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GUESS QUESTION PAPERS FOR NOV 2015 IPCC EXAMS

GROUP-II (RELEASED ON 11TH OCT 2015)

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INDEX

S. No Subject Pages

1. ADVANCED ACCOUNTING

Guess paper 1 3 – 9


Guess Paper 3 17 – 23

2. AUDITING AND ASSURANCE



3. INFORMATION TECHNOLOGY AND STRATEGIC MANAGEMENT


Guess paper 2 30 – 31 Dear Students:

Our main objective in releasing Guess Question papers for IPCC examinations is to help the CA Students to achieve good pass percentage. In addition to these Guess Question Papers we have already released Guess Questions for IPCC examinations. We hope that these sincere efforts will improve the self confidence of students, appearing for IPCC Examinations.

Even if you are not well prepared for Group – II, our advise is to attempt all the papers of Group – II, atleast by preparing Guess Questions and Guess Question Papers.

DISCLAIMER: Dear students,

a) Since CA is a professional course it is impossible to predict the questions / problems which may come in the public examination.

b) There are chances of getting questions / problems in the model which are similar to questions / problems given in question papers but don’t expect exact questions / problems to repeat in the public examination.

c) We have done this work based on the 33rd edition of IPCC materials.

d) These question papers are applicable for Nov 2015 attempt of IPCC only.

e) Don’t blame us even if you don’t get any questions from these question papers in the public exams of IPCC.

f) Even if you get good number of questions / problems from these question papers in the public examinations then it is purely coincidence.



IPCC _Nov 2015_ Guess Question Papers___________________________________ 3

No.1 for CA/CWA & MEC/CEC MASTER MINDS

IPCC GROUP II, PAPER : 5 – ADVANCED ACCOUNTING

GUESS PAPER 1, FOR NOV 2015 EXAMS

Total No.of Questions – 7 Time Allowed – 3 Hours

Total No. of printed pages – 7 Maximum Marks – 100

Instructions to candidates:-

1) Questions No. 1 is compulsory.

2) Candidates are also required to answer any five questions from the remaining six questions.

3) Working notes should form part of the answer.

4) "Wherever necessary, suitable assumptions should be made and indicated in answer by the

Candidates."

MARKS 1) Answer the following: (4x5 = 20)

a) A company made a public issue of 1,25,000 equity shares of Rs.100 each, Rs.50 payable on application. The entire issue was underwritten by four parties. A, B, C and D in the proportion of 30% and 25%, 25% and 20% respectively. Under the terms agreed upon, a commission of 2% was payable on the amounts underwritten.

A, B, C & D also agreed on ‘firm’; underwriting of 4,000, 6,000, Nil and 15,000 shares respectively.

The total subscriptions, excluding firm underwriting, including marked applications were for 90, 000 shares. Marked applications received were as under: A – 24,000, C-12,000, B-20,000, D-24,000

Ascertain the liability of the individual underwriters and also show the journal entries that you would make in the books of the company. All workings should form part of your answer.

b) An earthquake destroyed a major warehouse of PQR Ltd. on 30.4.2014. The accounting year of the company ended on 31.3.2014. The accounts were approved on 30.6.2014. The loss from earthquake is estimated at Rs. 25 lakhs. State with reasons, whether the loss due to earthquake is an adjusting or non-adjusting event and how the fact of loss is to be disclosed by the company.

c) XYZ Ltd. purchased an equipment at a price of $ 1,00,000 on 2.4.09. Upon terms of credit that price should be settled within six months from the date of purchase. The company capitalised the asset in terms of Indian Rupees at a rate of exchange prevailing as on date of purchase. When the liability is settled as per terms on 10.9.2009, it incurs an additional amount of RS. 3,50,000 due to exchange rate fluctuation on the date of settlement. The said sum is charged off to profit and Loss Account?

d) Y Ltd borrowed Rs 12 crores for Its capital expansion which lasted for 18 months. The relevant borrowing rate was 12.5%. During this period, the Company invested the temporary surplus funds at 4.5% on short-term basis and earned interest of Rs. 25 lakhs, which was shown as Miscellaneous income in the P& L A/c. The company has capitalized the entire interest cost and added to its plant and Machinery. Is the correct?

2) Answer the following: 16M P, Q, R and S are sharing profits and losses in the ratio 3 : 3 : 2 : 1. Frauds committed by R during the year were found out and it was decided to dissolve the partnership on 31st March, 2014 when their Balance Sheet was as under:

Liabilities Amount (Rs.) Assets Amount (Rs.) Capitals:

P Q R S

General reserve

1,50,000 1,50,000

- 60,000 40,000

Building Stock Investments Debtors Cash R

1,90,000 1,30,000

50,000 70,000 30,000 40,000



IPCC _ Nov 2015_ Guess Question Papers___________________________________ 4

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80,000 30,000

Trade creditors Bills payable

5,10,000 5,10,000

Following information is given to you:

(i) A cheque for Rs. 7,000 received from debtor was not recorded in the books and was misappropriated by R.

(ii) Investments costing Rs. 8,000 were sold by R at Rs. 11,000 and the funds transferred to his personal account. This sale was omitted from the firm’s books.

(iii) A creditor agreed to take over investments of the book value of Rs. 9,000 at Rs. 13,000. The rest of the creditors were paid off at a discount of 5%.

(iv) The other assets realized as follows:

Building 110% of book value

Stock Rs. 1,20,000

Investments the rest of investments were sold at a profit of Rs. 7,000

Debtors the rest of the debtors were realized at a discount of 10%

(v) The bills payable were settled at a discount of Rs. 500.

(vi) The expenses of dissolution amounted to Rs. 8,000

(vii) It was found out that realization from R’s private assets would only be Rs. 7,000.

Prepare Realisation Accounts, Cash Account and Partner’s Capital Account. All workings should part of your answer.

3) Answer the following:

a) From the following balances extracted from the books of Gemini Insurance Company Limited as on 31.3.2014 you are required to prepare Revenue Accounts in respect of Fire and Marine Insurance business for the year ended 31.3.2014 to and a Profit and Loss Account for the same period: 8M

Amount (Rs.)

Amount (Rs.)

Directors’ Fees Dividend received Provision for Taxation (as on 1.4. 2013)

1,84,000 2,30,000

1,95,000

Interest received Fixed Assets (1.4.2013) Income-tax paid during the year

44,000 20,00,000

1,40,000

Fire (Rs.) Marine (Rs.)

Outstanding Claims on 1.4. 2013 Claims paid Reserve for Unexpired Risk on 1.4.2013 Premiums Received Agent’s Commission Expenses of Management Re-insurance Premium (Dr.)

63,000 2,30,000 4,60,000

10,00,000 92,000

1,40,000 60,000

15,000 1,84,000 3,20,000 7,50,000

46,000 1,00,000

35,000

The following additional points are also to be taken into account :

(i) Depreciation on Fixed Assets to be provided at 5% p.a.

(ii) Interest accrued on investments Rs. 23,000.

(iii) Closing provision for taxation on 31.3. 2014 to be maintained at Rs. 2,05,000.





(iv) Claims outstanding on 31.3. 2014 were Fire Insurance Rs. 23,000; Marine Insurance Rs. 34,000.

(v) Premium outstanding on 31.3.2014 were Fire Insurance Rs. 70,000; Marine Insurance Rs. 45,000.

(vi) Reserve for unexpired risk to be maintained at 50% and 100% of net premiums in respect of Fire and Marine Insurance respectively.

(vii) Expenses of management due on 31.3.2014 were Rs. 20,000 for Fire Insurance and Rs. 10,000 in respect of marine Insurance.

b) The following are the figures extracted from the books of TOP Bank Limited as on 31.3.2014. 8M

Particulars Rs. Interest and discount received Interest paid on deposits Issued and subscribed capital Salaries and allowances Directors fee and allowances Rent and taxes paid Postage and telegrams Statutory reserve fund Commission, exchange and brokerage Rent received Profit on sale of investments Depreciation on bank’s properties Statutory expenses Preliminary expenses Auditor’s fee

59,29,180 32,59,920 16,00,000 3,20,000

48,000 1,44,000

96,460 12,80,000 3,04,000 1,04,000 3,20,000

48,000 44,000 40,000 28,000

The following further information is given:

(i) A customer to whom a sum of Rs. 16 lakhs has been advanced has become insolvent and it is expected only 40% can be recovered from his estate.

