Google+ COMPUTER TRICKS, TWEAKS AND TUTORIALS: July 2012

CS 101 few long question



What is the out put of the following JavaScript code ?                                                    1 marks
             name=”Ali Akbar”;
             document.write(name.charAt(4))  ;

What does TCP/IP stand for?                                                                                                   1 marks

What is spreadsheet? List any two jobs that it can do.                                                   2 marks

What is an intelligent system?                                                                                        2 marks

Explain how many ways businesses monitor their employees?                                        3 marks

Differentiate between 'switch' and 'if-else' statement.                                                      3 marks

Write down three advantages of using Functions in a program.                                       3 marks

What is the difference between Database and Database Management System (DBMS)?            5 marks

Briefly describe the guidelines for layout of presentations                                                            5 marks

Write down the output of the following lines of JavaScript code?                                                10 marks

a) <script type="text/javascript">
document.write(Math.round(5.92))      
</script>

b) <script type="text/javascript">
var name="Muhammad Abdul Bashir"
document.write(name.length)
</script>

c) <script type="text/javascript">
var str="This is my test string"
document.write(str.charAt(9))
</script>
                                                                                          
d) <script type="text/javascript">
var str="VU Learning Management System "
document.write(str.indexOf("system")+"<br />")
</script>
                                               
e) <script type="text/javascript">
var str="Virtual University of Pakistan"
document.write(str.substr(23))
</script>


What is the function of Network Interface Card ?                                                                                  01 Marks

What are the types of computer network according to the distance between nodes ?                  01 Marks

Define the term Aliasing in computer graphics.                                                                           02 Marks

What is an intelligent system?                                                                                                    02 Marks

Where "While" loop is more  preferable than "For" loop and vice versa ? , explain with the help of example.
03 Marks

What are the Sub categories of Artificial Intelligence? Briefly explain any two.                            03 Marks

Write JavaScript code to convert the number 236.2363611111556into currency format and JavaScript statement to show output.                                                                                                                                      03 Marks

Write the difference between Wisdom and Heuristic?                                                                05 Marks

Write JavaScript code for the following:                                                                                                05 Marks

Make a function compareWithTen(value)
Compare the function argument with ‘10’ and display a message whether the value is less than, equal to or greater than 10.

Answer the following questions by looking at the code given below.                                           10 Marks

1-     Which alert box will be displayed if variable 'marks' has value 75?
2-     What is the range of the marks when the alert box displays the message “Average performance”?
3-     What is the range of the marks when the alert box displays the message “That's poor performance”?
4-     Which alert box will be displayed if variable 'marks' has the value 100?

1.  if (marks == 100)
2.     {
3.     alert("You've touched a century");
4.     }
5.  else if (marks >= 80 && marks < 100)
6.     {
7.     alert("That's good");
8.     }
9.  else if (marks >= 60 && marks < 80)
10.   {
11.   alert("Above average performance");
12.   }
13.else if (marks > 50 && marks < 60)
14.   {
15.   alert("Average performance");
16.   }
17.else
18.   {
19.   alert("That's poor performance");
20.   }


What are the phases of the DoS attack? Explain each phase in detail.                             10 Marks


In programming, what is a loop?                                                            1 Marks

What is function identifier?                                                                    1 Marks

Why hub is used in networks?                                                   2 Marks

Write HTML format to include gif and jpg images in a web page.           2 Marks

How can we include images in a web page using HTML and Java script?           3 Marks

What is the difference between Internet and Intranet ?                           3 Marks

Briefly mention any three problems in old modes of presentation development    3 Marks

What is DNS? Briefly explain the working of DNS.                                                       5 Marks

What do you know about Development Team?                                                 5 Marks

Write down JavaScript functions that is equivalent to the following HTML code?                       10 Marks
HTML code
JavaScript function
<FONT size=18>
</FONT>

<FONT color=”blue”>
</FONT>

<PRE> … </PRE>

<A href=URL> …</A>

<BIG> … </BIG>

<SMALL> … </SMALL>

<SUB> … </SUB>

<SUP> … </SUP>

<B> … </B>

<I> … </I>


What are Commonsense Guidelines to avoid viruses? Discuss about Antivirus as well.                10 Marks

What is heuristic?                                                                      1marks

Why there is a need to use primary key in database ?    1marks

What is spreadsheet? List any two jobs that it can do.   2marks

What is the database?                                                               2marks

Explain how many ways businesses monitor their employees?    3marks

How can you define a consistent web design? Why is it needed?            3marks

Write down three advantages of using Functions in a program.   3marks

Why the quality of image in dithering scheme is not good?                      5marks

Can a human doctor be replaced by an Expert System? Give reasons to support your answer.               10marks

Write code for the following screen shot. The text field should not accept any other name except “CS101”. On wrong entry it should give you a message as soon as you leave the text box.                                                  10marks

What is an organization? How many teams can be in an organization? Write their names. (3+3+4)


What is pseudo code?                                                              1

In programming, what is an object ?                                          1

For what purposes FTP is used in networks ?                           2

What is the error in the following JavaScript statement? 2

student=new array(10);

What is the difference between Internet and Intranet ?   3

Elaborate with examples Raster graphics                                   3

What are Logic- or Time-Bombs ?                                           3

What are the key advantages of internet? Write any three.         5

What are the important properties, methods and event handlers of image object?           5

What is Data Integrity? How can we ensure it (any three ways) ? (4+6)

Define the following                                                      10
                                                                       
a.       Algorithm
b.      Heuristic
c.       Database
d.      Relational Database



Amazing Short notes of mgt 101 account 23-45.


