Model Test paper-1

HMCT - 4thSem

Accounting skills for hospitality

Subject Code-BHMCT 409-18

Time –3 hrs.                                                                                                            MM: 60Marks

Instructions to Candidate:

1. Section – A contains 10 questions carrying two marks each. All are compulsory.2. Section – B contains 5 questions carrying five marks each. Students have to attempt any

four questions.Section – C contains 3 questions carrying ten marks each. Students have to attempt any two questions.

Section –A

1. Attempt all questions.                                                                                                2X10=20

a) Define Trial Balance.Ans. Trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled into debit and credit account column totals that are equal. A company prepares a trial balance periodically, usually at the end of every reporting period. The general purpose of producing a trial balance is to ensure the entries in a company’s bookkeeping system are mathematically correct.

b) Explain rules of Double Entry System with suitable example.Ans. Doctrine says that if doing something morally good has a morally bad side-effect, it's ethically OK to do it providing the bad side-effect wasn't intended. This is true even if you foresaw that the bad effect would probably happen.This might seem counter-intuitive, but the principle is used in serious argument about some important issues in ethics.

c) Drawings with example.Ans.A drawing account is an accounting record maintained to track money withdrawn from a business by its owners. A drawing account is used primarily for businesses that are taxed as sole proprietorships or partnerships. Owner withdrawals from businesses that are taxed as separate entities must generally be accounted for as either compensation or dividends.

d) Performa of Trading Account

e) Prepaid Expenses and Outstanding Expenses.prepaid expenses- are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired.Generally, the amount of prepaid expenses that will be used up within one year are reported on a company's balance sheet as a current asset. As the amount expires, the current asset is reduced and the amount of the reduction is reported as an expense on the income statement.

outstanding expenses- are those expenses which have been incurred during the current accounting period and are due to be paid, however, the payment is not made. Such an item is to be treated as a payable for the business.

f) What is departmental accounting?Ans. Departmental Accounting refers to maintaining accounts for one or more branches or departments of the company. Revenues and expenses of the department are recorded and reported separately. The departmental accounts are then consolidated into accounts of the head office to prepare financial statements of the company.

 

g) Define Allocation.Ans.The act of deciding officially which person, company, area of business, etc. something should be given to, or what share of a total amount of something such as money or time should be given to someone to use in a particular way. The company is holding a review into the optimal allocation of a salesperson’s time.

h) What do you mean by Apportionment of expenses?Ans. Departmental accounting refers to maintaining accounts for one or more departments of the company. Revenues and expenses of the department are recorded and reported separately. The departments are then consolidated into the accounts of the head office to prepare the financial statements of the company. The Allocation of expenses in departmental accounting is made on various bases.i) Prepare a Performa of Balance Sheet.

j) Difference between Internal Audit and Statutory Audit.Ans.

                                                                   Section- B                                                     4X5=20

2. What are the methods of preparing Trial Balance?

Ans.A Trial Balance is a statement that shows the total debit and total credit balances of accounts. The total of debit amounts shall be equal to the credit amounts. It thus verifies the arithmetical accuracy of the postings in the ledger accounts. We will now study the methods of Preparation of Trial Balance – totals method, balance method and total-cum-balance method.

Preparation of Trial Balance

We can prepare the Trial Balance in the following three ways:

1] Totals Method

In this totals method, we ascertain the total of each side in the ledger i.e. debit and credit, separately and show them in the respective columns in the Trial Balance. Here also the total of the column with debit totals should tally with the total of the column of the credit totals. The dual aspect concept holds true in this case also.

2] Balances Method

In this method, we total the debit side and the credit side of the accounts and balance them. We then write these debit or credit balances of the ledger accounts in the respective debit and credit columns in the Trial Balance. A trial balance tallies when the total of the debit column is equal to the total of the credit column.

3] Totals-cum-Balances Method

In this method, we prepare four columns. In two columns we write debit and credit totals of accounts and in the other two columns, we write the debit and credit balances of accounts. This method consumes a lot of time and is a duplicate of work. Hence, it is rarely in use.

3. Explain Trial Balance and its features

.

4. What is Final Accounts? Prepare specimen of Profit and Loss Account / Balance Sheet.

Ans.Final accounts give an idea about the profitability and financial position of a business to its management, owners, and other interested parties. All business transactions are first recorded in a journal. They are then transferred to a ledger and balanced. These final tallies are prepared for a specific period. The preparation of a final accounting is the last stage of the accounting cycle. It determines the financial position of the business. Under this, it is compulsory to make a trading account, the profit and loss account, and balance sheet.

