CWA ICWA Question Papers Inter Group I Financial Accounting June 2009

CWA ICWA question papers Inter Group I

 Financial Accounting June 2009

 

This Paper has 29 answerable questions with 2 answered.
I—P5(FAC)
Syllabus 2008
Time Allowed : 3 Hours Full Marks : 100
The figures in the margin on the right side indicate full marks.
Answer Question No. 1 which is compulsory and any five from the rest.
Marks
1. (a) Distinguish between liability and provisions. 3 (0)
(b) Choose the correct answer
The excess amount received over the face value of shares, should be credited to
(i)
(ii)
(iii)
(iv) Current Liabilities;
Current Assets;
Reserves & Surplus;
Securities Premium Account.
3 (1)
(c) Match the following:
1.
2.
3.
4. AS – 7
AS – 9
AS – 19
AS – 20 (i)
(ii)
(iii)
(iv) Earning per Share
Construction Contracts (Revised)
Revenue Recognition
Leases
3 (1)
(d) State whether following statements are true or false: 3
(i) Goodwill is a fictitious asset. (0)
(ii) Land is a depreciable asset. (0)
(e) Can dividend be declared out of Security Premium Account? 3 (0)
(f) State briefly the Rule of Garner vs. Murray. 4 (0)
(g) State whether the following statements are true or false: 3
(i) AS – 26 applies when computer software is acquired for sale in the ordinary course of business. (0)
(ii) Cost incurred in salaries/wages in internally generated software are included in the cost computation. (0)
(h) State whether the following statements are true or false: 3
(i) Capital Redemption Reserve Account is created to meet legal requirements. (0)
(ii) Partly paid–up preference shares can be redeemed. (0)
(iii) Capital Redemption Reserve Account cannot be utilised for issuing fully paid bonus shares. (0)
2. (a) Prepare the Balance Sheet as at 31st March, 2008 from the particulars furnished by Vision Ltd., as per Schedule VI of Companies Act.
Rs.
Equity Share Capital (Rs. 10 each fully paid)
Calls in arrear
Land
Building
Plant & Machinery
Furniture
General Reserve
Loan from IDBI
Loans (Unsecured)
Provision for Taxation
Sundry Debtors
Advanced (Dr.)
Proposed dividend
Profit & Loss A/c.
Cash balance
Cash at Bank
Preliminary Expenses
Sundry Creditors (For goods & expenses) 8,00,000
800
1,60,000
2,80,000
4,20,000
40,000
1,68,000
1,20,000
96,800
54,400
1,60,000
34,160
48,000
80,000
24,000
1,97,600
10,640
1,60,000
Stock:
Finished goods
Raw material 1,60,000
40,000

2,00,000
Adjustment:

(i) 1500 equity shares were issued for consideration other than cash.
(ii) Loan of Rs. 1,20,000 fro IDBI is inclusive of Rs. 6,000 for interest accrued but not due. The loan is hypothecated by plant & machinery.
(iii) Debtors of Rs. 50,000 are due for more than six months.
(iv) The cost of assets:
Rs.
Building
Plant & Machinery
Furniture 3,20,000
5.60,000
50,000
(v) Bank balance includes Rs. 2,000 with Trust Bank Ltd., which is not a scheduled Bank.
(vi) Bills receivable for Rs. 2,20,000 maturing on 30th June, 2008 have been discounted.
(vii) The company had contract for the erection of machinery at Rs. 1,50,000 which is still incomplete.
10 (0)
(b) What are the objects of charging depreciation and problems of measurement of depreciation? Explain. 5 (0)
3. (a) The following balances have been extracted from the books of Star Insurance Co. Ltd. for the year ending 31st December, 2006:
Rs.
Amount of Life Assurance at the beginning of the year
Claims by death
Claims by maturity
Premia
Expenses of management
Commission
Consideration for annuities
Interest, dividends and rents
Income–tax paid on profit
Surrenders
Annuities
Bonus paid in cash
Bonus paid in reduction of premium
Preliminary expenses
Claims admitted but not paid at the end of the year
Annuities due but not paid
Capital paid up
Government Securities
Sundry Assets
Investment Reserve 12,56,450
93,584
77,136
1,68,457
23,912
29,233
8,496
41,969
2,448
17,414
23,536
7,560
2,800
480
64,027
17,904
4,80,000
13,52,712
4,54,488
48,000
Prepare the Revenue Account and the Balance Sheet after taking into account the following:

Rs.
(i)
(ii)
(iii)
(iv)
(v)
(vi) Claims covered under re–insurance
Further claims intimated
Further bonus utilised in reduction of premium
Interest accrued
Premium outstanding
Bonus surrendered 8,000
6,400
1,200
12,320
5,920
4,000
10 (0)
(b) Define the Concept of Minimum/Dead Rent. 5 (0)
4. (a) Sunshine company sells goods for cash and on hire purchase and latter being the cash retail price plus 12.5% there on. Following are the particulars for the year ended 31st December; 2007.
Rs.
Stock with hire purchase (at hire purchase price) with customers on 1.1.2007
Purchase during the year 29,700
1,58,400
Stock at shop: On 1.1.2007
On 31.12.2007 22,000
26,400

48,400
Cash Sales during the year
Cash received during the year (Hire purchase installments)
Instalments due but not received:
On 1.1.2007
On 31.12.2007
Hire purchase sales during the year 79,200
1,01,750

4,400
6,600
1,18,800
Prepare the following:
(a) General Trading Account.
(b) Hire Purchase Trading Account.
(c) Hire Purchase Sales Account, for the year ended 31st December, 2007.

