05. select the correct answer having the transaction
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01. The major objective of accounting is,
1. Calculate profit or loss
2. Accounting income and expenses
3. Recording transaction in books
4. Providing information to interested parties to make decisions.
5. To fulfil legal requirement. ^'''''''&
02. Which of the following are considered as the fundamental qualitative characteristics of financial
information as per the "conceptual framework for Financial Reporting"
1. Relevance and confidentiality 2. Relevance and comparability
3. Verifiability and Timeliness 4. Understandability and Relevance
5. Faithful Representation and relevance ^'''''''&
03. Which of the following accounting concepts provides the basis to prepare final financial statements at
the end of an every year,
1. Periodic concept 2. Matching concept 3. Realization concept
4. Entity concept 5. Prudence concept ^'''''''&
04. A stock which the cost was Rs. 200,000 has been sold for Rs. 240,000 on credit basis and a stock for
Rs. 60,000 has been returned by above customer. The net effect of above transactions to the accounting
equation is shown as,
Assets = Liabilities + Equity
1' + 30,000 = - +30,000
2' + 40,000 = +40,000
3' + 30,000 = + 60,000 - 30,000
4' +50,000 = + 20,000 +30,000
5' +180,000 = + 150,000 +30,000 ^'''''''&
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05. Select the correct answer having the transaction, source document and relevant prime entry book
respectively.
1. Writing off bad debts - Sales invoice - Sales journal
2. Purchasing furniture on credit bases - Purchase invoice - Purchase journal
3. Providing for doubtful debts - Journal Voucher - General Journal
4. Paying for creditors - Receipt - Cash receipt Journal
5. Settling petty cash imprest - Petty cash voucher - Petty cash payment journal '''''''&
06. Which of the followings provide only the reasons which help to increase the balance as per bank
statement than the balance as per cash account
1. Deposited but not realized cheques and direct deposits
2. Standing order payments and unpresented cheques
3. Standing order payments and bank charges
4. Direct deposits and issued but not presented cheques.
5. Direct deposits and standing order payments ^'''''''&
07. A stock was sold amounting Rs. 690,000 (Including 15% VAT). Out of above stock, a stock worth of
Rs. 57500 above has been returned. The net sales amount should be recognized in the income statement
and the VAT liability should be recognized in the statement of financial position are,
Net Sales (Rs.) VAT Liabilities (Rs.)
1' 550,000 82,500
2' 600,000 82,500
3' 600,000 90,000
4' 690,000 82,500
5' 690,000 90,000 ^'''''''&
Answer for No. 08 and 09 by using following information
A - The total of the sales journal has undercasted by Rs. 50,000
B - Goods returned valued Rs. 5000 has been credited to purchase account.
C - Interest received amounting Rs. 3000 has been recorded as paid interest.
D - The balance of the paid commission account of Rs. 1000 has not been extracted to
the trial balance
08. The effect to the net profit due to above errors is,
1. Increase by Rs. 50000 2. Decrease by Rs. 55000
3. Decrease by Rs. 56000 4. Decrease by Rs. 57000
5. Increase by Rs. 57000 ^'''''''&
09. The balance of the suspense account due to above errors is?
1. A credit balance of Rs. 5000 2. A debit balance of Rs. 5000
3. A debit balance of Rs. 6000 4. A credit balance of Rs. 6000
5. A credit balance of Rs. 7000 ^'''''''&
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10. A business which has been registered for VAT on 1/4/2017, has purchased a land while relevant
expenses for above are given below,
Purchase price (Including 15% VAT) 690,000
Cost of removing old building 150,000
Stamp duty and legal fees 25,000
Expenses for the signboard 20,000
Income from selling removed building materials 40,000
The amount should be recognized as the cost of the land as at purchased date is,
1. Rs. 600,000 2. Rs. 690,000 3. Rs. 735,000
4. Rs. 865,000 5. Rs. 885,000 ^'''''''&
11. The balance of the debtors control account of a public limited company as at 31/03/2018 was
Rs. 125,000. But following transactions have not been accounted.
- Written off bad debts amounting Rs. 5000
- Charged interest from the debtors amounting Rs. 10,000
- Dishonoring a received cheque amounting Rs. 5000 from a debtor
- Providing 10% doubtful debts
The balance of the debtors control account after rectifying above errors is,
1. Rs. 81000 2. Rs. 90000 3. Rs. 95000 4. Rs. 110000 5. Rs. 135100 ^'''''''&
12. Following balances could be seen in a commerce society of a school as at 1/4/2017
- Receivable members subscription Rs. 8000
- Life time members subscription Rs.` 64000
1. The members subscription received within the period is Rs. 65200 and the members subscription
received in advance as at 31/3/2018 is Rs. 5000
2. The life time members subscription scheme was commenced on 1/4/2015 and it has been decided
to recognize that as an income over a period of 10 years.
The members subscription income for the year ending 31//3/2018 and the balance of the life time
members subscription account as at 31/3/2018 are, Members fee for the year ending
31/3/2018 (Rs.)
Life time members fee
as at 31/3/2018 (Rs.)
