Book 9 Account for 2077_final

Jestha 3 Bought goods for Rs. 10,000 , paid by cheque Rs. 6,000 and balance in cash. Jestha 9 Received a cheque of Rs. 20,000 in full settlement of Rs. 21,000 from Rupesh. Jestha 13 Sale of goods for Rs. 12,000, Rs. 2,000 received in cash and balance amount through cheque allowing cash discount Rs. 400. Jestha 18 Cash deposited into bank Rs. 5,000. Jestha 20 Paid to Anish by cheque Rs. 1,900 and received discount from him Rs. 100. Jestha 23 Withdrawn cash from bank Rs. 2,000 for office use. Required: Triple column cash book Cr. Solution: Dr. Cash Book with Cash, Bank and Discount Column Date Particulars L.F. Disc. Cash Bank Date Particulars L.F. Disc. Cash Bank Jestha 1 To Balance b/d 1,000 15,000 Jestha 1 By Balance b/d C 23,000 Jestha 9 To Rupesh a/c 400 2,000 20,000 Jestha 3 By Purchase a/c C 4,000 6,000 Jestha 13 To Sales a/c 2,000 9,600 Jestha 18 By Bank a/c 5,000 Jestha 18 To Cash a/c C 5,000 Jestha 20 By Anish a/c 100 1,900 Jestha 23 To Bank a/c C Jestha 23 By Cash a/c 2,000 Jestha 30 By Balance c/d 10,000 1,700 1,400 19,000 34,600 100 19,000 34,600 10,000 1,700 Ashadh 1 To Balance b/d Key – a subsidiary book used to keep the record of cash and Terms banking transactions during a period of time. Cash book – deduction made by the creditor in the account to be received Cash discount from the debtor. Contra entry Credit note – the record of a transaction in the cash book affecting on both Debit note receipt and payment sides. Division of work Double column cash book – a note prepared by the seller and sent to the buyer to inform the acceptance of goods returned by him. Invoice – a note prepared by the buyer and sent to the seller to inform the quantity of goods returned as well as reasons for returning. – classification of job among staffs as per their knowledge and specialization. – a cash book having two columns (cash and bank a cash and discount or bank and discount) on both sides to keep the record of cash receipt and payment. – trade document prepared and sent by the seller to the buyer along with the goods delivered. Subsidiary Books 251

Purchase book – a subsidiary book used to keep the record of trading goods Sales book Single column cash book purchased on credit. Subsidiary books – a subsidiary book used to keep the record of trading goods Trade discount sold on credit. Triple column cash book – a cash book having single column on both sides to keep the record of cash receipt and cash payment. – the number of books maintained by the larger business organizations to keep the primary recording as per the nature of transactions. – the deduction made by the seller in the list price of the goods. – a cash book having, three columns (cash, bank and discount) on both sides to keep the record of cash and banking transactions. A. Very short answer questions 1. What is subsidiary book? 2. Why is subsidiary books called subdivision of journal? 3. Mention any two types of subsidiary book. 4. Which accounts can be prepared from purchase book? 5. Mention the accounts that can be prepared from sales book. 6. How is trade discount shown in subsidiary book? 7. What is meant by a debit note? 8. What is meant by a credit note? 9. What do you mean by contra entry? 10. Why is discount column not balanced in cash book? 11. In which subsidiary book are the credit purchase and sales transactions recorded? B. Short answer questions 1. What do you mean by subsidiary books? Describe its importance. 2. What is purchase book? Show its specimen. 3. Define sales book and show its specimen. 4. What is meant by purchase return book and sales return book? Why are they prepared? 5. Write short notes: a) Debit note and credit note b) Invoice c) Contra entry C. Long answer questions 1. Define subsidiary books and explain its types in brief. 2. Define cash book and explain the different types of cash book. 252 Office Management and Accountancy

PRACTICAL PROBLEMS(PP) PP-1 The following transactions are related to purchase: Shrawan 1 Purchased from Ganesh Traders, Birtamod 500 kgs. Sugar @ Rs. 50 per kg 100 kgs. Nuts @ Rs. 100 per kg Shrawan 5 Purchased from Bindu Traders, Bhairahawa 20 tins Mustard oil @ Rs. 500 per tin 5 tins Ghee @ Rs. 4,000 per tin (Less: Trade discount 10%). Shrawan 26 Purchased from Yogesh Traders, Ilam 250 kgs. Tea @ Rs. 100 per kg 10 bags Gram @ Rs. 800 per bag (Less: Trade discount 5%) Shrawan 30 Purchased from Joshi Traders for cash Rs. 10,000 Required: Purchase book Ans: Total Rs.93,350 PP-2 Following transactions are related to purchase of Binayak Traders Kathmandu for Jestha 2073: Jestha 3 Purchased from Parbat Enterprises, Parbat 5 dozens T-shirt @ Rs. 2,000 per dozen 10 dozens Cap @ Rs. 1,500 per dozen (Less: Trade discount 10%) Jestha 13 Purchased from Sunaulo Enterprises, Palpa 25 dozens Dhaka Topi @ Rs. 2,500 per dozen 10 dozens Sun Cap @ Rs.1,500 per dozen (Less: Trade discount 10%) Jestha 19 Purchased from SuryaTraders, Bhadgaun 2 dozens Cap @ Rs. 1,200 per dozen 50 pairs Socks @ Rs. 100 per pair (Less: Trade discount 5%) Jestha 28 Purchased from Sanjaya Traders, Lalitpur for cash 5 dozens Cotton Vests @ Rs. 1,500 per dozen 5 pcs. Pants @ Rs. 500 each Required: Purchase book Ans: Total Rs. 99,280 Subsidiary Books 253

PP-3 The following transactions of Deluxe Furniture are given: Marga 1 Purchased on credit from Sharma Furniture, Pokhara 50 Tables @ Rs. 1,600 each 120 Chairs @ Rs. 500 each. (Discount at 10% for both sales) Marga 8 Purchased from Cona Furniture, House 5 Almirahs @ Rs. 10,000 each 13 Dining Tables @ Rs. 5,000 each Marga 17 (Less: Trade discount 5%) Marga 23 Purchased computer for office use from Micro Land Traders Rs. 50,000 Marga 29 Purchased from Robin Decorate for cash 5 Sofa sets @ Rs. 4,000 per set 4 Dressing Tables @ Rs. 1,000 each Purchased furniture from Yonus Traders for Rs. 40,000 Required: a) Purchase book b) Purchase account Ans: a) Total Rs. 2,75,250 b) Balance Rs. 2,99,250 PP-4 The following purchase transactions of JM Traders, Lagankhel are provided: 2074 Kartik 1 Purchased from Him Electronics, Dharan 50 pcs Iron @ Rs. 400 each 25 Table Fans @ Rs. 1,000 each (Trade discount 10%) 2074 Kartik 6 Purchased from LG Electronics, Birtanagar. 15 Emergency lights @ Rs. 700 each 20 Recorders @ Rs. 800 each (Less: Trade discount 10%) 2074 Kartik 18 Purchased from Sony Electrical ,Khichhapokhari for cash 7 pcs Rice cooker @ Rs. 1,000 10 Stand Fans @ Rs. 900 2074 Kartik 26 Purchased furniture for office use from JK Furniture Suppliers on credit Rs. 40,000 2074 Kartik 29 Purchased 5 Fan Heaters @ Rs. 2,000 from Himal Electronics, Pokhara 254 Office Management and Accountancy

Required: a) Purchase book b) Purchase account Ans: a) Total Rs. 75, 400 b) Balance Rs.91,400 PP-5 Following sales transactions of Harati Store, Biratnagar are provided to you: Bhadra 2 Sold goods on credit to Asha Store, Janakpur 50 pcs T-shirt @ Rs. 500 40 pcs Shirt @ Rs. 100 Bhadra 3 Sold goods on credit to Dilip Trade Centre, Kathmandu 14 pairs Socks @ Rs. 200 per pair (Less: Trade discount 10%) Bhadra 21 Sold goods on credit to Yochina, Palpa 19 pcs Trousers @ Rs. 400 per unit 21 pcs Frocks @ Rs. 200 per frock (Less: Trade discount 5%) Bhadra 29 Sold goods to Janak Store for cash Rs. 5,000 Required: Sales book Ans: Total Rs. 42,730 PP-6 Following are the transactions relating to sales: 2074 Aswin 1 Sold to Binayak Enterprises Nepalgunj 200 kgs. Tea @ Rs. 500 per kg 1,600 kgs. Sugar @ Rs. 50 per kg (Trade discount 10%) 2074 Aswin 6 Sold to Krishna Gopal, Dhangadhi 50 bags Mansuli Rice @ Rs. 1,000 per bag 6 bags Wheat @ Rs. 2,000 per bag 2074 Aswin 15 Sold goods to Nabin Suppliers for cash 5 bags Nuts @ Rs. 1,000 per bag 20 tins Oil @ Rs. 800 per tin 2074 Aswin 27 Sold goods to Hemanta for Rs. 10,000, less 10% trade discount Required: Sales book Ans: Total Rs. 2,33,000 Subsidiary Books 255

PP-7 The following sales transactions of Muna Furniture, Kathmandu are provided to you: December 1 Sold to DH Decorate, Nayabazar 5 Tables @ Rs. 1,000 per table 3 dozen Chairs @ Rs. 600 per chair December 10 Sold to Sumnima Furnishing Centre, Dharan 5 Sofa sets @ Rs. 10,000 per set 9 Almirahs @ Rs. 5,000 (Trade discount 10%) December 14 Sold to Mini Furniture Suppliers for cash 14 Coffee Tables @ Rs. 1,500 December 20 Sold old computer to Manoj for Rs. 20,000 December 30 Sold to Anamika Furniture Company, Kapilvastu for Rs. 10,000 Required: a) Sales book b) Sales account PP-8 Ans: a) Total Rs. 1,22,100 b) Balance Rs. 1,43,100 Following sales transactions are abstracted from Munal Books and Stationery: 1–7–2017 Sold to Teacher Books and stationery,Khotang 15 dozen Pencils @ Rs. 100 per dozen 10 dozen Registers @ Rs. 200 per dozen (Less: Trade discount 10%) 4 – 7 – 2017 Sold to Sabin Stationery, Pokhara 10 ream White Paper @ Rs. 500 per ream 13 ream Ruled Paper @ Rs. 400 per ream 16 – 7- 2017 Sold to Him Stationery Suppliers, Solukhumbu for cash 5 gross Exercise Books @ Rs. 1,500 per gross 18 – 7–2017 Sold old furniture to Yogesh for Rs. 14,000 29 – 7 –2017 Sold to Barahi Stationery, Nuwakot 5 gross Ball Pens @ Rs. 200 per gross Required: a) Sales book b) Sales account Ans: a) Total Rs. 14,350 b) Balance Rs. 21,850 256 Office Management and Accountancy

