CS FP : Financial Accounting - December 2011

CS FP • Financial Accounting • December 2011

This Paper has 38 answerable questions with 0 answered.

Roll No………
Time allowed : 3 hours	Maximum marks : 100
Total number of questions : 8	Total number of printed pages : 8

Note: Answer SIX questions including Question No. 1 which is compulsory. All working notes should be shown distinctly.

Note: Answer SIX questions including Question No. 1 which is compulsory. All working notes should be shown distinctly.

(a)

Explain any two of the following :

(i)

Accounting policies.

(0)

(ii)

Capital receipts and revenue receipts.

(0)

(iii)

Accrual system of accounting.

(0)

(5 marks each)

(b)

State, with reasons in brief, whether the following statements are true or false:

(i)

Revaluation account is a real account.

(0)

(ii)

For claiming loss of profit due to fire, it is necessary to take a separate policy.

(0)

(iii)

Fixed assets are stated in the balance sheet at their market value.

(0)

(iv)

Interest on capital is an income of the business.

(0)

(v)

Even if there appears a sports fund in the books of a club, the expenses incurred on sports activities will be debited to income and expenditure account.

(0)

(2 marks each)

(a)

Re–write the following sentences after filling–in the blank spaces with appropriate word(s)/figure(s)

(i)

Accounting records only those events which are of _________________ character.

(0)

(ii)

The amount spent on machinery to keep it in working condition is a _____________ expenditure.

(0)

(iii)

________________ method of depreciation is used to have a uniform charge for depreciation.

(0)

(iv)

The accounting period mostly consists of _______________ months.

(0)

(v)

Noting charges are paid in the event of ________________ of a bill.

(0)

(vi)

When cash is withdrawn from the bank, the entries passed in the three columnar cash book are called _______________ entries.

(0)

(vii)

A sum of Rs. 2,000 earlier written off as bad debts, is now received, it will be credited to ________________account.

(0)

(viii)

In final accounts, carriage inwards appears in _____________ account while carriage outwards appears in profit and loss account.

(0)

(1 mark each)

(b)

Distinguish between any two of the following :

(i)

‘Fixed capital accounts’ and ‘fluctuating capital accounts’ in partnership accounts.

(0)

(ii)

‘Invoice’ and ‘account sales’.

(0)

(iii)

‘Trial balance by balance method’ and ‘trial balance by totals method’.

(0)

(4 marks each)

(a)

Write the most appropriate answer from the given options in respect of the following:

(i)

The ruling of a purchases book does not include –

(a)	Ledger folio
(b)	Invoice number
(c)	Details
(d)	Debit and credit columns for amounts.

(0)

(ii)

The statement showing balance of all the ledger accounts is known as –

(a)	Trial balance
(b)	Balance sheet
(c)	Bank reconciliation statement
(d)	Account sales.

(0)

(iii)

At the time of admission of a new partner, reserves and undistributed profits are credited to old partners’ capital accounts in –

(a)	Old profit–sharing ratio
(b)	New profit–sharing ratio
(c)	The ratio of sacrifice
(d)	The ratio of gain.

(0)

(iv)

Which of the following item is not financial in nature –

(a)	Purchase of a car on credit
(b)	Dismissing an employee from job
(c)	Withdrawal of cash by proprietor for his personal use
(d)	Purchase of building for cash.

(0)

(v)

Which of the following will be goods for a business run by a furniture merchant –

(a)	Electrical appliances
(b)	Shoes
(c)	Tables and chairs
(d)	Pens and pencils.

(0)

(vi)

Balance of a petty cash book denotes –

(a)	An expense
(b)	An asset
(c)	A liability
(d)	Capital.

(0)

(vii)

Balance sheet discloses –

(a)	Cash position of the business
(b)	Financial position of the business
(c)	Income position of the business
(d)	Profit–earning capacity of the business.