1' 52,200 80,000
2' 60,200 56,000
3' 60,200 8,000
4' 65,000 56,000
5' 65,200 80,000 ^'''''''&
13. Following information relates to a business
1. As at 1/4/2017
- Pre-paid telephone expenses Rs. 12000
- Payable rates Rs. 6000
2. Paid rates and telephone expenses within the period is Rs. 46000 and Rs. 54000 respectively.
3. Payable telephone expenses as at 31/3/2018 and payable rates as at some date are Rs. 8000 and
Rs. 6000 respectively.
4
Calculate the expenses should be recognized as an income in the income statement for the year ending
31/3/2018 and the liability should be shown in the statement of financial position as at 31/3/2018
Expenses for the year ending
31/3/2018 (Rs.)
The liability as at
31//3/2018 (Rs.)
1' 54,000 12,000
2' 100,000 14,000
3' 100,000 8,000
4' 120,000 14,000
5' 120,000 46,000 ^'''''''&
Answer Q No. 14 and 15 by using following information
- Nethum was admitted on 1/4/2017 for the partnership business continued by Pethum and
Sithum by sharing profit and loss at 2:1
- The good will estimated on that date was Rs. 150,000 and Nethum brought Rs. 250,000 as
the capital.
- every partner entitle an annual salary of Rs. 60,000
- New profit sharing ratio is 2:2:1
- The share of profit owes to Pathum is Rs. 40,000
14. Profit for the year of the partnership business is,
1. Rs. 40,000 2. Rs. 80,000 3. Rs. 100,000
4. Rs. 120,000 5. Rs. 280000 ^'''''''&
15. What is the net increment in the capital account balances of the partners due to above transactions.
1. Rs. 150,000 2. Rs. 250,000 3. Rs. 300,000
4. Rs. 400,000 5. Rs. 500,000 ^'''''''&
16. Select the incorrect answer relevant for the disclosures on the face of the financial statements as per
LKAS 01 (presenting FF.S)
1. Name of the business, Currency, Name of the statement
2. Name of the business, Names of the directors, currency
3. Name of the business, Reporting period, type of the currency
4. Name of the business, Reporting period, type of the business (sole or partnership)
5. Name of the business, currency, type of the business type of the business (sole or partnership) '''''''&
17. The final financial statements of Ruberu PLC for the year ending 31/3/2018 were authorized by the
directors on 30/6/2018. Following events occurred within the time period started from 31/3/2018 ended
at 30/6/2018
A - Bankruptcy of a debtor on 15/6/2018 who had a balance of Rs. 50,000 arising on a sale on
10/04/2018.
B - Sold a stock for Rs. 210,000 by bearing a sales expense of Rs. 15000 which the cost was Rs.
200,000 as at 31/3/2018
C - The judgment of a court case was delivered on 15/06/2018 confirming a liability of Rs. 500,000
to an employee who had filed a case against the company on 30/6/2017
D - A stock amounting Rs. 50,000 which was on 31/3/2018 has damaged on 1/6/2018 due to fire.
1. A and B only 2. B and C only 3 A,B and D only
4. B,C and D only 5. A,B,C and D all ^'''''''&
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18. A company changed the useful life time of a depreciable asset. The above change should be adjusted in
the financial statements,
1. As an effect only for prior periods
2. As an effect only for the current periods
3. As an effects to current and future periods.
4. Not an effect to current period and as an effect to future periods.
5. As effect to current and prior periods. ^'''''''&
19. Which of the followings can be identified as changes in estimates as per LKAS 08 (Accounting policies,
changes in accounting estimates and errors)
A - Applying WAC method from the current year instead of FIFO method when valuing the stock.
B - Receiving Rs. 20,000 in the current year which was written off as bad debts in the previous year.
C - Changing the depreciation method of PPE from the current year from the straight line method
to diminishing balance method
D - It was decide that the useful life time of the machinery increases from 8 years to 10 years and
the scrap value increase by Rs. 50000 due to a machinery repair.
1. A and B only 2. B and D only 3. A,B and D only
4. C and D only 5. A,B,C and D only ^'''''''&
20. The following information pertains in a trial balance prepared as at 31/3/2018 of a company.
Provision for income tax as at 1/4/2017 Rs. 90000
Paid tax Rs. 220000
The paid income tax for the financial year of 2016/2017 is in paid tax in the current year. The estimated
income tax for the year 2017/2018 is Rs. 180,000. The income tax should be adjusted to the profit for
the year ending 31/3/2018 in the income statement and the payable income tax in the statement of
financial position are, Tax should be adjusted to the profit Payable To
1' 120,000 10,000
2' 130,000 30,000
3' 180,000 60,000
4' 190,000 60,000
5' 190,000 90,000 ^'''''''&
21. The following information is given for the year ending 31/3/2018 in relation to property plant and
equipment of a company.
- Profit from selling motor vehicle Rs. 50.000
- Depreciation of property plant and equipment Rs. 600,000
- Revaluation reserve (received from the Land revaluation on 1/4/2016) Rs. 250,000
- There was a deficit on revaluation of land on 31/3/2018 for 300,000.
What is the net effect to the profit for the year and the total comprehensive income of the company
for the year ending 31/3/2018 due to these transactions and events."
