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AGA KHAN UNIVERSITY EXAMINATION BOARD

HIGHER SECONDARY SCHOOL CERTIFICATE

CLASS XI EXAMINATION

APRIL/ MAY 2019

Principles of Accounting Paper II

Time: 2 hours 15 minutes Marks: 70

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INSTRUCTIONS
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Please read the following instructions carefully.

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1. Check your name and school information. Sign if it is accurate.

I agree that this is my name and school.

Candidate’s Signature
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RUBRIC
2. There are TEN questions. Answer ALL questions.
3. When answering the questions:
Read each question carefully.
Use only a black pointer to write your answers. DO NOT write your answers in pencil.
Use a black pencil for diagrams. DO NOT use coloured pencils.
DO NOT use staples, paper clips, glue, correcting fluid or ink erasers.
Complete your answer in the allocated space only. DO NOT write outside the answer box.
4. The marks for the questions are shown in brackets ( ).
5. You may use a scientific calculator if you wish.
6. Wherever new terminologies are mentioned their old terminologies are mentioned in the
brackets for your assistance.

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Q.1. (Total 4 Marks)

Classify the following activities performed by different individuals in various branches of accounting.

S. No. Activity Branch of Accounting

Anum prepares various reports that are for the facilitation of
different internal and external stakeholders of the business.
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These reports are periodic and are based on historical data
of the enterprise.
Arwa prepares different reports that are for facilitation of
various internal stakeholders. These reports are for decision
2
making and target setting based on historical data as well as
future estimations.
Areej prepares different reports that include categorisation,
valuation and expenses incurred during the process of
3 production. This data is used by the internal stakeholders for

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controlling, planning and budgeting decisions related to
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production.
Asma records all the transactions of the business whether
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cash or credit. These records are normally for internal
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purposes and are used for further processing of data and
report preparations.
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Q.2. (Total 5 Marks)

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Identify the effect of the given transactions on all applicable account heads.
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(Note: The first transaction has been solved for your assistance.)

S. No. Transaction Effect on Account Heads

Increase in capital
Business started its activity by cash
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Increase in cash (current asset)

1 investment of Rs 500,000 and building
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Increase in building (non-current asset

worth Rs 1,000,000
/fixed asset)
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Purchased merchandise on account worth

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Rs 50,000

Purchased weighting scale and supplies for

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Rs 10,000

4 Sold goods for Rs 15,000

5 Paid Rs 1500 for maintenance of building

6 Purchased goods worth Rs 25,000

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Q.3. (Total 6 Marks)

Complete the table by identifying the books of original entry and the accounts to be debited or credited
by the transactions performed by the grocery store.

(Note: The first transaction has been solved for your assistance.)

Book of Original Account Head to Account Head to

S. No. Transaction
Entry be Debited be Credited

Purchased goods on
Trade Payable
1 account from Salim Purchase journal Purchase
(Salim Brothers)
Brothers

Sold goods to Mustaqeem

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Sold store fixtures for
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Purchased automatic cash

4 counter machine from
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Alpha Brothers
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Goods received in return

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from Mustaqeem Sons
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6 Paid wages to workers

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7 Cash deposited into bank

PLEASE TURN OVER THE PAGE

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Q.4. (Total 6 Marks)

The following transactions were extracted from the books of Alpha Store during the last week of
December, 2018.

Dec, 24 A supplier account of Rs 4,500 was settled by issuing a cheque for Rs 4,000.
Dec, 25 Sold goods to a customer worth Rs 50,000, of which Rs 10,000 was received as cash and the
remaining amount will be received in two months.
Dec, 26 Cash deposited into the bank Rs 25,000.
Dec, 27 Received a cheque from Ali & Co. of Rs 7,500 in settlement of his account for Rs 8,000.
This cheque was deposited into bank on the same day.
Dec, 28 Received a bank memo stating that client MM Brothers have deposited Rs 10,000 directly in
the account of Alpha Store.
Dec, 29 Withdrew cash Rs 2,000 for personal use and issued a cheque for Rs 10,000 as utility bills of

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the residence from the business account.

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Using the given information, prepare a THREE column cash book.
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Cash Book
Receipt Payment
Date Particulars Discount Cash Bank Date Particulars Discount Cash Bank
24.12 Balance 50,000 500,000

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Q.5. (Total 7 Marks)

a. Saleem the owner of a restaurant, in order to facilitate his customers for billing through cards,
wants to open a bank account for the day-to-day transactions of his restaurant. (2 Marks)

i. Identify the type of bank account that will be appropriate for Saleem.

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ii. Mention any ONE reason for the selection of that particular account.

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b. The given table shows various discrepancies found by the accountant of Al-Abid Brothers at the
time of preparing bank reconciliation statement for the month of July 31, 2018. (5 Marks)
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S.No. ng Discrepancy
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1 Bank returned the cheque marked NSF; Rs 500

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2 Service charges deducted by bank; Rs 100

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3 Payment by cheque of Rs 1,900 was wrongly entered in the cash book as Rs 9,100
Cash deposited by Al-Abid Brothers were wrongly credited by bank into Jinnah
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Brothers’ account; Rs 5,000
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5 Bank collected dividends of Rs 1,300 on behalf of Al-Abid Brothers

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Bank paid rent of Rs 3,000 on behalf of Salim Sons but erroneously debited the
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account of Al-Abid Brothers.
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The bank balance of Al-Abid Brothers before the above mentioned adjustments was Rs 2,000.