(0)

(viii)

Capital + liabilities =

(a)	Total assets
(b)	Losses
(c)	Current assets
(d)	Fixed assets.

(0)

(1 mark each)

(b)

Explain any two of the following statements:

(i)

If stock at the end appears in the trial balance, it will be shown only in the balance sheet in final accounts.

(0)

(ii)

Joint venture is in the nature of a partnership but without a firm’s name.

(0)

(iii)

Accounting is a science as well as an art.

(0)

(4 marks each)

(a)

The cash book of Giriraj shows a balance of Rs. 44,000 standing to his credit in bank on 30^th June, 2011. On comparison of entries in the cash book with those in the pass book, it is found that –

(i)	Cheques amounting to Rs. 60,000 issued to creditors have not been presented till that date.
(ii)	Cheques amounting to Rs. 55,000 only were collected by bank upto 30^th June, 2011 out of the cheques of Rs. 1,05,000 paid into bank.
(iii)	A dividend of Rs. 10,000 received by bank has not been recorded in cash book.
(iv)	Insurance premium (upto 30^th June, 2011) paid by the bank Rs. 2,700 has not been recorded in the cash book.
(v)	A bill receivable for Rs. 6,000 discounted with bank at a discount of Rs. 100 has not been recorded in the cash book.

Record in the bank column of the cash book entries not yet recorded, ascertain the amended bank balance as per cash book and then prepare a bank reconciliation statement showing bank balance as per pass book.

(0)

(8 marks)

(b)

While preparing final accounts on 31st March, 2011, the trial balance of Suman did not match. Suman transferred the difference to a newly opened suspense account. In the next accounting period, the following errors were discovered in the books of account for the year 2010–11 :

(i)	The total of the sales book for January, 2011 was short by Rs. 2,500.
(ii)	Entertainment expenses Rs. 375 incurred on 5^thFebruary, 2011 were omitted to be posted from the cash book to the ledger.
(iii)	Discount column on the receipt side of the cash book for February, 2011 was added as Rs. 5,575 instead of Rs. 5,325.

Pass the necessary journal entries to rectify the above mentioned errors without affecting the profit for the year ended 31^st March, 2011. Also prepare – (i) Suspense account; and (ii) Profit and loss adjustment account. Assume that all the errors have been located.

(0)

(8 marks)

On 31^st March, 2011, the capital accounts of three partners, namely X, Y and Z stood at Rs. 8,00,000, Rs. 6,00,000 and Rs. 4,00,000 respectively after making adjustments for profit for the year and drawings during the year. Subsequently, it was discovered that interest on capital, and on drawings had been omitted to be charged both being @ 5% per annum. The drawings during the year were X : Rs. 2,00,000; Y : Rs. 1,30,000; Z : Rs.90,000 and interest on drawings chargeable to partners were X : Rs. 5,000; Y : Rs. 3,600; and Z : Rs. 2,000. The profit for the year amounted to Rs. 12,00,000 to be distributed among X, Y and Z in the ratio of 3 : 2 : 1 respectively. You are required to prepare –

(i)	Statement showing capital as on 1^st April, 2010.
(ii)	Profit and loss adjustment account.
(iii)	Partners capital accounts, showing the amended closing balances as on 31^st March, 2011.

(0)

(16 marks)

(a)

On 1^st July, 2011, Sohan sold to Mohan goods for Rs. 10,00,000. On the same date, Mohan accepted four bills drawn by Sohan on him, the first bill being for Rs. 1,00,000 at 1 month, the second bill for Rs. 2,00,000 at 2 months, the third bill for Rs. 3,00,000 at 3 months and the fourth bill for Rs. 4,00,000 at 4 months.

Sohan decided to keep the first bill till maturity with himself. On 4^th July, 2011, he got the second bill discounted with the bank @ 12% per annum. On 29^th July, 2011, he endorsed the third bill for Rs. 3,00,000 in favour of his creditor Tahir and sent the fourth bill for Rs. 4,00,000 to his bank for collection on the date of maturity.

