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Posted By: Kenny Member Level: Gold Posted Date: 22 May 2008
|
2004 ICFAI University M.B.A Financial Accounting (MB131) : April 2004 Question paper
Question Paper
Financial Accounting (MB131) : April 2004
Section A : Basic Concepts (100 Marks)
??This section consists of questions with serial number 1 - 73.
??Answer all questions.
??Each question carries one mark.
1. Which of the following appears under the head ‘Miscellaneous expenditure’ on the assets side of
Balance Sheet of a company?
(a) Bills discounted from bank (b) Prepaid insurance
(c) Directors’ remuneration (d) Discount allowed on issue of shares
(e) Income tax paid in advance.
(1 mark)
< Answ
2. Dividends are usually paid on
(a) Authorized capital (b) Issued capital
(c) Called-up capital (d) Paid-up capital (e) Reserve capital.
(1 mark)
< Answ
3. Which of the following can be utilized for redemption of preference shares?
(a) The proceeds from fresh issue of equity shares
(b) The proceeds from issue of debentures
(c) The proceeds from issue of fixed deposit
(d) The sale proceeds of investments
(e) Both (a) and (b) above.
(1 mark)
< Answ
4. Which of the following costs is not categorized as Research and Development Costs?
(a) Cost of materials consumed in the process of research and development
(b) Amortization of patents and licenses related to research and development
(c) Depreciation of premises that is used for carrying the work of research
(d) Salaries and wages paid to personnel engaged in the research and development activities
(e) Promotional expenses on market research for existing products.
(1 mark)
< Answ
5. The maximum amount beyond which a company is not allowed to raise funds by issue of shares is
(a) Issued capital (b) Reserve capital
(c) Nominal capital (d) Subscribed capital
(e) Paid-up capital.
(1 mark)
< Answ
6. According to which of the following accounting concepts, are consolidated financial statements
prepared when a parent-subsidiary relationship exists?
(a) Going concern (b) Business entity (c) Materiality (d) Cost (e) Periodicity.
(1 mark)
< Answ
7. Rights shares are the shares
(a) Issued by a newly formed company (b) Legally issued to the public at large
(c) Offered to the existing equity shareholders (d) That have a right of redemption
(e) That have a right to cumulative dividends.
(1 mark)
< Answ
8. Which of the following data is essential for calculation of value of an equity share under the intrinsic
value method?
< Answ
(a) Normal rate of return (b) Expected rate of return
(c) Market value per share (d) Dividend per share
(e) Net equity.
(1 mark)
9. Premium on redemption of debentures account is
(a) A real account (b) A nominal account (c) A personal account
(d) An asset (e) A capital reserve.
(1 mark)
< Answ
10. The maximum rate of discount that is allowed as per the provisions of the Companies Act in the event
of a company issuing shares at a discount is
(a) 5% (b) 8% (c) 10% (d) 12% (e)
15%.
(1 mark)
< Answ
11. The trade discount on purchases is recorded
(a) When it is received (b) When the inventory is purchased
(c) When the inventory is sold (d) When the inventory is returned
(e) Not at all recorded in the books.
(1 mark)
< Answ
12. In a funds flow statement prepared on working capital basis, a short term loan repaid by the
organization
(a) Is shown as a source of working capital
(b) Is shown as an increase in cash
(c) Is shown as a decrease in cash
(d) Does not affect the working capital
(e) Is not shown either as a source or a use of funds.
(1 mark)
< Answ
13. Which of the following is a leverage ratio?
(a) Debt-Equity ratio (b) Current ratio (c) Quick ratio (d) Earning power
(e) Inventory turnover ratio.
(1 mark)
< Answ
14. The document inviting offers from public to subscribe for the debentures or shares of a body corporate
is a
(a) Share certificate (b) Debenture (c) Fixed deposit receipt (d) Prospectus
(e) Share Warrant.
(1 mark)
< Answ
15. Which of the following is not an asset?
(a) Stock of stationery (b) Goodwill
(c) Profit and loss account (credit balance) (d) Accounts Receivable
(e) Cash at bank.
