Dibrugarh University Question Papers: Advanced Financial Accounting Nov' 2012 | B.Com 3rd Sem

1. (a) Choose the correct answer:                                             1x3=3

(i) Banking Companies are governed by the Banking Regulations Act, 1947/1948/1949.

(ii) The valuation balance sheet is prepared by the general insurance companies/the life insurance companies/ both general and life insurance companies.

(iii) Accounting for price level changes is popularly known as Inflation Accounting/Deflation Accounting.

(b) Fill in the blanks:                                        1x3=3

(i) In case of cum-interest, interest is _________ in the quoted price.

(ii) The Provincial Insolvency Act was enacted in the year ________________.

(iii) In case of Banking Companies Accounts, Contingent liabilities are shown under schedule __________.

(c) Write “True” or “False”:                                          1x2=2

(i) The investments which are made permanently for a regular income outside the business are known as trade investments.

(ii) Rebate in bills discounted is treated as a liability, if it is given in the trial balance.

2. Write brief answers (within 150 words):                                           4x4=16

(a) Explain the procedure of preparation of the valuation balance sheet.

(b) What are the lists to be prepared under the insolvency act?

(c) Explain clearly the accounting for price level changes under the CPP method.

(d) Distinguish cum-dividend and cum-interest from ex-dividend and ex-interest.

3. (a) From the following information relating to YES Bank Ltd,. Prepare a Profit and Loss Account for the year ended 31^st March. 2012. Prepare under necessary schedules:                           12

Following adjustments are to be made:

(i) Provide for Income tax (Including surcharge) @51.75%

(ii) Every year the bank transfers 20% of profit to statutory reserve and 5% of profit to revenue reserve

(iii) Dividends amounting to Rs. 10,00,000 for the year ended 31^st march, 20123 are proposed by the board of directors

Or

(b) Explain the following in respect to the Banking companies accounts:                             4x3=12

(i) Books maintained by a bank

(ii) Cash Credit and overdraft

(iii) Rebate on bills discounted

4. (a) The revenue account of life insurance corporation shows the life fund at Rs.40,94,250 as on 31^st march, 2012 before taking into consideration the under mentioned items:

Consideration for annuities granted: 21,750

Agents allowance: 15,750

Reinsurance premium: 26,250

Bonus in reduction of premium: 15,000

Outstanding premium: 35, 250

Pass necessary journal entries regarding the above transactions and show the correct position of the life fund at the end of the year, 2011-12                                     11

Or

(b) What is the life insurance revenue account? How do you prepare it?                       4+7=11

5. (a) Assets of Mr. K. Deka of Guwahati on 30^th june, 2011 as shown by his books were Rs.28,000 and his liabilities were Rs.22,000. He filed his petition in the insolvency court and estimated his deficiency to be Rs. 15,000. After making the above estimate, he found that the following items were not passed through his books of accounts:

Interest @ 6% on his capital. a contingent liability of Rs.1,250 on bills discounted by him for Rs. 5,000. Amount due as wages – Rs.300; salary – Rs.200; Rent – Rs.100 and Taxes – Rs.150.

Prepare a statement of affairs and the deficiency account.                      12

Or

(b) Who are preferential creditors under the provincial insolvency act? Distinguish between statement of affairs and balance sheet.                                                  4+8=12

6. (a) On 1.1.2010, 6% 200 debentures of Rs.100 each of B Ltd. were held as investment by A Ltd. at a cost of Rs.18,200. Interest is payable on 31^st December.

On 1.4.2010, Rs.4,000 of such debentures were purchased by A Ltd. @ Rs.98 each and on 1.1.2010, Rs.6,000 debentures were sold at Rs.96 ex-interest. On 1.12.2010, Rs. 8,000 debentures were sold @ Rs.99 cum-interest. On 31.12.2010, A Ltd. sold Rs. 10,000 debentures @ Rs.95 each.

Prepare investment account for 6% debentures of B. Ltd. in the books of A Ltd. Ignore income tax. 10

Or

(b) Define the following:                               5+5=10

(i) Jobbers and Brokers

(ii) Contango and Backwardation

7. (a) State the accounting principles to be followed while preparing inflation adjusted profit & loss account and inflation adjusted balance sheet.                                       11

Or

(b) Define Inflation Accounting. What are the limitations of Inflation Accounting?     4+7=11

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