Recap

Example 1

  Consider the following data for the month of June of T Company

  Balance as per bank book is Rs. 70,240

  Bank statement showed a favourable balance of Rs. 73,920..

  Examination of bank book and bank statement revealed the following:

nA cheque of Rs. 4,920 paid into bank was not credited by the bank until July 3rd.

nA standing order for payment of annual payment of Rs. 1,000 had not been entered into bank book.

nOn 27thJune two customers of T Co. paid directly into bank Rs. 5,500, advice of which was received in July.

nCheques issued but not presented in the bank amounted to Rs. 4,600.

nThe bank had debited the account by Rs. 500 on account of bank charges.

 

  Lets assume that T Co. has not closed its books.

  You are required to adjust the bank book and then prepare a bank reconciliation statement.

 

Solution

  Following require adjustment in bank book:

nPayment of an annual subscription Rs. 1,000, not entered in bank book.

Debit    Relevant Expense A/c                         1,000

Credit   Bank                                                                                                    1,000

nReceipts from two customers of directly into bank Rs. 5,500,

Debit    Bank                                                                                        5,500

Credit   Customer’s Accounts                                                  5,500

nBank charges Rs. 500

Debit    Bank Charges Account                                      500

Credit   Bank                                                                                                    500

 

 

Adjustments in Bank Book

 

Original Balance As Per bank book                                                    70,240

Credit / Less Payment on standing orders                             (1,000)

Credit / Less bank charges                                                                                 (500)

Add Receipts from customers                                                                          5,500

Adjusted balance as per bank book                                                    74,240

Solution

T. Co.

Bank Reconciliation Statement as on June 30, 20—

 

Balance as per Bank Book                                                                              74,240

Add Un presented cheques                                                                              4,600

Less Un credited cheques                                                                               (4,920)

Balance s per bank statement                                                              73,920

Example 2

  Same data as previous example.

  Balance as per bank book is Credit Rs. 56,000

  As per bank statement unfavorable balance of Rs. 52,320

Solution

Adjustments in Bank Book

 

Original Balance As Per bank book                                             (56,000)

Credit / Less Payment on standing orders                              (1,000)

Debit / Add Receipts from customers                                                  5,500

Credit / Less bank charges                                                                                 (500)

Adjusted balance as per bank book                                            (52,000)

Solution

T. Co.

Bank Reconciliation Statement as on June 30, 20—

 

Balance as per Bank Book                                                                              (52,000)

Add Un presented cheques                                                                               4,600

Less Un credited cheques                                                                                (4,920)

Balance as per bank statement                                                                        (52,320)

 

Example 3

  From the following data ascertain the balance as per bank statement of Nasir & Co on March 31, 20--

n Balance as per bank book Rs. 63,000

n Cheques issued but not presented for payment Rs. 12,000.

n Cheques deposited but not cleared Rs. 20,000

n Profit on deposit was credited by bank but not debited in bank book Rs. 2,000.

n A customer paid into bank directly Rs. 15,000 but the same was not recorded in bank book.

nOther receipts in bank that were not recorded in bank book Rs. 8,000.

Solution

Nasir and Co.

 

Balance as per Bank Book                                                                              63,000

Add Un presented cheques                                                                            12,000

Less Un credited cheques                                                                        (20,000)

Add Profit received                                                                                                      2,000

Add amount deposited by customer                                                  15,000

Add other receipts in bank                                                                               8,000

Balance as per bank statement                                                                        80,000

Solution

Nasir and Co.

 

Balance as per Bank Statement                                                                      80,000

Less Un presented cheques                                                                     (12,000)

Add Un credited cheques                                                                                           20,000

Less Interest received                                                                               (2,000)

Less amount deposited by customer                               (15,000)

Less other receipts in bank                                                                              (8,000)

Balance as per bank book                                                                               63,000

 

  Debtors OR Trade Debtors – are the receivables by the organization against the sale of goods.

  Receivables / Other Receivables – are all receivables other than trade debtors e.g. advances to staff, suppliers.

  Creditors OR Trade Creditors – are the payables by the organization against the purchase of stock.

  Payables / Other Payables – are all payables other than trade creditors e.g. advances received from customers.

  Accruals – are the expenses of the business that are payable at the end of the accounting period.

  Payables / Other Payables – are all payables other than trade creditors e.g. advances received from customers.

