Accounting, Law & Economics 28 November1

ACCOUNTING, LAW &
ECONOMICS
AFTERSCHO☺OL
– DEVELOPING CHANGE MAKERS
CENTRE FOR SOCIAL ENTREPRENEURSHIP
PGPSE PROGRAMME –
World’ Most Comprehensive programme in social
entrepreneurship & spiritual entrepreneurship
OPEN FOR ALL FREE FOR ALL
www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

ACCOUNTING, LAW &
ECONOMICS
Dr. T.K. Jain.
AFTERSCHO☺OL
Centre for social entrepreneurship
Bikaner M: 9414430763
tkjainbkn@yahoo.co.in
www.afterschool.tk, www.afterschoool.tk
A cheque for Rs. 500 received
from Yuvraj & C was dishonoured
and debited to Discount Account.
Due to rectification of this error, net
profit will:
• (a) Decrease by Rs. 1,000
• (b) Increase by Rs. 500
• (c) Increase by Rs. 1,000
• (d) No change
• Solution
•www.afterschoool.tk
(b) AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS
Sale to Mr. Z of Rs.3 000 on credit
was recorded twice in the sales
book. The rectification entry is:
• (a) Mr. Z will be credited
• (b) Mr. Z will be debited
• (c) Sales account will be credited
• (d) None
• Solution
• (a) along with debiting the sales account.
Find the mean of the following
observations
X=2, 5 7, 8, 13
• Mean = (2+ 5+ 7+ 8+ 13)/5= 7

What will happen if the mean of the
transformed series become 10
• Standard deviation will remain the same

as earlier, but the mean will change to 10.
• Ans.

By changing the value, we see that
std. dev. Remains unchanged
2 -5 25 5 -5 25
5 -2 4 8 -2 4
7 0 0 10 0 0
8 1 1 11 1 1
13 6 36 16 6 36
7 13.2 10 13.2
3.63318 3.63318
In the given question, if the mean of
the transformed series becomes 14
and the standard
deviation becomes double the
standard deviation of the given
series,what will happen? .

Solution
• As you can see, we 2 4 -10 100
have multiplied each
5 10 -4 16
value by 2. thus we
have obtained 7 14 0 0
doubled the standard 8 16 2 4
deviation.
13 26 12 144
• The mean has now
become 14. ans. 7 14 52.8
7.26636

Total income 30,000, total direct
expenses Rs 10,000,
Miscellaneous income
Rs 5,000 the gross profit will be
• (30000 – 10000 – 5000)

• Gross profit = 15000
• Miscellaneous income will be taken up in
P & L account.
The Company made Purchase of
Rs. 3,40,000 on credit. During
March, the company paid Rs.
3,50,000 to suppliers. The goods
are sold at 25% above cost. The
Sales for the month of March were
• Opening stock = 1.8 lakhs and closing

stock = 1 lakh find the sales.

Solution – statement of goods
• Op. stock 180000 • Sale : 420000
• Purchase 340000
• Closing stock 100000

Solution
• Cost of sales : 420000
• Add margin: 25% = 105000
• Thus sale price = 525000

Solve it
• Opening Stock 40,000
• Closing Stock 50,000
• Purchases 5,50,000
• Return outward 5,000
• Return inward 20,000
• Carriage inward 5,000
• If gross profit is 20% of sales, the gross
sales will be:
Solution
• Purchase 550000 – 5000 = 545000
• Add opening stock = 40000
• Less closing stock = 50000
• Total = 535000
• Add carriage inward = 5000
• Total = 540000
• Add gross profit : 20% of sales or 25% of cost :
135000
• Net sales = 675000 gross sales =
(675000+20000) = 695000 answer.

Solve it
• Goti sells goods at 1/3rd above cost. His
sales were Rs. 10,20,000( during the year.
However, he sold damaged goods for Rs.
20,000 costing Rs. 30,000. This sale is
included in Rs. 10,20,000. The amount of
gross profit is:

Question…
• A Ltd. issued 10,000 12% Debentures of Rs. 10 each
at par which are redeemable at the end of each year
in equal lots in 5 years at a premium of 30%. The
amount of loss on redemption of debentures to be
written off in fourth and fifth year will be
• Solution
• The debentures to be written off : 2000 each year,
thus loss to be written off :
• 30000*2/15 = 4000 and 30000 * 1/15 = 2000.
• Sum of the years : 15 for last year : 1/15 for second
last year : 2/15
• Total loss : 3*10000 = 30000. ans.
Solution
• Let us take 25% of 10,00,000 = 2,50,000 –
abnormal loss 10000 = 240000 answer.

