BBA (203)
ASSIGNMENT
WINTER 2014-2015
Internal Users:
These are the persons who manage the business, i.e. management
at the top, middle and lower levels. Their requirements of Information
are different because they make different types of decisions. The top
level is more concerned with planning, the middle level is concerned
equally with planning and control and the lower level is concerned
more with controlling operations. Information is supplied on different
aspects.
External Users:
The main sources of information for external users are annual reports
of business organizations. They not only state the financial position
and performance but also give the auditor’s report, director’s report
and other information. Investors and creditors are the external users
having direct interest. Planning and controlling operations, employees
and Trade Unions would like to know general operations, stability and
profitability of the firm, customers are interested to know the source of
future purchase, after sale services and finally Government and
regulatory authorities are responsible to regulate business activities
and to collect tax.
Q2. Mayur, Veer and Prakash are partners sharing profits and losses
in ratio of 2:1. Their Balance sheet was as follows:
Capital Accounts
Q3. Final Accounts are prepared at the end of the accounting year
with various adjustments. Explain the feature and objectives of final
accounts.
1. A Final account should reflect true and fair view of the business
affairs of the organization. As these accounts are used by various
constituents of the society/ regulators, they need to reflect true
view of the financial position of the organization.
2. Final accounts are required for measuring the performance of the
business which is indicated by gross profit or gross loss. Final
accounts facilitate the comparison of trading results of the current
year with those of the previous year.
3. Final accounts act as a summary of all transactions, which have
been taking place in business. The final accounts comprise of the
income statement accounts, the balance sheet and the cash flow
statement.
1. Relevant information:
This simply means the information is able to directly influence the
decision making process of the user. Relevance is also measured
in relation to materiality. If an item or event is material, it is
probably relevant to the user of final accounts.
2. Understandability:
In addition to relevance, the users of final accounts will be to make
informed and better decision if they can be able to interpret the
contents of final accounts. Accountants should produce final
accounts information and present it in a form, which can be easily
understood and interpreted by their intended users.
3. Reliable information:
According to IASC’s Conceptual framework, to be reliable,
information must be mutual, that is free from basis. Final accounts
are not neutral, if by the selection or presentation of information,
They influence the making of a decision or judgment in order to
achieve a pre-determined results or income.
4. Comparability:
Final account of the organization must be capable of being linked
with other non-final account within the enterprise. User should also
be able to compare final account of an enterprise through time in
order to assess the trend in performance and financial position. If
possible the entity should apply accounting policies consistently to
ensure meaningful comparison of the results over time.
5. True and Fair view Presentation:
It must exhibit the true and fair view of the financial position of the
organization.
Q4. Prepare the Trading, Profit and Loss accounts and Balance sheet
from the following particular as at 31st March 2012.
Trial Balance
Ans:
Trading and Profit and Loss Account for the period ended 31st March
2012.
Q5. What is Petty Cash book? Solve the below given problem.
Jan 20 Shyam settled his account by means of cheque for Rs.755, Rs.5
being for interest charged
Jan 27 Purchased machinery from Rajiv for Rs.5000 and paid him by
means of a bank draft purchased from bank for Rs.5,005
The amount which the main cashier give to the petty cashier to
meet the petty or small cash expenses for a given period is known
as Imprest cash book. The petty cashier submits the petty cash
book along with the supporting vouchers/bills at the end of the
period.
Date Particular L.F Disc. Cash Bank Date Particular L.F Disc. Cash Bank
Jan1 To Capital 6000 Jan1 By bank a/c C 6000
a/c
Jan1 To cash C 6000 Jan2 By bank C 250
Jan2 To sales 250 Jan5 By Hari 10 190
Jan2 To Cash C 250 Jan10 By 200
calculator
a/c
Jan7 To Shyam 25 725 Jan10 By 50
calculator
a/c
Jan15 To Hari 25 Jan12 By Shyam 25 725
Jan15 To Cash C 25 Jan15 By bank C 25
Jan20 To Shyam 750 Jan27 By 5000
machinery
Jan20 To interest 5 By draft 5
commission
Jan31 By balance 1585
c/d
25 6275 7755 35 6275 7755
Feb1 To - - 1585
balance
b/d
Classification of Errors:
1. Errors of Omission:
Partial Omission: