CWA ICWA Question Papers Foundation Accounting June 2009

CWA ICWA Question Papers Foundation

Accounting June 2009

 

This Paper has 59 answerable questions with 1 answered.

P–2(ACT)
Syllabus 2008
Time Allowed : 3 Hours Full Marks : 100
The figures in the margin on the right side indicate full marks.
SECTION I
Answer Question No. 1 which is compulsory and any two questions from Section I.
Marks
1. (a) In each of the following one of them is correct. Indicate the correct answer. 1×9=9
(i) Till the discounted bill is paid by the acceptor, it remains
A. A contingent liability
B. A liability
C. An expense
D. An asset.
(0)
(ii) Del Credere Commission is allowed to cover the risk of
A. Theft
B. Bad Debts
C. Fire
D. Damage of goods in transit.
(0)
(iii) The amount of yearly depreciation under diminishing balance method
A. Remains constant over the years
B. Decreases year after year
C. Increases year after year
D. Fluctuates.
(1)
(iv) The credit purchases of fixed assets are recorded in
A. Purchase Book
B. Cash Book
C. Journal Proper
D. Sales Return Book.
(0)
(v) Expenses paid but not accrued means
A. Cash expenses
B. Prepaid expenses
C. Outstanding expenses
D. Capital expenses.
(0)
(vi) When goods are purchased for the joint venture, the account to be debited is
A. Purchases account
B. Joint Venture account
C. Venture’s Capital account
D. Consignee’s account.
(0)
(vii) The total of discount column on the debit side of the Cash Book, is posted to the
A. Credit of the discount allowed account
B. Debit of the discount received account
C. Credit of the discount received account
D. Debit of the discount allowed account.
(0)
(viii) Goods purchased from Mr. Ajay for Rs. 10,000 passed through the Sales Book. The rectification of error will result in
A. Increase in gross profit
B. Decrease in gross profit
C. No effect on gross profit
D. Either A or B.
(0)
(ix) Which of the following is not a negotiable instrument?
A. Bearer Cheque
B. Promissory Note
C. Bill of Exchange
D. Crossed Cheque.
(0)
(b) Fill in the blanks: 1×5=5
(i) The _________ balance in the bank column of the Cash Book indicates bank overdraft. (0)
(ii) Expenditure is called _________ expenditure, if the benefits from it extend to more than one year. (0)
(iii) The _________ discount is never entered in the books of accounts. (0)
(iv) The burden of noting charges is ultimately borne by the _________ of the bill. (0)
(v) Prepaid expenses appear on the _________ side of the Balance Sheet. (0)
(c) State with reasons whether the following statements are true or false: 2×8=16
(i) Goodwill is a current asset. (0)
(ii) The error of principle is caused due to incorrect allocation of expenses. (0)
(iii) Accommodation bill is used without a trade transaction and is for mutual benefit. (0)
(iv) Cash received from Kishor will be debited to his account. (0)
(v) Balances on personal accounts are carried forward to the next year. (0)
(vi) Single Entry System does not recognize two effects of a transaction. (0)
(vii) Joint Venture is a permanent partnership. (0)
(viii) Wages paid for installation should be debited to wages account. (0)
2. (a) From the following particulars, prepare Bank Reconciliation Statement and arrive at the balance as per Cash Book as on 31st March, 2009.
(i) Credit balance as per Pass Book: Rs. 9,700.
(ii) Cheques issued on 27th March, 2009, but presented for payment on 3rd April, 2009: Rs. 19,000.
(iii) Cheques deposited in the Bank on 29th March, 2009, but credited on 2nd April, 2009: Rs. 10,000.
(iv) Bank debited Bank Charges, but not yet recorded in Cash Book Rs. 250.
(v) Dividend on shares collected and credited by Bank, but not yet recorded in Cash Book: Rs. 2,000.
7+3=10 (0)
(b) Write a note on ‘Objectives of Providing Depreciation’. (0)
3. (a) Pass Journal entries to rectify the following errors:
(i) Machinery purchased for Rs. 5,000 was passed through Purchase Day Book.
(ii) Rs. 2,000 spent for repairs was debited to Buildings A/c and depreciation @ 10% was also charged.
(iii) Goods purchased from Rohan for Rs. 50,000 wrongly entered in Sales Book.
(iv) An item of Rs. 6,000 in respect of Purchase Return, wrongly debited to Purchase Account.
(v) Cost of cement, sand, stone chips, steel rods and wages amounting to Rs. 10,000 for extension of building was debited to Repairs & Maintenance Account.
5+3+2=10 (0)
(b) On 1.4.09, Mr. A draws a bill for Rs. 6,000 for 7 months on Mr. B who returned the bill to Mr. A after acceptance. On 10.4.09, Mr. A endorsed the bill in the favour of Mr. C who endorsed the bill on 15.4.09 in favour of Mr. D on 1.5.09. Mr. D discounted the bill at 10%. On maturity, the bill was dishonoured and banker paid Rs. 50 towards noting charges.
Pass necessary Journal entries in the books of Mr. D. (0)
(c) Indicate the due date for payment of bill drawn on 14.3.09 for 30 days after sight on Mr. P who accepted on 17.3.09. (0)
