Advance Financial Accounting
2015 (November)
Commerce (Speciality)
Course: 301: Advance Financial Accounting)
Full Marks: 80
Pass Marks: 32
The figures in the margin indicate full marks for the questions.
1. (a) Choose the correct answer: 1x3=3
i.
According to Sec. 17, every banking company
shall transfer a sum equal to 20% / 22% / 24% of its net profits to a reserve
fund as statutory reserve.
ii.
In Life Insurance Business, interim dividends
paid during the year are an appropriation / income / expenses.
iii.
Accounting for investments is associated with
AS-13 / AS-14 / AS-15.
(b) Fill in the blanks: 1x3=3
i.
As per RBI’s Prudential Accounting Norms,
provision required to be made against the standard assets is @ 0.40%.
ii.
In case of ex-interest / ex-dividend sales of
securities, quoted prices do not include accrued interest.
2. Write short notes on the following: 4x4=16
a)
NPA.
b)
Cash credit.
c)
Investment account.
d)
Bonus.
3. (a) The following figures are extracted from the books of
Guwahati Bank Ltd. as on 31.03.2014:
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Rs.
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Interest and discount received
Interest paid on deposits
Issued and subscribed capital
Reserve under Section 17
Commission, exchange and brokerage
Rent received
Profit on sale of investment
Salaries and allowances
Directors’ fees and allowances
Rent and taxes paid
Stationary and printing
Postage
Other expenses
Audit fees
Depreciation on bank’s properties
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40,30,000
24,04,000
10,00,000
7,00,000
1,80,000
60,000
1,90,000
2,10,000
24,000
1,08,000
24,000
50,000
24,000
8,000
25,000
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Other information:
i.
Provision for bad and doubtful debts necessary
Rs. 1,00,000
ii.
Rebate on bills discounted as on 31.03.2014 Rs.
15,000
iii.
Provide Rs. 7,00,000 for income tax
iv.
The Directors’ desire to declare dividend @ 10%
Prepare the Profit and Loss Account of Guwahati Bank Ltd.
for the year ended 31st March, 2014. 14
Or
(b) What is slip
system of ledger posting? Discuss the advantages and disadvantages. 8+3+3=14
4. (a) From the following
figures of Live Saving Life Assurance Co. Ltd., prepare a valuation Balance
Sheet and Profit Distribution Statement for the year ended 31st
March, 2014. Also pass necessary Journal Entries to record the transactions: 14
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Rs.
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Balance of Life Assurance Fund as
on 01.04.2013
Interim bonus paid in the
valuation period
Balance of Revenue Account for
the year ended 31.03.2014
Net liability as per valuers’
certificates as on 31.03.2014
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1,67,15,000
25,00,000
2,40,00,000
1,65,00,000
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The company
declares a reversionary bonus of Rs. 185 per Rs. 1,000 and gave the policy
holders as option to take bonus in cash Rs. 105 per Rs. 1,000. Total business
conducted by the company was Rs. 600 lakhs. The Company issued profit policy
only ¾th of the policyholders in value opted for cash bonus.
Or
(b) Distinguish
between: 7x2=14
i.
Surrender value and Paid-up value.
ii.
Re-insurance and Double insurance.
5. (a) From the
following information as on 31st March, 2014, prepare the Revenue
Accounts of Sagar Co. Ltd. engaged in Marine Insurance Business: 14
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Particulars
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Direct Business
(Rs.)
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Re-Insurance
(Rs.)
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I. Premium:
Received
Receivable
1st April, 2013
31st March, 2014
Premium paid
Payable
1st April, 2013
31st March, 2014
II. Claims:
Paid
Payable
1st April, 2013
31st March, 2014
Received
Receivable
1st April, 2013
31st March, 2014
III. Commission:
On insurance accepted
On insurance ceded
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24,00,000
1,20,000
1,80,000
2,40,000
16,50,000
95,000
1,75,000
1,50,000
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3,60,000
21,000
28,000
20,000
42,000
1,25,000
13,000
22,000
1,00,000
9,000
12,000
11,000
14,000
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Other Expenses
and Income:
Salaries – Rs.