An asset has a useful life of 4
years. If it is depreciated by
diminishing balance method Its
book value at the end of 4 years is
24% of its original cost, what is the
rate of depreciation applied
• Let us assume the value to be 100. Value
at the end of 4 years: 100 *(100-X)/100
*(100-X)/100*(100-X)/100*(100-x)/100 =
24/100
Solution
• When we multiply .7^4 (four times) we get
.24. Thus the rate is 30% answer.

Solve it …
• Goti drew a bill for Rs.9,000 on Jitu on 1st July,
2006 for three months. Goti got the bill
discounted with the bank for Rs.8, 820 and
remitted one third of the amount to Jitu. On the
due date, Goti failed to remit the amount due to
Jitu but he accepted a bill for Rs.12,600 for three
months which Jitu discounted for Rs.12,330 and
remitted Rs.2,220 to Goti . Before the maturity of
the renewed bill, Goti became insolvent and
only 50% was realized from his estate on 1
January, 2007.
Solution
• In the books of Goti :
• B.R. A/c Dr. 9000
• To Jitu 9000 (accommodation bill)
• Bank Ac dr. 8820
• Dis dr. 180
• To B/r 9000
• Jitu. Dr. 3000
• To bank 2940
• To Discount 60

Solution …
• Jitu Ac dr. 12600
• To BP 12600
• Bank Ac. Dr. 2220
• Discount A..c dr. 180
• Jitu Ac Dr. 6000
• To Jitu A.c 8400
• (amount of Rs. 6000 due was adjusted by Jite and amount
received Rs. 2220 after deducting bank commission of Rs. 180,
Jitu has given our share of Rs. 2400).
• Jitu Ac. Dr. 2100
• To Bank 2100
• (5j0% of the money due to Jitu was paid after insolvency).

• Goti , Monu and Ajay were in partn Goti and
Monu sharing profits and losses in the proportion
of 3:1 and Ajay receiving a salary of Rs. 50,000
plus 5% of the profit after charging his salary
and his 5% of the profit or 1/7 of the profits of the
firm whichever is higher. Any excess of the latter
over the former under the partnership
agreement to be charged to Goti . The profit for
the year ended 31st March 2007 is Rs.6,50,000
after charging Ajay ’s salary.
• You are required to show the distribution of
profits among the partners.
Solution
• Profit : 650000
• 5% profit: 650000*5/105= 30952
• 1/7 of profit: 700000/7= 100000
• Thus Ajay will get Rs. 50000 + 30952 or
Rs. 100000 witch ever is higher – thus he
will take 100000. Goti will bear : 100000 –
80952 = 19048
• Thus shares are :Goti: 445238,
Monu154762 Ajay 100000
Goti contracted to make and deliver 350
pairs of shoes to Double in January. A
strike of Goti’s employees prevented him
from implementing his contract. In a suit by
Double for breach of contract, Goti claims
that the contract was terminated by
impossibility of performance. Is his defence
good?
• Double can claim damages.

Question on limitation act?
• X owes Y two sums (X has to pay two
amounts to Y), one for Rs. 2,000 which is
barred by Limitation and another for Rs.
2,500-which is not barred. X pays Y Rs.
1,000 on account Later Y sues for Rs.
2500. X pleads; what should be his
argument?
• Solution: X should plead that this amount
is towards 2500 (which is not time barred)

When an inferior right accruing to a
party in a contract merges into a
superior right accruing to the same
party, then what happens:
• Inferior right will merge in the superior
charge and get discharged as now only
superior matter will remain.

Revenue is said to be realized
when:
• (a) Cash is received
• (b) Sales are made
• (c) Goods are manufactured
• (d) Cheque is realised
• Answer:
• B.

