Gauhati University Question Papers
ADVANCED FINANCIAL ACCOUNTING (May-June’ 2015)
(MAJOR)
Full Marks: 80
Time Allowed: 3 hours
Answer either in
English or Assamese
The figures in the
margin indicate full marks for the questions
1.
Answer as directed: 1x8=8
a) Write
the definition of Banking Company as per Banking Regulation Act, 1949.
b) Premium
received by an insurance company is shown in the _____ A/c. (Fill in the
blanks)
c) Final
Accounts of Insurance Companies are prepared according to the provision of the
LICI Act, 1956. (State whether the statement is true or false)
d) How
you will write the Heading of an investment account if it is opened in general
ledger?
e) Cum-interest
and Ex-interest is applicable only to the fixed interest bearing securities.
(State whether the statement is true or false)
f) The
average clause applicable in a fire insurance policy discourages _____. (Fill
in the blank)
g) The
accounts of Government Departments are maintained on _____ basis. (Fill in the
blank)
h) Single
Entry system is followed to keep the records of the transactions relating to
non-commercial nature. (State whether the statement is true or false)
2.
Answer the following: 2x6=12
a) Write
two types of statutory books to be maintained by an insurance company.
b) Write
the name and numbers of schedules of Revenue Account of a general insurance
company.
c) Write
two objectives of preparing Investment Account.
d) Write
the meaning of ‘cum-interest’ relating to Investment Accounting.
e) Write
two differences between Government Accounting and Commercial Accounting.
f) Write
two objectives of Government Accounting.
3.
(a) UTI Bank Ltd. discounted bills of the face value of Rs. 8,00,000 for Rs.
7,68,000 on January 3, 2013. Of the total discounts, Rs. 11,572 pertain to the
next accounting year is 2013-2014. Show journal entries to be passed at the
time of discounting the bills. Also show the opening entry in the books of the
bank at the beginning of the next year. 5
Or
Write five conditions for recognising an advance/loan as
NPA (as per RBI notification, dated July 1, 2010). 5
(b) On 1.4.2013 Mr. Akash had investment in 1,000 equity
shares of Rs. 10 in Assam Ltd. having a book value of Rs. 12 each. During the
year ended 31st March, 2014, Mr. Akash entered into the following
transactions in respect of his investment:
April
1, 2013 Purchased 3,000 equity shares of Rs. 10 each in Assam Ltd. at Rs. 15
each.
Oct
1, Assam Ltd. made a right issue of one share for every two shares held at Rs.
10 per share. Right sold in the market for Rs. 4 per share.
Dec
31, Received interim dividend for the year ended 31st March, 2014 @
12% on shares in Assam Ltd.
Prepare
Investment Account in the books of Mr. Akash. 5
Or
Write the accounting treatment of pre-acquisition and
post-acquisition period dividend. 5
(c)
A fire occurred in the premises of Guwahati Enterprises on 31st
August, 2013, destroying a part of the stock. On 31st March, 2013,
stock appeared in the books at Rs. 1,80,000. The value of stock salvaged was
Rs. 34,500. Total sales during the year ended on 31st March, 2013
amounted to Rs. 18,00,000 and the cost of sales during the period was Rs. 12,60,000. The value of sale from April 1,
2013 to the date of fire was amounted to Rs. 4,59,000 and purchases Rs. 3,16,500 during the period. Goods
valued Rs. 6,000 was withdrawn for household purposes which was included in the
said purchases.
Prepare
a statement of claim for submission to the Insurance Company assuming books of
accounts are closed on 31st March each year. 5
Or
Describe the procedure to be followed to lodge claim before
Insurance Company for indemnification, of loss of stock due to fire. 5
(d)
Answer any one of the following questions: 5x1=5
1) Briefly
describe five principles of Government Accounting.
2) Write
a note on classification of Incomes and Expenditures of Government.
3) Write
a note on Government Accounting Standards Advisory Board.
4.
