2006 ICFAI University M.B.A Financial Accounting-I (MB131): July 2006 Question paper
Question Paper
Financial Accounting-I (MB131): July 2006
??Answer all questions.
??Marks are indicated against each question.
1. The funds available with a company after paying all claims including tax and dividend is called
(a) Net profit (b) Net operating profit
(c) Capital profit (d) Retained earnings
(e) Profit before tax.
(1 mark)
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2. Which of the following events/transactions is not recorded in the books of account of a
business?
(a) Withdrawal of goods by the proprietor for personal consumption
(b) Sale of an asset on credit
(c) Purchase of a new asset in exchange of an old asset
(d) Receipt of interest by proprietor on bank fixed deposit held jointly with spouse
(e) Loss of stock by fire.
(1 mark)
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3. Which of the following accounting concepts enables comparison of financial statements over a
period of time?
(a) Cost concept (b) Consistency concept
(c) Materiality concept (d) Money measurement concept
(e) Accounting period concept.
(1 mark)
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4. Under the Companies Act, a company is normally not permitted to have an accounting period
extending beyond
(a) 6 months (b) 12 months (c) 15 months
(d) 18 months (e) 22 months.
(1 mark)
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5. Who of the following is not an internal user of Financial Statements?
(a) Board of Directors (b) Partners (c) Investors
(d) Managers (e) Officers.
(1 mark)
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6. For a trading company which of the following is not a non-trading income or expense?
(a) Rent received (b) Profit from sale of old furniture
(c) Dividend received (d) Interest on borrowings
(e) Interest on Investments.
(1 mark)
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7. Which of the following statements is false?
(a) Accounting principle is general law or rule followed in the preparation of financial
statements
(b) Usefulness, objectivity and feasibility are the three basic norms generally found in
accounting principles
(c) The entity concept does not consider the business and the proprietor as distinct from
each other
(d) In accountancy all business transactions are recorded as having dual aspect
(e) The convention of disclosure implies that all material information should be disclosed in
the accounts.
(1 mark)
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8. When applied to Balance-Sheet the convention of conservatism results in
(a) Understatement of assets
(b) Understatement of liabilities and provisions
(c) Over statement of capital
(d) Understatement of assets and liabilities and provisions
(e) Understatement of assets, liabilities and provisions and capital.
(1 mark)
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9. The total of all the current assets of Intelligent Limited is Rs. 3,00,000. The following
information is also available from the trial balance of the company.
The only other current asset not included in the information above is closing stock. Its value
must be
(a) Rs.2,14,500 (b) Rs.2,04,500 (c) Rs.2,02,000
(d) Rs.1,98,000 (e) Rs.2,41,500.
(2 marks)
Sundry debtors Rs. 30,500
Current liabilities Rs. 16,400
Provision for taxation Rs. 12,000
Cash & bank balance Rs. 30,000
Bills receivable Rs. 25,000
Office typewriter Rs. 39,000
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10.Valuation of inventory on the same basis every year, is based on the principle of
(a) Cost concept (b) Consistency concept
(c) Conservatism concept (d) Matching concept
(e) Accounting period concept.
(1 mark)
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11.Consider the following data pertaining to Volga Ltd.:
While finalizing the annual accounts, if the company values the machinery at Rs.12,00,000,
which of the following concepts is violated by the company?
(a) Cost (b) Matching
(c) Realisation
(d) Periodicity (e) Business Entity.
(1 mark)
Particulars Rs.
Cost of the machinery purchased on April 1, 2005 10,00,000
Installation charges 1,00,000
Market value as on March 31, 2006 12,00,000
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12.As per Accounting Standard-1, which of these accounting assumptions are taken into
consideration while preparing financial statements?
I. Prudence.
II. Going concern.
III. Accrual.
IV. Consistency.
(a) Both (I) and (IV) above (b) Both (II) and (III) above
(c) Both (I) and (III) above (d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.
(1 mark)
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13.The ending balance of owner’s equity is Rs.21,000. During the year, the owner contributed Rs.
6,000 and withdrew Rs.4,000. If the firm had Rs.8,000 net income for the year, what was the
owner’s equity at the beginning of the year?
