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1.	State the usual adjustments that have to be made when final accounts are prepared.
Answer» Thepurpose of making various adjustments is to ensure that the final accounts reveal thetrue profit or loss and the true financial position of the business.The items which usually need adjustment are:1 Closing Stock,2 Outstanding Expenses,3 Outstanding or Accrued Incomes,4 Prepaid Expenses,5 Incomes Received in Advance or Unearned Incomes,6 Depreciation,7 Interest on Capital,8 Interest on loans,9 Bad Debts,10 Provision for Bad Debts,1 1 Provision for Discount on Debtors,12 Provision for Discount on Creditors .

2.	What is meant by Prepaid Expenses ? How are they adjusted in the final accounts ?
Answer» Prepaid Expense -That portion of an expense the benefit of which is yet to be received, is called prepaid expense.journal entry -Prepaid Expense A/c Dr.To Expense A/c(Being the adjustment of prepaid expense)

3.	What are the methods of recording Depreciation ?
Answer» Methods of recording depreciation are : (i) Depreciation being credited to respective Asset Account, and (ii) Depreciation credited to Provision for Depreciation Account.

4.	What is meant by Unearned Income ?
Answer» Unearned Income means income that has been received against which services are yet to be rendered or goods are yet to be sold.

5.	Following Trial Balance has been extracted form the books of Prasad on 31st March, 2019: Additional Information : (i) Outstanding salaries were Rs 45,000. (ii) Depreciate Machinery at 10%. (iii) Rent Prepaid Rs 10,000. (v) Provide for interest on capital @ 5% per annum. (vi) Stock on 31st March, 2019 Rs 8,00,000. Prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date.
Answer» Correct Answer - Gross Profit -Rs 8,95,000; Net Profit -Rs 6,05,000; Balance Sheet Total - Rs 20,50,000.

6.	Following balances are taken from the books of Niranjan. Prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March 2019. Adjustments: (i) Closing Stock Rs 7,50,000. Depreciate Machinary by `10%` and Furniture by `20%`. (iii) Wages Rs 50,000 and salaries Rs 20,000 are outstanding . (iv) Write off Rs 50,000 as further Bad debts and create `5%` Provision for Doubtful Debts. Also create a reserve for discount on Debtors `@ 2%`. (v) Investments were made on 1st July 2018 and no interest has been received so far.
Answer» Correct Answer - Gross Profit -Rs 12,20,000; Net Profit -Rs 7,38,350; Balance Sheet Total - Rs 19,96,350. NA

7.	Why is it necessary to pass adjusting entries when final accounts are prepared ?
Answer» The purpose of making various adjustments is to ensure that the final accounts reveal the true profit or loss and the truefinancial position of the business.

8.	Is CGST and SGST or IGST paid on puchase input GST or output GST? Why?
Answer» It is input GST because it is paid in purchases and can be set -off against GST Collected.

9.	What is meant by Provision for Discount on Debtors ?
Answer» Provision for discount allowed to debtors as an incentive for prompt payment.

10.	Lalit of Delhi purchased goods of `Rs 20,000` from Mehar of Kanpur. Whether IGST or CGST and SGST will be charged by Mehar ? Why?
Answer» Mehar will charge IGST because it is inter-state sale.

11.	The Trial Balance of Manish gives the following information : It is decided to create a Provision for Doubtful Debts @ 10% on debtors and a Provision for Discount @ 2% on debtors. Show how the adjustment will appear in the Final Accounts.
Answer» Correct Answer - Profit and Loss Account; Bad Debts - Rs 2,500; Discount - Rs 4,500 ; Provision for Doubtful Debts - Rs 25,000; Provision for Discount - Rs 4,500.