(ii) There were also other debts for which a provision of Rs. 2,10,000 was found necessary by the auditors.

(iii) Rebate on bills discounted on 31.3.2013 was Rs. 19,000 and on 31.3.2014 was Rs. 25,000.

(iv) Preliminary expenses are to be fully written off during the year.

(v) Provide Rs. 9,00,000 for Income-tax.

(vi) Profit and Loss account opening balance was Nil as on 31.3. 2013.

Prepare the Profit and Loss account of TOP Bank Limited for the year ended 31.3. 2014.


a) The Empire Stores Ltd. invoice goods to their various branches at cost and the branches sell on credit as well as for cash. Form the following details relating to the Mumbai branch, prepare the necessary accounts in the head office books: 8M

Particulars Rs. Particulars Rs. Debtors, 1st January, 2001 Debtors, 31st December, 2001 Cash Balance, 1st January, 2001 Stock, 1st January, 2001 Stock, 31st December, 2001 Goods received from head office Cash received from head office Goods returned to head office Cash sales Credit sales

26,200 33,100

300 15,000 13,900 50,800

1,500 700

33,500 60,000

Allowances to customers Returns from customers Discount allowed to customers Bad debts Remittance to head office Rent and rates Wages and salaries General trade charges Normal loss of goods due to wastage Abnormal loss of goods due to pilferage

320 580

2,400 600

74,900 1,800 6,000 1,300

1,200

3,000





b) Rama limited issued 8% debentures of Rs.3,00,000 in earlier year on which interest is payable half yearly on 31st march and 30th September. The company has power to purchase its own debentures in the open-market for cancellation there of. The following purchases were made during the financial year 2009-2010 and cancellation made on 31st march, 2010. 8M

(i) On 1st April, Rs.50,000 nominal value debentures purchased for Rs.49,450, ex-interest.

(ii) On 1st Sept., Rs.30,000 nominal value debentures purchased for Rs.30,250 cum interest.

Show the journal entries (with out narrations) for the transactions held in the year 2009-10.

5) Answer the following: 16M

Following is the summarized Balance Sheets as at March 31, 2013: Name of the Companies : MAX Ltd, MINI Ltd

Balance Sheet as at : 31-03-2005 (Rs. ‘000)

Particulars Notes No.

Max Ltd ( Rs.)

Mini Ltd ( Rs.)

1 2 3 4 1

a b

EQUITY AND LIABILITIES: Shareholder’s funds Share capital Reserves and Surplus

1 2

2000 (261)

1400 185

2 a

Non-current liabilities Long term borrowings (12% Deb. of Rs.100 each)

600

200

3 a

Current liabilities Trade Payable-(creditors)

TOTAL

415

2754

225

2010 1

a

(i) (ii)

ASSETS: Non current assets Fixed assets Tangible assets Intangible assets (Goodwill)

3

1500 20

760 -

2 a b c d

e

Current Assets Current investments Inventories (stock) Trade receivables(debtors) Cash and cash equivalents (Cash at bank) Other current assets TOTAL

4 5

192 363 651

26

2 2754

-

680 440 130

-

2010

Note to Accounts:

Particulars Max Ltd (Rs.) Mini Ltd (Rs.)

1. Share capital E. shares of Rs.100 each 9% P. shares of Rs.100 each 2. Reserves and Surplus General reserve Profit and loss account 3. Tangible Assets Other fixed assets 4. Current Investment Own debentures (Nominal value Rs.2 lakhs) 5. Other Current Assets Discount on issue of debentures

1500 500

180

(441)

1500

192

2

1000 400

170 15

760

- -

On 1.4.2013, Max Ltd. adopted the following scheme of reconstruction:





(i) Each equity share shall be sub-divided into 10 equity shares of Rs. 10 each fully paid up. 50% of the equity share capital would be surrendered to the Company.

(ii) Preference dividends are in arrear for 3 years. Preference shareholders agreed to waive

(iii) 90% of the dividend claim and accept payment for the balance.

(iv) Own debentures of Rs. 80,000 were sold at Rs. 98 cum-interest and remaining own debentures were cancelled.

(v) Debenture holders of Rs. 2,80,000 agreed to accept one machinery of book value of Rs. 3,00,000 in full settlement.

(vi) Trade payables, trade receivables and inventory were valued at Rs. 3,50,000, Rs. 5,90,000 and Rs. 3,60,000 respectively. The goodwill, discount on issue of debentures and Profit and Loss (Dr.) are to be written off.

(vii) The Company paid Rs. 15,000 as penalty to avoid capital commitments of Rs. 3,00,000. On 2.4.2013 a scheme of absorption was adopted. Max Ltd. would take over Mini Ltd. The purchase consideration was fixed as below:

I. Equity shareholders of Mini Ltd. will be given 50 equity shares of Rs. 10 each fully paid up, in exchange for every 5 shares held in Mini Ltd.

II. Issue of 9% preference shares of Rs. 100 each in the ratio of 4 preference shares of Max Ltd. for every 5 preference shares held in Mini Ltd.

III. Issue of one 12% debenture of Rs. 100 each of Max Ltd. for every 12% debentures in Mini Ltd. You are required to give Journal entries in the books of Max Ltd. and draw the resultant Balance Sheet as at 2nd April, 2013


a) M Ltd. furnishes the following summarized Balance Sheet as at 31st March, 2015: 10M

Rs. In ‘000 Rs. In ‘000

Equity & Liabilities Share Capital: Authorized Capital: Issued and Subscribed Capital : 6,00,000 Equity shares of Rs.10 each fully paid up 40,000 9% Preference Shares of 100 each Reserve and Surplus: Capital reserve Revenue reserve Securities premium Profit and Loss account Non-current liabilities - 10% Debentures Current liabilities and provisions

Total Assets Fixed Assets: Cost Less: Provision for depreciation Non-current investments at cost Current assets, loans and advances (including cash and bank balances)

Total

6,000 4,000

20

8,000 1,000 3,600

6,000 (500)

10,000

10,000

12,620 500

380 23,500

5,500 10,000

8,000 23,500

The company passed a resolution to buy back 10% of its equity capital @ Rs. 15 per share. For this purpose, it sold its investments of Rs. 60 lakhs for Rs. 50 lakhs. The company also redeemed all preference shares at par on 1st April, 2015.





You are required to pass necessary Journal entries and prepare the Balance Sheet on 01.04.2015.

b) On 1st April, 2014, a company offered 100 shares to each of its 400 employees at Rs. 25 per share. The employees are given a month to accept the shares. The shares issued under the plan shall be subject to lock-in to transfer for three years from the grant date i.e. 30, April 2014. The market price of shares of the company on the grant date is Rs. 30 per share. Due to post-vesting restrictions on transfer, the fair value of shares issued under the plan is estimated at Rs. 28 per share. Up to 30th April, 2014, 50% of employees accepted the offer and paid Rs. 25 per share purchased. Nominal value of each share is Rs. 10. Record the issue of shares in the books of the company under the aforesaid plan. 6M

7) Answer any four out of the following: (4 x 4 = 16)

a) Differentiate on ordinary partnership firm with an LLP. Under what circumstances, an LLP may be wound up by the Tribunal?

b) M/s. Bright & Co. had four departments A, B, C & D. Each department being managed by a departmental manager whose commission was 10% of the respective departmental profit, subject to a minimum of Rs.6,000 in each case. Interdepartmental transfers took place at a 'loaded' price as follows:

From Dept. A to Dept. B From Dept. A to Dept. D From Dept. C to Dept. D From Dept. C to Dept. B

10% above cost 20% above cost 20% above cost 20% above cost

For the year ended 31-3-1991 the firm had already prepared and closed the departmental Trading & Profit and loss a/c. Subsequently it was discovered that the closing stocks of departments had included interdepartmentally transferred goods at loaded price instead of cost price. From the following information prepare a statement re-computing the departmental profit/loss:

Particulars Dept. A Dept. B Dept. C Dept. D

Final profit/loss 38,000

(L)

50,400

(P)

72,000

(P)

1,08,000

(P)

Interdepartmental transfers Included at loaded price in the Departmental stock

-

70,000 (Rs.22,000 from

Dept. A & Rs.48,000 from

Dept. C)

-

4,800 (Rs.3,600 from

Dept. C & Rs.1,200 from

Dept. A)

c) (i) The liquidator of a company is entitled to a remuneration of 2% on assets realized and 3% on

the amount distributed to unsecured creditors. The assets realized Rs.10,00,000. Amount available for distribution to unsecured creditors before paying liquidator’s remuneration is Rs. 4,12,000. Calculate liquidator’s remuneration if the surplus is insufficient to pay off unsecured creditors, in toto.