(1 mark)
< Answ
16. The portion of the acquisition cost of an asset yet to be allocated is known as
(a) Written down value (b) Accumulated value
(c) Realisable value (d) Salvage value
(e) Residual value.
(1 mark)
< Answ
17. Which of the following items is/are covered under Accounting Standard-2 with regard to accounting for
inventory?
I. Financial instruments held as stock-in-trade
< Answ
II. Work in progress arising under construction contracts
III. Work in progress of service providers
IV. Work in progress of a manufacturing industry.
(a) Only (I) above (b) Only (IV) above
(c) Both (I) and (II) above (d) Both (III) and (IV) above
(e) (II), (III) and (IV) above.
(1 mark)
18. Which of the following statements is/are true?
I. Drawings account is a nominal account
II. Capital account is a real account
III. Prepaid rent is a personal account
IV. Outstanding salaries account is a nominal account
V. Patents account is a personal account.
(a) Only (I) above (b) Only (III) above
(c) Both (II) and (IV) above (d) (II), (IV) and (V) above
(e) (I), (II), (III) and (IV) above.
(1 mark)
< Answ
19. Which of the following events is/are not recorded in the books of a business?
(a) Significant monetary events after the balance sheet date
(b) Death of a chief executive of the business
(c) Government investigations into the pricing policies of the business
(d) Both (b) and (c) above
(e) (a), (b) and (c) above.
(1 mark)
< Answ
20. Which of the following appears in the profit & loss appropriation account?
(a) Interest on debentures (b) Dividend (c) Provision for taxation
(d) Provision for bad debts (e) Penalty paid for defective works.
(1 mark)
< Answ
21. Which of the following inventory valuation methods shows higher profits during the period of rising
prices?
(a) FIFO method (b) LIFO method
(c) Weighted average method (d) Simple average method
(e) Specific identification method.
(1 mark)
< Answ
22. At the time of preparation of final accounts, bad debts recovered account will be transferred to
(a) Debtor’s account (b) Profit & loss account
(c) Profit & loss adjustment account (d) Profit & loss appropriation account
(e) Provision for discount on debtors account.
(1 mark)
< Answ
23. Which of the following is not an intangible asset?
(a) Goodwill (b) Trade mark (c) Franchise (d) Accounts receivable
(e) Secret process.
(1 mark)
< Answ
24. If machinery account is debited with the amount of repairs incurred on the machine, this is an example
of
(a) Compensating error (b) Error of principle (c) Error of commission
(d) Error of omission (e) Error of partial omission.
(1 mark)
< Answ
25. If the opening inventory of a business is undercast, it will
< Answ
(a) Increase gross profit and decrease net profit
(b) Decrease gross profit as well as net profit
(c) Increase value of assets
(d) Increase gross profit as well as net profit
(e) Decrease value of assets.
(1 mark)
26. Which of the following is not a financial statement?
(a) Profit and loss account (b) Profit and loss appropriation account
(c) Balance sheet (d) Funds flow statement
(e) Trial Balance.
(1 mark)
< Answ
27. Based on which of the following concepts, is share capital account shown on the liabilities side of a
balance sheet?
(a) Business entity concept (b) Money measurement concept
(c) Duality concept (d) Going concern concept
(e) Matching concept.
(1 mark)
< Answ
28. Which of the following is a liability of a firm?
(a) Debit balance of analytical petty cash book
(b) Credit balance of bank pass book
(c) Debit balance of bank column of cash book
(d) Debit balance of cash column of cash book
(e) Credit balance of bank column of cash book.
(1 mark)
< Answ
29. Which of the following statements is true?
(a) Inventory valuation affects only the income statement
(b) Undercasting or overcasting of subsidiary book is an example of error of commission
(c) Capital expenditure wrongly treated as revenue is an example of error of commission
(d) The sum total of assets is equal to the sum total of outside liabilities
(e) Inventories should be valued at lower of historical cost and current replacement cost.
(1 mark)
< Answ
30. Provision for bad debts is made as per the
(a) Conservatism concept (b) Cost concept
(c) Consistency concept (d) Going concern concept
(e) Time period concept.
(1 mark)
< Answ
31. Purchase of fixed assets on credit is originally recorded in
(a) Purchases book (b) Ledger
(c) Cash book (d) Journal proper
(e) Both (b) and (d) above.