  Provision – where an expense is incurred but the actual amount is not known at the time of recording at the end of accounting period.

Accounting for Creditors

  Purchase of goods

   Debit                    Stocks Account

   Credit                              Creditors Account

  Goods returned

   Debit                    Creditors Account

   Credit                              Stocks Account

  At the time of payment

   Debit                    Creditors Account

   Credit                              Cash / Bank Account

  Discount received from creditors

   Debit                    Creditors

   Credit                              Stock OR Discount Received

Discounts Allowed to Customers

  Discount allowed to debtors

   Debit                    Sales OR Discounts Allowed

   Credit                              Debtors

Recording of Accrual

  At the time of recording accrual

   Debit                    Relevant expense account

   Credit                              Accrued expenses / Expenses Payable

  At the time of payment

   Debit                    Accrued expenses / Expenses Payable

   Credit                              Cash / Bank

  Recording of rebate

   Debit                    Accrued expenses / Expenses Payable

   Credit                              Expense Account

Recording of Accrual

  At the time of recording accrual

   Debit                    Relevant expense account

   Credit                              Accrued expenses / Expenses Payable

  At the time of payment

   Debit                    Accrued expenses / Expenses Payable

   Credit                              Cash / Bank

  Recording of rebate

   Debit                    Accrued expenses / Expenses Payable

   Credit                              Expense Account

Difference Between Accrual and Provision

  Accrual is made when exact amount of expense is known at the time of recording.

 

  Provision is made when it is known that an expense will arise but the exact amount is not known.

Recording of Provision for Doubtful Debts

  At the time of creating the provision

   Debit                    Profit and Loss Account

   Credit                              Provision for Doubtful Debts

  At the time of actual bad debt

   Debit                    Provision for Doubtful Debts

   Credit                              Trade Debtors

  In case of bad debt where no provision was made

   Debit                    Profit and Loss Account

   Credit                              Trade Debtors

Provision for Expenses (e.g. Electricity)

  At the time of creating the provision

   Debit                    Relevant Expense Account

   Credit                              Accrued Expenses

  At the time actual amount is known

n Where actual bill is less than the provision

   Debit                    Accrued Expenses

   Credit                             Expense Account

  Recording of payment

   Debit                    Accrued Expenses

   Credit                              Cash / Bank

Presentation of Provision

  Provisions are presented as current liabilities in the balance sheet.

  Exceptions

nDepreciation

nProvision for doubtful debts

  Provision for Doubtful Debts is shown as a reduction from debtors in the balance sheet.

Recording of Debtors

  At the time of sale

   Debit                    Debtors

   Credit                              Sale

  At the time of receipt

   Debit                    Cash / Bank

   Credit                              Debtors

Recording of Debtors

  Return of goods by debtors

   Debit                    Sale

   Credit                              Debtors

 

   Debit                    Stock

   Credit                              Cost of Sales

  

Recording of Provision

Extract of Profit and Loss Account

  Extract of Profit and Loss to show the Provision for Doubtful Debts

 

Profit and Loss Account

For the year ended --—

 

   Gross Profit                                                                                                    90,000

   Less: Expenses

                         Provision for bad debts                                                 (5,000)

Extract of Balance Sheet

  Extract of Balance Sheet to show the Provision

 

 

 

 

 

Balance Sheet

As At ----------

 

   Current Assets

   Debtors                                                                                100,000

   Provision for Bad Debts                     (5,000)                      95,000

Recording of Bad Debt

  Where provision has already been made for that debt:

   Debit                    Provision for Bad and Doubtful Debts

   Credit                  Debtors

  No expense will be charged.

Recording Change in Provision

  Reducing the provision

   Debit                    Provision for Bad and Doubtful Debts

   Credit                  Profit and Loss Account

  Increasing the provision

   Debit                    Profit and Loss Account

   Credit                  Provision for Bad and Doubtful Debts                                                                                                                                                                                                                                                                                                                                                                                         

Example

  Following information is available for A Ltd. For the year ended June 30, 20--.

n Bad Debts During the year

        November                               1,100

        January                                       640

        April                                           120

n At the year end total debtors amounted to Rs. 68,000 out which Rs. 2,200 is considered to be doubtful / bad.

  Show the relevant accounts and extracts from Profit and Loss and Balance Sheet.

Example

Presentation

A Ltd.

  Profit and Loss Account for the year ended June 30, 20—

   Gross Profit                                                                                                     -------

   Less: Expenses

                         Bad Debts                                                                               (1,860)

                         Provision for bad debts                                                (2,200)

  Extract of Balance Sheet As On June 30, 20--

   Current Assets

   Debtors                                                                                  68,000

   Provision for Bad Debts                     (2,200)                      65,800

Example 2

  A business creates a provision for bad debts @ 5% of its debtors on balance sheet date.

  On Jan 01, 20-- the balance of Provision was 6,600.

  During the year debts written off amounted to Rs. 5,400.

  On December 31, 20--, debtors totaled Rs. 62,000.