(ii) A Liquidator is entitled to receive remuneration at 2% on the assets realized, 3% on the amount distributed to Preferential Creditors and 3% on the payment made to Unsecured Creditors. The assets were realized for Rs.25,00,000 against which payment was made as follows:

Liquidation Rs.25,000 Secured Creditors Rs.10,00,000 Preferential Creditors Rs. 75,000

The amount due to Unsecured Creditors was Rs. 15,00,000. You are asked to calculate the total Remuneration payable to Liquidator. Calculation shall be made to the nearest multiple of a rupee.





d) A Ltd. Company has set up its business in designated backward area which entitles it to receive, as per a public scheme announced by the Government of India; a subsidy of 15% of the cost of investment. Having fulfilled all the conditions laid down under the scheme, the company on its investment of Rs. 100 lakhs in capital assets during its accounting year ending on 31st March, 1995, received a subsidy of Rs 15 lakhs in January,1995 from the Government of India. The accountant of the company would like to record the receipt as an item of revenue and to reduce the loses on the profit and Loss Account for the year ended 31st March,1995. Is the action justified? Discuss.

e) M/s Dinesh & Company signed an agreement with workers for increase in wages with retrospective effect. The outflow on account of arrears was for 2005-06 – Rs.10.00 lakhs, for 2006-07 – Rs.12 lakhs and for 2007-08 – Rs.12.00 lakhs. These amount is payable in September, 2008. The accountant wants to charge Rs.22.00 lakhs as prior period charges in Financial Statement for 2008-09. Discuss.

THE END



IPCC _ Nov 2015_ Guess Question Papers__________________________________ 10










4) "Wherever necessary, suitable assumptions should be made and indicated in answer by the Candidates."


a) Bad luck Ltd. went into voluntary liquidation and the proceedings commenced on 2nd July, 2003. Certain creditors could not receive payment out of the realization of assets and out of the Contributions from the contributories of the ‘A’ List. The following details of share transfers are made available to you.

Name of the transferor

shareholders

No. of shares

transferred

Date of the transferor ceasing to

be a member

Creditors remaining unpaid and o/s at the time of the transferor

ceasing to be a member

A B C D E

1,000 1,250

500 2,000

250

1st March, 2002 16th August, 2002 1st October, 2002

1st December, 2002 1st April, 2003

Rs.6,000.00 Rs.8,000.00

Rs.10,750.00 Rs.13,000.00 Rs.15,000.00

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 work out the liability of the individual contributories listed above.

b) X Ltd provides you the following information.

No. of employees

No. of options to be granted to each employees

Vesting period

2500

500

4 years

No. of employees not expected to fulfill the vesting conditions

other than conditions

1st year

2nd year

3rd year

4th year

20%

15%

10%

10%

No. of employees not expected to fulfill the vesting conditions

based on market conditions

1st year

2nd year

3rd year

5%

7%

10%



IPCC _Nov 2015_ Guess Question Papers__________________________________ 11


4th year 12%

Fair of value of the option Exercise price Exercise period Face value of each share

Rs.5 Rs.50

3 years Rs.10

At the end of third year it has been re-estimated that all vesting conditions have been fulfilled and no other further conditions are required for options to vest and 600 employees exercise their option at the end of 4th year, 800 employees exercise their option at the end of 5th year and 100 employees exercise their option at the end of 6th year. Rights of 30 employees expire unexercised at the end of 6th year. Pass journal entries for above.

c) Explain whether the following will constitute a change in accounting policy or not as per Accounting Standard 5.

(i) Introduction of a formal retirement gratuity scheme by an employer in place of ad hoc ex-gratia payments to employees on retirement.

(ii) Management decided to pay pension to those employees who have retired after completing 5 years of service in the organistaion. Such employees will get pension of Rs. 20,000 per month. Earlier there was no such scheme of pension in the organization?

d) White Ltd. A fixed asset is purchased for Rs. 25 lakhs. Government grant received towards it is Rs. 10 lakhs. Residual Value is Rs. 5 lakhs and useful life is 5 years. Assume depreciation on the basis of Straight Line method. Asset is shown in the balance sheet net of grant. After 1 year, grant becomes refundable to the extent of Rs. 6 lakhs due to non compliance with certain conditions. Pass journal entries for first two years.


X, Y & Z were in partnership sharing Profits & Losses in the proportion of 3:2:1. The partnership was dissolved on 30-6-2003 when the position was as follows:

Liabilities Rs. Assets Rs.

2,24,000 2,10,000

28,000 2,94,000 1,12,000

Capitals: X 1,40,000 Y 70,000 Z 14,000

Creditors 4,34,000

Cash in hand Sundry Debtors Stock in trade

4,34,000

There was a bill for Rs.10,000 due on 30-11-2003 under Discount. It was agreed that the net realisation should be distributed in their due order (at the end of each month) but as safely as possible. The realizations and expenses were as under:

Date Stock & Debtors Expenses

31-7-2003 31-8-2003 30-9-2003 31-10-2003 30-11-2003

84,000 1,26,000

70,000 77,000 35,000

7,000 5,400 4,900 3,500 3,500

The stock was completely disposed off and amounts due form debtors were realised, the balance being irrecoverable. The acceptor of the bill under Discount met the bill on the due date. Prepare a Statement showing the Monthly Distribution of cash realised under Maximum loss method


a) The following figures have been extracted from the books of New India Insurance Company Ltd. in respect of their Marine Business for 2007-2008: 10M

( Rs. in lakhs)





Particulars Rs. Particulars Rs.

Direct Business Income Received Reserve for unexpired risks as on 1.4.2007 Claims outstanding as on 1.4.2007 (Net) Bad Debts Income from investment and dividends (gross) Rent received from properties Investment in government securities as on 01.04.2007 Investment in shares as on 1.4.2007

50.00

60.00

20.00

10.00

10.00

5.00

100.00

20.00

Commission paid on Direct Business Expenses of Management Income tax deducted at source Profit and Loss Account: (Cr.) balance as on 1.4.2007 Other expenses Reinsurance premium receipts Outstanding claims as on 31.3.2008 (net) Direct claims paid (gross) Reinsurance claims paid

5.00

5.00

3.00

10.00

1.25

5.00

30.00

25.00

4.00

Prepare a Revenue Account and Profit and Loss Account for the year taking into account the following further information:

a) All direct risks are reinsured for 20% of the risk.

b) Claim a Commission of 25% on reinsurance ceded.

c) Provide 25% Commission on reinsurance accepted

d) Market value of investments as on 31st March, 2008 is as follows:

(i) Government Securities Rs.105 lakhs.

