Loyola College M.Com April 2007 Advanced Corporate Accounts Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

TH 34

M.Com. DEGREE EXAMINATION – COMMERCE

FIRST SEMESTER – APRIL 2007

CO 1806/CO 1803 – ADVANCED CORPORATE ACCOUNTS

 

 

Date & Time: 28/04/2007 / 1:00 – 4:00      Dept. No.                                       Max. : 100 Marks

 

 

PART – A

10 x 2 = 20

Answer ALL questions:

 

  1. What do you mean by Holding Company?
  2. Differentiate Double Insurance from Reinsurance.
  3. Discuss the objective of accounting the Human Resource in a company.
  4. When do you prepare valuation Balance sheet?
  5. Explain the term “Non-performing Assets”.
  6. State the different levels of remuneration due to various managerial personnel.
  7. Distinguish between commission on Reinsurance ceded and commission on insurance accepted.

 

  1. Show the disposal of surplus mentioned below profit Rs. 28,00,000 and Reasonable

Return 24,00,000.

 

  1. The Revenue a/c a Life Insurance company showed a balance of Rs. 4,75,000 at the end of 2005 before considering the following items (a) Bonus in reduction of premiums Rs. 40,000, (b) outstanding premiums Rs. 1,00,000, (c) Interest accured on investments Rs. 20,000, (d) claims intimated but not admitted 35,000, (e) claims recovered under Reinsurance Rs. 3,000.

 

  1. What are the limitations of ‘Historical Accounting’ in a period of Inflation?

 

 

PART – B

Answer any FIVE questions:                                                                                                              5 x 8 = 40

 

 

  1. (a) Explain the term ‘B List Contributories’

(b) Bad and Luck Limited went into voluntary Liquidation and proceedings commenced on 2/7/06 certain creditors could not receive the payment out of the realization of assets and out of contributions from the contributories of the ‘A’ list. The following details of share transfers are made available to you.

Name of share holders No. of shares transferred Date of the transferor ceasing to be a member Creditors remaining unpaid and outstanding on the date

Rs.

(i)     A

(ii)  B

(iii) C

(iv) D

(v)  E

1,000

1,250

500

2,000

250

01.03.2005

15.08.2005

01.10.2005

01.12.2005

01.04.2006

 

6,000

8,000

10,750

13,000

15,000

All the shares were of Rs.10 each, on which Rs.5 per share had been paid up. Ignoring other details like liquidator’s expenses etc. You are required to workout the liability of the individual contributories listed above.

 

  1.  Explain the following items.
  • Rebate on Bill discounted
  • On 31/3/06 the books of NBA bank showed the following items.

Rs.

Rebate on Bill discounted 1/4/05              3,000

Bill discounted and purchased             6,00,000

Interest and discount received             1,60,000

The following bills are discounted.

Bill Amount Date of Discounting Period of Bill Discount Rate
50,000

60,000

70,000

80,000

  1/1/06

25/1/06

18/2/06

10/3/06

2 months

90 days

60 days

1 months

14%

12%

16%

10%

Calculate the closing rebate on bill discounted, Pass journal entries.

 

  1. (a) Discuss the features of Double Accounts.

(b) An Electric Supply Co. rebuilds its Mains at the cost of Rs. 19,90,000. This  includes value of Rs. 13,800 material of old Main used for new one. The  original mains were constructed at a cost of Rs. 9,90,000. The ratio of material   and labour therein was 7 : 3. The increase in material prices is 12½ % and

wages rates 15%. Materials worth Rs. 25,200 from old works was sold. Show Journal entries under  Double Account System for the above and    determine the net cost of replacement.

 

  1. The following balances rates to an electricity company and pertain to its accounts for the year ended

31st December, 1989:

 

Rs. Rs.
Share Capital

Reserve Fund (invested in

5% Government Securities at

par)

Contingencies Reserve invested in

6% State Government loans

Loan from State Electricity Board

11% Debentures

 

 

Development Reserve

1,00,00,000

 

 

60,00,000

 

20,00,000

30,00,000

8,00,000

 

Rs.