Performa of profit and loss account:

Performa of balance sheet:

5. Define internal control? Write down its objectives.

Ans. Definition: Internal Control can be defined as a system designed, introduced and maintained by the company’s management and top-level executives, to provide a substantial degree of assurance in achieving business objective, while complying with the policies and laws, safeguarding the assets, maintaining efficiency and effectiveness in regular operations and reliability of financial statements.

Objectives of Internal Control System

To ensure that the business transactions take place as per the general and specific authorization of the management.

To make sure that there is a sequential and systematic recording of every transaction, with the accurate amount in their respective account and in the accounting period in which they take place. It confirms that the financial statement fulfils the relevant statutory requirements.

To provide security to the company’s assets from unauthorized use. For this purpose, physical security systems are used to provide protection such as security guards, anti-theft devices, surveillance cameras, etc.

To compare the assets in the record with that of the existing ones at regular intervals and report to those charged with governance (TCWG), in case any difference is found.

To evaluate the system of accounting for complete authorization of the transactions.

6. Write down of content of Balance Sheet (Under Uniform System). 

                                                            Section –C                                              2X10=20

7. Consider the following balances extracted from the books of Jain as on 31st December, 2016.

Prepare the final accounts.

Adjustments

 i.               Salaries outstanding for December, 2016 amounted to Rs.  600

 ii.               Provide depreciation on furniture @ 10% p.a.

 iii.               Provide interest on capital for the year @ 5% p.a.

 iv.               Stock on 31st December, 2016 Rs.  14,000

 

Solution

 

8. Prepare Trial Balance.Record the following transactions in the Journal and post them into ledger and prepare a Trail Balance

Oct 1st : Neel started business with a capital of 80,000

3rd : Bought goods from Karl on credit 20,000

4th : Sold goods to Tarl 25,000

5th : Cash purchases 25,000

7th : Cash sales 15,000

9th : Goods retuned to Karl 2,000

10th : Bought furniture for 15,000

11th : Cash paid to Karl 12,000

12th : Goods returned by Tarl 3,000

14th : Goods taken by Neel for personal use 3,000

15th : Cash received from Tarl 12,000

16th : Took loan from Parl 30,000

17th : Salary paid 5,000

18th : Bought stationery for 1,000

19th : Amount paid to Parl on loan account 18,000

20th : Interest received 4,000

Solution : Trial Balance[Modern Method]

Trial Balance of Mr. Neel as on 31/10/_5

Particulars L/FAmount

(Dr)

Amount

(Cr)

Cash a/cCapital a/cGoods/stock a/cKarl a/cTarl a/cFurniture a/cDrawings a/cLoan from parl a/cSalaries a/cStationery a/cInterest a/c

–––––––––––

65,000–3,000–10,00015,0003,000–5,0001,000–

–80,000–6,000–––12,000––4,000

Total 1,02,000 1,02,000

9. Define Trial Balance. Write down its Advantages and Limitations.

Model Test paper-II

HMCT - 4th semester

Accounting skills for hospitality

Subject Code-BHMCT 409-18

Time –3 hrs.                                                                                                            MM: 60Marks

Instructions to Candidate:

1. Section – A contains 10 questions carrying two marks each. All are compulsory.2. Section – B contains 5 questions carrying five marks each. Students have to attempt any

four questions.3. Section – C contains 3 questions carrying ten marks each. Students have to attempt any

two questions.

Section –A

1. Attempt all questions.                                                                                                2X10=20

a) Bad Debts.Ans. Bad debt is an expense that a business incurs once the repayment of credit previously extended to a customer is estimated to be uncollectible. Bad debt is a contingency that must be accounted for by all businesses who extend credit to customers, as there is always a risk that payment will not be received.

b) Current Assets.Ans. Current assets represent all the assets of a company that are expected to be conveniently sold, consumed, used, or exhausted through standard business operations with one year. Current assets appear on a company's balance sheet, one of the required financial statements that must be completed each year.

c) Night Auditor.Ans.The night auditor typically handles both the duties of the front desk agent and some of the duties of the accounting department. This is necessitated by the fact that most fiscal days close at or around midnight, and the normal workday of the employees in the accounting department does not extend to cover this time of day. Work shifts for night auditors usually run from 11 p.m. to 7 a.m. but could vary depending on the hotel, with shifts of 10 p.m. to 6 a.m. or midnight to 8 a.m. being common.

