Description
1. Often it happens that while running a business there is an inflow and outflow of revenues and expenses of more than one accounting period. Such transactions, which affects more than one accounting period requires adjustment. Such adjustment are reflected in the books of accounts.
Discuss about adjustment entries, point out the type of adjustment, which may arise in the due course of business and reflect on how adjustment entries impacts the financial statement. (10 Marks)
Q2. The revenue from operations and earnings before interest, taxes, depreciation, and amortization are distinct metrics with Decemberarate implications for our business performance. It is crucial to understand the difference between these two figures as they provide unique insights into our operational efficiency and profitability. Discuss the statement by differentiating the difference between these two terms, Revenue from operation and earnings before interest, taxes, depreciation, and amortization.
With the given information, prepare the statement of Profit and Loss of the company in vertical format. (10 Marks)
| Depreciation and amortisation expenses | 295600 |
| Purchase of stock in trade | 10450 |
| Employees benefit costs | 959139 |
| Other expenses | 565000 |
| Revenue from sale of product | 5000000 |
| Other operating revenues | 2500000 |
| Cost of material consumed | 1050000 |
| Finance cost | 525000 |
Q3. Following is the information available for Paraam Industries Pvt Ltd for the month of August
| Amount | |
| Withdrawal of cash from the bank, as on 10th August 2023 | Rs. 200000 |
| Balance in the business bank account as on 6th Aug 2023 | Rs. 500000 |
| Purchased Computer for personal use using business fund as
on 15th August 2023 |
Rs. 50000 |
| Paid for school fees for the kid from the business bank
account as on 11th August 2023 |
Rs. 3000 |
For the given information-
- a) Discuss the rules in relation to debit and credit as applicable for the account type being assets, liabilities, expenses and gains. (5 Marks)
- b) Pass journal entry for the transactions. Explain why the personal expenses and business expenses of owner are treated differently (5 Marks)