IMT 57 Financial Accounting M1

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IMT 57 Financial Accounting M1

PART– A
1. What is a Contingent Liability? Where is it shown in the Balance Sheet? Give three examples of
Contingent Liabilities?
2. State which of the errors will affect the agreement of the Trial Balance and which will not.Give rectifying
journal entries(with full narration) assuming the difference in trial balance has been placed to suspense
account
a. Purchase of second hand Motor Car for Rs 10000/- has been debited to car maintenance
account.
b. A sale of Rs 7500/- to Mr A has been wrongly entered in sales day book as Rs 750/-
c. An entry in the Purchase return book of Rs 3000/- has been omitted to be posted in the account
of Mr B the supplier.
d. An amount of Rs 12000 received from Mr X has been posted to the credit of Mrs X a/c as Rs
1200/-
e. The total of sales Day Book for the month of December Rs 750000/- has been omitted to be
posted
f. Wages for installation of machinery has been debited to wages account Rs 10000/-
3. a) Describe operating, financing and investing activities as per AS 3.
b) Discuss the provisions of AS 6 regarding the change in the method of Depreciation.
4. Write short notes on the following:
a. Money Measurement Concept
b. Going Concern Concept
5. Differentiate between
a. Capital Expenditure and Revenue Expenditure
b. Cash System of accounting and Mercantile System of accounting

 
PART– B
1. ” If debits equal credits in the Trial Balance you can be assured that there are no errors in the Trial
Balance” Comment.
2. Show the effect of the following transactions on the assets, liabilities & capital of Mr Abhay Kumar
through the accounting equation:
a. He started business with cash of Rs 20000
b. He purchased goods for cash Rs 10000 Financial Accounting. ………………………………………. Page 3 of 5 ……………………………………………………………………. IMT-57
c. Purchased goods on credit from Mr Mohal Lal for Rs 8000
d. Sold goods for cash costing Rs 8000 for Rs 10000
e. Withdrew Rs1000 from business in cash to pay for his private expenses
f. Electricity bill paid for Rs100
g. Rent outstanding Rs400
h. He borrowed Rs 5000 from Mr Lalit
i. Purchased goods for cash Rs 2000.
3. The following is the extracts of financial information relate to Curious Ltd.
Balance Sheet
Particulars 2011 2010
Share Capital 10 10
Reserve and Surplus 30 10
Loan Fund 60 70
100 90
Fixed Assets(Net) (a) 30 30
Current Assets:
Stocks 30 20
Debtors 30 30
Cash & Bank Balances 10 20
Other Current Assets 30 10
100 80
Less: Current Liabilities 30 20
Net Working Capital(b) 70 60
Total assets(a+b) 100 90
Sales (Rs in lakhs) 270 300
(a) Calculate, for the two years Debt Equity Ratio, Quick Ratio and Working Capital Turnover Ratio;
and
(b) Find the sales volume that should have been generated in 2011 if the company were to have
maintained its Working Capital Turnover Ratio.
4 What is a trial balance? Explain its objectives.
5 What do you understand by the expression Corporate Governance and discuss contents of the Report on
Corporate Governance.

 
PART– C
1. a) Can depreciation be charged on capital work in progress ? Give reasons.
b). Discuss the triple column cash book. What are the contra entries Financial Accounting. ………………………………………. Page 4 of 5 ……………………………………………………………………. IMT-57
2. ” Analysis and interpretation of financial data is the real challenge the financial managers face today”.
Discuss
3. Define the following
a. Price Earnings Ratio
b. Debt Equity Ratio
4. Explain the different categories in which the accounting transactions can be classified. Also state the
rule of ‘debit’ and’ credit’ in this connection.
5. Prepare the bank reconciliation statement from the following details:
a. Balance as per pass book Rs.25000/- (Dr.)
b. Cheque deposited but not credited Rs.7000/-
c. Cheques issued but not presented for payment Rs.5000/-
d. Bank charges and interest levied by bank Rs 250/-
e. Dividend received credited by bank directly Rs 450/-
f. Insurance premium paid by bank as per the standing instruction but not accounted for Rs 500/-
g. Amount deposited directly by the customer Rs 2000/-
h. A bill payable paid by bank on due date Rs 3000/-
i. A bill receivable which was earlier purchased by bank,dishonoured on due date Rs 5000/-

 

 

CASE STUDY – I
From the following balance sheets of Alfa Ltd. make out Cash Flow Statement as per AS-3(revised) as on 31
st
March 2011.
LIABILITIES 2010 2011 ASSETS 2010 2011
Equity Share Capital 200000 200000 Cash 8000 10000
Profit & Loss a/c 50000 90000 Bank 22000 20000
Bank Loan 10000 – Debtors 10000 20000
Creditors 15000 20000 Stock 25000 15000
Outstanding Expenses 5000 1000 Fixed Assets 235000 27500
0
Provision for Taxation 20000 25000
Unclaimed dividend – 4000
TOTAL 300000 340000 TOTAL 300000 34000
0
Net Profit for the year after providing Rs 20000 for depreciation was Rs 60000. During the year, company
declared equity dividend @ 10%, and paid Rs 15000 as income tax. Financial Accounting. ………………………………………. Page 5 of 5 ……………………………………………………………………. IMT-57
CASE STUDY-II
The following is the Trial Balance of AL Manufacturers Ltd. Prepare (i) Trading Account, (ii) Profit & Loss
Account and (iii) Balance Sheet in the form prescribed under the Companies Act, 1956.
Trial Balance of M/S ABC Ltd:
Dr.(Rs) Cr.(Rs)
Authorised Capital –
50,000 shares of Rs. 10 each 500,000
Subscribed Capital –
10,000 shares of Rs. 10 each

100,000
Calls in arrear 6,400
Land 10,000
Buildings 25,000
Plant and machinery 15,000
Furniture & Fixtures 3,200
Carriage Inwards 2,300
Wages 21,400
Salaries 4,600
Bad Debt Provision, 1-4-2010 1,400
Sales 80,000
Sales Returns 1,700
Bank Charges 100
Coal, Gas & water 700
Rates & Taxes 800
Purchases 50,000
Purchase Returns 3,400
Bills Receivable 1,200
General Expenses 1,900
Sundry Debtors 42,800
Sundry Creditors 13,200
Stock, 1-4-2010 25,000
Fire Insurance 400
Cash at Bank 13,000
Cash in hand 2,500
Securities premium 6,000
General Reserve 24,000
228,000 228,000
You are also to make provisions in respect of the following:
(i) Depreciation: @ 5% on Building
@ 15% on Plant & Machinery
@10% on Furniture & Fixtures
(ii) Make a provision of 5% on Sundry Debtors for bad debts.
(iii) Carry forward Rs. 120/- for unexpired insurance expenses
(iv) Provide for the following outstanding liabilities:
(i) Wages: Rs. 3,200/-
(ii) Salaries: Rs. 500/-
(iii) Rates & Taxes: 200/-
(v) The value of closing stock as on 31-3-2011 is Rs. 30,000.

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