(ii) Shares Rs.18 lakhs

Adjust separately for each of these two categories of investments.

e) Provide 65% for Income tax.

b) A Commercial Bank has the following capital funds and assets. Segregate the capital funds In to Tier I and Tier II capitals. Find out the risk adjusted asset and risk weighted assets ratio. 6M

Particulars ( Rs. in crores)

Equity share capital 500.00

Statutory reserve 270.00

Capital reserve (of which Rs.16 crores were due to revaluation of assets and the balance due to sale of capital asset)

78.00

Assets: Cash balance with RBI Balance with other banks Other investments Loans and advances: (i) Guaranteed by the Government (ii) Others Premises, furniture and fixtures Off-Balance Sheet items: (i) Guarantee and other obligations (ii) Acceptances, endorsements and letter of credit

10.00 18.00 36.00

16.50

5,675.00 78.00

800.00

4,800.00






The shareholders of Maitri Ltd. Decided on a corporate restructuring exercise necessitated because of economic recession from the given summarized balance sheet as on 31-03-2012. And the information supplied. you are required to prepare (i) Journal entries reflecting the scheme of reconstruction, (ii) capital reduction account, (iii) cash account in the books of Maitri Ltd.

Name of the Company : Maitri Ltd Balance Sheet As At : 31st March, 2012

Particulars

Notes No.

Rs.

1 2 3

1

a b

EQUITY AND LIABILITIES: Shareholder’s funds Share capital Reserves and Surplus

1 2

7,00,000 (1,28,400)

2 a

(i)

Non-current liabilities Long tem borrowings 9% Debentures (Rs.100)

1,20,000

3 a b

Current liabilities Trade Payable Other current liabilities

TOTAL

3

1,20,000 2,78,500

10,90,100

1 a

(i) (ii) (iii)

ASSETS: Non current assets Fixed assets Tangible assets Intangible assets Non current investments

4 5 6

6,84,000 1,46,100

64,000

2 a b

Current Assets Inventories Trade receivables

TOTAL

7

76,000

1,20,000 10,90,100

Note to Accounts:

Particulars Rs.

1. Share capital 30,000 equity shares of Rs.10 each 40,000 8% cumulative preference shares Rs.10 each 2. Reserves and Surplus Securities premium account Profit and account 3. Other current liabilities Accrued interest on debentures Vat payables Temporary bank overdraft 4. Tangible assets Freehold land Freehold premises Plant and equipment 5. Intangible assets

3,00,000

4,00,000

10,000

(1,38,400)

5,400 50,000

2,23,100

1,20,000 2,44,000 3,20,000





Goodwill at cost 6. Non current investments Investment (Marked to market) 7. Inventories Raw material and packing material Finished goods

36,100

64,000

60,000 16,000

Note: Preference dividends are in arrears for 4 years.

The scheme of reconstruction that received the permission of the Court was on the following lines:

� The authorized capital of the Company to be re-fixed at Rs.10 lakhs (preference capital of Rs.3 lakhs and equity capital of Rs.7 lakhs). Both classes of shares are of Rs.10 each.

� The preference shares are to be reduced to Rs.5 each and equity shares reduced by Rs.3 per share. Post reduction, both classes of shares to be re-consolidated into Rs.10 shares.

� Trade Investments are to be liquidated in open market.

� One fresh equity shares of Rs.10 to be issued for every Rs.40 of preference dividends in arrears (ignore taxation).

� Expenses for the scheme were Rs.10,000.

� The debenture holders took over freehold land at Rs.2,10,000 and settled the balance after adjusting their dues.

� Unprovided contingent liabilities were settled at Rs.54,000 and a pending insurance claim receivable settled at Rs.12,500.

� The intangible assets were all to be written off along with Rs.10,000 worth obsolete packing material and 10% of the receivables.

� Remaining cash available as a result of the above transactions is to be utilized to pay off the bank overdraft to that extent.

The Equity shareholders agree that they will bring in necessary cash to liquidate the balance outstanding on the overdraft account by subscribing the fresh shares. The equity shares will be issued at par for this purpose.


a) Rahul Limited operates a number of retail outlets to which goods are invoiced at wholesale price which is cost plus 25%. These outlets sell the goods at the retail price which is wholesale price plus 20%. Following is the information regarding one of the outlets for the year ended 31.3.2003: 8M

Particulars Rs.

Stock at the outlet 1.4.2002 Goods invoiced to the outlet during the year Gross profit made by the outlet Goods lost by fire Expenses of the outlet for the year Stock at the outlet 31.3.2003

30,000 3,24,000

60,000 ?

20,000 36,000

You are required to prepare the following accounts in the books of Rahul Ltd. for the year ended 31.3.2003: Outlet Stock A/c, Outlet Profit & Loss A/c and Stock Reserve A/c.

b) Gram Udyog, a retail store, has two departments, Khadi and Silks for each of which stock account and memorandum mark up accounts are kept. All the goods supplied to each department are debited to the stock account at cost plus a 'mark up' which together make-up the selling-price of the goods and in the account the sale proceeds of the goods are credited. The amount of 'mark-up' is credited to the Departmental mark up account. If the selling price of any goods is reduced below its normal selling price, the reduction 'mark down' is adjusted both in the stock account and the Departmental 'mark up' account. The rate of mark up for Khadi Department is 33.33% of the cost and for Silks Department it is 50% of the cost. The following figures have been taken from the books for the year ended 31-12-2002. 8M





Particulars Khadi Dept. Silks Dept.

Stock as on Jan. 1st at cost Purchases Sales

10,500 75,900 95,600

18,600 93,400

1,25,000

(i) The stock of Khadi on 1-1-2002 included goods the selling price of which had been marked down by Rs.1,260. These goods were sold during the year at the reduced prices.

(ii) Certain stock of the value of Rs.6,900 purchased for the Khadi Dept. were later in the year transferred to the Silks Dept. and sold for Rs.10,350. As a result though cost of the goods is included in the Khadi Dept. the sale proceeds have been credited to the Silks Dept.

(iii) During the year 2002 to promote sales the goods are marked down as follows:

Dept. Cost Mark Down

Khadi Silk

5,600 10,000

360 2,000

All the goods marked down, were sold except silks of the value of Rs.5,000 marked down by 1,000.

(iv) At the time of stock-taking on 31-12-2002 it was discovered that Khadi Cloth at the cost of Rs.390 was missing and it was decided that the amount be written off.

You are required to prepare in a columnar form for both departments: The Memorandum stock A/c, Memorandum mark-up A/c.


Hindustan Ltd., issued 50,000, 6% Debentures of 100 each on 1st January, 2009. The debentures are redeemable by the creation of a Debenture Redemption Reserve. The company had the right to call upon the Trustee to apply the Debenture Redemption Reserve monies in purchasing own debentures, if available below par. The following information is given

(i) The annual appropriation is Rs. 50,000.

(ii) Debenture Redemption Reserve Balance as on 1st January, 2012 was Rs. 1,31,942 represented by 6% State Loan at cost of Rs. 74,262 (face value Rs. 80,000) and Debenture Redemption Reserve cash Rs. 57,680. This cash balance which includes the annual appropriation of Rs. 50,000 was invested in 6% State Loan. The Loan bond, purchased cum interest, had a face value of Rs. 60,000.

(iii) 1st September, 2012 sold the State Loan of the face value Rs. 40,000 out of loan held on 1st January, 2012 Rs. 38,000 (ex-interest) and the proceeds were applied in purchasing own debentures (face value Rs. 45,000 ex-interest).

(iv) The debentures purchased are cancelled on 31st December.

(v) Interest on State Loan is received on 31st March and 30th September.

(vi) Interest on debentures is paid on 30th June and 31st December.

(vii) Debentures outstanding as on 1st January, 2012 were Rs. 4,67,000.

Make ledger entries in the books of the company to give effect to the above.


a)

(i) Distinguish between operating lease and finance lease.

(ii) L Private Limited has taken machinery on lease from P Ltd. The information is as under:

Lease term = 4 years

Fair value at inception of lease = Rs. 20,00,000

Lease rent = Rs. 6,25,000 p.a. at the end of year





Guaranteed residual value = Rs. 1,25,000

Expected residual value = Rs. 3,75,000

Implicit interest rate = 15%

Discounted rates for 1st year, 2nd year, 3rd year and 4th year are 0.8696,

0.7561, 0.6575 and 0.5718 respectively.

