ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
– FINANCIAL ACCOUNTING
UNIT-1 – BRANCH ACCOUNTS
Type: 80% Theory – 20% Problem
Question
Syllabus: [Regulation: 2012]
UNIT: 1 Branch accounts-objectives of branch account-types of branchdependent branch-stock and debtor system-accounting system- independent
branch-incorporation of branch figure in head office book
PART – A QUESTION
1. Give journal entries for cash sent to bank for expenses
2. Give journal entries for profit arises at the branch(April-2013)
3. Give journal entries for good sent to branch transferred to trading account.
4. Give the journal entry for closing stock in the branch
5. Give the journal entry for closing debtors in the branch
6. Give the journal entry for shortage of stock
7. What is meant by Inter-branch transactions?
8. What is meant by goods in transit?
9. What is meant by cash in transit?
10. What is meant by branch adjustment account?
11. What are the accounts that should be maintained in Stock and debtors system?
12. What is branch? (Nov – 2014, April-2010)
13. What is meant by Invoice price method? (April-2011)
14. What are the types of branch? (Nov – 2011, Nov – 2012, April-2011, April2014)
15. What is meant by Independent b r a n c h ? (April-2014)
16. What are the types of home branch?
17. What is meant by Dependent branch? (Nov – 2011, Nov – 2013, April-2010)
18. What is meant by Debtors system? ( Nov-2010
19. What is meant by Stock and Debtors system?
20. What is meant by Wholesale Branch System?( Nov – 2012)
21. What is meant by Final account system
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22. What is meant by Foreign Branch?
23. Give journal entries for good sent to branch(April-2013)
PART-B QUESTION
Write down the features of dependent branch. (Nov – 2013)
Give Journal entries passed in the books of head office.
Questions in answer book
. Questions in answer book
Questions in answer book
Questions in answer book
. Questions in answer book
Write down the objectives of branch accounting.( NOV – 2010, Nov – 2014,
April-2010, April-2013, April-2014
9. Distinction between wholesale and retail profit at branch.
10. Write down the features of independent branch.
1.
2.
3.
4.
5.
6.
7.
8.
PART-C QUESTION
1.
2.
3.
4.
5.
Difference between Independent & Dependent Branch. (NOV – 2010)
Question in answer book
Question in answer book
Question in answer book
Question in answer book
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
UCM 21 – FINANCIAL ACCOUNTING
UNIT-1 – BRANCH ACCOUNTS
Type: 80% Theory – 20% Problem
Question & Answers
PART – A ANSWERS
1. Give journal entries for good sent to branch transferred to trading account.
Goods sent to Branch A/c
Dr.
To Trading A/c
2. Give journal entries for profit arises at the branch(April-2013)
Branch A/c
Dr.
To Profit and Loss A/c
3. Give journal entries for cash sent to bank for expenses
Branch A/c
To Bank A/c
Dr.
4. Give the journal entry for closing stock in the branch
Branch stock A/c
To Branch
Dr.
5. Give the journal entry for closing debtors in the branch
Branch Debtors A/c
To Branch A/c
Dr.
6. Give the journal entry for shortage of stock
Branch adjustment A/c
Dr.
To Branch Stock A/c
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7. What is meant by Inter-branch transactions ?
The head office has many branches and there is a possibility that some branch
may supply goods or send cash to the other branch are called inter-branch transactions.
8. What is meant by goods in transit ?
When goods are dispatched by the head office to branch and the branch does
not receive it even upto the end of the year, it is known as goods in transit.
9. What is meant by cash in transit ?
The cash sent by branch to H.O. or the cash sent by H.O. to branch has not
been received by the other party upto the end of the year, it is known as cash in
transit.
10. What is meant by branch adjustment account?
This account is prepared for ascertaining the amount of gross profit earned by
the branch. This is done by eliminating the profit element or the ‘loading’ included in the
value of opening and closing stock at branch, goods sent to branch, less returns made by
branch to head office and in surplus or shortage in branch stock etc.
11. What are the accounts that should be maintained in Stock and debtors system?






Branch Stock Account.
Branch Debtors Account
Branch Expenses Account.
Branch Adjustment account
Branch profit and loss account and
Goods sent to the branch account
12. What is branch? (Nov – 2014, April-2010)
The word ‘branch’ is any subordinate division of a business, subsidiary shop, office
etc. Business is carried out in different areas scattered over a large territory.
13. What is meant by Invoice price method? (April-2011)
When the goods are sent by the head office to the branch at invoice price means
cost plus some percentage of profit, the branch manager required to sell the goods at
invoice price only.
14. What are the types of branch? (Nov – 2011, Nov – 2012, April-2011, April-2014)


Home branch
Foreign branch
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15. What is meant by Independent branch ? (April-2014)
Branch which maintains its own set of books and has freedom to operate
independently. If a branch is big and carries on manufacturing operations also, it is
allowed to operate freely within the framework of head office policies.
16. What are the types of home branch?


