| 1. | (a) | Following are the applications of some accounting principles or assumptions. State the name of the relevant accounting assumption or principle herein: | 2x10=20 | |
| | | (i) | Appending notes to the financial statements. | | (0) |
| | | (ii) | Accounting of a small calculator as an expense and not as an asset. | | (0) |
| | (b) | How tariffs and dividend control Reserve can be utilised by an Electricity undertaking? | | (0) |
| | (c) | (i) | Name the two reports that must be attached to final accounts. | | (0) |
| | | (ii) | For the preparation of Balance Sheet which two alternative forms are prescribed under Part I of Schedule VI of the Companies Act.1956. | | (0) |
| | (d) | What is meant by qualifying asset in the context of accounting treatment of borrowing cost as per AS–16? | | (0) |
| | (e) | What do you mean by "Fellow subsidiary" in the context of related party disclosures as per AS – 18? | | (0) |
| | (f) | Fill up the blanks: | | |
| | | (i) | Conversion of debt into equity shares is a ____________ transaction. | | (0) |
| | | (ii) | Hull insurance may be for a period or for a ____________. | | (0) |
| | (g) | State with reasons whether the following propositions are true or false: | | |
| | | (i) | Short–workings arise when minimum rent is less than actual royalty. | | (0) |
| | | (ii) | Revenue recognition of Royalties receivable from foreign countries is made on receipt basis. | | (0) |
| | (h) | Fill up the blanks:
Government under AS–12 refers to ___________ and similar bodies ___________. | | (0) |
| | (i) | Mention three names of Intangible Assets other than goodwill, patents and copy right. | | (0) |
| | (j) | What is Statutory Reserve u/s. 17 of Banking Companies Act? | | (0) |
| 2. | R K and C have carried on business as drapers for 20 years and on 31st March, 2008 their Balance Sheet was as under: | Liabilities | Rs. | Assets | Rs. | Bank overdraft
Creditors for Suppliers
Creditors for expenses
Capital accounts (fixed)
R – 30,000
K – 20,000
C – 20,000
Current accounts
R – 16,000
C – 24,000 | 20,000
30,000
18,000
70,000
40,000 | Plant and machinery
Premises
Sundry Debtors
Stock in Trade
Cash and Bank Balance | 32,000
50,000
48,000
40,000
8,000 | | 1,78,000 | | 1,78,000 |
The Profit and Losses were shared in the ratio of fixed capital on 31st March, 2008. The partners agreed that due to old age R would retire from the firm when its goodwill will be valued and proportionate share credited to R. It was also decided that premises appearing in the books at cost would be valued at their market value of Rs.80,000 and allotted to R in satisfaction of his dues. Any excess or deficit would be settled in cash. It was also agreed that Stock in Trade and debtors would be taken at 90% of the book value and an unrecorded liability of bonus of Rs.10,000 to staff brought into books. Goodwill of the firm was to be taken at Rs.70,000. After R’s retirement, the business was carried on by K and C sharing profits and losses equally and till 30th June, 2008 the firm had made a net profit of Rs.30,000 after crediting each partner’s Capital Account with Rs.500 p.m. as salary. No drawing were made by the partners in the quarter. K and C now fined that they cannot continue the business and decide to sell it to a private limited company as and from 1st July, 2008. The company is to take over the entire business for a consideration of Rs.90,000 which the vendors agree to take 40% in 14% secured debentures and the balance in cash. The enable the company to pay the vendors and also leave it with a working capital of Rs.20,000, the Company makes issue of equity shares of Rs.10/– each at par. Show the Balance Sheet of the Company after the take over of the business of K and C.
All working should form part of your answer. | 16 | (0) |
| 3. | On 20th June, 2009, the godown and business premises of a merchant were affected by fire and from accounting records salvaged, the following information is made available to you: | Rs. | Stock of Goods at cost on 1st April, 2008
Stock of Goods at 10% below than cost as on 31st March, 2009
Purchases of Goods for the year from 1st April, 2008 to 31.03.2009
Sales for the same period
Purchases less returns for the period from 1st April, 2009 to 20th June, 2009
Sales less Returns for the same period | 1,00,000
1,08,000
4,20,000
6,00,000
1,40,000
3,10,000 |
Sales up to 20th June, 2009 included Rs.40,000 for which goods had not been dispatched. Purchases up to 20th May, 2008 did not include Rs.20,000 for which purchase invoices had not been received from suppliers, though goods have been received at the godown.