10,00,000

 

Fixed Assets

Depreciation, Reserve on fixed assets

Consumer’s Deposits

Amounts contributed by

consumers towards

fixed assets

Intangible assets

 

 

Tariffs and Dividend

Control Reserve

Current assets – Monthly average

 

2,00,00,000

 

80,00,000

75,00,000

 

 

2,00,000

5,00,000

 

Rs.

 

6,00,000

 

20,00,000

The company earned a post tax profit of Rs. 9 lakhs. Show how the profits of the company will be dealt with under the provision of the Electricity Act, assuming that the Bank rate during the year was 8%.

 

  1. Zaldi Pay Insurance Co. Ltd., has furnished the following information for preparation of revenue account for the insurance business for the year ended 31st March, 1989:-

Rs.

Claims admitted but not paid                                   42,376

Commission paid                                                     50,000

Commission on reinsurance ceded                                      12,000

Share transfer fees                                                     5,000

Expenses of Management                                         78,000

Bad Debts                                                                   2,500

Claims paid                                                                           15,000

Profit and Loss Appropriation Account                    10,000

Premiums received (less reinsurance)                    5,52,000

Reserve for unexpired risks as on 1.4.88               2,30,000

Additional reserve as on 1.4.1988                            40,000

Claims outstanding as on 1.4.1988                                       27,000

Dividend on share capital                                         18,500

 

The following further information has also to be considered:-

  • Premiums outstanding at the end of the year: Rs. 40,000
  • It is the policy of the company to maintain 50% of premium towards reserve for unexpired risks.
  • Additional reserve at 10% of net premium to be maintained.

 

 

 

  1. Mohan Company Ltd., was incorporated on 30th June 1985 to take over the business of Mr. K.Mohan as from 1st Januray 1985. The financial accounts of the business for the year ended 31st December 1985 disclosed the following information:
Particulars Rs. Rs.
Sales:

January to June

July to December

Less: Purchases:

January to June

July to December

Gross profit

Less: Salaries

Selling expenses

Depreciation

Directors remuneration

Debenture interest

Administration expenses (Rent, Rates etc.)

Profit for the year

 

1,20,000

1,80,000

 

75,000

1,20,000

 

15,000

3,000

1,500

750

90

     4,500

 

 

3,00,000

 

 

1,95,000

1,05,000

 

 

 

 

 

   24,840

   80,160

You are requested to prepare a statement apportioning the balance of profit between the periods prior to and after incorporation and show the profit and loss appropriation account for the year ended 31st December 1985.

 

  1. The summarised Balance Sheet of H Ltd. and S Ltd. as on 31st March 2006 are given below.
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Share Capital: Share of

Rs. 10 each

General reserves

Profit & Loss Account

 

5,00,000

80,000

1,20,000

7,00,000

 

1,20,000

20,000

   80,000

2,20,000

Sundry assets

9000 shares in S

Ltd.

5,40,000

 

1,60,000

_______

7,00,000

2,20,000

 

 

_______

2,20,000

At the time of purchase of shares by H Ltd. and S Ltd. had balance of Rs. 10,000 and Rs. 20,000 in General reserve and P&L a/c respectively. S Ltd decided to issue bonus shares out of post acquisition profit in the ratio of 3 shares for every 6 shares held. Calculate only the cost of control before the issue of bonus shares and after the issue of bonus shares.

 

  1. From the following Profit & Loss Account of Soundarya Ltd. for the year ended 31.12.92 and additional data given, calculate commission due to Managing director at 5% of net profit. Salary of Managing director is to be treated as part payment of the commission:

Profit & Loss A/c for the year ended 31.12.92

Rs. Rs.
To Opening stock

To Bonus (including Rs.500 for 1991)

To Director’s fees

To Managing director:

Salary

Commission

To Development rebate reserve

To Provision for tax

To Establishment expenses

To Loss on sale of investments

To Net profit c/d

   11,000

5,000

3,000

 

2,000

1,000

800

3,000

40,000

200

1,22,000

1,88,000

By Sales

By Closing stock

By Other incomes:

Discount

Profit on sale of fixed

Assets

1,70,000

15,000

 

2,000

 

1,000

 

 

 

 

_______

1,88,000

The book value of the fixed assets sold was Rs, 2,000 and their original cost was Rs.2,600.

