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Ignou solved assignment eco 02 2014 to 2015 (demo)

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Ignou Solved Assignment with Free Solved Question Papers for Online members.

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Ignou solved assignment eco 02 2014 to 2015 (demo)

  1. 1. 1 Prepared By Kumar Nirmal Prasad, M.Com, UGC – NET (Three Times), CMA (Final Intership); 9577097967 TUTOR MARKED ASSIGNMENT Course Code : ECO - 02 Course Title : Accountancy – I Assignment Code : ECO – 02/TMA/2014-15 Coverage : All Blocks Maximum Marks: 100 Answer of Q.N.1. Bank Reconciliation Statement Business concern maintains the cash book for recording cash and bank transactions. The Cash book serves the purpose of both the cash account andthe bankaccount. Itshowsthe balance of bothat the endof a period.Bank alsomaintainsanaccount for eachcustomerinits book.All depositsbythe customerare recorded on the credit side of his account and all withdrawals are recorded on the debit side of his account. A copy of this account is regularly sent to the customer by the bank. This is called ‘Pass Book’ or Bank statement. It is usual to tally the firm’s bank transactions as recorded by the bank with the cash book. But sometimes the bank balances as shown by the cash book and that shown by the pass book/bank statement do not match. If the balance shown by the pass book is different from the balance shown by bank column of cash book, the business firm will identify the causes for such difference. It becomes necessary to reconcile them. To reconcile the balances of Cash Book and Pass Book a statement is prepared. This statement is called the ‘Bank Reconciliation Statement. How to Prepare Bank Reconciliation Statement: To reconcile the bank balance as shown in the pass book with the balance shown by the cash book, Bank ReconciliationStatementisprepared.Afteridentifyingthe reasonsof difference,the BankReconciliationstatementis prepared without making change in the cash book balance. We may have the following different situations with regard to balances while preparing the Bank Reconciliation statement. These are: 1. Favourable balances (a) Debit balance as per cash book is given and the balance as per pass book is to be ascertained. (b) Credit balance as per pass book is given and the balance as per cash book is to be ascertained. 2. Unfavourable balance/overdraft balance (a) Credit balance as per cash book (i.e. overdraft) is given and the balance as per pass book is to be ascertained. (b) Debit balance as per pass book (i.e. overdraft) is given and the balance as per cash book is to be ascertained. The following steps are taken to prepare the bank reconciliation statement: (i) Favourable balances: When debit balance as per cash book or credit balance as per pass book is given:
  2. 2. 2 Prepared By Kumar Nirmal Prasad, M.Com, UGC – NET (Three Times), CMA (Final Intership); 9577097967 (a) Take balance as a starting point say Balance as per Cash Book. (b) Add all transactions that have resulted in increasing the balance of the pass book. (c) Deduct all transactions that have resulted in decreasing the balance of pass book. (d) Extract the net balance shown by the statement which should be the same as shown in the pass book. In case balance as per passbookis takenas startingpointall transactions thathave resultedinincreasing the balance of the Cash bookwill be added andall transactionsthat have resultedindecreasing the balance of Cash book will be deducted. Now extract the net balance shown by the statement which should be the same as per the Cash book. (ii) Unfavourable Balance/Overdraft: Sometimes a businessman withdraws excess amount from the bank account and the closingbankbalance of a monthis a debitbalance.Thisbalance amountiscalled‘overdraft balance’ as per Pass Book. This is shown in the cash book as a credit balance. Overdraft balance is to be shown in the minus columnof statementasthe starting point.The otherstepsshall remainthe same asmentionedabove. The following illustration helps to understand dealing with the unfavourable balance as per cash book and pass book. Illustration.1. On December 31, 2013, the cash book of the M/s. X shows the credit balance Rs.6, 500. ChequesamountingtoRs.3,500 depositedintobankbutwere notcollected by the bank. Firm issued cheques of Rs. 1,000 whichwere notpresentedforpayment.Therewasadebitinthe pass bookof Rs.200 forinterestandRs.400 for bank charges. Prepare Bank Reconciliation Statement. Solution: Bank Reconciliation of M/s. X as on 31st Dec, 2013 Particulars Plus(Amount) Minus(Amount) Overdraft as per cash book 1. Cheque issuedbutnotpresentedforpayment 2. Cheque depositedbut notcreditedbybank 3. Bank chargesand Interestcharged Overdraft as per pass book 1,000 9,600 6,500 3,500 600 10,600 10,600 Illustration.2. Prepare Bank Reconciliation Statement of M/s. X on 31st Dec, 2013, from the following information: Overdraft as per pass book 16,500, Interest on overdraft 1,600, Insurance premium paid by the bank 800, Cheques deposited but not yet credited 5,500, Cheques issued but not present for payment 6,000, Wrongly credit to firm account by the bank 1,000 Solution: Bank Reconciliation of M/s. X as on 31st Dec, 2013