(a) Rs.23,000 (b) Rs.21,000 (c) Rs.19,000 (d)
Rs.11,000 (e) Rs.25,000.
(2 marks)
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14.According to money measurement concept, which of the following will be recorded in the
books of accounts?
(a) Health of the Chairman of the company
(b) Quality control in the business
(c) Value of building
(d) ISI certification obtained
(e) Election of board of directors.
(1 mark)
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15.Accounting Standards 12 (AS 12) pertains to
(a) Accounts for Amalgamation
(b) Accounting for Government Grants
(c) Accounting for the Effects of Changes in Foreign Exchange Rates
(d) Accounting for Construction Contracts
(e) Contingencies and Events Occurring after the Balance-Sheet Date.
(1 mark)
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16.The income or expenses which arise in the current year as a result of errors or omissions in the
preparation of financial statements of one or more previous years is known as
(a) Prior period items (b) Extraordinary items
(c) Contingent items (d) Preliminary items
(e) Equity items.
(1 mark)
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17.Which of the following represent(s) Personal accounts in accounting parlance?
I. Sundry creditors.
II. Bank account.
III. Outstanding wages.
IV. Prepaid insurance.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Only (IV) above
(e) All (I), (II), (III) and (IV) above.
(1 mark)
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18.M/s. Swapna 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 June 2006 are as
under:
The amount of cash received on July 01, 2006 to make up the imprest balance is
(a) Rs.678 (b) Rs.294 (c) Rs.906 (d)
Rs.522 (e) Rs.1,100.
(2 marks)
Particulars
Amount
(Rs.)
Stamps 145
Conveyance 186
Repairs 228
Stationery 154
Other office expenses 193
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19.Which of the following is not a nominal A/c?
(a) Purchases (b)
Sales (c) Rent
(d) Trade mark (e) Advertisement.
(1 mark)
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20.Which of the following type of error will not be reflected by a Trial Balance?
(a) Posting of a transaction twice
(b) Omission of a transaction
(c) Wrong calculation of balance in ledger accounts
(d) Omission of an account balance
(e) Wrong totaling in a subsidiary book.
(1 mark)
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21.Consider the following data pertaining to purchases made by Zodiac Ltd., a dealer in electronic
goods, for the month of June 2006:
On June 22, 2006, the company purchased from Indian Stationers on credit for office use 10
dozens of carbon papers at the rate of Rs.35 per dozen and 10 dozens of ball pens at the rate of
Rs.25 per dozen.
The total of purchases for the month of June 2006, was
(a) Rs.2,14,350 (b) Rs.2,38,000 (c) Rs.2,14,950
(d) Rs.2,38,600 (e) Rs.2,14,200.
(2 marks)
Date Particulars No. of units
Rate per unit
Rs.
Trade
Discount
June 01 Black & White TVs 50 3,000 10%
Colour TVs 10 6,000 10%
June 09 Tape Recorders 10 1,000 10%
Two-in-one 10 1,500 10%
June 19 Audio Cassettes 100 30 5%
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22.Consider the following data pertaining to a company for the month of June 2006:
The sales of the company during the month are
(a) Rs.1,41,250 (b) Rs.1,35,600 (c) Rs.1,33,750
(d) Rs.1,28,400 (e) Rs.1,13,000.
Opening stock Rs.22,000
Closing stock Rs.25,000
Purchases less returns Rs.1,10,000
Gross profit margin (on sale) 20%
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(1 mark)
23.Which of the following statements is false?
(a) Credit side total of discount column of cash book is an income
(b) Credit balance of bank pass book is an overdraft
(c) Debit balance of bank column of cash book is an asset
(d) Debit balance of cash column of cash book is an asset
(e) Credit balance of bank column of cash book is a liability.
(1 mark)
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24.Consider the following data pertaining to M/s. Libra Company:
During the year 2005-06, the sales were Rs.3,60,000 and all were on credit. The cash
purchases were Rs.80,000 and credit purchases were Rs.2,00,000. Expenses paid during the
year were Rs.70,000.
The cash and bank balance of M/s. Libra Company as on March 31, 2006 was
(a) Rs.50,000 (b) Rs.90,000 (c) Rs.70,000
(d) Rs.80,000 (e) Rs.60,000.
(2 marks)
Particulars
As on April 01, 2005
Rs.