Good Bank has finished the following information in respect of their advances
as on 31.3.2013. You are required to classify the advances for provisioning
purposes. Also calculate the amount of provisions required as per Prudential Accounting
Norms. 10
|
|
(Rs. In thousand)
|
|
Total loans and advances
Fully secured loans
and advances (without any default)
Advances overdue for
11 months
(Secured by Mortgage
of the value Rs. 2,00,000)
Advances overdue for
13 months to 35 months
(Secured by Mortgage
of Land and Buildings valued at Rs. 2,50,000)
Advances overdue for
more than 36 months
(Secured upto Rs.
1,00,000)
Non-recoverable
advances (balance)
|
4,800
3,000
500
600
300
400
|
Or
Explain
the following in relation to Bank Accounting:
1) Capital
Adequacy.
2) Rebate
on Bills Discounted. 6+4=10
5.
The following balances are extracted from the accounts of Best Life Assurance
Ltd. related to the year ended 31st March, 2014.
|
|
Rs.
|
|
Life Fund at the
beginning of the year
Premium less
re-insurance
Interest, dividends
and rents
Fines and fees
Income tax
Management expenses
Annuities paid
Commission
Surrenders
Bad debt
Claims less
re-insurance claims
Consideration for
annuities granted
|
6,12,500
3,45,000
1,87,500
1,000
29,500
43,750
2,500
13,500
21,250
250
2,22,500
12,250
|
The
Best Life Assurance Ltd. had a paid up capital of Rs. 62,500 divided into 6,250
equity shares of Rs. 10 each and its net liability on all contracts in force as
on 31st March, 2014 was Rs. 5,62,500 and on 31st March,
2013, this liability was Rs. 5,00,000.
Prepare
Revenue Account of Best Life Assurance Ltd. for the period ended 31st
March, 2014, considering the following:
a) The
company has paid an interim bonus of Rs. 27,500.
b) Transfer
30% of surplus to Shareholders’ Account and 10% of surplus to the Catastrophe
Reserve and carry forward the balance amount. 10
Or
Write
the following in relation to accounting of Insurance Companies: 3+3+4=10
1) Meaning
of Reserve for unexpired risk.
2) Rates
of reserve for unexpired risk, and
3) Treatment
of Reserve for unexpired risks in Revenue Account.
6.
On 1.4.2013 Mr. A hold 1,200, 15% debentures of Rs. 100 each at a cost of Rs.
1,26,000. Interest is payable on 30th June and 31st
December each year. During the year 2013-2014, he entered into the following
transactions in the same debenture. 10
|
01.05.2013
01.09.2013
30.11.2013
31.12.2013
|
Purchased
cum-interest 600 debentures at Rs. 64,200,
Sold ex-interest 700
debentures at Rs. 66,850.
Purchased
ex-interest 500 debentures at Rs. 48,000.
Sold cum-interest
400 debentures for Rs. 55,000.
|
Applying
FIFO method, ascertain the cost of investment on 31st March, 2014 by
preparing an Investment Account.
Or
Describe
the procedure of recording for accounting for investments in Variable Income
bearing securities. 10
7.
On 1st July 2013, a fire took place in the business of Vishal Cloth
Store, which destroyed all stock. Calculate the amount of insurance claim for
loss of stock from the following information:
|
|
Rs.
|
|
Sales in 2011
Sales in 2012
Gross profit in 2011
Gross profit in 2012
Stock on 01.01.2013
Purchases from
01.01.2013 to 30.06.2013
Sales from
01.01.2013 to 30.06.2013
|
1,50,000
2,25,000
45,000
45,000
2,02,500
3,00,000
5,40,000
|
The
following are also to be taken into consideration:
a)
Stock on 31.12.2012 has been undervalued by 10%.
b)
A stock verification conducted in March, 2013
has revealed that stock costing Rs. 60,000 were lying in a damaged condition,
50% of this stock had been sold in May, 2013 at 50% of cost and balance was
expected to be sold at 40% of cost. 10
Or
Explain
the following terms in relation to insurance claim: 2 ½ x 4=10
a) Average
clause.
b) Consequential
loss.
c) Insurance
claim.
d) Period
of indemnity.
***
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