TUTOR MARKED ASSIGNMENT
Course Code : ECO – 02
Course Title : Accountancy-I
Assignment Code : ECO – 02/TMA/2018-19
Maximum Marks: 100 Attempt all the questions.
1. (a) What is Bank Reconciliation Statement? Explain the causes of disagreement in the balances shown by cash Book and Pass Book. (10)
BANK RECONCILIATION STATEMENT
Generally all the transactions made through Cash or by cheques are not recorded at the same time in the Cash Book and the Pass Book regularly, because there are some transactions which are recorded in the Cash Book first and recorded in the Pass Book after some days. On the other hand. some transactions are recorded in the Pass Block first and later in the Cash Book. Here lies the problem to a trader or the business. So, on a particular date, both the books do not show an identical balance. Those transactions which appear on any one of the books only are the main causes of differences/discrepancies or disagreements.
In order to reconcile those differences/disagreements with the cash book or the pass book balance on a particular date a statement is prepared known as bank reconciliation statement. For preparing a Bank Reconciliation Statement with the help of the balance of a particular book, the disagreements are to be considered as follows:
Suppose, the balance of a Cash Book is given and for a particular disagreement or mistake, if the said balance is—
(a) less than the Pass Book balance, then the difference is to be added to the Cash Book balance and
(b) Similarly, if the said balance is greater than the Pass Book balance, then the difference is to be deducted from the Cash Book balance. Hence, all the disagreements are to be considered as stated above.
By preparing the bank reconciliation statement, it is generally confirmed that there are no other undetected causes of differences, because when this statement is prepared by taking one of the book’s balance as the basis, then the result which will come out after the adjustment of the disagreements would be the other book’s balance. But if the resultant balance is not tallying with the original balance of the said book, then it indicates that still there are some undetected causes Of difference or disagreements or mistakes which are to be found out. Here lies the importance of preparing the bank reconciliation statement.
Some causes of differences between a cashbook balance and passbook balance are:
- Cheque deposited but not credited by the bank
- Cheque issued but not cashed
- Bank charges and interest not accounted far in the cash book
- Direct collections made by bank on behalf of customers
- Clerical errors in recording cash book or passbook transactions
(b) Why do you maintain bill book separately? State the transactions recorded in Bill Receivable and Bills Payable journals. (10)
2. (a) What is suspense Account? Why is it opened and how is it closed? Explain. (10)
(b) Why is provision for doubtful debts created? How is it shown in the Balance sheet? Explain (10)
3. How would a not-for-profit organization deal with the following items. (4X5)
- (a) Outstanding Subscriptions,
- (b) Donation,
- (c) Tournament Fund,
- (d) Legacy,
- (e) Life Membership Fees
4. (a) What is joint venture ? Explain various methods of recording the joint venture transaction. Give entries in each case. (10)
(b) Differentiate between : (10)
- (i) General Commission and Del Creder Commission
- (ii) Normal Loss and Abnormal Loss
5. “Incomplete records system is unscientific, incomplete, inaccurate and unsystematic”. Explain (20)