Calculate the value of the lease liability as per AS19.

b) While preparing its final accounts for the year ended 31st March 2009, a company made a provision for badbebts @ 5% of its total debtors. In the last week of February 2009, a debtor for 2 lakhs had sufferd heavy loss due to earth quake. The loss was not covered by any insurance policy. In April 2009, the debtor became bankrupt. Can the company provide for full loss arising out of insolvency of debtor in the final accounts for the year ended 31st March, 2009?

c) The borrowing cost of Santra Pharmaceuticals Ltd. set up for the manufacture of antibiotics at Navi Mumbai is as under:

Date Nature of borrowings

Amount (Rs.)

Purpose of borrowings

Incidental expenses

1st Jan 2008 15% demand loan 60 lakhs Acquisition of Fixed assets 8.33%

1st Jul 2008 14.5% Term loan 40 lakhs Acquisition of plant and Machinery

5%

1st Oct. 2008 14% bonds 50 lakhs Acquisition of Fixed assets

8%

The incidental expenses consist of commission and service charges for arranging the loans and paid after rounding off it to the nearest lakh.

Fixed assets considered as qualifying assets as under: Rs.

Sterlie manufacturing shed 10,00,000

Plant and Machinery (total) 90,00,000

Other fixed assets 10,00,000 The project is completed on 1st January, 2009 and is ready for commercial production. Show the capitalisation on the borrowing costs.

d) Mohur Ltd. has equity capital of Rs.40,00,000 consisting of fully paid equity shares of Rs. 10 each. The net profit for the year 2004-05 was Rs. 60,00,000. It has also issued 36,000 10% debentures of Rs. 50 each. Each debenture is convertible into five equity shares. The tax rate applicable is 30%. Compute the Diluted earnings.

e) Swift Ltd. acquiring a patent at a cost of Rs. 80,00,000 for a period of 5 years and the product life-cycle is also 5 years. The company capitalised the cost and started amortizing the asset at Rs. 10,00,000 per annum. After two years it was found that the product life-cycle may continue for another 5 years from them. The net cash flows from the product during these 5 years were Expected to be Rs. 36,00,000; Rs. 46,00,000; Rs. 44,00,000; Rs. 40,00,000 and Rs. 34,00,000. Find out the amortisation cost of the patent for each of the years.

THE END













4) "Wherever necessary, suitable assumptions should be made and indicated in answer by the

Candidates."


a) What are the conditions to be fulfilled by a joint stock company to buy-back shares?

b) G Ltd. began construction of a new building on 1st January, 2014. It obtained Rs. 2 lakh special loan to finance the construction of the building on 1st January, 2014 at an interest rate of 11%. The company’s other outstanding two non-specific loans were:

Amount Rate of Interest

Rs. 3,00,000

Rs. 7,00,000

12%

14%

The expenditures that were made on the building project were as follows:

Amount

January 2014

May 2014

August 2014

December 2014

1,60,000

2,70,000

4,20,000

1,50,000

Building was completed by 31st December, 2014. Following the principles prescribed in AS 16 ‘Borrowing Cost,’ calculate the amount of interest to be capitalized and pass one Journal Entry for capitalizing the cost and borrowing cost in respect of the building.

c) From the information furnished you are required to compute the Basic and Diluted EPS (earnings per share) for accounting year 01-04-2014 to 31-03-2015 and adjusted EPS for the year 01-04-2013 to 31-03-2014.

Net profit for year ended 31-03-2014 Rs.

Net profit for year ended 31-03-2015 Rs.

No. of equity shares as on 01-04-2014

Bonus issue on 01-01-2015

No. of 12% Convertible Debentures of Rs. 100 each issued on 01-01-2015

Conversion ratio of Debentures

Tax rate

75,50,000

1,00,25,000

50,00,250

1 share for every 2 held

1,00,000

10 shares per debenture

30 percent

d) ABC Limited purchased a machinery for Rs.25,00,000 which has estimated useful life of 10 years with the salvage value of RS. 5,00,000. On purchase of the assets Central Government pays a grant for Rs. 5,00,000. Pass the journal entries with narrations in the books of the company for the first year, treating grant as deferred income.




Ph: 98851 25025/26 w.mastermindsindia.com


Black & Green and Brown & Grey are two partnership firms carrying on a similar type of business. They agreed to amalgamate the two businesses as on 1st January, 2003 under the name of Tints & Co. Black & Green share profits in the ratio of 8:7 and Brown & Grey 3:2. Their respective Balance Sheets as at 31st December, 2002 were as under:

Liabilities Black & Green ( Rs.) Brown & Grey ( Rs.)

64,000

10,000 6,000

1,20,000 1,05,000

56,000

--- ---

1,10,000 78,000

Trade & Expense Creditors Current A/cs:

Black Green

Capital A/cs: Black Green Brown Grey

3,05,000 2,44,000

Assets Black & Green ( Rs.) Brown & Grey ( Rs.) 42,000 15,000 71,000 59,000 25,000 18,000 75,000

31,000 ---

65,000 67,000 17,000 14,000 50,000

Balance at Bank Investments Debtors Stocks Vehicles Fixtures Freeholds

3,05,000 2,44,000

The amalgamation agreement contained the following provisions:

a. The Freeholds & Fixtures of brown and grey were sold for Rs.1,00,000 on 1st Jan., 2003.

b. Assets are to be revalued as under:

Particulars Black & Green ( Rs.) Brown & Grey ( Rs.) Stock Vehicles Fixtures Freeholds

57,000 23,000 20,000 95,000

62,000 15,000

----- -----

c. Provisions to be made for Bad Debts of Rs.4,000 by Black & Green, Rs.5,000 by Brown & Grey.

d. The creditors of each firm to be subject to a Discount of 2 ½%.

e. Black to take over his firms investments at Rs.12,000.

f. The Goodwill of Black & Green is to be taken at Rs.75,000 & that of Brown & Grey at Rs.50,000.

g. Profits in the new firm are to be shared in the proportion of 6/20 to Black 5/20 each to Green and Brown and 4/20 to Grey.

h. The capital of the new firm is to be Rs.5,00,000 to be provided by the partners in their profit sharing ratio; adjustments to be made in cash.

You are required to Draft:

(i) The Capital A/Cs of Black & Green and Brown & Grey.

(ii) The partners Capital A/Cs as they will appear in the books of the new firm on completion of the amalgamation together with the opening Balance Sheet.


a) The following is the Balance Sheet of Y Limited as at 31st March, 2003. 10M





Name of the Company : Y Ltd. Balance Sheet as at: 31st March, 2003

Particulars Notes No.

Figures as at the end of

current reporting

period

Figures as at the end of the

previous reporting

period 1 2 3 4

1

a b

EQUITY AND LIABILITIES: Shareholder’s funds: Share capital Reserves and Surplus

1 2

7,10,000 (2,40,000)

2 a

Non-current liabilities: Long tem borrowings

3

2,00,000

3 a b

Current liabilities: Trade Payable Other current liabilities–O/S Interest secured on all assets

Total

4,90,000

10,000

11,70,000

1 a

i

ASSETS Non-current assets: Fixed assets Tangible assets

4

7,80,000

2 a b c

Current Assets: Inventories Trade receivables Cash and cash equivalents (Bank)

Total

1,10,000 2,20,000

60,000 11,70,000

Notes to Accounts:

1. Share Capital:

Particulars Rs.

2,000 Equity shares of Rs.100 each, Rs.75 per share paid up 6,000 Equity shares of Rs.100 each, Rs.60 per share paid up 2,000 10% Preference share of Rs.100 each, fully paid up

1,50,000 3,60,000 2,00,000

2. Reserve & Surplus:

Particulars Rs.

Profit & Loss A/c (2,40,000)

3. Long term Borrowings:

Particulars Rs.

