CWA ICWA Question Papers Foundation Accounting June 2010

CWA ICWA Question Papers Foundation

Accounting June 2010

 

This Paper has 64 answerable questions with 43 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 the rest of Section I.
Marks
1. (a) In each of the following one of them is correct. Indicate the correct answer. 1×9=9
(i) ‘Brand Value’ for a business is:
A. Capital
B. Asset
C. Profit
D. Liability
(2)
(ii) Sale of goods has:
A. Only Revenue effect
B. Only Expense effect
C. Both Revenue effect and Expense effect
D. None of the above.
(2)
(iii) Error of omission means:
A. That errors are compensating each other
B. That any entry is totally missed
C. That there is a wrong entry in the books of accounts
D. That a transaction is recorded twice.
(1)
(iv) Cash sales at exhibition hall are:
A. Recorded in Journal Proper
B. Recorded in Cash Book
C. Recorded in Sales Book
D. Not recorded.
(1)
(v) In case of an ‘Unpresented Cheque’
A. Bank Balance in Cash Book is more than Bank Passbook
B. Bank Balance in Cash Book is less than Bank Passbook
C. Either (A) or (B)
D. No effect in both the books.
(1)
(vi) A Bill of Exchange is:
A. Drawn on a specific banker
B. Drawn by seller and accepted by banker
C. An unconditional undertaking signed by the maker
D. An unconditional order signed by the maker
(1)
(vii) Joint Venture Account is a
A. Nominal Account
B. Real Account
C. Artificial Personal Account
D. Representative Personal Account
(1)
(viii) The abnormal Loss on Consignment is credited to:
A. Profit and Loss Account
B. Consignee’s Account
C. Consignment Account
D. Insurance Company Account
(1)
(ix) A Capital Reserve is built out of
A. Recurring profits
B. Non–recurring profits
C. Revenue
D. Reserve Fund.
(1)
(b) Fill in the blanks: 1×5=5
(i) Debtor is a person who ________ money to the business. (2)
(ii) Every debit has a ________ credit. (1)
(iii) Cash account never has ________ balance. (1)
(iv) Goodwill can be better explained as ________ asset. (1)
(v) If the two sides of the trial balance tally, it is indication of the fact that the books of accounts are ________ accurate. (1)
(c) State with reasons whether the following statements are ‘true’ or ‘false’: 2×8=16
(i) Loan taken for 5 years is a current liability. (1)
(ii) Error of Principle affects the Trial Balance. (1)
(iii) P & L A/c is for a period of time. (0)
(iv) Consignee is the owner of consignment stock. (0)
(v) Joint Venture is a Temporary partnership. (0)
(vi) Income received is an asset. (0)
(vii) Goodwill is fictitious asset. (0)
(viii) If the consignee gets del–credere commission, loss of bad debt is borne by him. (0)
2. (a) Pass necessary journal entries to rectify the following errors: 1×4=4
(i) Purchase of goods for Rs. 300 from Nathan was wrongly entered in sales book. (1)
(ii) Rs. 375 paid as salary to cashier Dhawan was debited to his personal account. (1)
(iii) A bill for Rs. 2,750 for extension of building was debited to building repairs account. (1)
(iv) Goods of Rs. 500 returned by Raja were taken into stock, but returns were not posted. (1)
(b) X drew a bill on Y for Rs. 1,000 payable two months after date. Immediately after its acceptance, X sent the bill to his banker for collection. On the due date bank collects the bill and sends the advice if collection after deducting Rs. 2 as collection charges.
Pass Journal entries in the books of X and Y. 3 (0)
(c) The provision for doubtful Debts A/c shows a balance of Rs. 5,000 on 1st January, 2009. The Bad Debts during the year 2009 amounted to Rs. 3,000. The Sundry Debtors on 31st December, 2009 are Rs. 50,000. On 31st December, 2009, there is an additional Bad Debts of Rs. 3,000. Create a new Provision for Bad Debts @ 10% on Debtors.
You are required to show how the different items will appear in the firm’s Profit and Loss A/c and Balance Sheet.

3 (0)
3. (a) State which item of expenditure would be charged to capital and which to revenue: 1×3=3
(i) Freight and cartage on the new machine Rs. 150, erection charges Rs. 200. (0)
(ii) Fixtures of the book value of Rs. 1,500 were sold off at Rs. 600. (0)
(iii) A sum of Rs. 1,100 was spent on painting the factory. (0)
(b) A plant is purchased for Rs. 20,000. It is depreciated @ 5% per annum on reducing balance for five years, when it becomes absolute due to new methods of production and is scrapped. The scrap produces Rs. 5,385.
Show the plant account in the ledger. 5 (0)
(c) What is ABC Analysis? 2 (0)
4. (a) Journalise the following transactions in the books of Ramesh: 1×3=3
(i) Started business with Rs. 10,00,000/-, out of which Rs. 1,00,000 was borrowed from ICICI as loan. (0)
(ii) Machinery purchased for Rs. 4,00,000/- on credit and Furniture Purchased for Rs. 1,50,000 on cash. (0)
(iii) Deposited cash in Vijaya Bank Current A/c 2,50,000/-. (0)
(b) The following information is available from Suresh’s records:
Particulars 31st March,
2009
Rs. 31st March,
2008
Rs.
Creditors 16,000 10,000
Bank Overdraft 30,000 —
Bank Balance — 20,000
Plant and Machinery 40,000 20,000
Furniture 8,000 8,000
Debtors 1,04,000 60,000
Stock of Goods 56,000 68,000
Suresh had withdrawn Rs. 10,000 for personal expenses and Rs. 9,000 for his son’s marriage. Out of business funds, he had also purchased a residential building costing Rs. 40,000 which is not shown in the above balances. Additions to machinery were made on 1st April, 2008. Depreciation at 10% p.a. should be provided on plant and machinery.
Find out Suresh’s net profit for the year ended 31st March, 2009.

