GURUKUL FOR MEC, CA & CMA CA FOUNDATION (F-6) R.

EXAM -5(KEY)

ACCOUNTS
Question-1:
(i) False
(ii) False
(iii) True
(iv) False
(v) True
(vi) False
(vii) False
(viii) True

Question-2:
(1) LIMITATIONS OF FINANCIAL STATEMENTS
1) Historical Cost:
a) Accounting records and the financial statements are prepared only on the basis of the
money value prevailing at the time the transactions were entered into.
b) The effect of subsequent changes in the value of money is not taken into account. At
times this has the effect of making the statements of account quite misleading.
Example: A house built in 1980 at the cost of Rs.15,000. In 2016 the benefit receivable from
its occupation will be as much as that of a house created in 2016, say at a cost of
Rs.14,50,000. If the house were included in the financial statements at its original cost, as
normally it would not convey a true picture except to a knowledgeable person.
2) Intangible strengths and weaknesses:
a) A company may have a number of strengths and weaknesses which cannot be shown in
the balance sheet e.g., the loyalty and calibre of its staff .
b) These must be kept in mind while judging the financial position of the company.
3) Perpetual continuity and periodical account:
a) Financial statements ordinarily are drawn up at the end of each year but the accounting
record is maintained on the assumption that the business undertaking shall continue to
exist forever on the basis of going concern assumption.
b) In consequence, much of the expenditure other than revenue expenditure has to be
distributed arbitrarily over a number of years during which benefit of the expenditure is
expected to arise. As a result, financial statements of account are not absolutely correct.
4) Different accounting policies: It is permissible for a company within certain limits to adopt
different policies for the preparation of accounts, valuation of various assets and distribution
of expenditure over different periods of account.
Example: A company may decide to provide annually for payment of pensions and gratuities
to staff and thus build up a ‘fund’ out of which payments will be made ultimately whereas
another company may deal with these only when actual payments are made. Similarly, a
company may decide whether or not to include intangible assets amongst its assets or
manner in which the amounts thereof should be written off.
5) Management policies: Management can have different accounting policies for welfare of the
staff and public at large.

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GURUKUL FOR MEC, CA & CMA CA FOUNDATION (F-6) R.EXAM -5(KEY)
(2) SITUATIONS WHEN ACCOUNT CURRENT IS PREPARED.

(3) Refer Gurukul Material in Page no.43 - Problem no -1

Question-3:
(a)

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GURUKUL FOR MEC, CA & CMA CA FOUNDATION (F-6) R.EXAM -5(KEY)

(b)

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GURUKUL FOR MEC, CA & CMA CA FOUNDATION (F-6) R.EXAM -5(KEY)

Question-4:
Refer Gurukul Material In Page No.38 - Problem No -7

Question-5:

Question-6:

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GURUKUL FOR MEC, CA & CMA CA FOUNDATION (F-6) R.EXAM -5(KEY)

Question-7:

MATHEMATICS

1. B 2. C 3. D 4. A 5. D 6. A 7. A 8. A 9. C 10. C
11. D 12. B 13. B 14. B 15. B 16. A 17. B 18. B 19. A 20. A

STATISTICS

21. D 22. C 23. A 24. C 25. B 26. C 27. C 28. D 29. B 30. A
31. C 32. B 33. D 34. A 35. D 36. B 37. B 38. A 39. D 40. B

REASONING

41. D 42. B 43. A 44. A 45. A 46. D 47. B 48. A 49. C 50. B

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