10% Debentures (having a floating charge on all assets) 2,00,000

4. Tangible Assets:

Particulars Rs. Land & Building Plant & Machinery

4,00,000 3,80,000

On that date, the Company went into Voluntary Liquidation. The dividends on preference shares were in arrears for the last two years. Sundry Creditors include a loan of Rs.90,000 on mortgage of Land & Buildings. The assets realised were Land & Buildings: 3,40,000; Plant & Machinery: 3,60,000; Stock: 1,20,000; Sundry debtors: 1,60,000.





Interest accrued on loan on mortgage of buildings up to the date of payment amounted to Rs.10,000. The expense of Liquidation amounted to Rs.4,600. The Liquidator is entitled to a remuneration of 3% on all the assets realised (except cash at bank) and 2% on the amounts distributed among equity shareholders. Preferential creditors, included in sundry creditors amount to Rs.30,000. All payment were made on 30th June, 2003. Prepare the liquidator’s final statement of A/c.

b) Departmental R sells goods to department S at a profit of 25% on cost and department T at 10% profit on cost. Department S sells goods to R and T at a profit of 15% and 20% on sales irrespectively. Department T charges 20% and 25% profit on cost to department R and S respectively. 6M

Department managers are entitled to 10% commission on net profit subject to unrealized profit on departmental sales being eliminated. Departmental profits after charging manager’s commission, but before adjustment of unrealized profit are as under:

Department R Rs.54,000 Department S Rs.40,500 Department T Rs.27,000

Stocks lying at different departments at the end of the year are as under:

Particulars Dept. R (Rs.) Dept. S (Rs.) Dept. T (Rs.)

Transfer from department R - 22,500 16,500

Transfer from department S 21,000 - 18,000

Transfer from department T 9,000 7,500 -

Find out the correct departmental profits charging manager’s commission


a) The following figures have been taken from the books of National Bank Limited as on 31st March, 2011: 10M

Particulars Rs. Paid up share capital Interest and discount received Interest paid on deposits Salaries and allowances Rent and taxes paid Directors' fees and allowances Statutory reserve fund Postages and telegrams Rent received Commission, exchange and brokerage Profit on sale of investments Depreciation on bank's property Law charges Auditors' fees

20,00,000 74,11,000 40,74,000 4,00,000 1,80,000

60,000 16,00,000 1,20,000 1,30,000 3,80,000 4,00,000

60,000 80,000 10,000

The following additional information is given to you :

a) One customer to whom a sum of Rs.20 lakhs was advanced has become insolvent and it is expected that only 50% of the amount will be recovered from his estate.

b) Auditors find that a provision of Rs.3 lakhs is necessary against other debts.

c) Rebate on bills discounted on 31st March, 2010 was Rs.24,000 and on 31st March, 2011 was Rs.32,000.

d) Provide Rs.13, 00,000 for income tax.

e) The Board of Directors decides to declare dividend @ 10% after transfer of 25% of the year's profit to Statutory Reserve.





You are required to prepare Profit and Loss Account of the bank with all the necessary schedules for the year ended 31st March, 2011. Ignore figures for the previous year and corporate dividend tax.

b) From the following balances, as on 31.12.2004, prepare the necessary Revenue A/c for the Marine Insurance business of an Indian insurance Company. 6M

Particulars Direct Business

Reinsurance Business

Premium: Received Receivable:

1st January 31st December Paid

46,00,000

2,48,000 3,36,000

-----

7,20,000

27,000 34,000

4,60,000 Payable:

1st January 31st December

----- -----

37,500 62,000

Claims: Paid

Payable: 1st January 31st December Received

Receivable: 1st January 31st December

23,50,000

1,66,000 2,08,000

-----

----- -----

3,00,000

39,000 44,000

1,70,000

16,000 23,000

Commission: On - insurance accepted On re-insurance ceded

2,20,000

-----

19,000 26,000

(i) Other Exp. & Income: Salaries Rs.3,20,000, Rent Rs.29,000; Postage Rs.43,000 Income Tax paid Rs.4,40,000, Interest, Dividend and Rent received (net) Rs.1,37,500, Income Tax deducted at source Rs.40,250, Legal expenses (includes Rs.40,000 for claims): Rs.72,000.

(ii) Balance of Fund on 1st Jan. 2004 was Rs.38,45,000 including additional Reserve of Rs.4,45,000. Additional reserve is to be maintained at 5% of the net premium of the year.


Following are the summarized Balance Sheet of Companies K Ltd. and W Ltd., as at 31-12-2012 :

(Rs. in ‘000) (Rs. in ‘000) Liabilities (Rs. in ‘000)

K Ltd. W Ltd. Assets

K Ltd. W Ltd.

2,000 700 240 - 600 560

1,500 400 170 15 200 315

20 2,400 625 412 38 192 2 411

- 1,150 615 680 155

Share Capital : Equity shares of Rs. 100 each 10% Preference shares of Rs. 100 each General Reserve Profit and Loss Account 12% Debentures of Rs. 100 each Trade payables

4,100 2,600

Goodwill Other Fixed Assets Trade receivables Inventory Cash at bank Own Debenture (Nominal value of Rs. 2,00,000) Discount on issue of debentures Profit and Loss Account

4,100 2,600

On 01-04-2013, K Ltd. adopted the following scheme of reconstruction:

(i) Each equity share shall be sub-divided into 10 equity shares of Rs. 10 each fully paid up. 50% of the equity share capital would be surrendered to the company.

(ii) Preference dividends are in arrear for 3 years. Preference shareholders agreed to waive 80% of the dividend claim and accept payment for the balance.





(iii) Own debentures of Rs. 80,000 (nominal value) were sold at Rs. 98 cum interest and remaining own debentures were cancelled.

(iv) Debenture holders of Rs. 3,00,000 agreed to accept one machinery of book value of Rs. 3,20,000 in full settlement.

(v) Trade payables, Trade receivables and inventory were valued at Rs. 5,00,000, Rs. 6,00,000 and Rs. 4,00,000 respectively. Goodwill, discount on issue of debentures and Profit and Loss account (Dr.) are to be written off.

(vi) The company paid Rs. 20,000 as penalty to avoid capital commitments of Rs. 4,00,000.

On 02.04.2013, a scheme of absorption was adopted. K Ltd. would take over W Ltd. The purchase consideration was fixed as below:

i. Equity shareholders of W Ltd. will be given 50 equity shares of Rs. 10 each fully paid up, in exchange for every 5 shares held in W Ltd.

ii. Issue of 10% preference shares of Rs. 100 each in the ratio of 4 preference shares of K Ltd. for every 5 preference shares held in W Ltd.

iii. Issue of 12% debentures of Rs. 100 each of K Ltd. for every 12% debenture in W Ltd.

Pass necessary Journal entries in the books of K Ltd. and draw the resultant Balance Sheet as at 2nd April, 2013.

6) Answer the following: a) Carlin & Co. has head office at New York (U.S.A.) and branch at Mumbai (India). Mumbai branch

is an integral foreign operation of Carlin & Co. Mumbai branch furnishes you with its trial balance as on 31st March, 2008 and the additional information given thereafter. 12M (Rs. in thousands)

Particulars Dr. Cr. 300 800 400 120 560 360 160 240 420

-

- 1200

300 240

- - - - -

1620

Stock on 1st April, 2007 Purchases and sales Sundry Debtors and creditors Bills of exchange Wages and salaries Rent, rates and taxes Sundry charges Computers Bank balance New York office a/c

3360 3360 Additional information:

1. Computers were acquired from a remittance of US $ 6,000 received from New York head office and paid to the suppliers. Depreciate computers at 60% for the year.

2. Unsold stock of Mumbai branch was worth Rs.4,20,000 on 31st March, 2008.

3. The rates of exchange may be taken as follows:

a. On 1.4.07 @ Rs.40 per US $.

b. On 31.3.2008 @ Rs.42 per US $.

c. Average exchange rate for the year @ Rs.41 per US $.

d. Conversion in $ shall be made upto two decimal accuracy.