d) Departmental Profit.Ans. Departmental Accounts are accounts relating to the several departments or sections of a business drawn up with a view to ascertaining their individual performances. A business may have a number of departments each dealing in a different type of goods. For instance, Departmental Store is an example of large scale trading by a retail trader.

e) Internal Audit.Ans. Internal audits evaluate a company’s internal controls, including its corporate governance and accounting processes. They ensure compliance with laws and regulations and help to maintain accurate and timely financial reporting and data collection. Internal audits also provide management with the tools necessary to attain operational efficiency by identifying problems and correcting lapses before they are discovered in an external audit.

f) Outstanding expensesAns. outstanding expenses- are those expenses which have been incurred during the current accounting period and are due to be paid, however, the payment is not made. Such an item is to be treated as a payable for the business

g) Allocation of expensesAns.The act of deciding officially which person, company, area of business, etc. something should be given to, or what share of a total amount of something such as money or time should be given to someone to use in a particular way. The company is holding a review into the optimal allocation of a salesperson’s time.

h) Define Depreciation.Ans. Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy. Depreciation represents how much of an asset's value has been used up. Depreciating assets helps companies earn revenue from an asset while expensing a portion of its cost each year the asset is in use. If not taken into account, it can greatly affect profits.

i) What is Uniform System of Accountancy.Ans. Uniform System of Account is used by several hotels/restaurants of the same accounting (costing and sale) principal and/or practices. Uniform accounting is thus not a separate technique or method. It simply denotes a situation in which a number of hotels/restaurants may use the same accounting (costing and sales) principal in such a way as to produce sales, valuable conclusions can be drawn and one hotel can be compared to others.

j) Basis of Allocation.

Ans.An allocation base is the basis upon which an entity allocates its overhead costs. An allocation base takes the form of a quantity, such as machine hours used, kilowatt hours consumed, or square footage occupied. Cost allocations are mostly used to assign overhead costs to produced inventory, as required by several accounting frameworks. The typical allocation process in a multi-department company is:Allocate service department costs to operating departments.Assign operating department costs (including the allocations from service departments) to products and services.

                                                                   Section- B                                                     4X5=20

2. Write a note on Departmental Accounting..

3. Draw imaginary figures an Income Statement with Schedule as per Uniform System of Accounting.

Ans.

4. Difference between Trading Account and Profit and Loss Account.

Ans.

5. Write down the implementation and review of Internal Audit.

Ans.

                                                            Section –C                                              2X10=20

7. What are the difference between Internal Audit and Statutory Audit?

Ans.

8.  From the following Trial Balance, Prepare the Trading A/C, Profit and Loss Account and the Balance Sheet.

Given below are the balances extracted from the books of Natarajan as on 31st March, 2016.

Prepare the trading and profit and loss account for the year ended 31st March, 2016 and the balance sheet as on that date after adjusting the following:

i.               Commission received in advance Rs.  400

 ii.               Advertisement paid in advance Rs.  150

 iii.               Wages outstanding Rs.  200

iv.               Closing stock on 31st March 2016, Rs.  2,100

Solution

                                                                                                          Cr.

Q9) Find out gross profit from the following information:

Prepare trading account from the following ledger balances presented by P. Sen as on 31st March, 2016.

Additional information:

 i.               Stock on 31st March, 2016 Rs.  20,000

 ii.               Outstanding wages amounted to Rs.  4,000

 iii.               Gas and fuel was paid in advance for Rs.  1,000

Model Test paper-III

HMCT -4th semester

Accounting skills for hospitality

Subject Code-BHMCT 409-18

Time –3 hrs.                                                                                                            MM: 60 Marks

Instructions to Candidate:

1. Section – A contains 10 questions carrying two marks each. All are compulsory.2. Section – B contains 5 questions carrying five marks each. Students have to attempt any

four questions.3. Section – C contains 3 questions carrying ten marks each. Students have to attempt any

two question.

