Friday, October 07, 2016

Dibrugarh University Question Papers: Advanced Financial Accounting (Nov' 2015)

2015 (November)
COMMERCE
(Speciality)
Course: 301
(Advanced Financial Accounting)
The figures in the margin indicate full marks for the questions
(NEW COURSE)
Full Marks: 80
Pass Marks: 24
Time: 3 hours

1. (a) Choose the correct answer:                                                                                             1x3=3
                                 i.            According to Sec. 17, every banking company shall transfer a sum equal to 20% / 22% / 24% of its net profits to a reserve fund as statutory reserve.
                               ii.            In Life Insurance Business, interim dividends paid during the year are an appropriation / income / expenses.
                              iii.            Accounting for investments is associated with AS-13 / AS-14 / AS-15.

(b) Fill in the blanks:                                                                                                               1x3=3
                                 i.            As per RBI’s Prudential Accounting Norms, provision required to be made against the standard assets is @ 0.40%.
                               ii.            In case of ex-interest / ex-dividend sales of securities, quoted prices do not include accrued interest.

2. Write short notes on the following:                                                                                    4x4=16

      a)      NPA.
      b)      Cash credit.
      c)       Investment account.
      d)      Bonus.

3. (a) The following figures are extracted from the books of Guwahati Bank Ltd. as on 31.03.2014:

Rs.
Interest and discount received
Interest paid on deposits
Issued and subscribed capital
Reserve under Section 17
Commission, exchange and brokerage
Rent received
Profit on sale of investment
Salaries and allowances
Directors’ fees and allowances
Rent and taxes paid
Stationary and printing
Postage
Other expenses
Audit fees
Depreciation on bank’s properties
40,30,000
24,04,000
10,00,000
7,00,000
1,80,000
60,000
1,90,000
2,10,000
24,000
1,08,000
24,000
50,000
24,000
8,000
25,000
Other information:
                     i.            Provision for bad and doubtful debts necessary Rs. 1,00,000
                   ii.            Rebate on bills discounted as on 31.03.2014 Rs. 15,000
                  iii.            Provide Rs. 7,00,000 for income tax
                 iv.            The Directors’ desire to declare dividend @ 10%
Prepare the Profit and Loss Account of Guwahati Bank Ltd. for the year ended 31st March, 2014                                 14
Or
(b) What is slip system of ledger posting? Discuss the advantages and disadvantages.      8+3+3=14

4. (a) From the following figures of Live Saving Life Assurance Co. Ltd., prepare a valuation Balance Sheet and Profit Distribution Statement for the year ended 31st March, 2014. Also pass necessary Journal Entries to record the transactions:                                                                           14

Rs.
Balance of Life Assurance Fund as on 01.04.2013
Interim bonus paid in the valuation period
Balance of Revenue Account for the year ended 31.03.2014
Net liability as per valuers’ certificates as on 31.03.2014
1,67,15,000
25,00,000
2,40,00,000
1,65,00,000
The company declares a reversionary bonus of Rs. 185 per Rs. 1,000 and gave the policy holders as option to take bonus in cash Rs. 105 per Rs. 1,000. Total business conducted by the company was Rs. 600 lakhs. The Company issued profit policy only ¾th of the policyholders in value opted for cash bonus.
Or
(b) Distinguish between:                                                                                                              7x2=14
                     i.            Surrender value and Paid-up value.
                   ii.            Re-insurance and Double insurance.

