Exam Details

Subject financial accounting
Paper
Exam / Course mba
Department
Organization Gujarat Technological University
Position
Exam Date May, 2017
City, State gujarat, ahmedabad


Question Paper

Page 1 of 3
Seat No.: Enrolment
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA (INTEGRATED) SEMESTER -02 • EXAMINATION SUMMER 2017
Subject Code: 4120504 Date: 12/05/2017
Subject Name: FINANCIAL ACCOUNTING
Time: 10.30 AM TO 01.30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1

Define accounting and explain its role in making economic and business decisions.
07

What is meant by 'Basic Assumptions of Accounting'? Enumerate the four basic assumptions that underline the financial accounting structure.
07
Q.2

The following particulars are available in respect of the business carried on by Ramesh.
I. Capital employed Rs. 50,000.
II. Trading profit (after tax)
1998 Rs. 12,200;
1999 Rs. 15,000;
2000 Rs. 2,000(Loss); and
2001 Rs. 21,000.
III. Market rate of interest on investment 8%.
IV. Rate of risk return on capital invested in business 2%.
V. Remuneration from alternative employment of the proprietor (if not engaged in business) Rs. 3,600 p.a.
You are required to compute the value of goodwill on the basis of 3 years purchase of super profits of the business calculated on the average profit of the last four years.
07

On 1st January 2012, Sharda Ltd. purchased a second hand machine for Rs. 80,000 and spent Rs. 20,000 on its cartage, repairs and installation. On 30th September 2013, this machine is sold for Rs. 50,000. Depreciation is to be provided 20% p.a. according to Written Down Value Method.
Prepare Machinery Account for the first three years assuming that accounts are closed on 31st March each year.
07
OR

Distinguish between Straight Line Method and Written Down Value Method.
07
Q.3

From the following Trial Balance of Mr. Reddy, you are required to prepare Trading and Profit and Loss Account for the year ended on March 31, 2009 and a Balance Sheet on that date:
Particulars
Debit Balance
Rs
Credit Balance
Rs
Capital

2,00,000
Plant and Machinery
1,56,000

07
Page 2 of 3
Furniture
4,000

Purchases and Sales
1,20,000
2,54,000
Returns
2,000
1,500
Opening stock
60,000

Discount
850
1,600
Sundry Debtors/Creditors
90,000
50,000
Salaries
15,100

Manufacturing Wages
20,000

Carriage Outwards
2,400

Provisions for Doubtful Debts

1,050
Rent, Rates and Taxes
20,000

Advertisements
4,000

Cash
13,800

Total
5,08,150
5,08,150
Adjustments:
I. Closing stock was valued at Rs 68,440
II. Provision for doubtful debts is to be kept at Rs 1,000
III. Depreciate plant and machinery 10%
IV. The proprietor has taken goods worth Rs 10,000 for his personal use and additionally distributed goods worth Rs 2,000 as samples
V. Purchase of furniture Rs 1,840 has been passed through purchases book

Explain the inventory systems. Distinguish between Periodic Inventory System and Perpetual Inventory System.
07
OR
Q.3

Purchase and Sales of a certain product during Jan 2009 are given below.
Purchases
On Jan 2009 100 units Rs 5
On Jan 12, 2009 200 units Rs 4.80
On Jan 17, 2009 100 units Rs 4.60
On Jan 22, 2009 100 units Rs 4.50
Sales
On Jan 2009 50 units
On Jan 14, 2009 150 units
On Jan 28, 2009 100 units
There was no Opening Inventory. You are required to compute the cost of goods sold (under the Periodic systems) under the methods:
FIFO and LIFO.
07

Describe the nature and types of Investments.
07
Q.4

"Revenue is recognized when a sales transaction is made or when services are rendered." Do you agree with this statement? Give reasons for your answer with suitable illustration, and exceptions, if any to this statement.
07

Classify the following into Personal, Real and Nominal Account:
Outstanding rent A/c Drawings A/c Discount Received A/c State Bank of India A/c L.I.C. Premium A/c Bad Debts written off A/c Advertisement A/c (viii) Carriage Inward A/c Interest Received a/c Land Purchased A/c Conveyance Charges A/c Subscription Outstanding A/c (xiii) Employee Group Insurance Premium A/c Commission Paid A/c.
07
Page 3 of 3
OR
Q.4

Explain the objectives and salient features of Trial Balance.
07

Krupa Textile Ltd. buys a building for the purpose of investment. It issues 65,000 equity shares of its company, which are quoted on the day of the deal at Rs. 180 per share at the BSE. The company also pays a brokerage of Rs. 2 lakh to the property dealer involved in the deal. The stamp duty is also incurred of the value of the building. Determine the value of this investment property.
07
Q.5

Prepare a pro forma for a Balance Sheet as prescribed in Schedule VI to the Companies Act, 1956.
07

Explain the following terms with suitable examples:
Deferred tax liability Calls in arrears Preliminary Expenses
07
OR
Q.5

Prepare a pro forma for profit and loss statement as prescribed in Schedule VI to the Companies Act, 1956.
07

Explain the rational of making a distinction between Capital and Revenue Expenditure.
07



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