Section –A

1. Attempt all questions.                                                                                                2X10=20

a) Current Assets

Ans. Current assets represent all the assets of a company that are expected to be conveniently

sold, consumed, used, or exhausted through standard business operations with one year. Current

assets appear on a company's balance sheet, one of the required financial statements that must be

completed each year.

b) Nominal Account

Ans, nominal accounts are the general ledger accounts that are closed at the end of each accounting year. The closing process transfers their end-of-year balances from the nominal accounts to a permanent or real general ledger account. As a result, the nominal accounts are also referred to as temporary accounts. The closing process also means that each nominal account will start the next accounting year with a zero balance.

c) Concept of Materiality

Ans.The materiality concept or principle is an accounting rule that dictates any transactions or

items that significantly impact the financial statements should be accounted for

using GAAP exclusively. In other words, if a transaction or event happened during the year that

would affect how an investor would view the company, it must be accounted for using GAAP on

the financial statements.

D) Narration

Ans.All Transactions and Events are ‘Recorded’ in the Account Books called Journal/ Subsidiary Books. The recording is done through a process called as ‘Accounting-Entry’ or ‘Journal Entry’ which has two-fold effect called as Debit and Credit in Accounts.When someone passes a journal entry the Debit and Credit effects are recorded thereby establishing the ‘completeness’ of the recording entry.

E) Posting

Ans. Posting is the act of moving debit and credit account balances from individual journals to

their corresponding ledgers. These ledgers are later used to create a trial balance used to generate

the income statement, balance sheet, and other financial statements.

F) Fictitious Assets

Ans.The word fictitious literally means fake, imaginary or not true. Hence, fictitious assets

means the assets which are not actually assets of the company though these assets are shown in

the assets side of the balance sheet.

H) 3 Rules of Accounting along with their respective accounts

I) Representative Accounts

Ans.The accounts recording transactions relating to the expenses and incomes are classified as

nominal accounts. But in certain cases due to the matching concept of accounting the amount, on

a particular date, is payable to the individuals or recoverable from individuals. Such amount (a)

relates to the particular head of expenditure or income and (b) represents persons to whom it is

payable or from whom it is recoverable. Such accounts are classified as representative personal

accounts

J) Define Tangible and intangible assets.

Section- B                                                     4X5=20

2.“Accounting serves as an information system and meets a need of a wide variety of

stakeholders”. In the light of this statement discuss the meaning and importance of

accounting.

Ans. Accounting is a very vital subject in the commerce field. For a better understanding of the objectives and the functions of accounting, first of all, it is very important to know about the accounting beforehand. The objectives and the function of accounting will be later discussed in depth.

scope of Accounting:

Accounting is basically the systematic process of handling all the financial transactions and business records. In other words, Accounting is a bookkeeping process that records transactions,  keeps financial records, performs auditing, etc. It is a platform that helps through many processes, for example, identifying, recording, measuring and provides other financial information.

Accounting is a very important procedure and holds great importance in people’s lives. Accounting aids to a lot of financial procedures and analytics taking place every day. There are specific people for doing this job and they are known as accountants. As said earlier, accounting is a very important process and in addition, holds a lot of objectives and functions.

Importance of Accounting

To move ahead to the functions of accounting, first of all, it is very important to know about the role of accounting. The basic role of accounting is to provide relevant financial information to the businessmen and the stakeholders. Furthermore, facilitating the decision making processes and keeping them updated. There are two types of functions of accounting, first, historical functioning and second, managerial functionals.

Browse more Topics under Meaning And Scope Of Accounting

Meaning of Accounting

Bookkeeping

Sub-fields of Accounting

Limitations of Accounting

Functions of an Accountant

3) Write a note on following terms:

1) Capital- Capital is a term for financial assets, such as funds held in deposit accounts and/or

funds obtained from special financing sources. Capital can also be associated with capital assets

of a company that requires significant amounts of capital to finance or expand

2) Income- Income is money (or some equivalent value) that an individual or business

receives, usually in exchange for providing a good or service or through investing

capital. Income is used to fund day-to-day expenditures. Investments, pensions,

and Social Security are primary sources of income for retirees. For individuals, income

is most often received in the form of wages or salary. Business income can refer to a

company's remaining revenues after paying all expenses and taxes. In this case, income

is referred to as "earnings.” Most forms of income are subject to taxation.

3) Expenditure-An expenditure is funds used by a business, organization, or corporation to

attain new assets, improve existing ones, or reduce a liability. In other words, it’s the use of a

resource in the operations of a business.

4) Expenses- An expense is the cost of operations that a company incurs to generate revenue. As the popular saying goes, “it costs money to make money.”Common expenses include payments to suppliers, employee wages, factory leases, and equipment depreciation. Businesses are allowed to write off tax-deductible expenses on their income tax returns to lower their taxable income and thus their tax liability.

