| 1. | (a) | State whether the following statements are ‘TRUE’ (T) or ‘False’ (F): | 1x5=5 | |
| | | (i) | The issue of shares at a discount must be authorized by a special resolution of the company. | | (2) |
| | | (ii) | At the end of the accounting period the balance of "Goods sent to Branch account" is transferred to trading account. | | (1) |
| | | (iii) | Operating or Finance lease comes under provision of AS–13. | | (0) |
| | | (iv) | For life business premium income is to be recognized on receipt basis. | | (0) |
| | | (v) | A Banking company cannot grant any loans on securities of its own shares. | | (0) |
| | (b) | From the four alternative answers given against each statement indicate the correct alternative: | 1x5=5 | |
| | | (i) | Transfer to Capital Redemption Reserve is not allowed from | (A) | General Reserve | | (B) | Profit prior to incorporation | | (C) | Reserve Fund | | (D) | None of the above |
| | (0) |
| | | (ii) | Goodwill in case of joint stock company is shown under asset side under the heading | (A) | Fixed Assets | | (B) | Investments | | (C) | Current Assets | | (D) | None of the above |
| | (0) |
| | | (iii) | Survey expenses for marine insurance claims must be | (A) | added to claim | | (B) | added to Legal charges | | (C) | added to Administrative expenses | | (D) | None of the above |
| | (0) |
| | | (iv) | A non–performing asset is | (A) | Money at call and short notices | | (B) | An asset that ceases to generate income | | (C) | Cash balance in till | | (D) | None of the above |
| | (1) |
| | | (v) | An amount spent for inauguration of new factory building is | (A) | Revenue Expenditure | | (B) | Capital Expenditure | | (C) | Prepaid Expenditure | | (D) | None of the above |
| | (1) |
| | (c) | Match the following: (i)
(ii)
(iii)
(iv)
(v) | AS–4
AS–7
AS–10
AS–31
AS–14 | A.
B.
C.
D.
E.
F. | Accounting for construction contract
Accounting for Fixed Assets
Contingency and events occurring after Balance Sheet date
Interim Financial Reporting
Accounting for Amalgamation
No matching statements found |
| 1x5=5 | (0) |
| | (d) | Choose the appropriate answer in each case from the given alternative answers (=1 mark) and also give reason for your choice (=1 mark): | 2x3=6 | |
| | | (i) | If the current ratio is 2.4:1 and net working capital is Rs. 3,50,000, the amount of current assets will be | (A) | Rs. 4,90,000 | (B) | Rs. 8,40,000 | (C) | Rs. 6,00,000 | (D) | None of these |
| | (2) |
| | | (ii) | Purchase price of a machine is Rs. 44,500; Installation charges Rs. 10,000; Freight and Cartage Rs. 4,000; Insurance charges Rs. 10,000; Residual Value Rs. 14,000; Estimated useful life 5 years. The annual amount of depreciation under Straight line method would be | (A) | Rs. 90,0000 | (B) | Rs. 88,000 | (C) | Rs. 87,000 | (D) | None of these |
| | (2) |
| | | (iii) | The net tangible assets of a business is worth Rs. 1,50,000. The average expected profit to be earned in future is Rs. 30,000 p.a. If the market rate of return is 15%, the value of goodwill is | (A) | Rs. 2,00,000 | (B) | Rs. 2,25,000 | (C) | Rs. 50,000 | (D) | None of these |
| | (1) |
| | (e) | State the conditions to be satisfied for payment of dividend out of capital profits. | 2 | (0) |
| | (f) | Name four errors which are not detected by Trial Balance. | 2 | (0) |
| 2. | (a) | The following is the Income and Expenditure Account of Rising Sun Club for the year ended 31.12.2010: | (Fig.in Rs.) | | Expenditure | | Income | | | To | Printing and Stationery
Interest and Bank charges
Annual Dinner expenses
General expenses
Salaries
Audit fees
Honorarium to Secretary
Depreciation of Sports Equip.
