of Balance sheet.
(a) Assets
(b) Liability
(c) Both
(d) None of these
Answer:
(b) Liability

Question 5.
Interest on Drawing is credited to _____________ Account.
(a) Trading
(b) Profit and Loss
(c) Capital
(d) All
Answer:
(b) Profit and Loss

Question 6.
Debit balance of Trading Account means _____________
(a) Gross Loss
(b) Net Loss
(c) Net Profit
(d) Gross Profit
Answer:
(a) Gross Loss

Question 7.
Carriage Inward is debited to _____________ Account.
(a) Trading
(b) Profit and Loss
(c) Capital
(d) Bank
Answer:
(a) Trading

Question 8.
Excess of credit over to debit in Profit and Loss A/c indicates _____________
(a) Net Profit
(b) Gross Profit
(c) Gross Loss
(d) Net Loss
Answer:
(a) Net Profit

Question 9.
Closing stock is always valued at cost or market price which is _____________
(a) more
(b) less
(c) zero
(d) equal
Answer:
(b) less

Question 10.
When specific date is not given, in that case interest on drawings is charged for _____________ month.
(a) Four
(b) Six
(c) Eight
(d) Nine
Answer:
(b) Six

4. State True or False with reasons:

Question 1.
In every adjustment at least there are three effects.
Answer:
This statement is False.
There are at least two effects in every adjustment of final accounts.

Question 2.
Every item of Trial Balance has only one effect.
Answer:
This statement is True.
Every transaction is recorded through journal or subsidiary books with the principle of the double-entry book-keeping system. Journal and subsidiary books are posted to the ledger account and trial balance is prepared from the balances of the ledger so there are already two effects passed. So every item of Trial Balance has only one effect.

Question 3.
Income due but not received is a liability.
Answer:
This statement is False.
Income due but not received is an Asset and not a liability.

Question 4.
Goodwill is not a fictitious asset.
Answer:
This statement is True.
Goodwill is the reputation or name and fame of a business organization in the market. It is the money value of a business reputation earned by a business. It is an intangible asset.
Fictitious assets are created by accounting entry in the books of accounts it doesn’t have any realizable value.
E.g.: Share issue expenses.

Question 5.
The credit balance of the Profit & Loss account shows a net profit.
Answer:
This statement is True.
The credit side of profit and loss A/c represents incomes when the credit side is greater than the debit side (expenses) it shows the Net Profit of the year.

5. Fill in the blanks:

Question 1.
Gross Profit is transferred to _____________ account.
Answer:
Profit and Loss A/c

Question 2.
Debit Balance of Trading Account indicates _____________
Answer:
Gross Loss

Question 3.
Income Receivable appears on _____________ side of Balance Sheet.
Answer:
Asset

Question 4.
Interest on Bank Loan is debited to _____________ A/c.
Answer:
Profit and Loss A/c

Question 5.
Profit and Loss account is prepared to find out _____________ results of the business.
Answer:
Net Working

Question 6.
All indirect/operating expenses are transferred to _____________ account.
Answer:
Profit and Loss A/c

Question 7.
Interest of proprietor’s drawing is credited to _____________ account.
Answer:
Profit and Loss A/c

Question 8.
An excess of debit over credit in the Profit & Loss A/c represents the _____________
Answer:
Net Loss

Question 9.
All direct expenses are transferred to _____________ account.
Answer:
Trading A/c

Question 10.
Balance Sheet is _____________ of assets & liabilities.
Answer:
Statement

6. Find the odd one:

Question 1.
Rent, Salary, Insurance, Plant, and Machinery.
Answer:
Plant and Machinery

Question 2.
Purchases, Closing stock, Debtors, Factory Rent.
Answer:

Question 3.
Capital, Bills Payable, Debtors, Outstanding wages.
Answer:
Debtors

Question 4.
Advertisement, Travelling Expenses, Factory Rent, Insurance.
Answer:
Factory Rent

Question 5.
Cash in Hand, Debtors, Outstanding Income, Reserve for Doubtful Debts.
Answer:
Reserve for Doubtful Debts

7. Do you agree or disagree with the following statements:

Question 1.
Reserve for bad debts is created by debiting Profit and Loss Account.
Answer:
Agree

Question 2.
A balance Sheet is a statement as well as an account.
Answer:
Disagree

Question 3.
Indirect Expenses are debited to Trading Account.
Answer:
Disagree

Question 4.
Bank Overdraft is treated as an Internal Liability.
Answer:
Disagree

Question 5.
Capital is excess of Liabilities over Assets.
Answer:
Disagree

8. Correct and Rewrite the following statements:

Question 1.
The balancing figure of the Trading Account is Net Profit or Net Loss.
Answer:
The balancing figure of the Trading Account is Gross Profit or Gross Loss.

Question 2.
All direct expenses are debited to the Profit and Loss Account.
Answer:
All direct expenses are debited to Trading Account.

Question 3.
When the credit side of the Profit and Loss Account is greater than the debit side, it is called Net Loss.
Answer:
When the credit side of the Profit and Loss account is greater than the debit side, it is called Net Profit.

Question 4.
Capital A/c……………..Dr.
To Profit and Loss Account
(Being Net Profit transferred to Capital A/c)
Answer:
Profit and Loss Account…………….Dr.
To Capital A/c
(Being Net Profit transferred to Capital A/c)

Question 5.
Trading A/c……………Dr.
To Sales A/c
(Being Sales transferred to Trading A/c)
Answer:
Sales A/c…………Dr
To Trading A/c
(Being sales transferred to Trading A/c)

9. Calculate the following.

Question 1.
Calculate the Capital

Solution:
Capital = Assets – Liabilities
= ₹ 1,00,000 – ₹ 39,950
= ₹ 60,050

Question 2.
The machinery of ₹ 35,500 is purchased on 1st July 2018 and on the same day ₹ 4,500 are spent on the installation of the Machinery. The proprietor has decided to Depreciate Machinery at the rate of 7% p.a. Calculate the amount of depreciation, assuming that accounting year is ending on 31st March every year.
Solution:
Cost of Machinery = Purchase Price + Installation Charges
= 35,500 + 4,500
= ₹ 40,000
Depreciation for 9 months = 40,000 × \(\frac{7}{100} \times \frac{9}{12}\) = ₹ 2,100

Question 3.
Mr. Pramod borrowed a Loan from the State Bank of India ₹ 3,50,000 on 1st Oct. 2018 at the rate of interest of 12% p.a. Calculate the Interest on a bank loan for the year 2018-19, assuming that the financial year-end on 31st March every year.
Solution:
Interest on Bank loan for 6 months = 3,50,000 × \(\frac{12}{100} \times \frac{6}{12}\) = ₹ 21,000

Question 4.
Annual Insurance Premium ₹ 8,000 is paid on 1st Dec 2018. Calculate the amount of Insurance Premium for the accounting year ending on 31st March 2019.
Solution:
Annual Insurance Premium for 12 months = ₹ 8,000
Less: Prepaid for 8 months = ₹ 5,333
Insurance for 4 months (01.12.18 to 31.03.19) = ₹ 2,667

Question 5.
Calculate the Gross Profit/Gross Loss
Purchases A/c ₹ 15,500, Sales A/c ₹ 30,000, Carriage Inward ₹ 1,200, Opening Stock ₹ 5,000, Purchases Returns ₹ 500, Closing Stock ₹ 18,000
Solution:
Cost of Goods Sold = Opening Stock + Purchases – Purchases Returns + Carriage Inward – Closing Stock
= 5,000 + 15,500 – 500 + 1,200 – 18,000
= ₹ 3,200
Gross Profit = Sales – Cost of goods sold
= 30,000 – 3,200
= ₹ 26,800

Practical Problems

Question 1.
From the following Balances of Jayashri Traders, you are required to prepare Trading Account for the year ended 31/03/2019.

Solution:
In the books of Jayashri Traders

Question 2.
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March 2018 from the following balances.
1. Bank charges ₹ 22,000
2. Interest (Cr.) ₹ 16,000
3. Sundry expenses ₹ 42,000
4. Insurance ₹ 35,000
5. Salaries ₹ 40,000
6. Rates and Taxes ₹ 13,000
7. Postage ₹ 8,000
8. Advertisement ₹ 40,000
9. Rent paid ₹ 32,000
10. Bad debts ₹ 10,000
11. Commission (Cr) ₹ 17,500
12. Printing & Stationery ₹ 21,000
13. Loss by fire ₹ 18,000
14. Discount (Dr) ₹ 23,000
15. Discount (Cr) ₹ 37,000
16. Misc. Income ₹ 14,000
17. Depreciation ₹ 34,000
18. Carriage Outwards ₹ 60,000
19. Godown Expenses ₹ 40,000
Note: Gross Profit ₹ 4,07,500
Solution:
In the books of the Sanjay Brothers.

Question 3.
From the following Trial Balance of Sanjiv & Sons. Prepare Trading Account and Profit & Loss Account for the year ending on 31st March 2019 and a Balance Sheet as on that date.

Additional information:
1. Closing stock on 31st March 2019, was at cost ₹ 60,000 and Market Price ₹ 70,000.
2. Outstanding expenses: Wages ₹ 4,000, Salary ₹ 2,400
3. Provide depreciation at 10% on Motor Van and 5% on Furniture.
4. Write off ₹ 2,000 for bad debts and create R.D.D. at 5% on debtors.
5. Provide 10% p.a. interest on capital.
Solution:
In the books of Sanjiv & Sons

Balance Sheet as of 31st March, 2019

Question 4.
From the following Trial Balance of Nandini & Co. as of 31st March 2019. Prepare Final Accounts after considering the adjustments given below.

Adjustments:
1. Closing stock valued at ₹ 1,00,000.
2. Write off ₹ 2,000 as bad debts and create a provision for doubtful debts @ 5% on Sundry Debtor.
3. Depreciate Machinery by 10% p.a. and Loose Tools is valued at ₹ 1,00,000.
4. Charge Interest on Capital @ 2% p.a.
Solution:
In the books of Nandini & Co.

Balance Sheet as of 31st March 2019

Question 5.
Prepare Final accounts of Abdul Traders for the year ending 31st March 2019 with the help of the following Trial Balance and Adjustments.
Trial Balance as of 31st March 2019.

Adjustments:
1. Closing stock valued at ₹ 89,600
2. Outstanding expenses Salaries ₹ 2,000, Wages ₹ 4,000
3. Charge depreciation on Machinery @ 10%
4. Bad debts are written off ₹ 2,000 and create a provision for bad and doubtful debts 5% on Sundry Debtors.
Solution:
In the books of Abdul Traders.


Balance Sheet as of 31st March 2019

Question 6.
Following is the Trial Balance of Geeta Enterprises. You are required to prepare a Trading and Profit & Loss Account for the year ended 31st March 2019 and the Balance Sheet as of that date after taking into account the additional information provided to you.
Trial Balance as of 31st March, 2019

Additional information:
1. Closing stock of goods on 31st March 2019 valued at ₹ 7,100 at cost price and ₹ 7,500/- as market price.
2. Travelling expenses include ₹ 125 spent on personal traveling.
3. ₹ 175 is to be written off as bad debts which were due from Mr. Ashok, a debtor, and 5% R.D.D. is to be maintained on debtors.
4. Reserve for discount on debtors as well as on creditors is to be maintained at 2% and 3% respectively.
5. Provide 10% depreciation on Plant & Machinery and Furniture.
Solution:
In the books of Geeta Enterprises.

