| 1. | (a) | State why the following two propositions is not correct: | 2x10 | |
| | | (i) | Bonus issue can be made out of profits to make partly paid–up shares as fully paid–up shares | | (0) |
| | | (ii) | An intangible asset is an identifiable monetary asset. | | (0) |
| | (b) | Match the following items shown in Column (I) with the items shown in Column (II) | Column I | Column II | (i)
(ii)
(iii)
(iv) | Cum, interest Purchase
Average Clause
Undervaluation of Asset
Statement of Net Revenue
and Appropriation Account | (1)
(2)
(3)
(4) | Secret Reserve
Double Accounting System
Fire–claim Policy
Price includes Interest |
| | (0) |
| | (c) | What are the disclosure requirements pertaining to events occurring after the Balance Sheet date under the Accounting standards? | | (0) |
| | (d) | When can an item qualify to be a prior period item? | | (0) |
| | (e) | State with reasons whether the following statements are true or false: | (i) | The debit balance in the Profit & Loss A/c is treated as surplus. | | (ii) | Goodwill is a fictitious Asset. |
| | (0) |
| | (f) | What is the objective of Accounting standard? | | (0) |
| | (g) | State the importance of "Average clause" in an insurance policy for loss of stock. | | (0) |
| | (h) | Can a company change the method of providing depreciation? | | (0) |
| | (i) | What are the principal sources of Indian GAAP? | | (0) |
| | (j) | Distinguish between proprietory theory and entity theory. | | (0) |
| 2. | From the following details find out the claims under a loss of profit policy: Indemnity period
Policy value
Date of fire
Dislocation up to 01.08.2007
Sale for 2006 accounting year
Net profit for 2006 accounting year
Standing charges for 2006 accounting year (all insured)
Sale from 01.04.2006 to 31.03.2007
Sale from 01.04.2007 to 01.08.2007
Sale from 01.04.2006 to 01.08.2006 | 6 months
Rs. 30,000/-
01.04.2007
Rs. 1,20,000/-
Rs. 13,000/-
Rs. 17,000/-
Rs. 1,60,000/-
Rs. 15,000/-
Rs. 50,000/- |
There is a clear 10% upward trend in the business. | 4+6+6 | (0) |
| 3. | The following informations were obtained from the books of Dignity. Foundation Recreation Club as on 31–03–2007. At the end of the first year of the club you are asked to prepare Receipts and Payments Account, Income and Expenditure Account for the year ended 31–03–2007 and a Balance Sheet as at 31–03–2007 on mercantile basis: (i)
(ii) | Donation received for building and library room
Other revenue income and actual receipts: | Rs. 1,00,000/- | | | Revenue Income
Rs. | Actual Receipts
Rs. | | Entrance Fees
Subscription
Locker rent
Sundry Income
Refreshment account | 20,000
17,000
800
1,400
– | 20,000
16,000
800
860
20,000 | | (iii) | Other revenue expenditure and actual payments: | | | Revenue Expenditure
Rs. | Actual Payments
Rs. | | Land (Cost Rs. 10,000)
Furniture (Cost Rs. 1,46,000)
Salaries
Maintenance of club
Rent
Refreshment account | –
–
6,000
3,000
6,000
– | 10,000
1,30,000
5,800
2,000
6,000
12,000 |
Donation to the extent of Rs. 12,500 were utilised for the purchase of library books, balance was still unutilised. In order to keep it safe, 9% Govt. bonds of Rs. 80,000 were purchased on 31–03–2007. Remaining amount was put in the bank on 31–03–2007 under the term deposit. Depreciation at 10% P.A. was to be provided for the whole year on Furniture and Library books. | 6+6+4 | (0) |
| 4. | The Balance Sheet of Small Ltd. as at 31st March, 2007 was as under: | (Rs. in lakhs) | | Liabilities | | Assets | | Share Capital
In Equity shares of Rs. 100 each
General Reserve
Profit & Loss A/c:
Balance B/F