PP-9 Following purchase return transactions are given: January 3 Goods returned to Anil Traders of Janakpur 25 pcs Cotton Shirt @ Rs. 300 3 pcs Pant @ Rs. 500 January 10 Goods returned to Bihani Traders of Bhairahawa 5 pcs T-shirt @ Rs. 250 per T-shirt 4 pairs Sport Shoes @ Rs. 1,000 January 23 Goods returned to Manus of Dhangadhi for Rs. 4,000 January 27 Goods returned to Ruban traders 8 pcs Cotton Vest @ Rs. 100 per Vest Required: Purchase return book Ans: Total Rs. 19,050 PP-10 The following purchase return transactions are abstracted from the book of Bachchhala Furnishing Centre: December 2 Returned to Kamal Binayak Furniture, Bhaktapur 7 Office Tables @ Rs. 600 per Table 3 Computer Tables @ Rs. 1,000 (Less: Trade discount 5%) December 7 Returned to Himal Furniture Store, Chitwan 4 Coffee Tables @ Rs. 1,500 2 Tea Tables @ Rs. 1,200 (Trade discount 10%) December 24 Returned to Classic Furniture Shop, Biratnagar for Rs. 13,500 December 29 Returned to Nabina Furniture Dealers, Kathmandu 2 Sofa sets @ Rs. 15,000 per set Required: Return outward book Ans: Total Rs. 57,900 PP-11 Following purchase return transactions are given to you: Magh 7 Returned to Maina 4 Television sets @ Rs. 15,000 each 3 Radio sets @ Rs. 1,000 each (Less: Trade discount 20%) Magh 18 Returned to Bijaya Subsidiary Books 257

10 Telephone sets @ Rs. 600 2 Tape-recorders @ Rs. 4,000 Magh 28 Returned to Kapil 5 Table Fans @ Rs. 1,200 Magh 30 Returned to Mamata Trade House of Rs. 5,000 being defective (Subject to 10% original trade discount) Required: a) Purchase return book b) Purchase return account Ans: a) Total Rs. 74,900 b) Balance Rs. 74,900 PP-12 The following purchase return transactions are abstracted from the book of Malini Traders: Jestha 4 Returned to Harati Traders, Nepalgunj 5 pairs Leather Shoes @ Rs. 1,000 per pair 15 pairs Sport Shoes @ Rs. 2,000 per pair (Less: Trade discount 10%) Jestha 13 Returned to Shikhar Shoes Store 9 pairs Leather Boot @ Rs. 2,000 per pair 14 Pairs White Canvas Shoes @ Rs. 1,500 per pair. Jestha 22 Returned to Fit Rite Shoes Store 10 pairs Sandles @ Rs. 800 per pair Jestha 30 Goods returned to Sony Shoes Store for Rs. 10,000 being defective (Subject to original trade discount 10%) Required: a) Purchase return book b) Purchase return account Ans: a) Total Rs. 87,500 b) Balance Rs. 87,500 PP-13 Following sales return transactions are provided: 2018 Jan 4 Returned from Namuna Enterprises, Pokhara. 20 pcs T-shirt @ Rs. 500 15 pcs Pants @ Rs. 1,000 (Less: Trade discount 10%) 2018 Jan 9 Returned from Jugal Trading House, Biratnagar 12 Sun Caps @ Rs. 300 (Less: Trade discount 5%) 2018 Jan 20 Returned from Rabina Traders, Chitwan 5 pcs Shirts @ Rs. 400 6 pcs Pants @ Rs. 300 Required: Sales return book Ans: Total Rs. 29,720 258 Office Management and Accountancy

PP-14 Following are the sales return transactions of Sumitra Furnishing Traders, Nepalgunj: Ashad 4 Returned from Kanak Trader, Kathmandu 5 Tables @ Rs. 2,000 each 3 Almirahs @ Rs. 5,000 each Ashad 10 Returned from Ashoka Furniture, Lalitpur 2 Sofa sets @ Rs. 10,000 (Less: Trade discount 10%) Ashad 22 Returned from Kapilvastu Furniture Centre, Kapilvastu 1 Fancy Table @ Rs. 6,000 2 Dressing Tables @ 3,000 (Less: Trade discount 5%) Required: Return inward book Ans: Total Rs. 54,400 PP-15 The following sales return transactions are abstracted from the books of Kamal Electrical Suppliers: February 7 Returned from Baba Electrical Centre 4 pcs Electrical Iron @ Rs. 500 3 pcs Table Fans @ Rs. 800 February 12 Returned from Manakamana Electrical House 2 pcs Rice Cooker @ Rs. 1,000 February 20 (Trade discount 10%) February 28 Returned from Shuvatara Electrical Centre 3 Water Heaters @ Rs. 600 Return received from Mono Light Centre for Rs. 2,000 Required: a) Sales return book b) Sales return account Ans: a) Total Rs. 10,000 b) Balance Rs. 10,000 PP-16 The following sales return transactions are abstracted from the book of Himal Suppliers: June 6 Returned from Yubaraj, Lahan 5 pcs Jeans Pant @ Rs. 400 each 9 pcs Cotton Shirts @ Rs. 250 each (Less: Trade discount 10%) June 9 Returned from Mahesh, Janakpur 3 pcs Pashmina Shawl @ Rs. 1,000 (Less: Trade discount 5%) Subsidiary Books 259

June 19 Returned from Hem Lal, Kathmandu 14 pcs Woolen Shirts @ Rs. 300 7 pcs Sarees @ Rs. 2,000 each June 26 Returned goods from Manisha for Rs. 5,000 Required: a) Sales return book b) Sales return account Ans: a) Total Rs. 29,875 b) Balance Rs. 29,875 PP-17 The following transactions are given to you: Magh 1 Business started with cash Rs. 1,00,000. Magh 3 Opened bank account by depositing cash Rs. 60,000. Magh 7 Purchased goods for cash Rs. 10,000. Magh 9 Purchased furniture for cash Rs. 7,000. Magh 13 Sold goods for Rs 9,000. Magh 18 Sold goods to Kamal for Rs. 4,000. Magh 25 Paid salary Rs 5,000. Magh 27 Cash received from Kamal Rs. 4,000 Magh 29 Paid for electricity charges Rs. 1,000. Required: Simple cash book Ans: Cash balance Rs. 30,000 PP-18 Following information are given to you: Bhadra 1 Ganesh commenced business with capital Rs. 1,50,000. Bhadra 4 Opened a bank account with cash Rs. 90,000. Bhadra 7 Bought goods for Rs. 20,000. Bhadra 10 Paid wages in cash Rs, 4,000. Bhadra 15 Computer purchased for office use Rs 27,000. Bhadra 20 Sold goods for cash Rs. 19,000. Bhadra 23 Purchased goods from Mukesh for 25,000. Bhadra 27 Paid rent Rs, 3,000. Bhadra 29 Paid salary Rs, 6,000 Required: Simple cash book Ans: Cash balance Rs. 19,000 PP-19 Following transactions are given to you: Shrawan 1 Business started by depositing cash Rs 3,00,000 into the bank Shrawan 3 Bought goods for Rs 60,000 and paid by cheque Shrawan 7 Sold goods to Anil for Rs 40,000. 260 Office Management and Accountancy

Shrawan 10 Paid wages Rs 21,000 by cheque. Shrawan 17 A cheque received from Anil for Rs 40,000 Shrawan 20 Withdrawn cash from bank Rs 20,000 for office use Shrawan 27 Rent paid by cheque Rs 12,000 Shrawan 28 Paid to Harish by cheque Rs 10,000 Required: Simple bank book Ans: Bank balance Rs 2,17,000 PP-20 Prepare a simple bank book from the following transactions: Aswin 1 Business started with Rs 2,10,000 depositing into bank. Aswin 6 Purchased goods worth Rs 70,000 and payment made through bank. Aswin 7 Paid office expenses by cheque Rs 4,000. Aswin 10 Purchased machinery for Rs 25,000 and payment made through bank. Aswin 14 Sold goods to Binita for Rs 49,000. Aswin 19 Withdrawn cash from bank for office use Rs 10,000. Aswin 27 Paid salary by cheque Rs 8,000. Aswin 28 Cheque received from Binita for Rs 30,000. Aswin 30 Received a cheque of Rs 20,000 from Reshma. Ans: Bank balance Rs.1,43,000 PP-21 The following cash and banking transactions are given: February 1 Business started with cash Rs. 1,95,000. February 3 Purchased goods for Rs. 60,000 at 10% cash discount. February 9 Paid wages for Rs. 13,000. February 14 Sold goods for Rs. 40,000 at 15% discount. February 18 Cash paid to Manita Rs. 18,700 and received discount of Rs. 300. February 22 Received cash from Menuka Rs. 14,500 and allowed discount to her Rs. 500. February 29 Paid office expenses Rs. 7,000. Required: Cash book with cash and discount column Ans: Cash balance Rs.1,50,800 PP-22 Enter the following transactions in double column cash book with cash and discount column: Chaitra 1 Commenced business with cash Rs. 1,40,000. Chaitra 5 Bought goods for Rs. 30,000 at 12% cash discount. Chaitra 10 Paid office expenses Rs. 6000. Chaitra 12 Sold goods for Rs. 20,000 at 15% discount. Chaitra 16 Received cash from Debika Rs. 13,720 and discount allowed to her Rs. 280. Subsidiary Books 261

Chaitra 24 Cash paid to Rojina Rs. 11,800 and received discount of Rs. 200. Chaitra 28 Paid salary in cash Rs. 6,000. Ans: Cash balance Rs.1,20,520 PP-23 The following transactions are given to you: Ashad 1 Bank balance Rs. 96000. Ashad 3 Purchased goods worth Rs. 19,000 at 10 % discount and paid by cheque. Ashad 7 Purchased furniture for Rs. 22,500 and payment made by cheque. Ashad 9 Sold goods for Rs. 15,000 at 10% discount and received a cheque. Ashad 16 A cheque of Rs. 4,750 issued to Nabina for full settlement of her debts of Rs. 5,000. Ashad 24 Received a cheque of Rs. 6,750 from Ranjan and allowed discount Rs. 250. Ashad 29 Sold goods to Mahesh for Rs. 12,000. Required: Cash book with bank and discount column Ans: Bank balance Rs. 71,900 PP-24 Enter the following transactions into cash book with bank and discount column: Bhadra 1 Bank balance Rs. 65,000. Bhadra 3 Bought goods for Rs. 40,000 at 10% discount and paid by cheque. Bhadra 6 A cheque of Rs. 4,900 issued to Ram Gopal after deducting discount Rs.100. Bhadra 13 Purchased machinery for Rs. 10,000 from Nepal Machinery suppliers. Bhadra 18 Sold goods for Rs. 50,000 at 15% discount and payment received by cheque. Bhadra 22 Received a cheque of Rs.7,900 from Yojana in full settlement of Rs. 8,000. Ans: Bank balance Rs. 74,500 PP-25 Following cash and banking transactions are given. Marga 1 Balance of cash in hand Rs. 19,000 and at bank Rs. 27,000. Marga 4 Purchased goods for cash Rs. 16,500. Marga 5 Paid wages by cheque Rs. 3,000. Marga 10 Cash withdrawn from bank for office use Rs. 5,000. Marga 14 Sold goods for cash Rs. 10,000. Marga 20 Sold goods to Mamata for Rs. 9,000. 262 Office Management and Accountancy