(1 mark)
< Answ
32. Double entry book keeping involves
(a) Two accounts being affected for each transaction which are equal and opposite to one another
(b) Two sets of books being kept for the business
(c) Business book-keeping being kept by more than one person
(d) Every entry in the business books being checked twice
(e) Every transaction is recorded once in the journal and again in the ledger.
(1 mark)
< Answ
33. Which of the following are current assets of a business?
I. Income received in advance II. Stock
< Answ
III. Debtors IV. Pre-paid expenses
V. Accrued income.
(a) Both (I) and (IV) above (b) Both (II) and (III) above
(c) (I), (II) and (III) above (d) (II), (III), (IV) and (V) above
(e) (I), (II), (III) and (IV) above.
(1 mark)
34. The excess price received over the par value of shares should be credited to
(a) Calls-in-advance account (b) Share capital account
(c) Reserve capital account (d) Share premium account
(e) Share allotment account.
(1 mark)
< Answ
35. The claims against the company not acknowledged as debts are shown as
(a) Current liabilities (b) Loans and advances
(c) Notes to balance sheet (d) Directors’ report
(e) No separate disclosure is required.
(1 mark)
< Answ
36. The amount of any transaction incorrectly recorded, either wholly or partly, is
(a) Error of omission (b) Error of commission
(c) Error of principle (d) Compensating error
(e) Error of computation.
(1 mark)
< Answ
37. The discount allowed on re-issue of forfeited shares is debited to
(a) General reserve account (b) Capital reserve account
(c) Revaluation reserve account (d) Capital redemption reserve account
(e) Forfeited shares account.
(1 mark)
< Answ
38. Under cash basis of accounting, revenue is recognized when
(a) Sale is made (b) Cash is received
(c) Goods are delivered (d) Services are rendered
(e) Both (a) and (d) above.
(1 mark)
< Answ
39. Which of the following factors is used as a multiplier of super profits in valuation of goodwill of a
business?
(a) Average capital employed in the business (b) Simple profits
(c) Number of years’ purchase (d) Normal rate of return
(e) Normal profits.
(1 mark)
< Answ
40. Declared dividend should be classified in the Balance Sheet as a
(a) Provision (b) Current liability
(c) Reserve (d) Current asset
(e) Miscellaneous expenditure.
(1 mark)
< Answ
41. ESS Ltd. issued 2,000, 10% debentures at the rate of Rs.100 each during the year 2000–2001. Interest
on debentures is payable half yearly on September 30 and March 31 every year. The company has
power to purchase its own 10% debentures in the open market for cancellation. The following purchases
were made during the year 2003–2004:
Only July 01, 2003 - 400 of its own 10% debentures at the rate of Rs.96 ex-interest.
On December 01, 2003 - 300 of its own 10% debentures at the rate of Rs.102 cuminterest.
< Answ
The total amount debited to own debenture investment account was
(a) Rs.70,000 (b) Rs.68,500 (c) Rs.69,000 (d) Rs.70,600 (e)
Rs.71,600.
(2 marks)
42. Silver Coats Ltd. invited applications for 1,00,000 equity shares of Rs.10/- each at a premium of Rs.2 per
share. The entire issue was underwritten by three underwriters in the following percentages:
The details of marked and unmarked applications received are:
The final liability of Vimal in terms of number of shares is
(a) Nil (b) 9,600 (c) 3,200 (d) 16,000 (e)
8,000.
(2 marks)
Anil 30%
Vimal 40%
Sunil 30%
Marked applications of Anil 22,000 shares
Vimal 24,000 shares
Sunil 28,000 shares
Unmarked applications 16,000 shares
< Answ
43. Sonic Ltd. issued 10,000 equity shares of Rs.10 each at a premium of 20%. The share amount was
payable as:
Applications were received for 9,500 shares and the shares were allotted to applicants in full. Vikas,
who was allotted 300 shares, failed to pay the first call. On his subsequent failure to pay the second and
final call, all his shares were forfeited. Out of the forfeited shares, 200 shares were re-issued @ Rs.9
per share. The amount transferred to capital reserve is
.