The value of asset after deducting
depreciation from the historical cost
is known as:
• Book value

A contracts to sell to B all the oil to be
produced from harvested from A’s farm.
The crops having been harvested made
therefrom, A fills the oil in the cans
supplied by B. Does property in oil pass to
B?
• No, property passes only when delivery or

symbolic delivery is made. In this case A has not
made the delivery yet. So still A is the owner of
the goods. B will become owner only when A
hands over the delivery to B. ans.
Goti, a partner of a firm, borrows
money on his own credit by giving
his own promissory note for the
same, but he subsequently uses
the proceeds of the note in the
partnership concern of his own free
will without any reference to the
lender to do so. Is the firm liable?
• No. the firm is not liable for this amount. However, if the
lender and partners know about it , the firm will be liable.
Goti Bikaneri sends out 1,000 boxes costing
1,00,000 to Pawan of Jaipur at cost +20%
consignor’s expenses were
Freight Its 6,000
Insurance Rs. 2.000
Consignees expenses were
Loading and Unloading charges Rs. 10000
Salesman salary Rs. 6,000 and
Commission 2% on Gross sale
What will be the amount of profit it ¾ goods
sold by consignee at Rs 1,00,000

Solution
• Cost = 100000
• Add 20% = 120000
• Goods sold = 75000 sale value 100000
• Commission = 2000
• Closing stock :
• 25000 + ¼ of expenses (18000) = 29500

Gross profit
• Purchase 100000 • Closing stock 29500
• Expenses 18000 • Sales 100000
• Salary 6000
• Commission 2000
• Gross profit : 3500
• Total : 129500

What will be the book value of the asset as
at the beginning of fourth
year:
• Original Cost .= Rs. 1,26,000
• Salvage ValueRs. 6,000
• Useful Life = 6 Year
• 126000 – 6000
• =120000
• Sum of the year’s digit method:
• Total dep. For first 3 years: 15/21*120000
• =85714
• Thus value left out is : 40285.7 answer.

Attempt it
• Obsolescence means decline in the value
due to:
• (a) Fall in the market price
• (b) Physical wear and tear
• (c) efflux of time
• (d) Innovations and inventions
• Correct answer:
• (c)
• Following trading results are a in respect
ni the business carried on 1 a unit
• 2003 — Loss Rs 20,000
• 2004— Loss Rs 5,000
• 2005 — Profit Rs 3 0000
• 2006— Piotit Rs 15 000
• The value of goodwill on the basis of 3
year purchase of average profit :
Solution
• Average profit :
• (45000 – 25000) = 20000/4 years = 5000
• Three year purchase :5000*3 =15000
• Answer.

the Indian economy aimed at an
annual growth rate of 8 per cent in
national income,
assuming incremental capital —
output-ratio of 3.5:1 what would be
the required rate of
investment as percent of national
income?
• If you invest 3.5, you get 1. thus in order to
get 8, you have to invest: 28 answer.
• Sundry Debtors on 3 March, 2006 are Rs.
55,200. Further Bad debts are Rs. 200:
Provision for doubtful debts are to be made on
debtors 5% and provision of discount is to be
made on debtors @ 2%. The amount provision
of discount on debtors will be::
• (a) Rs. 1,045
• (b) Rs. 2,750
• (c) Rs. 1,100
• (d) Rs. 2,760

Solution
• 55200 – 200
• 55000
• Now deduct 5% provision for doubtful
debt: 55000-2750
• Thus provision will be made on 52250
• 2% of this amount is 1045 which is
provision for discount on debtors. Answer.

ABOUT AFTERSCHO☺OL
Afterschoool conducts three year integrated PGPSE
(after class 12th along with IAS / CA / CS) and 18
month PGPSE (Post Graduate Programme in Social
Entrepreneurship) along with preparation for CS / CFP /
CFA /CMA / FRM. This course is also available online
also. It also conducts workshops on social
entrepreneurship in schools and colleges all over India –
start social entrepreneurship club in your institution
today with the help from afterschoool and help us in
developing society.