Profit for the period (Rs.) Total cophrensive income (Rs.)
1. Decrease by 550,000 Not change
2. Decrease by 600,000 Decrease by 55,000
3. Decrease by 600,000 Decrease by 600,000
4. Decrease by 600,000 Decrease by 850,000
5. Decrease by 850,000 Decrease by 850,000 ^'''''''&
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22. The following information pertains to a company for the year ending 31/3/2018
Rs.'000'
Net cash flow generated form operating activities 1500
Paid income tax during the period. 250
Annual depreciation 100
Loss from selling motor vehicle 50
paid interest 50
increment of the stock 25
increase in creditors 35
The profit before tax for the year ending 31/3/2018 is,
1. Rs. 1,360,000 2. Rs. 1,640,000 3. Rs. 1,660,000
4. Rs. 1,710,000 5. Rs. 1,740,000 ^'''''''&
Use following information to answer Q.no. 23 and 24.
as at 31/3/2018 (000) as at 31/3/2017 (000)
Stated ordinary share capital 2100 2050
Retained profit 900 350
Total assets 5500 4500
For the year ending 31/3/2018
- Interest for the bank loan Rs. 150,000
- Paid interim dividends Rs. 150,000
- Income tax for the period Rs. 100,000
Ordinary share capital has been increased due to capitalization of reserves.
23. What is the return on total assets ratio of the company (on average total assets)
1. 11% 2. 12% 3. 13% 4. 18% 5. 20% ^'''''''&
24. What is the return on equity ratio as at 31/3/2018.
1. 20% 2. 25% 3. 33.3% 4. 35.7% 5. 50% ^'''''''&
25. Which of the following assumptions / assumption is /are correct in relation ot economic order of
quantity.
A - Fixed and known purchasing costs can be identified
B - Fixed and known holding costs can be identified
C - Quantity order would be received at once
D - Ordered stock will receive when reaching to re-order level.
1. A and B only 2. A,B and C only 3 A,B and D only
4. B,C and D only 5. A,B,C and D all ^'''''''&
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26. Following information relates to raw material �� used by a manufacturing company during a year,
- Monthly consumption 250 Kg
- Cost of a order Rs. 60
- Cost of 1 Kg Rs. 10
Holding cost is 10% from a unit cost. Calculate raw material (Kg) should be ordered at once and number
of orders for a year.
Kg of raw material should be
ordered
No. of order
1' 60 50
2' 250 12
3' 300 10
4' 600 5
5' 600 12 ^'''''''&
27. Following information relates to salaries of a company for the month of March 2018
Paid salaries to employees Rs.171000
Deductions form the salary
Salary advances Rs.30000
Festival advances Rs. 24000
Contribution for EPF Rs.25000
Contribution by employer
EPF Rs.37500
ETF Rs. 7500
The gross salary in the month of March 2018 and total expenses for the employees of the company are,
Gross salary (Rs.) Total expense relates to employees (Rs.)
1' 171,000 250,000
2' 250,000 295,000
3' 250,000 241,000
4' 196,000 241,000
5' 250,000 171,000 ^'''''''&
28. Which of the following statement / statements is / are correct when decreasing the selling capacity and
the other factors remains unchanged
A - Not change the unit contribution
B - Decrease the break even point
C - Increase the safety of margin
D - Decrease profit
1. A and D only 2. A and C only 3 A,C and D only
4. B,C and D only 5. A,B and D only ^'''''''&
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29. Following are the budgeted production levels and total costs related to a product expect to produce by
a company.
Production level (units) Total cost (Rs.)
5000 500,000
6000 540,000
Calculate the variable cost of a unit and total fixed cost,
unit variable cost Fixed cost (Rs.)
1' 40 200,000
2' 40 300,000
3' 50 300,000
4' 90 200,000
5' 100 300,000 ^'''''''&
30. If the other factors remain constant, which of the following will lead to a decrease in the net present
value of a project?
A - Increase the discount factor
B - Increase the annual depreciation
C - Increase market survey charges
D - Increase the initial investment
E - Decrease the net operational cash flows
1. A,B and E only 2. A,C and E only 3. A,D and E only
4. C,D and E only 5. B,C,D and E only ^'''''''&
Write short answers for question No. 31-50 on the dotted lines.
31. The final financial statements prepared for external parties are called as .......................................... and
the final financial statements prepared for the internal party (Managers) are called as ...............................
32. Identify the accounting concept that is most applicable to each of the following transactions.
1. Providing for doubtful debts for the closing balance of debtors '''''''''''''''''''''''''''''''''''''''''
2. Recording an asset purchased on leasing in the statement of financial position ..............................
3. Recording an invested cash by the owner '''''''''''''''''''''''''''''''''''''''''
4. Recording a purchased stapler machine as an expense '''''''''''''''''''''''''''''''''''''''''
33. The payments made by cheques are recorded in the ................................ account and the payments made
by coins and notes are recorded in the ....................................... account
34. Following transactions could been seen in a business for the year ending 31/3/2018
- It has been estimated the useful life time of a machinery worth of Rs. 600,000 purchased on
1/4/2014 as 6 years on 1/4/2017
- Furnitures have been purchased on 1/10/2017 for Rs. 500,000
- Property plant and equipment's should be depreciated at 10% on straight line method.