Marga 25 Purchased a machinery for Rs. 10,000 and payment made by cheque. Marga 29 Cash deposited into bank Rs. 8,000. Required: Cash book with cash and bank column Ans: Balance: Cash Rs. 9,500, Bank Rs. 17,000 PP-26 The following cash and banking transactions are given to you: January 1 Cash in hand Rs. 40,000 and cash at bank Rs. 70,000. January 2 Goods purchased for Rs. 15,000. January 4 Bought computer for Rs. 32,000 and paid by cheque. January 7 Paid commission by cheque Rs. 4,000. January 10 Paid into bank Rs. 13,000. January 19 Sold goods for Rs. 16,000. January 27 Bought goods from Hemanta for Rs. 20,000. January 29 Withdrew from bank for office use Rs. 5,000. Required: Cash book with cash and bank column Ans: Balance: Cash Rs. 33,000, Bank Rs 42,000 PP-27 The following cash and banking transactions are given: a) John started a business with cash Rs. 2,60,000. b) Opened bank account by depositing cash Rs. 1,60,000. c) Purchased furniture from Harati Furniture Center Rs.13,000. d) Purchased goods for cash and paid by cheque Rs. 70,000. e) Sold goods for Rs. 50,000 and received cash Rs. 20,000 and cheque of Rs. 30,000. f) Paid into bank Rs. 50,000. g) Paid to Sharma by cheque Rs. 10,000. h) Cash withdrawn from bank Rs. 25,000. Required: Cash book with cash and bank column Ans: Balance: Cash 95,000, Bank 1,35,000 PP-28 The following transactions are given to you: Baishakh 1 Balance of cash in hand Rs. 50,000 and at bank Rs. 98,000. Baishakh 3 Purchased goods of Rs. 15,000 in cash at 10% discount. Baishakh 5 Purchased of machinery for Rs. 25,000 and payment made by cheque. Baishakh 16 Cash deposited into bank Rs. 10,000. Baishakh 20 Sold goods for Rs. 20,000 and received cash Rs. 19,500 and allowed discount of Rs. 500. Baishakh 25 Withdrawn cash from bank for office use Rs. 2,000. Baishakh 28 Received a cheque of Rs. 5,000 from Ranjana in full settlement of Rs.5,200. Required: Triple column cash book
 Ans: Balance: Cash Rs. 48,000, Bank Rs. 86,000 Subsidiary Books 263

PP-29 Following cash and banking transactions are given to you: March 1 Cash in hand Rs. 59,690 and at bank Rs. 95,500. March 5 Bought goods for Rs. 30,000 at 10% discount. March 9 Withdrawn cash Rs. 20,000 from bank for office use. March 14 Purchased computer for cash Rs. 25,000 and paid by cheque. March 19 Sold goods for Rs. 40,000 and received cash Rs. 39,000 and allowed discount Rs. 1,000. March 25 Cash deposited into bank Rs. 35,000. March 26 Issued a cheque of Rs. 24,500 to Anil in full settlement of Rs. 25,000. Required: Triple column cash book Ans: Balance: Cash Rs. 56,690, Bank Rs. 61,000 PP-30 From the following information, prepare a triple column cash book: July 1 Balance of cash in hand Rs. 18,000 and overdraft at bank Rs. 20,000. July 4 Bought goods for Rs. 10,000 and paid by cheque of Rs. 6,000 and balance in cash Rs. 4,000. July 6 Withdrew Rs. 2,000 from bank for office use. July 13 Sold goods of Rs. 15,000, received in cash Rs. 9,000 and balance amount by cheque. July 19 Paid in cash Rs. 2,900 to Amar in full settlement of Rs. 3,000. July 23 Received a cheque of Rs. 23,500 from Yogesh after deducting discount of Rs.500. July 29 Paid cash into bank Rs. 4,000. Ans: Balance: Cash Rs. 18,100, Bank Rs. 5,500  264 Office Management and Accountancy

14 Chapter TRIAL BALANCE Learning Objectives After studying this chapter, the readers will be able to :  tell the meaning of trial balance,  state the objectives and advantages of trial balance,  prepare a trial balance after preparation of ledger accounts or from the given ledger balances,  understand the concept of adjustment and closing of trial balance by opening suspense account. Introduction When all the transactions are posted into different ledger accounts, it is necessary to know whether they are recorded and posted accurately or not. In order to ensure the correctness in recording and posting, a statement is prepared which is known as trial balance. While recording the transactions in primary books or posting them into various ledgers, there may be errors or frauds committed knowingly or unknowingly. If such errors remain in the books of account, finally it affects the net result of business operation. Due to this reason too, the journal and ledgers should be checked to make correction in the arithmetical records by preparing a statement which is termed as trial balance. It is the third step of accounting process. Trial Balance 265

Concept and definition Trial balance is the list of debit and credit balances or even the total of the ledger accounts prepared at the particular date. If a trial balance is prepared on the basis of ledger balances, all debit balances should be transferred into the debit column and credit balances should be transferred into the credit column. The debit total and credit total should be equal to each other. If debit and credit total remains equal, it is called agreement of trial balance. But, if the debit total and credit total is found different, it is assumed that there may be arithmetical errors in preparing the journal and the ledgers. The following are the definitions of trial balance: \"A trial balance is a statement prepared with the debit and credit balances of ledger accounts to test arithmetical accuracy of books.\" J. R. Batliboi \"A trial balance is the list of debit and credit balance taken out from ledger; it also includes, the balance of cash and bank taken from cash book.\" R. N. Carter \"A trial balance is a statement of the debit and credit balances of the various ledger accounts which is prepared to check their arithmetical accuracy.\" A.N. Agrawal Trial balance is a statement of debit and credit balances or totals of various ledger accounts which is prepared at the particular date in order to prove the arithmetical accuracy of the books of accounts. Objectives of preparing a trial balance The following are the main objectives of preparing trial balance: a. To check the arithmetical accuracy Memory Tips The main objective of preparing a trial balance  To check the arithmetical accuracy is to check arithmetical accuracy of books of  To locate and rectify the errors and account. It gathers the debit and credit balances of all ledger accounts at a place and checks frauds whether the debit total equals to credit total or  To provide summary of all the ledger not. If the debit total is not equal to the credit total, it indicates that there may be some errors accounts existed in the books of account.  To facilitate the preparation of final accounts  To help in evaluation and decision making b. To locate and rectify the errors and frauds The trial balance also helps to find out the errors and to correct them in time. The disagreement in trial balance i.e. difference in debit and credit total indicates the arithmetical errors in maintaining the books of accounts. Thus, it helps to identify them and correct in time. 266 Office Management and Accountancy

c. To provide summary of all the ledger accounts As all the ledger balances are listed in a separate sheet of paper under a trial balance, it provides the information about all ledger accounts. Thus, to provide summarized information about ledger accounts is also another objective of a trial balance. d. To facilitate the preparation of final accounts Final accounts are prepared at the end of an accounting period to know the true financial position. Such accounts are prepared on the basis of a trial balance. It provides summary of personal, real and nominal accounts. Thus, to assist for the preparation of final accounts is the next objective of a trial balance. e. To help in evaluation and decision making The trial balance provides the information about assets, liabilities, expenses, income etc for a certain period. The trial balance drawn in different time periods helps the management for evaluation and decision making process on different business matters. Advantages of a trial balance Following are the main advantages of a trial balance:  It helps to check the arithmetical accuracy of recording and posting of financial transactions.  It helps to locate and rectify the accounting errors and frauds.  It helps to provide a summary of all the ledger accounts of the firm.  It facilitates for preparation of final accounts.  It helps in making evaluation and decision on various business matters.  It supports for internal audit by providing complete, reliable and accurate accounting information. Specimen of a trial balance Following is a general specimen of a trial balance: Trial Balance of ….. As on …….. S.N. Particulars L.F. Debit Rs. Credit Rs. 1 2 34 5 Trial Balance 267

In the above specimen, the following information are to be mentioned: 1. S. No The serial number of accounts likes 1, 2, 3, 4... is mentioned in this column. 2. Particulars The name of different ledger accounts like cash account, capital account etc is mentioned in this column. 3. Ledger Folio (L.F.) The page number of various ledger accounts from where they have been taken is mentioned in this column. 4. Debit Rs. The amount of the debit balance of the ledger account is written in this column. 5. Credit Rs. The amount of the credit balance of the ledger account is written in this column. Procedures for preparing a trial balance Following are the procedures to be followed in preparation of a trial balance:  The specimen of trial balance should be prepared.  Name of the organization and the date of preparing trial balance should be mentioned at the middle top.  The serial numbers like 1, 2, 3, 4 .......... etc should be mentioned in first column as per the number of ledger accounts.  The name of ledger accounts like cash, capital, interest etc should be mentioned in the second column.  The page number of each ledger account should be written in third column.  The amount of ledger accounts having debit balance should be posted in debit column and the amount of ledger accounts having credit balance should be posted in credit column.  If only the ledger balances are given, the following rules should be applied to post the amount either in debit or credit side of a trial balance: a. Dr. all assets, expenses and losses b. Cr. all liabilities, capital, income and gains  Finally, the debit and credit sides should be totalled to ensure the orrectness in reording and posting which must be equal.  If the debit and credit sides are not found equal, the difference should be transferred to suspense account assuming some arithmetical errors. Later on, they should be located and rectified. Ill-1 The following transactions are given to you: July 1 Business started with cash Rs. 1,50,000. July 3 Opened bank account with Rs. 1,00,000. July 12 Purchased goods for cash Rs. 40,000. July 18 Paid wages Rs. 10,000 by cheque. July 26 Sold goods to Ramala for Rs. 50,000. 268 Office Management and Accountancy