As on March 31, 2006
Rs.
Cash & bank 60,000 ?
Sundry debtors 50,000 40,000
Sundry creditors 70,000 80,000
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25.Purchases of office furniture on acceptance of a bill of exchange is recorded in
I. Journal proper.
II. Bills payable book.
III. Purchases book.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) Both (II) and (III) above.
(1 mark)
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26.In retail inventory method, original selling price may be modified. If the selling price is
lowered below the original selling price, it is known as
(a) Markup (b) Markup cancellation
(c) Net markup (d) Markdown (e)
Net markdown.
(1 mark)
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27.Consider the following information of Make-up Company for the year 2005-2006:
The amount to be debited to profit and loss account to make the estimated provision is
(a) Rs.8,600 (b) Rs.10,400 (c) Rs.10,520 (d) Rs.10,600
(e) Rs.10,680.
(2 marks)
Opening balance of provision for debtors account Rs. 20,000
Bad debts during the year Rs. 18,000
Closing balance of Sundry debtors Rs.2,65,000
Estimated provision for doubtful debts 4%
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28.A company purchased second hand machinery in exchange of its 2,000 shares. The book value
of the machinery is Rs.2,25,000 and similar machinery is available in the market for
Rs.2,50,000. The book value of the company’s share is Rs.90 and its shares are quoted at
Rs.110 in the market. The value of machinery to be taken in the book is
(a) Rs.2,25,000 (b) Rs.2,50,000 (c) Rs.1,80,000
(d) Rs.2,20,000 (e) Rs.2,00,000.
(2 marks)
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29.Which of the following is not included in the cost of land?
(a) Broker’s commission (b) Legal fee (c) Stamp duty
(d) Registration charge (e) Property tax.
(1 mark)
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30.Renewal fee for patent is
(a) Capital expenditure (b) Revenue expenditure
(c) Deferred revenue expenditure (d) Development expenditure
(e) Contingent expenditure.
(1 mark)
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31.The main objective of providing depreciation is to
(a) Calculate the true net profit
(b) Compute the actual cash profit
(c) Create funds for replacement of fixed assets
(d) Reduce tax burden
(e) Value the equity shares of a company.
(1 mark)
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32.Laxman Ltd. recovered bad debts of Rs.20,000 from Mr. Tarun and it was erroneously credited
to Mr. Tarun’s account. The rectification of this error will result in
(a) An increase in net profit by Rs.20,000
(b) A decrease in net profit by Rs.20,000
(c) An increase in net profit by Rs.40,000
(d) A decrease in net profit by Rs.40,000
(e) No change in net profit.
(1 mark)
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33.If the difference in trial balance is controlled in Suspense A/c what will be the Suspense A/c
balance due to the following errors?
I. Debited Purchases A/c Rs.6,500 for furniture purchased.
II. Debited Bansal’s A/c and Salary A/c Rs.3,000 each for salary paid to him.
III. Debited D.Gupta & Co.’s A/c Rs.7,350 for goods purchased from them on credit.
IV. Credited M/s Roy & Co Rs. 100 for cash discount allowed by them.
(a) Rs.16,750 (b) Rs.10,250 (c) Rs.17,500 (d) Rs.24,200
(e) Rs.24,100.
(2 marks)
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34.
Consider the following information of Hyder Ltd. of Hyderabad for the year 2005-2006:
The opening balance of sundry creditors account was
(a) Rs.25,000 (b) Rs.45,000 (c) Rs.75,000
(d) Rs.2,05,000 (e) Rs.1,25,000.
Credit purchases during the year Rs. 9,25,000
Payment made to creditors during the year Rs.10,00,000
Closing balance of sundry creditors account Rs. 40,000
Discount received Rs. 10,000
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(1 mark)
35.Consider the following data pertaining to Wise Ltd. for the month of June2006:
Balance as per bank column of the cash book of Wise Ltd. as on June 30, 2006 was
(a) Rs.4,670 (Debit) (b) Rs.4,700 (Credit)
(c) Rs.5,030 (Debit) (d) Rs.5,300 (Credit)
(e) Rs.5,360 (Credit).