4. (a) Ram and Shyam agreed for purchasing and selling furniture in a joint venture; their profit sharing ratio being 3 : 2 respectively. Ram purchased 10 sofas @ Rs. 10,000 per sofa. He sent these sofas to Shyam for sale after spending Rs. 1,000 per safa on insurance and transaction. He drew a bill of Rs. 50,000 on Shyam and this bill was discounted at a discount of Rs. 5,000 after acceptance. Shyam incurred further expenses of Rs. 2,000 on these sofas before sale. He sold all the sofas @ Rs. 15,000 per sofa, giving 5% commission to the dealer.
Prepare Joint Venture with Shyam Account in the books of Ram. Also show Memorandum Joint Venture Account. 8+2=10 (0)
(b) Write a note on ‘Single Entry System’. (0)
SECTION II
Answer Question No. 5 which is compulsory and any two questions from Section II
Marks
5. (a) In each of the following one of them is correct. Indicate the correct answer. 1×14=14
(i) A company wants to sell 1,00,000 units at Rs. 12 each. Fixed costs are Rs. 2,80,000. In order to earn a profit of Rs. 2,00,000, the variable cost should be
A. Rs. 4,80,000
B. Rs. 7,20,000
C. Rs. 9,00,000
D. Rs. 9,20,000
(0)
(ii) Bad Debts are included as
A. Direct expenses
B. Cost of production
C. Selling overhead
D. Distribution overhead
(0)
(iii) In behavioural analysis, costs are divided into
A. Production and Non–production costs
B. Controllable and Non–controllable costs
C. Direct and Indirect costs
D. Fixed and Variable costs
(0)
(iv) Sharing of a percentage of value added is done under
A. Emerson’s Differential Pay Plan
B. Rucker Plan
C. Taylor’s Plan
D. Rowan Plan
(0)
(v) Difference between time keeping and time booking is called
A. Idle time
B. Absent hours
C. Time worked on jobs
D. Time for which a worker is present at the place of work
(0)
(vi) A costing method in which fixed overheads are included in the cost of inventory is
A. Variable costing
B. Direct costing
C. Absorption costing
D. Process costing
(0)
(vii) In marginal costing, the following are considered in contribution computation.
A. Selling price and variable cost
B. PV ratio and fixed cost
C. Profit and fixed cost
D. BEP and margin of safety.
(0)
(viii) Which cost system description applies to the manufacture of 20 engraved doors for the new clubhouse at a golf course?
A. Contract
B. Process
C. Batch
D. Service
(0)
(ix) Lead time is the
A. Maximum time to get the materials
B. Time between ordering and replenishment
C. Time taken for preparation of order
D. None of the above.
(0)
(x) The scope of inventory control is
A. Related to maintaining the correct level of inventory at all times
B. Related to fixation of stock levels for various items
C. To check the stock figures readily
D. To locate the slow and non–moving items
(0)
(xi) When sales is Rs. 10,000 and PV ratio is 40%, variable cost is
A. Rs. 4,000
B. Rs. 5,000
C. Rs. 6,000
D. Rs. 3,000
(0)
(xii) Objective of Cost Accounting is to
A. Link the cost to the cost centre
B. Link the cost to the organisation to ascertain total profit
C. Link the cost to production department
D. Link the cost to individual stakeholder
(0)
(xiii) Overstacking of materials may result into
A. Locking of working capital and storage space
B. Unfavourable price and credit terms
C. Payment for idle time to workers
D. Production hold ups
(0)
(xiv) A company produces and sells a single product and has followed details:
Selling price per unit : Rs. 40
Variable cost per unit : Rs. 20
Fixed expenses : Rs. 2,00,000
Hence, BEP sales of the company is
A. Rs. 4,00,000
B. Rs. 30,000
C. Rs. 50,000
D. Rs. 2,00,000
(0)
(b) State with reasons whether the following statements are true or false: 2×6=12
(i) Fixed overheads jump up, if production exceeds capacity. (0)
(ii) Primary packaging is an item of price cost. (0)
(iii) The Halsey Plan gurarantees minimum hourly rate. (0)
(iv) At break even point, there is no profit and no loss. (0)
(v) With change in production, variable cost per unit will remain fixed. (0)
(vi) Abnormal costs are not controllable. (0)
(c) Specify the methods of determination of cost and the units suitable for the following industries: 1×4=4
(i) Crude Oil/Refinery; (0)
(ii) Hospital; (0)
(iii) Printing; (0)
(iv) House Building. (0)
6. An advertising agency has received an enquiry for submission of quotation. Bill of materials prepaired by the production department for the job states the following requirement of materials:
Paper 10 reams @ Rs. 1,800 per ream
Ink and other printing material Rs. 5,000
Binding material and other consumables Rs. 3,000
Some photography is required for the job. The agency doesnot have a photographer as an employee. It decides to hire one by paying Rs. 10,000 to him. Estimated job card prepared by production department specifies that service of following employees will be required for this job:

(1) Artist (Rs. 12,000 per month) 80 hours; (2) Copywriter (Rs. 10,000 per month) 75 hours; (3) Clint servicing (Rs. 9,000 for month) 30 hours.

The primary packing material will be required to the time of Rs. 4,000. Production overheads 40% of direct cost while the selling and distribution overheads are likely to be 25% on production cost. The agency expects a profit of 20% on the quoted price. The agency works 25 days in a month and 6 hours a day.
You are required to determine the price to be quoted for the job.

10 (0)
7. (a) A factory has a price rate system. Production fixed for a day is 50 units. Remuneration payable to workers is as follows
(i) Wages Rs. 5 per piece, subject to a minimum of Rs. 200 per day
(ii) Dearness Allowance — Rs. 60 per day
(iii) Incentive Bonus — up to 80% efficiency – Nil
Above 80% efficiency – Rs. 40
for every 1% increase in efficiency above 80%.
Calculate the earnings of Mr. Amal and Mr. Kamal whose performance for the month of April, 2009 is as under:
Amal worked for 20 days — output 60 units
Kamal worked for 24 days — output 1,080 units.
7+3=10 (0)
(b) Mention 3 ways in which profit–volume ratio can be improved. (0)
8. (a) If the margin of safety is Rs. 2,40,000 which is 40% of sales and PV ratio is 30%, calculate the break even sales and profit at the sales value of Rs. 9,00,000. 5+3+2=10 (0)
(b) From the following data, calculate stock holding period for sugar and milk. Which is fast moving item?
Sugar
Rs. Milk
Rs.
Opening Stock
Purchases
Closing Stock 20,000
1,60,000
10,000 10,000
2,00,000
10,000
Assume 1 year = 365 days. (0)
(c) Explain how will you treat the following items in Cost Accounts?
(i) Tools set up cost;
(ii) Carriage and freight. (0)

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