  Show Bad debts Account and provision for bad debts account.

Solution

  Required closing balance of Provision

            62000 x 5% = 3,100

Example 2

Presentation

 

 

  Extract of Balance Sheet

   Current Assets

   Debtors                                                                                  62,000

   Provision for Bad Debts                     (3,100)                      58,900

Control Accounts

  In general ledger summarized record is maintained in the account called “Control Account”. Separate control account is used for Debtors and Creditors.

  Details of individual accounts are kept in a separate Register / Ledger called subsidiary ledger.

Control Accounts

  Control accounts are part of Double Entry recording.

  Entries in Subsidiary Accounts are not part of double entry.

  Total of transactions in subsidiary ledger should match with the transactions in control accounts.

Information for Control Accounts - Debtors

Control Accounts

  Cash sales are usually not recorded in control accounts.

Example

  Prepare a Debtors control Account from the following data and work out the closing balance  on May 31, of debtors.

n May 1      Opening Balance                                                                                 55,000

               Totals for May

               Total Credit Sales                                                                               45,000

               Returns Inward                                                                                                 8,000

               Cheques and Cash received                                        40,000

               Discounts allowed                                                                                4,500

Example 2

  Prepare a Creditors Control Account from the following data and work out the closing balance  on April 30, of creditors.

n Apr. 1      Opening Balance                                                                                             44,500

               Totals for May

               Total Credit Purchases                                                                                    32,000

               Purchase Return                                                                                                6,200

               Cheques and Cash paid                                                                      28,800

               Discounts received                                                                                            2,500

Recap

  With the increase in business, it becomes difficult to maintain separate accounts for every Debtor and every Creditor.

  Control Accounts are opened in the ledger for both Debtors and Creditors.

  Control Accounts are part of double Entry system.

 

  Subsidiary ledgers are not part of double entry system.

  Control Account system is used only for credit sale and credit purchase.

 

Subsidiary Books

  To reduce the volume of general ledger, number of books are opened that are called Subsidiary books.

Subsidiary Books- Debtors

  Three subsidiary books are maintained in case of sales / debtors.

n Sales Journal / Sales Day Book – individual invoice wise sales are recorded in this Journal.

n Sales Return / Return Inward Journal – in case the volume of returns is also high then these are also recorded in a separate register.

n Debtors Ledger – this ledger maintains record of individual debtor.

  Cash sale is not included in the debtors control accounts.

 

Information for Control Accounts

Opening balance of debtors List of debtors balances drawn up to the end of previous period confirms with the aggregate balance of the Control Account.

Credit Sales    Periodically total of sales journal is posted into the debtors control account.

Sales Return  In case the transaction volume of sales return is high then these are recorded in the sales return journal. Periodically the total is posted in the debtors control a/c.

Cheques / Cash Received     List of receipts is extracted from cash and bank book. Or a separate column is maintained in cash and bank books for this purpose

Closing Balance         This is the balancing figure. It can also be checked with the total of balances in

 debtors Control Account.


  Again if we total the balance of three accounts of the debtors ledger on Jan 30,:

n A                            8,500

n B                          10,000

n C                          15,000

n Total                    33,500

 

  It will be the same as the balance in the debtors control account of the general ledger.

 

Receipts From Debtors

  When control accounts are used we maintain cash and bank books with separate pages for receipts and payments i.e. two column cash/bank books are not used.

  On the receipts side of the cash and bank book a column is added in which receipts from debtors are separately noted.

  This type of cash / bank book is also called multi column cash / bank book.

 

Recording of Receipts – Multi Column Cash Book

Subsidiary Books- Creditors

  The recording of creditors is similar to debtors. The subsidiary books maintained in case of purchases / creditors are:

n Purchase Journal / Purchase Day Book – individual purchases are recorded in this Journal.

n Purchase Return / Return outward Journal – in case the volume of returns is also high then these are also recorded in a separate register.

n Creditors Ledger – this ledger maintains record of individual creditors.

  Cash purchase is not included in the creditors control accounts.

 

Subsidiary Books - Creditors

Opening balance of Creditors          List of creditors balances drawn up to the end of previous period confirms with the aggregate balance of the Control Account.

Credit Purchases       Periodically total of purchase journal is posted into the creditors control account.

Purchase Return       In case the transaction volume of purchase return is high then these are recorded in the purchase return journal. Periodically the total is posted in the creditors control a/c.

Cheques / Cash Paid List of payments is extracted from cash and bank book. Or a separate column is maintained in cash and bank books for this purpose

Closing Balance         This is the balancing figure. It can also be checked with the total of balances in creditors Control Account.

 

Recording of Payments – Multi Column cash book

Recap

n The need for maintaining control accounts

n Subsidiary record maintained, and

nControl Accounts when a person is both Debtor & Creditor.

nNumerical Examples of Control Accounts.                    

When a person is both debtor and creditor

  When a person is both debtor & creditor, that means you are purchasing one thing from him and at the same time selling another thing to him.