(2 marks)
Particulars Rs.
i. Balance as per Bank pass book (Overdraft) 5,000
ii. Bank charges for collection of up-country cheque 30
iii Amount of interest on UTI deposits directly collected by the bank 330
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36.The following errors were made by the accountant of a company in the profit and loss account
during the year 2005 – 2006.
Salaries overstated by Rs.15,000
Repairs understated by Rs. 7,000
Income from investments understated by Rs. 7,000
The impact on the net profit during the year will be
(a) Rs.22,000 (overstated) (b) Rs.22,000 (understated)
(c) Rs.15,000 (understated) (d) Rs.7,000 (understated)
(e) Rs.7,000 (overstated).
(2 marks)
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37.The following balances are extracted from the books of accounts of Silver Line Ltd. as on
March 31, 2006.
The total of Trial Balance of the company as on March 31, 2006 was
(a) Rs.11,03,300 (b) Rs.13,12,700 (c) Rs.13,09,700
(d) Rs.13,12,300 (e) Rs.11,07,500.
(2 marks)
Particulars Rs. Particulars Rs.
Share capital account 2,68,800 Manufacturing wages 81,940
Preliminary expenses 21,100 Sales 7,10,800
Sundry creditors 1,10,060 Returns inward 5,560
15% Term- Loan 40,000 Salaries 2,79,840
Closing inventory as on
March 31, 2006
2,05,200 Returns outward 2,060
Cash at bank 44,000 Discount allowed 8,200
Sundry debtors 1,43,000 Office administrative expenses 21,740
Bills Payable 1,55,500 Prepaid insurance 1,200
Provision for doubtful
debts
2,000 Insurance 800
Fittings and Fixtures 75,540 Bad debts 7,240
Discount received 9,200 Commission received 11,280
Opening inventory as on
April 01, 2005
1,09,360 Outstanding salaries 3,000
Purchases 3,07,980
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38.Consider the following data pertaining to M/s. Ramu Enterprises as on March 31, 2006:
Additional Information:
Gross profit of M/s.Ramu Enterprises for the year ended March 31, 2006 was
(a) Rs.73,800 (b) Rs.75,800 (c) Rs.74,800
(d) Rs.76,200 (e) Rs.75,200.
(2 marks)
Particulars Rs.
Credit sales 1,40,000
Credit purchases 20,000
Cash sales 20,000
Cash purchases 70,000
Wages paid 5,000
Salaries paid 2,000
Returns inward 3,000
Returns outward 2,000
Carriage inward 1,000
Carriage outward 1,000
Printing and stationery 600
Gas, water and fuel 2,000
Raw materials destroyed by fire 2,000
Particulars
As on April 01, 2005 As on March 31, 2006
Rs. Rs.
Inventory 27,000 40,000
Outstanding wages 500 700
Outstanding salaries 400 300
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39.As per the Profit and loss account of Vardhan Ltd. for the year ended March 31, 2006 the
amount of salary expenditure was Rs.4,15,000. If the balance of outstanding salaries as on
April 01, 2005 and March 31, 2006 was Rs.52,000 and Rs.64,000, respectively, the cash paid
on account of salaries during the year 2005-06 was
(a) Rs.3,63,000 (b) Rs.4,03,000 (c) Rs.4,67,000
(d) Rs.4,27,000 (e) Rs.4,79,000.
(2 marks)
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40.Some financial information pertaining to M/s Storewell Supermarkets are as follows:
The gross profit margin of the firm is
(a) 25.6 % (b) 29.1% (c) 34.35% (d)
39.10% (e) 30.20%.
(2 marks)
Particulars Rs.
Sales 3,66,967
Cost of goods sold 2,73,135
Net profit 8,679
Opening Inventory 43,382
Closing Inventory 56,354
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41.Obsolescence of a depreciable asset may be caused by
I. Technological changes.
II. Improvement in production method.
III. Change in market demand for the product or service output.
IV. Legal or other restrictions.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Only (IV) above
(e) All (I), (II), (III) and (IV) above.
(1 mark)
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42.The Balance sheet of Mr. Sam as on March 31, 2006 is as below
Further investigation reveals the following information
i. Closing stock includes damaged goods costing Rs.1000 which have an estimated sale
value of Rs.750.
ii. Debtors include Rs.200 in respect of a customer who is no more.
iii. Bank overdraft charges amounting to Rs.80 not been recorded.