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1. The annual depreciation should be recognized in the income statement for the year ending 31/3/2018
''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
2. Calculate the carrying amount of PPE as at 31/3/2018 '''''''''''''''''''''''''''''''''''''''''''''''''''''''''
35. A finished stock worth of Rs. 100,000 of garment damage due to flood on 20/5/2018
1. Write the journal entry to record above damage
''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
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2. State following statements are "True" or "False"
(a) This stock damage should be adjusted under manufacturing over heads cost '''''''''''''''''''''''''''''''''
(b) This damage should be adjusted under other expenses ............................
36. A motor vehicle was donated to Sinha Sports Club on 1/4//2016 as a special donation. This donation is
recognized as an income over a period of 10 years. The balance in the motor vehicle donation fund
account as at 31/3/2017 is Rs. 1,350,000
1. Calculate the annual depreciation of motor vehicle for the year ending 31/3/2018
''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
3. Calculate the balance of the motor vehicle donation fund account as at 31/3/2018
''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
37. The total of the debtors list as at 31/3/2018 was Rs. 85000. Following errors were revealed later.
1. A sales invoice amounting Rs. 50,000 has been accounted twicely
2. A written off bad debts amounting Rs. 12,000 has not been recorded in the debtors personal account.
3. There is on any entry for a dishonoured cheque amounting Rs. 81,000 received from a debtor under
a discount of 10%
(a) Calculate the balance of the adjusted debtors control account as at 31/3/2018 '''''''''''''''''''''''''''''''''''''''
(b) Calculate the net effect to the net profit due to above errors. '''''''''''''''''''''''''''''''''''''''''''''''''''
38. The balance as per bank account as at 31/3/2018 is Rs. 85,000
- Issued but not presented cheques Rs. 20,000
- Bank charges and direct deposits in the bank statement is Rs. 5000 and Rs. 15,000 respectively
- Rs. 10,000 has been debited to bank statement by the bank erroneously
- The value of the deposited but not realized cheques is Rs. 120,000
1. Calculate the cash balance in the statement of financial position as at 31/3/2018 ''''''''''''''''''''''''''''''''''''''
2. What is the balance /OD in the bank statement ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
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39. State following statements are "True" or "False" as per section on 24 of partnership ordinance
1. 10% interest should be settled for the partners capital balances '''''''''''''''''''''''''''''''''''''''''
2. The total equity is not change when adjusting good will through the capital A/C ''''''''''''''''''''''''''''''''''
3' The total equity of the partners is shown by the capital account balances '''''''''''''''''''''''''''''''''''''''''
4. 5% annual interest should be paid for the loans obtained from the partners '''''''''''''''''''''''''''''''''''''''''
40. Kamal was admitted to the partnership business, which was carried out by Amal and Bimal by sharing
profits and losses in the ratio 3:2 . The new profits and losses sharing ratio 3:2:2. The good will
calculated on that date and should be adjusted through the capital accounts of the partners. Kamal's
portion for the goodwill is Rs. 100,000.
Calculate the total good will as at the date which Kamal was admitted ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
41. State whether following statements are True or False on the dotted lines.
True / False
1' A change in accounting estimates is an adjustment for the carrying
amounts of assets and liabilities ''''''''''''''''''''''''''''''''''''''''''''''''''
2' When settling dividends for ordinary share holders, the profit for
the period is decreased
''''''''''''''''''''''''''''''''''''''''''''''''''
3' Contingent liabilities are recognized in the final financial
statements
''''''''''''''''''''''''''''''''''''''''''''''''''
4' Payment of a leasing installment (excluding interest) for a leasing
creditor is a finance activity.
''''''''''''''''''''''''''''''''''''''''''''''''''
42. A company issued 100,000 ordinary shares within the year ending 31/3/2018. The consideration per
share was Rs. 50. The consideration per share was Rs. 50. The company incurred Rs. 50,000 as share
issue expenses. Applications for 150.000 shares were received with the full amount of money. The
company allotted shares proportionately and the excess money was returned to the applicants.
1. The increment of the stated capital as at 31/3/2018 Rs. ''''''''''''''''''''''''''''''''''''''''''''''''
2. Net increase in equity during the year due to the above transactions Rs. '''''''''''''''''''''''''''''''''''''''''''''''''
43. Following information relates to a public limited company
Rs. '000'
- Ordinary share capital as at 31/3/2017 (100,000 shares) 7000
- Retained profit as at 31/3/2017 2000
Following information is relates to that company for the year ending 31/3/2018
1. It was decided to capitalize reserves at Rs. 50 each on 1/4/2017 (01 share for each 5 shares)
2. A right issue was made on 31/3/2018 at 60 each (01 share for each 6 ordinary shares)
11
Calculate followings,
(a) Write the journal entries for reserves capitalization (Narration is not required)
''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
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(b) The increase of the equity as at 31/3/2018 ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
44. State two situations in which a company could change an accounting policy as per LKAS 8 (Accounting
policies, changes in accounting estimates and errors)
1' ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
2' ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
45. Following information relates for two companies.
Kaman Company Nadan Company
Stock turn over ratio 8 times 10 times
Quick ratio 1:1 0.5:1
Interest coverage ratio 8 times 5 times
Assets turnover ratio 40% 35%
By using above information answer following questions.