(a) Rs.200 (b) Rs.1,000 (c) Rs.800 (d) Rs.1,300 (e)
Rs.1,200
(2 marks)
On application Rs.2
On allotment (including premium) Rs.5
On first call Rs.3
On second and final call Rs.2
< Answ
44. The issued capital of Marval Ltd. is Rs.12,00,000 divided into 1,20,000 shares which were issued at a
premium of 100%. The company offers two shares for every three shares held to its existing
shareholders. If the rights issue price is Rs.410 per share and the market value at the time of rights issue
is Rs.560 per share, the value of right is
(a) Rs.60 (b) Rs.20 (c) Rs.150 (d) Rs.410 (e)
Rs.560.
(1 mark)
< Answ
45. AVON Ltd. purchased a machinery in exchange of its debentures. The machinery was installed on
March 31, 2003. The value of securities exchanged is Rs.1,85,000. It is expected that the machinery will
have a useful life of 10 years after which it will have a salvage value of Rs.5,000. The machinery was
put to use with effect from April 01, 2003. The company follows straight line method of depreciation,
the amount of depreciation charged for the year 2003-04 is
(a) Rs.18,000 (b) Rs.20,500 (c) Rs.15,500 (d) Rs.15,000 (e)
Rs.17,500.
(1 mark)
< Answ
46. While finalizing the accounts of M/s. Novelty India for the year ended March 31, 2004, the following
errors were noticed:
Salaries overstated Rs.15,000
< Answ
The impact of the above errors on the net profit is
(a) Overstatement of Rs.22,000 (b) Understatement of Rs.22,000
(c) Understatement of Rs.15,000 (d) Understatement of Rs. 7,000
(e) Overstatement of Rs. 7,000.
(1 mark)
Repairs understated Rs. 7,000
Income from investments understated Rs. 7,000
47. As on March 31, 2004, the favourable balance of Mr.Prahlad as per bank pass book is Rs.20,000. The
pass book balance did not agree with the balance as per cash book. On scrutiny, the following omissions
and commissions were noticed:
??A cheque for Rs.4,000 issued to Mr.Pramod has not been presented for payment till
date.
??Mr.Jeevan, a tenant, directly deposited into the bank account an amount of Rs.10,000
towards rent and the same is not accounted in the cash book.
??A cheque for Rs.15,000 deposited in the bank is not yet realized.
??The interest on debentures for this year, directly collected by the bank, amounted to
Rs.10,000 and the same is not accounted in the cash book.
The bank balance as per cash book is
(a) Debit balance of Rs.11,000 (b) Credit balance of Rs.11,000
(c) Credit balance of Rs.20,000 (d) Debit balance of Rs. 40,000
(e) Debit balance of Rs.19,000.
(2 marks)
< Answ
48. Consider the following information pertaining to Xylofone Ltd.:
On April 01, 2003, the Provision for bad debts account showed a credit balance of Rs.30,000. As on
March 31, 2004, the status of the following debtors is
??Mr. A had become insolvent and only 40 paise in a rupee is expected to be
realized out of his estate in full settlement. He owed a total amount of Rs.20,000
??Mr. B who owes an amount of Rs.10,000 became bankrupt and it was understood
that no amount will be recovered from him.
??Mr. C has agreed to pay Rs.3,000 as final settlement against his due of Rs.10,000
and the balance is irrecoverable.
If the company decided to maintain the provision at Rs.35,000 as on March 31, 2004, the amount to be
debited to Profit and loss account for the year ending March 31, 2004, after considering the above, is
(a) Rs. 34,000 (b) Rs. 29,000 (c) Rs. 26,000 (d) Rs. 35,000 (e) Rs.
64,000.
(2 marks)
< Answ
49. On April 01, 2002, Ray Ltd. purchased furniture for Rs.60,000. The book value of the furniture on
March 31, 2004 is Rs.43,350. If the company charges depreciation on furniture under written down
value method, the rate of depreciation is
(a) 35% (b) 30% (c) 25% (d) 20% (e)
15%.