Balance Sheet as of 31st March 2019

Question 7.
Following are the closing ledger balances of Deepak & Co. Prepare Trading Account and Profit & Loss Account for the year ended 31st March 2019 and Balance sheet as of that date.
Ledger Balances of Mr. Deepak and Co. as of 31st March, 2019

Adjustments:
1. Closing stock was valued at ₹ 60,000
2. An amount of ₹ 3,000 is still to be received on account of commission.
3. Provision for discount on debtors and Provision for discount on Creditors are to be created 2% and 3% respectively.
4. Amount of Furniture is to reduce by ₹ 4,500 and Building by 10%.
5. Outstanding expenses Salaries ₹ 4,500 and Wages ₹ 1,500.
Solution:
In the books of Deepak & Co.

Balance Sheet as of 31st March 2019

Question 8.
Following is the Trial Balance extracted from the books of Raju Traders. You are required to prepare Trading A/c, Profit & Loss A/c for the year ending on 31st March 2019 and Balance Sheet as of that date after Considering the additional information given below.
Trial Balance as of 31st March 2019

Adjustments:
1. Closing stock is valued at ₹ 40,000 at Cost Price and ₹ 44,000 as Market Price.
2. Provide Depreciation on Plant & Machinery, Furniture, Computers @ 5%, 10%, 15% respectively.
3. Salaries are paid for 10 months only.
4. Further Bad debts amounted to ₹ 400 and provide 10% R.D.D. on Sundry Debtors.
5. Advertisement is paid for 2 years.
Solution:
In the books of Raju Traders.


Balance Sheet as of 31st March 2019

Question 9.
From the following Trial Balance of Shradha Enterprises, you are required to prepare Final Accounts for the year ending on 31st March 2019.
Trial Balance as of 31st March 2019

Adjustments:
1. Insurance is prepaid to the extent of ₹ 2,250
2. Closing stock is valued at ₹ 3,80,000 Cost price and ₹ 4,00,000 as Market price.
3. Outstanding Expenses are Wages ₹ 6,000 and Rent ₹ 5,000
4. Write off further had debts ₹ 1,500 and provide 5% Reserve for doubtful debts.
5. Depreciation on Furniture and Plant & Machinery at 10% p.a. and on Freehold Premises at 15% p.a.
Solution:
In the books of Shradha Enterprises

Balance Sheet as of 31st March 2019

Question 10.
From the following Trial Balance of Ayub & Co. as of 31st March 2019, you are required to prepare Trading Account, Profit and Loss Account for the year ending 31st March 2019, and Balance Sheet as of that date after making necessary adjustments.
Trial Balance as of 31st March 2019

Adjustments:
1. Stock on hand on 31st March 2019 valued at ₹ 60,000
2. Rent amounting to ₹ 600 Prepaid.
3. Bad Debts ₹ 600 and create a Provision for Doubtful Debts 5%
4. Depreciation on Plant & Machinery by 10% and Furniture is valued at ₹ 4,500
5. Outstanding Salaries ₹ 900
Solution:
In the books of Ayub and Co.

Balance Sheet as of 31st March 2019

Question 11.
From the following Trial Balance of Rajnish & Sons and the additional information given below prepare Trading & Profit and Loss Account for the year ending on 31st March 2018 and Balance Sheet as on that date.
Trial Balance as of 31st March 2018

Adjustments:
1. Closing Stock valued at ₹ 3,00,000 cost price and ₹ 3,20,000 at Market price.
2. Salaries were paid for 10 months only.
3. Insurance is paid for one year ending on 30.06.2018
4. One of the debtors Mr. Amit became insolvent, from whom ₹ 10,000 was not received.
5. 5% R.D.D. is to be maintained on Debtors.
6. Depreciate Machinery & Furniture @ 10% and 5% respectively.
Solution:
In the books of Rajnish & Sons


Balance Sheet as of 31st March 2018

Question 12.
From the following Trial Balance of John & Sons, you are required to prepare Trading Account, Profit and Loss Account for the year ending 31st March 2019 and Balance Sheet as of that date.
Trial Balance as of 31st March 2019

Adjustments:
1. Closing Stock ₹ 27,000
2. Charge Depreciation on Machinery and Motor car @ 10% and 5% respectively.
3. Create R.D.D. 5% on Sundry Debtors
4. Interest on Drawings @ 5% p.a.
5. Create Discount on Sundry Creditors 3%
6. Advertisement ₹ 1,000 is prepaid.
7. Outstanding Rent ₹ 1,500
Solution:
In the books of John and Sons

Balance Sheet as of 31st March 2019

Question 13.
From the following Trial Balance of Pushkraj, you are required to prepare Trading Account and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as of that date.
Trial Balance as of 31st March 2019

Adjustments:
1. Stock on 31st March 2019 was valued at ₹ 28,000
2. Create a Provision for doubtful debts on Sundry Debtors @ 5%
3. Depreciate Motor car by 5% p.a. and Machinery by 7% p.a.
4. Outstanding expenses Rent ₹ 800 & Wages ₹ 1,000
5. Charge interest on Capital @ 3% p.a.
6. Goods of ₹ 4,000 withdrawn by the proprietor for personal use.
Solution:
In the books of Pushkraj


Balance Sheet as of 31st March 2019

Question 14.
From the following Trial Balance of Jyoti, Trading Co. Prepare the Trading Account and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as of that date.
Trial Balance as of 31st March 2019

Adjustments:
1. Closing stock valued at ₹ 58,000 Cost Price while the Market price is ₹ 60,000
2. Write off ₹ 1,200 as Bad debts and create provision for doubtful debts 2% on Sundry Debtors and also create provision for discount on Creditors 5%.
3. Loose Tools is valued at ₹ 52,000 and depreciate Furniture by 10% p.a.
4. Outstanding expenses Salary ₹ 1,000 and Wages ₹ 225
5. Charge interest on Capital 2% and on Drawings 10%.
Solution:
In the books of Jyoti Trading Co.

Balance Sheet as of 31st March 2019

Question 15.
From the following Trial Balance of Manish Enterprise, Prepare the Trading Account and Profit and Loss Account for the year ended 31st March 2019 and Balance sheet as of that date.
Trial Balance as of 31st March 2019

Adjustments:
1. Closing Stock was ₹ 32,000.
2. Write off 50% of patents, depreciate Plant & Machinery by 10% p.a and Office Equipment by 20%.
3. Reserve for bad debts is to be created 5% and discount on Debtors 2%.
4. Outstanding expenses Mobile charges ₹ 300 and Freight ₹ 500
5. Charge Interest on Capital @ 5%.
6. Goods of ₹ 2,000 distributed on free samples.
Solution:
In the books of Manish Enterprise

Balance Sheet as of 31st March 2019

Class 11 Commerce BK Textbook Solutions Digest

• 11th Bk Chapter 1 Practical Problems
• 11th Bk Chapter 2 Practical Problems
• 11th Bk Chapter 3 Practical Problems
• 11th Bk Chapter 4 Practical Problems
• 11th Bk Chapter 5 Practical Problems
• 11th Bk Chapter 6 Practical Problems
• 11th Bk Chapter 7 Practical Problems
• 11th Bk Chapter 8 Practical Problems
• 11th Bk Chapter 9 Practical Problems
• 11th Bk Chapter 10 Practical Problems

Meaning and Fundamentals of Double Entry Book-Keeping 11th BK Commerce Chapter 2 Solutions Maharashtra Board

Balbharti Maharashtra State Board Bookkeeping and Accountancy 11th Solutions Chapter 2 Meaning and Fundamentals of Double Entry Book-Keeping Textbook Exercise Questions and Answers.

Class 11 Commerce BK Chapter 2 Exercise Solutions

1. Answer in one sentence only.

Question 1.
What is a Double Entry System?
Answer:
A system of accounting is which double or two-fold effects of every business transaction are recorded systematically in the books of accounts is called a double-entry book-keeping system.

Question 2.
What is an Account?
Answer:
The summarised record of all transactions related to a person, an institution, an income, and expenditure, an asset, a liability, a profit, gain as per the accounting principles is called an account.

Question 3.
State the meaning of the Single Entry System.
Answer:
A book-keeping system in which only one aspect of every business transaction is considered and systematically recorded in the books of accounts and other aspects are completely ignored is called Single Entry System.

Question 4.
What is Personal Account?
Answer:
Account of person or account relating to a person with whom a business keeps dealings is called Personal Account.
e.g. Kishor’s A/c, Bank of India’s A/c.

Question 5.
State the rules of Nominal Account.
Answer:
The rules of Nominal Account state that Debit all expenses or loses and Credit all incomes and gains.

Question 6.
Give two examples of intangible assets.
Answer:
Goodwill and Patents or Trademark are two examples of intangible assets.

Question 7.
State the meaning of Real Account.
Answer:
Account of tangible as well as intangible property or anything owned and possessed by the business is called real account, e.g. Cash A/c.

Question 8.
Give two examples of income and gains.
Answer:
Interest received, Discount earned, sales, etc. are examples of income and gains.

Question 9.
State the rule for Personal Account.
Answer:
The rule of personal account states that Debit the receiver and Credit the giver.

Question 10.
How many methods of recording accounting information are there?
Answer:
The methods of recording accounting information are broadly classified as (i) Indian System and (ii) English System. It is sub-classified as (a) a Single Entry System and (b) a Double Entry System.

2. Write one word/term or phrase which can substitute each of the following statements.

Question 1.
Method of Accounting which records both aspects of the transaction.
Answer:
Double Entry System

Question 2.
The right-hand side of an account.
Answer:
Credit side

Question 3.
Name of the account which is debited when proprietor uses business money for personal use.
Answer:
Drawings A/c

Question 4.
Accounts of Assets and Properties.
Answer:
Real A/c

Question 5.
Accounts of Expenses and Losses and Incomes and Gains.
Answer:
Nominal A/c

Question 6.
The left-hand side of an account.
Answer:
Debit side

Question 7.
The Assets which cannot be seen, touched or felt.
Answer:
Intangible Asset

Question 8.
A person who invented the Double Entry System.
Answer:
Luca D. Bargo Pacioli

Question 9.
Incomplete system of recording business transactions.
Answer:
Single Entry System

Question 10.
A scientific system of recording business transactions.
Answer:
Double Entry system

3. Select the most appropriate alternatives from those given below and rewrite the statements.

Question 1.
International Accounting day is observed on _______________
(a) 10th November
(b) 12th November
(c) 10th December
(d) 15th December
Answer:
(a) 10th November

Question 2.
Conventional system of accounting is _______________
(a) English entry system
(b) Double entry system
(c) Indian System
(d) None of these
Answer:
(c) Indian System

Question 3.
Every debit has corresponding _______________
(a) Debit
(b) Credit
(c) Right hand side
(d) None of these
Answer:
(b) Credit

Question 4.
Radha’s Account is a type of _______________ account.
(a) Nominal
(b) Personal
(c) Real
(d) Expenses
Answer:
(b) Personal

Question 5.
Machinery Account is _______________ account.
(a) Nominal
(b) Income
(c) Personal
(d) Real
Answer:
(d) Real

Question 6.
Goodwill is _______________ asset.
(a) Tangible
(b) Current
(c) an intangible
(d) None of these
Answer:
(c) an intangible

Question 7.
Prepaid expenses is _______________ account.
(a) Real
(b) Personal
(c) Nominal
(d) Income
Answer:
(b) Personal

Question 8.
Debit the receiver, Credit the _______________
(a) Goes out
(b) Giver
(c) Income and gains
(d) Comes in
Answer:
(b) Giver

Question 9.
Debit what comes in, Credit what _______________
(a) Giver
(b) Expenses and losses
(c) Goes out
(d) Income and gains
Answer:
(c) Goes out

Question 10.
Debit all _______________ and Credit all income and gains.
(a) Giver
(b) Expenses and losses
(c) Goes out
(d) None of these
Answer:
(b) Expenses and Losses

4. State whether the following statements are True or False with reasons.

Question 1.
Outstanding expense is a nominal account.
Answer:
This statement is False.
Outstanding expenses are personal accounts. It is a representative personal account. Expenses are payable to some person.