2,60,000, Rent, Rates and Taxes – Rs. 18,000, Printing and Stationery – Rs.
23,000, Indian Income tax paid - Rs. 2,40,000, Interest, Dividend and Rent
received (Net) - Rs. 1,15,500, Income tax deducted at source – Rs. 24,500,
Legal expenses – Rs. 40,000, Bad debts – Rs. 5,000, Double income tax refund –
Rs. 12,000, Profit on sale of motor car – Rs. 5,000.
Balance of Fund
as on 1st April, 2013 was Rs. 26,50,000 including additional reserve
of Rs. 3,25,000. Additional Reserve has to be maintained at 5% of the net premium
of the year.
Or
(b) Briefly
explain schedules to be shown in the financial statements of General Insurance
Companies as prescribed by IRDA Regulation, 2002. 14
6. (a) On 1st
January, 2014, ABC Ltd. held as investment Rs. 50,000, 6% Government Stock
costing Rs. 47,000. On 31st March, a purchase of Rs. 2,00,000 of
same Government Stock was made at Rs. 95 cum-interest. On 1st July,
the company sold Rs. 1,00,000 Stock @ 96. On 1st October, a further
Rs. 70,000 of the investment was sold at LRs. 98 cum-interest. The market price
of the stock on 31.12.2014 was Rs. 99 (ex-interest). Half-yearly interest is
payable on 30th June and 31st December every year.
Prepare the
Investment Ledger of the company ignoring income tax and brokerage. 14
Or
(b) (i) Define ‘Investment’ and ‘Jobbers and
brokers’. 6
(ii) What
are the cum-interest and ex-interest purchase and sale of investment? Show its
treatment in investment ledger. 8
(OLD COURSE)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
1. (a) Choose the correct answer: 1x5=5
i.
Banking companies are governed by the Banking
Regulation Act, 1949 / 1950 / 1951.
ii.
Every General Insurance Company must prepare its
Financial Statements as per Schedule B / C / D of the IRDA Regulation, 2002.
iii.
According to the Provincial Insolvency Act,
1920, salary Rs. 20 / Rs. 40 / Rs. 60 per head is considered as preferential
creditors.
iv.
Profit on sale of marketable securities is
transferred to Profit and Loss Account / Capital Reserve.
v.
Accounting for changing prices is also known as
Inflation Accounting / Deflation Accounting.
(b) Fill in the blanks: 1x3=3
i.
According to the provisions of the Insolvency
Act, any amount due to Government or local authority is known as ____.
ii.
AS – 13 is associated with accounting for ____.
iii.
Presidency Towns Insolvency Act was enacted in
the year ____.
2. Write short
notes on the following: 4x4=16
a)
Slip system of accounting for banking companies.
b)
Valuation of Balance Sheet.
c)
Deficiency Accounts.
d)
Cum-interest or cum-dividend purchases and
sales.
3. (a) From the
following information, prepare the Profit and Loss Account of ABC Bank Ltd. for
the year ended 31st March, 2014. 11
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Rs.
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Interest on fixed deposits
Interest on loans
Commission
Rebates on bill discounted
Establishment charges
Discount on bills discounted
(net)
Interest on cash credit
Interest in Current Accounts
Rent and rates
Interest on overdrafts
Directors’ fees
Auditors’ fees
Interest on savings bank deposits
Postage and telegrams
Sundry charges
Printing and stationery
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27,50,000
25,90,000
82,000
4,90,000
5,40,000
14,60,000
22,30,000
4,20,000
1,80,000
15,40,000
30,000
12,000
6,80,000
14,000
17,000
29,000
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Bad debts to be
written-off amounted to Rs. 4,00,000. Provision for taxation may be made at
55%.
