CWA ICWA question papers Foundation Accounting June 2011

CWA ICWA question papers Foundation

Accounting June 2011

This Paper has 62 answerable questions with 16 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 the alternatives is correct, indicate the correct one: 1×10
(i) The convention that states that the accounting practice should be followed consistently over the years
A. Consistency
B. Conservation
C. Materiality
D. Disclosure
(1)
(ii) Reduction in the value of assets due to its continuous use is treated as
A. Loss
B. Profit
C. Appreciation
D. Depreciation
(1)
(iii) Wages paid for installation of assets should be debited to
A. Wages A/c
B. Assets A/c
C. Trading A/c
D. P & L A/c
(1)
(iv) Revenue Reserves are built out of
A. Recurring profit
B. Non recurring profit
C. Capital Reserves
D. None of the above
(1)
(v) Del–credre commission is payable on
A. Total sales
B. Net profit
C. Credit sales
D. Cash sales
(1)
(vi) Incoming partner does not pay for goodwill but the goodwill a/c is raised and credited in
A. Old profit sharing ratio
B. New profit sharing ratio
C. Sacrifice ratio
D. Gains ratio
(0)
(vii) Amount set apart to meet loss due to bad–debts is a
A. Provision
B. Reserve
C. Appropriation
D. None of the above
(1)
(viii) Claims against the company not acknowledged as debts are
A. Contingent liability
B. Current liability
C. Secured loan
D. Unsecured loan
(0)
(ix) Prepaid Expenses are shown as
A. Miscellaneous expenses
B. Loans and Advances
C. Current Liabilities
D. Investments
(1)
(x) Noting charges are paid by
A. Acceptor
B. Payee
C. Drawee
D. None of the above
(1)
(b) Fill in the blanks: 1×6=6
(i) Cash account has always ________________ balance. (1)
(ii) Journal Folio (J.F.) column stands in ____________. (1)
(iii) A credit purchases of furniture for Rs. 21,000 is recorded in purchases book. It is a error of __________. (1)
(iv) The profit is 25 per cent of selling price then it is _________________ of cost price. (1)
(v) Bill of exchange is a ________________ instrument. (1)
(vi) According to ____________ concept all the personal income and expenditure of the owner of a business should be separated from business income and expenditures. (1)
(c) State with reasons whether the following statements are True or False: 2×8=16
(i) Depreciation measures wear and tear of fixed assets. (1)
(ii) Profit prior to incorporation is capital profit. (0)
(iii) Prepaid expenses are a part of current assets. (1)
(iv) A trial balance discloses all types of errors. (0)
(v) Increase in equity due to fresh contribution from owners represents income for the period. (0)
(vi) Current assets are necessarily short term assets. (0)
(vii) In a consignment business, the consignee is the agent of the consignor. (0)
(viii) Joint venture is a permanent form of business. (0)
2. (a) From the following information prepare a Bank Reconciliation Statement as on 31st March, 2011 from the following information:
(i) The credit balance as per cash Book on 31st March, 2011 was Rs. 12,680.
(ii) Interest on overdraft for 3 months Rs. 320.
(iii) Bank charges of Rs. 60 were debited by the bank.
(iv) Cheques issued but not cashed prior to 31st March, 2011, amounted to Rs. 2,336.
(v) Cheques deposited into bank but not cleared before 31st March, 2011, Rs. 4,340.
(vi) Interest on investments collected by the bank Rs. 2,400.
6 (0)
(b) Purchases Rs. 2,65,000; opening inventory Rs. 35,000 and closing inventory is Rs. 60,000. If the profit margin is 25 percent on selling price, find out the amount of sales. 1 (0)
(c) Journalise the following transactions in the books of a trades:
2011
April 1 Goods costing Rs. 600 (sale price Rs. 800) withdrawn for personal use.
April 5 Goods costing Rs. 2,000 (sales price Rs. 2,500) distributed as free samples.
April 8 Goods stolen in transit Rs. 2,000 (cost Rs. 1,500).
April 10 Goods worth Rs. 1,500 stolen by an employee cost of which was Rs. 1,000.
April 15 Goods used in making of furniture (cost Rs. 2,000 selling price Rs. 2,400).
2 (0)
3. (a) Sagar and Pankaj entered into Joint Venture and under took building construction of Patil & Co. Ltd., Bombay for Rs. 5,00,000/-
• Sagar supplied materials of Rs. 35,000 and Pankaj paid Rs. 20,000 his Architect fees.
• Sagar contributed Rs. 1,25,000 and Pankaj contributed Rs. 75,000 and deposited the same amount in the Joint Bank Account.
• They paid from Joint Bank Account for materials Rs. 2,80,000 and wages Rs. 1,20,000.
• On completion of the venture they received contract price as per the terms.
• Pankaj took over the unused material for Rs. 15,000
Prepare Joint Venture A/c, Co–Ventures A/c and Joint Bank A/c.
6 (0)
(b) Pass Journal Entries
(1) Started Business with cash Rs. 2,00,000, furniture 80,000 and stock Rs. 20,000.
(2) Deposited Rs. 1,00,000 in the Bank.
(3) Paid wages Rs. 20,000 through cheques.
3 (0)
4. (a) Match the following:
I II
(i)
(ii)
(iii)
(iv) AS–2
AS–6
AS–9
AS–14 (A)
(B)
(C)
(D) Revenue recognition
Accounting for amalgamatoins
Depreciation accounting
Valuation of inventories
1×4=4 (0)
(b) Indicate where the following items will be shown in the balance sheet: 1×4=4
(i) Bills discounted (0)
(ii) Membership fee received in advance. (0)
(iii) Debit balance of the profit and loss account. (0)
(iv) Bank overdraft. (0)
(c) Purchase price of machine Rs. 4,45,000; Freight and Cartage Rs. 3,500; Installation charges Rs. 15,000; Insurance charges Rs. 10,000; Residual Value of the machine is Rs. 20,000; Estimated useful life 5 years. Calculate the amount of annual depreciation under straight line method. 1 (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 the alternatives is correct. Indicate the correct one: 1×10=10