5. (a) From the following information as on 31st March, 2014, prepare the Revenue Accounts of Sagar Co. Ltd. engaged in Marine Insurance Business:                        14
Particulars
Direct Business
(Rs.)
Re-Insurance
(Rs.)
I. Premium:
     Received
     Receivable
         1st April, 2013
       31st March, 2014
     Premium paid
     Payable
         1st April, 2013
       31st March, 2014

II. Claims:
     Paid
     Payable
         1st April, 2013
       31st March, 2014
      Received
      Receivable
         1st April, 2013
       31st March, 2014

III. Commission:
     On insurance accepted
     On insurance ceded


24,00,000

1,20,000
1,80,000
2,40,000





16,50,000

95,000
1,75,000






1,50,000



3,60,000

21,000
28,000


20,000
42,000


1,25,000

13,000
22,000
1,00,000


9,000
12,000

11,000
14,000
Other Expenses and Income:
Salaries – Rs. 2,60,000, Rent, Rates and Taxes – Rs. 18,000, Printing and Stationery – Rs. 23,000, Indian Income tax paid - Rs. 2,40,000, Interest, Dividend and Rent received (Net) - Rs. 1,15,500, Income tax deducted at source – Rs. 24,500, Legal expenses – Rs. 40,000, Bad debts – Rs. 5,000, Double income tax refund – Rs. 12,000, Profit on sale of motor car – Rs. 5,000.
Balance of Fund as on 1st April, 2013 was Rs. 26,50,000 including additional reserve of Rs. 3,25,000. Additional Reserve has to be maintained at 5% of the net premium of the year.
Or
(b) Briefly explain schedules to be shown in the financial statements of General Insurance Companies as prescribed by IRDA Regulation, 2002.  14

6. (a) On 1st January, 2014, ABC Ltd. held as investment Rs. 50,000, 6% Government Stock costing Rs. 47,000. On 31st March, a purchase of Rs. 2,00,000 of same Government Stock was made at Rs. 95 cum-interest. On 1st July, the company sold Rs. 1,00,000 Stock @ 96. On 1st October, a further Rs. 70,000 of the investment was sold at LRs. 98 cum-interest. The market price of the stock on 31.12.2014 was Rs. 99 (ex-interest). Half-yearly interest is payable on 30th June and 31st December every year.
Prepare the Investment Ledger of the company ignoring income tax and brokerage.                     14
Or
(b) (i) Define ‘Investment’ and ‘Jobbers and brokers’.                                                          6
(ii) What are the cum-interest and ex-interest purchase and sale of investment? Show its treatment in investment ledger.                                                                                                                                 8

(OLD COURSE)
Full Marks: 80
Pass Marks: 32
Time: 3 hours

1. (a) Choose the correct answer:                                                                                             1x5=5
                                 i.            Banking companies are governed by the Banking Regulation Act, 1949 / 1950 / 1951.
                               ii.            Every General Insurance Company must prepare its Financial Statements as per Schedule B / C / D of the IRDA Regulation, 2002.
                              iii.            According to the Provincial Insolvency Act, 1920, salary Rs. 20 / Rs. 40 / Rs. 60 per head is considered as preferential creditors.
                             iv.            Profit on sale of marketable securities is transferred to Profit and Loss Account / Capital Reserve.
                               v.            Accounting for changing prices is also known as Inflation Accounting / Deflation Accounting.

(b) Fill in the blanks:                                                                                                          1x3=3
                                 i.            According to the provisions of the Insolvency Act, any amount due to Government or local authority is known as ____.
                               ii.            AS – 13 is associated with accounting for ____.
                              iii.            Presidency Towns Insolvency Act was enacted in the year ____.

2. Write short notes on the following:                                                                                    4x4=16
a)      Slip system of accounting for banking companies.
b)      Valuation of Balance Sheet.
c)       Deficiency Accounts.
d)      Cum-interest or cum-dividend purchases and sales.

3. (a) From the following information, prepare the Profit and Loss Account of ABC Bank Ltd. for the year ended 31st March, 2014.                                                                                                  11

Rs.
Interest on fixed deposits
Interest on loans
Commission
Rebates on bill discounted
Establishment charges
Discount on bills discounted (net)
Interest on cash credit
Interest in Current Accounts
Rent and rates
Interest on overdrafts
Directors’ fees
Auditors’ fees
Interest on savings bank deposits
Postage and telegrams
Sundry charges
Printing and stationery
27,50,000
25,90,000
82,000
4,90,000
5,40,000
14,60,000
22,30,000
4,20,000
1,80,000
15,40,000
30,000
12,000
6,80,000
14,000
17,000
29,000
Bad debts to be written-off amounted to Rs. 4,00,000. Provision for taxation may be made at 55%.
Or
(b) What is rebate on bill discounted? How is rebate on bill discounted treated in preparation of accounts of banking companies?                                                                              4+7=11