After passing the adjusting entries, the total of revised Balance-Sheet of Mr. Sam was
(a) Rs.30,370 (b) Rs.30,450 (c) Rs.31,430
(d) Rs.31,450 (e) Rs.31,370.
(2 marks)
Particulars Rs. Rs. particulars Rs. Rs.
Liabilities Assets
Capital as on 1-4-
2005
18,900 Land and Building 15,500
Add:Profit for the
year
4,500 Machinery (at cost) 13,000
Less Drawings 1,500 Less depreciation 7,500
21,900 5,500
S. Creditors 6,300 Stock at cost 5,700
Bank Overdraft 2,700 S. debtors 4,200
30,900 30,900
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43.The revised Accounting Standard (AS 2) does not apply to
I. Livestock.
II. Agricultural and forest products.
III. Mineral Oils.
IV. Ores and gases.
V. Machinery spares.
(a) Only (I) above (b) Both (I) and (II) above
(c) (II), (III) and (IV) above (d) (I), (II), (III) and (IV) above
(e) All (I), (II), (III), (IV) and (V) above.
(1 mark)
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44.During a period of steadily declining prices which of the following methods of measuring the
cost of goods sold is likely to result in reporting the lowest gross profit?
(a) LIFO method (b) FIFO method
(c) Simple Average method (d) Weighted Average method
(e) Moving Average method.
(1 mark)
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45.Johnson and Thomson Ltd. sold a depreciable asset for Rs.30,000 payable in cash. The
accumulated depreciation amounted to Rs.50,000 and a loss of Rs.10,000 was recognized on
sale. The original cost of the asset was
(a) Rs.90,000 (b) Rs.70,000 (c) Rs.60,000 (d) Rs.40,000
(e) Rs.30,000.
(1 mark)
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46.Consider the following:
I. Rate of depreciation under the written down method = 20%
II. Original cost of the asset = Rs.1,00,000
III. Residual value of the asset at the end of useful life = Rs. 40,960
The estimated useful life of the asset, in years, is
(a) 4 (b) 5 (c) 6 (d)
7 (e) 8.
(2 marks)
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47.When the claim on account of loss of stock is fully recoverable from the insurance company,
the Journal entry to record the same will be
(a) Cash A/c Dr.
To Insurance company
(b) Insurance claim A/c Dr.
To Trading A/c
(c) Trading A/c Dr.
To Insurance claim A/c.
(d) Insurance claim A/c Dr.
To P & L A/c.
(e) Insurance company A/c Dr.
To Insurance claim A/c
(1 mark)
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48.The rates of depreciation in respect of various assets have been laid down by the
(a) Companies Act
(b) Accounting Standard - 6
(c) Accounting Standard - 10
(d) Institute of Chartered Accountants of India (ICAI)
(e) Institute of Cost and Works Accountant of India (ICWA).
(1 mark)
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49.Dinakar operates a garment store in a hired premises at a rent of Rs.1,20,000 per annum. The
owner of the premises, who has recently completed her fashion-designing course, wishes to
purchase the garment store. The details of the business of Dinakar are as under:
I. The profit for the year 2005-2006 is Rs.2,30,000.
II. The capital employed by Dinakar is Rs.20,00,000.
III. The value of the premises is Rs.4,00,000.
If the normal return on capital employed is 12%, the super profit is
(a) Rs.58,000 (b) Rs.62,000 (c) Rs.1,10,000 (d) Rs.1,20,000
(e) Rs.1,78,000.
(2 marks)
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50.The profits of Kavya Ltd. for the past 5 years are as under:
The company noticed the following errors, while computing the weighted average profits for
the purpose of valuation of goodwill:
??On October 01, 2003, repair expenses of Rs.30,000 of machinery were capitalized.
Kavya Ltd. provides depreciation at the rate of 10% on straight-line method.
??The profit for the year 2005-2006 includes profit of Rs.22,500 on sale of plant.
The weighted average profit of the company to be considered for valuation of goodwill is
(a) Rs.4,76,100 (b) Rs.3,79,500 (c) Rs.2,84,100 (d) Rs.5,00,100
(e) Rs.3,78,500.