Required: Journal Entries a) Journal entries b) Ledger accounts c) Trial balance as on 31st July Solution: a) Date Particulars L.F. Debit Rs. Credit Rs. July 1 Cash a/c ............................................................Dr. 1,50,000 1,50,000 July 3 To Capital a/c (Being business started with cash) July 12 Bank a/c ...........................................................Dr. 1,00,000 1,00,000 July 18 To Cash a/c (Being bank account opened) July 26 Purchase a/c ....................................................Dr. 40,000 40,000 To Cash a/c (Being goods purchased in cash) Wages a/c .........................................................Dr. 10,000 10,000 To Bank a/c (Being wages paid by cheque) Ramala’s a/c ....................................................Dr. 50,000 50,000 To Sales a/c (Being goods sold to Ramala on credit) b) Ledger accounts Cash Account Cr. Dr. J.F. Amount Date Particulars J.F. Amount Date Particulars 1,00,000 40,000 July 1 To Capital a/c 1,50,000 July 3 By Bank a/c 10,000 July 12 By Purchase a/c 1,50,000 July 31 By Balance c/d Cr. 1,50,000 J.F. Amount Aug 1 To Balance b/d 10,000 1,50,000 1,50,000 Dr. Particulars Capital Account 1,50,000 To Balance c/d Date J.F. Amount Date Particulars Cr. July 31 1,50,000 July 1 By Cash a/c J.F. Amount 10,000 1,50,000 90,000 Aug 1 By Balance b/d 1,00,000 Dr. Bank Account Date Particulars J.F. Amount Date Particulars July 3 To Cash a/c 1,00,000 July 18 By Wages a/c July 31 By Balance c/d 1,00,000 Aug 1 To Balance b/d 90,000 Trial Balance 269

Dr. Purchase Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount July 12 To Cash a/c 40,000 July 31 By Balance c/d 40,000 40,000 40,000 Aug 1 To Balance b/d 40,000 Cr. Dr. Particulars Wages Account To Bank a/c J.F. Amount Date J.F. Amount Date Particulars 10,000 July 18 To Balance b/d 10,000 July 31 By Balance c/d 10,000 10,000 Aug 1 Particulars 10,000 Cr. To Sales a/c Dr. Ramala’s Account J.F. Amount To Balance b/d 50,000 Date J.F. Amount Date Particulars 50,000 July 26 Particulars To Balance c/d 50,000 July 31 By Balance c/d Cr. Aug 1 50,000 J.F. Amount Dr. 50,000 50,000 50,000 Date 50,000 July 18 Sales Account c) J.F. Amount Date Particulars 50,000 July 31 By Ramala’a a/c S.No. 1. 50,000 2. 3. Aug 1 By Balance b/d 4. 5. Trial Balance 6. As on 31st July 7. Particulars L.F. Debit Rs. Credit Rs. 10,000 1,50,000 Cash a/c ......................................................... 90,000 50,000 Capital a/c ..................................................... 40,000 2,00,000 10,000 Bank a/c ......................................................... 50,000 Purchase a/c .................................................. 2,00,000 Wages a/c ...................................................... Ramala's a/c .................................................. Sales a/c ......................................................... Total................................................................. Preparation of trial balance from the given ledger balances A trial balance is prepared on the basis of ledger balances drawn from various ledger accounts. The following rules should be followed for debiting and crediting the items in trial balance: 270 Office Management and Accountancy

 All assets, expenses and losses are debited  All liabilities, capital, incomes and gains are credited The following is the list of possible items to be debited and credited in a trial balance. Trial Balance of ........... As on ……. S.No. Particulars L.F. Debit Rs. Credit Rs. 1. Cash balance .................................................. ××× 2. Bank balance .................................................. ××× 3. Sundry debtors .............................................. ××× 4. Investment ..................................................... ××× 5. Bills receivable ............................................... ××× 6. Accounts receivable ..................................... ××× 7. Land and building ........................................ ××× 8. Plant and machinery .................................... ××× 9. Furniture and fixture .................................... ××× 10. Vehicles .......................................................... ××× 11. Loose tools ..................................................... ××× 12. Goodwill ....................................................... ××× 13. Patent ............................................................ ××× 14. Trademark .................................................... ××× 15. Copy right ..................................................... ××× 16. Prepaid expenses .......................................... ××× 17. Accrued income ............................................ ××× 18. Loan given ..................................................... ××× 19. Business premises ........................................ ××× 20. Opening stock ............................................... ××× 21. Purchase ........................................................ ××× 22. Sales return .................................................. ××× 23. Carriage/freight inward .............................. ××× 24. Carriage/freight outward ........................... ××× 25. Purchase expenses ...................................... ××× 26. Import and export duty .............................. ××× 27. Wages and salaries ...................................... ××× 28. Factory expenses .......................................... ××× 29. Insurance premium ...................................... ××× 30. Rent, rates and tax ........................................ ××× 31. Office and administrative expenses ............ ××× Trial Balance 271

32. Interest paid .................................................. ××× 33. Commission paid .......................................... ××× 34. Advertisement .............................................. ××× 35. Heating and lighting charges....................... ××× 36. Communication charges............................... ××× 37. Printing and stationery expenses ................. ××× 38. Repairs and maintenance .............................. ××× 39. Depreciation................................................... ××× 40. Fuel, coal and coke ........................................ ××× 41. Legal expenses .............................................. ××× 42. Establishment expenses .............................. ××× 43. Charity and donation ................................... ××× 44. Bank charges .................................................. ××× 45. Discount allowed .......................................... ××× 46. Drawing ......................................................... ××× 47. Bad debts ........................................................ ××× 48. Loss on sale of assets .................................... ××× 49. Entertainment expenses .............................. ××× 50. General expenses .......................................... ××× 51. Delivery van expenses ................................. ××× 52. Sales tax ......................................................... ××× 53. Capital ............................................................ 54. Sundry creditors ........................................... ××× 55. Bank overdraft .............................................. ××× 56. General reserve ............................................ ××× 57. Capital reserves ............................................ ××× 58. Deposits from customers.............................. ××× 59. Reserve fund .................................................. ××× 60. Bills payable ................................................... ××× 61. Accounts payable .......................................... ××× 62. Loan received ................................................ ××× 63. Outstanding expenses ................................. ××× 64. Advance income ........................................... ××× 65. Commission received .................................. ××× 66. Discount received ........................................ ××× 67. Interest received ........................................... ××× 68. Rent received.................................................. ××× 69. Apprentice premium..................................... ××× ××× 272 Office Management and Accountancy

70. Interest on investment.................................. XXX ××× 71. Gain on sale of assets.................................... ××× 72. Sale of scrap.................................................... ××× 73. Bad debts recovered...................................... XXX 74. Provision for bad debts................................. XXX 75. Miscellaneous income ................................. XXX XXX Total................................................................. Ill-2 The following are the ledger balances taken from the books of Anupama on 31st Chaitra 2073: Opening stock Rs. 10,000 Sundry creditors Rs. 40,000 20,000 Purchases 90,000 Wages 5,000 9,000 Sales 2,00,000 Commission received 15,000 Purchase return 5,000 Bank balance 1,49,000 Sales return 7,000 Salary Sundry debtors 50,000 Furniture Capital 1,00,000 Required: Trial balance as on 31st Chaitra, 2073 Solution: Trial Balance As on 31st Chaitra, 2073 S.No. Particulars L.F. Debit Rs. Credit Rs. 1. Opening stock ................................................................. 10,000 2. Purchases ........................................................................ 90,000 3. Sales ................................................................................. 2,00,000 4. Purchase return .............................................................. 5,000 5. Sales return ..................................................................... 7,000 6. Sundry debtors .............................................................. 50,000 7. Sundry creditors ............................................................ 40,000 8. Wages .............................................................................. 20,000 9. Salaries ............................................................................ 15,000 10. Commission received ................................................... 5,000 11. Bank balance ................................................................... 9,000 12. Furniture ......................................................................... 1,49,000 13. Capital ............................................................................. 1,00,000 Total 3,50,000 3,50,000 Trial Balance 273

Adjustment and closing in a trial balance A trial balance is a basis for preparation of final accounts. It provides the summary of all the ledger accounts drawn in a business firm. It should have equal amount in both the debit and credit columns. But sometimes due to any error, it may not be equal in both columns. In such situation, the errors should be detected and rectified in time. However, the errors may not be located easily in spite of hard efforts of concerned staffs. Due to which, a trial balance cannot be found equal. On the other hand, it causes delay in preparation of final accounts in absence of agreement in trial balance. Thus, to avoid such delay, a trial balance is made equal by adding the balance amount in lighter side which is known as adjustment and closing of trial balance. Thus, in case of disagreement in trial balance, it is made equal by putting the difference amount in any of the sides i.e. debit or credit. In order to put the difference amount, an artificial account is used till the location and rectification of errors which is called suspense account. It is a temporary solution adopted to make the trial balance equal. When all the errors affecting the trial balance are detected and rectified, the suspense account is automatically disposed off. Adjustment and closing of trial balance is an artificial process of making the trial balance equal by opening suspense account in lighter side to avoid delay in preparation of final accounts. Ill-3 The following are the balances of ledger accounts taken from the books of Shalimar Concern on 31st Ashadh, 2073 : Opening stock Rs. 60,000 Drawing Rs. 2,500 Purchase 1,20,000 Sales return 1,800 Sundry debtors 55,000 Purchase return 2500 Capital 1,70,000 Sundry creditors 27,600 Cash balance 45,000 General reserve 15,000 Loan from bank 8,000 Salaries and wages 12,500 Sales 1,00,000 Interest received 4,500 24,000 Repairs and maintenance 6,800 Furniture Required: Trial balance Solution: Trial Balance of Shalimar Concern As on 31st Ashadh, 2073 S.No. Particulars L.F. Debit Rs. Credit Rs. 1. 2. Opening stock................................................. 60,000 3. 4. Purchases........................................................ 1,20,000 Sundry debtors............................................... 55,000 Capital............................................................ 1,70,000 274 Office Management and Accountancy

5. Cash balance.................................................. 45,000 8,000 6. Loan from bank.............................................. 1,00,000 7. Sales................................................................ 6,800 8. Repairs and maintenance................................ 2,500 2,500 9. Drawings........................................................ 1,800 27,600 10. Sales return..................................................... 15,000 11. Purchase return............................................... 12,500 4,500 12. Sundry creditors............................................... 24,000 3,27,600 13. General reserve............................................... 3,27,600 14. Salaries and wages.......................................... 15. Interest received............................................... 16. Furniture........................................................... Total Suspense account Suspense account is an artificial account opened to make the trial balance agreed in case of difference in debit and credit column. It is an artificial process of adjusting and closing the trial balance. It remains until and unless the errors are located and rectified. After rectification of all types of errors affecting the trial balance, it will be automatically disposed off. The following are some of the errors due to which suspense account should be opened in the trial balance:  Posting of amount in wrong side of an account.  Posting of wrong amount in one side of an account.  Omission of posting in one side of an account.  Wrong totaling or balancing of ledger account.  Double posting in one account.  Posting in wrong side of trial balance.  Omission of transferring balance of any account in trial balance. Suspense account is an artificial account opened temporarily for the purpose of adjusting and closing the trial balance until the errors are located and rectified. Short Notes to Remember (SNR 14.1)  If the debit total of trial balance is more than its credit total, suspense account is opened in credit side by writing the difference amount.  If the credit total of trial balance is more than its debit total, suspense account is opened in debit side by writing the difference amount.  After all the errors are located and rectified, the suspense account automatically disappears from the books of account. Trial Balance 275