4. (a) Zenith Fire Insurance Co. Ltd. commenced its business on 01.04.2013. It submits the following information for the year ended 31.03.2014.                                                                       11

Rs.
Claims paid
Commission paid
Premium received
Re-insurance premium paid
Expenses of management
Claims outstanding on 31.03.2014
Create reserve for unexpired risk @ 40%
Rent, Rates and Taxes
Printing and Stationery
Salaries
Premium receivable on 31.03.2014
7,00,000
50,000
15,00,000
1,00,000
3,00,000
1,00,000

18,000
23,000
2,60,000
3,01,000
Prepare Revenue Account for the year ended 31.03.2014
Or
(b) Define the following:                                                                                      3+4+4=11
                                 i.            Claims.
                               ii.            Re-insurance.
                              iii.            Life Insurance Fund.

5. (a) Rakesh commenced business on 01.07.2011 with a capital of Rs. 2,00,000. On 31st March, 2015, an adjudication order for insolvency was made against him. Following are the other details available relating to his business as on 31.03.2015.                                                            12

Rs.
Sundry creditors
Mortgage loan (building)
Godown rent (2 months)
Wages due
Loan of Mrs. Rakesh (given out of her own sources)
Cost of building (estimated to realize Rs. 1,00,000)
Debtors (including bad of Rs. 10,000)
Stock-in-trade (realization value Rs. 10,000)
Cash in hand / bank
1,50,000
1,00,000
5,000
8,000
25,000
1,60,000
90,000
15,000
10,000
He maintained books up to 31st March, 2014 and profit up to 31st March, 2014 was Rs. 1,40,000. He did not maintain books from 1st April, 2014 onwards. He has been drawing Rs. 4,000 p.m. and goods worth Rs. 1,500 p.m. uniformly from April 2014 onwards. Prepare Statement of Affairs.
Or
(b) Distinguish between:                                                                                                          6+6=12
                                 i.            Statement of Affairs and a Balance Sheet.
                               ii.            Statement of Affairs and a Deficiency Account.

6. (a) On 01.04.2013, Vinoy Ltd. had 12% Govt. Bonds amounting to Rs. 4,00,000 at Rs. 96 (face value being Rs. 100 each), interest being payable on 31st March and 30th September every year. On 01.06.2013, Vinoy Ltd. sold 12% Govt. Bonds of Rs. 1,00,000 at Rs. 98 ex-interest. Show 12% Govt. Bonds Account for the year ended 31st March, 2014. At the end of the year the market value of the bonds were Rs. 99 each (ex-interest).                                                     11
Or
(b) Define investment. How do you balance the Investment Account at the end of the year, when market price is less than the cost price?                                                                          4+7=11

7. (a) A company buys and sells goods. During the three months ending March 31, 2014, the company entered into the following transactions:
2014 January 1:
By 500 units costing Rs. 750
2014 January 31:
Sell 400 units for Rs. 2,000 and replace them with units costing Rs. 1,400
2014 February 28:
Sell 200 units for Rs. 1,000. Buy 50 units costing Rs. 200
2014 March 31:
Sell 200 units for Rs. 1,100. Buy 100 units costing Rs. 500
The retail price index during the period was as follows:
January 1, 2014
January 31, 2014
February 28, 2014
March 31, 2014
Rs. 200
Rs. 220
Rs. 230
Rs. 240
You are required to Prepare Trading Account under the following situations:                     11
                                 i.            Historical Cost Accounting.
                               ii.            Current Purchasing Power Accounting.
                              iii.            Current Cost Accounting.
Or

(b) Define Inflation Accounting. Write four objectives of Inflation Accounting. Discuss five points in favour of Inflation Accounting in the context of Indian Companies.                           3+4+4=11

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