  3. 3. 3 Prepared By Kumar Nirmal Prasad, M.Com, UGC – NET (Three Times), CMA (Final Intership); 9577097967 Particulars Plus(Amount) Minus(Amount) Overdraft as per pass book 1. Interestonoverdraft 2. Insurance Premiumpaidbybank 3. Cheque depositedbutnotcreditedbybank 4. Cheque issuedbutnotpresentedforpayment 5. Wronglycreditedbybank Overdraft as per cash book 1,600 800 5,500 15,600 16,500 6,000 1,000 23,500 23,500 Answer of Q.N.2. COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE MEMBERS ONLY. BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF Rs.300 ONLY. SOME SOLVED QUESTION PAPERS WILL ALSO BE PROVIDED. FOR DETAILS CONTACT: KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM) CONTACT NO. 9577097967 EMAIL: KUMARNIRMALPRASAD@GMAIL.COM WEBSITE: WWW.DYNAMICTUTORIAL.BLOGSPOT.COM Answer of Q.N.3. (a) Treatment of Outstanding Subscription Subscription is received by the non-trading organisations from its members regularly each year. It is a recurringreceiptof revenue nature andhence treatedasamain source of income. This is shown to the debit side of Receipts and Payments Account and to the credit side of the Income and Expenditure Account. It is shown on cash basis in the Receipts and Payments Account and on accrual basis in the Income and Expenditure Account i.e., outstanding subscription and advance subscription is to be adjusted. Subscription can be outstanding both in the beginning and at the end of the accounting year. Outstanding subscriptionatthe beginningisthatamountof subscriptionwhichdue inprevious year and not received in previous year.Therefore,itisdeductedwhile ascertainingsubscriptionincomeduringthe currentyearand on the other hand, it isshownonthe assetsside of openingbalance sheet.Again,Subscriptionoutstanding at the end is that sum which is due in current year and yet not received. It is related to current year, therefore it is added while ascertaining subscription income during the current year and on the other hand, and it is shown on the assets side of closing balance sheet. (b) Treatment of Donation: In Income and Expenditure Account: It is the amount received from some person, firm, company or any otherbodyby swayof a gift.It isshowninreceiptsandpaymentsaccountsof the year. If a donation is received for a
  4. 4. 4 Prepared By Kumar Nirmal Prasad, M.Com, UGC – NET (Three Times), CMA (Final Intership); 9577097967 specificpurpose (donationforbuilding,donationforconductingspecific events–sports,annual day celebration etc.) It is in the nature of a capital receipt credited to a separate Fund account and shown in the balance sheet. The non trading concern has to fulfill the purpose for which the donation is received. If the donation is not for a specific purpose,itisknownas a general donation.Generaldonationof abigamountiscapitalized and not shown as income as it isnon-recurringinnature.Donationsof asmall amountmaybe expectedevery year. So this may be considered as income during the year. In Receiptsand Payments Account: Donationisshowninthe receiptsside of ReceiptsandPaymentsAccount whether it is of general purpose or specific purpose. (c) Legacy: In Income and Expenditure Account: Itis the amountreceivedbythe nonprofit organizations as per the will of a deceasedperson.It isa capital receiptandisshownonthe liabilitysideof the balance sheet,butif the amount is small it may be treated as income and may be shown on the credit side income and expenditure account In the absence of any specific information legacy must be preferably be capitalized and added with capital fund. In Receipts and Payments Account: It is the amount which is received by organisations as per the will of a deceasedperson.Itistreatedasa capital receiptandshownon the receiptsside of Receipts and Payments Account. (d) Treatment of Tournament Fund: In non trading concerns, Tournament funds are created for conducting tournaments. It a specific fund and investedin specificsecuritiesbynon-tradingorganisations.The income derivedfromthe investment is added to that fund and is not treated as income. Incomes are normally added with the fund. Again, expenditure incurred on conducting tournament is deducted with tournament fund and is not shown as expense. For example: Tournament Fund - 20,000; Tournament fund investment - 15,000; Interest on Tournament Fund Investment for the year - 2,000; Expenditure on Tournament - 8,000. Nowthe total Tournamentfund is Rs. 22,000 (20,000 + 2,000) the interestof Rs. 2000 isadded with the Prize fund.The expensesincurredoutof fundare deductedfromthe funditself.Inthe previousexample the accumulated Prize fund is Rs. 22,000. The Prize given for of Rs. 8,000 is deducted from the Prize fund and the balance fund of Rs. 14,000 will be shown in the Balance sheet. Answerof Q.N.4. COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE MEMBERS ONLY. BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF Rs.300 ONLY. SOME SOLVED QUESTION PAPERS WILL ALSO BE PROVIDED. FOR DETAILS CONTACT: KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM)
  5. 5. 5 Prepared By Kumar Nirmal Prasad, M.Com, UGC – NET (Three Times), CMA (Final Intership); 9577097967 CONTACT NO. 9577097967 EMAIL: KUMARNIRMALPRASAD@GMAIL.COM WEBSITE: WWW.DYNAMICTUTORIAL.BLOGSPOT.COM Difference betweenProvisionsandReserves 1. Provision is made to meet known liability the amount of which cannot be ascertained with substantial accuracy. Whereas, Reserve is created to meet unexpected losses and contingencies likely to arise in future. 2. Provisioncanbe usedonlyformeetingthe specificpurpose forwhichithasbeenmade. But, Reserve can be used for any purpose unless it is created for a specific purpose. 3. Provisionisacharge onprofitsand reduces the amount of net profits. But, Reserves is an appropriation of profits and reflects undistributed profits. 4. Provisionistobe made even if there are no profits. Whereas, Reserve is created only when there are profits. 5. Provision creation is compulsory. But, Reserves creation is at the discretion of management with the exception of debenture redemption reserve for which the Companies Act has made a provision in certain cases. 6. Provisionismeantformeetingexpectedlossesand cannotbe usedfordividenddistribution. But, Reserves is a part of owner’s funds and can be used for distribution of dividends. Answer of Q.N.5. COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE MEMBERS ONLY. BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF Rs.300 ONLY. SOME SOLVED QUESTION PAPERS WILL ALSO BE PROVIDED. FOR DETAILS CONTACT: KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM) CONTACT NO. 9577097967 EMAIL: KUMARNIRMALPRASAD@GMAIL.COM WEBSITE: WWW.DYNAMICTUTORIAL.BLOGSPOT.COM

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