Dependent branch
Independent branch
17. What is meant by Dependent branch? (Nov – 2011, Nov – 2013, April-2010)
These branches are inland branches wholly dependent on the head office for
their requirements. These branches do not maintain their own set of books, and all the
records of the branch are maintained by the head office.
18. What is meant by Debtors system? ( Nov-2010)
This system is adopted in case of branches of small size. Under this
system a branch account is opened separately for each branch in the books of head
office.
19. What is meant by Stock and Debtors system?
Profit or loss of a branch can be found out by preparing branch account , but
there is another method for the same purpose is known as stock and debtors method.
20. What is meant by Wholesale Branch System?( Nov – 2012)
Manufacturers may sell goods to the consumers either through the
wholesalers and approved stockiest or through their branches. The person/corporate
buy the goods at bulk for the purpose of sell.
21. What is meant by Final account system?
The head office can also ascertain the profit or loss of a dependent branch by
preparing branch trading and profit and loss of a dependent branch by preparing branch
trading and profit and loss account at cost.
22. What is meant by Foreign Branch?
The head office in inland and its branch in foreign country, these branches is
called foreign branch. The foreign branch keeps their accounts not in the home
currency the values will be expressed in foreign currency, now the same has to be
converted into home currency.
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23. Give journal entries for good sent to branch(April-2013)
Branch a/c
Dr.
To goods sent to Branch A/c
PART – B ANSWERS
1. Write down the features of dependent branch. (Nov – 2013)
 It do not maintain its books of accounts
 Goods are supplied by head office to the branch.
 Branch receives the goods and sells them as per the direction of the head
office.
 All the expenses of branches are paid directly by the head office.
 The head office provides petty cash to the branch to meet some petty
expenses, so only simple petty cash book is maintained at the branch
 The branch remits cash to the head office which are from the sale proceeds and
collection from debtors in case of credit sales.
2. Journal entries passed in the books of head office
(i) Branch a/c
Dr.
To goods sent to Branch A/c
(ii) Branch A/c
Dr.
Invoice value of goods sent.
Cash sent for expenses.
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To Bank A/c
(iii) Bank A/c
To Branch A/c
(iv) Branch Stock A/c
REGULATION CBCS - 2012
Dr Cash remitted by the branch to the H.O.
(Cash consists of sales and receipts from Drs.)
Dr. Branch stock (at invoice Price) and branch
Branch Debtors A/c
Dr. Debtors at the end of year.
To Branch A/c
(v) Goods Sent to Branch A/c Dr. Invoice price on goods sent to branch adjusted.
To Branch A/c
(Loading on the goods sent)
(vi) Branch A/c
Dr.
Invoice value of closing stock adjusted.
To Branch Stock Reserve A/c
(vii) Branch A/c
Dr.
Profit at branch
To Profit and Loss A/c
(viii) Goods sent to Branch A/c
Dr. Goods sent to Branch Transferred.
To Trading A/c
3.Layal company opened a branch at madras on 1.1.89. From the following particulars the
madras branch account for the year 1989 and 1990. (Nov – 2011, Nov – 2013)
1989 Rs.
1990 Rs.
15000
45000
Rent
1800
1800
Salaries
3000
5000
Other expenses
1200
1600
24000
60000
2300
5800
40
30
Goods sent to branch
Cash sent to branch for :
Cash received from the branch
Stock on 31st December
Petty cash on 31st December
IN THE BOOKS OF HEAD OFFICE
Madras branch A/c for 1989
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Particulars
REGULATION CBCS - 2012
Rs.
Rs.
To balance b/d
Particulars
Rs.
Rs.
NIL By cash
TO Goods sent to branch
24000
15000 By Balance C/d
To Cash:
Stock
Rent
1800
Salaries
3000
Other expenses
1200
2300
Petty cash
40
2340
6000
To General P&L A/c
5340
26340
26340
Madras branch A/c for 1989
Particulars
Rs.
Rs.
Particulars
To balance b/d
Stock
Petty cash
Rs.
Rs.
By cash
2300
40
TO Goods sent to branch
60000
By Balance C/d
2340 Stock
5800
45000 Petty cash
30
5830
To Cash:
Rent
1800
Salaries
5000
Other expenses
1600
To General P&L A/c
8400
10090
65830
65830
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4. Prepare branch accounts for the year 1994. From the following particulars the Madurai branch
account for the year 1994 (Nov – 2011, Nov – 2012, Nov – 2014, April-2010, April-2011, April-2013,
April-2014)
Stock on 1.1.94
11200
Debtors on 1.1.94
6300
Goods sent to branch
51000
Cash sent to branch for :
Rent
1500
Salaries
3000
Petty cash
500
5000
Sales at branch
Cash
25000
Credit
39000
64000
Cash received from debtors
41200
Stock on 31.12.94
13600
Madurai branch A/c for 1994
Particulars
Rs.
Rs.
To balance b/d
Stock
Debtors
Particulars
Rs.
Rs.
By Bank :
11200
Cash sales
25000
6300
17500 Cash from debtors
41200
TO Goods sent to branch
66200
51000
To Bank:
Rent
1500
By Balance C/d
Salaries
3000
Stock
13600
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Petty cash
REGULATION CBCS - 2012
500
To General P&L A/c
5000 Debtors
4100
17700
10400
83900
83900
5.From the following particulars prepare a branch account showing the profit or loss at the
branch
Rs.
Opening stock at the branch
15000
Goods sent to branch
45000
Sales
60000
Salaries
5000
Other expenses
2000
Closing stock could not be ascertained but it is known that the branch usually sells at cost plus
20%. The branch manager is entitled to a commission of 5% of the profit of the branch before
charging such commission.
Branch A/c
Particulars
To Opening stock at the branch
To Goods sent to branch
Rs
Particulars
Rs
15000 By Sales
60000
45000 By Closing stock
10000
To Salaries
5000
To Other expenses
2000
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REGULATION CBCS - 2012
To Manager’s commission
150
To Net profit –transfer to
P & L A/c
2850
70000
70000
6. A Madras head office has a branch at Salem to which goods are invoiced cost
plus 20%. From the following particulars prepare branch a/c in the books of head
office. (Nov – 2012, April-2011, April-2013)
Stock on 1.1.96
7680
Debtors on 1.1.96
24000
Stock on 31.12.96
13440
Goods sent to branch
211872
Total sales
206400
Cash sales
110400
Cash received from debtors
88000
Salem branch A/c for 1996
Particulars
Rs.
To balance b/d
Stock
Debtors
To Goods sent to branch
Rs.
Particulars
Rs.
Rs.
By Bank :
7680
Cash sales
110400
24000
31680 Cash from debtors
88000
211872 By Stock Reserve
1280
By Goods sent to branch
- Loading
35312
By Balance C/d
Stock
198400
13440
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REGULATION CBCS - 2012
To Stock Reserve
2240 Debtors
To General P&L A/c
32000
45440
34640
280432
280432
7. A head office sends goods to its branch at 20% less than the list price. Good are sold to
customers at cost plus 100%. From the following particulars ascertain the profit made at the head
office and the branch on whole sale basis.
Particulars
Head
office
Head office
Purchases
200000
-
Goods sent to branch
80000
-
Sales
170000
80000
Trading , Profit & Loss A/c
Particular
To
Purchases
To Goods
received
from H.O
To Gross
Profit
To Stock
reserve
Branch
Head
office
Branch
200000
Particular
Branch
170000
80000
-
By Goods
sent to
80000 branch
80000
-
115000
By Closing
16000 stock
65000
16000
315000
96000
315000
96000
115000
16000
6000
- By Sales
Head
office
By Gross
Profit
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ACADEMIC YEAR: 2014 – 2015
To Net
Profit
109000
16000
115000
16000
REGULATION CBCS - 2012
115000
16000
8.Write down the objectives of branch accounting.( NOV – 2010, Nov – 2014, April-2010, April-2013, April2014)




