CWA ICWA Exam Papers Inter Group I Financial Accounting June 2010

CWA ICWA Exam Papers Inter Group I

 Financial Accounting June 2010

 

This Paper has 44 answerable questions with 13 answered.

IP—5(FAC)
Syllabus 2008
Time Allowed : 3 Hours Full Marks : 100
The figures in the margin on the right side indicate full marks.
Answer Question Nos. 1 which is compulsory and any five questions from the rest.
Marks
1. (a) Answer the following: 1×5=5
(i) A profit on sale of furniture of a club will be taken to
(A) Cash account
(B) Receipt & Payment Account
(C) Income & Expenditure Account
(D) Profit & Loss Account
(1)
(ii) When interest on own debentures becomes due it will be credited to
(A) Profit & Loss Account
(B) Own Debentures Account
(C) Debentures Interest Account
(D) Interest on own Debentures Account
(1)
(iii) Profit prior to incorporation is transferred to
(A) General Reserve
(B) Capital Reserve
(C) Profit & Loss Account
(D) Development Reserve
(1)
(iv) Under installment system of purchase, interest suspense account is debited with
(A) The difference between installment price and cash price
(B) Amount of interest included in each installment
(C) Installment price and discounted cash price
(D) Difference between Cash Price and Depreciated Value
(1)
(v) Free Reserves include
(A) Securities Premium
(B) Revaluation Reserve
(C) Capital Reserve
(D) All of the above
(1)
(b) Match the following:
(i) AS 20 (A) Construction Contract
(ii) AS 13 (B) Net Profit or Loss for the period.
prior period items & change in
accounting Policies
(iii) AS 7 (C) Earning Per Share (EPS)
(iv) AS 5 (D) Accounting for Investment
1×4=4 (0)
(c) Indicate the Correct Answer:
Saturn & Neptune are partners sharing profits in the ratio 5 : 3, they admit Jupiter giving him 3/10th share of profit. If Jupiter acquires 1/5th share from Saturn 1/10th share from Neptune, new profit sharing ratio will be

(i) 5 : 6 : 3
(ii) 2 : 4 : 6
(iii) 18 : 24 : 38
(iv) 17 : 11 : 12
1 (1)
(d) Fill in the blanks 1×7=7
(i) A company cannot redeem preference shares unless they are _____________ paid up. (1)
(ii) Unclaimed dividend is shown under ____________ head in the Balance Sheet of a banking company. (1)
(iii) Tax deducted at source, from interest on investment is shown under __________ in Schedule VI. (1)
(iv) Selling Commission is apportioned among departments in the ratio of _________ of each department. (1)
(v) By products should be valued as lower of cost and net ___________ value. (1)
(vi) When minimum rent is more than Royalty the amount payable to landlord is the _____________ (1)
(vii) Where hire vendor reckons the profit on the basis of installments received, the method is known as ______________. (1)
(e) What are the various activities classified as per AS 3 (Revised) related to Cash Flow Statement? 3 (0)
(f) What are the rates of interest in respect of the following 1
(i) Calls in advance (0)
(ii) Calls in arrear (0)
(g) State any four purposes for which Securities Premium Account balance may be applied by a company. 4 (0)
2. (a) CESC Ltd. laid down a main at a cost of Rs. 25,00,000. Some years later, the company laid down an auxiliary main for one-fifth of the length of the old main at a cost of Rs. 7, 50,00. At the same time, it also replaced the rest of the length of the old main at a cost of Rs. 30,00,000 using in addition the materials of the old main amounting to Rs. 50,000. The cost of materials and labour having gone up by 15%. Sale of old materials realized Rs. 40,000. Materials of the old main valued at Rs. 25,000 were used in the construction of the auxiliary main.
Give journal entries for recording the above transactions and also draw up the Replacement A/c.

11 (0)
(b) As per AS – 14 what are the conditions to be fulfilled in case of Amalgamation in the name of merger? 4 (0)
3. (a) Varun sells goods on hire purchase basis also. He fixes hire purchase price by adding 50% to the cost of goods sold. The following are the figures relating to his hire purchase business for the year 2009-2010.
Rs.
Balance of Hire Purchase Stock Account as on 1st April, 2009 84,000
Balance of Hire Purchase Debtors Account as on 1st April, 2009 2,100
Selling Price of goods sold on hire purchase basis during the year 6,34,200
Cash received from customers during the year 6,46,800
Total amount of installments that fell due during the year 6,48,900
One customer to whom goods had been sold for Rs. 8,400 paid only 5 installments of Rs. 700 each. On his failure to pay the monthly installment of Rs. 700 due on 4th March, 2010 the goods were repossessed on 27th March, 2010 after due legal notice.

Prepare ledger accounts on Stock and Debtors Systems for the year ended 31st March, 2000

10 (0)
(b) From the following information prepare
(i) Fixed Assets Account and
(ii) Accumulated Depreciation Account:
Opening Balance
(Rs.) Closing Balance
(Rs.)
Fixed Assets 4,00,000 5,50,000
Accumulated Depreciation 80,000 1,35,000
Additional information
A part of a machine costing Rs. 60,000 has been sold for Rs. 30,000, on which accumulated depreciation was Rs. 15,000.

