CS FP : Financial Accounting - June 2011

CS FP • Financial Accounting • June 2011

This Paper has 39 answerable questions with 0 answered.

Roll No………
Time allowed : 3 hours	Maximum marks : 100
Total number of questions : 8	Total number of printed pages : 7

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)

Classification of assets

(0)

(ii)

Principal book of accounts

(0)

(iii)

Dual aspect concept

(0)

(iv)

Del credere commission.

(0)

(5 marks each)

(b)

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

(i)

The debit balance in the profit and loss account denotes a surplus.

(0)

(ii)

The purchases day book is a part of the ledger.

(0)

(iii)

Sale of old office furniture should be credited to sales account.

(0)

(iv)

Loss of goods sent on consignment is said to be an abnormal loss, if such a loss is due to the inherent characteristics of the goods consigned.

(0)

(v)

The relationship between the consignor and the consignee is that of principal and agent.

(0)

(2 marks each)

(a)

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

(i)

In the balance sheet, provision for bad debts is shown as a _________ from trade debtors.

(0)

(ii)

________ functions both as a part of ledger and a book of original entry.

(0)

(iii)

Contra entries are passed in _________ cash book.

(0)

(iv)

While preparing final accounts, all the ________ accounts are transferred to the trading and profit and loss account.

(0)

(v)

Dissolution of a firm necessarily implies ________ of the partnership also.

(0)

(vi)

________ account is prepared to ascertain the cost of goods manufactured.

(0)

(vii)

When the debts earlier written off as bad are recovered at a later date, the amount so recovered is credited to _________ account.

(0)

(viii)

Compensating errors______________the agreement of trial balance.

(0)

(1 mark each)

(b)

Distinguish between any two of the following :

(i)

‘Real account’ and ‘nominal account’.

(0)

(ii)

‘Revenue expenditure’ and ‘deferred revenue expenditure’.

(0)

(iii)

‘Joint venture’ and ‘consignment’.

(0)

(4 marks each)

(a)

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

(i)

A motorbike is purchased for the owner’s son and firm’s vehicles account is debited with the amount paid by the firm. It is –

(a)	An error of principle
(b)	An error of omission
(c)	An error of Commission
(d)	A Compensating error.

(0)

(ii)

The maximum number of partners, a non–banking partnership firm can have is –

(a)	Ten
(b)	Twenty
(c)	Fifty
(d)	Seven.

(0)

(iii)

If partnership deed is silent on the point, interest allowed on partner’s capital accounts will be –

(a)	@ 6% per annum
(b)	@ 5% per annum
(c)	@ 8% per annum
(d)	Nil.

(0)

(iv)

To provide funds to pay to the deceased partner’s heires in case of death of a partner. the partners generally –

(a)	Create a sinking fund
(b)	Take a joint life policy
(c)	Create a reserve fund
(d)	Open a separate bank account.

(0)

(v)

Goodwill brought in by an incoming partner in cash to join a partnership firm is shared by the old partners in their –

(a)	Ratio of capitals
(b)	New profit sharing ratio
(c)	Ratio of sacrifice
(d)	Old profit sharing ratio.

(0)

(vi)

On 21^st February, 2011, Akash draws a bill of exchange on Bhupesh for Rs.10.000 payable 30 days after date. Bhupesh immediately accepts the bill. The due date or the bill will be –

(a)	24^th March, 2011
(b)	22 ^ndMarch, 2011
(c)	26^th March, 2011
(d)	21^st March, 2011.

(0)

(vii)

If unsold goods costing Rs.20,000 are taken over by a co–venturer for Rs.15,000, the joint venture account will be credited with –

(a)	Rs.20,000
(b)	Rs.15,000
(c)	Rs.5,000
(d)	Rs.35,000.

(0)

(viii)

Dinesh of Delhi consigns goods of the invoice price of Rs.1,00,000 to Bharat of Ballabhgarh at cost plus 25%. The amount of loading is –

(a)	Rs.25,000
(b)	Rs. 20,000
(c)	Rs. 15,000
(d)	Rs. 32,500.

(0)

(1 mark each)

(b)

Explain any two of the following statements:

(i)

Non–monetary events are not recorded in the books of account.

(0)

(ii)

Trial balance is a link between ledger and final accounts.

(0)

(iii)

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

(0)

(4 marks each)

(a)

The following errors were located in the books of Suresh after his books of account had been closed for the accounting year ended 31^st March, 2011 and the difference in trial balance had been transferred to a newly opened suspense account:

(i)	Sales book for the month of January, 2011 was overcast by Rs.100.
(ii)	A sum of Rs.4,000 received from Chandan was debited to his account as Rs.400.
(iii)	Credit purchase of goods from Sonu for Rs.12,000 was debited to Monu.
(iv)	Purchase of office furniture for Rs.6,000 was entered in the purchases book.
(v)	Credit purchase of goods for Rs.15,000 from Mahesh was recorded as credit sale of goods to Mahesh.

Pass necessary journal entries to rectify the abovementioned errors. Also prepare suspense account and profit and loss adjustment account to nullify the effect of errors on the profit for the year ended 31^st March, 2011.

(0)

(10 marks)

(b)

On the basis of following details, prepare the bank reconciliation statement and ascertain the balance as per pass book on 28^th February, 2011:

(i)	Bank balance as per cash book on 28^th February, 2011 : Rs.1,700.
(ii)	Cheques deposited with bank but not yet cleared : Rs.12,000.
(iii)	Cheques in hand of the cashier not yet deposited with bank : Rs.3,000.
(iv)	Amount charged by bank for certain services but not yet recorded in cash book : Rs.100.
(v)	Dividend collected by bank and appearing in pass book, but not yet recorded in cash book : Rs.1,500.
(vi)	Cheques issued on 28^th February, 2011 to suppliers, but presented to bank for payment on 3^rd March. 2011 : Rs.14,000.