Surplus(being the excess of income over
expenditure) | 3,200
1,100
18,400
6,400
52,500
3,200
15,000
4,000
12,700 | By | Entrance fees
Subscription
Annual Dinner receipt
Profit on annual sports
| 3,000
80,200
15,000
18,300
| | 1,16,500 | | 1,16,500 |
The following adjustments were made to prepare the accounts: Subscription outstanding on 1.1.10
Subscription outstanding on 31.12.10
Subscription received in advance on 31.12.09
Subscription received during the year
Subscription outstanding on 31.12.09
Subscription outstanding on 31.12.10 | Rs. 4,000
Rs. 6,300
Rs. 5,600
Rs. 3,400
Rs. 5,200
Rs. 6,800 |
General expenses include insurance prepaid to the extent of Rs. 800; Audit fees due for the year 2010. Audit fees paid in 2010 Rs. 2,800 for 2009. The Club has the following assets: Football Ground
Sports equipments on 1.1.2010
Sprots equipments on 31.12.2010, such sports
equipment after depreciation amounted to | Rs. 1,80,000
Rs. 35,000
Rs. 37,000 |
The Club had taken a loan of Rs. 30,000 from a bank a few years back which remain outstanding on 31.12.10. On 31.12.10 the cash in hand amounted to Rs. 20,000. Prepare the Receipts and Payment Account for the year ended 31.12.10 and a Balance Sheet as on that date. | 11 | (0) |
| | (b) | What is a geographical segment as per AS–17? | 4 | (0) |
| 3. | (a) | Ritu acquired a mine on lease from Richa for a period of 8 years at a royalty of Rs. 60 per tonne of coal produced subject to minimum rent of Rs. 1,00,000 for the first year, increasing by Rs. 30,000 every year till Rs. 2,80,000 per annum is reached. Shortworkings of any one year may be recouped out of excess workings of the following two years only. The output during the first five years was as follows: | Year ending 31st March | 2006–07 | 2007–08 | 2008–09 | 2009–10 | 2010–11 | | Output in tonnes | 600 | 900 | 2,500 | 3,800 | 5,000 |
While preparing the accounts of first year, Ritu decided not to carry forward as an asset any short workings. In the second year Rs. 95,000 were carried forward and in the third year Rs. 55,000. Prepare necessary accounts in the books of Ritu. | 6 | (0) |
| | (b) | NR and Sons sells goods on hire purchases at cost plus 33 1/3 percent. Prepare hire purchase Trading Account from the following information: | Rs. | April 1, 2010
"
"
March 31, 2011
"
"
"
" | Stock with customers on hire purchase price
Stock in hand at shop
Instalments overdue
Purchase during the year
Goods repossessed (Instalment not due Rs. 21,600)
Stock at shop (excluding repossessed)
Cash received during the year
Instalment overdue | 97,200
1,94,400
81,000
6,48,000
5,400
2,16,000
6,21,000
97,200 |
| 5 | (0) |
| | (c) | State with reasons whether the following items are Capital expenditure or Revenue expenditure: | (i) | A factory building was constructed at a cost Rs. 15,00,000. A sum of Rs. 64,000 were incurred for the construction of the temporary huts for storing building materials. | | (ii) | Rs. 5,000 paid for removal of stock to a new site. | | (iii) | Expenses incurred in connection with obtaining a licence to start the business were Rs. 15,000. |
| 4 | (0) |
| 4. | (a) | X and Y are partners sharing profit/loss in the ratio of 5:4. They admit Z into partnership for 1/5th the share in the profit which is given 2/15th by X and 1/15th by Y, Z brings Rs. 1,50,000 as his capital and Rs. 60,000 as premium. Goodwill account appears in the books at Rs. 1,65,000. Give necessary journal entries in the books of the firm at the time of Z’s admission and find out the new profit sharing ratio. | 4 | (1) |
| | (b) | P and Q are partners sharing profits and losses in the ratio of 5:4. On 1st April, 2010 they admitted their Manager R into partnership for 1/5th the share of the profits. As Manager, R was receiving a salary of Rs. 60,000 per year and a commission of 5 percent on the net profit after charging such salary and commission. It is however, agreed that any excess over his former remuneration to which R becomes entitled as a partner is to be borne by Q. The profits of the firm for the year ended 31st March, 2011 amounted to Rs. 4,27,500. You are required to show the division of profits among the partners. | 5 | (0) |
| | (c) | A motor car is sold on instalment payment system, the payment for which is made thus: Rs. 50,000 as immediate deposit and the balance to be paid on five equal annual instalments of Rs. 40,000 each. The interest is charged at 12% on unpaid cash price. If the present value of annuity of Rs. 1 for five years at 12% is Rs. 3.605, calculate the cash price of motor car. | 2 | (0) |
| | (d) | State the main characteristics of the Book Keeping system of Banks. | 4 | (0) |
|
| 5. | (a) | Deepa Ltd. had 3 departments D1, D2, D3. Information's relating to the departments are as follows: | D1(Rs.) | D2(Rs.) | D3(Rs.) | Opening stock