To Ascertain the profit or loss of the branches
To have a better control over the branches by the head office
To know the financial position of the branches
To enable the head office to know the requirements of goods and cash of each
branch
 To provide suggestions for improvements
 To formulate further programmes and policies relating to the branches.
9.Distinction between wholesale and retail profit at branch.
Sometimes head office also sells goods at retail or list price besides sending the
goods to branches at wholesale prices. The difference between the retail price and wholesale
price will be the profit made by the branch. Suppose if an article costs to head office Rs. 100 and
it is supplied to the branches at Rs. 160 at wholesale price but both head office and branches sell
goods at Rs. 200, then, profit made by the branch will be Rs. 40 (i.e., Rs. 200 –Rs. 160) and not
Rs. 100 (Rs. 200-Rs.100).
The goods are sent by the head office to the branches at Wholesale price and if all the
goods are sold there is no problem but if some goods remain unsold at the end of the
accounting year, these unsold goods at the branches must be reduced to cost price by making a
stock reserve for unrealized profit for the difference between eh wholesale and cost price and
will be debited to the head office profit and loss account, as previously the head office must
have earned profit while sending goods to the branches.
10.Write down the features of independent branch. ()
 They need not depend on the Head office for their requirements of supplies of goods. They
can make purchases themselves. Of course, they can also obtain supplies of goods from the
head office as and when they want.
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 They can only sell goods for cash and credit at any price they consider profitable.
 They need not remit the money received by them from cash sales and debtors to the Head
office periodically. They can retain the funds and meet their day-to-day expenses out of
those funds. Finally, if they have surplus cash in their hands, they can remit the same to the
Head office.
 They keep a complete set of books for recording their transactions. So, they can prepare
their own Trial Balance, Trading and Profit and Loss Account and Balance Sheet.
 However, as they are ultimately responsible to the Head office, at the end of every financial
period, they are required to submit a copy of their Trial Balance to the Head office
PART – C ANSWERS
6. Difference between Independent & Dependent Branch. (NOV – 2010)
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Sr.
Basis
Independent Branch
1.
Accounting System
2.
Sale of Goods
3.
Point of Payment
of Expenses
4.
5.
Remittance of Cash
Trial Balance
Reconciliation
7.
Methods
of
Preparing
Final
Dependent Branch
Independent branch keeps
The accounts of branches are
full system of accounting at their
maintained at the Head Office level.
place.
At branch only Cash Register.
Debtors Register are maintained.
These branches sell goods
These branches sell only those
received from head office as
goods which are supplied by the Head
well as from the purchases
office. They are normally not allowed
made by them.
to make own purchases.
Branch keeps the required
cash to meet the expenses
of regular nature with
themselves.
Independent Branches are
not required to remit all the
cash daily to head office.
A trial balance has been
extracted from the ledger
maintained at branch level.
6.
Account
REGULATION CBCS - 2012
All branch expenses of regular
nature like salary, Rent normally
paid directly by head office. Branch
managers are allowed to incur petty
expenses
All the only.
daily cash sale and
collection from debtors will be
deposited at local bank or remitted to
Trial
H.O. Balance is not required to be
extracted as accounts are
maintained at Head Office.
Reconciliation
between There is no need of reconciliation
branch Account in books of
head office and head office as accounts are maintained at
Account in the books of Branch head office level itself.
is to be made before finalising
the Accounts.
Accounting is done on the
Accounting under Dependent branches
double entry system basis, so
can be made by three
Trading/P&L
different methods are Debtors system,
A/c has been prepared in
Final Account system and Stock and
normal way.
Debtors system.
2. A Limited opened a branch at Shimla in 2002. Goods were invoiced at cost plus 25%. From the
following prepare ledger accounts in the books of A Limited.( April-2010)
Rs.
Goods sent to Shimla (Invoice Price)
40,000
Sales at Shimla :
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REGULATION CBCS - 2012
Cash Sales
21,000
Credit Sales
16,000
Cash collected from debtors
14,500
Discount allowed
200
Cash sent to Branch for expenses
4,000
Stock at Branch, 31st Dec.2002 (Invoice Price)
3,200
Branch A/c
Date
2002
Dec.31
Particulars
To Goods sent to
Date
Rs .
Particulars
2002
40,000
Branch
A/c
Rs .
By Bank (Remittance)
Cash sales
Dec.31
21,000
Cash Form Drs. 14,500
To Bank (Expenses)
35,500
4,000
To Bank stock
Reserve
A/c
To P & L
A/c
transfer
By Branch Stock A/c
3,200
By Branch Debtors A/c
1,300
By Goods sent to
Branch A/c
640
8,000
(loading)
3,360
48,000
48,000
Goods sent to branch A/c
Date
Particulars
Rs .
Date
Particulars
Rs .
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
2002
Dec.31
8,000
To Shimla Branch A/c
2002
40,000
Dec.31
(Loading)
By Shimla
Brach A/c
32,000
To Trading A/c
(transfer)
40,000
40,000
Branch Debtors A/c
Date
Particulars
2002
Dec.31
Rs .
16,000
To Sales A/c
Date
Particulars
2002
Dec.31
Rs .
14,500
By Cash
By Discount
200
1,300
By Balance c/d
16,000
16,000
Branch Stock A/c
Date
2002
Dec.31
Particulars
To Shimla
Branch A/c
Rs .
Date
2002
3,200
Particulars
By Balance c/d
Rs .
3,200
Dec.31
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REGULATION CBCS - 2012
3200
3,200
Branch Stock Reserve A/c
Date
2002
Particulars
Date
Rs .
640
To Balance c/d
Dec.31
2002
Dec.31
Particulars
Rs .
By Shimla Branch
A/c
640
640
640
3. A Ltd. has a branch in Calcutta. Goods are invoiced at cost plus 25%.
(Nov – 2011, Nov – 2012, Nov – 2013, April-2014)
(
Opening Balance
Stock
3,200
Debtors
1,300
Goods sent to Branch (Invoice price)
75,000
Sales at Calcutta
Cash Sales
32,000
Credit Sales
38,000
Cash collected from Debtors
33,400
Discount allowed
400
Bad Debts written off
250
Cash sent to Branch for expenses
5,500
Stock at end
7,900
Branch Adjustment A/c
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Branch Stock A/c
ACADEMIC YEAR: 2014 – 2015
Date
Particulars
REGULATION CBCS - 2012
Rs .
2 00 2
Date
Particulars
Rs
.
By Stock Reserve
640
2 00 2
To Stock Reserve
1,580
Dec.31
Dec.31
(openin
g
stock)
(closing stock) A/c
To br. Stock A/c
(shortag
e)
300
7,150
To Br. Exp. A/c
15,000
By Goods sent to br.
A/c
6,610
To P & L A/c
15,640
15,640
Goods sent to branch A/c
Date
2002
Dec.31
Particulars
Rs .
To br. Adjustment
2002
15,000
A/c
Particulars
By Br. Stock
A/c
Rs .
75,000
Dec.31
(loading)
To
Trading
A/c
(Transfer)
Date
60,000
75,000
75,000
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