Calculate the adjusted bank balance as per Al-Abid Brothers as on July 31, 2018 by preparing bank
reconciliation statement.

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PLEASE TURN OVER THE PAGE

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Q.6. (Total 6 Marks)

The following errors were identified during the closing of accounts by Sabeer Brothers.

I. A cheque of Rs 25,000 received from Ameen Brothers on account of sales was wrongly credited
to Aman Brothers.

II. A purchase of office furniture worth Rs 10,000 had been posted to the purchase account.

III. On cross-checking with invoices of Alpha Traders, it was revealed that the purchases of
Rs 150,000 have been posted in the accounts as Rs 15,000.

IV. Cash sales worth Rs 20,000 were not recorded in the books.

a. Identify the type of error made in each of the given transactions. (Attempt any THREE).
(3 Marks)

I. _________________________________________________________________________________

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II. ________________________________________________________________________________
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III. ________________________________________________________________________________
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IV. ________________________________________________________________________________
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b. Rectify the errors identified in part a, by preparing general entries. (Attempt any THREE).
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(3 Marks)
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S. No. Particulars P.R. Debit Credit

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Q.7. (Total 6 Marks)

The extract of the trail balance of Ameen Traders showed salary expense as Rs 25,000.

Cases for Adjustment

Case 1: Salaries expenses for the year was Rs 36,000.

Case 2: Prepaid salaries at the end of the year were Rs 18,000.
Case 3: Salaries expenses for the year was Rs 15,000.

Considering each of the given conditions separately, mention how these amounts will be reflected in the
financial statements of Ameen Traders after adjustments.

Statement of Financial Position (Balance Sheet) Income Statement

Prepaid Salary Salary Payable Salary Expense

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Case 1
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Case 2
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Case 3
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Q.8. (Total 10 Marks)

On January 01, 2015, Al-Fatah Traders purchased printing machine from Al-Razzaq Industries. The list
price of the machine was Rs 875,000. Al-Razzaq Industries offered 5% trade discount with a credit term
of 2/10, n/30. The payment was made within the discount period.

Al-Fatah Traders made the following payments before the machine became operational:

Accounts Titles Amount (Rs)

General sales tax (GST) 45,000
Foundation charges 85,000
Installation charges 15,000
Transit insurance 100,000
Three year fire insurance premium 125,000
An extra AC unit installed for machine 75,000
An extra component installed for efficiency 15,000
Repair and maintenance cost during January, 2015 10,000

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a. List the revenue expenditures that are incurred on the purchase of machine by Al-Fatah Traders.
(2 Marks)
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b. Compute the cost of machine. (5 Marks)

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c. On January 01, 2015 Aftab Traders purchased a printing machine for Rs 1,000,000. The estimated
life of the machine was 2,000,000 hours.

The accounting year of the business ends on December, 31 each year and the business uses the
hours worked method for charging depreciation.

The usage of the machine for the first two years of operation is as under:

Year Hours Worked

2015 240,000
2016 600,000

Calculate the amount of depreciation from 2015 to 2016. (3 Marks)

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PLEASE TURN OVER THE PAGE

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Q.9. (Total 10 Marks)

Suleman started a mini-mart with cash investment of Rs 1,500,000 and store building worth
Rs 3,000,000. The following transactions took place during the first week of January 2019.

I. Purchased machinery worth Rs 250,000 on installment by paying Rs 50,000 down payment and
the rest of the amount will be paid in four quarterly installments.

II. Purchased supplies for the mart worth Rs 20,000 and merchandise for Rs 150,000.

III. Purchased merchandise from Alpha Company for Rs 100,000 of which Rs 28,000 was paid and a
post-dated cheque was issued for the remaining amount.

IV. Paid promotional activity charges on the inauguration of mart Rs 10,000 and paid Rs 15,000 in
advance for advertisement on a local area TV network.

V. Sales revenue on the first day of operation was Rs 30,000 in cash and Rs 7,000 by cheque.

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Prepare the general entries of any FIVE of the given transactions.
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S. No. Particulars ng P.R. Debit Credit

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S. No. Particulars P.R. Debit Credit

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Q.10. (Total 10 Marks)

The following trial balance has been extracted from the books of Noorani Travels.

Adjusted
Trial balance Adjustment
Account Title Trial Balance
Dr Cr Dr Cr Dr Cr

Cash 25,500 25,500

Trade (accounts) receivables 8,500 8,500

Equipment 75,000 75,000

Trade (accounts) payable 4,000 4,000

Unearned service revenue 13,000 1,800 2,000 13,200

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Notes payable 20,000 20,000

Capital 64,000 64,000

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Service revenue ng 31,000 2,000 1,800 30,800

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Salaries expense 15,000 2,000 17,000

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Advertising expense 5,000 2,000 3,000

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Fuel expense 2,000 2,000

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Supplies 1,000 1,000

Depreciation expense 15,000 15,000

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Accumulated depreciation 15,000 15,000

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Salaries payable 2,000 2,000

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Interest expense 1,200 1,200

Interest payable 1,200 1,200

Prepaid advertising 2,000 2,000

Total 132,000 132,000 24,000 24,000 150,200 150,200

Prepare classified statement of financial position (balance sheet).

(Note: The balancing amount should be considered as the amount of Profit/ Loss.)

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Noorani Travels
Statement of Financial Position (Balance Sheet)

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END OF PAPER
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