ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Commerce)

PRINCIPLES OF ACCOUNTING (438/5401)

CHECKLIST

SEMESTER:SPRING,2025

This packet comprises the following material:

1. Text Book (One)

2. Assignment No. 1 & 2
3. Assignment Forms ( 2 sets )
4. Schedule for submitting assignments and tutorial meetings

In this packet, if you find anything missing from the above mentioned material,
please contact us at the address given below:

The Mailing Officer

Allama Iqbal Open University
H-8, Islamabad
Ph: 051-9057611-12

ASIA BATOOL
(Course Coordinator)

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 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Commerce)

WARNING
1. PLAGIARISMOR HIRING OF GHOST WRITER(S) FOR SOLVING THE
ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF
DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.

ASSIGNMENT SUBMISSION SCHEDULE FOR B.Com/Associate Degree

6 Credit Hours Due Date 3 Credit Hours Due Date
Assignment 1 12-06-2025 Assignment 1 --
Assignment 2 08-07-2025 08-07-2025
Assignment 3 31-07-2025 Assignment 2 --
Assignment 4 20-08-2025 20-08-2025
Note: Tutorial Schedule and Rehnama-e-Tulba are available on AIOU
website i.e. aiou.edu.pk
Course: Principles of Accounting (438/5401) Semester: Spring,2025
Level:ADC/ ADB/ BS

Please read the following instructions for writing your assignments. (SSC,
HSSC & BA Programmes)
1. All questions are compulsory and carry equal marks but within a question
the marks are distributed according to its requirements.
2. Read the question carefully and then answer it according to the requirements
of the questions.
3. Late submission of assignments will not be accepted.
4. Your own analysis and synthesis will be appreciated.
5. Avoid irrelevant discussion/information and reproducing from books, study
guide of allied material.

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Total Marks: 100 Pass Marks BA: 40
Pass Marks (A.D/BS): 50
ASSIGNMENT No. 1
(Units 1–4)
Note: You are required to solve all questions if you are unable to understand any
question of assignment, do seek help from your concerned tutor. But
remember that tutors are not supposed to solve the assignment questions for
you.

Q. 1 (i) Define the term “Accounting” and its objectives. (10+10=20)

(ii) Demonstrate how certain business transactions affect the elements of the
accounting equation:Assets Liabilities + Owner’s Equity.

Q. 2 What is a single-entry system of bookkeeping? Also, describe the characteristics

and limitations of a single-entry system. (20)

Q. 3 Mr. Bilal started a sole proprietorship business. The business is newly

established, and Mr. Bilal hired an accountant to keep the journal updated.
Suppose you are the accountant of Mr. Noman’s business and prepare the
journal book for October 2024. You are also required to post journal entries
into the ledger and prepare the trial balance. Detailsof the transactions during
October 2018 are given as follows: (20)
October 1. Invested Cash Rs.2, 000, 000& Equipment Rs.300, 000 in the business.
October 3. Purchased supplies for cash Rs.70, 000.
October 8. Purchased a Truck for Rs.2, 200,000 paying cash Rs. 1,000,000 and a note
payable for the balance.
October 15. Purchased office equipment on account Rs.150, 000.
October 18. Paid rent for October Rs.75, 000.
October 19. Received cash for job completed Rs.120, 000.
October 22, Purchased supplies on account Rs.260, 000.
October 23. Wages paid to employees Rs.410, 000.
October 25. Paid premium on property insurance Rs.29, 6000.
October 26. Paid cash to the creditors Rs.240, 000.
October 28. Received cash Rs.140, 000 for job completed.
October 29. Received an invoice for truck expenses, to be paid in November, Rs.41, 000.
October 29. Paid miscellaneous expenses Rs.33, 000.
October 30. Paid wages to employees Rs.430, 000.
October 3 1. Withdraw cash for personal use Rs.300, 000.

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Q. 4 The following Trial Balance has been extracted from the general ledger of Mr.
Ahmed. (20)
TRIAL BALANCE
December 31, 2024

PARTICULARS Dr. (Rs.) Cr. (Rs.)

Cash 500,000
Accounts Receivable (Debtors) 1,000,000
Inventory (January 1, 2024) 700,000
Office Equipment 460,000
Accounts Payable (Creditors) 800,000
Notes Payable (Bills Payable) 300,000
Insurance 80,000
Office Supplies 40,000
Rent Expenses 60,000
Office Salary Expenses 120,000
Ahmed’s Capital 1,250,000
Ahmed’s Drawings 90,000
Advertising Expenses 20,000
Delivery Expenses 50,000
Purchases 1,500,000
Sales 23,00,000
Freight In 20,000
Purchases Returns 50,000
Sales Returns 60,000
______ ______
4,700,000 4,700,000

Adjustments:
1. Merchandize Inventory on December 31, 2024 is valued at Rs.850,000/-

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2. Raise an Allowance for Depreciation on Office Equipment Rs.60,000/-
3. Insurance Unexpired is Rs.20,000/-