Branch Debtors A/c
Date
Particulars
Rs .
2002
Jan.
Date
Particulars
Rs .
2002
To Balance
b/d
1,300
Dec.31
To Branch
Stock
33,400
By Cash
By Branch Exp.
A/c
38,000
(cr.
sales)
Discount
400
Bad Debts 250
By Bal. c/d
39,300
650
5,250
39,300
Branch Stock A/c
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ACADEMIC YEAR: 2014 – 2015
Date
Particulars
REGULATION CBCS - 2012
Rs .
2002
Jan.1
Date
Particulars
Rs .
To Cash Sales
32,000
2002
To Balance
b /d
To goods sent
t o Branch
A/c
3,200
Jan.1
By Branch
Debtors
By Branch
Adjustment A/c
75,000
38,000
300
By Balance c/d
7,900
78,200
78,200
Branch Stock Reserve A/c
Date
Particulars
2002
To Br. Adjustment
A/c
Date
Rs .
2002
Rs .
By Balance b/d
640
By Branch Adj.
A/c
1580
640
Dec. 31
Dec.31
To balance c/d
Particulars
1580
Branch Expenses A/c
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ACADEMIC YEAR: 2014 – 2015
Date
2002
Particulars
To Cash
REGULATION CBCS - 2012
Rs .
Date
Particulars
6,500
2002
By Branch
Adjustment
A/c
Dec.31
To branch Dr.s
A/c
Discount
400
Bad Debts
250
Dec.31
Rs .
7,150
650
7,150
7,150
3. Agra head office supplies goods to its branch at Alwar at invoice price which is cost plus
50%. All Cash received by the branch is remitted to Agra and all branch expenses are paid
by the head office. From the following particulars related to Alwar Branch for the year 2006,
prepare Branch debtors account Branch stock account and Branch Adjustment Account in the
books of the head office so as to find out the gross profit and net profit made by the
branch.
Rs.
Stock with Branch on 1.1.2006 (at invoice price)
Branch Debtors on 1.1.2006
Petty cash balance on 1.1.2996
Goods received from head office (at invoice price)
Goods returned to Head Office
Credit Sales
Sales Returns
66,000
22,000
500
2,04,000
6,000
87,000
3,000
(already adjusted while invoicing)
2,000
Cash received from debtors
93,000
Discount allowed to debtors
2,400
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
Expenses (cash paid by Head Office)
Rs.
Rent
2,400
Salaries
24,000
Petty Cash
2,000
28,400
Cash Sales
1,06,000
Stock with Branch on 31.12.2006 (at invoice price)
69,000
Petty Cash balance on 31.12.2006
100
Branch Adjustment Account
Date
Particulars
Rs .
Date
Particulars
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Rs .
ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
To Stock reserve A/c
To Goods sent to Branch A/c
23,000
By stock reserve A/c
2,000
(66,000 × 50/150)
2,000
To Branch stock A/c
22,000
By Goods sent to Branch A/c
(2,04,000 × 50/150)
To Shortage (Load)
To Gross profit c/d
1,000
68,000
62,000
90,000
90,000
To Branch expenses A/c
62,000
By Gross profit b/d
Rent
2,400
Salaries
24,000
Petty exp.
2,400 (500 +
2000 - 100)
28,800
To Branch debtors A/c discount
To Shortage
2,400
(cost)
2,000
To Net profit
28,800
62,000
62,000
Branch Debtors A/c
Date
Particulars
To Balance b/d
Rs .
22,000
Date
Particulars
By Branch Cash
Rs .
93,000
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
A/c
87,000
To Branch stock A/c
2,400
By Branch
Expenses A/c
(credit sales)
(Discount allowed
to Debtors)
By Sales Returns
3,000
By Balance c/d
10,600
1,09,000
1,09,000
Branch stock A/c
Date
Particulars
Rs .
To balance
b/d
66,000
To Goods
sent to
Branch A/c
2,04,000
Date
Particulars
By branch A/c-cash sales
By Branch Debtors A/ccredit sales
Rs .
1,06,000
87,000
By Branch
Adjustment A/c
To Branches
Debtors A/c
Sales
Return
Allowance to
customer On selling
3,000
price (already
2,000
Adjusted while
invoicing)
By Goods sent to branch
A/c
Returns
to H.O.
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
By Shortage-in-stock A/c
By Balance c/d
6,000
3,000
69,000
2,73,000
2,73,000
4. A head office sends goods to its branch at 25% less than the list price. Good are sold to
customers at cost plus 60%. From the following particulars ascertain the profit made at the head
office and the branch on whole sale basis.
Particulars
Opening stock
Head office Rs.
Branch Rs.
50000
30000
Purchases
150000
-
Goods sent to branch
108000
-
Sales
160000
80000
10000
6000
(at invoice price in case of branch)
Expenses
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
Trading , Profit & Loss A/c
Particulars
To opening
stock
To Purchases
Head
office
50000
To Expenses
To Stock
reserve
Particulars
30000 By Sales
Branch
160000
80000
108000
-
10000
78000
315000
96000
78000
20000
150000
By Goods
sent to
branch
To Goods
received from
H.O
To Gross
Profit
Branch
Head
office
108000
780000
By Closing
20000 stock
278000
158000
10000
6000
By Gross
Profit
13000
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By Stock
Answers/VER
1.0 5000
reserve
To Net Profit
60000
14000
83000
20000
Unit – 1 Answers Page 27 of 50
83000
20000
ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
ASCM25C – FINANCIAL ACCOUNTING -II
Unit-2 –DEPARTMENTAL ACCOUNTS
80% Problem – 20% Theory
Question & Answers
PART –A
Syllabus: [Regulation: 2012]
UNIT- 2 Departmental accounts: basis for allocation of expenses –inter departmental transfer at
cost or selling price- treatment of expense which cannot be allocated.
PART – A QUESTIONS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
What is meant by interdepartmental transfer?
. List out the objectives of departmental accounting?
What is meant by department accounts?
What is stock reserve?
What is meant by elimination of unrealized profit?
. What are the two types of departments?
What is independent department?
Write the basis of allocation of expenses –any two.
What are direct expenses? Give some examples.
What are expenses which can be apportioned?
What are the three basis of interdepartmental transfer?
What is meant by common expenses?
What is an indirect expense?
What is cost price?
Write two advantages of departmental accounts.
Write two needs of departmental accounts.
What are the methods and techniques of departmental accounts?
What is dependent department?
What are the two sub-divisions of indirect expenses?
What are expenses which cannot be apportioned?
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
PART – B
1.
2.
3.
4.
5.
6.
7.
8.
What are the Disadvantages of departmental accounting?
Explain the advantages of departmental accounting.
Write down the needs of departmental accounting.
Explain the ways of recording transactions in departmental accounts.
Difference between branch and departmental accounts.
Question and answer in answer file
Question and answer in answer file
Question and answer in answer file
PART – C QUESTIONS
1.
2.
3.
4.
What are the bases of apportionment of expenses?
Question and answer in answer file
Question and answer in answer file
Question and answer in answer file
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
ASCM25C – FINANCIAL ACCOUNTING -II
Unit-2 –DEPARTMENTAL ACCOUNTS
80% Problem – 20% Theory
Question & Answers
PART –A
1. What is meant by interdepartmental transfer?
Whenever goods or services are provided by one department to another their cost
should be separately recorded and charged to that department benefiting thereby
and credited to that providing it.
2. List out the objectives of departmental accounting?






