2007 Bangalore University B.Com Advanced Financial Accounting (Elective - I) Question paper
V Semester B.Com. Examination, Nov./Dec. 2007
(Semester Scheme)
COMMERCE (Accounting Group)
5.5 : Advanced Financial Accounting (Elective - I)
Time : 3 Hours Max. Marks : 90
SECTION - A
Answer any ten sub-questions of the following. Each sub-question carries two marks. (10x2=20)
1. a) What are subsidiary companies ?
b) What are pre-acquisition profits?
c) What is meant by unrealised profit ?
d) What is statutory reserve ?
e) What is meant by contingent liability ?
f) What is meant by standard assets ?
g) What is an annuity ?
h) Give the meaning of reversionary bonus.
i) What is life fund ?
j) What is consideration for anuuties granted ?
k) What is a bank draft ?
l) Define Banking.
SECTION - B
Answer any five of the following. Each question carries five marks. (5x5=25)
2. While preparing final accounts of Banking company under which schedule the following items are shown :
a) Other reserve b) Borrowings outside India
c) Lodd on sale of investments d) Insurance
e) Advances in India.
3. Distinguish between General Insurance and Life Insurance.
4. a life insurance company disclosed a fund of Rs. 25,00,000 on 31st March 2006, before taking the following into consideration.
a) A claim Rs. 15,000 was intimated and admitted but not paid during the year.
b) A claim of Rs. 8,000 outstanding in the books for 8 years is written back.
c) Premium of Rs. 1,000 is payable under reinsurance.
d) Reinsurance recoveries Rs. 30,000.
e) Bonus utilized in reduction of premium Rs. 8,000.
f) Agent's commission to be paid Rs. 6,000. Prepare statement showing the Recomputation of fund.
5. Briefly explain the steps involved in the preparation of consolidated Balance Sheet.
6. From the following balance sheets of H Ltd. and S Ltd. as on 31-12-2003. Calculate minority interest.
Balance Sheet
Liabilities H Ltd. S Ltd. Assets H Ltd S Ltd.
Rs. Rs. Rs. Rs.
Share Capital Fixed Assets
Shares of Sundry Assets 4,25,000 2,00,000
Rs. 100 each 2,50,000 1,00,000 Investments
Reserve Fund 50,000 25,000 in S Ltd. 75,000 ---
Profit and loss
accounts 50,000 25,000
Secured Loans
Debentures 50,000 ---
Unsecured loans --- ---
Creditors 1,00,000 50,000
5,00,000 2,00,000 5,00,000 2,00,000
7. S Co. Ltd. acquired the whole of the shares in M Ltd. on 1st April 2005. Their Balance Sheet as on 31st March 2006 were as follows :
S Ltd M Ltd. S Ltd. M Ltd.
Rs. Rs. Rs. Rs.
Share Capital Sundry assets 8,60,000 8,00,000
Shares of 10,00,000 6,00,000 Shares in M Ltd
Rs.10 each at cost 5,40,000 ---
General reserve 2,00,000 1,00,000
Profit and Loss A/c 1,00,000 50,000
Creditors 1,00,000 50,000
14,00,000 8,00,000 14,00,000 8,00,000
From the above balance sheet calculate capital reserve.
8. Write a note on classification of Bank advances.
9. From the following information, calculate the benefits paid as per the Insurance Regulation Act, 1938.
Claims by death 8,41,200
Annuities 1,61,800
Surrenders 2,25,600
Bonus in cash 15,600
Bonus un reduction of premium 20,400
Additional information
a) Further bonus in reduction of premium Rs. 10,000.
b) Claims recovered under reinsurance Rs. 95,000.
SECTION - C
Answer any three questions. Each question carries 15 marks : (3x15=45)
10. From the following Trial Balance of Syndicate Bank Ltd. prepare profit and losount for the year ended 31-3-2003 and Balance Sheet as on that date.
Dr. Cr.
Rs. Rs.
Paid up capital --- 10,00,000
Money at call and short notice 4,00,000 ---
Reserve fund --- 2,50,000
Cash on hand 5,00,000 ---
Cash with RBI 2,00,000 ---
Fixed Deposits --- 12,00,000
Loans, Cash Credits etc. 15,00,000 ---
Investments 2,00,000 ---
Borrowing from city bank --- 3,00,000
Pension fund --- 1,00,000
Unclaimed dividend --- 50,000
Furniture less depreciation 80,000 ---
Premises less depreciation 3,20,000 ---
Rent --- 10,000
Interest and discounts --- 6,00,000
Commission recived --- 60,000
Salaries and allowances 90,000 ---
Interest on Deposits and Brorrowings 3,10,000 ---
Audit fees 8,000 ---
Directors fees 7,000 ---
Depreciation on Bank property 9,000 ---
Printing and stationery 4,000 ---
Other expenses 2,000 ---
P and L a/c 1-4-2002 --- 60,000
36,30,000 36,30,000
Adjustments :
1) Provide Rs. 5,000 for rebate on bills discounted.