  In the absence of written agreement, the way of settling the payable and receivable is that you  pay him full and ask him to pay you full amount.

  If the agreement exists, the way and may be the wiser way is that you pay or receive from him, the net amount of payables and receivables.

When a person is both debtor and creditor

  For example, you purchase item A from Mr. ABC for Rs. 100,000 and sell him item B for Rs. 65,000.

o  One way of settling the payable and receivable is that you can pay Mr. A 100,000 and ask him to pay Rs. 65,000.

o  The other and may be the wiser method is that you pay him Rs. 35,000 and both the transactions are settled. And this is how such transactions are handled in real life.

When a person is both debtor and creditor

Normally where no control accounts are maintained, following entries will be passed:

Debit           A (payable/creditor) account                          65,000

Credit                     A (receivable/debtor) account             65,000

The other entry will be:

Debit           A (payable/creditor) account                          35,000

Credit                     Cash / Bank                                                                             35,000

This will settle the payable account fully.

When a person is both debtor and creditor

  Where control accounts are being maintained the above two entries are still passed but with slight modification:

 

Debit           Creditors Control account                              65,000

Credit                                 Debtors Control account                                             65,000

 

The other entry will be:

 

Debit           A (payable/creditor) account                          35,000

Credit                                 Cash / Bank                                                                             35,000

 

This entry comes from the creditors column of cash / bank book payment side as usual.

Bad Debts

  Provision does not effect debtors account in simple books. It will therefore, have no effect either on debtor control account or debtors ledger.

  At the time of actual bad debt, the journal entry

Debit           Provision / Bad Debts

    Credit          Debtors Control Account

   In subsidiary ledger, the debit entry will be same but the credit effect will go to Individual Debtors Account in Debtors Ledger.

  Similar treatment is given to discounts received and allowed.

Example 1

  You are required to prepare the Creditors Control account for the month of March and calculate the closing balance from the following data.

n March 1 Opening balance Dr.                                         50,390

n Totals for the month

Sales from Sales Register                                                           60,500

Sales Return (Sales Return Register)                   1,550

 Cheques and cash received                                           75,500

Discounts Allowed                                                                                  2,000

Bad debts written off                                                                  1,800

n No provision for bad debts was made previously.

Example

  Prepare the Creditors Control account for the month of June and calculate the closing balance from the following data.

n June 1 Opening balance Cr.                                                         35,500

n Totals for the month

Purchases from Purchase Register                                 50,000

Purchase Return (Purch. Return Register)           1,550

Payments made                                                                                      45,500

Discounts received                                                                                              1,500

Example

  The financial year of ABC Co. ended on June 30, 2002. You have been asked to prepare the Debtors and Creditors Control Account from the information extracted form subsidiary books.                                                                                                                   NOTE

n Sales                                Cash                                                   140,500                                   1

                                            Credit                                                  255,000

n Purchases Cash                                                     95,000                                   1

                                            Credit                                                  199,500

n Total Receipts                                                                  405,000                                   2

n Total Payments                                                                275,000                                   2

n Discounts allowed(all credit cust.)            12,000

n Discounts received(all credit supp.)            9,500

 

Example 3

                                                                                                                                    NOTE

n Bad debts written off                                                                                 800

n Increase in prov. Doubtful debts                         2,000               3

n Last year closing balances were

        Debtors                                                                                                 285,000

        Creditors                                                                                               194,000

NOTES

1 Cash Sales and Purchases don’t effect debtors/creditors control accounts.

2 Total receipts and payments include cash sale and purchases.

3 Change in provision does not effect debtors actual write off .

 

Subsidiary Ledgers

  Subsidiary ledgers contain the record of all individuals Debtors and Creditors.

  Subsidiary ledgers give information about the  main clients and slow moving clients which is helpful for the management in decision making.

  If the business has distributors in different areas, subsidiary ledger give information about sale of different distributors in different areas which is helpful for the management in decision making.

 

Recording of Bad Debts in Control Accounts

  In case no provision was created for doubtful debts:

Debit                  Bad Debts

Credit                 Debtors Control Account

 

 

  In case provision was created for doubtful debts:

Debit                  Provision for Doubtful Debts

Credit                 Debtors Control Account

 

  Recording is also made in the respective account of the debtor in subsidiary  ledger.

 

 

Recording of Discounts Received in Control Accounts

Debit           Creditors Control Account

Credit                     Discount Received Account

 

Recording is also made in the respective account of the creditor in subsidiary  ledger.

 

 

Recording of Discounts Allowed in Control Accounts

Debit           Discount Allowed Account

Credit                     Debtors Control Account

 

Recording is also made in the respective account of the debtor in subsidiary  ledger.

 

 

Rectification of errors

  In recording transactions, there is always a chance of error.

  There can be clerical errors in the books of Accounts.

  Whatever the reason may be, there may be an error or two in the accounting process.

  Which means that we need a procedure to rectify those errors.