4. Office supplies consumed Rs.30,000/-

5. A bill of Rs.10, 000/- in respect of advertising is outstanding.

Q. 5 On 1st January 2021, Mr. Noman purchased Machinery for Rs. 139,000. The
machine has an estimated salvage value of Rs. 13,000 and an estimated useful life
of 5 years. The depreciable cost of the asset is Rs. 136,000 (139,000-3,000). The
machine will produce 720,000 units during its useful life. The units produced first
through the fifth year are 180,000 units, 156,000 units, 138,000 units, 126,000
units, and 120,000 respectively. (20)

You are required to prepare the Depreciation schedule using the units of production
method:

Total Marks: 100 Pass Marks BA: 40

Pass Marks (A.D/BS): 50
ASSIGNMENT No. 2
(Units 5–9)

Q. 1 Ruhi Trader keeps his record of business under a single-entry system and wants to
know the operating results of his business. He provides the following data as of 31 st
December 2022 and 31st December 2018 of his business: (20)
st
As of 31 December 2022: Cash in hand Rs. 25,000; Cash at bank Rs. 40,000; Account
Receivables Rs. 70,000; Stock Rs. 65,000; Land & Building Rs. 300,000, Office
Furniture Rs. 150,000, Office Equipment. 80,000; Account Payables Rs. 95,000; Bills
Payables Rs. 30,000.

As of 31stDecember 2023: Cash in hand Rs. 40,000; Cash at bank Rs. 60,000; Account
Receivables Rs. 110,000; Stock Rs. 85,000; Account Payables Rs. 75,000; Bills Payable
Rs. 45,000.

Depreciation @ 5% on Land & Building; @ 15% on Office Furniture; @ 10% on Office

Equipment is charged annually on original cost.
During the year Ruhi trader withdrew Rs. 158,000 and invested Rs. 112,000 into the
business.

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You are required to:
i. Prepare the statement of affairs as of 31-12-2017 and as of 31-12-2023 to calculate
the amounts of capital.
ii. Prepare the statement of Profit & Loss account for the period ended on 31-12-2023
Q. 2 Mr. Naeem has a trading business of computer accessories. The business has been
successfully running for the last 10 years and is considered one of the leading
trading stores in the city. Recently, due to the increase in the volume of
transactions, Mr Naeem has been unable to identify the difference in the balances
between the Cashbook and the passbook. Details of the transactions are given in
the preceding paragraph. (20)
st
On 31 March 2024, the passbook showed a credited balance of Rs. 500,000, and
as per the cash book it is Rs. 408,750 for Mr. Naeem Trader. These are the
following discrepancy items between the book and the cash book: -
1. A cheque for Rs. 100,000 was paid on March 5th, 2024, out of which Rs. 80,000
was credited by the bank on 25th March 2024 and the remaining balance on 5th
April 2024.
2. Interest on investments collected by bank Rs. 1,750.
3. Bank charges for the above period were also debited in the passbook of Rs. 500
4. A cheque for Rs.85, 000 was issued to the creditor but not presented tothe bank for
payment till 31st March 2024.
5. On 29 March 2024 a cheque of Rs. 25,000 was deposited into the bank but was
omitted from the entered into cash book.
Required: Prepare the Bank Reconciliation Statement under the double balance
method

Q. 3 X and Y are carrying on business as general merchants, sharing profit and

losses in the ratio of 2:3. Their balance sheet as of 31st December 2024 is as
under: (20)
Equities & Liabilities Amount Assets Amount
Sundry creditors 320,000 Cash at bank 20,000
Bills payable 60,000 Bills receivable 30,000
General reserve 40,000 Stock 80,000
Capital X 80,000 Investment 40,000
Capital Y 60,000 Machinery 190,000

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 Building 200,000
560,000 560,000

It is decided to admit Z into the partnership on the condition that he would pay
Rs.40, 000/- as capital on 1st January. Goodwill is to be valued at 3 years purchase
of 4 years average profit, the profit or loss for the 4 years are:
1st-year profit 22,000 2nd-year profit 16,000
3rd-year loss 8,000 4th-year profit 18,000
The new profit-sharing ratio is 5:6:7
Required: Give journal entries and show the balance sheet under the following
methods of treatment, of goodwill:
i. Goodwill paid privately
ii. Goodwill paid in cash and retained

Q.4 Short questions: (4x5=20)

i. What does the dissolution of a partnership entail?
ii. What are realization accounts?
iii. What are the consequences of the Garner vs. Murray case?
iv. In what situations is the Garner vs. Murray ruling applicable?

Q.5 Short questions: (4x5=20)

i. How would you rectify the following errors:
a. Monthly total of Rs. 180 discount allowed column of the cash book
was posted to the credit of the discount received account.
b. An amount of Rs. 3,000 paid for the erection of machinery was
wrongly debited to wages A/c.
ii. Write down the formula for determining the net profit under the net worth
method.
iii. What will be the capital of the proprietor, if his assets are Rs. 10,500,000
and liabilities are Rs. 5,070,500?
iv. State with reasons whether the following items of expenditure are capital or
revenue.
a. Telephone expenses
b. Offices salaries
c. Purchase a secondhand truck
d. Paid for advertising