Profit for the year
Trade creditors |
1.20
0.60 |
6.00
3.00
1.80
1.20
12,00 | Land & Building
Machinery balance B/F
Less: Depreciation for the year
Stock at cost
Debtors
Cash and Bank Balances
Preliminary expenses |
3.50
0.50 | 4.00
3.00
2.00
1.50
1.00
0.50
12,00 |
Big Ltd. purchased 4000 Equity shares of Rs. 100 each on 1st October, 2006 on which date it was found that land and building were undervalued by Rs. 1 lakh and machinery was worth only Rs. 2.75 lakhs. In preparing the consolidated Balance Sheet of holding company, it was decided to adopt proper values of Assets, and write off preliminary expenses. On the above infirmation given,—
Ascertain: (a) Capital Profits
(b) Revenue Profits and
(c) Minority interest | 8+4+4 | (0) |
|
| 5. | (a) | What is the procedure for reduction of share capital? | 6+4+6 | (0) |
| | (b) | From the summarized Balance Sheet of Weak Company Ltd. as on 31st March, 2007 are given below: | Balance Sheet
Rs. | |
Rs. | 10,000 Equity Shares of
Rs. 100/- each |
10,00,000
10,00,000 | Net Sundry Assets
P/L Account | 4,05,600
5,94,400
10,00,000 |
The company feels that the worst is over and hence it adopts the scheme of reconstructions reducing all its equity shares into an equal number of fully paid equity shares of Rs. 40 each.
Pass Journal entries and give the Balance Sheet immediately after Reconstruction | | (0) |
| 6. | The Balance Sheet of AB Ltd. as at 31st March, 2006 was as follows: | Sources of Funds | Rs. | 8000 'A' Class Equity Shares of Rs. 100 each fully paid
2000 'B' Class Equity Shares of Rs. 100 each fully paid
Security premium
General Reserve
10% Debenture of Rs. 100 each
Secured loans | 8,00,000
2,00,000
1,00,000
4,00,000
14,00,000
6,00,000
35,00,000 | | Employment of funds | Fixed Assets Net of Depreciation
Working Capital | 28,00,000
7,00,000
35,00,000 |
You are given the following information: | (a) | 'B' Class Equity Shares are with differential rights as to dividends, voting or otherwise. | | (b) | On 1st April, 2006 company in terms of its articles and through its special resolution decided to buy–back the 'B' Class equity shares at a premium of Rs. 50 per share. Necessary approvals were obtained in due course and the buy–back arrangement was completed by 30th June, 2006. | | (c) | On 30th September, 2006 company declared the issue of fully paid bonus shares ('A' Class) to 'A' Class equity shareholders in the ratio of one share for every four shares held and the issue was successfully completed by 31st December, 2006. |
Journalise the transactions in the books of AB Ltd. | 12+4 | (0) |
| 7. | Due to paucity of profits a company proposes to declare devidends out of its general reserves. From the under mentioned data you are asked to ascertain the amount which can be drawn from general reserves as per Declaration of Dividend and Reserve Rules 1975: | Rs. | 10,000 10% preference shares of Rs. 100 each fully paid
30,000 equity shares of Rs. 10 each fully paid
General reserve
Securities Premium
Credit balance of profit and loss account
Net profit for the year (after tax)
Average dividend during last five years | 10,00,000
30,00,000
8,00,000
2,00,000
20,000
1,80,000
15% |
| 16 | (0) |
| 8. | Write short notes (any four) of the following: | 4x4 | |
| | (a) | Phase of Accounting process | | (0) |
| | (b) | Accrual basis of Accounting | | (0) |
| | (c) | Treasury System | | (0) |
| | (d) | Advantages of setting Accounting standards | | (0) |
| | (e) | Votable and non–votable items | | (0) |
| | (f) | Income and expenditure classifications of Central Government. | | (0) |
