ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Commerce)

PRINCIPLES OF ACCOUNTING (438)

CHECKLIST

SEMESTER: SPRING, 2020

This packet comprises the following material:

1. Text book (one)
2. Assignment No. 1, & 2
3. Assignment forms (Two sets )
4. Schedule for submitting assignments and tutorial meetings

If you find anything missing in this packet, please contact at the address given
below:

The
Mailing Officer,
Allama lqbal Open University
H-8, Islamabad
051-9057611- 12

ASIA BATOOL
Course Coordinator

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 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)
[

WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENT(S) BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.
Course: Principles of Accounting (438) Semester: Spring, 2020
Level: B.A/B.Com Total Marks: 100
Pass Marks: 40
ASSIGNMENT No. 1
(Units: 1-4)
Note: You are required to attempt all questions, if you are unable to understand any
question of assignment, do seek help from your concerned tutor. But keep in mind that
tutors are not supposed to solve the assignment questions for you.

Q. 1 a) Define accounting and discuss its functions.

b) Describe the users of accounting information. Why do they need
information? (20)
Q. 2 Journalize the following transactions in the books of Mr. Maqsood & Sons, post
them to the ledgers, and prepare trial balance. Mr. Maqsood started a sole
proprietorship business named Mr. Maqsood & Sons, with cash Rs. 450,000 and
furniture Rs. 30,000. The transactions, completed during June, 2019, the first
month of operations are as under: (20)
a)Opened a bank account in the name of business with Rs. 150,000.
b)Acquired a shop on monthly rent for Rs. 3,000 after paying cash Rs. 36,000 as
advance rent.
c)Purchased showcases and counters for Rs. 18,000, payment was made by cheque.
d)Purchased goods costing Rs. 50,000.
e)Bought gods from Mr. Abrar on account of Rs. 26,000.
f) Cash sale Rs. 32,000.
g) Sold goods on credit to Rahim Rs. 6,000.
h) Returned defective goods to Rauf and Co. costing Rs. 7,000.
i) A regular customer complained about the quality of goods has been granted
an allowance of Rs. 1,000.
j) Received a cheque from Rahim amounting Rs. 5,000, the same day it was
deposited into the Bank.
Q. 3 The following trial balance was extracted from the books of Ahmad, a sole trader,
for the year ending December 31, 2018: (20)
Purchases and Sales 22,860 41,970

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 Opening Stock 5,160
Capital 7,200
Bank Overdraft 4,350
Cash 90
Discount 1,440 930
Returns Inwards 810
Returns outwards 570
Carriage outwards 2,160
Rent and Insurance 1,740
Provision for Bad & Doubtful debts 660
Fixtures and Fittings 1,200
Delivery Van 2,100
Debtors and Creditors 11,910 6,060
Drawings 2,880
Wages and Salaries 8,940
General Office Expenses 450
61.740 61,740
Additional information:
a) Closing stock was valued at Rs. 4,290.
b) Wages and Salaries accrued Rs. 210.
c) Office Expenses owing Rs. 20.
d) Rend prepaid Rs. 180.
e) Increase the provision for bad and doubtful debts by Rs. 810.
f) Charge depreciation on fixture & fittings @ 10% and Delivery Van Rs. 300.
Required: Prepare a Trading and profit & Loss Account and a Balance Sheet for the
year ended December 31, 2018.
Q. 4. Describe the major parts of the income statements and balance sheet of a
merchandising concern. (20)
Q. 5. On April 15, 2018, ABC Company purchased a new machine for Rs. 55,000 with a
residual value of Rs. 5,000, having all estimated useful life of 5 years. It spent Rs.
12,500 on its erection and installation.
Compute account under the following depreciation methods:
a) Straight-line
b) Double declining-balance (20)

ASSIGNMENT No. 2
(Units: 05-09)
Total Marks: 100
Pass Marks: 40
Q. 1 Rectify the following errors by making necessary journal entries in the General
Journal. (20)
a) A Cash Sales of Rs. 3,750 to Rahat correctly entered in the Cash Book but
also posted to the credit of his personal account.
b) Goods returned by Moeen Rs. 300 have been entered in the Returns
Outwards Book. However, Moeen's account has been correctly posted.
c) The purchase Book has been under casted by Rs. 900, Rs. 600 and Rs. 1,500

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 respectively on consecutive three pages.
d) Purchase of Furniture on credit from Lahore Furniture for Rs. 7500 was
entered in the Purchase Book.
e) The account of a debtor for Rs. 12,000 had been written off as bad, but the
entry had been made only in the personal account.
f) The sales book was under cost by Rs. 50, Rs. 175 and Rs. 75 respectively on
consecutive three pages.
Q. 2 Discuss the various causes of disagreement of balance between Bank Statement
and Company's Cashbook. (20)
Q. 3 Prepare Income and Expenditure Account and Balance Sheet of lqra
Foundation from the following Receipts and payment Account for the
period ended on 30 th June, 2017. (20)
Receipts Amount (Rs.) Payments Amount (Rs.)
Balance 6,274 Grants to members 1,320
Entrance fee (25 @ Rs.100) 2,500 Salaries 675
Annual subscription: Rend and rates 1,266
2016 200 Postage & telegram 136
2017 2,900 Repair to premises 425
2018 150 3,250 Investment 13,000
Legacies 12,600 Furniture purchased 1,700
Miscellaneous receipts 3,450 Cash in office 3,578
Sale of old furniture 1,500 Cash at bank 7,880
Donations 406
29,980 29,980
Additional information:
i) Annual subscription for each member is Rs. 120, Rs. 240 being in arrear for 2016.
ii) Prepaid rent and rates Rs. 300.
iii) Postage and telegram Rs. 56 related to 2016, One-half of the legacies are to be
treated as income.
iv) At July, 2016 the building and premises stood in the books at Rs. 35,000
investment Rs. 12,000 and furniture Rs. 3,000.
v) Depreciation is to be provided at the rate of 10% p.a. on furniture and writing down
investments by 5% (opening balance only).
Q. 4. Explain the accounting treatment of Goodwill in case of admission of a new partner.
(20)
Q. 5 Salman and lmran agree to dissolve the partnership on 30 th June, 2018, their
Balance Sheet was as follow: (20)
Balance Sheet
Liabilities Rs. Assets Rs.
Creditors 60,000 Cash 10,000
Bank Loan Account 80,000 Debtors 50,000
Capital Stock 200,000
Salman 200,000 Plant 140,000
Imran 100,000 Good will 40,000
44,0000 44,0000
The partners share profits and losses in proportion to their capitals. The debtors
realized Rs. 42,000, Stock Rs. 180000, Plant 20% less than the book value and the
goodwill Rs. 60,000. The creditors were paid off and the costs of dissolution amounted

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to Rs. 6,000.