(3 marks)
Year Rs.
2001-2002 75,000
2002-2003 3,00,000
2003-2004 3,75,000
2004-2005 4,50,000
2005-2006 7,42,500
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51.Almaz Softex Ltd. purchased 12% bonds with a face value of Rs.2,00,000 at a discount of 15%
in the open market as investments and intends to hold them to maturity. The market value of
the investments is Rs.1,80,000. The investments should be accounted at
(a) Rs.2,24,000 (b) Rs.2,00,000 (c) Rs.1,84,000 (d) Rs.1,80,000
(e) Rs1,70,000.
(2 marks)
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52.The following information is extracted from the books of Jeet and Company:
??Capital employed - Rs.1,00,000.
??Normal rate of return is -10%.
??Present value of annuity of Re.1 for five years at the rate of 10% – 3.78.
??Net profits for five years:
The profits included non-recurring profits on an average basis of Rs.1,000 and even recurring
profits had a tendency of appearing at the rate of Rs.600 per annum.
The value of goodwill under annuity method is
(a) Rs.37,800 (b) Rs.6,000 (c) Rs.22,680 (d) Rs.60,480
(e) Rs.59,724.
(2 marks)
Year Rs.
1 14,400
2 15,400
3 16,900
4 17,400
5 17,900.
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53.Goodwill Limited issued prospectus inviting applications for 1,00,000 equity shares of Rs. 10
each payable as under:
??On Application Rs. 5 (including premium of Rs. 2)
??On allotment Rs. 4
??First & Final Call Balance Amount
Applications were received for 1,30,000 shares. Application Money received on 10,000 shares
were refunded and allotment was made on pro rata basis for the remaining.
Mr.Lazy to whom 1,400 shares were allotted failed to pay allotment money and his shares were
forfeited later when he failed to pay the call money. All forfeited shares were reissued to Mr.
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Active at the rate of Rs. 8 as fully paid up. The amount outstanding to the credit of share
premium account is
(a) Rs.2,00,000 (b) Rs. Nil (c) Rs.2,40,000 (d) Rs.2,60,000
(e) Rs.1,97,200.
(2 marks)
54.The value of the goodwill, according to the simple profit method, is
(a) The product of current years profit and number of years of purchase
(b) The product of last year’s profit and the number of years of purchase
(c) The product of average profit of the given years and number of years of purchase
(d) The product of expected average profit for future years and numbre of years of purchase
(e) The product of average profit of last year, current year and coming year and number of
years of purchase.
(1 mark)
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55.Sundar Ltd., a listed company, proposed to issue 1,000 equity shares of Rs.100 each at par by
way of private placement. The maximum amount of brokerage that can be paid by the company
is
(a) Rs.500 (b)
Rs.1,500 (c) Rs.2,500
(d) Rs.5,000 (e) No brokerage can be paid.
(1 mark)
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56.Sampath Ltd. issued 1,00,000 equity shares of Rs.100 each, payable as under:
The applications received for 1,70,000 shares were dealt with as under:
??Applicants of 20,000 shares were allotted in full.
??Applicants of 1,40,000 shares were allotted 80,000 shares pro-rata.
??Applications for 10,000 shares were rejected.
The excess of application money received that can be adjusted towards allotment money, is
(a) Rs.20,00,000 (b) Rs.8,00,000 (c) Rs.16,00,000
(d) Rs.4,00,000 (e) Rs.24,00,000.
(3 marks)
On application Rs.40
On allotment Rs.20
On first call Rs.20
On final call Rs.20
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57.The Balance Sheet of Moonlight Ltd. disclosed the following financial position as on
March 31, 2006:
Liabilities Rs. Assets Rs.
Paid-up capital Goodwill at cost 30,000
30,000 shares of
Rs.10 each fully paid
3,00,000 Land and buildings at cost
(less depreciation)
1,75,000
Capital reserve 20,000 Plant and machinery at cost
(less depreciation)
90,000
Sundry creditors 71,000 Stock at cost 1,15,000
Provision for taxation 55,000 Book debts Rs.98,000
Profit and loss
account
66,000 Less: Provision for bad debts Rs.3,000 95,000
Cash at bank 7,000
5,12,000 5,12,000
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Additional Information:
i. Adequate provision has been made in the accounts for income tax and depreciation.
ii. The rate of income tax is 50%.
iii. The average rate of dividend declared by the company for the past five years was 15%.
iv. The reasonable return on capital invested in the class of business done by the company is 12%.