Question 2.
A capital account is a real account.
Answer:
This statement is False.
Capital is a personal account. Amount invested in the business by the proprietor is capital. A proprietor is a natural person.

Question 3.
Every debit has equal and corresponding credit.
Answer:
This statement is True.
Under the Double Entry System, the two-fold effects of each transaction are recorded. Under this system one account is to be debited and another is to be credited with an equal amount.

Question 4.
The discount received is a nominal account.
Answer:
This statement is True.
Discount received in an income for the business. All expenses and income come under the Nominal account.

Question 5.
The drawings account is a nominal account.
Answer:
This statement is False.
The drawing is a Personal account. Drawing means cash on goods withdrawn by the proprietor for personal use. As the proprietor is a Personal account his drawings are also a Personal account.

Question 6.
Outstanding salary is a nominal account.
Answer:
This statement is False.
Outstanding salary is Personal account. Salary is the amount payable to staff. As he is a person, the amount payable to him is a personal account. It is a Representative Personal account.

Question 7.
A loan account is a personal account.
Answer:
This statement is True.
The loan is taken from a person or bank and they are persons either natural or person or artificial persons.

Question 8.
A goodwill account is a real account.
Answer:
This statement is True.
All properties/assets come under real accounts. Goodwill is an intangible asset so goodwill is a Real account.

Question 9.
A discount account is a nominal account.
Answer:
This statement is False.
Trade discount is a noncash transaction it is not recorded in the books of account so it doesn’t fall under any account.

Question 10.
Personal transactions of proprietors are recorded in the books of account of business.
Answer:
This statement is False.
Personal transactions of proprietors are not recorded in the books of account of business. Only business transactions are recorded in the books of account of business as businesses have a separate entity.

Question 11.
A motor car account is a Real Account.
Answer:
This statement is True.
All properties and assets fall under real accounts. Motor car is property so it is a real account.

Question 12.
The rule of a Nominal Account is to Debit the receiver and Credit the giver.
Answer:
This statement is False.
The rule of the Nominal account is to debit all expenses and losses Credit all incomes and gains.

Question 13.
A bank loan account is a Nominal account.
Answer:
This statement is False.
The bank account is a Personal account. It is a representative person.

Question 14.
Assets = Capital + Liabilities
Answer:
This statement is True.
Total assets are always equal to total liabilities. Total liabilities include capital also.
So Assets = Capital + Liabilities.

Question 15.
A Trademark account is a personal account.
Answer:
This statement is False.
Trademark is a real account. All tangible and intangible assets are properties and they fall under real account.

5. Fill in the blanks.

Question 1.
Increase in asset is debited and decrease in asset is _______________
Answer:
Credited

Question 2.
Assets = Liabilities + _______________
Answer:
Capital

Question 3.
Increase in capital is credited and decrease in capital is _______________
Answer:
Debited

Question 4.
Scientific and complete system of recording is known as _______________
Answer:
Double Entry System

Question 5.
Debit all expenses and losses, Credit all _______________
Answer:
Income and Gains

Question 6.
Land and Building account is _______________ account.
Answer:
Real

Question 7.
Cash Book and Personal Accounts are only maintained under _______________ system.
Answer:
Single Entry

Question 8.
Debit what comes in and credit what goes out is the rule of _______________ account.
Answer:
Real

Question 9.
Travelling expenses account is _______________ type of Account.
Answer:
Nominal

Question 10.
Every transaction has _______________ effect.
Answer:
Two Fold

Question 11.
_______________ accounts are accounts of properties and assets.
Answer:
Real

Question 12.
Laptop account is a _______________ account.
Answer:
Real

6. Classify the following accounts under the types of Personal, Real, and Nominal accounts.

Question 1.
Mr. Rohit’s capital A/c
Answer:
Personal Account

Question 2.
Loose Tools A/c
Answer:
Real Account

Question 3.
Drawing A/c
Answer:
Personal Account

Question 4.
Cartage A/c
Answer:
Nominal Account

Question 5.
Prepaid Rent A/c
Answer:
Personal Account

Question 6.
Copyright A/c
Answer:
Real Account

Question 7.
Patent A/c
Answer:
Real Account

Question 8.
Outstanding Income A/c
Answer:
Personal Account

Question 9.
Prepaid Expenses A/c
Answer:
Personal Account

Question 10.
Commission Received A/c
Answer:
Nominal Account

Question 11.
Freight A/c
Answer:
Nominal Account

Question 12.
Plant and Machinery A/c
Answer:
Real Account

Question 13.
Sundry Income A/c
Answer:
Nominal Account

Question 14.
Live Stock A/c
Answer:
Real Account

Question 15.
Goods distributed as free sample A/c
Answer:
Nominal Account

Question 16.
Radhika’s A/c
Answer:
Personal Account

Question 17.
Outstanding Wages A/c
Answer:
Personal Account

Question 18.
Loss on Sale of Furniture A/c
Answer:
Nominal Account

Question 19.
Bank of Maharashtra A/c
Answer:
Personal Account

Question 20.
Loan A/c
Answer:
Personal Account

Question 21.
Computer A/c
Answer:
Real Account

Question 22.
Legal Expenses A/c
Answer:
Nominal Account

Question 23.
Fixed Deposit A/c
Answer:
Real Account

Question 24.
Income Receivable A/c
Answer:
Personal Account

Question 25.
Audit Fees A/c
Answer:
Nominal Account

Question 26.
Trademark A/c
Answer:
Real Account

Question 27.
Loss by fire A/c
Answer:
Nominal Account

Question 28.
Motor Car A/c
Answer:
Real Account

Question 29.
Income tax A/c
Answer:
Personal Account

Question 30.
GST A/c (Goods and Service Tax)
Answer:
Nominal Account

Question 31.
Siddhivinayak Trust A/c
Answer:
Personal Account

Question 32.
Office Equipment A/c
Answer:
Real Account

Question 33.
The stock of Stationery A/c
Answer:
Real Account

Question 34.
Indian Railways A/c
Answer:
Personal Account

Question 35.
Income Received in Advance A/c
Answer:
Personal Account

Question 36.
Dividend on Investment Advance A/c
Answer:
Nominal Account

Question 37.
Discount A/c
Answer:
Nominal Account

Question 38.
Raj & company A/c
Answer:
Personal Account

Question 39.
Repairs A/c
Answer:
Nominal Account

Question 40.
Royalty A/c
Answer:
Nominal Account

7. Complete the following Accounting equation table.

Question 1.

Answer:

Transactions	Assets (₹)	=	Liabilities (₹)	+	Capital (₹)
1. Started business with Cash ₹ 50,000	50,000	=	00	+	50,000
2. Purchased goods of ₹ 10,000	50,000 (+) 10,000 (-) 10,000	=	00	+	50,000
3. Goods stolen ₹ 1,000	50,000 (-) 1,000	=	00	+	50,000 (-) 1,000
4. Sold goods for Cash ₹ 5,000	49,000 (+) 5,000 (-) 5,000	=	00	+	49,000
5. Loan taken from Bank ₹ 7,000	49,000 (+) 7,000	=	00 7,000	+	49,000
Total	56,000	=	7,000	+	49,000

8. Give necessary transactions for the following effect of increase and decrease in Assets, Capital, and Liabilities.

Question 1.

Answer:

1.	Sold goods for Cash ₹ 10,000	Increase in Assets Decrease in Assets
2.	Goods costing ₹ 12,000 Sold for ₹ 15,000	Increase in Capital Decrease in Assets
3.	Paid cash ₹ 8,500 to our creditor Mr. Kishor	Decrease in Liabilities Decrease in Assets
4.	Goods worth ₹ 7,000 stolen from Godown	Decrease in Assets Decrease in Capital

Practical Problems

Question 1.
Prepare a chart showing Analysis of the following transactions in a Tabular form according to the Traditional Approach:
1. Rajasaheb started the business with cash of ₹ 85,000.
2. Goods Purchased for cash ₹ 5,000.
3. Sold goods on credit worth ₹ 6,000 to Ramesh.
4. Cash deposited into Bank of Maharashtra ₹ 12,000.
5. Interest received ₹ 700 from Radhika.
6. Paid Rent ₹ 2,000 to the landlord.
7. Bought goods on credit from Birajmohan ₹ 7,000.
8. Withdrew cash from bank ₹ 1,000 for office use.
9. Purchased computer ₹ 9,000 for cash.
10. Paid Mobile bill (office) ₹ 500.
11. Sold old Mobile ₹ 2,000.
12. Received Rent ₹ 1,000 from the tenant.
Solution:
Table showing analysis of the transactions is given below (Traditional Approach)

Question 2.
Prepare Chart showing Analysis of the following transaction in a Tabular form according to Modern Approach.
1. Mr. Meghraj started the business with cash of ₹ 30,000.
2. Deposited cash into Bank of India ₹ 2,000.
3. Withdrew cash ₹ 1,000 for personal use.
4. Purchased goods on credit from Nilesh ₹ 2,000.
5. Cash purchases ₹ 3,000.
6. Paid Wages ₹ 400.
7. Purchased a chair for office use ₹ 3,200.
8. Sold goods to Mohan worth ₹ 1,200.
9. Withdrew Cash for Office use ₹ 3,000.
10. Sold old furniture ₹ 9,000.
11. Received Dividend of ₹ 1,000.
12. Paid for Printing bill book ₹ 200.
Solution:
Analysis of transactions by applying rules of Debit and Credit (Modern Approach)

Question 3.
Give the accounting equation for the following transactions:
1. Mr. Vaibhav started the business with Cash of ₹ 1,00,000.
2. Purchased goods on credit from Rita Stores ₹ 9,000.
3. Purchased Laptop for office use ₹ 10,000.
4. Sold goods to Rina on credit ₹ 12,000.
5. Received Interest ₹ 2,500.
6. Paid Telephone bill ₹ 1,300.
Solution:
Table showing Accounting equations for the transactions.

Question 4.
Give the accounting equation for the following transactions.
1. Mr. Swaraj commenced business with a Bank balance of ₹ 1,10,000.
2. Purchased Furniture on credit from S.M Furniture Mart ₹ 25,000.
3. Bought goods on credit from Yuvraj ₹ 15,000.
4. Purchased Machinery ₹ 10,000.
5. Paid Electricity bill ₹ 3,500.
6. Goods destroyed by fire ₹ 1,500.
Solution:
Table showing equation for the transactions.

