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com IMT 57 Financial Accounting M1 PART A 1. What is a Contingent Liability? Where is it shown in the Balance Sheet? Give three examples of Contingent Liabilities? 2. State which of the errors will affect the agreement of the Trial Balance and which will not.Give rectifying journal entries(with full narration) assuming the difference in trial balance ha s been placed to suspense account a. Purchase of second hand Motor Car for Rs 10000/- has been debited to car main tenance account. b. A sale of Rs 7500/- to Mr A has been wrongly entered in sales day book as Rs 750/c. An entry in the Purchase return book of Rs 3000/- has been omitted to be post ed in the account of Mr B the supplier. d. An amount of Rs 12000 received from Mr X has been posted to the credit of Mrs X a/c as Rs 1200/e. The total of sales Day Book for the month of December Rs 750000/- has been om itted to be posted f. Wages for installation of machinery has been debited to wages account Rs 1000 0/3. a) Describe operating, financing and investing activities as per AS 3. b) Discuss the provisions of AS 6 regarding the change in the method of De preciation. 4. Write short notes on the following: a. Money Measurement Concept b. Going Concern Concept 5. Differentiate between a. Capital Expenditure and Revenue Expenditure b. Cash System of accounting and Mercantile System of accounting

PART B 1. If debits equal credits in the Trial Balance you can be assured that there ar e no errors in the Trial Balance Comment. 2. Show the effect of the following transactions on the assets, liabilities & ca pital of Mr Abhay Kumar through the accounting equation: a. He started business with cash of Rs 20000 b. He purchased goods for cash Rs 10000 Financial Accounting. .................. ............................ Page 3 of 5 ....................................... ........................................ IMT-57 c. Purchased goods on credit from Mr Mohal Lal for Rs 8000 d. Sold goods for cash costing Rs 8000 for Rs 10000 e. Withdrew Rs1000 from business in cash to pay for his private expenses f. Electricity bill paid for Rs100 g. Rent outstanding Rs400

h. He borrowed Rs 5000 from Mr Lalit i. Purchased goods for cash Rs 2000. 3. The following is the extracts of financial information relate to Curious Ltd. Balance Sheet Particulars 2011 2010 Share Capital 10 10 Reserve and Surplus 30 10 Loan Fund 60 70 100 90 Fixed Assets(Net) (a) 30 30 Current Assets: Stocks 30 20 Debtors 30 30 Cash & Bank Balances 10 20 Other Current Assets 30 10 100 80 Less: Current Liabilities 30 20 Net Working Capital(b) 70 60 Total assets(a+b) 100 90 Sales (Rs in lakhs) 270 300 (a) Calculate, for the two years Debt Equity Ratio, Quick Ratio and Working Cap ital Turnover Ratio; and (b) Find the sales volume that should have been generated in 2011 if the company were to have maintained its Working Capital Turnover Ratio. 4 What is a trial balance? Explain its objectives. 5 What do you understand by the expression Corporate Governance and discuss c ontents of the Report on Corporate Governance.

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

Rs 5000/-

CASE STUDY - I From the following balance sheets of Alfa Ltd. make out Cash Flow Statement as p er AS-3(revised) as on 31 st March 2011. LIABILITIES 2010 2011 ASSETS 2010 2011 Equity Share Capital 200000 200000 Cash 8000 10000 Profit & Loss a/c 50000 90000 Bank 22000 20000 Bank Loan 10000 - Debtors 10000 20000 Creditors 15000 20000 Stock 25000 15000 Outstanding Expenses 5000 1000 Fixed Assets 235000 27500 0 Provision for Taxation 20000 25000 Unclaimed dividend - 4000 TOTAL 300000 340000 TOTAL 300000 34000 0 Net Profit for the year after providing Rs 20000 for depreciation was Rs 60000. During the year, company declared equity dividend @ 10%, and paid Rs 15000 as income tax. Financial Acco unting. .............................................. Page 5 of 5 ............. .................................................................. IMT-57 CASE STUDY-II The following is the Trial Balance of AL Manufacturers Ltd. Prepare (i) Trading Account, (ii) Profit & Loss Account and (iii) Balance Sheet in the form prescribed under the Companies Act, 1956. Trial Balance of M/S ABC Ltd: Dr.(Rs) Cr.(Rs) Authorised Capital 50,000 shares of Rs. 10 each 500,000 Subscribed Capital 10,000 shares of Rs. 10 each 100,000 Calls in arrear 6,400 Land 10,000 Buildings 25,000 Plant and machinery 15,000 Furniture & Fixtures 3,200 Carriage Inwards 2,300 Wages 21,400 Salaries 4,600 Bad Debt Provision, 1-4-2010 1,400 Sales 80,000 Sales Returns 1,700 Bank Charges 100 Coal, Gas & water 700 Rates & Taxes 800 Purchases 50,000 Purchase Returns 3,400 Bills Receivable 1,200

General Expenses 1,900 Sundry Debtors 42,800 Sundry Creditors 13,200 Stock, 1-4-2010 25,000 Fire Insurance 400 Cash at Bank 13,000 Cash in hand 2,500 Securities premium 6,000 General Reserve 24,000 228,000 228,000 You are also to make provisions in respect of the following: (i) Depreciation: @ 5% on Building @ 15% on Plant & Machinery @10% on Furniture & Fixtures (ii) Make a provision of 5% on Sundry Debtors for bad debts. (iii) Carry forward Rs. 120/- for unexpired insurance expenses (iv) Provide for the following outstanding liabilities: (i) Wages: Rs. 3,200/(ii) Salaries: Rs. 500/(iii) Rates & Taxes: 200/(v) The value of closing stock as on 31-3-2011 is Rs. 30,000. Contact www.solvedhub.com for best and lowest cost solution or email solvedhub@g mail.com