To check out interdepartmental performance
Evaluate the performance of the department with previous period result.
. To help the owner for formulating right policy for future.
To assist the management for making decision to drop or add a department
To provide detail information of the entire organization
To assist management for cost control
3. What is meant by department accounts?
An organization may produce or buy and sell several products or perform different
services under the same roof or from the same premises. The modern practice
is to divide the organization into independent departments, each of which may
deal in a particular class or goods or render a specialized type of service
4. What is stock reserve?
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
Unrealized profit included in unsold inventory at the ending of accounting
period eliminated by creating an appropriate stock reserve by debiting the
amount profit and loss account.
5. What is meant by elimination of unrealized profit?
When profit added in the inter-department transfers the loading included
in the unsold stock at the end of the year is to be excluded before final accounts
are prepared so as to eliminates any anticipatory profit included therein.
6. What are the two types of departments?


Independent department
Dependent department
7. What is independent department?
Departments which work independently of each other and have
negligible inter department transfer are called Independent Departments.
8. Write the basis of allocation of expenses –any two.




Rent, rates and taxes
- Floor area occupied.
Salaries
- Time allocated to each department.
Selling expenses, Bad debts - Sales of each department
Carriage inwards
- Purchases of each department
9. What are direct expenses? Give some examples.
Expenses which are directly identified with or incurred for particular
departments are called as direct expenses. Example: Wages, insurance of stock
etc.
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10. What are expenses which can be apportioned?
All indirect expenses which are amenable for division on some logical or
appropriate basis among the departments should be charged to the departments
after dividing them on suitable basis.
11. What are the three basis of interdepartmental transfer?



Cost
Ruling market price
Cost plus agreed percentage of profit.
12. What is meant by common expenses?
Common expenses, the benefit of which is shared by all the
departments and which are capable of precise allocation are distributed among
the departments concerned on some equitable basis considered suitable in the
circumstances.
13. What is an indirect expenses?
Expenses which cannot be identified with a particular department, but
incurred for their common benefit.
14. What is cost price?
When the good are sold at the price of which incurred for the
production of a goods that means the cost of goods sold is called as cost price.
13. Write two advantages of departmental accounts.


Evaluation of performance
Growth potential of each department
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ACADEMIC YEAR: 2014 – 2015


REGULATION CBCS - 2012
Judgment of efficiency
Planning and control
14. Write two needs of departmental accounts.



To have comparative results of departments
To assesses the stock position of each department
To analyze the result of each department and to draw up a trend for the
future.
15.What are the methods and techniques of departmental accounts?
1. Preparation of trading and profit and loss account,
2. Maintenance of Records,
3. Departmentalization of expenses
16. What is dependent department?
Departments which transfer from one department to another
department for further processing are called dependent departments.
17. What are the two sub-divisions of indirect expenses?


Expenses which can be apportioned
Expenses which cannot be apportioned
18. What are expenses which cannot be apportioned?
Expenses which have no connection with the departments or those
which have no reasonable basis for apportionment must be shown in the
general profit & loss a/c.
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
PART-B
1. What are the Disadvantages of departmental accounting?
1. There may be a lack of communication among the different departments. For
example, production may be so isolated from marketing that the people making the
product do not get the proper feedback from customers.
2. Individual employees may begin to identify with their department and its goals
rather than with the goals of the organization as a whole. For example, the
purchasing department may find a good value somewhere and buy a huge volume of
goods that have to be stored at a high cost to the firm. Such a deal may make the
purchasing department look good, but it hurts the overall profitability of the firm.
3. The company’s response to external changes may be slow.
4. People may not be trained to take different managerial responsibilities; rather, they
tend to become narrow specialists.
5. People in the same department tend to think alike (engage in groupthink) and may
need input from outside the department to become more creative.
2. Explain the advantages of departmental accounting.

Evaluation of performance: The performance of each department can
be evaluated separately on the basis of trading results. An endeavor
may be made to push up the sales of that department which is earning
maximum profit.

Growth potential of each department: The growth potential of a
department as compared to others can be evaluated.

Judgement of efficiency: It helps to calculate stock turnover ratio of each
department separately, and thus the efficiency of each department can
be calculated.

Planning and control: Availability of separate cost and profit figures
for each department facilitates better control. Thus effective
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
planning and control can be achieved on the basis of departmental
accounting information.