Ill-4 From the following balances of ledger accounts, draw a trial balance and open suspense account, if needed. Building Rs. 1,90,000 Capital Rs. 2,00,000 Loan to Kreeti 30,000 Advance income 14,000 Sales 80,000 Bank overdraft 10,000 17,000 Purchase 75,000 Cash in hand 12,000 Commission paid 9,000 Opening stock Solution: Trial Balance As on .................. S.No. Particulars L.F. Debit Rs. Credit Rs. 1. Building........................................................................ 1,90,000 – 2. Advance income......................................................... – 14,000 3. Sales............................................................................. – 80,000 4. Purchase...................................................................... 75,000 – 5. Commission paid...................................................... 9,000 – 6. Capital........................................................................ – 2,00,000 7. Loan to Kreeti............................................................ 30,000 – 8. Bank overdraft.......................................................... – 10,000 9. Cash in hand............................................................. 17,000 – 10. Opening stock........................................................... 12,000 – 11. Suspense a/c............................................................. – 29,000 Total 3,33,000 3,33,000 REVIEW ILLUSTRATIONS (ILL) Ill-5 The following are the business transactions of Shree Ganesh Enterprises for the month of January 2018: January 1 Business started with cash Rs. 6,40,000 January 3 Opened a bank account with cash Rs. 5,00,000 January 7 Purchased goods for cash Rs. 45,000 January 13 Sold goods for Rs. 35,000 January 19 Bought goods from Ajaya Rs. 75,000 January 25 Paid wages in cash Rs. 15,000 January 27 Paid salary by cheque Rs. 50,000 January 28 Sold goods to Abha on credit for Rs. 50,000 January 30 Cash deposited into bank Rs. 25,000 January 31 Bought a computer for Rs. 30,000 and paid by cheque. Required: a) Journal entries b) Ledger accounts c) Trial balance as on 31st January, 2018 276 Office Management and Accountancy

a) Solution: Journal Entries Date Particulars L.F. Debit Rs. Credit Rs. Jan. 1 Cash a/c ............................................................Dr. 6,40,000 6,40,000 To Capital a/c (Being business started with cash) Jan. 3 Bank a/c ...........................................................Dr. 5,00,000 5,00,000 To Cash a/c (Being bank account opened) Jan. 7 Purchase a/c ....................................................Dr. 45,000 45,000 To Cash a/c (Being goods purchased in cash) Jan. 13 Cash a/c ...........................................................Dr. 35,000 35,000 To Sales a/c (Being goods sold for cash) Jan. 19 Purchase a/c ....................................................Dr. 75,000 75,000 To Ajaya’s a/c (Being goods purchased from Ajaya) Jan. 25 Wages a/c .........................................................Dr. 15,000 15,000 To Cash a/c (Being wages paid) Jan. 27 Salary a/c .........................................................Dr. 50,000 50,000 To Bank a/c (Being salary paid by cheque) Jan. 28 Abha a/c .........................................................Dr. 50,000 50,000 To Sales a/c (Being goods sold to Abha) Jan. 30 Bank a/c ...........................................................Dr. 25,000 25,000 To Cash a/c (Being cash deposited into bank) Jan. 31 Computer a/c .................................................Dr. 30,000 30,000 To Bank a/c (Being computer bought by paying cheque) b) Ledger accounts Dr. Capital Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount To Balance c/d 6,40,000 Jan. 31 6,40,000 Jan. 1 By Cash a/c 6,40,000 6,40,000 6,40,000 Feb. 1 By Balance b/d Trial Balance 277

Dr. Cash Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Jan. 1 To Capital a/c 5,00,000 Jan. 31 To Sales a/c 6,40,000 Jan. 3 By Bank a/c 45,000 35,000 Jan. 7 By Purchase a/c 15,000 Feb. 1 To Balance b/d Jan. 25 By Wages a/c 25,000 Particulars Jan. 30 By Bank a/c 90,000 Dr. To Cash a/c Jan. 31 By Balance c/d 6,75,000 To Cash a/c Date 6,75,000 Cr. Jan. 3 To Balance b/d Jan. 30 Particulars 90,000 J.F. Amount To Cash a/c 50,000 Feb. 1 To Ajay’s a/c Bank Account 30,000 To Balance b/d Dr. Particulars J.F. Amount Date Particulars 4,45,000 To Balance c/d 5,25,000 Date 5,00,000 Jan. 27 By Salary a/c Jan. 7 Particulars 25,000 Jan. 31 By Computer a/c Cr. Jan. 19 To Balance c/d Jan. 31 By Balance c/d J.F. Amount Feb. 1 Particulars 5,25,000 1,20,000 To Cash a/c Dr. To Balance b/d 4,45,000 1,20,000 Date Purchase Account Cr. Jan. 31 J.F. Amount Date Particulars J.F. Amount Dr. 35,000 45,000 Jan. 31 By Balance c/d 50,000 Date 75,000 85,000 Jan. 31 85,000 1,20,000 Dr. Cr. 1,20,000 Date J.F. Amount Jan. 25 Sales Account 75,000 75,000 Feb. 1 J.F. Amount Date Particulars 75,000 85,000 Jan. 13 By Cash a/c Cr. Jan. 28 By Abha a/c J.F. Amount 85,000 15,000 15,000 Feb. 1 By Balance b/d Ajaya Account J.F. Amount Date Particulars 75,000 Jan. 19 By Purchase a/c 75,000 Feb. 1 By Balance b/d Wages Account J.F. Amount Date Particulars 15,000 Jan. 31 By Balance c/d 15,000 15,000 278 Office Management and Accountancy

Dr. Salary Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Jan. 27 To Bank a/c 50,000 50,000 Jan. 31 By Balance c/d 50,000 Feb. 1 To Balance b/d 50,000 Cr. Dr. 50,000 J.F. Amount Date 50,000 Jan. 28 Abha Account 50,000 Feb. 1 Particulars J.F. Amount Date Particulars To Sales a/c 50,000 Jan. 30 By Balance c/d To Balance b/d 50,000 50,000 Dr. Computer Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Jan. 31 To Bank a/c 30,000 30,000 Jan. 31 By Balance c/d 30,000 Feb. 1 To Balance b/d 30,000 30,000 c) Trial Balance As on 31st January, 2018 S.No. 1. Particulars L.F. Debit Rs. Credit Rs. 2. Capital a/c............................................................. 6,40,000 3. Cash a/c................................................................ 90,000 4. Purchase a/c.......................................................... 1,20,000 85,000 5. Bank a/c................................................................ 4,45,000 75,000 6. Sales a/c................................................................ 7. Ajaya's a/c............................................................ 15,000 8. Wages a/c............................................................. 50,000 9. Salary a/c.............................................................. 50,000 10. Abha's a/c............................................................. 30,000 Computer a/c....................................................... Total 8,00,000 8,00,000 Ill-6 The following ledger balances are extracted from the book of Binayak Traders. Prepare a trial balance for the year ending 31st December, 2017: Cash Rs. 10,000 Purchases Rs. 4,50,000 Sundry debtors 2,80,000 Salary 55,000 Sundry creditors 1,45,000 Office expenses 35,000 Trial Balance 279

Land and building 4,38,000 Advertisement 57,000 Capital 6,00,000 Sales return 10,000 Furniture and fixtures 2,50,000 Purchase return 5,000 Commission received Carriage inward 40,000 Sales 15,000 Commission paid 30,000 8,90,000 Solution: Trial Balance As on 31st December, 2017 S.No. Particulars L.F. Debit Rs. Credit Rs. 1. Cash....................................................................... 10,000 2. Sundry debtors...................................................... 2,80,000 3. Sundry creditors.................................................... 1,45,000 4. Land and building................................................. 4,38,000 5. Capital.................................................................... 6,00,000 6. Furniture and fixtures............................................ 2,50,000 7. Commission received............................................. 15,000 8. Sales....................................................................... 8,90,000 9. Purchases............................................................... 4,50,000 10. Salary..................................................................... 55,000 11. Office expenses...................................................... 35,000 12. Advertisement....................................................... 57,000 13. Sales return......................................................... 10,000 14. Purchase return.................................................. 5,000 15. Carriage inward.................................................. 40,000 16. Commission paid................................................ 30,000 Total 16,55, 000 16,55,000 Ill-7 Prepare a trial balance from the given ledger balances of Durga Company as on 31st Ashadh, 2074: Opening stock Rs. 10,000 Accounts payable Rs.70,000 Wages 14,000 Purchases 60,000 Rent, rates and taxes 95,000 Sales Capital 2,00,000 Plant and machinery 1,25,000 Drawings 60,000 Carriage outward 5,00,000 Vehicles 30,000 Bank balance 35,000 Investment 2,00,000 Loan 12,000 Accounts receivable 4,000 5,000 Import duty 11,000 10,000 Factory expenses 59,000 Interest paid 1,00,000 General reserve 90,000 Interest on investment 280 Office Management and Accountancy

Solution: Trial Balance As on 31st Ashadh, 2074 S.No. Particulars L.F. Debit Rs. Credit Rs. 1. Opening stock............................................................ 10,000 2. Wages........................................................................ 60,000 3. Purchases.................................................................. 2,00,000 4. Sales.......................................................................... 5,00,000 5. Capital...................................................................... 2,00,000 6. Drawing.................................................................... 5,000 7. Carriage outward..................................................... 10,000 8. Bank balance............................................................. 59,000 9. Investment................................................................. 1,00,000 10. Accounts receivable................................................... 90,000 11. Accounts payable...................................................... 70,000 12. Rent, rates and taxes................................................... 14,000 13. Plant and machinery.............................................. 95,000 14. Vehicles.................................................................... 1,25,000 15. Loan.......................................................................... 60,000 16. Import duty............................................................. 30,000 17. Factory expenses..................................................... 35,000 18. Interest paid............................................................. 12,000 19. General reserve....................................................... 4,000 20. Interest on investment............................................. 11,000 Total 8,45,000 8,45,000 Ill-8 Prepare a trial balance from the given ledger balances of HimalayanTrade Centre as on 30th June 2017. Open suspense account, if needed. Patent right Rs. 60,000 Capital Rs. 2,25,000 Reserve fund 38,000 Export duty 20,000 Prepaid expenses 5,000 Provision for bad debts 2,000 Administrative expenses 30,000 Rent received 14,000 Sales of scrap 1,000 Printing and stationery 10,000 Loss on sale of assets 9,000 Accrued income 11,000 Repair and maintenance 15,000 Other assets 2,00,000 Entertainment expenses 25,000 Purchases 2,50,000 General expenses 8,000 Sales 4,00,000 Trial Balance 281