All the bills were duly met on due dates.

Pass journal entries for all the transactions in the books of Sohan.

(0)

(8 marks)

(b)

A fire broke out on 10^th January, 2011 in the premises of Vikrant Ltd. The entire stock was destroyed except to the extent of Rs. 2,48,000. From the following figures, ascertain the amount of loss suffered by the company :

	Rs.
Book value of opening stock as on 1 ^st April, 2009 Purchases during the accounting year ended 31^st March, 2010 Sales less returns during the accounting year ended 31^st March, 2010 Book value of closing stock as on 31^st March, 2010 Purchases from 1^st April, 2010 to 10^th January, 2011 Sales from 1^st April, 2010 to 10^th January, 2011	14,40,000 58,00,000 80,00,000 9,00,000 58,40,000 75,60,000

It is the practice of the company to value stock at 20% less than cost. On 1^st April, 2010, the company raised the prices by 10%

(0)

(8 marks)

For Roshanara Club, prepare the receipts and payments account for the year ended 31^st March, 2011 and the balance sheet as on that date from the following information :

Income and Expenditure Account for the year ended 31^st March, 2011
Expenditure		Rs.	Income		Rs.
To To To To To To To To To	Drama expenses Salaries Postage and stationery Printing of souvenirs Journals and newspapers General expenses Insurance Depreciation on fixed assets Surplus, i.e., excess of income over expenditure	68,300 1,00,000 4,800 56,000 3,500 19,000 11,800 13,000 43,600	By By By By	Subscriptions Donations Surplus from annual meet Sale of souvenirs	1,50,000 20,000 26,000 1,24,000
		3,20,000			3,20,000

Additional information :

	As on On 31^st March, 2010 (Rs.)	As on On 31^st March, 2011 (Rs.)
Subscriptions due Subscriptions received in advance Salaries outstanding Prepaid insurance	8,000 3,000 7,000 3,800	12,000 2,000 7,500 4,000

The club had sports equipments on 1^st April, 2010 valued at Rs. 55,000 and at the end of accounting year 2010–11 after depreciation of Rs. 11,000, it amounted to Rs. 60,000. Also, the club had furniture costing Rs. 20,000 at the beginning of the year and as on 31^st March, 2011 after depreciation of Rs. 2,000, it amounted to Rs. 30,000. On 31^st March, 2011, cash in hand amounted to Rs. 24,500.

(0)

(16 marks)

(a)

A lease is purchased on 1^st April, 2006 for 5 years at a cost of Rs. 5,00,000. The firm decided to depreciate the lease by annuity method charging interest @ 10% per annum. Show the lease account for the entire period of 5 years assuming that accounts are closed every year on 31^st March.

A reference to the annuity table shows that to depreciate Rs. 1 by annuity method over 5 years, charging interest @10% per annum, one must write off a sum of Rs. 0.263797 every year.

(0)

(8 marks)

(b)

A trader does not maintain proper books of account as required under the double entry system. However, he prepares a statement of affairs at the end of every accounting year on 31^st March and maintains a proper cash book. An analysis of his cash book for the accounting year ended 31^st March, 2011 reveals the following figures for the year :

	Rs.
Cash received from sundry debtors Discount allowed to sundry debtors Cash paid to sundry creditors Discount received from sundry creditors Amount received on maturity of bills receivable Amount paid for bills payable Cash purchases Cash sales	4,01,150 3,960 2,08,460 3,010 35,000 67,000 97,500 1,65,000

Statements of affairs reveal the following :

	As on On 31^st March, 2010 (Rs.)	As on On 31^st March, 2011 (Rs.)
Sundry debtors Sundry creditors Bills receivable Bills payable	44,250 26,910 5,000 11,000	59,490 38,000 6,000 13,000

Ascertain total sales and total purchases for the year.

(0)

(8 marks)

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