Justification of capital outlay: It helps the management
the justification of capital outlay in each department.
to determine
3.Write down the needs of departmental accounting.
 To compare the results of each department with the results of previous
years and ascertain the trend.
 To know the comparative results of different departments in the same year.
 To assess the position of stock in each department.
 To identify areas weakness for cost control and improvement of efficiency.
 To decide upon expansion, discontinuation and investment policies.
4. Explain the ways of recording transactions in departmental accounts.
a)
Unitary method: Under this method, the accounts of each
department are kept separately. The results of the various departments are
finally combined together in one general P & L account.
b) Tabular or columnar method: • Under this method, the accounts of
each department are kept in columnar form with a separate column for
each department and also with a separate column for the total. The
tabular method is more popular and is adopted by almost all the
departmental undertaking,
Under this method, at the end of the accounting year, Trading and P & L
account is prepared with separate amount column for each of the
department and also for the total. The trading and P & L of a departmental
organization kept in the columnar basis is called Departmental Trading and P
& L account. In trading account, opening stock, purchases, direct expenses
and Gross profit are debited and sales and closing stock credited. Indirect
expenses have to be apportioned between the departments and debited to
the P&L account.
5.Difference between branch and departmental accounts.
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
BRANCH: Branches are separated from the main organization.
DEPARTMENTS: Departments are attached with the main organization under a
single roof.
BRANCH: Branches are the outcome of tough competition and expansion of
business.
DEPARTMENTS: Departments are the result of fast human life.
BRANCH: Branches are geographically separated.
DEPARTMENTS: Departments are not separated rather existed under a same
roof.
BRANCH: Branches are of different types like dependent, independent and
foreign.
DEPARTMENTS: There is no such classification in department because all are
common under the same roof.
BRANCH: Allocation of branch common expenses does not arise.
DEPARTMENTS: Allocation of departmental common expenses is a tough job.
BRANCH: To find out the net result of the organization, the reconciliation of
different branch account is a main job.
DEPARTMENTS: In departmental accounting, no reconciliation is necessary
because there is a central account division.
6. Question and answer in the hard copy
7. Question and answer in the hard copy
8. Question and answer in the hard copy
PART C
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
5. What are the bases of apportionment of expenses?
SI.NO
Sales
1
EXPENSES
BASIS OF APPORTIONMENT
expenses
as traveling Sales of each department
salesman, salary and commission,
selling
expenses
service, discount
debts,
after
sales
allowed, bad
freight
outwards,
provision for discount on debtors,
sales manager's salary and other
benefits etc.
2
All
expenses
relating
to
building as rent, rates, taxes,
air
conditioning
expenses,
heating, insurance building etc.
Area or value of floor space
3
Lighting
Lighting points in the department
4
Workmen’s amenities and
welfare expenses
Number of workers in each
department
5
Workmen’s compensation
insurance, ESI, PF etc. payable at
employer
Wages of each department
6
Premium for loss of profits
insurance
7
Power
8
Depreciation of assets, fire
insurance, repairs on such assets.
Value of each assets possessed by
each departments
9
Factory manager’s salary
Time devoted to each department
10
Carriage inwards
Purchase value
Profit of each department in the
previous year
Consumption as per meter, horse
power, time and hours.
6. Question and answer in the hard copy
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
7. Question and answer in the hard copy
8. Question and answer in the hard copy
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
ASCM21X – FINANCIAL ACCOUNTING -II
Unit-III – HIRE PURCHASE AND INSTALLMENT
80%Problem – 20% Theory
Question Bank
Syllabus: [Regulation: 2012]
UNIT-3 Hire purchasesystem: meaning and legal position- accounting aspects – default and
repossession-hire purchase trading account
Installment purchase system: meaning and legal possession-distinguish between hire purchase
system and installment purchase system –accounting treatments.
QUESTIONS
PART – A
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Define the Hire Purchase System?
What is the meaning of Hire Purchase system?
What is Re-possessed stock?(APRIL2013) (NOV 2011)
What is an Instalment Purchase system? APRIL 2012
Define Instalment Purchase system?
What do you understand by Hire Purchase Trading Account? APRIL 2012
What is the EntryFor Purchase of Asset?
What is the Entry for Down payment of Asset
What is the Entry for Interest Due?
What is the Entry for Instalment paid?
What is the Entry for Depreciation charged?
What is Transfer of interest and Depreciation to Profit & Loss Account?
What is Entry for sale of Asset?
What is the Entry for down payment received?
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ACADEMIC YEAR: 2014 – 2015
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
REGULATION CBCS - 2012
What is the Entry for interest due?
What is Entry for instalment received?
What is the Entry for transfer of Hire Sales to Trading A/c?
What is the Entry for transfer of Interest to P & L A/c?
Who is Hire purchaser?
Who is Hire vendor?
What is meant by rebate?
What is meant by down payment?
What is meant by partial repossession?
Write any two contents of Hire purchase agreement.
Define Hire purchase agreement?
Distinguish between cash price and hire purchase vendor.(APRIL 2013) (NOV 2011)
PART – B
1. What are the Characteristics or features of Hire-Purchase System?APRIL2013
2. What is the difference between hire purchase system and Installment payment
system?
3. What are the conditions when a Hire-Purchase Transaction takes place?
4. What are the Features of Instalment Payment System?APRIL 2012
5. What are the Advantages of Hire Purchase System?
6. What are the disadvantages of hire purchase system?
7. Question and answer in answer file
8. Question and answer in answer file
9. Question and answer in answer file
PART – C
1. What is Difference between Hire Purchase System and Instalment Purchase
System.NOV 2011
2. Question and answer in answer file
3. Question and answer in answer file
4. Question and answer in answer file
-----
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REGULATION CBCS - 2012
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
ASCM21X – FINANCIAL ACCOUNTING -II
Unit-III – HIRE PURCHASE AND
INSTALLMENTSYSTEM
80%Problem – 20% Theory
Question & Answers
PART –A
1. Define the Hire Purchase System?
“Hire Purchase System is a system under which money is paid for goods by means
of periodical installments with the view of ultimate purchase. All money being paid in the
meantime is regarded as payment of hire and the goods become the property of the buyers
only when all the installments have been paid-Carter
“The hire-purchase is a form of trade in which credit is granted to the customer on
the security of a lien on the goods.” —J. Stephenson
2.What is the meaning of Hire Purchase system?
A system by which a buyer pays for a thing in regular installments while enjoying
the use of it.During the repayment period, ownership (title) of the item does not pass to
the buyer. Upon the full payment of the loan, the title passes to the buyer.
3.What is Re-possessed Stock? (APRIL2013) (NOV 2011)
Asperhire-purchaseagreement,thevendorhasgoteveryrighttore-possessthe
goodssoldtothehire-purchaserif
thelattermakethedefaultin
thepaymentofany
instalmentandforfeittheamountofinstalmentalreadyreceivedandtreatingthe
instalmentsashirecharges.Inthecircumstances,vendormaytakebackthe
possessionoftheentiregoodsi.e.,CompleteRe-possessionorhecanrepossesonly
a
partofthegoodssoldfromthedefaultingbuyer,i.e.,PartialRe-Possession.
4.What is an Installment Purchase system? APRIL 2012
Instalment payment system (also called the deferred instalments) is a system
where the buyer is given the ownership as well as the possession of the goods at the time
of signing the contract. The buyer has the facility to pay the price in instalments.
5.Define Installment Purchase system?
According to J.B. Batliboi, Instalment Purchase System is a system under there is
an agreement to purchase and pay by instalments, the goods which become the property
of the Purchaser immediately when he receives the delivery of the same.
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
6.What do you understand by Hire Purchase Trading Account? APRIL 2012
When numerous goods of small value are sold by firm on hire purchase system. It
becomes inconvenient to maintain separate account of each customer; also it would be
very difficult for the vendor to calculate interest in respect of every sale. Under such
circumstances a Hire Purchase Trading Account is prepared to ascertain Profit or Loss on
such sale separately. This method is also known as Debtor Method.
7.What is the Entry For Purchase of Asset?
Asset A/c
Dr.
To Vendor A/c
8.What is the Entry for Down payment of Asset
Vendor A/c
Dr.
To Bank/Cash A/c
9.What is the Entry for Interest Due ?
Interest A/c
Dr.
To Interest Vendor A/c
10.What is the Entry for Instalment paid?
Vendor A/c
Dr.
To Bank A/c
11.What is the Entry for Depreciation charged?
Depreciation A/c
Dr.
To Assets A/c
12.What is Entry for transfer of interest and Depreciation to Profit & Loss Account?
P & L A/c
Dr.
To Depreciation A/c
To Interest A/c
13.What is Entry for goods sold on hire purchase agreement?
RAAK/BCA/A. CANAGAVALLY /II YEAR/IV Sem/ASCM21X/FIN. ACC/UNIT-3
Answers/VER 1.0
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ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
Hire purchaser A/c Dr.
To Hire Sale A/c
14.What is the Entry for down payment received?
Bank/Cash A/c
Dr.
To hire purchaser A/c
15.What is the Entry for interest due?
Hire purchaser A/c Dr.
To Interest A/c
16.What is Entry for instalment received?
Bank A/c
Dr.
To Hire Purchaser A/c
17.What is the Entry for transfer of Interest to P & L A/c?
Interest A/c
Dr.
To Profit & Loss A/c
18. What is the Entry for transfer of Hire Sales to Trading A/c?
Hire Sales A/c
Dr.
To Trading A/c
19. Who is Hire purchaser?
A hire purchaseris aperson who possesses the goods under hire purchase
agreementfor use within an option to either purchase it or return after use.
20. Who is Hire vendor?
A hire vendor is a person who sells the goods under hire purchase
agreement.
21. What is meant by rebate?
It is an amount which is claimed by the hire purchaser from the hire vendor in
case if he decides to remit the balance of the purchase price (future installments) in
lump sum without continuing the hire purchasing agreement.
22. What is meant by down payment?
RAAK/BCA/A. CANAGAVALLY /II YEAR/IV Sem/ASCM21X/FIN. ACC/UNIT-3
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ACADEMIC YEAR: 2014 – 2015
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This istheadvancepayablebybuyer whilesigningthehirepurchase agreement. Itis
also a partof the hirepurchase price.
23. What is meant by partial repossession?
The hirer did not pay installment amount the part of the goods only took by
the hire vendor and left the remaining goods with the hirer equal to the value
of amount paid by the hirer.
24. Write any two contents of Hire purchase agreement.
 Thehirepurchasepriceof thegoodsfor whichthe agreementis made
 Thenumberofinstallmentsinwhichthehire purchase pricehasto be paid
25. Define Hire purchase agreement?
It is an agreement between hire purchaser and hire vendor according to
section 2(c) of the hire purchase act, 1972 for purchasing of goods according
to agreement.
26. Distinguish between cash price and Hire purchase price? (APRIL 2013) (NOV
2011)
Cash price is the retail price of the articles at which they can be purchased
immediately for cash. Hire purchase price is the total amount payable by the buyer for
goods agreed in instalments. But in this, cash price and interest is included.
PART- B
1. What are the Characteristics or features of Hire-Purchase System?
APRIL2013