10 (0)
(b) Distinguish between Hire Purchase System and Instalment System. 5 (0)
5. (a) A and B carry on independent business in provisions and their position as at 31.03.09 are reflected in the Balance Sheets given below:
A
Rs. B
Rs.
Stock in Trade
Sundry Debtors
Cash at Bank
Cash in hand
Furniture and fixtures
Investments 1,70,000
89,000
13,000
987
2,750
513 98,000
37,000
7,500
234
1,766

2,76,250 1,44,500
Represented by Sundry Creditors for
Purchases
Expenses
Capital Account 1,10,000
13,250
1,53,000 47,000
2,000
95,500
2,76,250 1,44,500
Both of them want to form a partnership firm from 1st April, 2009 on the following understanding:

(a) The capital of the partnership would be Rs. 3 lakhs which would be contributed by them in the ratio of 2 : 1.
(b) The assets of the individual business would be evaluated by C at which values, the firm will take them over and the value would be adjusted against the contribution due by A and B.
(c) C gave his valuation report as follows:
Business of A: Stock in Trade to be written down by 15% and a portion of Sundry Debtors amounting to Rs. 9,000 estimated unrealisable not to be assumed by the firm; furniture and fixtures to be valued at Rs. 2,000 and investments to be taken of market value of Rs. 1,000.
Assets of B: Stocks to be increased by 10%, and Sundry Debtors to be admitted at 85% of their value; rest of the assets to be assumed at their book value.
(d) The firm is not to assume any Creditors other than the dues on account of purchases made.
Prepare the opening Balance Sheet of the firm.

10 (0)
(b) State the advantages and disadvantages of Weighted Average method of valuation of inventory. 5 (0)
6. (a) The following extracts of financial information relate to Complex Ltd:
(Rs. in lakhs)
Balance Sheet as at 31st March 2008–09
Rs. 2007–08
Rs.
Share Capital
Reserves and Surplus
Loan Funds

Fixed Assets (Net) 10
30
60
100
30 10
10
70
90
30
(Rs. in lakhs)
Balance Sheet as at 31st March 2008–09
Rs. 2007–08
Rs.
Current Assets:
Stock
Debtors
Cash at Bank
Others Current Assets

Less: Current Liabilities
Net
Total Assets
Sales (Rs. lakhs)
30
30
10
30
100
30
70
100
270
20
30
20
10
80
20
60
90
300
(i) Calculate for the two years Debt Equity Ratio, Quick Ratio and Working Capital Turnover Ratio.
(ii) Find the Sales volume that should have been generated in 2008–09 if the company were to have maintained its Working Capital Turnover Ratio.
Note: All Current Liabilities are quick liabilities.
10 (0)
(b) State clearly the provisions contained in the Accounting Standard in respect of Revaluation of fixed Assets. 5 (0)
7. (a) The following is the Receipts and Payment Account of Sodepore Recreation Club for the year ended 31.12.2008:
Rs. Rs.
To Cash in hand
To Cash at Bank
To Members’ Subscription 1,000
12,000 By Rent of Club House
By Painting of Club House
By Wages of Ground Maintenance 2,600
1,400
3,000
2007
2008
2009 200
3,600
400

4,200 By General Expenses
By Electricity Charges
By Investment 2,600
3,600
20,000
To Life Membership Subscription
To Sale of Ticket of annual exhibition
To Sale of refreshment
To Interest on investment
To Sale of furniture
(Original Cost on 1.1.02 Rs. 1,000) 4,000

20,000
24,000
2,600

200 By Secretary’s Honorarium
By Annual Meeting Expenses
By Sports Equipment
By Purchase of refreshment
By Printing & Stationery
By Insurance
By Cash in hand
By Cash at Bank 1,200
800
3,600
11,000
1,000
600
4,000
12,600
68,000 68,000
The following information are available to you:

(a) On 31.12.2007 outstanding subscription for 2007 was Rs. 300.
(b) On 31.12.2007 advance subscription for 2008 received was Rs. 100.
(c) On 31.12.2008 outstanding subscription for 2008 was Rs. 600.
(d) A life membership scheme was introduced in 2007. Under this scheme, life membership premium is Rs. 1,000 and it was to be apportioned to income 1/10th every year over a period of 10 years. Life membership subscriptions totaling Rs. 5,000 was collected during 2007.
(e) On 1.1.2008 Investment was Rs. 40,000 and accrued interest on such date was Rs. 2,400.
(f) On 1.1.2007 furniture costing Rs. 16,000 were purchased and it was decided to write off depreciation on furniture and sports equipment @ 10% on cost.
(g) In 2007, a plot of land was purchased for Rs. 20,000 to construct Club House.
(h) Other assets & liabilities of club were (all figures in rupees) as follows:
Stock of
refreshment Prepaid
Insurance Accrued
Rent Creditors for
refreshment
31.12.2007
31.12.2008 Rs. 3,800
Rs. 4,200 Rs. 140
Rs. 100 Rs. 400
Rs. 200 Rs. 800
Rs. 1000
10 (0)
(b) Discuss the conditions of Companies Act with regard to buy–back of shares. 5 (0)
8. Write short notes on: 3×5=15
(a) Escrow Account; (0)
(b) Solvency Ratio; (0)
(c) Stationary Reserve in case of Bank; (0)
(d) Disclosure requirement in a case where the companies do not comply with Accountancy standard; (0)
(e) Reserve Capital. (0)

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