(1 mark)
< Answ
50. M/s.Pie Company, a dealer in herbal creams records its stock under First-in-First-out method, so as to
minimize accumulation of outdated stock. The opening stock as on
March 01, 2004 is 150 units at the rate of Rs.20 per unit. The purchases and sales made during the
month are:
Purchases:
Date No. of units Cost price per unit
04-03-2004 200 Rs.25
14-03-2004 100 Rs.22
< Answ
Sales:
Closing stock of the company as on March 31, 2004 is
(a) Rs.1,500 (b) Rs.6,000 (c) Rs.3,000 (d) Rs.4,500 (e)
Rs.7,500.
(2 marks)
21-03-2004 300 Rs.30
26-03-2004 150 Rs.40
Date No. of units
03-03-2004 100
10-03-2004 150
15-03-2004 100
25-03-2004 200
28-03-2004 200
Consider the following data pertaining to Mr. Krishnan for the year ended March 31, 2004, and answer
Question No.s 51 and 52
Trial Balance as on March 31, 2004
Additional information:
???Depreciate the fixed assets at the rate of 10% per annum.
Make a provision for bad and doubtful debts at the rate 5% on debtors.
Particulars Rs. Particulars Rs.
Insurance 4,000 Sales 5,10,000
Purchases 4,50,000 Returns outward 15,000
Opening stock 30,000 Capital 2,00,000
Salaries and wages 10,000 Sundry creditors 45,500
Rent paid 5,000
Insurance Prepaid 1,000
Freight inward 5,500
Cash on hand 23,800
Returns inward 10,000
Closing stock 10,000
Managerial commission 500
Fixed Assets 1,25,500
Sundry debtors 35,000
Land 60,000
Bad debts 200
Total 7,70,500 Total 7,70,500
51. The net profit/loss of Mr. Krishnan for the year ending March 31, 2004 is
(a) Rs.4,500(loss) (b) Rs.3,500 (profit) (c) Rs.4,300 (loss) (d) Rs14,500 (loss)
(e) Rs.6,500 (profit).
(3 marks)
< Answ
52. The total of Balance Sheet of Mr.Krishnan as on March 31, 2004 is
(a) Rs.2,30,000 (b) Rs.2,41,000 (c) Rs.2,51,000 (d) Rs.2,46,500 (e)
Rs.2,30,800.
(2 marks)
< Answ
53. Consider the following data pertaining to XLNT Ltd.
i. Original cost of furniture (Rs.) 5,000
< Answ
The estimated useful life of the furniture is
(a) 3 years (b) 4 years (c) 5 years (d) 6 years (e) 7
years.
(1 mark)
ii. Rate of depreciation under written down value method
(%)
20
iii. Residual value of furniture at the end of useful life (Rs.) 2,048
54. Kohinoor Ltd. started its operations on April 15, 2003. Consider the following data pertaining to the
company for the year 2003-2004:
The balance of cash as on March 31, 2004 is
(a) Rs.1,15,000 (b) Rs.1,55,000 (c) Rs.1,13,000 (d) Rs.2,75,000 (e) Rs.2,33,000.
(2 marks)
Particulars Rs.
Cash Sales 6,80,000
Credit Sales 1,20,000
Bad debts written off 2,000
Issue of shares for cash 5,00,000
Purchase of fixed assets for cash 4,00,000
Depreciation 40,000
Amount received from bank by way of short-term loan 1,00,000
Short-term loan repaid during the year 25,000
Manufacturing and administrative expenses paid 3,50,000
Cash Purchases 1,50,000
Credit purchases 2,90,000
Amount deposited in bank 2,00,000
< Answ
55. Consider the following data pertaining to Dhamaka Ltd.:
The company has issued 10,000 shares of Rs.100 each at a premium of Rs.15. M/s Underwriters &
Brokers have taken 100 percent underwriting at a percentage of maximum allowable commission under
the Companies Act, 1956. The applications were received for 10,000 shares and allotment was made in
full.
The commission payable to M/s Underwriters & Brokers is
(a) Rs.10,000 (b) Rs.57,500 (c) Rs.50,000 (d) Rs.25,000 (e)
Rs.28,750.
(2 marks)
< Answ
56. In the books of Pyramid Ltd. goods worth Rs.7,850 returned by Mr. Prakash were entered in the returns
inward day book. Therefrom, the inexperienced accountant posted the amount to the debit of
Mr.Prakash account.