Question 5.
Show accounting equation for the following transactions:
1. Rohit started the business with cash of ₹ 50,000.
2. Bought goods on credit from Manoj ₹ 6,000.
3. Cash purchases ₹ 5,000.
4. Paid wages ₹ 3,000 to Casual labour.
5. Sold goods to Santosh ₹ 7,000 on credit.
6. Received Commission ₹ 1,000 from Vaishali.
Solution:

Class 11 Commerce BK Textbook Solutions Digest

• 11th Bk Chapter 1 Practical Problems
• 11th Bk Chapter 2 Practical Problems
• 11th Bk Chapter 3 Practical Problems
• 11th Bk Chapter 4 Practical Problems
• 11th Bk Chapter 5 Practical Problems
• 11th Bk Chapter 6 Practical Problems
• 11th Bk Chapter 7 Practical Problems
• 11th Bk Chapter 8 Practical Problems
• 11th Bk Chapter 9 Practical Problems
• 11th Bk Chapter 10 Practical Problems

Ledger 11th BK Commerce Chapter 4 Solutions Maharashtra Board

Balbharti Maharashtra State Board Bookkeeping and Accountancy 11th Solutions Chapter 4 Ledger Textbook Exercise Questions and Answers.

Class 11 Commerce BK Chapter 4 Exercise Solutions

1. Answer in one sentence only.

Question 1.
What is Ledger?
Answer:
Ledger is an important book of account in which individual records business transactions with respect to persons, properties, expenses, or losses are maintained.

Question 2.
What is ledger posting?
Answer:
Transferring the entry passed in the journal to the ledger for the individual record is called ledger posting.

Question 3.
When does an account show a nil balance?
Answer:
When the total credit side of an account equals the total of the debit side, such an account shows a nil balance.

Question 4.
What is Folio?
Answer:
Page number of the account opened in the ledger is called Ledger folio.

Question 5.
Where is the statement form of ledger A/c is used in actual practice?
Answer:
The statement form of ledger A/c is used in the banks and financial institutions to prepare the client’s account showing balances of accounts after each transaction is complete.

Question 6.
Why Proprietor’s Capital account is a liability for the business?
Answer:
Capital invested in the business by the proprietor is an asset for the proprietor and liability for the business.

Question 7.
Why does a cash account never shows a credit balance?
Answer:
Available cash with the business is an asset of the business and the account of every asset shows debit, cash account always shows debit balance.

Question 8.
What is ‘Trial Balance’?
Answer:
Trial Balance is an abstract or list of all the ledger accounts as on a specified date showing debit total and the credit total of all the accounts or their net balance.

2. Write the word, term, phrase, which can substitute each of the statements.

Question 1.
Principal Book of accounts.
Answer:
Ledger

Question 2.
Transferring a journal entry to the appropriate accounts in the Ledger.
Answer:
Posting

Question 3.
Page number of Ledger to which an entry is posted.
Answer:
Ledger folio

Question 4.
The process of extracting the balance and inserting it on the lesser side of an account.
Answer:
Balancing

Question 5.
A debit balance to Personal Accounts.
Answer:
Debtor

Question 6.
A credit balance to Bank Account.
Answer:
Bank overdraft

Question 7.
An account to be debited for goods damaged by fire.
Answer:
Loss by fire

Question 8.
A Trial Balance in which only net balances of all ledger accounts are transferred.
Answer:
Net Trial Balance

3. Select appropriate alternatives from those given below and rewrite the sentences.

Question 1.
In case of a credit transaction one of the account must be a ______________ account.
(a) Cash
(b) Credit
(c) Personal
(d) Debit
Answer:
(c) Personal

Question 2.
‘c/d’ indicates ______________ balance.
(a) Opening
(b) Closing
(c) Positive
(d) Negative
Answer:
(b) Closing

Question 3.
______________ Column of ledger is used for writing page number of Journal.
(a) J.F.
(b) L.F.
(c) Date
(d) Particulars
Answer:
(a) J.F.

Question 4.
Debtors Account shows ______________ balance.
(a) Real
(b) Negative
(c) Credit
(d) Debit
Answer:
(d) Debit

Question 5.
______________ is the process of deriving the difference between totals of the debit and credit side of each ledger a/c.
(a) Totalling
(b) Journalizing
(c) Balancing
(d) Posting
Answer:
(c) Balancing

Question 6.
Total of Purchase book is ______________ to Purchase Account.
(a) posted
(b) moved
(c) given
(d) entered
Answer:
(a) posted

Question 7.
Real account always shows ______________ balance.
(a) minimum
(b) maximum
(c) debit
(d) credit
Answer:
(c) debit

Question 8.
______________ is prepared to test arithmetical accuracy of Books of Accounts.
(a) Trial Balance
(b) Ledger
(c) Journal
(d) List
Answer:
(a) Trial Balance

4. State whether the following statements are ‘True or False’ with reasons.

Question 1.
Ledger is a book of Original Entry.
Answer:
This statement is False.
Ledger is a book of Secondary Entry.
Journal is a book of Original Entry: First, all transactions are recorded to journal or subsidiary books, and then they are pasted to the respective ledger accounts.

Question 2.
The process of recording a transaction in the Journal is called Posting.
Answer:
This statement is False.
The process of recording a transaction in the Journal is called Journalising. Posting means transferring journal entries to respective ledger accounts.

Question 3.
A cash withdrawal from business by the trader should be credited to Drawings A/c.
Answer:
This statement is False.
Cash withdrawn from the business by the trader should be debited to Drawing A/c. It is a personal account and as per the golden rules of a personal account Debit the receiver.

Question 4.
Balances of Nominal Accounts are carried forward to the next year.
Answer:
This statement is False.
Balances of Nominal Accounts are transferral to Trading and Profit and loss accounts of the year to find Gross Profit and Net Profit.

Question 5.
When the debit side of an account is greater than the credit side, the account shows a debit balance.
Answer:
This statement is True.
While balancing the ledger account the side which is greater is the balance of that account so when the debit side of an account is greater the account shows debit balances.

Question 6.
The name of an account written on top of each account is called ‘Head of Account’.
Answer:
This statement is True.
There are many ledger accounts in the ledger book. To identity, the name of the account, every account on the Top Head of Account is written.

Question 7.
Agreement of Trial Balance always proves accounting accuracy.
Answer:
This statement is False.
Even though the Trial balance is tally there may be some mistake like the complete omission of transaction or compensatory error so Agreement of Trial Balance does not always prove accounting accuracy.

Question 8.
The trial balance is based on the double-entry principle that for every debit there is an equal amount of corresponding credit.
Answer:
This statement is True.
Trial balance is an extract of ledger balances. Ledger is prepared of journal book which follows the Double Entry System of book-keeping. When both the effects of debit and credit with equal amount is given. The trial balance will be tally.

5. Fill in the blanks.

Question 1.
______________ Balance on Nominal Account shows expenses or loss.
Answer:
debit

Question 2.
Cash account always shows ______________ balance.
Answer:
debit

Question 3.
The right hand side of an account is called ______________ side.
Answer:
credit

Question 4.
Creditors shows ______________ balance.
Answer:
credit

Question 5.
______________ accounts are closed by transferring its balances to Profit and Loss Account.
Answer:
Nominal

Question 6.
‘b/d’ means ______________
Answer:
brought down

Question 7.
Rent paid for the residential quarter will be debited to ______________ account.
Answer:
Drawings

Question 8.
Sold goods of ₹ 24,000 at 20% Profit on cost, the purchase price of the goods is ______________
Answer:
₹ 20,000

6. Complete the following table.

Question 1.

Answer:
Ledger

Question 2.

Answer:
Return outward

Question 3.

Answer:
J.F.

Question 4.

Answer:
Credit balance

Question 5.

Answer:
Nominal A/c

7. Put ‘4’ mark for the nature of balance for the following.

Question 1.


Answer:

Account	Dr. Balance	Cr. Balance
1. Capital A/c		4
2. Goodwill	4
3. Bank Overdraft		4
4. Bills Receivable	4
5. Creditors		4
6. Drawings	4
7. Advertisement	4
8. Prepaid Rent	4
9. Outstanding Salary		4
10. Bad debts	4

Practical Problems

Question 1.
Give Journal entries of the following posting from the ledger account.
In the books of Sopan



Solution:
Journal of Sopan

Question 2.
Prepare necessary Ledger Accounts from the following Subsidiary Books.
Purchase Book

Purchase Return Book

Solution:
In the Ledger of ______________

Question 3.
From the following transactions prepare necessary Ledger Accounts in the Books of Vinay and balance the same.
2019 Jan.
1 Started business with Cash ₹ 10,000
6 Bought goods from Vikas ₹ 3,000
9 Sold goods to Bhushan ₹ 2,400
12 Paid to Vikas on account ₹ 1,600
19 Received on account from Bhushan ₹ 1,000
25 Cash Purchases ₹ 3,600
30 Cash Sales ₹ 5,000
31 Paid Wages ₹ 400
Solution:
In the Ledger of Vinay

Question 4.
Journalise the following transactions and prepare Cash A/c only.
2019 July
1 Hardik started the business with Cash ₹ 15,000 and Machinery ₹ 20,000.
4 Purchased goods for ₹ 9,000 less 10% Cash Discount.
9 Sold goods to Amar ₹ 3,000.
12 Distributed goods worth ₹ 700 as free samples.
14 Bought Stationery for ₹ 550 for office use.
18 Received ₹ 950 from Dhanashree, a customer, whose account was earlier written off as a bad debt.
21 Abhiram invoiced us goods worth ₹ 3,000.
24 Settled Abhiram’s account, he allowed 5% cash discount.
27 Exchanged goods worth ₹ 2,500 against Furniture of the same amount.
29 Withdrawn cash from ATM ₹ 5,000 for office use and ₹ 3,000 for personal use.
Solution:
Journal of Hardik ______________


Ledger of Hardik

Question 5.
Prepare Aparna’s account in the books of Suparna.
2019 Jan.
1 Balance due from Aparna ₹ 60,000
4 Sold goods to Aparna ₹ 15,000 at 10% Trade Discount.
7 Goods returned by Aparna ₹ 1,500 (Gross)
11 Received crossed cheque from Aparna ₹ 50,000
17 Invoiced goods to Aparna ₹ 12,000
25 Sold goods to Aparna in cash ₹ 6,000
30 Received cash from Aparna ₹ 33,000 in full settlement of her account.
Solution:
Ledger of Suparna

Working Notes:
Jan. 4:
Trade discount = 10% on ₹ 15,000
= \(\frac {10}{100}\) × ₹ 15,000
= ₹ 1,500
Net Selling Price = Catalogue price – Trade discount
= 15,000 – 1,500
= ₹ 13,500

Question 6.
Prepare Cash A/c, Bank A/c, Purchases A/c, Sales A/c, and Capital A/c and balance the same in the books of Madanlal.
2019 Aug.
1 Started business with a bank balance of ₹ 40,000.
2 Purchased goods from Aseem worth ₹ 15,000 less 10% Trade Discount.
3 Sold goods to Arun for ₹ 8,000 in cash.
4 Paid Rent ₹ 3,000 and Electricity bill ₹ 500.
5 Purchased 100 Shares of Perfect Technologies for ₹ 55 per share and paid Brokerage ₹ 250 by transfer through net banking.
6 Withdrawal of goods for personal use ₹ 500.
7 Sold goods for cash ₹ 5,000 less 10% Cash Discount.
8 Deposited cash into Bank ₹ 2,000.
9 Paid ₹ 3,000 for daughter’s tuition fees by Debit Card.
10 Purchased a Table for ₹ 2,000.
19 Received ₹ 1,500 by selling the scrap.
27 Paid cash into a bank in excess of ₹ 2,000
Solution:
In the Ledger of Madanlal

Question 7.
Journalise the following transactions; post them into Ledger for February 2019
1 Sunil Started business with a stock of goods ₹ 20,000 and Cash ₹ 1,70,000 out of which ₹ 50,000 borrowed from his friend Kedar @ 10 p.a.
5 Placed an order for goods worth ₹ 7,000 with Mohan for which an advance of ₹ 5,500 was paid.
9 Purchased Stationery for office use ₹ 4,500
12 Goods distributed as free samples ₹ 2,000
17 Paid Freight ₹ 400 on behalf of Mr. Dev.
24 Received Goods from Mohan as per our order dated 5th Feb and settled his account.
27 Bought goods from Shekhar on two months credit for ₹ 7,000 at 20% Trade Discount with instructions to send them to Sagar.
28 Sent to Sagar Outward Invoice for goods supplied by Shekhar, at list price less 10% Trade Discount.
Solution:
Journal of Sunil

Ledger of Sunil

Question 8.
Journalise the following transactions and Prepare ledger accounts in the books of Sanjeev.
2019 June
1 Cash Received from Raju ₹ 10,000 for commission.
3 Intra-state sale to Rakesh ₹ 3,000 and SGST @ 2.5% and CGST @ 2.5% applicable.
5 Received full amount from Rakesh.
8 Intra-state purchases from Mangesh ₹ 2,000 and SGST @ 2.5% and CGST @ 2.5% applicable.
11 Paid the necessary amount to Mangesh.
18 Paid Rent ₹ 2,500
24 Paid mobile bill ₹ 1,000 out of which ₹ 700 for office use and for ₹ 300 for personal use.
Solution:
Journal of Sanjeev


In the Ledger of Sanjeev

Question 9.
The following ledger balances were extracted from the books of Pawan Pawar, Pune as of 1st July 2019.

