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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2013
B.COM – I SEMESTER
FINANCIAL ACCOUNTING – I
Time : 3 Hrs. Max. Marks : 100
SECTION – A
I) Answer ALL questions in One or Two sentences each: (10 x 2 = 20)
1. What do you mean by Capital Expenditure? Give an example.
2. What is Convention of Conservatism? Give an example.
3. Write any two reasons for convergence of Indian Accounting System with Global and
Financial Reporting Standards.
4. Computer purchased for Rs. 75,000 is wrongly passed through the purchase book. Give
the rectification entry.
5. What are Compensating Errors?
6. What is a Suspense Account?
7. Write any four methods of Stock Valuation and Pricing of Issues.
8. When do you recognize revenue in Consignment Sale?
9. The method of depreciation can be changed under certain situations. Given any two
situations.
10. Mr. Sharma purchased a plant on hire purchase system paying Rs. 45,000 down and Rs.
50,000 at the end of three successive years. The rate interest charged by the vendor is 5%
p.a. Given the present value of an annuity of Re. 1 p.a. at 5% interest for three years, is
Rs. 2.7232. Determine the Cash Price.
SECTION – B
II) Answer ANY FOUR questions: (4 x 5 = 20)
11. State True or False:
a) Any expenditure incurred in relation to purchase of fixed asset should be
capitalized.
b) If the depreciable asset is put to use for a period less than 180 days, then full year’s
depreciation can be claimed for Income Tax purpose.
c) A change in the method of depreciation should be given retrospective effect.
d) Legal charges incurred Rs. 50,000 to defend a suit claiming that the firm’s land
purchased 10 years ago, belongs to the plaintiff is a Capital Expenditure.
e) Under FIFO method, the closing stock comprises of the latest purchased goods.
f) Closing Stock should be valued at Cost or Net Realisable Value, whichever is lower.
g) As per Income Tax Act, intangible assets are depreciable at the rate of 20%.
h) Trade Discount is always recorded in books of accounts.
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i) In Hire Purchase System, the seller can repossess the goods, if the buyer makes any
default in payment of any installment.
j) Cash received from Arun on account Rs. 5,000 is completely omitted to be recorded
in the books. This error will not allow the Trial Balance to tally.
12. Mr. Abhishek is appointed as an accountant of Z Co. Ltd. He is unable to pass entries
for the following transactions. He seeks your help. You are requested to pass the
Journal Entries.
i) Bought goods from Arun for Rs. 4,00,000 at a trade discount of 15% and cash
discount of 2%. Paid 80% amount immediately.
ii) Z Co. Ltd is a dealer in Computers. It purchased 2 computers worth Rs.
40,000 each for its own use and 10 computers worth Rs. 45,000 for the
purpose of sale from Anish Computec Ltd.
iii) Sohan who owed us Rs. 95,000 was declared insolvent and 40 paise in a rupee
is recovered from him in full settlement.
iv) Purchased goods for Rs. 40,000 from X and supplied it to Y for Rs. 52,000. Y
returned goods worth Rs. 15,600 which in turn were returned to X.
13. WDV of the block (15%) having two machines namely X and Y as on 1.4.2012 is Rs.
6,00,000. Machine Z was acquired on 5.11.2012 (Depreciable at 15%) for Rs. 3,00,000 and
put to use on the same date. Machine Z is sold on 28.03.2013 for Rs. 4,00,000. Ignore
additional depreciation.
a) Compute the depreciation allowable for the Assessment Year 2013-14. (as per Income
Tax Act)
b) What will be the amount of depreciation allowed, if machine X is sold for Rs.
4,00,000 instead of machine Z?
14. The books of Raj Ltd. revealed the following information:
Particulars Rs.
Opening Inventory 5,50,000
Purchases during the year 2012-13 36,00,000
Wages 2,50,000
Selling and Distribution Expenses 25,000
Freight inwards 4,500
Sales during the year 2012-13 45,00,000
On March 31, 2013, the value of inventory as per physical stock-taking was Rs. 2,75,000.
The Company’s gross profit on sales has remained constant at 25%. The management of
the company suspects that some inventory might have been pilfered by an employee.
What is the estimated cost of missing inventory?