5) Assets- An asset is a resource with economic value that an individual, corporation, or

country owns or controls with the expectation that it will provide a future benefit. Assets

are reported on a company's balance sheet and are bought or created to increase a firm's

value or benefit the firm's operations. An asset can be thought of as something that, in the

future, can generate cash flow, reduce expenses, or improve sales, regardless of whether

it's manufacturing equipment or a patent. 

4. What do you mean by Trial Balance? Why there is a need of preparing the trial balance?

What are the various errors that are located in the trial balance?

Q5. What is Final Accounts? Prepare specimen of Profit and Loss Account / Balance Sheet.

Ans. .Final accounts give an idea about the profitability and financial position of a business to its management, owners, and other interested parties. All business transactions are first recorded in a journal. They are then transferred to a ledger and balanced. These final tallies are prepared for a specific period. The preparation of a final accounting is the last stage of the accounting cycle. It determines the financial position of the business. Under this, it is compulsory to make a trading account, the profit and loss account, and balance sheet.

Q6. Define internal control? Write down its objectives.

Ans.Whether you have your own business or you're planning to start one, it’s crucial to perform internal controls. These processes are a fundamental part of good corporate governance, as their objective is to help identify and manage the risks that keep your business from growing as well as keep them in compliance with governmental rules and regulations. An internal control audit is typically conducted by a company's management team, the board of directors and other industry experts.

Objective of Internal Controls

The objective of every type of internal control within an organization is to ensure ethical and efficient functioning in the following three areas:

Operations: Internal controls help an organization operate at peak efficiency when it comes to finances, personnel and business procedures. They also aid organizations in loss prevention and future projections. 

Reporting: Internal controls make all types of reporting more accurate, financial or otherwise. Their objective is to identify problems, solve them and then prevent them in the future, all while documenting things thoroughly and accurately.

Compliance: Internal controls aim to ensure that a company is in compliance with all internal and external rules and regulations that pertain to its industry. This includes everything from manufacturing to labor laws, branding and even OSHA standards. 

Section –C                                              2X10=20

7. From the following list of balances, prepare a trial balance as on 30.06.2009

Enter the following transactions in the Journal and post them into ledger and from the information obtained prepare a Trail Balance.

Nov 10th : Mrs. Roy started business with 60,00011th : Bought furniture from Modern Furniture for

10,00012th : Purchased goods for cash 15,00013th : Purchased goods from B. Sen & Co for 30,00014th : Opened a bank account by depositing 16,00016th : Sold goods for cash 15,00017th : Purchased stationery for 1000 from Bharat

Stationery Mart18th : Sold goods to Zahir Khan for 10,00019th : Bought machinery for 6,000 and payment made

by cheque20th : Goods returned by Zahir Khan for 2,00021st : Payment to B.Sen& Co by cheque 5,000

22nd : Withdrew from bank for personal use 3,00023rd : Interest paid through cheque 2,00024th : Withdrew from bank for office expenses 10,00026th : Cheque received from Zahir Khan 5,00027th : Paid electricity bill for 10029th : Cash sales for 6,00030th : Commission received by cheque 5,000

Trial Balance of Mrs. Roy as on 30/11/_5

Particulars L/F Amount(Dr)

Amount(Cr)

Cash a/cCapital a/cFurniture a/cModern Furniture a/cPurchases a/cB.Sen& Co a/cBank a/cSales a/cStationery a/cBharat Stationery Mart a/cZahir Khan a/cMachinery a/cSales Returns a/cB. Sen & Co a/cDrawings a/cInterest a/cOffice Expenses a/cElectrical Bill a/c

–––––––––––––––––––

34,900–10,000–45,000–15,000–1,000–3,0006,0002,0005,0003,0002,00010,000100–

–60,000–10,000–30,000–31,000–1,000––––––––5,000

Commission Received a/cTotal 1,37,000 1,37,000

Q8) Find out gross profit from the following information:Prepare trading account from the following ledger balances presented by P. Sen as on 31st March, 2016.

Additional information:

 i.               Stock on 31st March, 2016 Rs.  20,000

 ii.               Outstanding wages amounted to Rs.  4,000

 iii.               Gas and fuel was paid in advance for Rs.  1,000

9). Difference between Trading Account and Profit and Loss Account and balance sheet. Ans.