You are asked to prepare in US dollars the revenue statement for the year ended 31st March, 2008 and the balance sheet as on that date of Mumbai branch as would appear in the books of New York head office of Carlin & co. You are informed that Mumbai branch account showed a debit balance of US $ 39609. 18 on 31.3.2008 in New York books and there were no items pending reconciliation.





b) The Head Office passes adjustment entry at the end of each month to adjust the position arising out inter-branch transactions during the month. From the following Inter-branch transaction in January 2003, make the entry in the books of H.O.: 4M

A. Mumbai Branch:

a. Received Goods Rs.6,000 from Kolkatta Branch, Rs.4,000 from Patna Branch.

b. Sent Goods of Rs.10,000 to Patna, Rs.8,000 to Kolkatta.

c. Received B/R Rs.6,000 from Patna.

d. Sent Acceptance Rs.4,000 to Kolkatta, Rs.2,000 to Patna.

B. Chennai Branch (apart from the above):

a. Received Goods Rs.10,000 from Kolkatta, Rs.4,000 from Mumbai.

b. Cash Sent Rs.2,000 to Kolkatta Rs.6,000 to Mumbai.

C. Kolkatta Branch (Apart from the above):

a. Sent Goods to Patna Rs.6,000.

Accepted B/P Rs.4,000 to Patna, Rs.4,000 cash to Patna.


a) While preparing its final accounts for the year ended 31st March, 2012 Rainbow Limited created a provision for Bad and doubtful Debts are 2% on trade debtors. A few weeks later the company found that payments from some of the major debtors were not forthcoming. Consequently the company decided to increase the provision by 10% on the debtors as on 31st March, 2012 as the accounts were still open awaiting approval of the Board of Directors. Is this to be considered as an extraordinary item or prior period item? Comment.

b) AB Ltd. launched a project for producing product X in October, 2013. The Company incurred Rs. 20 lakhs towards Research and Development expenses upto 31st March, 2015. Due to prevailing market conditions, the Management came to conclusion that the product cannot be manufactured and sold in the market for the next 10 years. The Management hence wants to defer the expenditure write off to future years. Advise the Company as per the applicable Accounting Standard.

c) A limited company closes its accounting year on 30th June 1998. Accounts for that period were considered and approved by BOD on 20th August 1998. The company was engaged in Laying pipeline for an oil company, deep beneath the earth. While doing the boring work, 1.9.1998, it had met a rocky surface for which it was estimated that there would be an extra cost to be tune of Rs 80 lacs. Explain how the item will be dealt with for the accounting year ended 30th June 1998.

d) An equipment is leased for 3 years and its useful life is 5 years. Both the cost and the fair market value of the equipment are Rs. 3,00,000. The amount will be paid 3 installments and at the termination of lease, lessor will get back the equipment. The Unguaranteed Residual Value at the end of 3 years in Rs. 40,000. The Internal Rate of Return(IRR) of the investments is 10%. The present value of annuity factors of Re. 1 due at the end of 3rd year on 10% IRR is 24,868. The present value of Re. due at the end of 3rd year at 10% rate of interest is 0.7513

(i) State with reason whether the lease constitutes Finance Lease. (ii) Calculate Unearned Finance Income.

e)

(i) A manufacturer gives free 5-year warranty at the time of sale. On the basis of past experience it is probable that there will be some claim under the warranties. Should provision are required under AS 29?

(ii) A retail store has a policy of refunding purchases by dissatisfied customers even though it is under no legal obligation to do so. Its policy of making refunds is generally known. Should provision required as per AS 29?

THE END





IPCC GROUP II, PAPER : 6 – AUDITING & ASSURANCE





Questions No. 1 is compulsory.

Answer any five questions from the remaining six questions.


(a) The field of auditing as a discipline in simple words involves review of various assertions; both in financial as well as in non-financial terms, with a view to prove the veracity of such assertion and expression of opinion by auditor on the same.

(b) “Professional judgment is essential to the proper conduct of an audit”. Discuss the statement in terms of standard on auditing 200.

(c) Under what circumstances / conditions the financial statements are considered to present a “true and fair” state of affairs?

(d) What do you mean by the term 'Sufficient Appropriate Audit Evidence'? State various factors that help the auditor to ascertain as to what is sufficient appropriate audit evidence.

2) State whether the following statements are true or false: (8X2=16M)

(a) The remuneration of subsequent auditor appointed under the Companies Act.2013 Shall be fixed by the Board.

(b) If the auditor of the company has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Audit Committee.

(c) Audit procedure and Audit technique are not one and same thing.

(d) Where at any annual general meeting, no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the company.

(e) In case of failure of the Board to appoint the first auditor, it shall inform the Central Government.

(f) Standards on Review Engagements (SREs) - to be applied in the audit of historical financial information.

(g) Narrative Record is a series of instructions and/or questions which a member of the auditing staff must follow and/or answer.

(h) The principle of confidentiality precludes auditor to disclose the information about the client to a third party at all circumstances without any exception.

(i) Confirmations received by the auditor directly from third parties are conclusive evidence in support of a transaction.

(j) Internal check is part of internal control system.

3) Answer the following: (4X4=16M)

(a) How do you vouch the retirement gratuity?

(b) How will you vouch / verify loss of stock by theft?

(c) How will you verify discounted bills receivable dishonored?

(d)

How do you verify endowment policies?






(a) Describe the audit procedures necessary in order to gain sufficient audit evidence to be able to form an opinion on the going concern status of a company. 6M

(b) The new audit trainee of your firm of auditors has asked you to advise him on the reliability of the evidence for valuation of land and buildings by a valuer. Describe the work you would carry out to check the independence, qualifications and experience of the valuer and the accuracy of the valuation. 6M

(c) What is the procedure for appointment of the Subsequent Auditor of a company? 4M


(a) What are the precautions to be taken before applying test check? (or) How should the test check be made scientifically and effective? 6M

(b) Write about letter of weakness / letter of management. 6M

(c) State the reporting responsibility of an auditor in the context of non-compliance of law and regulation in an audit of financial statement. 4M


(a)

Mention any ten special points to be examined by you in the audit of Income and Expenditure of a Charitable Institution running a hospital. 6M

(b) Explain in detail the duties of Comptroller and Auditor General of India as envisaged under the comptroller & Auditor General’s (Duties, powers and conditions of service) 5M

(c) Write about Applicability of CARO-2015. 5M


(a) Matters that the auditor may consider when obtaining an understanding of the nature of the entity.

(b) Disadvantages of the use of an audit programme.

(c) Stratified sampling.

(d) Materiality.

(e) Self revealing & non self revealing errors.

THE END





IPCC GROUP II, PAPER: 6 – AUDITING & ASSURANCE





Questions No. 1 is compulsory.

Answer any five questions from the remaining six questions.


(a) What is the meaning of the term “cut off procedure”?

(b) “The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan.” How would you as an auditor establish the overall audit strategy?

(c) “Some material mis-statements remain unreported by auditors”. Comment

(d) Mr. X, a ca was engaged by PQR Ltd for auditing their accounts. He sent his letter of engagement to the board of director, which was accepted by the company. In the course of audit, the auditor was unable to obtain sufficient audit evidence regarding receivables. The client requested for change in terms of engagement. Offer your comments in this regard.

2) State whether the following statements are true or false: (8X2=16M)

(a) Comment. ABC Ltd. Has not deposited provident fund contributions of rs.20 lakhs to the authorities, but accounted in the books.

(b) Where a person appointed as an auditor of a company incurs any of the disqualifications after his appointment, he will still continue as an auditor.

(c) Every auditor of a company shall have a right of access at all times to the books of account and vouchers of the company kept at the registered office of the company only.

(d) Sales invoice is an example of external evidence.

(e) The primary objective of an audit is to detect fraud and errors in financial statements

(f) Events occurring after the balance sheet date must be disclosed in the financial statements.

(g) A branch auditor is a joint auditor according to sa 299 and his relationship with the company auditor is governed by the said standard.

(h) When inherent control risks are low, an auditor can accept a lower detections risk.

(i) As defined under companies act, 2013, “book and paper” and “book or paper” include books of account only.

(j) At every annual general meeting of a company, the board of directors of the company shall lay before the company the financial statements for the financial year.

