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                                       SEMESTER FALL 2015

TOPIC TO BE TESTED:
• Basic concepts/terminologies used in financial accounting
LEARNING OBJECTIVES:
• To understand the basic concepts/terminologies required for understanding the
financial accounting

QUESTIONS

Mr. Akram started a business with cash of Rs. 500,000 and necessary fixed assets of Rs.
900,000 on 1
st
January 2014. He has taken loan of Rs. 300,000 from his wife to expand
the business on 1
st
July 2014. Firm purchased merchandises of Rs. 250,000 on cash basis
during the year. Firm sold all merchandises on cash and credit basis amounting to Rs.
600,000 and Rs. 100,000 respectively during the year. Amount of all credit sales will be
received in next accounting period. Firm paid rental charges and other necessary
commercial expenses of Rs. 70,000 and Rs. 140,000 respectively during the year. Firm
repaid the loan amounting to Rs. 130,000 till the end of December 2014.
Note: All purchases should be treated as revenue expenditure. Firm closes the books of
accounts on 31
st
December each year.
Required:
Based on the above information of Mr. Akram’s business, you are required to
calculate the amount of:
1. “Revenue” and “Net Profit” for the period ended on 31
st
December 2014
2. “Cash in hand”, “Liabilities” and “Capital” as on 31
st
December 2014
IMPORTANT:
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from handouts along with recommended books.
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                           Note related to load shedding: Please be proactive
Dear students!
As you know that Pre Mid-Term semester activities have been
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Due Date: November 17, 2015

Marks: 10

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MGT101 assignment number 1

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Solution:

Revenue means amount of total sales = 600,000+100,000 = 700,000
Total sales:
cash sales 600,000
credit sales 100,000 700,000

less purchases (merchandise (250,000)
Gross profit 450,000
less : operating expenses

Rental charges (70,000)
Other expenses (140,000)
Net profit 240,000
cash in hand
opening 500000
add ;
loan 300,000
sales 600000
less ;
rent (70000)
other exp (140000)
purchase (250000)
repayment of loan(130000)
closing balance 810000

Liabilities:
loan taken 300000
Less repaid loan (130000)
Liability 170,000
Capital:
Capital introduced 1400,000
Profit of the year 240,000
1640,000

prove
assets = liabilities +capital
900000+ 810,000 + 100,000 = 170,000 + 1640,000
1810,000 = 1810,000

Revenue means amount of total sales    = 600,000+100,000 = 700,000

total sales:   
cash sales    600,000 
credit sales  100,000      =      700,000

less  purchases (merchandise  (250,000)
Gross profit                              450,000
less :  operating expenses 

   rental charges                    (70,000)

  other expenses                   (140,000)

Net profit                              240,000

cash in hand:

opening              500000
add ;

 loan                    300,000
 sales                    600000
 less ;

  rent                      (70000)

  other exp             (140000)

 purchase               (250000)


 repayment of loan  (130000)


closing balance        810000

liabilities: 

loan  taken           300000

less repaid loan   (130000)

liability                170,000

Capital:

capital introduced      1400,000

profit of the year         240,000

                                1640,000


prove:
assets  = liabilities +capital 

900000+ 810,000  + 100,000  =  170,000 + 1640,000

 1810,000 = 1810,000

 

 

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