1. The most efficient company when using working capital ''''''''''''''''''''''''''''''''''
2. The company having low gearing ''''''''''''''''''''''''''''''''''
3. The company having a good liquidity ''''''''''''''''''''''''''''''''''
4. The company which use the assets efficiency ''''''''''''''''''''''''''''''''''
46. Total sales value in 10,000 units of a company produces and sells a single product is Rs. 1,500,000
contribution sales ratio is 20%. Total fixed cost is Rs. 180,000. Calculate followings.
1. Variable cost of a unit Rs. ''''''''''''''''''''''''''''''''''''''''''''''
2. Break even point by units Rs. ''''''''''''''''''''''''''''''''''''''''''''''
47. Write two assumptions apply when estimating the cash flows for various investments.
1' ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
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2' ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
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48. Following are the details of raw material stock of Isuru manufacturing business.
- Maximum lead time - 6 days
- Minimum lead time - 2 days
- Minimum consumption - 60 Kg
- Re-order quantity - 500Kg
- Maximum stock level - 980 Kg
Calculate the maximum consumption per day ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
12
Use following information to answer question no 49 and 50
The variable cost of a unit of is Rs. 8 and variable sales expense per unit is Rs. 2. Annual fixed
cost is Rs. 40,000 while sales price of a unit is Rs. 18. Current annual sales volume is 6000 units.
The company expects to rent a machinery. Annual rent is Rs. 10,000. As a result of above hiring,
the variable cost of a unit can be decreased to Rs. 6.
49. If the new machinery is rent calculate the number of units should be sold to gain the profit which the
company obtain now.
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50. If the company increase sales by 6000 units, calculate the annual profit after renting the machinery.
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1
01. Kamel PLC is a manufacturing and trading company. The summarized trial balance as at 31/3/2018
is given below.
Description Dr
(Rs.'000')
Cr
Rs.'000')
Property plant and equipment 19500
Finished stock as at 1/4/2017 500
Prime cost 5800
Administrative expenses 500
Manufacturing overhead cost (excluding machinery depreciation) 1200
Paid VAT on purchases of raw material and expenses 1150
Raw material stock as at 31/3/2018 250
Distribution expenses 550
Trade receivables 1220
Paid tax 300
Bank and cash 350
Sales 11600
Accumulated depreciation on PPE as at 1//4/2017 4900
Payables for raw material suppliers 20
Stated capital – Ordinary shares 9000
Retained profit 3645
VAT on sales 1650
Revaluation reserve – Land 400
Payable EPF 30
Provision for income tax as at 1/4//2017 75
31320 31320
2
Additional Information
(a) Paid tax in the trial balance consists of followings
Rs.'000'
Paid VAT 100
Paid income tax for the year of 16/17 80
Paid income tax for the year of 17/18 120
300
(b) 20,000 shares were capitalized by using retained profit consideration per share is Rs. 50.
(c) Before preparing of the financial statements for the year ending 31/3/2018 adjustments have to be
made for the following.
i) The cost of the closing stock as at 31/3/3018 is Rs. 600,000 while a a stock damaged
amounting Rs. 120,000 is in above closing stock. This damaged stock was sold for Rs.
82,000 after bearing a sales expense for Rs. 2000 after the financial period but before
authorization.
ii) The composition of property plant and equipment and their accumulated deprecation as at
are as follows.
Cost / Value as at
31/3/2018
(Rs.'000')
Accumulated
depreciation as at
1/4/2017 (Rs.000)
Land 8000 -
Building 4500 1200
Machinery 5000 2700
Motor vehicle 2000 1000
19500 4900
Building and machinery are depreciated on straight line method at 10% and MV are
depreciated on straight line method at 20%.
iii) The land was revalued on 31/3/2018 at Rs. 8,500,000 and building was revalued on same
date at Rs. 2,500,000 at first time by a professional valuer.
iv) A motor vehicle of the business was sold for Rs. 600,000 on 1/4/2017 and the received
amount has been credited to sales account. There is no any entry made for above. On this
date a motor vehicle was acquired under a finance lease. The fair value of above MV was
2.5 millions. The initial deposit paid amounting Rs. 500,000 has been debited to motor
vehicle account. No any entry has been made in this respect. At the end of the 4 year lease
term the ownership of the asset will be passed to the lessee. Further the annual lease
instalment is Rs. 700,000 (annual interest applied in above is Rs. 200,000). There is no any
entry other than debiting the paid lease installment for the current year to the Trade payable
account.
v) A sales invoice for Rs. 46,000 (induding 15% VAT) has been totally omitted from the
books.
vi) The employees contribution towards the Employees Provident Fund (EPF) is 10% while
the employer's contribution is 15%. The Employees Trust Fund (ETF) rate is 3% on gross
salary.
vii) It has been estimated that the income tax for the current year is �
� of the profit before tax.
