Advance Financial Accounting
2014 (November)
Commerce (Speciality)
Course: 301: Advance Financial Accounting)
Full Marks: 80
Pass Marks: 32
The figures in the margin indicate full marks for the questions.
The figures in the margin indicate full marks for the questions.
1. (a) Choose the correct answer : 1x3=3
(i) As
per RBI’s Prudential Accounting Norms, provision required for standard assets
is @ 0.40% / @ 10% / @20%.
(ii) Commission
on reinsurance ceded deals with Schedule 2 / Schedule 3 / Schedule 4 in Revenue
Account.
(iii) Accounting
for investments deals in AS-13 / AS-14 / AS-15.
(b) Fill in the blanks: 1x3=3
(i)
In current cost accounting method, depreciation
is to be computed on the _____ of fixed assets.
(ii)
Under the Presidency Towns Insolvency Act, 1909,
rent is considered as preferential creditors up to_____.
(iii)
In banking company’s final accounts, Schedule 12
is associated with _____.
(c) Write True or False: 1x2=2
(i)
Partly paid-up investments in an insurance
company is considered as contingent liabilities.
(ii)
According to the provisions of the Insolvency
Act, any amount due to government or local authority is known as preferential
creditor.
2. Write brief answer of the following: 4x4=16
a) What
is rebate on bill discounted and how is it treated in the final accounts of
banking companies?
b) Explain
the list of creditors to be prepared by a debtor when he / she become insolvent.
c) What
are the limitations of historical accounting in a period of inflation?
d) Explain
cum-interest purchase and ex-interest purchase.
3. (a) From the following information, prepare
Profit & Loss A/c of Assam Bank Ltd. for the year ended 31st
March, 2014 (working should form part of your answer) : 11
Interest on Loan
|
3,00,000
|
Interest on Fixed Deposits
|
2,75,000
|
Commission
|
10,000
|
Exchange and Brokerage
|
20,000
|
Salaries and Allowances
|
1,50,000
|
Discount on Bills (Gross)
|
1,52,000
|
Interest on cash credits
|
2,40,000
|
Interest on Temporary Overdrafts in
Current Account
|
30,000
|
Interest on Savings Bank Deposits
|
87,000
|
Postage, Telegram and Stamps
|
10,000
|
Printing and Stationery
|
20,000
|
Sundry expenses
|
10,000
|
Rent
|
15,000
|
Taxes and Licenses
|
10,000
|
Audit Fees
|
10,000
|
Additional information :
1) Rebate
on bill discounted – Rs. 30,000
2) Director’s
Fees and allowances Rs. – Rs. 30,000
3) Bad
Debts – Rs. 40,000
4) Provision
for Income Tax is to be made @ 55% (round off to nearest thousand)
5) Interest
of Rs. 4,000 on doubtful debts was wrongly credited to interest on Loan Account
6) Transfer
20% of Net Profit to statutory reserve and provide Rs. 15,000 as dividend.
Or
(b) Explain the RBI’s prudential
Accounting Norms as recommended by the Narasimham Committee.
4. (a)
From the following particulars, you are required to prepare Fire Revenue A/c for
the year ended 31st March, 2013 : 11
Claims paid
|
4,80,000
|
Claims outstanding on 1st
April, 2012
|
40,000
|
Claims intimated but not accepted on 31st March, 2013
|
10,000
|
Claims intimated and accepted but
not paid on 31st March, 2013
|
60,000
|
Premium Received
|
12,12,000
|
Reinsurance premium paid
|
1,20,000
|
Commission
|
2,00,000
|
Commission on reinsurance ceded
|
10,000
|
Commission on reinsurance accepted
|
5,000
|
Expenses of management
|
3,17,000
|
Reserve for unexpired risk on 1st
April, 2012
|
4,00,000
|
Additional reserve for unexpired
risk
|
20,000
|
Reinsurance recoveries of claims
|
8,000
|
Sundry expenses regarding claims
|
5,000
|
Loss on sale of motorcar
|
5,000
|
Bad debts
|
3,000
|
Refund of double taxation
|
5,000
|
Interest and dividends
|
6,000
|
Income tax deducted thereon
|
1,000
|
Legal expenses regarding claims
|
3,000
|
Profit on sale of investments
|
2,000
|
Rent of staff quarters deducted from
salaries
|
2,000
|
Depreciation on furniture
|
6,000
|
You are required to provide an additional reserve for
unexpired risks at 1% of the net premium in addition to the opening balance.
Or
(b) Explain the financial
statements that are to be prepared by the life insurance companies as per the
IRDA Regulations, 2002
5. (a) From the following Trial Balance of Mr.
X, who commenced business on 1st January, 2012, you are asked to
prepare a Statement of Affairs and a Deficiency A/c : 11
Cash
|
2,300
|
Creditors
|
1,80,000
|
Stock-in-trade
|
6,660
|
Secured Creditors
|
25,000
|
Debtors (all goods)
|
1,30,000
|
Preferential Claims for Rent
|
1,900
|
Furniture
|
2,820
|
Capital
|
13,500
|
Investment in Shares
|
5,000
|
Profit (2010, 2011)
|
55,540
|
Value of Securities held by Creditors
|
35,000
|
||
Loss (2012)
|
25,000
|
||
Drawings (up to December, 2012)
|
69,160
|
||
2,75,940
|
2,75,940
|
Or
(b) Distinguish between the following: 5.5 x2=11
1)
A statement of Affairs and a Balance Sheet
2)
The Presidency Towns Insolvency Act and the
provincial Insolvency Act.
6. (a) On 1st April,
2012 Ashok Ltd. had 12% government bonds amounting to Rs. 4,00,000 at Rs. 96
(face value being Rs. 100 each), interest being payable on 31st
March and 30th September every year. On 1st June, 2012,
Ashok Ltd. sold 12% government bonds of Rs. 1,00,000 at Rs. 98 ex-interest. 12
Or
(b) Write explanatory notes on
the following: 6+6=12
1)
Cum-interest sale and Ex-interest sale
2)
Jobbers and Brokers
7. (a)
A company has the following transactions at the given dated and price indices
for the first quarter, 2014:
Rs.
|
Price
Index
|
|
Opening balance (January 1)
|
6,000
|
100
|
Cash sale (February 1)
|
17,500
|
105
|
Payment to creditors(March1)
|
12,000
|
108
|
Cash purchase (March 1)
|
2,000
|
108
|
Payment of
expenses (March31)
|
2,000
|
110
|
Closing balance (March 31)
|
7,500
|
110
|
Calculate monetary gain or loss. 11
Or
(b) What do you mean by Inflation
Accounting? Discuss the limitations of historical accounting in a period of inflation. 5+6=11
Rs.
|
Price
Index
|
|
Opening balance (January 1)
|
6,000
|
100
|
Cash sale (February 1)
|
17,500
|
105
|
Payment to creditors(March1)
|
12,000
|
108
|
Cash purchase (March 1)
|
2,000
|
108
|
Payment of
expenses (March31)
|
2,000
|
110
|
Closing balance (March 31)
|
7,500
|
110
|
Calculate monetary gain or loss. 11
Or
(b) What do you mean by Inflation
Accounting? Discuss the limitations of historical accounting in a period of inflation. 5+6=11
***
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