At the time of preparation of trial balance, the difference in books was placed to suspense account. The
entry to be passed to rectify the mistake is
Rs. Rs.
(a) Returns inward account Dr. 7,850
To Suspense account 7,850
(b) Returns inward account Dr. 7,850
To Prakash account 7,850
(c) Suspense account
Dr.
15,700
< Answ
(2 marks)
To Prakash account 15,700
(d) Returns inward account Dr. 15,700
To Prakash account 15,700
(e) Prakash account Dr. 15,700
To Suspense account 15,700.
57. On March 31, 2004, the bank column of cash book of Sree Ltd. showed an overdraft balance of
Rs.3,400 and this balance did not agree with the balance as per bank pass book. On verification, the
following facts were noticed:
i. An outstation cheque for Rs.6,300 deposited in the bank on March 28, 2004 was not collected by
the bank till March 31, 2004.
ii. Bank charges amounting to Rs.120 and interest charges amounting to Rs.790 were not recorded in the cash
book.
iii. Cheques issued amounting to Rs.5,650 were not presented for payment as on March 31,
2004.
iv. Interest on investment of Rs.5,200 collected by the banker appeared only in the bank
statement.
The bank balance as per pass book as on March 31, 2004 was
(a) Rs. 2,060 (debit) (c) Rs.10,160 (debit)
(b) Rs. 2,060 (credit) (d) Rs. 240 (credit) (e) Rs. 240 (debit).
(2 marks)
< Answ
58. Consider the following particulars pertaining to the sole proprietor business of Mr. Katyal:
The profit for the year 2003-2004 was
(a) Rs.4,45,000 (b) Rs. 65,000 (c) Rs. 30,000 (d) Rs. 1,05,000 (e)
Rs. 85,000
(2 marks)
Particulars As on April 01, 2003 (Rs.) As on March 31, 2004 (Rs.)
Capital 3,40,000 ?
Loan from bank 1,85,000 1,20,000
Sundry creditors 25,000 40,000
Fixed assets 2,70,000 2,45,000
Inventory 1,50,000 1,85,000
Sundry debtors 70,000 95,000
Cash and bank 60,000 80,000
< Answ
59. VNL Enterprises, which started its operations on April 01, 2003, provided the following untallied Trial
Balance as on March 31, 2004:
Particulars Rs.
Sales 5,65,000
Carriage inward 28,000
Other expenses 31,000
Fixed assets 10,90,000
Sundry debtors 1,25,000
Sundry creditors 95,000
Cash and bank 65,000
< Answ
On verification, it was noticed that the difference in trial balance is on account of omission of
purchases. If the value of stock as on March 31, 2004 was Rs. 50,000, the gross profit for the year 2003-
2004 was
(a) Rs.3,66,000 (b) Rs.3,94,000 (c) Rs.3,48,000 (d) Rs.2,08,000 (e)
Rs.6,15,000.
(2 marks)
Capital 9,00,000
60. The total of debit side of trial balance of M&M Company is Rs.2,45,000 and that of the credit side is
excess by Rs.2,68,900. Subsequently the following mistakes are discovered.
The total of the corrected trial balance is
(a) Rs.2,60,100 (b) Rs.2,59,900 (c) Rs.2,30,100 (d) Rs.2,65,900 (e)
Rs.2,51,100.
(2 marks)
Particulars Correct Amount
(Rs.)
Amount which appears in trial
balance (Rs.)
Opening stock 40,500 40,600
Advertisement expenses 15,000 15,000 (credit side)
Interest from investments 6,000 Omitted
< Answ
61. M/s.Saketha Enterprises introduced the imprest system of petty cash book, the amount of imprest being
Rs.1,000. The petty cash transactions during the month of March 2004 are as under:
The amount of cash received on April 01, 2004 to make up the imprest balance is
(a) Rs.578 (b) Rs.194 (c) Rs.806 (d) Rs.422 (e)
Rs.1,000.
(1 mark)
Particulars Amount
(Rs.)