12.	On 1st April 2017, Shiv had a Provision for Doubtful Debts of Rs 650. On 31st March, 2018, total debtors amounted to Rs 18,400 out of which Rs 400 were bad to be written off. It was decided to maintain a Provision for Doubtful Debts at 5% of the debtors. On 31st March,2019, debtors were Rs 10,320 out of which Rs 320 had to be written off as bad debts. Provision for Doubtful Debts is to be maintanied at 5% of the Debtors. Show the Bad Debts Account and Provision for Doubtful debts for the years ended on 31st, March, 2018 and 2019.
Answer» Correct Answer - In 2017-18 debit Profit and Loss A/c -Rs 650 and in 2018 -19 Profit and Loss A/c - Rs 80. NA

13.	Prepare Trading and Profit and Loss account and Balance sheet form the following Balances, relating to the year ended 31st March, 2019: Additiona Information : (i) Closing Stock was valued at Rs 14,500. (ii) Depreciate Plant and Machinery by 4,000. (iii) Rs 400 is due for repairs.
Answer» Correct Answer - Gross Loss- Rs 5,000 ; Net Loss -27,900; Balance Sheet Total -Rs 79,500. NA

14.	Following is the extract of Trial Balance as on 31st March, 2019 : Adjustments: Create a Provision for Doubtful Debts @ 5% Debtors. Pass neccessary entry and show these items in the Profit and Loss Account and the balance sheet.
Answer» Correct Answer - Provision for Doubtful Debts - Rs 6,000. NA

15.	Following is the extract of Trial Balance as on 31st March, 2019 : Adjustments: Create a Provision for Doubtful Debts @ 5% Debtors. Pass neccessary entry and show these items in the Profit and Loss Account and the balance sheet.
Answer» Correct Answer - Provision for Doubtful Debts - Rs 6,000.

16.	Following are the balances extracted form the books of Manish on 31st March, 2019 : Prepare Trading and Profit and loss Account and Balance Sheet as at 31st March, 2019 after following adjustments are made : (i) Closing Stock was Rs 16,000. (ii) Depreciate Plant and Machinery @ 10% and Delivery Vehicle @ 15%. (iii) Unpaid Rent amounted to Rs 500.
Answer» Correct Answer - Gross Profit -Rs 10,900; Net Loss -Rs 24,900; Balance Sheet Total -Rs 2,08,100. NA

17.	Following are the balances extracted form the books of Manish on 31st March, 2019 : Prepare Trading and Profit and loss Account and Balance Sheet as at 31st March, 2019 after following adjustments are made : (i) Closing Stock was Rs 16,000. (ii) Depreciate Plant and Machinery @ 10% and Delivery Vehicle @ 15%. (iii) Unpaid Rent amounted to Rs 500.
Answer» Correct Answer - Gross Profit -Rs 10,900; Net Loss -Rs 24,900; Balance Sheet Total -Rs 2,08,100.

18.	Following Balances were extracted from the books of Vijay on 31st March, 2019: Prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date after giving effect to the following adjustments: (i) Stock as on 31st March, 2019 was valued at Rs 2,30,000. (ii) Write off further Rs 1,800 as Bad Debts and maintain the Provision for Doubtful Debts at `5%`. (iii) Depreciate Machinery at `10%`. (iv) Provide Rs 7,000 as outstanding interest on loan.
Answer» Correct Answer - Gross Profit -Rs 1,79,600; Net Profit -Rs 95,510; Balance Sheet Total - Rs 5,02,810. Percentage of Provision for Doubtful Debts is calculated after deducting further Bad Debts from Debtors at 5% of Rs 61,000 (i.e., Rs 62,800- Rs 1,800).

19.	From the following Trial Balance of Mahesh, prepare his Final Accounts for the year ended 31st March, 2019: Additional Information : (i) Closing Stock on 31st March, 2019 was Rs 21,000. (ii) Rent of Rs 1,200 has been received in advance. (iii) Outstanding liability for Miscellaneous expenses is Rs 12,000. (iv) Commission earned during the year but not received was Rs 2,100. (v) Goods coasting Rs 2,000 were taken by the proprieter for his personal use but entry was not passed in the books of account.
Answer» Correct Answer - Gross Profit -Rs 1,73,000; Net Profit -Rs 1,32,100; Balance Sheet Total - Rs 4,96,100.