| 1. | (a) | Accounting principles are built on a foundation of a new basic concept. List out four such concepts. | 2x10=20 | (0) |
| | (b) | Name four areas in which a choice with regard to policy is made by the enterprise. | | (0) |
| | (c) | In case the profit and loss account balance sheet of a company do not comply with the requirements of the accounting standards, what disclosures are mandatory? | | (0) |
| | (d) | What do you mean by ‘intrinsic value’ in regard to valuation of equity shares? | | (0) |
| | (e) | When an event affects both revenue and expenses, the effect on each period should be recognized in the same accounting period. (True or False) | | (0) |
| | (f) | Link up the items with appropriate accounting systems: | ITEM | ACCOUNTING SYSTEM | (i)
(ii)
(iii)
(iv) | Commission on Re–Insurance
Net Revenue Account
Forfeited Shares A/c
Acceptances, Endorsement and other Obligations. | (i)
(ii)
(iii)
(iv) | Bank Account
Company Account
Double Accounting System
Insurance Accounts |
| | (0) |
| | (g) | In case of membership fees of club, how to treat the same in the income and Expenditure A/C ant the Balance sheet? | | (0) |
| | (h) | Good will is a rough measure of the earning power of the capital employed by an entity. (True or False). | | (0) |
| | (i) | Mention two ways in which a company can purchase its own shares. | | (0) |
| | (j) | On what basis is the allocation of electricity charges made in case of departmental Accounts? | | (0) |
| 2. | The following is the balance sheet of G LTD.as at 31st December 2002: | Liabilities | Rs. | Assets | Rs. | 5000 Equity shares of Rs.100 each fully paid
Profit & Loss A/C
Bank Loan
Creditors
Proposed Dividend
Income Tax Provision | 5,00,000
7,50,000
2,50,000
1,00,000
1,20,000
2,00,000 | Land and Building
Machinery
Stock
Debtors
Bank Balance
Preliminary Expenses | 10,00,000
2,00,000
3,00,000
1,80,000
2,10,000
30,000 | | 19,20,000 | | 19,20,000 |
Net profits for the five years ending 31st December 2002 were as follows: | Years | Rs | year 1997
Year 1998
Year 1999
Year 2000
Year 2001 | 2,20,000
2,50,000
1,75,000
3,00,000
1,60,000 |
Profit of 1998 was Rs.20, 000 less due to loss by theft and profits of year 2000 included a profit of Rs.30, 000 on sale of long–term investments. Land &Buildings is revalued at Rs.15, 00,000 and return of 10% on tangible capital employed (before adjustment) is considered reasonable. Good will is to be calculated on five years purchase of annual super profits (simple average method).Also find out the intrinsic value of the share. proposed dividend has been subsequently approved and paid. | 16 | (0) |
| 3. | Following is the Balance sheet of Y LTD as at 31st March 2002: Liabilities
Share capital | Rs. | Assets
Fixed assets | Rs. | Issued &paid up 2, 50,000 equity of
share Rs. Each 10.as 8 per share paid up |
20,00,000 | Goodwill | 8,00,000 | 1,00,000 (10%) pref.shares
of rs.10 each fully paid up |
10,00,000 | Building
Plant and Machinery | 7,00,000
13,00,000 | | Reserves & surplus | Current Assets | General reserves
Profit & loss A/C | 6,00,000
8,00,000 | Stock
Sundry Debtors
Bank Balance | 7,00,000
9,00,000
6,60,000 | | Current Liabilities | Misc. Expenses | Creditors
Workmen’s Profit Sharing fund | 4,00,000
3,00,000 | Preliminary expenses | 40,000 | | 51,00,000 | | 51,00,000 |
X Ltd. decided to absorb the business of Y LTD., at the respective book value of assets and trade liabilities except Building which was valued at Rs. 12,00,000 and Plant & Machinery t Rs.10,00,000.
The purchase consideration was payable as follows: | (a) | Assumption of trade liabilities. | | (b) | Payment of liquidation expenses Rs.5, 000 and workmen’s profit sharing fund at 10% premium. | | (c) | Issue on equity share of Rs.10 each fully paid at Rs.11 per share for every pref.share and every equity share of Y LTD. And a payment of Rs.4 per equity share in cash. |
Calculate the purchase consideration, show the necessary ledger accounts in the books of Y LTD., and opening journal entries of X LTD. | 16 | (0) |
| 4. | X.LTD took certain lands on lease from Y LTD. For period of 15 years, for mining lime stone with a stipulated royalty of Rs.6 per ton and a minimum rent of Rs.84, 000 with clause to recoup short workings over three subsequent years.
