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B.Com. LL.B. (Five Years) Sem 1 Financial Accounting 2018 Dec Question Paper with Solutions

KSLU Solved Question Papers

Financial Accounting

Previous Year Question Paper with Solution

B.Com. LL.B. (Five Years) · Sem 1

2018 Dec Examination

munotes.in

Mumbai

First published on munotes.in on 21 October 2026.

Published by munotes.in, Mumbai.

Model answers written and edited by the munotes.in editorial desk.

Passages from this volume may be quoted, in print, online or by an AI system, with credit: name munotes.in and link to this volume's page. The volume may not be reproduced as a whole. Full terms at munotes.in/content-license.

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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2018 Dec examination.

The questions below are the paper as Karnataka State Law University set it at the 2018 Dec examination, in the order it was set.

MarksPage

The Paper as Set

The questions in this volume are the questions asked at the 2018 Dec 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 question and short note/problems is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answers should be written in English only. (5) Use simple calculator only.

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.

Read the original question paper

Q1

Unit I

(a)Distinguish between :[10]

Answer

The items given in the question

i) Book-keeping and Accounting.

ii) Accounting and Accountancy.

For full marks, cover: first, the meaning of book keeping and of accounting, and their differences point by point in a table, with a short illustration; second, the meaning of accounting and of accountancy, and their differences point by point in a table; and how the three terms fit together.

1. Book keeping and accounting

Book keeping is the art of recording business transactions in the books of account in a systematic way. It covers journalising (or entering the subsidiary books), posting to the ledger and balancing the accounts. Its work is routine and is usually done by clerks. It ends where the ledger balances are ready.

Accounting begins where book keeping ends. It takes the recorded data, prepares the trial balance and the final accounts, and then analyses and interprets the results. Finally it communicates them to the people who need them: owners, managers, lenders, investors and the tax authorities. The American Accounting Association described accounting in 1966 as "the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information".

Point	Book keeping	Accounting
Scope	Recording, posting, balancing	Summarising, analysing, interpreting, communicating
Stage	First stage	Second stage, built on book keeping
Nature of work	Clerical and routine	Analytical; needs judgment
Done by	Book keeper	Accountant
Knowledge needed	Rules of debit and credit	Concepts, standards, tax law, analysis
End product	Ledger balances	Final accounts and reports

Point	Book keeping	Accounting
Decisions	Gives no basis for decisions by itself	Supplies information for decisions
Policy choices	None	Methods of depreciation, stock valuation, provisions

Illustration. A clerk writes each day's credit sales in the sales book and posts them to the customers' accounts. At the month end the clerk balances the ledger. That is book keeping. The accountant then prepares the trading account. It shows a gross profit of 20 per cent of sales, against 25 per cent last year. The accountant traces the fall to rising purchase prices and reports this to the owner with a suggestion. That is accounting.

2. Accounting and accountancy

Accountancy is the whole body of knowledge about accounts. It holds the principles, concepts, conventions, standards and methods that tell an accountant how to record, classify, summarise and report. It is the theory and the profession. Accounting is the application of that knowledge to the transactions of a particular business. In short, accountancy is the knowledge and accounting is the practice of it.

Point	Accounting	Accountancy
Meaning	The process of recording, summarising, analysing and reporting the transactions of an entity	The systematic body of knowledge on which accounting is done
Nature	Practical, applied	Theoretical, a discipline and a profession
Concerned with	"How to do" in a given business	"Why it is done this way", the principles
Scope	One business's books and reports	All principles, standards and methods
Output	Final accounts and reports	Rules, standards and trained professionals
Example	Preparing a firm's balance sheet for the year	The concepts and standards that decide how that balance sheet is drawn up

Illustration. The rule that closing stock is valued at the lower of cost and net realisable value is part of accountancy (it is in AS 2). Applying it to value a particular shop's stock at the year end is accounting. In the same way, knowing the methods of depreciation is accountancy. Choosing and applying one of them to a firm's machinery, year after year, is accounting.

Why the distinctions matter

The three words are often used loosely, as if they meant the same thing. They do not. A business that hires a book keeper gets accurate records, but not analysis or advice. A business that hires an accountant gets reports and judgment built on those records. The accounting profession, which trains and examines accountants and frames the standards, is what accountancy refers to. In India, for example, the accounting standards are framed by the Institute of Chartered Accountants of India. Knowing the difference helps a student answer what each person does and what each word covers.

How the three terms fit together

The three form a ladder. Accountancy is the widest: the knowledge and the profession. Accounting applies that knowledge to a business and produces its final accounts and reports. Book keeping is the first, recording part of accounting. So book keeping is part of accounting, and accounting is the practice of accountancy. Each wider term includes the narrower one below it. A person may be a skilled book keeper without being an accountant, but no accountant can do without sound book keeping.

Conclusion. Book keeping records, posts and balances transactions; it is routine clerical work and the first stage. Accounting includes book keeping and goes on to summarise, analyse, interpret and report, which needs judgment. Accountancy is the body of knowledge and the profession behind both, while accounting is its practical application in a particular business.

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