 

 

 

 

 

 

PART – C

2 x 20 = 40

Answer any TWO questions:

 

  1. Balance Sheet Alpha Ltd and Beta Ltd as on 31st March 2005 as follows:
Liability Alpha Ltd Beta Ltd., Assets Alpha Ltd Beta Ltd.,
Equity Share capital (Rs. 100 each)

General Reserve

Creditors

Bills payable

 

 

10,00,000

2,00,000

4,00,000

2,00,000

 

 

________

18,00,000

 

 

6,00,000

1,00,000

2,00,000

1,00,000

 

 

________

10,00,000

Land and Building

Plant & Machinery

Debtors

Stock

Bank

2000 shares in Alpha Ltd

 

 

5,00,000

 

3,50,000

4,00,000

2,50,000

3,00,000

­­­________

18,00,000

 

1,00,000

 

3,00,000

1,20,000

2,00,000

1,00,000

1,80,000

________

10,00,000

 

 

Alpha Ltd was to absorb Beta Ltd on the basis of intrinsic value of the shares. The Land and Building, Plant & Machinery were valued at Rs. 3,50,000 and Rs. 1,60,000 respectively. The purchase consideration is payable in intrinsic value of Alpha Ltd. A sum of Rs. 20,000 is payable by Beta Ltd for Alpha Ltd. Stock of Beta Ltd includes Rs.30,000 goods supplied by alpha Ltd at cost plus 20% prepare necessary ledger accounts and Balance sheets.

 

  1. The following are the Balance Sheets of H Ltd. and S Ltd. as on 31st March 1989.

 

Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
Share capital: Shares

of Rs. 100 each

General reserve

Profit & Loss A/c

Current liabilities

 

 

5,00,000

1,00,000

2,00,000

1,00,000

9,00,000

 

4,00,000

1,00,000

1,50,000

1,00,000

7,50,000

Fixed assets

Investment in S Ltd.

Current assets

2,50,000

2,50,000

4,00,000

 

_______

9,00,000

 

2,00,000

5,50,000

 

_______

7,50,000

 

 

The following further information is furnished:

  1. H Ltd. acquired 2,000 shares in S Ltd. on 1.4.88 when the latter’s general reserve and Profit & Loss account were Rs. 2,50,000 and Rs. 1,00,000 respectively.
  2. On 30.6.88, S Ltd. declared 20% dividend out of pre-acquisition profits and H Ltd. credited the amount received to it’s Profit & Loss Account.
  3. On 31.10.88 S Ltd. issued bonus shares in the ratio of 3 shares for 5 shares held out of the general reserve. H Ltd. made no entry in its books for the bonus shares received.
  4. S Ltd. owed H Ltd. Rs. 50,000 on 31.3.89 on account of goods supplied on credit. However all of those goods were already disposed off by S Ltd.

Prepare a consolidated Balance Sheet as at 31st March 1989.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. The following is the Trial Balance of Shri Nidhi Bank Ltd., as on 31.12.1986

 

Debit

Rs.

Credit

Rs.

Issued Share Capital

Reserve fund

Investment fluctuation fund

Bank over draft, loans and cash credits

Bank premises

Government bonds

Other government securities

Current accounts

Profit and Loss Account on 1.1.1986

Money at call and short notice

Bills discounted

Shares

Cash in hand

Cash at bank

Income tax paid

Salaries and other expenses

Interest discounts etc.,

Interim dividend paid

Deposits and savings bank accounts

 

 

4,00,000

60,000

3,00,000

2,00,000

70,000

73,000

17,000

1,10,000

3,00,000

9,000

73,500

7,500

________

16,20,000

   1,50,000

3,00,000

20,000

6,00,000

25,000

1,70,000

3,55,000

________

16,20,000

 

Additional information:

 

(i)   The bills discounted mature at an average date of February

19, 1987

(including days of grace). All bills are discounted at 10% per annum.

(ii)  The market value of investments in government securities was

Rs.4,75,000. Increase investment fluctuation fund with the necessary

amount.

(iii) Bank added premises during the year for Rs.10,000. Provide 5%

depreciation on the opening balance.

(iv)  Interest accrued on investment was Rs.750.

(v)   Provision for taxation 1.1.1986 was Rs.10,000. It is to be increased to

Rs.30,000.

 

Prepare final account in the statutory form.

 

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