Goods salvaged from the accident were worth Rs.12,000 and these were handed over to the insured.
Ascertain the value of the claim for loss of goods/stocks which could be preferred on the insurer. | 16 | (0) |
| 4. | The capital structure of Maidas Ltd. as on 31st March, 2008 was as follows: | (Rs. in lakhs) | Equity Share Capital of Rs.100 each per share
10% Preference Capital in shares of Rs.100 each
12.5% Secured Debentures of Rs.100 each
Reserves | 10
6
8
6 |
Annual average profit is Rs.8 lakhs before interest and tax at the rate of 50%.
Normal return on equity shares of similarly placed companies is 18% provided: | (i) | After tax profits cover fixed interest and fixed dividends at least 3 times. | | (ii) | Equity capital and reserves are 120% of debentures and preference share capital. | | (iii) | Yield on shares is calculated at 60% of distributed profits and 10% on undistributed profits. |
The Company used to pay dividend at 20% to equity shareholders.
Ascertain the value of equity shares of Maidas Ltd. by clearly showing: | (a) | Profit before interest and tax; |
| (b) | Fixed interest and dividend coverage; |
| (c) | Percentage of equity shareholders funds to fixed interest and dividend bearing capital; |
| (d) | Yield on equity shares; |
| (e) | Expected yield of equity shares, assuming a margin of 0.5% each for (b) and (c) above if necessary: |
| (f) | Value per equity share. |
| 4+2+2
+3+4+1=
16 | (0) |
|
| 5. | The following informations are culled out from the book of Scarce Electricity Ltd: | (Rs. in lakhs) | Sale of energy
Meter rents
Cost of generation
Selling and distribution expenses
Rent, rates and taxes
Management expenses (including Audit fee of 0.2)
Depreciation
Interest on loan from State Electricity Board
Contingency reserve income
Interest on security deposit
Interest from Bank
Contribution to Provident Funds
Original cost of fixed assets
Contribution from consumers for purchase of fixed assets
Cost of intangibles
Intangibles write off
Stores–opening
Stores–closing
Cash and Bank
Balances–opening
Do–closing
Contingency reserve investments | 15.0
1.0
9.0
2.0
0.5
0.5
0.5
0.2
0.3
0.1
0.1
0.2
40.0
2.0
0.5
0.1
0.2
0.3
0.3
0.2
5.0 |
Further details are as under: | (Rs. in lakhs) | Depreciation accumulation at the beginning of the year
Intangibles written off up to the beginning of the year
Security deposit of customers held in cash
Tariffs and dividend control reserve–opening balance
Development reserve–opening balance
Amount carried forward for distribution to consumers
Loan from Electricity Board
Transfer to contingency reserve
R.B.I. Int. rate 6% | 5.0
0.5
0.5
1.0
0.8
0.7
3.0
0.4 |
From the given details calculate: | (iv) | Amount available for dividend |
| (v) | Contribution to tariffs and dividend control reserve. |
| 5+4
+4+2+1
=16 | (0) |
| 6. | At the time of internal audit of D & Co. Ltd. it was noticed that net balance of Rs.1,80,000 extracted from the Sales Ledger on 31st March, 2009 did not agree with the net balance in Sales Ledger Adjustment A/c. On checking the following errors were discovered and after the adjustment of which the books balanced and the corrected net total of Sales Ledger balances agreed with the amended balance in the Sales Ledger Adjustment A/c.— . | (i) | A debit balance of Rs.8,660 and credit balance amounting to Rs.1,440 had been omitted from the list of balances. | | (ii) | The Sales Return Book had been undercast by Rs.10,100. | | (iii) | The list of balances had been overcast by Rs.1,100. | | (iv) | A balance owing by P for Rs.1,880 had been written off as bad on 31.3.09 and debited to Bad Debts, but no entry had been made in the Control Ledger. | | (v) | A debit balance of Rs.1,440 in the Sales Ledger had been listed as credit balance. | | (vi) | No entries had been made in the Adjustment A/cs in respect of transfer of Rs.4,100 standing to credit of D’s A/c in the Purchase Ledger to his account in the Sales Ledger. | | (vii) | V’s account had been credited with Rs.3,440 for goods returned by him but no other entry had been made in the books. | | (viii) | No entry was made in the Control Ledger regarding (a)
(b)
(c) | Interest charge to customers
Discount allowed
Discount received | Rs. 440
Rs. 330
Rs. 220 |
| | (ix) | A discount of Rs.550 allowed to V had been correctly recorded and posted in the books. This was subsequently disallowed and a corresponding amount entered in the Discount Received Column in the Cash Book and posted to V’s A/c in the Purchase Ledger and included in the total of discount received.