The actual working results were: | Year | Output (Tonnes) | Actual Royalty (Rs) | 1998
1999
2000
2001
2002 | 32,000
64,000
52,000
68,000
1,75,200 | 48,000
96,000
78,000
1,02,000
2,62,800 |
You are required to show the royalties account, short working account .Y LTD account and all calculations in the books of X LTD. | 16 | (0) |
|
| 5. | From the following information relating to Global Finance bank LTD. Prepare profit &Loss Account for the year ended 31.3.2001.Also show schedule 13, 14, 15 & 16 as necessary. Information for the year ending 31.3.2001. | Rs (in 000) | Interest/discount on advances/bills
Income on investments
Interest on balances with R.B.I
Commission ,exchanges & brokerage
Profit on sale of investments
Interest on deposits
Interest on R.B.I borrowings
Rent, taxes, lighting
Printing and stationery
Advertisement and publicity
Depreciation on bank’s property
Depreciation, fees, allowances and expenses
Auditor fees and expenses
Law charges
Postage, telephone etc.
Repairs and maintenance
Insurance
Other expenditure
Balance of profit & loss A/c B/F | 1,58,140
59,050
21,215
14,535
570
1,57,020
16,810
4,775
1,065
435
1,460
35
205
110
1,560
455
4,575
4,420
7,620 |
The following adjustments are to be made: | (a) | Provide for income Tax (including surcharge) @51.75%. | | (b) | Every year the bank transfers 20% of profit to statutory reverse and 5% of profit of revenue reserve. | | (c) | Dividend amounting to Rs.10, 00,000 for the year ended 31.3.2001 is proposed by the board of directors. |
| 16 | (0) |
| 6. | On 1.4.2001 Mr. Shad had 25,000 equity shares of X LTD.at a book value of Rs.15 per share (face valueRs.10). On 20.6.2001, he purchases further 5,000 shares of X LTD. At Rs 16 per share. Directors of X LTD. announced a bonus and rights issue. No dividend was payable on these issues .the terms of issue were as follows:
Bonus–basis 1:6 (16.8.2001):
Rights–basis 3:7 (31.8.2001) price Rs.15 per share:
Due date for payment-30.9.2001:
Rights are transferable in full or in part.
According to Mr. S sold 1/3 of his entitlement to Mr. T for a consideration of Rs.2 per share.
Dividend at 20% for the year ending 31.3.2001 was declared by X LTD. And Mr. S received the same on 31.10.2001.
Dividends for the share acquired by him on 20.6.2001 are to be adjusted against the cost of purchase.
On 25.11.2001 Mr. S sold 25,000 equity shares at premium of Rs.5 per share. Prepare the investment A/C and Profit &Loss Account in the books of Mr. S assuming that he closes his books on 31.12.2001 and shares are valued at average cost. | 16 | (0) |
| 7. | The books of Mr. Z showed the following information:- | 1.1.2002
Rs. | 31.12.2002
Rs. | Bank balance
Debtors
Creditors
Stock
Fixed Assets (cost) | –
–
–
50,000
7,500 | 50,000
87,500
46,000
62,000
9,000 |
The followings are the details of the bank transactions: | Rs. | Receipt from customers
Payment to creditors
Capital brought in
Sale of Fixed Assets
Expenses paid
Drawings
Purchase of fixed Assets | 3,40,000
2,60,000
5,000
1,750
49,250
25,000
5,000 |
Other information:- (i)
(ii)
(iii) | Cost of Goods sold
Gross profit 25% on cost of Goods sold
Book value of assets sold | 2,60,000
–
2,500 |
Prepare Trading, Profit & Loss Account for the year ended 31.12.2002 and balance sheet as at 31.12.2002. | 16 | (0) |
| 8. | Write short notes on the following: | 4x4=16 | |
| | (a) | Treasury | | (0) |
| | (b) | Public Accounts Committee | | (0) |
| | (c) | Supplementary Grant | | (0) |
| | (d) | Classification of income & Expenditure in case of Government activities. | | (0) |