The following transactions took place during July 2019. Post them into Ledger and prepare Trial Balance as of 31st July 2019.
1 Introduced additional Capital ₹ 40,000
4 Bought goods from Rakesh ₹ 80,000 @ 10% Trade Discount
7 Sold goods to Rashmi ₹ 30,000
9 Returned goods to Rakesh ₹ 20,000 (Gross)
11 Rashmi returned goods to us ₹ 400
14 Paid to Rakesh ₹ 40,000 @ 2% Cash Discount
22 Made purchases ₹ 17,000 and amount paid by cheque
24 Cash Sales ₹ 8,000
27 Bought Stationery ₹ 3,000
28 Received from Rashmi ₹ 39,000 by RTGS and discount allowed ₹ 1000
29 Paid Salary ₹ 10,000
29 Sold goods to Rashmi ₹ 20,000
31 Bought goods from Rakesh ₹ 36,000 and paid by cheque.
Solution:
Ledger of Pawan Pawar, Pune

Trial Balance as of 31st July 2019

Class 11 Commerce BK Textbook Solutions Digest

• 11th Bk Chapter 1 Practical Problems
• 11th Bk Chapter 2 Practical Problems
• 11th Bk Chapter 3 Practical Problems
• 11th Bk Chapter 4 Practical Problems
• 11th Bk Chapter 5 Practical Problems
• 11th Bk Chapter 6 Practical Problems
• 11th Bk Chapter 7 Practical Problems
• 11th Bk Chapter 8 Practical Problems
• 11th Bk Chapter 9 Practical Problems
• 11th Bk Chapter 10 Practical Problems

Reconstitution of Partnership (Retirement of Partner) 12th BK Commerce Chapter 4 Solutions Maharashtra Board

Balbharti Maharashtra State Board 12th Commerce Book Keeping & Accountancy Solutions Chapter 4 Reconstitution of Partnership (Retirement of Partner) Textbook Exercise Questions and Answers.

Class 12 Commerce BK Chapter 4 Exercise Solutions

A. Select the most appropriate alternatives from those given below and rewrite the sentence.

Question 1.
The profit or loss from revaluation on retirement of partner is shared by ______________
(a) the remaining partners
(b) all the partners
(c) only retiring partner
(d) bank
Answer:
(b) all the partners

Question 2.
Descrease in the value of assets should be ______________ to Profit and Loss Adjustment Account.
(a) debited
(b) credited
(c) added
(d) equal
Answer:
(a) debited

Question 3.
The balance of the capital account of retired partner is transferred to his ______________ account if it is not paid.
(a) loan
(b) personal
(c) current
(d) son’s
Answer:
(a) loan

Question 4.
Gain ratio = ______________ Ratio less Old Ratio.
(a) New
(b) Equal
(c) Capital
(d) Sacrifice
Answer:
(a) New

Question 5.
New Ratio = Old Ratio + ______________ Ratio.
(a) Gain
(b) Capital
(c) Sacrifice
(d) Current
Answer:
(a) Gain

Question 6.
Apte, Bhate and Chitale are sharing 1/2, 3/10, and 1/5 if Apte retire their new ratio will be ______________
(a) 5 : 2
(b) 3 : 2
(c) 5 : 3
(d) 2 : 5
Answer:
(b) 3 : 2

B. Write the word, term, phrase, which can substitute each of the following statement.

Question 1.
Credit balance of Profit and Loss Adjustment Account.
Answer:
Profit on Revaluation Accounts

Question 2.
The ratio in which the continuing partners are benefited due to retirement of partner.
Answer:
Gain Ratio

Question 3.
Debit balance of Revaluation Account.
Answer:
Loss on Revaluation

Question 4.
The ratio which is obtained by deducting Old Ratio from New Ratio.
Answer:
Gain Ratio

Question 5.
Money value of business reputation earned by the firm over a number of years.
Answer:
Goodwill

Question 6.
Partner’s Account where Loss or Profit on revaluation is transferred.
Answer:
Capital/Current Account

C. State whether the following statement are true or false with reasons.

Question 1.
Gain ratio means New ratio minus Old ratio.
Answer:
This statement is True.
As per definition, profit sharing ratio which is acquired by the continuing partners from the retiring partner is called gain ratio. If gain ratio added to old ratio we will get New ratio. It means New ratio = Old ratio + Gain ratio by interchanging the terms, we will get Gain ratio = New ratio – Old ratio.

Question 2.
Retiring partner’s share in profit up to the date of his retirement will be debited to Profit and Loss Suspense Account.
Answer:
This statement is True.
If a partner retires from the firm during the accounting year, the profit or loss for the period from the date of last balance sheet to the date of retirement is calculated on the basis of last year’s profit or average profit and it is credited to retiring partner’s capital A/c and for time being it debited to new account called Profit and Loss Expense A/c. This is because final accounts cannot be prepared on any date during the accounting year.

Question 3.
On retirement of a partner, sacrifice ratio is considered.
Answer:
This statement is False.
On retirement of a partner, his share is acquired by continuing partners in certain proportion and it is nothing but gain for them. Therefore, on retirement of a partner instead of sacrifice ratio gain ratio is considered.

Question 4.
Retiring partner is called an outgoing partner.
Answer:
This statement is True.
When a person retires from the firm due to health issues, financial issues or personal reasons then it is known as person retires from the business and for the business, he is an outgoing partner.

Question 5.
On retirement of a partner, remaining partner will share the goodwill in their profit sharing ratio.
Answer:
This statement is False.
On retirement of a partner, after giving retiring, partner’s share in goodwill and if goodwill is written off, then remaining partners will adjust the goodwill in their new profit sharing ratio. (If raised to full extent and written off)

Question 6.
Retiring partner is not entitled to share in general reserve and accumulated profit.
Answer:
This statement is False.
General reserve and accumulated profit are created out of past undistributed profit, such profits are the outcome of hard work of all the partners including retiring partner. Hence, retiring partner’s has right to share general reserve and accumulated profit. He is therefore, entitled to get share in general reserve and accumlated profit.

D. Fill in the blanks and rewrite the following sentence:

Question 1.
New Ratio (less) ______________ = Gain ratio.
Answer:
Old ratio

Question 2.
Retiring partner’s share of goodwill is ______________ to remaining Partner’s Capital Account.
Answer:
debited

Question 3.
Revaluation A/c is also known as ______________ Account.
Answer:
Profit and Loss Adjustment

Question 4.
On retirement, the balance at a Current Account of a partner is transferred to his ______________ Account.
Answer:
Capital

Question 5.
A proportion in which the continuing partners get the share of retiring partner is known as ______________ Ratio.
Answer:
Gain

E. Answer in one sentence.

Question 1.
What is meant by Retirement of a Partner?
Answer:
Retirement of a partner refers to a process in which a partner leaves the firm or severes his relations with other partners on account of his old age, continued ill health, loss of interest in the firm, misunderstanding amongst the partners, etc.

Question 2.
What is Benefit Ratio?
Answer:
Profit sharing ratio which is acquired by the continuing partners on account of retirement or death of a partner is called Benefit Ratio or Gain Ratio.

Question 3.
What is New Ratio?
Answer:
The ratio in which profits or losses are shared by the continuing partners after retirement of a partner is called New Profit Sharing Ratio.

Question 4.
How is the amount due to the retiring partner settled?
Answer:
The amount due to a retiring partner is settled as per the terms of partnership agreement or otherwise mutually agreed upon either in lumpsum or in instalments.

Question 5.
How is Gain Ratio calculated?
Answer:
Gain ratio is calculated at the time of retirement of a partner by deducting old ratio from new ratio.

Question 6.
Why is retiring partner’s capital account credited with goodwill?
Answer:
Goodwill is an intangible assets or benefits accrued to the firm and its benefits are transferred to retiring partner’s Capital A/c by giving credit.

Practical Problems

Question 1.
The Balance Sheet of Mr Mama, Kaka and Mr Baba who shared profits and losses as 4 : 3 : 3 respectively.
Balance Sheet as on 31st March, 2018

Kaka retires on 1st April, 2018 on the following terms.
1. The share of Kaka in Goodwill of the firm is valued at ₹ 2,700.
2. Furniture to be depreciated by 10% and Motor car by 12.5%.
3. Live Stock to be appreciated by 10% and Plant by 20%.
4. A provision of ₹ 2,000 to be made for a claim of compensation.
5. R.D.D. is no longer necessary.
6. The amount payable to Kaka should be transferred to his Loan A/c.
Prepare Profit and Loss Adjustment A/c, Partners’ Capital A/cs and Balance Sheet of the new firm.
Solution:
In the books of Partnership Firm

Balance Sheet as on 1st April, 2018


Working Notes:
1. R.D.D. is no longer require means it is a gain for firm.
2. A provision of ₹ 2,000 to be made for a claim of compensation, ₹ 2,000 is recorded on debit side of Profit and Loss Adjustments A/c and then on liability side of Balance Sheet.
3. Total payable amount to Kaka ₹ 20,175 is recorded as Kaka’s Loan A/c.

Question 2.
The Balance Sheet of Ram, Shyam and Ghanshyam sharing profits and losses in 3 : 2 : 1 respectively and their position on 31-3-19 were as follows:
Balance Sheet as on 31st March, 2019

Ghanshyam retired on 1st April, 2019 on the following terms:
1. Building and Investment to be appreciated by 5% and 10% respectively.
2. Provision for Doubtful Debts to be created at 5% on Debtors.
3. The provision of ₹ 3,000 be made in respect of Outstanding Salary.
4. Goodwill of the firm is valued at ₹ 90,000 and partners decide that goodwill should be written back.
5. The amount payable to the retiring partner be transferred to his Loan A/c.
Prepare: Profit and Loss Adjustment A/c, Partners’ Capital A/c, Balance Sheet of new firm.
Solution:
In the books of Partnership Firm


Balance Sheet as on 1st April, 2019

Working Notes:
1. Provision of ₹ 3,000 for outstanding salary is recorded on debit side of Profit and Loss Adjustment A/c and then on the Liability side of Balance Sheet.
2. Goodwill of the firm is valued at ₹ 90,000 and share of retiring partner in it is ₹ 15,000 (\(\frac{1}{6}\)th part) and it is to be written back means it is to be shared by remaining partners in their profit-loss ratio.