15. Determine Cash Price in the following cases:
a) Mr. Verma purchased a machine on hire purchase system paying Rs. 20,000 down
and Rs. 10,000 , Rs. 20,000 and Rs. 30,000 at the end of 1st, 2nd and 3rd year
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respectively. The rate of interest is 5% p.a. Given the present value of annuity of Re.
1 at 5% for one, two and three years respectively as 0.9524, 0.9070 and 0.8639.
b) M/S Bharat Motors Ltd. sells scooters on the hire purchase system. The terms of
payment for the sale of a scooter are Rs. 10,000 on delivery, Rs. 10,400 at the end of
the first year, Rs. 9,600 at the end of the second year and Rs. 8,800 at the end of the
third year, inclusive of interest.
16. Pass Rectification Entries for the following:
a) Rs. 2,500 paid as wages for the installation of Machinery at site is debited to wages
account.
b) Salary paid to Mohan Lal Rs. 25,000 for the month is debited to his personal account.
c) Extension to Building Rs. 1,50,000 is charged to Repairs A/c.
d) A purchase of goods Rs. 35,000 has been wrongly recorded in Sales Book.
e) A sales return of Rs. 2,000 is wrongly recorded in purchases returns account.
SECTION – C
III) Answer ANY THREE questions: (3×15=45)
17. From the following Trial Balance of M/S Deepa & Co., prepare Trading and Profit and
Loss Account for the year ended 31st March 2013 and Balance Sheet as on that date:
Particulars Debit
(Rs.)
Credit
(Rs.)
Purchases and Sales 2,75,000 5,20,000
Returns Inwards 15,000
Returns Outwards 9,000
Carriage Inwards 12,400
Wages and salaries 58,600
Trade expenses 2,200
Rent 13,000
Insurance 2,000
Audit fees 1,200
Debtors and creditors 1,10,000 62,100
B/R and B/P 3,300 2,200
Printing and advertising 5,500
Commission 1,000
Opening stock 36,000
Cash in hand 12,800
Cash at bank 26,800
Bank loan 20,000
Interest on loan 1,500
Capital 2,50,000
Drawing 15,000
Fixed assets 3,00,000
Total 8,77,300 8,77,300
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Adjustments:
a) Stock at Cost Price is Rs. 60,000 and at Market Price is Rs.50,000.
b) Depreciate Fixed Assets by 10%.
c) Commission earned but not received amounts to Rs. 1,500.
d) Interest on Bank Loan at 15% p.a. is unpaid for the last 9 months.
e) Allow 8% interest on capital and charge Rs. 900 as interest on drawings.
f) Make a provision for bad and doubtful debts at 5% on debtors.
18. From the following details, prepare a stores ledger under:
a) FIFO Method and b) LIFO Method for Material ‘M’.
Date Particulars Quantity in
Nos.
Rate per unit (Rs.)
1.4.2013 Opening balance 5,000 15
3.4.2013 Purchases 1,000 16
5.4.2013 Issues 4,000 ?
10.4.2013 Purchases 3,800 17
14.4.2013 Issues 2,600 ?
16.4.2013 Purchases 2,500 18
28.4.2013 Issues 3,000 ?
On physical verification, it was found that there is a shortage of 80 units on 22nd April
2013. Assume this shortage as Abnormal.
19. (a) On 1st January 2009, Rama & Co. purchased machinery for Rs. 74,000 and spent Rs.
4,000 on its repair and Rs. 2,000 on its installation. On 1st Jan, 2010 the firm purchased
another machinery for Rs. 20,000. On 1st July, 2011 the machinery purchased on 1st Jan,
2009 was sold for Rs. 56,000 and on the same date a new machinery was purchased for
Rs. 50,000. Depreciation is chargeable at the rate of 10% p.a. on the Original Cost of the
asset. Show Machinery Account for 4 years. Accounts are closed on 31st December each
year. (8 Marks)
(b) Write the differences between Hire Purchase System and Sale. (7 Marks)
20. The following are the particulars relating to hire purchase:
Purchaser Vishnu & Co.
Seller Praveen & Co.
Date of purchase Jan. 1, 2011
Cash Price Rs. 322,350
Asset purchased Motor Car
Payments: Rs. 50,000 on signing of the agreement and the balance in three equal
instalments of Rs. 1,00,000 due on 31st December each year.