2) Provide Rs. 22,000 for bad debts.
3) Bills for collection on behalf of customers Rs. 5,00,000.
4) provide for taxation Rs. 4,000.
11. On 1st July, 2005, XYZ Ltd. Bought 7,000 shares of Rs. 10 each fully paid in ABC Ltd for Rs. 20 each. The following are the balance sheets of the two companies on 31st December 2005.
Liabilities XYZ Ltd. ABC Ltd. Assets XYZ Ltd. ABC Ltd.
Rs. Rs. Rs. Rs.
Share Capital 3,00,000 80,000 Fixed Assets
General reserve Buildings 2,75,000 50,000
(1-1-2005) 60,000 25,000 Investments
P and L account 7,000 shares of
(1-1-2005) 45,000 10,000 Rs. 10 each at
Current profit Rs. 20 per
share 1,40,000 ---
for the year 2005 95,000 34,000 Advances
Secured loans --- ---- Sundry Assets 90,000 1,20,000
Unsecured loans Debtors 80,000 30,000
Creditors 85,000 51,000
5,85,000 2,00,000 5,85,000 2,00,000
The Debtors of XYZ Ltd. Included Rs. 10,000 due from ABC Ltd. Prepare the consolidated balance sheet as at 31-12-2005.
12. The following trial balance is related to the National Risk Insurance Company as on 31-3-2001.
Debit Balances Amount Credit balances Amount
Rs. Rs.
Claims paid : Fire 74,315 Reserve for unexpired risks
Accident 40,000 Fire 1,67,495
Commission : Fire 45,500 Accident 1,20,000
Accident 15,090 Premium : Fire 2,83,932
Management expenses Accident 1,20,000
Fire 1,24,696 Claims outstanding
Accident 75,000 on fire (1-4-2000) 5,085
Depreciation 15,419 Interest and Dividend 34,692
Loss on sale of investment 23,169 Share Capital (2500 Shares
Income Tax 10,625 of Rs. 100 each) 2,50,000
Agents balance 57,404 Investment Reserve 10,690
Govt. Securities 3,86,921 Agents balance 2,612
Outstanding premium 4,019 P & L Appropriation A/c 33,581
Interest accrued Provision for taxes 43,618
On investment 6,028 Sundry creditors 4,919
Advance on deposits 12,122 Premium Deposits 14,000
Cash and bank 65,650
Furniture 94,666
10,50,624 10,50,624
Adjustments :
a) Reserve for unexpired risk to be provided at 50% on each case.
b) Claims outstanding on 31-3-2001 in respect of Fire Rs. 3,137.
c) Provide Rs. 20,000 towards taxation.
Prepare final Accounts of the insurance co.
13. The following trial balance was extracted from the books of Oriental Life Assurance Co. Ltd. As on 31-3-2003.
Particulars Dr. (Rs.) Cr. (Rs.)
Share capital 3,20,000
Life assurance fund 1-4-2002 59,44,600
Dividend paid 30,000
Interest and dividend received 2,25,400
Premiums received 2,03,000
Surrenders 14,000
Claims paid 3,94,000
Commission paid 18,600
Management Expenses 64,600
Mortgage in India 9,84,400
Agents balances 18,600
Free hold premises 80,000
Investments 46,10,000
Loans on company policies 3,47,200
Cash on deposits 54,000
Cash in hand 14,600
Bonus to policy holders 63,000
66,93,000 66,93,000
You are required to prepare company’s revenue A/c for the year ended 31-3-03 and its balance sheet as on that date.
Adjustments :
1) Claims admitted but not paid Rs. 18,600
2) Premium outstanding Rs. 24,000
3) Interest accrued Rs. 38,600
4) Management expenses due Rs. 400
14. The following figures are extracted from the books of Solvent Bank Ltd. As on 31st March 2006.
Rs.
Interest and discount received 40,60,000
Interest paid on deposits 24,00,000
Issued and subscribed capital 10,00,000
Reserve under section 17 7,00,000
Commission, exchange and brokerage 1,80,000
Rent received 60,000
Profit on sales of investments 1,90,000
Salaries and allowances 2,10,000
Rent and taxes paid 1,08,000
Stationery and printing 48,000
Postage and printing 40,000
Preliminary expenses 10,000
Audit fees 3,000
Depreciation on Bank’s properties 25,000
Director’s fees and allowances 24,000
The following further information is given :
a) A customer to whom a sum of Rs. 5,00,000 has been advanced has become insolvent and it is expected that only 40% can be recovered from his estate.
b) Provision for bad and doubtful debts on other debts necessary Rs. 1,00,000
c) Rebate on bills discounted as on 31st March, 2006 Rs. 10,000 / rebate on bills discounted as on 31st March 2007 Rs. 15,000.
d) Provide Rs. 7,00,000 for Income tax.
e) The direct desire to declare 10% dividend.
Prepare the profit and loss account in accordance with law. Make necessary assumptions.
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