Question 3.
The Balance Sheet of the Anu, Renu and Dinu is as follows, and the partners are sharing profits and losses in the proportion of 2 : 2 : 1 respectively.
Balance Sheet as on 31st March, 2019

Dinu retires from the firms on 1st April, 2019 on the following terms:
1. The assets are to be revalued as : freehold property ₹ 30,000, Machinery ₹ 5,000, Furniture ₹ 12,000, All debtors are good.
2. Goodwill of the firm be valued at thrice the average profit for preceding five years. Profits of the firm for the year.
2014-15 – ₹ 14,500
2015-16 – ₹ 10,500
2016-17 – ₹ 10,000
2017-18 – ₹ 16,000
2018-19 – ₹ 10,000
3. Dinu should be paid ₹ 3,000 by cheque.
4. The Balance of Dinu’s Capital A/c should be kept in the business as loan.
Prepare: Profit and Loss Adjustment A/c, Capital Accounts of Partners, Balance Sheet of the new firm.
Solution:
In the books of Partnership Firm

Balance Sheet as on 1st April 2019

Working Notes:
1. Average profit = \(\frac{\text { Total Profit }}{\text { No. of years }}\)
= \(\frac{1000+10,500+10,000+16,000+10,000}{5}\)
= \(\frac{47,500}{5}\)
= ₹ 9,500
Goodwill = Avg. profit × No. of years
= 9,500 × 3 years
= ₹ 28,500
Goodwill value given in balance sheet = ₹ 30,000
New value arrived at = ₹ 28,500
Loss due to revaluation = ₹ 1,500
To be recorded in P & L Adj. A/c – Dr. Side.
In asset side of Balance sheet, write ₹ 28,500 for Goodwill.

2. Balance of Bank A/c = Opening Balance – Cheque given to Dinu
= 5,000 – 3,000
= ₹ 2,000

Question 4.
Rohan, Rohit and Sachin are partners in a firm sharing profits and losses in the proportion 3 : 1 : 1 respectively. Their balance sheet as on 31st March, 2018 is as shown below:
Balance Sheet as on 31st March, 2018

On 1st April, 2018 Sachin retired and the following adjustments have been agreed upon:
1. Goodwill was revalued on ₹ 50,000.
2. Assets and Liabilities were revalued as follows:
Debtors ₹ 50,000, Live stock ₹ 45,000, Building ₹ 1,25,000, Plant and Machinery ₹ 30,000, Motor truck ₹ 95,000 and Creditors ₹ 30,000.
3. Rohan and Rohit contributed additional capital through Net Banking of ₹ 50,000 and ₹ 25,000 respectively.
4. Balance of Sachin’s Capital Account is transferred to his Loan Account.
Give Journal entries in the books of new firm.
Solution:
Journal entries in the books of Partnership Firm

Working Notes:
1. Calculation of Profit on Revaluation of Assets and Liabilities.

Question 5.
Shah, Lodha and Dhole were partners sharing profits and losses in the ratio of 4 : 3 : 3. Their Balance Sheet as on 31st March, 2019 is given below:
Balance Sheet as on 31st March, 2019

On 1st April, 2019 Mr. Lodha retired from the firm on the following terms:
1. Goodwill is to be valued at an average profits and losses of the last five years which were as follows:
Year – Profit/Loss
2015 – ₹ 35,000
2016 – ₹ 20,000
2017 – ₹ 30,000
2018 – ₹ 20,000
2019 – ₹ 25,000
2. Computers to be depreciated by 10%.
3. Furniture to be revalued at ₹ 27,500.
4. Vehicles appreciated by 20%.
5. R.D.D. was no longer necessary.
6. Shah and Dhole will share the future profits and losses in the ratio of 2 : 1.
7. It was decided that goodwill should not appear in the books of a new firm and amount payable to Lodha is to be transferred to his Loan A/c.
Prepare: Profit and Loss Adjustment A/c, Partners’ Capital Accounts, Balance Sheet of new firm.
Solution:
In the books of Partnership Firm

Balance Sheet as on 1st April 2019

Working Note:
Average profit = \(\frac{\text { Total Profit }}{\text { No. of Years }}\)
= \(\frac{35,000+20,000+30,000+20,000+25,000}{5}\)
= \(\frac{1,30,000}{5}\)
= ₹ 26,000
∴ Goodwill = ₹ 26,000
Goodwill should not appear in the books of accounts.
Therefore, ₹ 26,000 credited in Partners’ Capital Account in partners’ old profit and loss ratio. ₹ 26,000 will be debited in Partners’ Capital Account in partners’ new profit-loss ratio.

Class 12 Commerce BK Textbook Solutions Digest

• 12th Bk Chapter 1 Practical Problems
• 12th Bk Chapter 2 Practical Problems
• 12th Bk Chapter 3 Practical Problems
• 12th Bk Chapter 4 Practical Problems
• 12th Bk Chapter 5 Practical Problems
• 12th Bk Chapter 6 Practical Problems
• 12th Bk Chapter 7 Practical Problems
• 12th Bk Chapter 8 Practical Problems
• 12th Bk Chapter 9 Practical Problems
• 12th Bk Chapter 10 Practical Problems

Psychology Class 11 Chapter 8 Memory Question Answers Maharashtra Board

Balbharti Maharashtra State Board Class 11 Psychology Solutions Chapter 8 Memory Textbook Exercise Questions and Answers.

Memory Class 11 Psychology Chapter 8 Questions and Answers

1A. Complete the following statements.

Question 1.
One of the important processes for storage of information in the LTM is _____________
a. perception
b. elaborative rehearsal
c. encoding
Answer:
b. elaborative rehearsal

Question 2.
Memory is a/an _____________
a. activity
b. process
c. performance
Answer:
b. process

Question 3.
_____________ memory has the shortest duration.
a. Sensory
b. Short Term
c. Long Term
Answer:
c. Long Term

Question 4.
_____________ memory is also known as Working Memory.
a. Long Term
b. Accidental
c. Short Term
Answer:
c. Short Term

Question 5.
_____________ memory has unlimited capacity.
a. Sensory
b. Short Term
c. Long Term
Answer:
a. Sensory

Question 6.
The span of Short-Term Memory is _____________
a. 5+/-2
b. 7+/-2
c. 9+/-2
Answer:
b. 7+/-2

1B. State whether the following statements are true or false. If false, correct them. If true, explain why.

Question 1.
Our sense organs also have memory.
Answer:
True
Explanation: Our sense organs have the capacity to retain the sensory impression received through the five senses for a very short time even after the source stimulus is withdrawn. It is known as sensory memory.

Question 2.
Short-term memory has an unlimited capacity.
Answer:
False
Reason: STM holds the information between 15 to 30 seconds and the capacity of STM is about seven items at a time. Fleece, has limited capacity.

Question 3.
Conscious memory of facts and events is called explicit memory.
Answer:
True
Explanation: Explicit memory is a type of LTM that contains conscious memories of facts and events.

Question 4.
Implicit memory is the memory of skills.
Answer:
True
Explanation: Implicit memory is the unconscious memory of skills and how we do things, regarding the use of objects or movements of the body.

Question 5.
When we memorize meanings, concepts, and principles, it is called episodic memory.
Answer:
False
Reason: Episodic memory is a memory of experiences and specific events which we recall step by step to reconstruct actual events.

Question 6.
The method of relearning is also known as the saving method.
Answer:
True
Explanation: In relearning method, there is a saving of time taken to learn the same material. Fleece, this method is also known as the saving method.

Question 7.
The most vivid memory is flashbulb memory.
Answer:
True
Explanation: Flashbulb memories are vivid memories of what we were doing at the time of an emotion-provoking event.

1C. Identify the odd item from the following.

Question 1.
Encoding, Storage, Tip of the tongue (TOT), Retrieval
Answer:
Tip of the tongue (TOT)

Question 2.
Keyword method, Method of Loci, Chunking, Rote learning, First letter technique
Answer:
Rote learning

Question 3.
Sensory register, STM, Flashbulb memory, LTM
Answer:
Sensory register

Question 4.
Recall, Recognition, Relearning, Trace decay
Answer:
Trace decay

1D. Match the following pairs.

Question 1.

A	B
1. A technique to improve memory	a. Short-term memory
2. The most vivid memory	b. Declarative memory
3. Working memory	c. Implicit memory
4. Most organized memory	d. Flashbulb memory
5. Playing the harmonium after a long time	e. Method of Loci
6. Writing an essay on perceptual process	f. LTM
	g. Recall method
	h. Relearning method

Answer:

A	B
1. A technique to improve memory	e. Method of Loci
2. The most vivid memory	d. Flashbulb memory
3. Working memory	a. Short-term memory
4. Most organized memory	f. LTM
5. Playing the harmonium after a long time	c. Implicit memory
6. Writing an essay on perceptual process	g. Recall method

2. Answer the following questions in around 35-40 words each.

Question 1.
Explain any one example of Flashbulb memory from your life.
Answer:

• I clearly remember the day when my grandmother passed away.
• On that day, I had an omelet for breakfast and went to college around 10.30 a.m. I attended only two lectures and then received a call about this bad news. After that, my best friend accompanied me home.

Question 2.
Explain the model of working memory proposed by Baddeley.
Answer:

• Baddeley called STM a working bench of memory.
• In the working memory model given by him, a central executive is responsible for the coordination between sub-systems of the phonological loop, episodic buffer, and the visuospatial sketchpad.
• Both phonological loop and visuospatial sketchpad have two components.

Question 3.
Explain the Tip of the tongue (TOT) phenomenon with an example.
Answer:

• Sometimes, when we search through our library of experiences to retrieve information from LTM, we cannot recall it even when we have that information on the tip of the tongue.
• e.g. you want to recall the name of your cousin’s favourite clothing brand. Instead of that name, you recall all similar names.

Question 4.
Give an example of episodic memory.
Answer:

• I remember a four-day-long celebration of my sister’s wedding.
• It started with Haldi followed by Mehendi and the sangeet ceremony. After that, there was a grand wedding followed by a reception ceremony.
• I also remember all preparations, outfits that I wore, and the food that we had in those four days.

Question 5.
What is motivated forgetting?
Answer:

• Motivated forgetting is a behaviour in which people may forget unwanted memories either consciously or unconsciously.
• It is also called a conscious coping strategy but it should not be confused with defense mechanisms.
• There are two levels of motivated forgetting, viz. Repression and Thought suppression.

3. Compare and contrast.

Question 1.
STM and LTM
Answer:

• Only the significant sensory inputs enter the Short-Term Memory (STM) through maintenance rehearsal. On the other hand, some items in STM enter the Long-Term Memory (LTM) after elaborative rehearsal which makes information meaningful and connects the same with already existing information in the LTM.
• STM holds the information between 15 to 30 seconds and the capacity of STM is about seven items at a time. Conversely, once information enters LTM, it is retained more or less permanently and the amount of information stored in LTM is unlimited.