Rectification of errors

  One way is that we can simply erase or overwrite the incorrect entry and replace it with the correct one but this practice is not allowed in accounting.

   We have to Rectify / Correct the mistake by passing another entry.

 

Types of errors

ERRORS OF OMISSION.

n This means that an event occurred but we did not record it.

ERRORS OF COMMISSION.

n Event is classified and recorded correctly but  classification of account is wrong.

ERRORS OF PRINCIPLE

n Entry is recorded in the wrong class of account.

ERRORS OF ORIGINAL ENTRY

n Recording of transaction is in correct account but  incorrect figure is recorded.

 

Types of errors

REVERSAL OF ENTRY

n  Entry is reversed by mistake. This means that the account that should have been Debited is Credited and vice versa.

Rectifying the errors

ERRORS OF OMISSION.

nYou have to record the entry that was omitted by mistake.

 

Example

A sale of Rs. 15,000 made to XYZ on Apr 15, was omitted by mistake

Rectification Entry on the date of discovery

Debit           XYZ Account                                     15,000

Credit                     Sales                                                                15,000

Narration:   Rectification of omission of recording sale to XYZ on Apr 15.

Rectifying the errors

ERRORS OF COMMISSION / ERROR OF PRINCIPLE

nIn both these cases the effect given to incorrect account is reversed and effect is given to the correct account.

Example

Purchase of an asset for Rs. 50,000 is recorded in the expense account.

Rectification

Debit           Asset Account                                                                                    50,000

Credit                     Relevant Expense Account                             50,000

Narration: Rectification of purchase of asset incorrectly recorded as expense.

 

Rectifying the errors

ERROR OF ORIGINAL ENTRY

nIf the entry recorded is of lesser amount than the required amount, then an entry of the balance amount is passed. On the other hand if the entry recorded is of a greater amount than the required amount, a reverse entry is passed that cancels the effect of the error.

Example

1)    A receipt of cash Rs. 5,000 from B is recorded as Rs            500

2)    A receipt of cash Rs. 5,000 from B is recorded as Rs            50,000

 

Rectifying the errors

Rectification

nIn the first instance the recorded figure is less by Rs. 4,500. The rectification entry will therefore be:

   Debit                    Cash Account                                                             4,500

   Credit                              B Account                                                                               4,500

nIn the second instance the recorded figure exceeds by Rs. 45,000 from the desired figure. The rectification will, therefore be a reverse entry by Rs. 45,000

   Debit                    B Account                                                                   45,000

   Credit                              Cash Account                                                 45,000

 

 

 

Rectifying the errors

  REVERSAL OF ENTRY

nIf a reverse entry is passed by mistake then two entries are required to rectify it, one to reverse the effect of mistake and the other to record correct entry. we can also pass one entry with double amount that serves the purpose of both the entries.

Example

nA payment of Rs. 10,000 made to Mr. D is recorded on the receipt side of the cash book and credit is given to D’s account.

Rectifying the errors

Rectification

nWe can correct this mistake by two entries

Debit           Mr. D Account                                                                        10,000

Credit                     Cash Account                                                             10,000

This will reverse the effect of mistake.

Debit           Mr. D Account                                                                        10,000

Credit                     Cash Account                                                             10,000

And this will record the transaction correctly.

Or we can record it through one entry.

Debit           Mr. D Account                                                                        20,000

Credit                     Cash Account                                                             20,000

 

Rectification of Errors – Example 2

   Assume that we received cash Rs. 50,000 from a debtor and instead of Debiting the Cash Book / Cash Account we Debited the Bank Book whereas the credit was given to the correct account.

 

Rectification of Errors

Step 1  Note down the correct entry

            Debit               Cash                                                                50,000

            Credit                          Debtors                                                           50,000

Step 2  Note down the incorrect entry

            Debit               Bank                                                                50,000

            Credit                          Debtors                                                           50,000

Step 3  See that Credit affect is correct. In case of Debit, affect has been given to Bank instead of cash. Therefore we will give the due affect to Cash by debiting it and Remove the incorrect affect from bank by crediting it.

            Debit               Cash Account                                                 50,000

            Credit                          Bank Account                                                 50,000

 

Examples

Rectify the following errors

  Additional Capital paid in bank Rs. 100,000 credited to sales account.

  Purchase of goods of Rs. 5500 from Mr Amir recorded in books at Rs 5050

  Cash deposited in bank Rs. 20,000 credited to bank and debited to cash

  A purchase of Computer Rs. 25,000 recorded as maintenance expense.

  Completely omitted a payment of bank charges of Rs. 500

Solution

Rectify the following errors

  Additional Capital paid in bank Rs. 100,000 credited to sales account.