The characteristics of hire-purchase system are as under
Hire-purchase is a credit purchase.
The price under hire-purchase system is paid in instalments.
The goods are delivered in the possession of the purchaser at the time of
commencement of the agreement.
Hire vendor continues to be the owner of the goods till the payment of last
installment.
The hire-purchaser has a right to use the goods as a bailer.
Each instalment is treated as hire charges
The hire-purchaser has a right to return the goods before the last instalment is paid.
The hire-purchaser becomes the owner of the goods after the payment of all
instalments as per the agreement.
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

REGULATION CBCS - 2012
If there is a default in the payment of any instalment, the hire vendor will take away
the goods from the possession of the purchaser without refunding him any amount.
If the goods are repossessed, the values of goods on that date and the instalments paid
are added and the total hire purchase price is reduced. The balance is payable by the
hire vendor to the hirer,
2. What is the difference between hire purchase system and Installment
payment system?
Instalment Payment System is system of purchase and sale of goods in which title of
goods is immediately transferred to the purchaser at the time of sale of goods and the sale
price of the goods is paid in instalments. In the event of default in payment of any
instalment, the seller has no right to take back goods from the possession of the purchaser.
He can file a suit for the recovery of the outstanding balance of the price of goods sold.
The followings are the differences between Hire-purchase system and Instalment payment
system:

In Hire-purchase system, the transfer of ownership takes place after the payment of all
instalments while in case of Instalment payment system, the ownership is transferred
immediately at the time of agreement.

In Hire-purchase system, the hire-purchase agreement is like a contract of hire though
later on it may become a purchase after the payment of last instalment while in
Instalment payment system, the agreement is like a contract of credit purchase.

In case of default in payment , in Hire-purchase system the vendor has a right to back
goods from the possession of the hire-purchaser while in case of Instalment payment
system, the vendor has no right to take back the goods from the possession of the
purchaser; he can simply sue for the balance due.

In Hire-purchase system, if the purchaser sells the goods to a third party before the
payment of last instalment, the third party does not get a better title on the goods
purchased. But in case of Instalment payment system, the third party gets a better title
on the goods purchased.