Or
(b) What is
rebate on bill discounted? How is rebate on bill discounted treated in
preparation of accounts of banking companies? 4+7=11
4. (a) Zenith
Fire Insurance Co. Ltd. commenced its business on 01.04.2013. It submits the
following information for the year ended 31.03.2014. 11
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Rs.
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Claims paid
Commission paid
Premium received
Re-insurance premium paid
Expenses of management
Claims outstanding on 31.03.2014
Create reserve for unexpired risk
@ 40%
Rent, Rates and Taxes
Printing and Stationery
Salaries
Premium receivable on 31.03.2014
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7,00,000
50,000
15,00,000
1,00,000
3,00,000
1,00,000
18,000
23,000
2,60,000
3,01,000
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Prepare Revenue
Account for the year ended 31.03.2014
Or
(b) Define the
following: 3+4+4=11
i.
Claims.
ii.
Re-insurance.
iii.
Life Insurance Fund.
5. (a) Rakesh
commenced business on 01.07.2011 with a capital of Rs. 2,00,000. On 31st
March, 2015, an adjudication order for insolvency was made against him.
Following are the other details available relating to his business as on
31.03.2015. 12
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Rs.
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Sundry creditors
Mortgage loan (building)
Godown rent (2 months)
Wages due
Loan of Mrs. Rakesh (given out of
her own sources)
Cost of building (estimated to
realize Rs. 1,00,000)
Debtors (including bad of Rs.
10,000)
Stock-in-trade (realization value
Rs. 10,000)
Cash in hand / bank
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1,50,000
1,00,000
5,000
8,000
25,000
1,60,000
90,000
15,000
10,000
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He maintained
books up to 31st March, 2014 and profit up to 31st March,
2014 was Rs. 1,40,000. He did not maintain books from 1st April,
2014 onwards. He has been drawing Rs. 4,000 p.m. and goods worth Rs. 1,500 p.m.
uniformly from April 2014 onwards. Prepare Statement of Affairs.
Or
(b) Distinguish between: 6+6=12
i.
Statement of Affairs and a Balance Sheet.
ii.
Statement of Affairs and a Deficiency Account.
6. (a) On
01.04.2013, Vinoy Ltd. had 12% Govt. Bonds amounting to Rs. 4,00,000 at Rs. 96
(face value being Rs. 100 each), interest being payable on 31st
March and 30th September every year. On 01.06.2013, Vinoy Ltd. sold
12% Govt. Bonds of Rs. 1,00,000 at Rs. 98 ex-interest. Show 12% Govt. Bonds
Account for the year ended 31st March, 2014. At the end of the
year the market value of the bonds were Rs. 99 each (ex-interest). 11
Or
(b) Define
investment. How do you balance the Investment Account at the end of the year,
when market price is less than the cost price? 4+7=11
7. (a) A company
buys and sells goods. During the three months ending March 31, 2014, the
company entered into the following transactions:
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2014 January 1:
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By 500 units costing Rs. 750
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2014 January 31:
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Sell 400 units for Rs. 2,000 and
replace them with units costing Rs. 1,400
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2014 February 28:
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Sell 200 units for Rs. 1,000. Buy
50 units costing Rs. 200
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2014 March 31:
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Sell 200 units for Rs. 1,100. Buy
100 units costing Rs. 500
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The retail price
index during the period was as follows:
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January 1, 2014
January 31, 2014
February 28, 2014
March 31, 2014
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Rs. 200
Rs. 220
Rs. 230
Rs. 240
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You are required
to Prepare Trading Account under the following situations: 11
i.
Historical Cost Accounting.
ii.
Current Purchasing Power Accounting.
iii.
Current Cost Accounting.
Or
(b) Define
Inflation Accounting. Write four objectives of Inflation Accounting. Discuss
five points in favour of Inflation Accounting in the context of Indian
Companies. 3+4+4=11
***