KSLU Solved Question Papers
Financial Accounting
Previous Year Question Paper with Solution
B.B.A. LL.B. (Five Years) · Sem 1
2022 Apr Examination
munotes.in
Mumbai
B.B.A. LL.B. (Five Years) Sem 1 Financial Accounting 2022 Apr Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2022 Apr examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2022 Apr examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2022 Apr examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type quesiton and short note/problems is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written in English completely.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)What are accounting concepts ? Explain.[10]
Answer
For full marks, cover: what accounting concepts are and why they are needed; the major concepts one by one, each with its meaning, an illustration and its effect on the accounts (business entity, money measurement, going concern, accounting period, historical cost, dual aspect, realisation, matching, accrual, objective evidence); the fundamental assumptions named in AS 1; and a summary table.
What accounting concepts are
Accounting concepts are the basic assumptions and ideas on which the whole of accounting is built. Every entry, ledger account and statement rests on them. They are not laws passed by any government. They have been accepted by accountants because they make accounts sensible, uniform and comparable. Without them, two accountants could record the same transaction in two different ways and report two different profits.
The major accounting concepts
1. Business entity concept. The business is a unit separate from the person who owns it. When Meera puts ₹ 3,00,000 into her boutique, the boutique records a liability to her called capital. School fees she pays from the boutique's till are her drawings. This keeps the owner's private affairs out of the business profit.
2. Money measurement concept. Only events that can be expressed in money are recorded. Ten computers are recorded as ₹ 4,00,000, not as ten machines. A quarrel between two partners or the loss of a skilled employee is not recorded, though either may affect the business.
3. Going concern concept. The business is expected to keep running for a long time. That is why fixed assets are shown at cost less depreciation, and not at what they would fetch if the firm closed tomorrow. AS 1 treats going concern as a fundamental accounting assumption.
4. Accounting period concept. The endless life of a business is cut into equal periods, usually of twelve months. Profit can then be measured, and taxes paid, at regular intervals. Expenses and incomes are then split between periods. Rent paid in advance for next year is shown as an asset, not as this year's expense.
5. Historical cost concept. Assets are recorded at the price actually paid for them. A shop bought for ₹ 25,00,000 stays at that figure, less depreciation, even if its market price doubles. The bill or the sale deed proves the cost, so the figure can be checked.
6. Dual aspect concept. Each transaction affects two accounts in equal and opposite ways. A loan of ₹ 1,00,000 from a bank increases cash and increases a liability by the same amount. This gives the accounting equation, assets = capital + liabilities, and the double entry system.
7. Realisation concept. Revenue is recognised only when it is earned, normally when goods are delivered or services rendered and the buyer becomes liable to pay. An order for ₹ 50,000 received in March but supplied in April is April's revenue. AS 9 sets this rule for sales: the significant risks and rewards of ownership must have passed to the buyer.
8. Matching concept. The expenses of a period are set against the revenues of the same period, so that the true profit is found. If goods sold this year were bought last year, their cost is charged this year through opening stock. Unsold goods are carried forward as closing stock.
9. Accrual concept. Incomes and expenses are recorded when they arise, not when cash moves. Salary for March paid in April is an expense of March and is shown as outstanding. AS 1 names accrual as a fundamental accounting assumption, together with going concern and consistency.
10. Objective evidence concept. Every entry should be supported by a document that can be verified, such as an invoice, a receipt, a cheque counterfoil or a voucher. This keeps personal opinion out of the accounts and makes audit possible.
Concepts at a glance
| Concept | The idea | Effect on the accounts |
|---|---|---|
| Business entity | Business apart from owner | Capital and drawings accounts |
| Money measurement | Only money facts recorded | Non-money events left out |
| Going concern | Business continues | Assets at cost less depreciation |
| Accounting period | Equal periods | Annual profit; prepaid and outstanding items |
| Historical cost | Recorded at cost | Market rises not recorded |
| Concept | The idea | Effect on the accounts |
|---|---|---|
| Dual aspect | Two sides to every transaction | Double entry; balance sheet agrees |
| Realisation | Revenue when earned | Orders are not sales |
| Matching | Costs against revenues | Opening and closing stock |
| Accrual | When arising, not when paid | Outstanding and accrued items |
| Objective evidence | Supported by documents | Vouchers and audit |
Their limits
Concepts make accounts uniform, but they are not perfect. The cost concept ignores inflation, so old assets look cheap. Money measurement leaves out the skill of staff. The accounting period forces estimates, such as depreciation and provisions. These limits are reduced, not removed, by the accounting standards.
Conclusion. Accounting concepts are the basic assumptions on which accounts are prepared. The major ones are business entity, money measurement, going concern, accounting period, historical cost, dual aspect, realisation, matching, accrual and objective evidence. AS 1 treats going concern, consistency and accrual as fundamental assumptions. Together the concepts make the accounts of every business follow the same base.
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