(i) The following is included in Financial Accounts, but not in Cost Accounts:
A. Carriage & Freight
B. Excise Duty
C. Royalty
D. Dividend paid
(0)
(ii) The following items come under indirect administrative overheads:
A. Office stationery
B. Director’s fees
C. Office rent and lighting
D. All of the above
(0)
(iii) The following factor is an avoidable cause for labour turnover:
A. Lower wages
B. Resignation
C. Retirement
D. Worker’s roving nature
(0)
(iv) Cost reduction is:
A. Long–term phenomena
B. It challenges the standards
C. It is carried out without compromising the quality
D. All the above
(0)
(v) The main purpose of cost accounting is to
A. Recording Costs
B. Help in inventory valuation
C. Provide information to management for decision making
D. All the above
(0)
(vi) A company sold fans at Rs.2,000/- each. Variable cost Rs. 1,200/- each and fixed costRs. 60,000/-. The break even sales in Rupees is:
A. 1,20,000/-
B. 1,50,000/-
C. 1,80,000/-
D. 2,00,000/-
(0)
(vii) Which of the following is true at Break Even Point?
A. Total sales revenue = variable cost
B. Profit = Fixed cost
C. Sales revenue = Total cost – Variable cost
D. Contribution = Fixed Cost
(0)
(viii) With in a given capacity, fixed cost per unit is
A. Variable
B. Fixed
C. Both
D. Neither variable nor fixed
(0)
(ix) 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
(0)
(x) Which of the following source documents in a cost accounting System is designed to exercise control over the delivery and accurate recording of the receipt of goods?
A. Goods received note
B. Order to the supplier
C. Material requisition
D. Purchase requisitions
(0)
(b) Fill in the blanks: 1×4=4
(i) To show reduced profit during price rise _____________ method of material valuation should be followed. (0)
(ii) To ascertain the cost per unit of a product, we should prepare the statement of _______. (0)
(iii) The cost which does not change due to change in the volume of production is called __________. (0)
(iv) The semi– finished goods is also known as ______________ in Cost Accounting. (0)
(c) State with reasons whether the following statements are True or False: 2×8=16
(i) The difference between actual cost and standard cost is called ‘Margin of Safety’ (0)
(ii) The minimum quantity of stock kept for emergency purpose is known as ‘Base Stock’. (0)
(iii) Discount to customer comes under ‘Distribution Costs’. (0)
(iv) Bin Card is record of both quantities and value. (0)
(v) Casual workers are not regular workers. (0)
(vi) Cash discount is excluded from, Cost Accounts. (0)
(vii) Power consumption of a machine is semi–variable cost. (0)
(viii) Direct Labour cost is a part of factory overhead expenses. (0)
6. (a) From the following information calculate the amount of subscription to be shown in Income and Expenditure Account for the year ending 31st March, 2011:
(Rs.)
(i)
(ii)
(iii)
(iv)
(v) Subscription outstanding on 1st April, 2011
Subscription received in advance on 1st April,2010
Subscription received during the year 2010–11
Subscription outstanding on 31st March, 2011
Subscription received in Advance on 31st March, 2011 15,000
4,000
1,08,000
28,000
7,000
5 (0)
(b) A trader keeps incomplete accounts for his transactions. From the following information calculate his total purchase and profit for the year ended 31st March,2011:
Opening Stock Rs. 55,000; Closing Stock Rs. 62,000; Cash Sales Rs. 1,05,000; Credit Sales Rs. 4,15,000; and profit is 25% on purchase price. 2 (0)
(c) X and Y are partners in a firm and keep incomplete records of their transactions. On 1st April, 2010 their capital was Rs. 6,20,000 and on 31st March, 2011 it was Rs. 8,90,000. X employed Rs. 40,000 as additional capital and Y withdraw Rs. 75,000 during the year 2010–11. Salary was due Rs.60,000 for each partner.
Prepare a statement showing distribution of firm’s profit for the year 2010–11. If the profit sharing ratio is 2:3. 3 (0)
7. P drew a bill of Rs. 30,000 on Q who accepts it for mutual accommodation. The proceeds are to be shared by P and Q in the ration of 3:2. The bill is discounted by P for Rs. 29,000 and 2/5 of the proceeds remitted to Q. Before the due date Q draws another bill for Rs. 40,000 in order to provide funds to meet the first bill. This bill is discounted for Rs. 38,500 with the help of which the first bill is met and Rs. 5,100 are remitted to P. Before maturity of the second bill P becomes insolvent and Q received a dividend of 40 paise in a rupee in full settlement.
Pass journal entries and also prepare Q’s account in the books of P. 10 (0)
8. The books of JP Industries reveals the following information for the year ended 31st March, 2011:
(Rs.)
Direct Material 1,20,000
Direct Wages 2,00,000
Overheads (Fixed 60% & Variable 40%) 1,00,000
(i) Output will be raised by employing 50% more workers;
(ii) Overall efficiency will fall by 10% because of new workers;
(iii) Material price will decrease by 5%;
(iv) Variable overheads will vary with the number of workers;
(v) Fixed expenses will increase by 20%;
(vi) Assume that there will be no opening and closing stocks of any type.
Required:
(a) Calculate the cost of material and labour for the year 2011–12.
(b) Ascertain the selling price of the output for the year 2011–12 to earn a profit of 20% on the selling price

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