Stamps 145
Conveyance 186
Repairs 228
Stationery 154
Other office expenses 93
< Answ
62. Brijesh Ltd. issued 10,000 equity shares of Rs.100 each at a premium of Rs.20 payable as follows:
On application Rs.30
On allotment Rs.50 (inclusive of premium)
On first call Rs.20
On final call Rs.20
Applications were received for 10,500 shares. The company rejected the excess applications for 500
shares and the balance were allotted in full. The company forfeited 500 shares of
Mrs. Mithili for non-payment of first call of Rs.20 per share after making the second call. On forfeiture,
the Share Capital account will be
(a) Debited by Rs.60,000 (b) Credited by Rs.10,000
(c) Debited by Rs.50,000 (d) Credited by Rs.50,000
(e) Debited by Rs.35,000.
(2 marks)
< Answ
63. Consider the following data pertaining to Jagriti Ltd. as on March 31, 2004:
The value of stock as on March 31, 2004 is Rs.75,000. The company has the practice of charging
depreciation on the fixed assets at the rate of 15% on written down value method. The total of liabilities
side of Balance Sheet as on March 31, 2004 is
(a) Rs.7,38,000 (b) Rs.6,68,000 (c) Rs.6,73,000 (d) Rs.5,93,000 (e)
Rs.7,43,000.
(3 marks)
Particulars Amount (Rs.) Amount (Rs.)
Opening stock 90,000
Sales 6,35,000
Purchases 4,56,000
Salaries 86,000
Other expenses 73,000
Fixed assets 5,00,000
Sundry debtors 45,000
Sundry creditors 32,000
Cash and bank 53,000
Share capital 6,00,000
Short term loan 36,000
13,03,000 13,03,000
< Answ
64. In the year 2003- 2004, Ross Ltd. imported a new machine and made the following payments in relation
to it:
Cost as per supplier’s list Rs.5,20,000
Less: Agreed discount Rs. 50,000 Rs.4,70,000
The cost of the machine is
(a) Rs.5,40,000 (b) Rs.5,45,000 (c) Rs.4,70,000 (d) Rs.5,50,000 (e)
Rs.5,70,000.
(1 mark)
Delivery charges 10,000
Erection charges 20,000
Annual maintenance charges paid for the period 2003-04 30,000
Customs duty 40,000
Annual insurance premium 5,000
< Answ
65. The following Trial Balance pertaining to John Vicky as on March 31, 2004 was prepared by an
inexperienced accountant:
Trial Balance of John Vicky as at March 31, 2004
Particulars Debit
(Rs.)
Credit
(Rs.)
Capital (1st April, 2003) 89,000
Drawings 10,000
Stock (1st April, 2003) 37,000
Purchases 2,31,250
Sales 3,94,000
Motor vehicles 14,500
Cash in hand 1,350
Sundry creditors 49,760
Sundry debtors 1,39,700
< Answ
Though, the Trial Balance has tallied, it has certain errors which were subsequently rectified. The total
of corrected Trial Balance as on March 31, 2004 is
(a) Rs.5,52,320 (b) Rs.4,64,200 (c) Rs.5,55,510 (d) Rs.5,43,200 (e)
Rs.5,03,440.
(2 marks)
Bank overdraft 9,000
Administrative expenses 76,360
Office equipment 35,000
Carriage outward 2,310
Returns inward 2,050
Provision for bad debts 4,250
Returns outward 3,160
Discount allowed 2,800
Discount received 3,150
Total 5,52,320 5,52,320
66. Consider the following data pertaining to Leo Ltd.:
The super profit of the company is
(a) Rs.50,000 (b) Rs.42,000 (c) Rs.40,000 (d) Rs.30,000 (e)
Rs.18,000.
(2 marks)
Profit for 2001-2002 Rs. 4,38,000
Profit for 2002-2003 Rs. 4,62,000
Profit for 2003-2004 Rs. 4,50,000
Normal rate of return 12%
Capital employed Rs.35,00,000
< Answ
67. Consider the following data pertaining to Universe Ltd. as on March 31, 2004:
???Total sundry debtors as per Trial Balance Rs.40,600
???Bad debts identified after the preparation of Trial Balance Rs.600
???Provision for bad debts to be created @ 5% on sundry debtors
???Provision for discount on sundry debtors to be created @ 2%.