Question 2.
Implicit Memory and Explicit Memory
Answer:

• Implicit memory is the unconscious memory of skills and how we do things while explicit memory is conscious memory of facts and events.
• Implicit memory is also known as procedural memory while explicit memory is also known as declarative memory.

Question 3.
Semantic memory and Episodic memory
Answer:

• Semantic memory is a more structured record of facts, meanings, concepts, and knowledge. On the other hand, episodic memory is a memory of experiences and specific events which we recall step by step to reconstruct the actual events.
• Semantic memories have personal context which includes vocabulary, mathematics, rules of logic while episodic memory is the memory of autobiographical events with times, places, and associated emotions.

Question 4.
Storage failure and Retrieval failure
Answer:

• In case of storage, failure acquired and encoded information is not stored properly while in case of retrieval failure, problems arise while recalling the stored information for its actual use.
• Both storage failure and retrieval failure make it difficult to use the retained information in the future.

Question 5.
Recall method and Recognition method
Answer:

• The recall method involves remembering a fact, event, or object that is not currently physically present and requires the direct uncovering of information from memory, (e.g. long essay-type answers). In the recognition method, already learned material is present and the learner has to recognize it. (e.g. MCQs).
• Recognition is relatively easier than recall. So, a score of memory by recognition method is usually more than the recall method.

4. What will you do if…

Question 1.
You have to prepare a long speech covering all the activities in your college and present at the annual function
Answer:

• I will make a list of all the activities and rehearse it a number of times so as to ensure better retention.
• I may also make a note with all points in brief which I can refer to if I forget something in the middle of a speech.

Question 2.
How will you apply ‘POWER’ to prepare for the final exam of Psychology?
Answer:

• Prepare: Before starting to study, I would prepare myself for it by setting goals. I will make myself aware of why am I studying Psychology, e.g. for acquiring good marks in the final exam.
• Organize: I will organize the study material properly and make a schedule for each chapter. I will allot less time for chapters that are easy and familiar. I may study these chapters when I am a bit tired. Conversely, I will allot more hours to chapters that are unfamiliar, complicated, or technical. I will also ensure to study these complex chapters when I am fresh.
• Work: I know that I have to work hard to achieve the goal of acquiring good marks. So, I will learn with the motive to understand and remember. I will try to associate new information with something that I have already learned.
• Evaluate: I will try to evaluate my progress by solving practice papers. It will enable me to know how much I have learned and the quality of my knowledge.
• Rethink: I will reanalyze, review, question, and challenge myself. I will also rethink whether I need to change my method of studying so as to achieve the goal of acquiring good marks in the final exam.

5. Short Notes.

Question 1.
Characteristics of Memory
Answer:

• Memory is an ability by which information is encoded, stored, and retrieved when needed.
• Three basic processes or characteristics of memory are Acquisition, Storage, and Retrieval.
• The acquisition is the process of acquiring information from our sense organs. The information acquired and encoded is stored over a period of time. In retrieval, the stored information is recalled for the purpose of its actual use.
• There are three stages of memory, viz. Sensory information store, short-term memory, and long-term memory.

Question 2.
Techniques to improve memory
Answer:
Some techniques to improve memory are as follows:

• Keyword method: In the keyword method, any two different pieces of information can be linked together. It is an effective method for remembering definitions and learning foreign language vocabulary.
• Encoding specificity: According to encoding specificity, memory is improved when information is available while learning is also available at the time to recall.
• Method of loci: It involves creating an imaginary route so that things can be remembered in a better way. e.g. steps to solve mathematical problems.
• Mnemonic devices: Mnemonics will include acronyms or first letter techniques (e.g. VIBGYOR includes colours of the rainbow). It will also include visualization. Another technique is chunking where one can place large information into small chunks.
• Practice and rehearsal: Relearning the same material a number of times lead to better retention and better recall. For small size or easy material, it is effective to optimally utilize our time and learn the entire material. For large size or difficult material, we must take breaks and learn the material in parts.
• Minimizing interference: We should not learn similar subjects together as they might interfere with each other. Also, one must take a rest for minimising such interference.
• POWER method: One can also use the POWER method for improving memory. Here, P stands for Preparation, 0 stands for Organisation, W stands for Work, E stands for Evaluation and R stands for Rethinking.

Question 3.
Motivated forgetting
Answer:

• Motivated forgetting is a behaviour in which people may forget unwanted memories either consciously or unconsciously.
• It is also called a conscious coping strategy but it should not be confused with defense mechanisms.
• There are two levels of motivated forgetting, viz. Repression and Thought suppression.
• Repression: Sigmund Freud’s Psychoanalytic model states that we subconsciously push unwanted thoughts and memories into our unconsciousness. People think that such repressed memories are completely forgotten.
• e.g. a girl who had experienced sexual abuse during childhood may completely forget about it. But she may have difficulty while forming a romantic relationship.
• Thought suppression: It is a conscious effort where we forget the memories of unwanted incidents and experiences of our lives, e.g. a person will avoid talking about his breakup.
• Thought suppression can be time-consuming and also quite difficult as such suppressed thoughts tend to reoccur, e.g. a person may try to suppress the thoughts about his ex but he may not be successful in doing so.

Question 4.
Causes of forgetting
Answer:

• Trace decay: Our memories fade out when we don’t use them for a longer period, i.e., traces of memory get decayed over time if they are not used.
• Trace distortion: Some researchers believe that memory traces are not decayed but are distorted over a period of time and forgetting occurs.
• Interference: Some researchers believe that we forget when materials that we learn one after the other interfere with each other. There are two types of interference, viz. retroactive interference and proactive interference.
• Motivated forgetting: It is a behaviour in which people may forget unwanted memories either consciously or unconsciously. There are two levels of motivated forgetting, viz. Repression and Thought suppression.

6. Answer the following questions in 150-200 words.

Question 1.
Explain the process of human memory in detail.
Answer:

• Memory is an ability by which information is encoded, stored, and retrieved when needed.
• The basic processes of memory include acquisition (encoding), storage, and retrieval.
  
• Acquisition/Encoding: Acquisition is the process of acquiring information from sense organs. Encoding is the process of transforming the information received into suitable symbols like pictures, figures, words, numbers.
• Storage: The information acquired and encoded is preserved over a period of time. The process of storage is essential for using that information in the future.
• Retrieval: It is the process of recalling the stored information for the purpose of its actual use. We tend to retrieve mobile numbers, names, etc. in our daily life.
• We can think of these processes as analogous to the functions of a computer.

Question 2.
Explain the theories of forgetting in detail.
Answer:

• Forgetting is the failure to retrieve the material from our long-term memory which we had already stored.
• Researchers have put forward various theories of forgetting. Each theory highlights different reasons behind forgetting.
• The various theories of forgetting are: Trace decay theory, Trace distortion theory, and Interference theory.
  • Trace decay: Our memories fade out when we don’t use them for a longer period, i.e., traces of memory get decayed over time if they are not used.
  • Trace distortion: Some researchers believe that memory traces are not decayed but are distorted over a period of time and forgetting occurs.
  • Interference: Some researchers believe that we forget when materials that we learn one after the other interfere with each other. There are two types of interference, viz. retroactive interference and proactive interference.

7. Arrange the following elements in concepts of memory in ascending order.

Question 1.
Elaborative rehearsal, Short Term Memory, Receiving information from the environment, Long Term Memory, Retrieval
Answer:

• Receiving information from the environment
• Short Term Memory
• Elaborative rehearsal
• Long Term Memory
• Retrieval

Activities

Activity 1 (Textbook Page No. 87)

Do you remember your first picnic at your school? Do you remember your primary school teacher? Now can you remember what food you ate last Monday? Why you can remember some incidents from the past clearly while you cannot remember some things which happened yesterday?
Answer:
We remember some incidents from the past clearly when they are a part of our long-term memory. Similarly, we cannot remember certain incidents from the recent past whey they form a part of our sensory or short-term memory.

Activity 2 (Textbook Page No. 87)

Why does this happen? 25 workers used to work in Thomas Edison’s Bulb and Phonogram unit of industries. There was a huge tree near his company. After 6 months, Edison asked his workers about the huge tree but not a single worker could give information about that tree. Why do you think this happened despite seeing the tree every day?
Answer:
I feel the none of the workers could give information about the tree near their company since it was a part of their sensory memory, i.e., they perceived the stimulus (tree) with sense organs but did not rehearse it enough for it to become a part of their long term memory.

Class 11 Psychology Textbook Solutions Digest

• Psychology Class 11 Chapter 1 Question Answers
• Psychology Class 11 Chapter 2 Question Answers
• Psychology Class 11 Chapter 3 Question Answers
• Psychology Class 11 Chapter 4 Question Answers
• Psychology Class 11 Chapter 5 Question Answers
• Psychology Class 11 Chapter 6 Question Answers
• Psychology Class 11 Chapter 7 Question Answers
• Psychology Class 11 Chapter 8 Question Answers

Psychology Class 11 Chapter 7 Nervous System Question Answers Maharashtra Board

Balbharti Maharashtra State Board Class 11 Psychology Solutions Chapter 7 Nervous System Textbook Exercise Questions and Answers.

Nervous System Class 11 Psychology Chapter 7 Questions and Answers

1A. Complete the following statements with appropriate options.

Question 1.
Brain is a part of _________ nervous system.
a. central
b. peripheral
c. somatic
Answer:
a. central

Question 2.
_________ are the building blocks of the nervous system.
a. Cells
b. Neurons
c. Tissues
Answer:
b. Neurons

Question 3.
_________ nervous system prepares us for the fight or flight responses.
a. Somatic
b. Parasympathetic
c. Sympathetic
Answer:
c. Sympathetic

Question 4.
The gap between two neurons is called _________
a. synapse
b. joint
c. vacuum
Answer:
a. synapse

1B. Match the following pairs.

Question 1.

A	B
1. Thyroxin	a. Pituitary
2. Epinephrine	b. Parathyroid
3. Parathormone	c. Thyroid
4. Androgen	d. Adrenal gland
5. Somatotropin hormones	e. Salivary gland
	f. Sex glands

Answer:

A	B
1. Thyroxin	c. Thyroid
2. Epinephrine	d. Adrenal gland
3. Parathormone	b. Parathyroid
4. Androgen	f. Sex glands
5. Somatotropin hormones	a. Pituitary

1C. Identify the odd item following series of words.

Question 1.
The frontal lobe, Parietal lobe, Thalamus, Occipital lobe
Answer:
Thalamus

Question 2.
Dopamine, Serotonin, Norepinephrine, Uric acid, GABA
Answer:
Uric acid

Question 3.
Dendrite, Nucleus, Tectum, Axon, Synapse
Answer:
Tectum

Question 4.
Knee jerk, Sneezing, Thinking, Blinking of eyes
Answer:
Thinking

Question 5.
Thyroid, Sweat glands, Adrenal gland, Gonads, Pituitary gland
Answer:
Sweat glands

1D. Identify which hormones with hyposecretion or hypersecretion would lead to the following conditions.