Required
The following financial statements (including notes) of Kamel PLC for publication as per LKAS 01
1. Statement of profit or loss and other comprehensive income statement for the year ending 31/3/2018
2. Statement of financial position as at 31/3/2018
3. Statement of changes in equity for the year ending 31/3/2018 (Total 20 marks)
3
02. (a) Nandana and Vindana are carrying a partnership business under following agreements,
1. Profit and loss sharing ratio is 2: 1
2. Each partner is entitled to a monthly salary of Rs. 5000
3. Partners are entitled to an interest of 10% per annum on capital balances.
4. Partners are entitled to an interest of 6% per annum on the loans given by them.
(i) Cahndana was admitted as a new partner on 1/4/2017 while the goodwill was estimated as Rs.
300,000 on that date
(ii) After admitting the new partner the profit sharing ratio was changed as 2:2:1 and the other
conditions of the agreement were not changed.
(iii) Following balances were there as at 1/4/2017 (Rs. '000')
Nandana Vindana
Total equity 500 480
Capital accounts 400 400
Loan A/C - Nandana 3200
(iv) The cost of sales in the year ending 31/3/2018 is Rs. 4,250,000 and the profit margin is 20% on
cost.
(v) Drawings of the owners are as followings (Rs. '000')
Nandana Vindana Chandana
Cash 50 40 20
Goods 20 10 10
(vi) Total operating expenses within the year is Rs. 358,000 and the paid salaries for the partners are
included in operating expenses
Nandana Rs. 30000
Vindana Rs. 20000
Chandana Rs. 20000
Required
1. Income statement for the year ending 31/3/2018 (including appropriating to the partners)
2. Partners Capital Accounts and current accounts for the year ending 31/3/2018 (10 marks)
(b)"The time" watch manufacturing business has two production departments, Assembling and
finishing and a service department. Following information is given.
01. Estimated annual overhead costs (Rs.)
Electricity 180,000
Factory rent 160,000
Machinery depreciation 100,000
Expenses at the canteen 90,000
Indirect salary – Finishing 60,000
- Assembly 40,000
- Service 50,000
Indirect material – Finishing 30,000
- Assembly 20,000
4
02. Other relevant information
Finishing Assembly Service
Electricity usage Kilowatt hours 15,000 10,000 5,000
Floor space (Sq. Meters) 180,000 90,000 90,000
Machinery cost 360,000 180,000 60,000
Budgeted machine hours 50,000 10,000 -
Budgeted labour hours 5,000 28,000 -
No: of employees 40 30 20
03. 60% from the services of the service department applicable for finishing department
04. Finishing department uses machine hours and assembly department uses labour hours to absorb
overheads.
05. Budgeted cost of a watch is as follows
Direct material Rs. 350
06. To produce a watch 5 machinery hours and 3 labour hours are respectively used.
Required
1) The overhead analysis sheet (including second apportionment )
2) Overhead absorption rates for production departments
3) Total cost of a watch (10 marks)
(Total 20 marks)
03. The statement of financial position of Mihiranga's business as at 1/4/2018 is given below.
Rs. '000'
Property plant & equipment 240
Stock 60
Trade receivables 20
Bank 40
360
Equity 175
Bank loan 100
Trade payables 60
Other payables 25
360
The following transactions and events took place during month of April 2018
i. Sold goods on credit basis for Rs. 75000. The cost of these gods was Rs. 50,000
ii. Received Rs. 45,000 from debtors under a discount of 10%
iii. Purchased goods for Rs. 40000 on credit basis
iv. Setoff a creditors balance for Rs. 30000 with a debtors balance amounting Rs. 20,000 and
remaining was settled by cash.
v. Mihiranga settled the telephone bill of the month of April amount Rs. 4000 by his personal
money.
vi. Issued a cheque to settle the electricity bill in the month of April amounting Rs. 2000
vii. Settled the bank loan instalment for Rs. 12,000 (Included interest is Rs. 2000)
viii. Dishonored the issued cheque for the electricity bill.
ix. A stock damage due to fire and obtain the insurance claim of 80% out of above damage.
5
Additional Information,
(i) All the transactions are done through bank account
(ii) The balance of the bank statement as at 30/4/2018 was not agree with the cash account balance.
Reasons for above are given below.
(a) A deposited cheque worth of Rs. 10000 has been credited to another account erroneously
by the bank.
(b) There is no any record in the cash account for a directly deposited cheque amounting
Rs. 5000 by a debtor.
(c) There is no any record in the cash account about the bank changers amounting Rs. 1000
(iii) PPE are depreciated at 10% on straight line method.
Required,
1) Show the impact of above transactions (with value) in the accounting equation and state whether
each value increases (+) or decreases (-) in front of the value (Use a format similar to the one given
below)
Trance
No. PPE Stock
Trade
Receivables Bank
Trade
Payables
Other
Payables
Bank
Loan Equity
2) Calculate the cash balance should be shown in the statement of financial position as at 30/4/2018
and prepare the bank reconciliation statement for the month of April.
3) Income statement for the month ending 30/4/2018 of Mihiranga's business.
