M.Com. DEGREE EXAMINATION, NOVEMBER 2017
First Semester
Commerce
ADVANCED FINANCIAL ACCOUNTING
(CBCS 2016 onwards)
Time 3 Hours Maximum 75 Marks
Section A x 3 15)
Answer all questions.
All questions carry equal marks.
1. What is business entity concept?
2. Distinguish between single entry system and flexible
entry system.
3. A and B are sharing profits in the ratio of 5 3. C is
admitted with 3/8 share, which he obtains 2/8 from A and
1/8 from B. Find the new ratio.
4. What is tally?
5. Briefly explain diminishing balance method of
depreciation.
Section B x 10 50)
Answer all questions, choosing either or
6. Discuss different types of accounting concepts and
conventions.
Or
Discuss some of the important developments in the
accounting practices in India.
Sub. Code
611101
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7. Explain different methods of Depreciation.
Or
The Orchid Trader's Delhi Head Office sent goods to
Madras branch at 25% profit over costs. From the
following details, prepare the Branch Account in the
Head Office books and ascertain the net profit at
the branch
Rs.
Opening stock of goods at branch at
invoice price 20,000
Goods sent to branch at invoice price 90,000
Loss of goods in transit at invoice price 6,000
Pilferage at branch at cost to branch 1,200
Closing stock at branch at its cost 16,000
Sales at branch 1,05,000
Salaries and wages at branch 6,000
Other expenses at branch 3,000
Madras Branch received Rs. 4,000 from the
Insurance Company in settlement of the claim for
the loss of goods in transit.
8. The following was the Balance Sheet of Rajith,
Suresh and Janaki who were equal partners
Balance Sheet of Rajith, Suresh and
Janaki as on April 2012
Liabilities Rs. Assets Rs.
Capital Accounts Buildings 19,500
A 16,800 Furniture 2,400
B 12,600 Stock 11,400
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Liabilities Rs. Assets Rs.
C 6,000 Debtors 10,800
Creditors 6,000 Cash 600
Bills Payable 3,300
44,700 44,700
They agreed to take D into the partnership and give
him ¼ share in the profits on the following terms
That D should bring in Rs. 9,000 for goodwill
and Rs. 15,000 as capital
That 1/2 of the goodwill shall be withdrawn by
the old partners
That stock and furniture be depreciated by
10%
That a provision of on debtors be created
for doubtful debts
That a liability for Rs. 1,080 be created
against bills discounted
That the value of building, having
appreciated, should be valued at Rs. 27,000.
Give Journal entries and prepare a Balance
Sheet.
Or
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Y and Z were partners in a glassware business
and shared profits in the ratio 1/2 1/3 1/6
respectively. On January 1981, their Balance
sheet stood as follows
Rs. Rs.
Sundry Creditors 3,000 Goodwill 10,000
Capital Accounts Sundry assets 12,000
X 14,000 Cash at Bank 11,000
Y 10,000
Z 6,000
33,000 33,000
Immediately after the preparation of the above
Balance Sheet, the following changes took place:
Z retired from the business, and his share
valued at Rs. 8,000 was taken over by X and Y
who paid the former according to their profit
sharing proportions, from their personal
resources.
S was then introduced in the business, as a 1/6
partner on condition that a further sum of
Rs. 6,000 was allowed to be credited to X and
Y in their respective proportions and that he
contributed such a sum as would make his
capital equal to 1/4 of the total capital of X and
Y after the above adjustments.
Show the Capital Accounts of all the partners
and the Balance Sheet on admission.
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9. The directors of Telestar Limited wants to ascertain
approximately the net profits of the TV, Tape
Recorders and Transistors Department separately,
for the quarter ended March 31, 2014. It is found
impracticable to take stock on that date. On the
basis on an adequate system of departmental
accounting in use, it is estimated that the normal
rate of gross profit for the departments concerned
are 30% and respectively on turnover.
Indirect expenses are charged in proportion to the
department turnover.
The following are the figures for each department
TV Tape
Recorders
Transistors
Stock on January
1978 60,000 70,000 30,000
Purchase of March
31, 1978 70,000 75,000 47,000
Sales on March 31,
1978 1,20,000 1,00,000 60,000
Direct expenses 20,200 14,500 7,100
Total indirect expenses for the period (including
those relating to other departments) were
Rs. 42,000 on a total sale of 8,40,000.
Prepare the Departmental Trading and Profit
Loss Account to ascertain gross profit and net profit,
after making reserve for stock at 10% in respect of
each department.
Or
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Suresh started his business with Rs. 25,000 as
capital on January 2010. During the year he
introduced Rs. 4,000 as additional capital and
withdrew at the rate of Rs. 600 per month. On
December 31, 2000 his position was as follows
Rs.
Bank balance 2,000
Stock 20,000
Debtors 12,000
Furniture 500
Cash in hand 500
Sundry Creditors 6,000
Expenses outstanding 400
He keeps his books under the single entry method.
Determine his profit or loss for the period.
10. Discuss the importance of harmonization of Indian
Accounting Standards with regard to International
Financial Reporting Standards.
Or
Discuss the regulations for valuation of inventories.
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Section C 10 10)
Compulsory.
11. Kalyan, Meenakashi and Somu are three partners in a
firm sharing profits and losses in the ratio 5 4 3. On
March 31, 2011 they decided to dissolve the firm when
their state of affairs was as follows
Balance sheet
Liabilities Rs. Assets Rs.
Sundry creditors 10,860 Cash at Bank 710
Capital accounts Investments 12,400
Kalyanasundaram 20,000 Debtors 7,950
Meenakshisundaram 9,000 Stock 9,240
Somasundaran 73,030 Machinery 12,000
Buildings 20,500
Leaseholds 37,300
Goodwill 12,790
1,12,890 1,12,890
Kalyan agreed to take over the buildings at Rs. 32,000
and Meenakashi took over goodwill, stock and debtors at
book values, leaseholds at Rs. 29,250 and machinery at
Rs. 5,780. Meenakshi also agreed to pay the Creditors.
Somu took the investment at the agreed value of
Rs. 11,500.
Pass necessary journal entries and show the Realisation
Account, Partner's Capital Accounts and the Bank
Account.
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