Question 1.
Abnormal height, gigantism
Answer:
Hypersecretion – Somatotropin

Question 2.
Hyperactivity, speedy metabolism.
Answer:
Hypersecretion – Thyroxin

Question 3.
Cretinism
Answer:
Hyposecretion – Thyroxin

Question 4.
Stunted growth, dwarfism
Answer:
Hyposecretion – Somatotropin

Question 5.
Myxedema, fatigue, sluggishness, depression
Answer:
Hyposecretion – Thyroxin

Question 6.
Increased appetite, overactivity, restlessness, lack of concentration
Answer:
Hyposecretion – Insulin, and glycogen

2. Which part of the brain is involved in processing the following information?

Question 1.
Smelling a flower
Answer:
Occipital lobe

Question 2.
Maintaining balance while standing upright
Answer:
Cerebellum

Question 3.
Comprehending a speech
Answer:
Temporal Lobe

Question 4.
Memorizing a childhood experience
Answer:
Frontal lobe

Question 5.
Feeling touch
Answer:
Parietal lobe

Question 6.
Seeing a picture
Answer:
Occipital lobe

Question 7.
Feeling hungry
Answer:
Hypothalamus

Question 8.
Feeling afraid
Answer:
Amygdala

3. Answer the following questions in 35 to 40 words.

Question 1.
Explain the functions of the hypothalamus.
Answer:

• Hypothalamus controls major bodily needs i.e., primary needs of an individual like hunger, thirst, sex as well as temperature regulation, and sleep.
• It is also called the pleasure center of our body.

Question 2.
Describe the functions of each of the four lobes.
Answer:

• Frontal lobe: It controls motor actions, thinking, memory and reasoning. It has Broca’s area which helps in speech production.
• Parietal lobe: It helps in understanding information regarding skin-like touch, pressure, pain, and temperature.
• Occipital lobe: It is the visual processing center. It controls the sense of hearing, smell, and taste. It has Wernicke’s area which helps in language understanding.
• Temporal Lobe: Hearing, understanding language, memory for language take place because of the temporal lobe.

Question 3.
Explain the functions of the Amygdala and Hippocampus.
Answer:

• Amygdala: It stores emotional memories of experiences. We experience emotions, especially fear due to the amygdala.
• Hippocampus: It is the storage of long-term memories. If a person gets Alzheimer’s disease, his hippocampus is. mainly affected.

Question 4.
What is a synapse? How does a nerve impulse travel from one to another neuron?
Answer:

• A synapse is a gap between two neurons.
• The nerve impulse or neural message jumps across the synapse in order to reach the dendrite of another neuron.
• When the neural message is passing through, it excites or inhibits the neurotransmitter in it. This chemical reaction decides our reaction to various situations.

Question 5.
Which are the important parts of the hindbrain? Explain their functions.
Answer:
Important parts of the hindbrain and their functions are as follows:

• Cerebellum: It helps in maintaining body posture and body balance. It also helps in the coordination of the movements.
• Brain stem: Medulla oblongata controls the breathing rate, pulse rate, blood pressure, and digestion. Pons sends and receives information from the lower parts of the brain. It helps to transmit messages between the cerebellum and cortex.
• Reticular activation system: Its main function is to maintain wakefulness, concentration, and alertness.

Question 6.
How do endocrine glands affect our behaviour?
Answer:

• Endocrine glands secrete chemical substances called hormones.
• Hormones are like messengers that are responsible for certain behaviours or the absence of reactions.
• e.g. Thyroid gland secretes the thyroxin hormone. Its hypersecretion leads to Grave’s disease while hyposecretion results in cretinism or myxedema.

4. Write short notes.

Question 1.
Autonomic Nervous System
Answer:

• The autonomic nervous system controls the internal activities of the human body including heart rate, breathing, digestion, disposal of waste products, and toxins.
• It is divided into the sympathetic and parasympathetic nervous systems.
• The sympathetic nervous system prepares our body to face stressful and threatening situations. It prepares us for a ‘flight or fight reaction. The job of the system is just opposite to its name.
• The parasympathetic nervous system takes over when the situation becomes normal. It directs our body to store energy for emergencies.

Question 2.
Limbic System
Answer:
One of the important parts of the brain is the limbic system.

• Hippocampus, amygdala, thalamus, and hypothalamus are parts of the limbic system.
• Hippocampus is responsible for the storage of long-term memories.
• Amygdala stores emotional memories of our experiences.
• Thalamus is called a relay station of the brain. It receives all information from the body and sends it to various parts of the brain.
• Hypothalamus controls major bodily needs like hunger, thirst, sex as well as temperature regulation, and sleep.

Question 3.
Neurotransmitters
Answer:
Neurotransmitters are chemical messengers. The important neurotransmitters are:

• Acetylcholine: It is a chemical released by motor neurons of the nervous system to activate muscles.
• Dopamine: It is released by the brain. If the level of dopamine is normal, we experience happy, pleasant feelings. It also plays an important role in the motivational process.
• Norepinephrine: It increases the force of skeletal muscles, especially during fight or flight response.
• Serotonin: It plays a role mainly in cognition, reward, learning, and memory. It also controls wakefulness, sleep, hunger, thirst, and liking.
• Glutamate: It helps in learning, memory, and maintaining sugar levels.
• GABA (Gama Amino Butyric Acid): It is the chief inhibitory neurotransmitter i.e. its principal role is to reduce the excitability of neurons throughout the nervous system. If it is less, it leads to convulsions and we cannot control body movements.

Question 4.
Pituitary gland
Answer:

• The pituitary gland is one of the endocrine glands, i.e., glands that secrete chemical substances into the bloodstream.
• It is also called as master gland as it helps other glands to produce their secretions and secretes the majority of hormones.
• It consists of the anterior lobe and posterior lobe.
• Anterior lobe: It secretes somatotropin, growth hormone, and adrenocorticotropic hormone. It helps the growth of the body and aids the adrenal gland. The hormones secreted by this gland are also vital for the nourishment of foetus.
• Hypo or hypersecretion in the anterior lobe: Hyposecretion leads to dwarfism, wherein a person is very short (two-three feet tall). On the other hand, hypersecretion can lead to gigantism, wherein a person becomes very huge and is eight-nine feet tall. Hypersecretion can also result in acromegaly, wherein a person has the features of a chimpanzee.
• Posterior lobe: It secretes oxytocin (which creates a feeling of happiness), pituitrin (which helps smooth muscle functioning of the stomach), thyrotrophic follicle-stimulating luteinizing hormone (which helps in the nourishment of foetus), and endorphins (which help to create neurotransmitters).

5. Compare and contrast

Question 1.
Sympathetic nervous system and Parasympathetic nervous system
Answer:

• The sympathetic nervous system prepares our body to face stressful and threatening situations. It prepares us for a ‘flight or fight reaction. On the other hand, the parasympathetic nervous system takes over when the situation becomes normal,
• Example:
  • Situation: Suppose you are chased by a dog.
  • Sympathetic nervous system: Due to the functioning of this system, your heartbeat and palpitation increase. You also start to sweat.
  • Parasympathetic nervous system: When PNS takes over, your heart rate, palpitation, and sweating become normal. You regain a cool and composed state due to the functioning of this system.

Question 2.
Exocrine glands and Endocrine glands
Answer:

• Exocrine glands directly release their secretions into the organ or tissue while endocrine glands secrete chemical substances into the bloodstream.
• Exocrine glands have separate ducts for their secretion and so, they are also called duct glands, e.g. sweat glands and tear glands. On the other hand, endocrine glands are called ductless glands as they don’t have a separate duct. e.g. pituitary gland and thyroid gland.

6. Answer in 150-200 words.

Question 1.
Explain the functions of various parts of the human brain.
Answer:
The brain consists of three major parts, viz. hindbrain, midbrain, and forebrain. Its functions are as follows:
i. Hindbrain

• Cerebellum: It helps in maintaining body posture and balance as well as aids in the coordination of movements.
• Brain stem: Medulla oblongata controls the breathing rate, pulse rate, blood pressure, and digestion. Pons helps to transmit messages between the cerebellum and cortex.
• Reticular activation system: It is the ‘Alarm clock’ of the body. It maintains wakefulness, concentration, and alertness.

ii. Midbrain: It sends information to the upper part of the brain and controls eye movements.

iii. Forebrain

• Cerebrum: Cerebral cortex controls higher-order mental processes such as attention, perception, learning, memory. The surface of the cerebral cortex is divided into right and left hemispheres. Neurons from the right hemisphere control the left side of the body and vice versa. Left hemisphere controls language, spatial relation, and pattern recognition.
• Four lobes: Frontal lobe controls motor actions, thinking, memory and reasoning. The parietal lobe helps us in understanding information regarding skin. The occipital lobe controls our vision. The temporal lobe is responsible for hearing, understanding language, and memory for language.

Question 2.
Explain the significance of endocrine glands in human behaviour. State the functions of any five endocrine glands in detail.
Answer:

• Endocrine glands secrete vital chemical substances called hormones. There is a strong impact of hormones upon human behavior.
• Hormones are responsible for certain behaviours or the absence of reactions.
• Over (hyper) or under (hypo) secretion of hormones may lead to a variety of problems.
• e.g. Hypersecretion of insulin and glycogen hormones by the pancreas reduces blood sugar levels. It results in hyperglycemia, wherein a person lacks energy and motivation, may faint and go to coma. Conversely, in the case of hyposecretion, a person gets diabetes. He becomes quite hungry and feels very tired and restless. He also shows irritated behaviour and faces frequent and uncontrolled urination.

The functions of the five endocrine glands are as follows:

• Thyroid gland: It secretes thyroxin which maintains the rate of metabolism.
• Parathyroid gland: It secretes parathyroxin which maintains calcium as well as phosphate balance.
• Pancreas: It secretes insulin and glycogen that is responsible for maintaining blood sugar levels.
• Adrenal gland: Cortex secretes cortin or cortisone which maintains the level of water, sugar, and sodium. The medulla secretes adrenalin (which is associated with fear) and noradrenaline (which is associated with anger). Medulla plays important role in emotional excitement.
• Gonads (sex gland): Testes in males secrete androgen and testosterone. These hormones are responsible for secondary sex characteristics in males. Their voice becomes hoarse. They also get mustaches and beards. Ovaries in females secrete estrogen and progesterone. These hormones are responsible for secondary sex characteristics in females. As a result, feminine looks develop and menarche begins.

Activities

Activity 1 (Textbook Page No. 76)

Few activities are given below. Identify the system which dominates during these activities.

1. Picking up an object from the ground
2. Shivering when we sense danger
3. Feeling composed when we feel safe
4. Increase in heart rate when we sense that we are going to meet with an accident

Answer:

1. Central nervous system
2. Sympathetic nervous system
3. Parasympathetic nervous system
4. Sympathetic nervous system

Activity 2 (Textbook Page No. 80)

Think of the following actions. Which of them would be reflex actions and which of them will not be reflex actions?

• Throwing a ball in a cricket match
• Closing the eyes if someone brings a finger too close to them.
• Removing the hand when you accidentally touch a thorn.
• Immediate movement of the knee when tapped just below it.
• Touching a hot object and pulling back your hand.

Answer:
Reflex actions:

• Closing the eyes if someone brings a finger too close to them.
• Removing the hand when you accidentally touch a thorn.
• Immediate movement of the knee when tapped just below it.
• Touching a hot object and pulling back your hand.

Non-reflex actions:

• Throwing a ball in a cricket match

Class 11 Psychology Textbook Solutions Digest

• Psychology Class 11 Chapter 1 Question Answers
• Psychology Class 11 Chapter 2 Question Answers
• Psychology Class 11 Chapter 3 Question Answers
• Psychology Class 11 Chapter 4 Question Answers
• Psychology Class 11 Chapter 5 Question Answers
• Psychology Class 11 Chapter 6 Question Answers
• Psychology Class 11 Chapter 7 Question Answers
• Psychology Class 11 Chapter 8 Question Answers