04. Following have been provided some details of debtors of Janahanda PLC for the year ending 31/3/2018.
Balance of the debtors ledger as at 1/3/2018
Rs.
Ranga 10,000
Suranga 30,000
Eranga (7,000)
Viranga 15,000
48,000
Summary of the prime entry books in the month of March.
Cash receipts journal
Description Discount
Rs.
Cash
Rs.
Sales
Rs.
Debtors
Rs.
Sales 20,000 20,000
Ranga 6,000 6,000
Suranga 5,800 45,000 45,000
Eranga 1,200 38,000 38,000
Sales 30,000 30,000
Viranga 2,000 64,000 64,000
Total 9,000 203,000 50,000 153,000
6
Sales Journal Return inward Journal
Supplier Amount
Suranga 75,000
Eranga 80,000
Viranga 50,000
Total 205,000
Although the balance of the debtors control A/C as at 31/3/2017 was agree with the total of the
debtors list, the balance of the debtors control A/C as at 31/3/2018 was not agree with the total
of the debtors list as at some date.
Following errors were revealed later,
i& Omitting to record a written off bad debts (Receivable amount form Ranga)
ii& Overcasting the total of the return inward journal by Rs. 1000
iii& Return inward from Eranga has not been recorded in his personal A/C
iv& Allowed discount to Eranga for Rs. 1200 has been recorded in his A/C as Rs. 2100
v& The total of the allowed discount in the month of March has been recorded in the debit side of
the control A/C
vi& Not recording the credit balance of the debtors ledger as at 31/3/2018 in the control A/C
Required,
1) Before rectifying errors
- Debtors control Account
- Accounts in the debtors ledger and the debtors list as at 31/3/2018
2) Journal entries to rectify errors (Narrations are not required)
3) Adjusted debtors control account
4) The reconciliation statement to rectify the balance as per adjusted cash control a/c with the total of
the debtors list. (10 marks)
(b) Some information extracted from Nayana PLC as at 31/3/2018 is given below.
Rs.'000'
Interest expense 150
Income tax for the year 450
Stock 380
Pre-paid expenses 20
Profit before interest 2100
Total current assets 2000
Total current liabilities 800
Ordinary share capital 2000
Reserves 500
Non current liabilities
10% Bank loan 1500
Required,
Compute followings
1) return on equity ratio 2) Total assets turnover ratio
3) Quick ratio 4) Interest coverage ratio
5) Debt equity ratio (5 marks)
(Total 15 marks)
Supplier Amount
Suranga 4,000
Eranga 3,000
Viranga 2,000
Total 10,000
7
05. (a) A special educational seminars were organized by the commerce society of Madagama Central
College for the purposes of increase the G.C.E. A/L results of the students and to increase the
fund of the commerce society. It was organized for 300 students who expect to sit for A/L
examination for the subjects of, accounting, business studies and economics. University
professors participate as resource persons and one day seminar is conducted for each subject.
It has been decided to rent a building which can be facitate for Rs. 350 Students and charge Rs.
200 from one student per day. Every students is given pen, a file, a tute and a packet of milk. It
has been estimated than following expenses have to be spent.
- Hall rent per day Rs. 10,000
- Charges for sounds per day Rs. 1500
- Printing expense of a tute Rs. 50
- Price of a packet of milk Rs. 20
- For a pen and a file Rs. 20
- Lecturers fee per day Rs. 9000
- Advertising and other expense Rs. 1500
- Refreshment expenses for the lecturer and for teachers Rs. 1000 per day.
Required,
1) Contribution of a student
2) Minimum No. of students should be participated to cover total cost.
3) Margin of safety (No. of students)
4) Calculate the net profit if 300 students participate in all 3 days
5) The additional profit if 50 students who are from art scheme will be participated only for economics
6) Calculate the number of students at the break even point by assuming that other factors are constant
and entrance fee is decrease to Rs. 170. (10 marks)
(c) 1) 3000 units of raw material are required to Aruna Manufacturing business annually. 1 unit can be
purchased for Rs. 10 ordering cost per order is Rs. 60. Annual holding cost is 10% from cost of the
stock.
Required,
1) Economic order quantity 2) Number of times should be ordered
2) Some information about the receipts and issued of a special type of polythene used to produce bags
is given below.
Returned stock is sent by the factory to the warehouse from the stock which were purchased on 18/1
Required,
1) Prepare store ledger as per first in first out (FIFO) method
2) Calculate the cost of material used for the month ending 31/1/2018 and the value of the closing
stock as at 31/1//2018 (5 marks)
(Total 15 marks)
Date 5/1 8/1 14/1 18/1 22/1 31/1
Purchases (Kg) 1500 5000 2000
Purchases (Value) 3000 15000 8000
Issues (Kg) 2000 5000
Return inward (Kg) 250
8
06. (a) The final financial statements prepared for the year ending 31/3/2018 of Saliya PLC are given
below.