Why such a programme?
• To promote people to take up entrepreneurship
and help develop the society
• To enable people to take up franchising and
other such options to start a business / social
development project
• To enable people to take up social development
as their mission
• To enable people to promote spirituality and
positive thinking in the world

Who are our supporters?
• Afterschoolians, our past beneficiaries,
entrepreneurs and social entrepreneurs
are supporting us.
• You can also support us – not necessarily
by money – but by being promotor of our
concept and our ideas.

About AFTERSCHO☺OL PGPSE – the
best programme for developing great
entrepreneurs
• Most flexible, adaptive but rigorous programme
• Available in distance learning mode
• Case study focused- latest cases
• Industry oriented practical curriculum
• Designed to make you entrepreneurs – not just
an employee
• Option to take up part time job – so earn while
you learn
• The only absolutely free course on internet
Workshops from
AFTERSCHO☺OL
• IIF, Delhi
• CIPS, Jaipur
• ICSI Hyderabad Branch
• Gyan Vihar, Jaipur
• Apex Institute of Management, Jaipur
• Aravali Institute of Management, Jodhpur
• Xavier Institute of Management, Bhubaneshwar
• Pacific Institute, Udaipur
• Engineering College, Hyderabad

Flexible Specialisations:
• Spiritualising business and society
• Rural development and transformation
• HRD and Education, Social Development
• NGO and voluntary work
• Investment analysis,microfinance and inclusion
• Retail sector, BPO, KPO
• Accounting & Information system (with CA / CS /CMA)
• Hospital management and Health care
• Hospitality sector and culture and heritage
• Other sectors of high growth, high technology and social
relevance

Salient features:
• The only programme of its kind (in the whole world)
• No publicity and low profile course
• For those who want to achieve success in life – not just a
degree
• Flexible – you may stay for a month and continue the rest of
the education by distance mode. / you may attend weekend
classes
• Scholarships for those from poor economic background
• Latest and constantly changing curriculum – keeping pace
with the time
• Placement for those who are interested
• Admissions open throughout the year
• Latest and most advanced technologies, books and study
material

Components
• Pedagogy curriculum and approach based on IIM Ahmedabad and ISB
Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad)
• Meditation, spiritualisation, and self development
• EsGotitial softwares for business
• Business plan, Research projects
• Participation in conferences / seminars
• Workshops on leadership, team building etc.
• Written submissions of research projects/articles / papers
• Interview of entrepreneurs, writing biographies of entrepreneurs
• Editing of journals / newsletters
• Consultancy / research projects
• Assignments, communication skill workshops
• Participation in conferences and seminars
• Group discussions, mock interviews, self development diaryng
• Mind Power Training & writing workshop (by Dr. T.K.Jain)

Pedagogy
• Case analysis,
• Articles from Harvard Business Review
• Quiz, seminars, workshops, games,
• Visits to entrepreneurs and industrial visits
• PreGotitations, Latest audio-visuals
• Group discussions and group projects
• Periodic self assessment
• Mentoring and counselling
• Study exchange programme (with institutions out of
India)
• Rural development / Social welfare projects
Branches
• AFTERSCHO☺OL will shortly open its
branches in important cities in India
including Delhi, Kota, Mumbai, Gurgaon
and other important cities.
Afterschooolians will be responsible for
managing and developing these branches
– and for promoting social entrepreneurs.

Case Studies
• We want to write case studies on social
entrepreneurs, first generation
entrepreneurs, ethical entrepreneurs.
Please help us in this process. Help us to
be in touch with entrepreneurs, so that we
may develop entrepreneurs.

Basic values at AFTERSCHO☺OL
• Share to learn more
• Interact to develop yourself
• Fear is your worst enemy
• Make mistakes to learn
• Study & discuss in a group
• Criticism is the healthy route to mutual support
and help
• Ask fundamental questions : why, when, how &
where?
• Embrace change – and compete with yourself
only
www.afterschoool.tk
social entrepreneurship for better
society

Accounting, Law &amp; Economics 28 November1

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ACCOUNTING, LAW &

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

• Mean = (2+ 5+ 7+ 8+ 13)/5= 7

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

• Standard deviation will remain the same

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

• (30000 – 10000 – 5000)

• Opening stock = 1.8 lakhs and closing

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

• No, property passes only when delivery or

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS

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