  Correct Entry

  Debit                        Bank                                                                            100,000

  Credit                       Capital                                                                         100,000

  Entry recorded

  Debit                        Bank                                                                            100,000

  Credit                       Sales                                                                            100,000

  Rectification

  Debit                        Sales                                                                            100,000

  Credit                       Capital                                                                         100,000

Solution

Rectify the following errors

  Purchase of goods of Rs. 5500 from Mr Amir recorded in books at Rs 5050

  Correct Entry

  Debit                        Stock                                                                           5,500

  Credit                       Amir                                                                            5,500

  Entry recorded

  Debit                        Stock                                                                           5,050

  Credit                       Amir                                                                            5,050

  Rectification

  Debit                        Stock                                                                           450

  Credit                       Amir                                                                            450

 

Solution

Rectify the following errors

  Cash deposited in bank Rs. 20,000 credited to bank and debited to cash

  Correct Entry

  Debit                        Bank                                                                            20,000

  Credit                       Cash                                                                            20,000

  Entry recorded

  Debit                        Cash                                                                            20,000

  Credit                       Bank                                                                            20,000

  Rectification

  Debit                        Bank                                                                            40,000

  Credit                       Cash                                                                            40,000

 

Solution

Rectify the following errors

  A purchase of Computer Rs. 25,000 recorded as maintenance expense.

  Correct Entry

  Debit                        Computers                                                       25,000

  Credit                       Bank / Cash                                                     25,000

  Entry recorded

  Debit                        Maintenance                                                    25,000

  Credit                       Bank / Cash                                                     25,000

  Rectification

  Debit                        Computers                                                       25,000

  Credit                       Maintenance                                                    25,000

 

 

Solution

Rectify the following errors

  Completely omitted a payment of bank charges of Rs. 500

  Correct Entry

  Debit                        Bank Charges                                                  500

  Credit                       Bank                                                                            500

  Entry recorded

  -------

 

  Rectification

  Debit                        Bank Charges                                                  500

  Credit                       Bank                                                                            500

 

Profit and Loss Account

Profit and Loss Account

  Sales

n Sales are the revenue against the sale of the product in which the organization deals.

n In case of a service organization, there will be Income Against Services Rendered instead of Sales    and there will be no Cost of Sales or Gross Profit.

  Cost of Goods Sold / Gross Profit

n It is the direct cost incurred to manufacture the goods that are sold during the period.

n Gross Profit = Sales – Cost of Goods Sold

Profit and Loss Account

  Other Income

n Other income includes revenue from indirect source of income, such as return on investment, profit on PLS account, Sale of scrap etc.

  Administrative  and Selling Expenses

n All costs that are incurred for the purpose of business but are not directly related to production are classified in Admin and Selling Expenses.

  All expenses should be distributed properly among the three classifications i.e. Cost of Goods Sold, Administrative Expenses and Selling Expenses to present the financial statements fairly.

Profit and Loss Account

  Financial Expenses

n Financial expense are the cost / interest paid on loans taken by the organization. These are shown separately in the Profit and Loss Account

 

Profit and Loss Account

  Income Tax

n Income Tax is paid on Net Profit.

n At the time of preparing annual financial statements, an estimate of expected tax liability is made.

n A provision is then created equal to that estimate.

n The treatment of Provision for tax is same as that of provision for Doubtful debts. i.e. provision is made at the time of preparing accounts which then adjusted accordingly at the time actual tax expense is known.

Balance Sheet (Assets)

  Fixed Assets

n Assets purchased not for resale are called fixed assets and these are presented at cost less accumulated depreciation OR revalued amount.

  Capital Work in Progress

n A fixed asset under completion is shown under this head. At the time of completion it is transferred to fixed assets.

   Deferred Costs

n These are revenue expenditures that benefit the organization for a period longer than one year.

n These are, therefore, initially shown in balance sheet and then charged to profit and loss (amortized) over the period they are expected to provide benefit to the organization.

Balance Sheet (Assets)

  Long Term  and Short Term Investments

n Investments made with the intention that they will be held for a period longer than twelve months are classified as long term and those made for a period shorter than 12 months are classified as short term.

Balance Sheet (Assets)

n Following things are important to note here:

o  Classification is to be made every time a balance sheet is prepared and the period is to be calculated from the date of balance sheet.

o  An investment may initially be made as a current investment. Subsequently, if it is decided to hold it for a longer period. Then, its classification will have to be changed accordingly and vice versa.

n Therefore, investments are checked for classification every time a balance sheet is prepared and presented accordingly.

 

 

 

Classification of Investments

  Long term investments are those investments that are meant to be held for a long term period.

  If it is decided to dispose off a long term investment, then its classification is changed to current investment from long term.


 

 

  Capital

n It is the total of resources supplied to a business by its owners.

n Capital is termed as “Share Capital” in case of Limited Companies.

 

  Capital Introduced By Owner In form of Assets

 

   Debit                        Fixed Assets Account

Credit                                Capital Account

 

 

  Reserves

nReserve is the portion of profit set aside for use in future years for a specific purpose.

 

  Profit and Loss / Accumulated Profit and Loss Account

n It is that portion of the profit that is reemployed in the business.

OR

n This is the accumulated balance of undistributed profit.