Income Statement (Rs. '000')
Sales 690
Cost of Sales (250)
Gross profit 440
Other income 80
520
Operating expenses (310)
Profit before tax 210
Income tax (60)
Profit for the year 150
Statement of financial position (Rs. '000')
2018.03.31 2017.03.31
PPE 2455 2500
Current Assets
Stock 160 150
Trade receivables 250 320
Pre – paid rent - 50
Cash and cash equivalents 135 100
3000 3120
Ordinary share capital 1050 950
Retained profit 235 100
Revaluation reserve 500 500
Non – Current Liabilities
Bank loan 1000 1400
Current Liabilities
Creditors 175 160
Payable income tax 40 10
3000 3120
Followings have been provided for you
(i) A machinery which the carrying amount was Rs. 120,000 has been sold and a motor vehicle has
been purchased during the year.
(ii) Following expenses are in operating expenses
- Annual depreciation Rs. 125,000 - Interest Expense Rs. 145,000
(iii) Followings are in other income
- Profit form selling machinery Rs. 30,000
- Investment income Rs. 50,000
(iv) There was no any reserves capitalization or transfers to reserves and interim dividends have been
paid within the year.
Required,
Statement of cash flow of Saliya PLC for the year ending 31/3/2018 as per LKAS 07
(10 marks)
9
(b) A company is planning to purchase a new machinery. Information related that is given below.
Purchase price of the machinery Rs. 1,500,000
Installation fee Rs. 100,000
Opening working capital Rs. 300,000
i. The useful lifetime of the machinery was estimated as 4 years and the working capital will
be recovered at the end of the project.
ii. The expected annual operating profit is given below (Rs. '000')
Year 1 2 3 4
Profit 150 200 160 140
iii. The discount factors at 10% are as follows
Year 1 2 3 4
Discount factor 0.9 0.8 0.7 0.6
Required,
1) Initial total cash outflow of the project
2) Net present value
3) Recommendation of the project to selection of the project based on the NPV
(5 marks)
(Total 15 marks)
07. (a) Following assets and liabilities relates to "Negena Tharu" Sports Club as at 1/4/2017
Rs.'000'
Pavilion 620
Exercise machines 500
Pavilion fund 200
Sports equipment's 10
Receivable members fee 27
Members fee received in advance 9
Cash 200
Life time members fee 54
Other information
(i) Life time member's fee scheme which was started before 2 years by 10 members for Rs. 90000
should be recognized as an income over 5 years.
(ii) There were 100 members as at 1/4/2017 and 15 members have not settled their members fee as at
that date. Out of above members 5 members have not paid their members fee for the year ending
31//3/2018 and it was decided to cancel the membership of them.
(iii) The annual members fee has been increased by Rs. 200 from 1/4/2017. It is not relevant for life
time members. 10 members have not paid their annual members fee as at 31/3/2018 and 5 members
have paid their members fee for the next year. other members have paid their members fee duly
(iv) The special donation received to build up a pavilion in the period is Rs. 500,000. The pavilion was
built up and completed by spending Rs. 220,000 and it was used from 1/10/2017. The remaining
amount in the pavilion found A/C was decided to transfer to the accumulated fund.
(v) Sports equipment's are hired for the members and outsiders. Daily rental fee per member is Rs. 50
and for an external people is Rs. 100. Rs. 150,000 has been received by providing facilities for 50
members and 20 out siders for 30 days. If their is any extra amount received, it should be
considered as an advance.
10
(vi) The pavilion and sports equipments should be depreciated 5% and 10% respectively on straight
line method.
(vii) Sports equipments worth of Rs. 15000 have been purchased within the period and the value of the
sports equipments were assessed as Rs. 23000 on 31/3/2018.
(viii) A Grounds man was appointed on 1/10/2017 and the monthly salary for him is Rs. 10,000
(ix) Rs. 25,000 has been paid for the maintenance of office equipments.
Required,
1) Cash account (receipt and payment A/C) of "Negena Tharu" Sports Club for the year ending
31/3/2018
2) Income statement (Income and expense account) for the year ending 31/3/2018
3) Accumulated fund and total liability as at 31/3/2018 (10 marks)
(b) Information about the employees of Wasana PLC for the month ending 31/1/2018 is given for you.
Name of the employee
No. of days
worked
(8 hours)
No. of hours of OT
within the month
10 months salary
advance
Chathuranga 25 15 -
Madhuranga 20 12 2000
Vidhuranga 18 - -
Other information
(i) Salaries are paid at the end of each month.
(ii) Salary rates - Rs. 800 per normal day OT – Twice as the normal salary.
(iii) Contribution for EPF from employer is 15% and from the employee is 10% contribution for ETF
is 3% from the employer and above should be calculated form the basic salary.
Required,
1) Pay sheet for the month of January 2018
2) Salaries and wages control account and postings to the liability accounts
(5 marks)
( Total 15 marks)
1
Third Term Test - 2018 - Answer PaperAccounting - Grade 13
Part I
1
2
3
4
5
6
7
8
9
10
4
1
2
5
2
3
3
1
4
3
11
12
13
14
15
16
17
18
19
20
2
5
2
5
4
3
3
4
5
2
21
22
23
24
25
26
27
28
29
30
2
4
3
2
3
3
1
4
5
2
2
3
Part II
4
5
6
7
8
9
10
11
12
13
14
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17
18
19