Briefly explain any four of the following:

i) Classification of accounts
ii) Account current
iii) Garner v. Murray rule
iv) Financial lease
v) Money measurement concept
vi) Convention of materiality

a) What do you mean by 'self balancing ledgers'? Discuss the main advantages and disadvantages of self balancing ledgers.

b) What do you mean by 'trial balance'? What are its objectives? Explain the methods of preparing trial balance.

(8 marks each)

Distinguish between any two of the following:
i) 'Profit and loss account' and 'income and expenditure' account
ii) 'Double entry system' and 'single entry system'
iii) 'Capital receipts' and 'revenue receipts'

(8 marks each)

From the following particulars, find out adjusted bank balance as per cash book and prepare thereafter bank reconciliation statement as on 31st December, 1995 of Raja Brothers:

M Ltd., which depreciates its machinery @ 10% per annum according to diminishing balance method, had on 1st April, 1996 Rs.4,86,000 balance in its machinery account. During the year ended 31st March 1997, the machinery purchased on 1st April, 1994 for Rs.60,000 was sold for Rs.40,000 on 1st October 1996 and a new machinery costing Rs.70,000 was purchased and installed on the same date; installation charges being Rs.5,000.

The company wants to change its method of depreciation from diminishing balance method to straight line method w.e.f. 1st April 1994 and adjust the difference before 31st Mach, 1997, the rate of depreciation remaining the same as before.

Show the machinery account for the year ended 31st March, 1997.

Kay sent 500 articles to his agent Jay at an invoice price of Rs.25 per article and paid freight and cartage Rs.460. Jay sold 300 articles @ Rs.300 per article and sent an account sales, deducting Rs.200 for storage charges and Rs.300 for selling expenses. He changed 10% commission on the gross sale proceeds and remitted the amount due to Kay. Jay also informed Kay that 50 articles had been damaged in transit and they could fetch 70% of their cost.

Record the above mentioned transactions in Kay's ledger showing the profit earned by the consignor.

P and S were in partnership sharing profits and losses in the ratio 7 : 3 respectively. As a mark of appreciation of the services of their manager Z, they admitted him into partnership on 1st April, 1996 giving him 1/10th share of the future profits; the mutual ratio between P and S remaining unchanged. Before becoming a partner, Z was getting a salary of Rs.4,000 per month and a commission of 5% on the net profits remaining after charging his salary and commission. It was agreed that any excess over his former remuneration to which Z as a partner becomes entitled will be provided out of P's share of profit.

The net profit for the year ended 31st March 1997 amounted to Rs.19,80,000. Prepare the profit and loss appreciation account for the year ended 31st March, 1997 showing the distribution of the net profits amongst the partners. Show your working notes clearly.

(16 marks)

A company sends good to its branch at cost plus 25%. The following particulars are available in respect of the branch for the year ended 31st March, 1997.

Prepare (i) branch stock account; (ii) goods sent to branch account; (iii) branch adjustment account; and (iv) branch profit and loss account in the books of the head office.