Solution: Trial Balance As on 30th June 2017 S.No. Particulars L.F. Debit Rs. Credit Rs. 60,000 1 Patent right............................................................. 20,000 4,00,000 30,000 2,25,000 2. Export duty............................................................. 10,000 15,000 38,000 3. Administrative expenses........................................ 25,000 2,000 14,000 4. Printing and stationery.......................................... 2,50,000 1,000 8,000 5. Repair and maintenance........................................ 6,80,000 5,000 6. Entertainment expenses......................................... 9,000 7. Purchases................................................................ 11,000 2,00,000 8. General expenses.................................................... 37,000 6,80,000 9. Sales....................................................................... 10. Capital.................................................................... 11. Reserve fund.......................................................... 12. Prepaid expenses.................................................... 13. Provision for bad debts....................................... 14. Rent received....................................................... 15. Sale of scrap......................................................... 16. Loss on sale of assets.......................................... 17. Accrued income.................................................. 18. Other assets.......................................................... 19. Suspense account................................................ Total Key – errors committed unintentionally due to lack of Terms knowledge of principle or mistakes. Accounting errors – artificial process of equalising and closing the trial Adjustment and closing Arithmetical accuracy balance. Balance sheet – correctness of having equal amount on debit and credit Disagreement of trial balance Final accounts sides. – statement prepared by the firm to know the true Frauds financial position at the particular date. – difference in debit and credit side of trial balance due to some amounting errors in recording and posting. – summarized financial statements which are prepared to determine the operating results and true financial condition of the business. – errors committed intentionally to take undue benefit. 282 Office Management and Accountancy

Non-trading organization – organization established for rendering services rather Profit and loss account then earning profit. – account prepared to know the profit or loss of the business organization at the end of accounting period. A. Very short answer questions 1. What is a trial balance? 2. What is the main objective of preparing trial balance? 3. What is the general rule of preparing a trial balance? 4. Mention any two items which are posted in the debit column of trial balance. 5. Mention any two items which are posted in the credit column of trial balance. 6. What is suspense account? B. Short answer questions 1. Define trial balance and state the objectives for preparing it. 2. Show the specimen of trial balance and mention the things to be written in it. 3. What is disagreement of trial balance ? What are the causes of it ? 4. What do you mean by suspense account ? When and how is it opened ? 5. Write short notes on adjustment and closing of trial balance. C. Long answer question 1. What is a trial balance? State any four advantages of trial balance and mention the procedures for preparing it. PRACTICAL PROBLEMS(PP) PP-1 The following transactions are given to you: January 2 Ganesh started business with cash Rs. 3,00,000. January 5 Purchased goods on cash Rs. 40,000. January 10 Sold goods for Rs. 25,000. January 14 Cash deposited into bank Rs. 2,00,000. January 20 Purchased goods from Yogesh for Rs. 60,000. January 26 Paid rent by cheque Rs. 10,000. Required: a) Journal entries b) Ledger accounts c) Trial balance as on 31st January Ans: b) Balance: Capital account Rs. 3,00,000, Cash account Rs. 85,000, Purchase account Rs. 1,00,000, Sales account Rs. 25,000, Bank account Rs. 1,90,000, Yogesh account Rs. 60,000, Rent account Rs. 10,000 c) Total Rs.3,85,000 Trial Balance 283

PP-2 The following are the business transactions of Manakamana Traders for the month of Shrawan 2073: Shrawan 1 Commenced business with bank balance Rs. 4,00,000. Shrawan 2 Bought goods for Rs. 50,000 from John. Shrawan 9 Paid wages by cheque Rs. 20,000. Shrawan 17 Sold goods in cash Rs. 45,000. Shrawan 25 Withdrawn cash Rs. 40,000 for office use. Shrawan 28 Purchased goods for cash Rs. 30,000. Required: a) Journal entries b) Ledger accounts c) Trial balance as on 30th Shrawan Ans: b) Balance: Capital account Rs. 4,00,000, Purchase account Rs. 80,000, John account Rs. 50,000, Wages account Rs. 20,000, Bank account Rs. 3,40,000, Sales account Rs. 45,000, Cash account Rs. 55,000, c) Total Rs. 4,95,000 PP-3 The following ledger balances are extracted from the books of Everest ..... Enterprises as on 31st Chaitra, 2074: Capital Rs. 1,75,000 Sundry debtors Rs. 95,000 Purchases 2,15,000 Sundry creditors 80,000 Sales 4,70,000 Machinery Sales return 10,000 Cash in hand 1,39,000 Purchase return 15,000 Land and building 8,000 Salary 40,000 Cash at bank Rent 50,000 Bank loan 2,60,000 23,000 1,00,000 Required: Trial balance as on 31st Chaitra 2074 Ans: Total Rs. 8,40,000 PP-4 The following list of balances has been extracted from the books of Aabha as on 31st December 2017: Purchases Rs. 1,80,000 Rent and rates Rs. 45,000 Sales 4,13,000 Office expenses 38,000 Capital 3,00,000 Creditors 70,000 Purchase return 5,000 Bank loan 60,000 Sales return 3,000 Cash at bank 82,000 Plant and machinery 2,95,000 Commission allowed 20,000 Computer and equipment 1,10,000 Debtors 75,000 Required: Trial balance as on 31st December 2017 Ans: Total Rs. 8,48,000 284 Office Management and Accountancy

PP-5 The following ledger balances on 31st Ashadh 2074 are available: Opening stock Rs. 25,000 Investment Rs. 99,000 Sales 4,00,000 Cash and bank balance 78,000 Purchases 1,90,000 Administrative expenses 40,000 Wages 30,000 Loan from friends 50,000 Office equipment 90,000 Advertisement 35,000 Accounts receivable 1,85,000 Capital Accounts payable 80,000 Carriage 2,60,000 18,000 Required: Trial balance as on 31st Ashadh 2074 Ans: Total Rs. 7,90,000 PP-6 The following ledger balances are extracted from the book of Sujan as on 31st Ashadh 2074: Beginning inventory Rs. 9,000 Accounts receivable Rs. 30,000 Purchase 80,000 Accounts payable 20,000 Capital 10,000 Sales 1,20,000 Freight inward 4,000 Return inward 1,60,000 Commission received Return outward 1,59,000 5,000 Land and building 13,000 2,000 Cash at bank Required: Trial balance as on 31st Ashadh 2074 Ans: Total Rs. 3,06,000 PP-7 The following ledger balances are extracted from the book of Durga as on 31st Chaitra 2074: Purchase Rs. 75,000 Return inward Rs. 6,000 Sales 1,60,000 Rent received 5,000 Capital 85,000 Land and building 1,28,000 Return outward 3,000 Accounts payable 27,000 Carriage inward 10,000 Cash at bank 16,000 Beginning inventory 12,000 Accounts receivable 33,000 Required: Trial balance as on 31st Chaitra 2074 Ans: Total Rs. 2,80,000 Trial Balance 285

PP-8 The following ledger accounts are extracted from the book of a trader as on 31st Ashad 2074: Opening inventory Rs. 7,000 Rent expenses Rs. 13,000 Purchase 70,000 Capital 1,00,000 Sales 1,95,000 Bank loan 15,000 Bank overdraft 20,000 Carriage outward 14,000 Creditors 18,000 Discount allowed 6,000 Discount received 8,000 Business premises 2,17,000 Debtors 27,000 Interest expenses 2,000 Required: Trial balance as on 31st Ashadh 2073 Ans: Total Rs. 3,56,000 PP-9 The following ledger accounts are extracted from the book of Binayak as . on 30th June 2017: Purchase Rs. 50,000 Discount received Rs. 3,000 Sales 1,20,000 Loan received 30,000 Opening inventory 7,000 Business premises Discount allowed 2,000 Interest expenses 1,62,000 Debtors 20,000 Bank overdraft 2,000 Creditors 17,000 Printing and stationery 10,000 Capital 90,000 Carriage outward 13,000 14,000 Required: Trial balance as on 30th June 2017 The following are the business transactions of John EnAtnesr: pTortiasleRss.f2o,7r0t,0h0e0 PP-10 month of Chaitra 2074: Opening stock Rs. 40,000 General expenses Rs. 58,000 Bank balance 34,000 Investment 1,00,000 Accrued commission 5,000 Sales 4,25,000 Unearned commission 10,000 Interest received 13,000 Capital 59,000 Loan from Prime Bank 3,50,000 Creditors 78,000 Purchases 1,00,000 Debtors 3,50,000 Carriage inward 2,00,000 Land and building 14,000 50,000 Depreciation Required: Trial balance as on 31st Chaitra 2074, open suspense account if needed. Ans: Total Rs. 9,57,000, Suspense account Rs. 28,000 ●●● 286 Office Management and Accountancy

15 GOVERNMENT Chapter ACCOUNTING Learning Objectives After studying this chapter, the readers will be able to :  define government accounting,  explain the features of government accounting,  state the objectives of government accounting,  differentiate between government accounting and business accounting,  trace the historical development of government accounting in Nepal,  describe the types of accounting system used in Nepal. Introduction Government is the responsible body of the state. It has to perform a number of developmental and administrative activities towards the people. The government also has to perform a large number of financial transactions relating to such activities. The systematic recording of every financial transaction is equally important. Thus, in order to keep a systematic recording of financial transactions taking place daily in government offices, the government follows a proper accounting system which is known as government accounting. It is the part of accounting that maintains the record of governmental revenue and expenditures. Government Accounting 287