5 (0)
4. X & Y share profit & loss in the ratio of 5:3. They admit Z with 1/5th share of profits. he pays Rs. 80,000 as capital but does not contribute anything towards good will which is valued at Rs. 60,000. The capitals of the Partners are fixed. All adjustments are to be madethrough partner’s current accounts. Their balance sheet as on march 31, 2010 is as follows:
Balance Sheet
as on 31–03–10
Labilities Amount
Rs. Assets Amount
Rs.
Capital:
X–80,000
Y–60,000
Current account:
X–5,000
Y–6,000
General Reserve
Sundry Creditors

1,40,000

11,000
60,000
50,000 Plant and Machinery
Investments
Sundry Debtors
Stock and Trade
Bank 50,000
31,000
60,000
90,000
30,000
2,61,000 2,61,000
Additional Information

(i) Plant and Machinery is valued at Rs. 46,000 and stock at Rs. 96,000
(ii) One Creditor for Rs. 6,000 is dead and nothing is likely to be paid on this account.
(iii) The Capital accounts are to be proportionately adjusted on the basis of Z’s capital and his share of profit, through Current accounts
(iv) Partners decide to maintain the General Reserve in the books of the firm.
Prepare revaluation account, bank account, capital and current accounts and balance sheet of the new firm. 15 (0)
5. (a) Fill in the blanks : 5
(i) As per AS–6 when there is a change in the method of providing depreciation, the differential amount of depreciation would have _______________ effect. (0)
(ii) As per AS–6 when there is a change in the estimated useful life of the asset the, differential would be calculated ___________ (0)
(iii) Profit on revaluation of assets on the admission of a new partners is to be credited to the old partner in their __________ profit sharing ratio. (0)
(iv) Amalgamation Adjustment Account is opened in the books of the transferee company to incorporate ___________. (0)
(v) When a new partner enters in the partnership firm and the partners decide to maintain the General Reserve in the books of the firm at its original value, the amount of general reserve is ____________ to the old partners and ____________ to all partners. (0)
(b) State whether the following statements are “True” or “False” 5
(i) A change in the accounting policy should be made when the statute so requires. (0)
(ii) In Consignment sales, revenue should be recognised only the goods are sold to third party. (0)
(iii) As per AS – 10 when a fixed asset is revalued, other assets should not be revalued. (0)
(iv) Outstanding rent, if shown in the Trial Balance, it would appear in the debit side of the trial balance. (0)
(v) Bonus shares can be issued out of Capital Redemption Reserve even before the redemption of Preference Shares. (0)
(c) Correct the following Statements: 5
(i) Under section 37 of the Partnership Act, the executers of the deceased partner would be entitled at their choice to interest at 6% p.a. on the amount due from the date of death to the date of payment or to his share of profit before death. (0)
(ii) In the case of Banking Companies if the one account of the customer(the customer having more than one account with the same bank) with the bank becomes non–performing the other accounts of the same customer do not become non–performing. (0)
(iii) Depreciation Accounting is the process of valuation of the asset and not process of allocation. (0)
(iv) As per AS–19 in Finance Lease depreciation on the leased asset is allowed to the lessor as he is the owner of the asset. (0)
(v) In the Profit and Loss Account of a Banking Company Provisions and Contingencies are shown in Schedule 17. (0)
6. (a) Adarsh Ltd., was formed with an authorized capital of Rs. 30,00,000 divided into equity shares of Rs. 10/– each. The company invited applications for 2,00,000 equity shares of Rs. 10/– each at a premium of 20%. The money was payable follows:
On application Rs. 5/–, on allotment Rs. 4/– (including premium of Rs. 2/–), Rs. 2/– on first call and rest on the find call.

Applications were received for 2,40,000 shares and allotment was made as under :

(a) To applicants for 1,00,000 shares in full;
(b) To applicants for 80,000 shares–60,000 shares were allotted;
(c) To the applicants for 60,000 shares, the rest of the shares were allotted.
Applicants for 1,000 shares in the (a) category and applicants for 1,200 shares falling in category (b) failed to pay the allotment monies. These shares were forfeited on their failure to pay the first call. Holders of 1,200 shares in category(c) failed to pay the first and final call and these shares were also forfeited after the final call. Of the shares forfeited 1,300 shares were re–issued @ of RS. 8/– per share as fully paid up. The re–issued shared included 1,000 shares of category (a).
Journalize the above transactions and also show the Cash Book.

10 (0)
(b) Give the proforma entries of Cash Flow Statement as per AS – 3 5 (0)
7. A contractor whose books are closed on 31st December undertook a contract for construction of building on 1.4.2009. His books of accounts reveal the following information on 31.12.2009:
Materials sent to site Rs. 2, 92, 000, labour engaged Rs. 7,08,000, Foreman’s salary Rs. 87,500. During the year plant costing Rs. 3,50,000 was installed at site for 150 days, scarp value being Rs. 20,000.(estimated life 5 years)

Supervisor’s salary Rs. 5,000 per month (he devotes approximately 2/3rd of his time to this work). Administration expenses amounted to Rs. 1,60,000. Materials at site on 31.12.2009 was valued at Rs. 30,200. Unsuitable materials costing Rs. 7,200 was sold for Rs. 6,000. A part of the plant costing Rs. 8,400 found unsuitable to the contract was sold at a profit of Rs. 1,600 without being put to use.

The contract price was Rs. 25,00,000. On 31.12.2009 2/3rd of the contract was complete. Architect’s certificate covered 50% of the contract value. Amount received on account by the contractor is Rs. 8,75,000. Depreciation is charged on time basis.

Prepare the Contract Account and state how much profit should be credited to the Profit and Loss Account.

15 (0)
8. Write short notes on: 5×3=15
(a) Capital Adequacy Ratio; (0)
(b) Capital Redemption Reserve; (0)
(c) Cum-interest and ex–interest price. (0)

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