3) Answer the following: (4X4=16M)

(a) What are the steps in vouching of remuneration to directors?

(b) How will you verify or vouch Goods sent out on sale or return basis?

(c) Janta Ltd. Has made the contribution of Rs. 7.8 lacs during the financial year ended 31st March, 2015 to Samaj Seva Party, a political party, for running a teaching institute situated in the rural area, where most of the workers of the company reside. It is admitted that the benefit of the institute is mostly for the children of the wokers of the company. The average net profit of the company during the three immediately preceding financial years was Rs. 100 lakhs. Comment.

(d) How will you verify goodwill?






(a) In performing an audit of financial statements, the auditor should have or obtain knowledge of the business. Explain in the light of SA 315 “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment”. 6M

(b) Explain the Inherent Risk with reference to the relevant Standards on Auditing. 4M

(c) XYZ company Ltd. Removed its auditor appointed under section 139 of the companies Act, 2013 before the expiry of his term without obtaining prior approval of the Central Government. Explain the procedure to be followed for removing auditor before the expiry of his term. 6M


(a) What are audit working papers? Discuss various contents of Permanent Audit File and Current File. 6M

(b) What are the inherent Limitations of an Audit? 6M

(c) Write a short note on ‘Audit trail in a computerised accounting environment’. 4M


(a) Write about Audit of club. 6M

(b) Write about Audit of Government Expenditure? 6M

(c) Write about the applicability of internal audit. 4M


(a) Internal control questionnaire.

(b) Indepth examination.

(c) Management representation.

(d) Surprise checks.

(e) Write any four reporting requirements of CARO-2015

THE END





IPCC GROUP II , PAPER 7: INFORMATION TECHNOLOGY AND STRATEGIC MANAGEMENT



Total No. of printed pages –2 Maximum Marks – 100

SECTION – A

Question No. 1 is compulsory Answer any five questions from the rest.

MARKS: 50

1. Answer all the following questions in brief: (2x5 =10M)

a) Wi –Fi

b) Repeater

c) E-R Diagrams

d) Mobile Hardware and Mobile Software

e) PIN Number

2.

a) Explain the advantages and disadvantages of Flowcharts? 4M

b) Explain the advantages and disadvantages of Decision table? 4M

3.

a) Differentiate between Hierarchical Database Model and Network Database Model. 4M

b) Differentiate between Transport Layer and Network Layer of OSI Model. 4M

4.

a) Discuss about Ring Network and Mesh Network. And list out their advantages and Disadvantages. 4M

b) Discuss the Audit objectives in a Computerized Environment. 4M

5.

a) Discuss the components of Supply Chain Management. 4M

b) List down some of the reasons for the need of Documentation to Information Systems. 4M

6.

a) What is an Expert System? Discuss its components in brief. 4M

b) Discuss various Business Intelligence Tools. 4M

7. Write short notes on any Four of the following: (2x4 = 8M)

a) Six Sigma

b) Inference Engine in Expert system

c) Smart Card

d) Android

e) Score card



IPCC _May 2015_ Question Papers_______________________________________ 29


SECTION – B


MARKS: 50

8.

a) Explain the different strategic approaches for globalization by a company. 3M

b) What tips you offer to write a ‘right’ mission statement? 3M

c) Explain the concept of ‘experience curve’ in the context of strategic management? 3M

d) What are the factors that influence employees’ competence in an organization? 3M

e) Explain briefly the concepts of operational control and management control. 3M

9. a) State with reasons which of the following statements is correct or incorrect: (2X2 =4M)

(i) Efficiency and effectiveness mean the same in strategic management.

(ii) SBU structure facilitates management of multiple businesses.

b) What is Divestment strategy? What are the reasons for adopting it? (1 + 2 = 3M)

10. Explain the five forces in the Michael Porter’s model, Which is used for systematically diagnosing the significant competitive pressures in a market. 7M

11.

a) “Strategic planning and implementation are must for all organizations. In light of the statement discuss the importance of strategic planning” 4M

b) Different companies in an industry will have different approaches towards R&D. Explain. 3M

12.

a) Identify with reasons, the type of diversification strategies followed in the examples given below: 4M

(i) Coca-Cola’s acquisition of a bottle manufacturing unit.

(ii) Entry of Hinduja Group into DTH services.

(iii) Acquisition of Ranbaxy Laboratories by Sun Pharma.

(iv) A daily newspaper publishing company taking over a distribution logistics company.

b) To which industries the following development offers opportunities and threats? 3M

“Growing preference of consumers to buy smart phones over the ordinary mobile phones with only basic utilities”

13. Distinguish between:

a) Micro environment and Macro environment. 4M

c) Strategy formulation and strategy implementation. 3M

14. Write short notes on the following:

a) Kurt Lewin’s change process. 4M

b) Areas in which benchmarking is helpful. 3M

OR

Product Life Cycle concept

THE END





IPCC GROUP II , PAPER 7: INFORMATION TECHNOLOGY AND STRATEGIC MANAGEMENT



Total No. of printed pages – 2 Maxi mum Marks – 100

SECTION – A: INFORMATION TECHNOLOGY


MARKS: 50

1. Answer all the following questions in brief: (2x5 =10M)

a) Resilience

b) Network Access Control

c) Strategic Level Systems

d) Computer Bus

e) Business Application

2.

a) What is intranet? Explain about it? 4M

b) What is cloud computing? Explain different service models of Cloud computing? 4M

3.

a) What is Business Process Re-engineering? Explain? 4M

b) Differentiate between Concurrent audit and General audit? 4M

4.

a) In respect to Network Virtualization, describe Major applications of the concept of Virtualization. 4M

b) Explain Decision Support System and components of Decision Support system? 4M

5.

a) Discuss Network Protocols in detail. 4M

b) Explain about Core Banking Systems (CBS). 4M

6.

a) Discuss Application Software and its types? 4M

b) Discuss different tools/techniques to protect information and systems against compromise, intrusion or misuse. 4M

7. Write short notes on any Four of the following: (2x4 = 8M)

a) Ring and Mesh topology.

b) EFT Cards.

c) All phases in SDLC.

d) Plain text and Cipher text.

e) Threats and Vulnerability.



IPCC _May 2015_ Question Papers_______________________________________ 31


SECTION – B


MARKS: 50

8.

a) Business environment possesses some peculiar characteristics. Explain them. 3M

b) Objectives must possess/satisfy certain important characteristics. What are they? 3M

c) What are the various factors a firm should consider under industry & competition analysis? 3M

d) What is Turnaround Strategy? What are the elements that contribute to the turnaround of a company? 3M

e) Strategy formulation and Strategy implementation are highly inter-related. Explain. 3M

9. a) State with reasons which of the following statements is correct or incorrect: (2X2 =4M)

(i) E-Commerce technology opens up a host of opportunities for reconfiguring industry and company value chains.

(ii) Strategies may require changes in organizational structure.

b) “Network organization structure is suited to unstable environment”. Explain. 3M

10. ‘According to this matrix, the various SBUs of a company can be classified into 4 categories, namely, Stars, Cows, Cats and Dogs’. Explain. 7M

11.

a) “The success of a company in today’s environment depends heavily on its ability to ensure the availability of right materials at right place, at the right time, of the right quality and the right cost”. Explain. 4M

b) Discuss the impact of IT on education industry in India. 3M

12.

a) Identify with reasons, the type of Grand strategies followed in the cases given below: Give reasons. 4M

(i) Sale of TOMCO division by Tata Group to HUL in 1993.

(ii) Strategy of Reliance in retail industry.

(iii) Strategy being implemented by ITC in its cigarettes business.

(iv) The strategy to be implemented in Spice Jet Company.

b) To which industries the following development offers opportunities and threats? 3M

“Growing trend of online shopping in India”

13. Distinguish between:

a) Vision and Mission. 4M

a) BPR and Conventional methods of improving operational efficiency. 3M

14. Write short notes on the following:

a) Hourglass organisational structure . 4M

b) Rationale of BPR. 3M

OR

Strategic Group Mapping procedure.

THE END



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