1. Answer the following Questions

(a) Give a functional and operational definition of accounting.  [6]

(b) Differentiate between comparability and consistency of accounting information [6]

(c) Explain generally accepted accounting principles (GAAP) and cost principle [6]

 

2. Answer the following Questions

(a) What is the basic accounting equation? Define each component of the equation. [6]

(b) Identify the basic steps in the recording process [6]

(c) Explain the periodicity assumption and economic entity assumptions.

 

3. Answer the following Questions

(a) Explain what posting is and how it helps in the recording process.[6]

(b) Naziya Sanam, a new student in accounting believes that debit balances are favorable and credit balances are unfavorable. Is she correct? Discuss. [6]

(c) “Adjusting entris ensures that revenue recognition and matching principles are followed.” – Do you agree? Why or Why not? [6]

 

4. Mr. M. Khank opened the Campus Laundry on January 2013 [18]

During the first month of operations the following transactions occurred:

Jan

1 : Khan invested Tk. 20000.00 cash

2 : The company paid Tk. 1000.00  cash for store rent

3 : Purchased washers and dryers for Tk. 25000.00, paying Tk. 10000.00 in cash and signing a Tk. 15000, 6 month, 12% note.

4 : Paid. Tk. 1200.00 for a one year insurance policy

10 : Received a bill from the Daily News for advertising the opening of the Laundry Tk. 200.00

20 : Khan withdrew Tk. 700.00 cash for personal use.

30 : The company determined that cash receipts for January services for the month were Tk. 6200.00

 

The chart of accounts followed by M.Khan includes: Cash, M. Khan, capital, M. Khan, Drawing, Rent Expense, Laundry Equipment, Notes payable, Prepaid Insurance, Advertising Expense, Accounts Payable, Services Revenue.

Instructions:

(a)    Journalize the transactions

(b)   Post the transaction to the ledgers;

(c)    Prepare a trial balance at January 31;

 

5. Answer the following Questions

(a) What are the steps in accounting cycle? Briefly explain 9

(b) What are loan provision requirements for banks as per BRPD circular?                    9

 

6. Answer the following Questions

(a) Currently how many financial statements are prepared by bank? Briefly describe the contents of Each [9]

(b) What are the differences between single step and multiple step income statement? Which method is followed in banks? Give an example. [9]

 

7. Write short notes (any six): 3 X 6 = 18

(i) IFRS (ii) Assumptions of CVP analysis (iii) Sunk cost (iv) Window dressing (v) CAMELS rating (vi)   Revenue recognition principle (vii) FOB shipping point (viii) Comprehensive income (ix) Adjusting entry.

 

8. The trial balance column of the worksheet for Sasse Roofing at March 31, 2012 are as follows: – [28]

 

SASSE ROOFING

Worksheet

Account Titles		Debit (Taka)	Credit(Taka)
Cash		4500.00
Accounts Receivable		3200.00
Roofing Supplies		2000.00
Equipment		11000.00
Accumulated Depreciation- Equipment			1250.00
Account Payable			2500.00
Unearned Revenue			550.00
J. Sasse, Capital			12900.00
J. Sasse, Drawing		1100.00
Service Revenue			6300.00
Salaries Expense		1300.00
Miscellaneous Expense		400.00
		23500.00	23500.00

 

Other Data:

a) A Physical count reveals only Tk. 650.00 of roofing supplies on hand.

b) Depreciation for March Tk. 250.00

c) Unearned revenue amounted to Tk. 170.00 at March 31

d) Accrued salaries are Tk. 600.00

 

Requirements:

1) Complete the worksheet

2) Prepare an income statement

3) Journalize adjusting entries

4) Journalize closing entries