KSLU Solved Question Papers
Financial Accounting
Previous Year Question Paper with Solution
B.Com. LL.B. (Five Years) · Sem 1
2021 Oct Examination
munotes.in
Mumbai
B.Com. LL.B. (Five Years) Sem 1 Financial Accounting 2021 Oct Question Paper with Solutions
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.
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The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.
The question paper reproduced here is the paper as set by Karnataka State Law University at the 2021 Oct examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2021 Oct examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2021 Oct 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
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
(a)Give the meaning of accounting. Explain the functions of accounting.[10]
Answer
For full marks, cover: a definition of accounting, with the two standard definitions and a plain explanation; the nature of accounting (an art, a science, a service, an information system); then its functions, each explained with an example; and how the functions follow one another as a cycle.
Definition of accounting
Accounting is the process of recording business transactions in money terms and classifying and summarising them. It then interprets the results and communicates them to the people who need them.
Two definitions are commonly quoted:
- The American Institute of Certified Public Accountants (1941): accounting is "the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof."
- The American Accounting Association (1966): accounting is "the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information."
The first definition stresses the work done on the records. The second stresses the purpose: information that helps people decide.
Nature of accounting
- An art. It needs skill and judgment in applying principles, for example in deciding how much to provide for doubtful debts.
- A science. It rests on organised principles, such as the dual aspect and matching concepts, that are applied uniformly.
- A service activity. It serves owners, managers, lenders, investors and the government with financial information.
- An information system. It collects data (transactions), processes them (journal, ledger, trial balance) and gives output (final accounts and reports).
- A language of business. Profit, assets and liabilities are understood by everyone who deals with a business.
Functions of accounting
1. Recording. The first function is to record every financial transaction in writing, in order of date. The record is made in the journal or in subsidiary books such as the cash book, the purchases book and the sales book. Example: a credit sale of ₹ 8,000 to Ravi is entered in the sales book on the day it is made. This is book keeping, the base of all accounting.
2. Classifying. Recorded transactions are grouped by their nature in the ledger. All transactions with Ravi go to Ravi's account, all rent paid to the rent account, and all purchases to the purchases account. Classification shows how much has been spent or earned under each head.
3. Summarising. The ledger balances are summarised in a trial balance and then in the final accounts. These are the trading account, the profit and loss account and the balance sheet. A ledger of hundreds of pages is reduced to a few statements that a reader can understand.
4. Analysing. The figures in the statements are broken into meaningful parts and compared. For example, the gross profit is set against sales to find the gross profit ratio, and this year's expenses are compared with last year's.
5. Interpreting. The accountant explains what the analysed figures mean. A falling gross profit ratio may mean rising purchase prices or falling selling prices. A growing figure of debtors may mean slow collection. Interpretation turns figures into conclusions.
6. Communicating. The results are passed to the users in a clear form and on time. The final accounts go to the owner and budgets and reports to managers. Returns go to the tax department and statements to the bank.
7. Protecting the assets. Accurate records of cash, stock, debtors and fixed assets let the owner check that nothing is lost or stolen. The cash in hand can be counted against the cash book balance every day.
8. Meeting legal requirements. Accounting keeps the records that the law requires. A company must keep books of account on the accrual basis and by the double entry system under section 128 of the Companies Act, 2013. Income tax and GST returns are prepared from the accounts.
9. Helping planning and control. Past figures are the basis of budgets. Actual results are then compared with the budget, and the differences are studied and corrected.
Functions and objectives are not the same
The functions describe the work, while the objectives describe its purpose. Take the objective of finding the year's profit. It is reached by recording every sale and expense, classifying them in the ledger and summarising them in the profit and loss account. An answer on functions should therefore describe activities, each one leading to the next.
How the functions form a cycle
| Stage | Function | Book or statement |
|---|---|---|
| 1 | Recording | Journal and subsidiary books |
| 2 | Classifying | Ledger |
| 3 | Summarising | Trial balance, final accounts |
| 4 | Analysing and interpreting | Ratios, comparisons |
| 5 | Communicating | Reports to users |
The same stages are repeated every accounting year, which is why they are called the accounting cycle.
Conclusion. Accounting is the art of recording, classifying and summarising money transactions and interpreting and communicating the results for informed decisions. Its functions are recording, classifying, summarising, analysing, interpreting and communicating. It also protects assets, meets legal requirements and helps planning and control. Together these functions turn daily transactions into reliable information about a business.
The rest of the answers
The first answer is free. The rest come with the KSLU B.Com. LL.B. Semester 1 solved papers.
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Kannada medium? These answers are in the Kannada Semester 1 pass too, with the other subjects in Kannada. The Financial Accounting solved papers are in English, because they have not been translated into Kannada. See Kannada Semester 1
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