7 (0)
SECTION II
Answer Question No. 5 which is compulsory and any two
questions from the rest of Section II
Marks
5. (a) In each of the following, one of is Correct. Indicate the correct answer: 1×10=10
(i) Which of the following is a cost behaviour oriented approach to product costing?
A. Absorption Costing
B. Marginal Costing
C. Process Costing
D. Job Order Costing
(1)
(ii) Over which of the following costs, management is likely to have least control:
A. Wages Cost
B. Building Insurance Cost
C. Machinery Breakdown Cost
D. Advertisement Cost
(1)
(iii) Which of the following indicates BEP?
A. Sales Revenue — Variable Cost
B. Profit = Fixed Cost + Variable Cost
C. Contribution = Fixed Cost
D. Contribution + Fixed Cost = Profit
(1)
(iv) Payment of Royalties is:
A. Direct Expenses
B. Factory Overheads
C. Charged to P & L
D. Administration Cost.
(1)
(v) Bad debts are treated as:
A. Direct Expenses
B. Cost of Production
C. Selling Overheads
D. Distribution Overheads
(1)
(vi) In the situation of increasing prices, the valuation of closing stock is more under:
A. FIFO
B. LIFO
C. Simple average
D. Weighted average
(1)
(vii) Re–order level indicates
A. Level when a replenishment order is placed
B. Level beyond which stocks are not allowed to reach
C. Quantity Ordered
D. Economic Order Quantity.
(1)
(viii) An increase in Fixed Cost will result into:
A. Decrease in PV Ratio
B. Decrease in Contribution per unit
C. Increase in Break Even level
D. Increase in PV Ratio.
(1)
(ix) Which of the following is not usually included in Goods Received Note?
A. Date of receipt
B. Quantity received
C. Price of goods
D. Description of goods.
(1)
(x) Which of the following is usually prepared daily by employees for each job worked on?
A. Labour Job Ticket
B. Time Card
C. Punch Card
D. Cost Control Card.
(1)
(b) State with reasons whether the following are ‘True’ or ‘False’ 2×8=16
(i) Variable Cost per unit will not change. (1)
(ii) Under LIFO method, prices are close to current market prices. (1)
(iii) Primary Packing is an item of prime cost. (0)
(iv) Order should be automatically placed with supplier quoting lowest price. (1)
(v) The BEP remains same even in fixed cost are reduced. (1)
(vi) Abnormal cost are not controllable. (1)
(vii) Fixed Overheads per unit do not reduce as production rises. (1)
(viii) Finance Expenses are included in cost sheet. (1)
(c) Specify the method of determination of cost and the cost unit for the following industries: 1×4=4
(i) Hospital (1)
(ii) Readymade garments (1)
(iii) Canteen (1)
(iv) House Building. (1)
6. (a) Calculate the EOQ from the following information:
Monthly requirement
Ordering Cost
Price per unit
Inventory carrying cost =
=
=
= 1000 units
Rs. 60 per order
Rs. 100
15% on average inventory
4 (1)
(b) The Sales and Profit for Trident Ltd. during 2008 and 2009 were as follows:
Year Sales
Rs. Profit
Rs.
2008
2009 2,00,000
3,00,000 20,000
40,000
Find out:
P/V ratio, Break even point and Margin of Safety

(a) Sales required to earn profit of Rs. 80,000.
(b) What will be the profit if sales are Rs. 2,40,000?
6 (1)
7. The following are the costing records for the year 2009 of a manufacturer:
Production 1,000 units, Cost of raw materials Rs. 20,000, Labour cost Rs. 12,000, Factory overheads Rs. 8,000, Office overheads Rs. 4,000, Selling expenses Rs. 1,000, Rate of Profit 25% on the selling price.

The manufacturer decided to produce 1,500 units in 2010. It is estimated that the cost of raw materials will increase by 20%, the labour cost will increase by 10%, 50% of the overhead charges and fixed and the other 50% are variable. The selling expenses per unit will be reduced by 20%. The rate of profit will remain the same.

Prepare a cost statement for the year 2010 showing the total profit and selling price per unit.

5+5=10 (0)
8. (a) Classify packing of Products. How will you treat packing costs according to their nature? 3+3=6 (0)
(b) What is labour turnover? How will you treat it in costs? 2+2=4 (0)

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