Concept and definition Government accounting is the systematic process of collecting, recording, classifying, summarizing, interpreting and communicating the financial transactions of the government offices. It provides the information about the collection of revenue from different heads and their ulilization in various administrative and development activities. It discloses the position of the government providing the information about receipts and utilization of public fund. Following is the definition of government accounting. “Government accounting is the process of recording, analyzing, classifying, summarizing, communication and interpreting financial information about government in aggregate and in details, reflecting all transactions involving the receipts, transfer and disposition of government fund and property.” Oshisami and Dean The accounting system followed by the government offices to keep the systematic record of government revenue and expenditures is known as government accounting. Short Notes to Remember (SNR 15.1)  Government accounting is the process of collecting, recording classifying, summarizing, interpreting and communicating the financial transactions of the government offices.  It is followed by all the government offices including ministries, departments and other central and operating level government offices. Features of government accounting Following are the main features of government accounting: a. Based on double entry concept Government accounting is based on the M Tdouble entry concept of accounting. It also emory ips keeps the record of financial transactions  Based on double entry concept  Preparation of budget  Provision of budget heads showing double effect. Thus, all the financial  Banking transactions transactions are debited and credited  Governmental rules and regulations considering the double affect.  Auditing b. Preparation of budget Budget is the estimation of income and expenditure of the government for the forthcoming fiscal year. The government prepares the budget every year and 288 Office Management and Accountancy

thus expenditures are made within the limitation of budget. All the financial transactions are recorded as per the estimated budget that facilitates for recording. c. Provision of budget heads Government accounting requires to keep the record of financial transactions systematically and scientifically. Thus, the government classifies the expenditures under different budget heads like salary, allowance, furniture, vehicles etc. It helps to maintain the effective control over budget. d. Banking transactions In order to maintain the proper control over budget, all the financial transactions of government offices are performed through bank. It means all the receipts should be deposited into bank and payments are also made by issuing cheque. e. Governmental rules and regulations Government accounting follows the governmental rules and provisions for maintaining the record of financial transactions. It is affected by financial acts, rules and regulations for recording and analyzing the transactions. f. Auditing In order to prevent the misuse and misappropriation of cash and public funds, all the government offices should make their books of account examined through a separate body i.e the Office of the Auditor General. Office of Auditor General is the constitutional body that performs the final audit of all the government offices including corporations. Objectives of government accounting The main objectives of government accounting are mentioned below:  To keep the systematic and permanent record of financial transactions of government offices.  To prevent misuse and misappropriation of governmental properties including cash and store items.  To maintain the effective control over budget.  To provide various reliable information about the receipt and utilization of public fund.  To help for the preparation of various financial statements and reports.  To facilitate the auditing of books of account of government offices.  To maintain the record of governmental revenue and expenditures as per prevalent act, rules and provision.  To help for the preparation of annual budget by supplying financial data and information. Government Accounting 289

Differences between government accounting and business accounting Besides government accounting, there is another accounting i.e. business accounting which is maintained by business organizations. Both accounting systems are concerned with the recording classifying, summarizing and interpreting the financial transactions in systematic manner. Both the systems are based on double entry concept. However, there are some differences between these two systems as given below: Basis of difference Government accounting Business accounting 1. Meaning It is the accounting system It is the accounting system used by government offices used by business organizations to keep the record of revenue to keep the record of financial and expenditures. transactions. 2. Purpose Its main purpose is to depict Its main purpose is to ascertain the position of government the profit or loss and financial funds. condition of the business firm. 3. Basis It is maintained on cash basis. It is maintained on cash as well as accrual basis. 4. Level of It has the provision of central It does not have any classification accounting and operating level of of level of accounting. accounting. 5. Budget It strictly follows the It does not follow the government budgeting system of budgeting system. government. 6. Information It provides information about It provides information about the receipts, transfer and operating results and financial 7. Rules and disposition of public funds. position of business. provisions 8. Responsibility It strictly follows the financial It follows the rules and rules and provisions of the principles of Generally Accepted government. Accounting Principles (GAAP). It is responsible towards the It is responsible towards owners general public. or shareholders of the firm. 9. Forms and It uses the accounting forms It uses the forms and format format and formats prescribed by the as per its requirement and 10. Audting Office of the Auditor General. prescribed by company act or other regulations. Its books of account are Its book of account are audited audited by the constitutional by the professional auditor body i.e the Office of the having license. Auditor General. 290 Office Management and Accountancy

Evolution of government accounting in Nepal The accounting system of government of Nepal is not so old. There weren't many financial transactions in the past and thus the systematic accounting was not required in the government offices. The government and people were not as aware as they are today. On the other hand, the government was not much accountable towards the people. In fact, accounting system in government offices was started only during the Lichchhavi period. A certain system was followed during that period to record the revenue and expenditures of the government. At that period, trusts, taxes, voluntary contributions etc were the sources of income and war, renovation, construction of religious and public places were the different heads of expenditure. The trade and industry further developed in the Malla period. The governmental source of revenue of this period was the custom duty. The different heads of expenditures were like in Lichchhavi period. However, the accounting system could not be developed and remained same as earlier. It was unsystematic and unscientific for maintaining the record. As the number of financial transactions increased after the unification of Nepal in 1825 B.S, the government also became more responsible towards the general people. As a result, a book called Laldhadda was brought into use in 1871 B.S to keep the record of government revenues and administrative expenses. Similarly in 1879 B.S, a book called Mothdhadda was used to keep the record of transactions relating to land and land revenue. In the process of development of accounting, a government office called Nijamati Kitabkhana was established in 1925 B.S to keep the record of government personnel and salaries paid to them. This office is still working in Nepal. Then in 1936 B.S , Kharidar Gunawant, a senior official introduced an accounting system which was named as Syaha Sresta Pranali. It was comparatively advanced type of accounting system for maintaining the record of government revenue and expenditure. Faram Sresta Pranali was introduced in 1968 B.S. It had altogether 51 different forms to record and report the transactions. After the establishment of democracy in Nepal in 2007 B.S, the government become more responsible towards the general people. As a result, budget system was introduced in 2008 B.S. In 2016 B.S. the office of the Auditor General was established to audit the books of account of government offices. In the same year, Procedural rule for government fund expenditure 2016 was passed and enacted to maintain the uniformity in financial administration. As a result, Payment Accounting System was brought into use in 2017 B.S. But this system could not remain longer in use. It was replaced by the new accounting system which was introduced in 2018 B.S. as per the recommendation of Account Committee 2017. It is based on double entry system of accounting which has been followed by all the government offices of Nepal since the fiscal year 2019/20 B.S. till today. It is regarded as modern, scientific, systematic and practicable type of accounting system for recording the government revenue and expenditures. Government Accounting 291

Short Notes to Remember (SNR 15.2)  Government accounting in Nepal was started during Lichhavi and Malla period.  After unification of Nepal, accounting system became more systematic and organized. As a result, a book called ‘Laldhadda’ was introduced in 1871 B.S. to record the government revenue and expenditure.  In 1879 B.S. a book called ‘Mothdhadda’ was introduced to keep the record of land and land revenue.  In 1925 B.S., an office called ‘Nijamati Kitabkhana’ was established to keep the record of government personnel and salaries paid to them.  In 1936 B.S, Kharidar Gunawant, a senior official introduced a system called Syaha Sresta Pranali which was suitable for maintaining the record of government revenue and expenditures.  In 1968 B.S, Faram Shresta Pranali was introduced to record the large number of financial transactions specially in Terai region.  The government introduced the budget system in 2008 B.S.  In 2016 B.S., the Office of the Auditor General was established to audit the books of account of government offices. In the same year, an act called procedural rule for government fund expenditure 2016 was passed and enacted.  In 2017 B.S., an accounting system called Payment Accounting System was introduced which was based on double entry system.  As per the recommendation of ‘Account Committee 2017’ new accounting system was introduced in 2018 B.S. It has been followed by all government offices of Nepal since the fiscal year 2019/20 B.S. till today. Types of accounting system used in Nepal The following accounting systems were used in Nepal in different periods: Figure: 15.1 Types of accounting system used in Nepal Accounting system Wasil Banki Syaha Faram Bhuktani Naya Sresta Sresta Sresta Sresta Sresta Pranali Pranali Pranali Pranali Pranali Wasil Banki Sresta Pranali Wasil Banki Sresta Pranali was a simple system used earlier to keep the record of revenue and expenditures in government office. It was based on the single entry system. Under this system, revenues were recorded in one side of the page and expenditures were recorded in another side of same page. This system was useful only for those offices which were established for short term period. There was no provision of classifying the transactions into different heads. It was simple but unscientific and impracticable system having many demerits. 292 Office Management and Accountancy

Wasil Banki Sresta Pranali is a simple and unscientific accounting system used earlier to record the revenues and expenditures of government offices were in a simple sheet of paper under single entry concept. Syaha Sresta Pranali After the use of Wasil Banki Sresta Pranali in Nepal, another accounting system was introduced by a senior official, Kharider Gunawant in 1936 B.S. which was called Sysha Sresta Pranali. It was more systematic and scientific in comparison to Wasil Banki Sresta Pranali. Under this system, the governmental transactions were recorded in classified manner and balance also could be obtained at the required date. The different books of account maintained under this system were as follows: Figure: 15.2 Syaha sresta pranali Syaha sresta pranali Syaha Awarje Dhapot Job Month Year Nagadi Jinsi Dharauti Income Vinjalik ending ending ending Syaha Sresta Pranali is a classified type of accounting system introduced in to record the transactions were recorded under Syaha, Awarje and Dhapot as per their nature. i. Syaha Syaha was the primary recording of financial transactions like the journal book of today. It was used as the first step in Syaha Sresta Pranali. In this book, the transactions were recorded in chronological order. The records were maintained under it using local made paper called Nepali Kagaj. As per the necessity, Nepali Kagaj could be folded into 16 ,24 ,32 or 36 creases but the 16 creases paper was mostly common. Under Syaha, the expenditures were recorded in left hand side and revenues were recorded in right hand side of the paper. At the end of every day, both sides of Syaha were totaled which was called Terij (subtotal). Again, the total upto the previous day was added with the total of the day to find out grand total upto the day which was called Berij. Syaha was closed at the end of the month or at the end of a fiscal year. Government Accounting 293

Syaha were of three types as follows: a) Nagadi Syaha : It was used to keep the record of cash transactions. b) Jinsi Syaha : It was used to keep the record of all types of government properties. c) Dharauti Syaha : It was used to keep the record of amount deposited by people as security. ii. Awarje Awarje was another important book maintained under Syaha Sresta Pranali. It was like the ledger book of business firm used today in which the transactions were posted in classified manner into different heads. There were two types of awarje as follows: a) Income Awarje : It was used to post the transactions relating the government revenue. b) Vinjalik Awarje : It was used to post the transactions relating to government expenditures under different heads. iii. Dhapot Dhapot was the final statement of all the transactions used under Syaha Sresta Pranali. It was used as the balance sheet of a firm used today to present the financial position of public fund in government offices at the particular date. Dhapot were of three types as follows; a) Job ending Dhapot : It was prepared after the completion of particular job. b) Month ending Dhapot : It was prepared at the end of every month. c) Year ending Dhapot : It was prepared at the end of every fiscal year. Faram Sresta Pranali Syaha Sresta Pranali could not meet the requirement of increasing number of financial transactions in government offices specially in terai region and city areas. As a result in 1968 B.S., another accounting system was introduced which was called Faram Sresta Pranali. It was brought into use having the number of forms for recording the transactions of different nature. A ready made form could be used for recording the transactions that removed the difficulty and tediousness in designing different forms frequently. There were altogether fifty one different forms designed and developed under this accounting system. The following were some of the important forms used under Faram Sresta Pranali.  Day book of cashier  Ten days report  Fifteen days report  Monthly cash book  Monthly pay roll sheet  Remainder journal 294 Office Management and Accountancy