You are required to prepare — |
| (i) | A statement reconciling the original net balance extracted form the Sales Ledger with the adjusted final balance in the Sales Ledger Control A/c; |
| (ii) | The Sales Ledger Adjustment A/c, Showing the necessary adjustments and the balance in the account before and after this adjustments. |
| 6+10=16 | (0) |
| 7. | Sri Sandipan a trader keeps the following records for his transactions: | (i) | A Purchase Book in which he enters all his purchases invoices and cancels them as and when payment is made. | | (ii) | A Sales Book in which he enters all his sales bills and marks them off as and when each is received. | | (iii) | All the collections were deposited into the Bank and payments were made through cheques only except for petty payments he met from his personal drawings. | | (iv) | At the end of each year, he prepares a Profit and Loss A/c on cash basis. | | (v) | As Sri Sandipan like to admit Sri Rana Pratap as a partner of his business, he request you to prepare his Trading and Profit & loss A/c for the year ended 31st December, 2008 and the Balance Sheet on that date. |
You are furnished the following information for the said purpose:
The Bank Pass Book shows the following payments: | (a) | Paid for purchases including Rs.2,660 in respect of the previous
period for which a sum of Rs.377 is still outstanding |
Rs. |
25,880 | (b)
(c)
(d)
(e)
(f) | Salaries and wages
Rent, Rates, Stationery & Insurance
Additions to Furniture
Advertising including Rs.250 for the quarter ending 31st March, 2009
Repairs to premises | Rs.
Rs.
Rs.
Rs.
Rs. | 6,822
5,166
1,220
1,440
644 | | (g) | Personal drawings of Sri. Sandipan, out of which he has paid Rs.577
for coolie and cartage, postage, entertainment and miscellaneous
expenses in connection with business |
Rs. |
4,400 |
Sri. Sandipan had stock of Rs.10,660 on hand at the beginning of the year. This included some old defective items. Which he disposed off for Rs.755 but he had forgotten to deposit the sale proceeds in his Bank account. The stock at the end amounted to Rs.8,220. Cash received for sales amounted to Rs.47,880 of which Rs.7,110 were collections in respect of the previous year. Outstanding debtors at the end of the year were RS.9,655. His Purchase Book for the year discloses that invoices of the total value of Rs.2,177 have not been cancelled. He had a Bank balance of Rs.1,255 as on 31st December, 2008. The list of Furniture & Fittings at the end of the period was Rs.6,255. Expenses outstanding amount Rs.644. No other information is available with the trader, Sri Sandipan. | 16 | (0) |
| 8. | Write short notes (any four) of the following: | 4x4=16 | |
| | (a) | Non–banking assets. | | (0) |
| | (b) | Intrinsic value of shares. | | (0) |
| | (c) | Co–insurance in case of Insurance business. | | (0) |
| | (d) | Public Accounts Committee. | | (0) |
| | (e) | Purpose of Government and Commercial Accounts. | | (0) |
| | (f) | Amalgamation in the nature of merger. | | (0) |