Rate of Interest 5% p.a.
Depreciation 20% on the written down value each year
You are required to:
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a) Show the break-up of Principal and Interest included in each instalment.
b) Depreciation to be charged for the year ending 31st December, 2011,2012 and 2013.
c) Pass Journal Entries in the books of Vishnu & Co. under Outright Purchase Method.
Note: All figures to be rounded off to the nearest rupee.
21. X owns the following assets as on 1.4.2012:
Assets Rates of Depreciation WDV as on 1.4.2012 (Rs.)
Building A 10% 2,10,000
Building B 10% 3,30,000
Building C 5% 6,60,000
Building D 10% 1,80,000
Machinery P 15% 90,000
Machinery Q 15% 1,20,000
Machinery R 30% 2,10,000
Car X 15% 4,50,000
The following assets are acquired during the Previous Year 2012-13:
Assets Rates of Depreciation Cost of Acquisition
(Rs.)
Date of
Acquisition
Car Y 15% 7,50,000 15.05.2012
Machinery S 15% 60,000 14.08.2012
Machinery T 30% 1,80,000 10.09.2012
Patents 25% 2,40,000 01.01.2013
Know-how 25% 1,80,000 15.03.2013
The following assets have been sold during the Previous Year 2012 -13:
Assets Sale Consideration (Rs.)
Building B 3,60,000
Machinery P 30,000
The assets acquired during the year were put to use the day they were acquired. You
are required to compute the depreciation allowable to X as per in the Income Tax Act for
the Previous Year 2012-13.
SECTION – D
IV) COMPULSORY QUESTION. (15 MARKS)
22. Compare the Balance Sheets given below and answer the questions given thereafter.
Balance Sheet as on 15th March 2013 Evening
Liabilities Amount
(Rs.)
Assets Amount
(Rs.)
Capital 4,50,000 Land and Building 2,85,000
Creditors 50,000 Debtors 1,32,000
Profit 1,56,500 Cash 57,500
Stock 1,82,000
Total 6,56,500 Total 6,56,500
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Balance Sheet as on 16th March 2013 Evening
Liabilities Amount
(Rs.)
Assets Amount
(Rs.)
Capital 5,50,000 Land and Building 2,85,000
Creditors 50,000 Debtors 1,32,000
Profit 1,56,500 Cash 7,500
Vivek & Co (Crs. For
furniture)
1,00,000 Furniture 1,50,000
Bank 1,00,000
Stock 1,82,000
Total 8,56,500 Total 8,56,500
Balance Sheet as on 17th March 2013 Evening
Liabilities Amount
(Rs.)
Assets Amount
(Rs.)
Capital 5,50,000 Land and Building 2,85,000
Creditors 50,000 Debtors 1,00,000
Profit 1,54,500 Cash 7,500
Vivek & Co (Crs. For
furniture)
1,00,000 Furniture 1,50,000
Bank 1,30,000
Stock 1,82,000
Total 8,54,500 Total 8,54,500
Balance Sheet as on 18th March 2013 Evening
Liabilities Amount
(Rs.)
Assets Amount
(Rs.)
Capital 5,50,000 Land and Building 2,85,000
Creditors 50,000 Debtors 1,50,000
Profit 1,74,500 Cash 57,500
Vivek & Co (Crs. For
furniture)
1,00,000 Furniture 1,50,000
Bank 1,30,000
Stock 1,02,000
Total 8,74,500 Total 8,74,500
You are required to:
a) State the transactions that took place on 16th, 17th and 18th March 2013. (6 Marks)
b) Taking 18th March 2013 Evening Balance Sheet as the base, prepare daily Balance Sheets
for the following transactions: ( 9 Marks)
i) 19th March 2013 : Settled Vivek & Co’s account by giving cheque Rs. 99,000.
ii) 20th March 2013 : Received Rs. 49,500 from debtors. Discount allowed to them
Rs. 500.
iii) 21st March 2013: Received an order from X for the supply of goods Rs. 75,000.
iv) 22nd March 2013: Purchased goods on credit Rs. 50,000.
v) 23rd March 2013: Executed the order received on 21st March 2013. Cost of goods
sold is Rs. 70,000.
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