  

  Accumulated Profit and Loss Account

n In the first year of business this account shows following figure:

               Profit for the year                                                                               X

               Less: Transferred to Reserve                          X

               Less: Profit distributed                                                           X        

               Balance carried to Balance Sheet                   X        

 

n In Subsequent years balance brought forward from previous years and profit for the year is added and distributed as above and the balance is carried to next year.

  Long Term Loans

nLoans that are payable later than a period of more than twelve months from the balance sheet date.

   Short Term Loans

nLoans that are payable within twelve months of the balance sheet date.

  Current Portion of Long Term Loans

nIt is that portion / installment of the long term loan that is payable with in next twelve months.

   Other Long Term Liabilities

n These include all other liabilities that are payable after a period of one year of balance sheet date.

nFor example staff gratuity and other benefits, liability against lease finance and other liabilities that become payable after a period of one year.

  Provision

nProvision is charge created for an expected expense or loss whose actual amount is not known.

nIt is usually shown as a reduction in the asset to which it relates

  Reserves

nReserve is the portion of profit set aside for use in future years for a specific purpose.

nIt is usually created at the discretion of the owners an is shown as a liability.

 

 

 

  Current Liabilities

n Trade Creditors

n Short Term Borrowings

n Other Short Term Liabilities

o  Salaries Payable

o  Accrued Expenses

o  Bills payable

o  Advances From Customers

n Current Portion of Long Term Liabilities

Different Business Entities

  Commercial Organizations

n Sole proprietorship

n Partnership, and

n Limited Company

  In commercial organizations profit is distributed among the owners of the business.

Different Business Entities

  Non-Commercial Organizations

n Co-operative institutions

n NGO’s

n Trusts

  In non-commercial organizations profit is not distributed but is used for the objective of the organization.

Sole Proprietorship

  Sole Proprietorship is a business owned and run by an Individual called Proprietor / Sole Proprietor.

  It is the simplest form of business.

Partnership

  Partnership is a business owned and run by more than one persons called Partners.

  There can be a maximum of 20 partners.

Partnership

  Partners in a partnership business are Jointly and Severally liable for repayment of partnership’s liabilities.

  The liability of the partners is Unlimited.

Limited Companies

  The liability of the owners is limited to the extent of funds invested by them in the company.

Journal Entries for Drawings Account

  Cash Drawn by Proprietor

   Debit                  Proprietor’s Drawing

   Credit                             Cash

 

  The balance in drawings account is transferred to Capital Account at the year end.

Sole Proprietor – Capital Account

Balance Sheet  - Sole Proprietor

Partnership – Capital Accounts

  Fixed Capital Account

n In this case capital account shows movement in  capital only i.e. actual increase or decrease in capital, by partners.

n Other transactions such as Drawings and Profit etc. are not recorded in capital account

 

  Fluctuating Capital Account

n In fluctuating capital account all transactions relating to partners are recorded in capital account.

Partnership – Current Accounts

  Fixed Capital Account

n In case of fixed capital accounts other transactions such as Drawings and Profit etc. are recorded in a separate account called Current Account.

Partnership – Journal Entries

  Capital Introduced by Partner

            Debit               Cash / Bank

            Credit                          Partner’s Capital Account

 

Separate capital account is opened in general ledger for each partner.

Partnership – Journal Entries

  Drawing by Partner

   Debit                    Individual Partner’s Current Account

   Credit                              Cash / Bank

 

  Excess Drawn Amount Returned by Partner

   Debit                    Bank / cash

   Credit                              Individual Partner’s Current Account

 

  Profit Distribution

   Debit                    Profit and Loss Appropriation Account

   Credit                              Partner A’s Current Account

   Credit                              Partner B’s Current Account

   Credit                              Partner C’s Current Account

Balance Sheet  - Partnership

Limited Companies – Number of Shareholders

  Private Limited Company

n Two to fifty persons can form a private limited company.

n Minimum two members are elected to form a board. This board is given the responsibility to run day to day business of the company.

Limited Companies – Number of Shareholders

  Public Limited Company

n Minimum Seven persons can form a public limited company.

Limited Companies – Shareholders

  Capital of the company is divided into small units / denominations. These units / denominations are called shares.

  Owners purchase these shares and are therefore called shareholders.

Limited Companies – Shareholders

  Capital of the company is divided into small units / denominations. These units / denominations are called shares.

  Owners purchase these shares and are therefore called shareholders.

Distribution of Profits

  The profit of company is distributed in the form of Dividend.

   (5) Fixed Assets at WDV

 

                                                   Cost                 Rate                 Dep.                WDV

Furniture                        72,000             12.5%              9,000               63,000

 

Vehicle                  120,000                    20%         24,000                     96,000

                                                                                                                   33,000             159,000

Solution

  Working

  (6) Debtors

Debtors                                                                                                  246,000

Less: Provision for Doubtful

                Debts (note 4)                                                            (16,500) 

                                                                                                                           229,500

Solution

  Working

  (7) Expenses Payable