In Hire-purchase system the provisions of the Hire-purchase Act apply to the
transaction while in case of Instalment payment system, the provisions of Sale of
Goods Act apply to the transaction.
3. What are the conditions when a Hire-Purchase Transaction takes place?
RAAK/BCA/A. CANAGAVALLY /II YEAR/IV Sem/ASCM21X/FIN. ACC/UNIT-3
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REGULATION CBCS - 2012
Thus hire-purchase means a transaction where the goods are sold by vendor to the
purchaser under the following conditions:
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
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

The goods will be delivered to the purchaser at the time of agreement.
The purchaser has a right to use the goods delivered.
The price of the goods will be paid in instalments.
Every instalment will be treated to be the hire charges of the goods which is being
used by the purchaser.
If all instalments are paid as per the terms of agreement , the title of the goods is
transferred by vendor to the purchaser.
If there is a default in the payment of any of the instalments, the vendor will take
away the goods from the possession of the purchaser without refunding him any
amount received earlier in the form of various instalments.
4. What are the Features of Instalment Payment System? APRIL 2012
The features of Instalment payment are as follows:
 Under this system, there will be an outright sale of goods/assets.
 The possession as well as the ownership is passed to the buyer right at the time of
signing the contract.
 The buyer can make the payment in instalments.
 In case of default in payment, the seller cannot reposes the goods, but he can sue
the buyer for the recovery of unpaid price.
 The buyer cannot exercise the option of returning the goods and terminate the
contract, unless the same becomes void or voidable under the contract act.
5. What are the Advantages of Hire Purchase System?
(1) Convenience in Payment:
The buyer is greatly benefited as he has to make the payment in installments. This
system is greatly advantageous to the people having limited income.
(2) Increased Volume Of Sales:
This system attracts more customers as the payment is to be made in easy
installments. This leads to increased volume of sales.
(3) Increased Profits:
Large volume of sales ensures increased profits to the seller.
(4) Encourages Savings:
It encourages thrift among the buyers who are forced to save some portion of their
income for the payment of the installments. This inculcates the habit to save among the
people.
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(5) Helpful For Small Traders:
This system is a blessing for the small manufacturers and traders. They can
purchase machinery and other equipment on installment basis and in turn sell to the buyer
charging full price.
(6) Earning Of Interest:
The seller gets the installment which includes original price and interest. The
interest is calculated in advance and added in total installments to be paid by the buyer.
(7) Lesser Risk:
From the point of view of seller this system is greatly beneficial as he knows that if the
buyer fails to pay one installment, he can get the article back.
6. What are the disadvantages of hire purchase system?
(1) Higher Price:
A buyer has to pay higher price for the article purchased which includes cost plus
interest. The rate of interest is quite high.
(2) Artificial Demand:
Hire purchase system creates artificial demand for the product. The buyer is
tempted to purchase the products, even if he does not need or afford to buy the product.
(3) Heavy Risk:
The seller runs a heavy risk under such system, though he has the right to take
back the articles from the defaulting customers. The second hand goods fetch little price.
(4) Difficulties in Recovery of Installments:
It has been observed that the sellers do not get the installments from the
purchasers on time. They may choose wrong buyers which may put them in trouble. They
have to waste time and incur extra expenditure for the recovery of the installments. This
sometimes led to serious conflicts between the buyers and the sellers.
(5) Break Up Of Families:
The system puts a great financial burden on the families which cannot afford to
buy costly and luxurious items. Recent studies in western countries have revealed that
thousands of happy homes and families have been broken by hire purchase buying’s.
RAAK/BCA/A. CANAGAVALLY /II YEAR/IV Sem/ASCM21X/FIN. ACC/UNIT-3
Answers/VER 1.0
Unit – 1 Answers Page 48 of 50
ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
PART- C
1. What is Difference between Hire Purchase Systemand Instalment Purchase
SystemNOV 2011
Basis
HirePurchaseSystem
InstalmentPaymentSystem
Natureof
Contract
Itisanagreementofhiring
ItisaContractofSalefrom
Beginning
Transferof
ownership
Rightof
Repossession
Rightof
Forfeiture
Instalment
Ownershipinthegoodspasses
fromvendortopurchaserafter
thepaymentoflastinstalment
Thevendorhastherightto
repossessthegoods.
Incaseofdefault,vendorhas
therighttoforfeitthe
instalmentsalreadypaid.
Ownershipinthegoods
passesfromsellertobuyers
afterthecontractissigned.
Thesellerhasnorightto
repossessthegoods
Incaseofdefault,seller
cannotforfeittheinstalments
alreadypaid
RightofDisposal
Purchaserhasnorightto
sellthegoodstillthefinal
instalmentispaid.
Rightofreturn
goods
Risk
Repossession of
goods
Instalment
Thepurchaserhastheoptionto
returnthegoodsandterminate
theagreement
Anylosstogoodshastobe
bornebythehirevendor.
Asthebuyeris theownerof
thegoodsfromthevery
beginning,hecandisposeof
thegoodsashelikes.
Thebuyerhasnorightto
terminatethecontract.
Anylossofgoodswillhaveto
bebornebythebuyer
The Hire vendor can repossess the
goods if instalment is not paid.
Seller cannot repossess the
goods. He can sue the buyer for
dues.
Each Instalment includes Hire
charges and part payment of the
cash price
Each Instalment includes
interest and part payment of
cash price.
RAAK/BCA /A. CANAGAVALLY /II YEAR/IV Sem/ASCM21X /FIN. ACC/UNIT-3 Answers/VER 1.0
ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
ACADEMIC YEAR: 2014 – 2015
REGULATION CBCS - 2012
ASCM21X –FINANCIAL ACCOUNTING -II
Unit-V– MECHANISED SYSTEM OF ACCOUNTING
80%Problem – 20% Theory
Question Bank
Syllabus: [Regulation: 2012]
UNIT-V- Mechanized System of Accounting: Advantages - Limitations - EDP.
QUESTIONS
PART – A
1.
2.
3.
4.
What is mechanized system of accounting?
What are the advantages of mechanized system of accounting?
What are the limitations of mechanized system of accounting?
What do you mean by EDP?
PART – B
1. Explain in detail about the advantages of mechanized system of accounting?
2. Explain in detail about limitations of mechanized system of accounting?
3. What are the tools used in mechanized system of accounting?
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1.0
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