The value the Goodwill of Moonlight Ltd. on the basis of four years’ purchase of super profits
was
(a) Rs.63,000 (b) Rs.49,120 (c) Rs.1,16,400
(d) Rs.1,83,600 (e) Rs.33,000.
(3 marks)
58.Kanishk Ltd. issued 1,50,000 equity shares of Rs.10 each at a premium of Rs.2 payable as
under:
Sudha, who applied for 1,000 shares, was allotted 600 shares. She failed to pay the amount due
on first call and final call. The shares allotted to her were forfeited. Out of the forfeited shares,
300 shares were re-issued to Mr.Tarun at Rs.9 per share. The balance in the share forfeiture
account is
(a) Rs.1,500 (b) Rs.1,200 (c) Rs.Nil (d)
Rs.3,000 (e) Rs.4,200.
(2 marks)
On application Rs.2
On allotment (including premium) Rs.5
On first call Rs.3
On final call Rs.2
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59.Zidney Ltd. issued 20,000 equity shares of Rs.100 each at par, out of which, only Rs.85 is
called up. Mr. Arun did not pay the call money of Rs.25 and hence all the 1,000 shares allotted
to him were forfeited. If all these shares are to be re-issued as fully paid-up, the minimum
amount to be collected is
(a) Rs.40,000 (b) Rs.1,00,000 (c) Rs.15,000 (d) Rs.60,000
(e) Rs.25,000.
(1 mark)
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60.Which of the following cannot be utilized for issue of bonus shares?
(a) General reserve (b) Revaluation reserve
(c) Debenture redemption reserve (d) Share premium
(e) Capital redemption reserve.
(1 mark)
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61.Which of the following cannot be utilized for the redemption of Preference Shares of a
company?
(a) Proceeds of fresh issue of shares
(b) Securities premium on fresh issue of shares
(c) General reserve
(d) Profit and loss account
(e) Dividend equalization reserve.
(1 mark)
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62.A company offered 60,000 shares of Rs.10 each at a premium of 50%. 48,000 shares were
underwritten by Feroz. The number of shares subscribed by the public was 54,000, out of
which the marked applications were for 36,000 shares. The liability of Feroz is for
(a) 6,000 shares (b) 12,000 shares
(c) 4,800 shares
(d) 4,000 shares (e) Nil shares.
(1 mark)
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63.Consider the following data pertaining to M/s. Bright Sun Ltd. as on March 31, 2006
If net assets of the company are Rs.25,50,000, the value per share of Rs.7 paid-up share is
(a) Rs.12.72 (b) Rs.14.00 (c) Rs.10.75 (d)
Rs.15.67 (e) Rs.12.75.
(2 marks)
Particulars
Per share
Face value
Rs.
Paid-up value
Rs.
Share Capital:
1,00,000 equity shares 10 10
40,000 equity shares 10 7
40,000 equity shares 10 6
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64.High Power Ltd. invited applications for 5,000 shares of Rs.10 each at a premium of Rs.2 per
share payable as follows:
On application – Rs.5 (including premium)
On allotment – Rs.4
On final call – Rs.3
The company received 7,000 applications. 1,000 applications were rejected by the company
and allotment was made on pro rata basis to the applicants of 6,000 shares. Money overpaid on
applications was adjusted on account of sums due on allotment.
The journal entry for the adjustment and appropriation made to the money received on
application is
(a) Share application account Dr. 35,000
To Share capital account 25,000
To Share premium account 10,000
(b) Share application account Dr. 35,000
To Bank 5,000
To Share capital account 15,000
To Share premium account 10,000
To Share allotment account 5,000
(c) Share application account Dr. 35,000
To Share capital account 18,000
To Share premium account 12,000
To Bank 5,000
(d) Share allotment account Dr. 35,000
To Share capital account 25,000
To Share premium account 10,000
(e) Share application account Dr. 35,000
To Share premium account 10,000
To Share capital account 20,000
To Share first and final call account 5,000.
(2 marks)
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