 Statement of land tax  Outstanding revenue record form  Statement of balance to be collected from debtors Faram Sresta Pranali was a type of accounting system introduced in 1968 B.S. having provision of different printed forms which was specially used to record the land revenue of terai and city areas of Nepal. Bhuktani Sresta Pranali When the government introduced budget system since the fiscal year 2008 B.S, it became more responsible and accountable towards the general people. As a result in 2017 B.S, another accounting system was introduced in the country which was called Bhuktani Sresta Pranali. It was based on double entry system of book keeping. In order to maintain the record of revenues and expenditure of government according to the budget heads, it was found effective. However, this system could not remain for longer period as it was replaced by new accounting system. The notable features of this system were as follows:  Based on the double entry concept.  Classification of offices into central level and operating level.  Concept of decentralized financial administration.  Financial control through audit.  Provision of reporting on monthly, quarterly, half yearly and yearly basis.  Provision of depositing unspent amount of budget into consolidated fund of government. Bhuktani Sresta Pranali is a systematic and scientific accounting system introduced in 2017 B.S. in which the government revenues and expenditures were recorded according to the budget heads. Naya Sresta Pranali (New Accounting System) The various accounting systems were practiced by the government of Nepal in different periods. However all of them became unsuitable to meet the requirement of growing need of government offices due to increasing number of transactions. Considering this fact, on 20th Magh 2017 B.S., an accounting committee was formed to suggest a scientific system as per the demand of the time. After the detailed study of 288 days, the committee submitted the draft recommending a suitable system. It was approved by the government on 2nd Chaitra 2018 B.S. As a result, an accounting system was introduced in the country which was called new accounting system. This accounting system was gradually implemented since fiscal year 2019/20 B.S. throughout the country. This system is still in use in all the government offices due to its notable features. Government Accounting 295

New accounting system is the present accounting system of government of Nepal which was introduced as per the suggestions of account committee 2017 to maintain the systematic and scientific record of all the government revenue and expenditure under double entry system. Key – act of examining the books for account to ensure the correct Terms application of accounting principles. Auditing – a ledger book of business firm maintained under Syaha Sresta Pranali. Awarje – estimation of revenue and expenditure for forth coming year. Budget Budget heads – heads for making expenditure under government accounting like salary, furniture, vehicles etc. Business accounting – accounting system used by the business organizations to Consolidated fund keep the record of financial transactions. Decentralized – fund of government of Nepal of depositing surplus money, Government accounting unspent budget or other revenues. Syaha – delegated authority to the local bodies. Uniformity – accounting system used by the government offices to keep the record of revenues and expenditures. – primary recording of financial transactions named under Syaha Sresta Pranali – similarity. A. Very short answer questions 1. What is government accounting? 2. Write any two features of government accounting. 3. When was payment accounting system implemented in Nepal? 4. When and who introduced Syaha Sresta Pranali in Nepal ? 5. When was payment accounting system introduced in Nepal ? 6. State the types of Syaha. 7. State the types of Dhapot. 296 Office Management and Accountancy

8. When was account committee formed in Nepal to suggest a suitable accounting system? 9. When was the new accounting system implemented in Nepal? 10. When was the Office of the Auditor General established in Nepal? B. Short answer questions 1. Define government accounting and describe its features. 2. Mention the major objectives of government accounting. 3. Differentiate between government accounting and business accounting. 4. Write in short about Wasil Banki Sresta Pranali. 5. Introduce Syaha Sresta Pranali and discuss about the way of maintaining record in it. 6. Explain in brief about Faram Sresta Pranali. 7. What is Bhuktani Sresta Pranali? Write its features. C. Long answer questions 1. What is government accounting? Describe the historical development of government accounting in Nepal. 2. List out the accounting system used in Nepal and describe them briefly. ●●● Government Accounting 297

Model Questions Sets Office Management and Accountancy Time: 2 hrs 15 minutes F.M.: 75 Candidates are required to give thie answers in their own wwords as far as practicable. The figures in the margin indicate full marks. Set 1 Group A Answer the following questions in one sentence: [5×1=5] 1. Write the full form of WWW. 2. Write the meaning of bank overdraft. 3. Name any two modern means of communication. 4. Clarify the meaning of limited liability in business. 5. When was payment accounting system introduced in Nepal? Group B Give short answer of the following questions: [8×5=40] 6. Define office and explain its four functions in brief. [1+4] 7. Introduce each type of office resources with their usefulness. [5] 8. Differentiate between single entry system and double entry system of accounting. [5] 9. What is assembly? Describe any four types of assembly. [1+4] 10. What type of organization is sole trading concern? Explain its four advantages. [1+4] 11. What is postal service? Describe its utilities and importance to the different parties. [1+4] 12. Following transactions are given: Jan 1 Started business with cash Rs. 50,000. Jan 5 Bought goods from Saru for Rs. 10,000. Jan 10 Sold goods for Rs. 15,000. Jan 18 Paid cash Rs. 6,000 to Saru. Jan 20 Bought machinery on credit Rs 15,000. Jan 28 Paid cash Rs 8,000 into bank. Required: a) Cash account [3] b) Saru’s account [2] Ans: a) Balance Rs. 51,000 b) Balance Rs. 4,000 13. Following are the transactions relating to purchase: Falgun 2 Bought from Kamal Electric House, Patan 50 CFL Bulbs @ Rs. 190 each 30 Bulb holders @ Rs. 100 each Falgun 8 Purchased from Bishal Electrical House, Balaju 20 Tube lights @ Rs. 175 each 30 Torch lights @ Rs. 150 each (Trade discount @ 5% on both) Falgun 18 Purchased from Himal Electrical Centre, Chabahil on cash 20 Electric heater @ Rs. 1,000 each Required : a) Purchase book [3] b) Purchase account [2] Ans: a) Total Rs. 20,100 b) Balance Rs. 40,100 298 Office Management and Accountancy

Group C [2+8] 14. What is correspondence? Describe the different parts of a letter orderly in brief. 15. What is Joint Stock Company? Describe its four advantages and four disadvantages. (2+4+4) 16. Journalize the following transactions in the book of Decorate Nepal, Butwal. [10] Jan 2 Commenced business with cash Rs. 5,00,000 and stock of goods Rs. 1,00,000. Jan 4 Cash Rs. 50,000 deposited into Nepal Bank Limited. Jan 10 Bought furniture for Rs. 20,000 and paid by cheque. Jan 20 Goods sold to Diya for Rs. 20,000 on credit. Jan 22 Advertisement expenses Rs. 12,000 paid in cash. Jan 26 Purchased goods of Rs. 40,000 from Dhiraj & Company. Jan27 Received cash Rs. 18,000 from Diya in full settlement. Jan 28 Paid cash to Dhiraj & Company after deducting discount Rs. 2,000. Jan 29 Received rent Rs. 20,000 from Hari & Sons. Jan 30 Withdrawn cash Rs. 15,000 from Nepal Bank Limited. Set 2 Group A Give answer of the following questions in one sentence: [5×1=5] 1. Mention any two source of finance for government office. 2. Write the meaning of closing stock. 4. Who introduced Thapley Hulak? 5. When was office of auditor general established in Nepal? Group B Give short answer of the following questions: [8×5=40] 6. Who is office Chief? Mention any six responsibilities of office chief. [1+4] 7. Give the meaning of double entry system and explain its four features. [1+4] 8. What is minutes? Write any four considerable points for drafting minutes of meeting or assembly. [1+4] 9. Differentiate between ordinary letter and registered letter. [5] 10. What is partnership firm? Explain its four disadvantages. [1+4] 11. What is government accounting? Explain any three government accounting systems practiced in Nepal before introduction of new accounting system. [2+3] 12. Write a letter to Readmore Publishers and Distributors, Kuleshwor, Kathmandu giving order for purchasing 50 pieces of office management and accountancy book of grade 9 for your school. [5] 13. Following are the sales related transactions of a trader: Kartik 5 Sold to Rishav, Patan 300 pieces shirt @ Rs 150 each 200 pieces hats @ Rs 400 each Kartik 10 Sold to Rashmita, Dharan 70 pieces pants @ Rs 1200 each 30 pieces shirt @ Rs 500 each less 2% trade discount. Kartik 22 Sold to Bipana, Hetauda 80 Vests @ Rs 150 each 120 pairs of socks @ Rs 120 per pair (Trade discount @ 10 %) Model Questions Sets 299

Kartik 28 Sold to Hema, Kavre on cash 50 pairs of gloves @ Rs 300 per pair 20 trousers @ Rs 300 each Required: a) Sales book [3] b) Sales account [2] Ans : a) Total Rs. 2,47,460 b) Balance Rs. 2,68,460 Group C Give long answer of the following questions: [3×10=30] 14. Who is office assistant? Describe any eight qualities of office assistant in brief. [2+8] 15. Journalize the following transactions in the book of Quality Enterprises: [10] March 1 Invested cash Rs. 5,00,000 into a business . March 2 Deposited cash Rs. 2,00,000 into bank. March 4 Bought goods of Rs. 25,000 in cash and Rs 50,000 credit from Pramila. March 10 Sold goods of Rs. 50,000 to Limbu and received amount Rs 20,000 through cheque partially . March 18 Paid house rent Rs. 6,000 by cheque. March 22 Paid cash Rs 48,000 to Pramila in full settlement. March 24 Withdrawn cash Rs. 30,000 from bank for office use. March 25 Commission Rs. 5,000 received in cash. March 30 Received cash Rs. 30,000 from Harihar. 16. Post the above transactions of Q.No 15 into the following ledger accounts: a) Cash account [4] b) Bank account [3] c) Purchase account [1] d) Sales account [2] Ans: a) Balance Rs. 2,92,000 b) Balance Rs.1,84,000 c) Balance Rs. 75,000 d) Balance Rs.1,07,000(Cr) Set 3 Group A [5×1=5] Answer the following questions in one sentence: 1. Write the full form of CEO and PA. 2. Who is the father of modern accountancy? 3. Give any two examples of technical manpower. 4. Write any two examples of assets and liabilities each. 5. When was budget system introduced in Nepal? [8×5=40] Group B Write short answer of the following questions: 6. Describe any five qualifications of office assistant. [5] 7. What is cooperative organization? Explain its any four features. [1+4] 8. What is accounting? Discuss any four principles or concepts of accounting. [1+4] 9. What is record keeping? Describe the types of records according to Record Disposal Regulation 2027. [1+4] 10. What are subsidiary books? Give any six reasons for maintain subsidiary books in business. [1+4] 300 Office Management and Accountancy