The amount of provision for discount on sundry debtors to be created for the period ended
March 31, 2004 is
(a) Rs.760 (b) Rs.2,000 (c) Rs.771 (d) Rs.800 (e)
Rs.812.
(2 marks)
< Answ
68. Consider the following data in respect of material traded by Success Ltd. during the month of March
2004:
Opening stock as on March 01 2004 is 1,000 kg. @ Rs.20 per kg.
On March 31, 2004, the value of stock held by the company under the Weighted Average Method is
(a) Rs.23,083 (b) Rs.23,000 (c) Rs.24,000 (d) Rs.28,000 (e)
Rs.26,250.
(2 marks)
Date Purchases Issues
Quantity (Kg) Rate per Kg Rs. Quantity (Kg)
March 10,2004 500 23.00
March 15, 2004 750
March 20, 2004 1000 26.25
March 31, 2004 750
< Answ
69. Mr. Mohan sold goods to Mr. Raju for Rs.900. The catalogue price of the goods is Rs.1,000. Mr. Mohan
also offered a further discount of Rs.50 for spot payment of cash. Mr. Raju took delivery of goods by
paying cash.
< Answ
The journal entry to record the transaction in the books of Mr. Mohan is
(a) Cash a/c. – Dr. Rs.850
Trade discount a/c. – Dr. Rs.100
Cash discount a/c. – Dr. Rs. 50
To Sales a/c. Rs.1,000
(b) Cash a/c. – Dr. Rs.850
Discount a/c. – Dr. Rs.150
To Sales a/c. Rs.1,000
(c) Cash a/c. – Dr. Rs.850
Discount a/c. – Dr. Rs. 50
To Sales a/c. Rs. 900
(d) Cash a/c. – Dr. Rs.850
To Sales a/c. Rs. 850
(e) Mr. Raju’s a/c. – Dr. Rs.850
To Sales a/c. Rs. 850.
(2 marks)
70. H. Ltd. acquired 80% shares of S. Ltd. on October 01, 2003. At the time of acquisition, the plant and
machinery of S. Ltd. was revalued by H. Ltd. at 20% above its book value of Rs.5,00,000. At the time
of consolidation of Balance Sheet on March 31, 2004, the share of
H. Ltd. in the profit on revaluation is
(a) Rs.80,000 (Capital profit) (b) Rs.80,000 (Revenue profit)
(c) Rs.40,000 (Capital profit) (d) Rs.40,000 (Revenue profit)
(e) Rs.20,000 (Capital profit).
(1 mark)
< Answ
71. For the year 2003-04, the directors of Anuhya Ltd. proposed a dividend of 19%. The capital structure of
the company as on the date of proposal of dividend is :
If the profit for the year 2003-04 is Rs.2,25,000, the minimum amount of profits that will have to be
compulsorily transferred to general reserve is
(a) Rs.16,875 (b) Rs.11,250 (c) Rs.22,500 (d) Rs.1,52,000 (e)
Rs.1,50,100.
(2 marks)
Rs.
Authorised Capital 10,00,000
Issued and Called-up capital 8,00,000
Calls-in-arrear 10,000
Calls-in-advance 20,000
Securities Premium 80,000
< Answ
72. Consider the following profits pertaining to Vennela Ltd. for the last 3 years:
The weighted average profit of the company is
(a) Rs.4,50,000 (b) Rs.4,35,000 (c) Rs.4,10,000 (d) Rs.3,85,000 (e)
Rs.3,50,000.
(2 marks)
Year Rs.
1 3,30,000
2 4,20,000
3 4,80,000
< Answ
73. The following information is given about PS Ltd.:
Inventories Rs.4.0 lakhs
< Answ
The quick ratio for the firm is
(a) 5.45 (b) 3.75 (c) 3.64 (d) 2.50 (e)
1.56.
(2 marks)
Sundry debtors Rs.3.0 lakhs
Cash and Bank balances Rs.5.0 lakhs
Short-term bank borrowings Rs.1.0 lakhs
Accounts payable Rs.2.2 lakhs
END OF SECTION B
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