Direct Materials consumed
Wages
Closing Stock
Sales | 30,000
80,000
50,000
40,000
– | 40,000
1,20,000
1,00,000
1,40,000
– | 60,000
–
–
80,000
3,40,000 |
Stocks of each department are valued at cost of the department concerned. Stock of D1 are transferred to D2 at a margin of 50% above departmental cost.Stocks of D2 are transferred to D3 department at a margin of 10% above departmental cost. Other relevant expense were: | Rs. | Salaries
Printing and Stationery
Rent
Interest paid
Depreciation | 20,000
10,000
60,000
40,000
30,000 |
Allocate expenses in the ratio of departmental gross profits. Opening figures of reserves for unrealised profits on departmental stock were; | D2 — Rs. 10,000 | | D3 — Rs. 20,000 |
Prepare Departmental Trading and Profit & Loss A/c. | 10 | (0) |
| | (b) | Give journal entries in the books of Head Office to record the following transactions on the closing date 31st March,2011: | (i) | Depreciation amounting to Rs. 11,000 on Kolkate Branch fixed assets when such accounts are opened in books of Head Office. | | (ii) | Goods amounting to Rs. 7,500 transfer from Kolkata Branch to Delhi Branch under the instruction from Head Office. | | (iii) | The Delhi Branch paid Rs. 2,10,000 for machinery purchased by Head Office in Delhi. | | (iv) | The Kolkata Branch collected Rs. 8,000 from a Kolkata customer of the Head Office. | | (v) | Goods of Rs. 20,000 sent by the Head Office to Delhi Branch on 28th March and received by the later on 10th April 2011. |
| 5 | (0) |
| 6. | (a) | Following is the Balance Sheet of Madox Ltd. as at 313.2011; | (Fig. in Rs.) | Liabilities | | Assets | | 1 lakh Equity shares of Rs. 10 each fully paid
5,000 12% Redeemable Preference Shares
of Rs. 100 each
Securities Premium
Profit & Loss A/c
Current Liabilities | 10,00,000
5,00,000
1,00,000
5,50,000
4,80,000 | Fixed Assets
Current Assets
Bank | 12,80,000
10,20,000
3,30,000
| | 26,30,000 | | 26,30,000 |
On 1.4.2011,the company issued further 30,000 equity shares @ Rs. 10 per share at a premium of Rs. 5 per share. The amount payable was Rs. 6 on application, Rs. 7 on allotment including premium and the balance on First and Final Call. Application were received for 45,000 shares. Application money of 5,000 shares were refunded. Pro–rata allotment was made. The excess application money were adjusted towards allotment. Mr.X holding 3,000 shares failed to pay the allotment money and his shares were forfeited after final call and thereafter, out of these shares 2,000 shares were re–issued at a discount of Rs. 3 per share. Preference shares were redeemed at a premium of 10%. Considering the above transaction, show journal entries and the Balance Sheet in the books of Madox Ltd. | 12 | (0) |
| | (b) | Lakshmi Bank has followed the policies for retirement benefits as under: | (i) | Contribution to pension fund is made based on actuarial valuation at the year end. In respect of employees who have opted for pension scheme. | | (ii) | Contribution to the gratuity fund is made based on actuarial valuation at the year end. | | (iii) | Leave encashment is accounted for on "PAY–AS–YOU–GO" method. |
Comment whether the policy followed by Bank in the above cases are in accordance with AS–15. | 3 | (0) |
| 7. | (a) | From the following information, you are required to calculate the amount of net worth, current liabilities, long– term debt. fixed assets, current assets, inventory and debtors: Current ratio — 2.5 : 1
Sales/Net worth — 4 times
Sales to Inventory — 20 times
Annual sales — Rs. 40,00,000
Reserves and surplus — Rs. 3,50,000
Net worth/current liabilities — 5 times
Fixed assets to net worth — 75%
Total debts to Proprietors’ ratio — 50%
Debtors velocity — 12 times
Fictitious assets — Rs. 50,000
75% of sale were on credit. |
| 7 | (0) |
| | (b) | The Revenue Account of Sunlife Insurance Company shows the Life Insurance Funds on 31.3.2011 at Rs. 75,20,400 before taking into account the following items: | (i) | Claim covered under re–insurance — Rs. 17,000 | | (ii) | Bonus utilized in reduction of life insurance premium — Rs. 6,300 | | (iii) | Interest accrued on securities — Rs. 13,240 | | (iv) | Outstanding premium — Rs. 10,180 | | (v) | Claim intimated but not admitted — Rs. 32,400 |
Calculate the assurance fund considering the above omissions. | 5 | (0) |
| | (c) | State the purpose and use of financial leverage ratio. | 3 | (0) |
| 8. | Write short notes on(any three): | 5x3=15 | |
| | (a) | ‘Capital Base’ of Electric Supply companies; | | (0) |
| | (b) | Treatment of past losses of limited companies; | | (0) |
| | (c) | Source of Buy–back of shares; | | (0) |
| | (d) | Rebate on Bills discounted. | | (0) |