(0)

(6 marks)

(a)

On 1^st April, 2007, Arrow Ltd. purchased machinery costing Rs. 1,00,000 and decided to provide depreciation on it @ 10 % per annum by using straight line method. The company closes its books every year on 31^st March.
On 31^st March, 2011, before providing depreciation, the company decided to change the method of depreciation from straight line method to written down value method retrospectively w.e.f. 1^st April, 2007, the rate of depreciation remaining the same.
Prepare machinery account for the year ended 31^st March, 2011.

(0)

(8 marks)

(b)

On 1^stseptember, 2010, Pankaj draws on Rakshit a bill of exchange for Rs.10,000 at 3 months which is immediately accepted by the drawee as he has purchased goods for the amount. On 4^th September, 2010, Pankaj gets the bill discounted with his bankers at 8% per annum. On the date of maturity, Rakshit, not being able to meet the bill, offers Rs.4.000 to Pankaj and requests him to draw another bill at three months for the balance amount plus Rs.120 for interest. Pankaj agrees to the arrangement. But before the due date of the second bill. Rakshit becomes insolvent. Rakshit’s estate pays fifty paise in a rupee.
Pass journal entries for all the Tansactions in the books of Pankaj.

(0)

(8 marks)

Following is the receipts and payments account of Dhanvantri Medical Help Society for the year ended 31^st March, 2011:

Receipts		Rs.	Payments		Rs.
To To To To To	Cash at bank and in hand on 1^st April, 2010 Subscriptions Donations Interest on investments @ 9 % per annum Charity show proceeds	37,000 7,20,000 50,000 45,000 33,000	By By By By By By By	Payment to suppliers of medicines Honoraium to doctors Salaries Sundry expenses Equipments purchased Charity show expenses Cash at bank and in hand On 31^st March, 2011	3,00,000 1,00,000 2,75,000 5,000 1,50,000 10,000 45,000
		8,85,000			8,85,000

Donations are mostly made by patients and are treated as income.
The following additional information is provided to you:

Particulars	On 31^st March, 2010 Rs.	On 31^st March, 2011 Rs.
Subscriptions in arrear Subscriptions received in advance Stock of medicines Amount due to suppliers of medicines Estimated value of equipments Estimated value of building	3,500 1,000 1,00,000 80,000 2,10,000 4,00,000	2,500 500 90,000 60,000 3,00,000 3,80,000

You are required to prepare income and expenditure account for the year ended 31^st March, 2011 and balance sheet as on that date.

(0)

(16 marks)

(a)

On 4 ^th September, 2009, Wintex Ltd. took a loss, of profit policy for Rs.5.00,000 with an indemnity period of six months. A fire broke out on 1^st January, 2010 because of which there was dislocation upto 31^st May, 2010. Ascertain the amount of claim for loss of profit taking into account the following additional information:

	Rs.
Sales for accounting year. ended 31 ^st March. 2009 Net profit for accounting year ended 31^st March, 2009 Standing charges (all covered) for. the year ended 31^st March, 2009 Saks from l^st January. 2009 to 31^st December, 2009 Sales from 1^st January, 2010 to 31^st May, 2010 Sales from 1^st January, 2009 to 31^st May, 2009 –	24,00.000 2,60,000 3,40,000 26,00,000 3,10,000 11,00,000

There was a 10% upward trend in business. The policy had an average clause .

(0)

(8 marks)

(b)

Mohit keeps his books of account by single entry system. On 31^st March, 2010, his statement of affairs was as follows:

Liabilities	Rs.	Assets	Rs.
Bills payable Sundry Creditors Mohit's capital	6,460 20,290 1,46,800	Cash in hand Bills receivable Sundry debtors Stock Furniture Plant	2,470 4,070 48,680 32,850 5,300 80,180
	1,73,550		1,73,550

Mohit provided you the following information also regarding his assets and liabilities as on 31^st March, 2011:

	Rs.
Cash in hand Bills receivable Sundry debtors Stock Furniture Plant Bills payable Sundry creditors	5,530 6,840 57,000 36,730 5,300 80,180 5,950 21,470

Mohit considered it desirable to depreciate plant@ 10% and furniture @ 5%: and to create a provision for bad debts on sundry debtors @ 5%
During the year. Mohit withdrew Rs.3,000 every month to meet his household expenses. On 1^st October, 2010, he introduced Rs. 10,000 as fresh capital.
Ascertain the profit earned by Mohit during the year ended 31^st March, 2011 and prepare his statement of affairs as on 31^st March 2011.

(0)

(8 marks)

Atul, Biju, Chandan and Deepak were partners in a partnership firm sharing profits and losses in the ratio of 4:3:2:1 respectively. The firm was dissolved on 31^st March, 2011. The firm’s balance sheet on that date was as follows:

Balance Sheet as on 31^st March, 2011
Liabilities	Rs.	Assets	Rs.
Bills payable Creditors capital accounts: Atul Chandan	40,000 2,40,000 1,60,000 2,40,000	Cash at bank Bills receivable Debtors Stock capital accounts: Biju Deepak	16,000 80,000 2,80,000 1,84,000 80,000 40,000
	6,80,000		6,80,000

Bills receivable and debtors realised 90% of their book values, Stock was sold for Rs.1,56,000. Outstanding salary of Rs.4,000 which was not shown in the above balance sheet was also paid. The relisation expenses amounted to Rs. 12,000 and were paid by Deepak, Biju was insolvent an only Rs.64,000 could be recovered from his estate. Garner vs. Murray rule was applied. Prepare realisation account and partners' capital accounts.

(0)

(16 marks)

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