Acc-End Game-Questionnaire-Nov'23

The End Game
CA Inter Group 1
EXAM ORIENTATION
a) Paper Pattern:
Question Content & Marks
1 Accounting Standards (4 Qs * 5 marks = 20)
Answer any 4 Qs out of Q2 to Q6.
2 to 6
Q6 - Answer any 4 Qs out of 5 (4 Qs * 5 marks = 20)
b) Past Exam Analysis:
Topic Q1 Q2 Q3 Q4 Q5 Q6
(a) Hire (a) (a) AS - 1
(a) AS- 10 (a) Company FS (a) Pre-Post
Purchase Department (10) (10) (b) Hire Purchase
(b) AS-11
May (10) (10) (b) Insurance (c) Redemption
(c) AS-12
2023 (b) (b) Cash Flow Claim (5) of Debentures
(d) AS-16 (b) Single (10)
Investment Entry (10) (c) Branch (5) (d) Company FS
(10) (e) Bonus
(a)Hire Purchase
(a) AS- 2 (a) (a) Branch (a)
(b) Basics
Insurance (10) Redemption of
(b) AS-3 Company FS (c) Redemption
Nov Claim (10) Debentures
(c) AS-11 (b)Single (20) of Preference
2022 (d) AS-13 (b) (12)
Share
Entry (b) Department
Investment (10) (d) MR
(10) (8)
(e) AS - Theory
(a)
(a) Hire (a) MR
(a) Single Redemption
(a) AS-12 Purchase (b)Bonus and
Entry(12) Pre-Post of Preference
May (b) AS-2 (10) Right
(20) Share(10)
2022 (b) (b) (b) Branch (c) Basics of AS
(c) AS-10
Insurance Department (10)
(d) AS-16 (d) AS - 3
Claim(10) (8) (e) Investment
(a) AS-11 (a) (a) (a) Basics

Redemption of (a)Pre-Post
(b) AS-3 Insurance Department Debentures& (12) (b) MR
Dec Claim (10) (10) Preference (b) Hire
(c) AS-13 (c) Theory
2021 (b)
(b) Branch Shares (20) Purchase (8)
(d) AS-1 Investment (d) Debentures
(10)
(10) (e) Single Entry
NAVIN CLASSES 1 CA CS AVINASH SANCHETI

CA INTER ACCOUNTING STANDARDS
PRACTICE QUESTIONS FOR ACCOUNTING STANDARDS

INTRODUCTION TO AS
Q1. A company with turnover of ₹ 225 crores & borrowings of ₹ 51 crore during year ended
31st March, 2021, wants to avail exemptions available in adoption of Accounting
Standards applicable to companies for year ended 31.3.2021. Advise management on the
exemptions that are available as per the Companies (Accounting Standards) Rules,2021.
Q2. An organization whose objects are charitable or religious, believes that the Accounting
Standards are not applicable to it since only a very small proportion of its activities are
business in nature. Comment.
AS 1 - DISCLOSURE OF ACCOUNTING POLICIES

Q3. State whether the following statements are ‘True’ or ‘False’ in line with the provisions of
AS-1. Also give reason for your answer.
(i) Certain fundamental accounting assumptions underline the preparation and
presentation of financial statements. They are usually specifically stated because
their acceptance and use are not assumed.
(ii) If fundamental accounting assumptions are not followed in presentation and
preparation of financial statements, a specific disclosure is not required.
(iii) All significant accounting policies adopted in the preparation and presentation of
financial statements should form part of the financial statements.
(iv) Any change in an accounting policy, which has a material effect should be disclosed.
Where the amount by which any item in the financial statements is affected by such
change is not ascertainable, wholly or in part, the fact need not to be indicated.
(v) There is no single list of accounting policies which are applicable to all circumstances.
Q4. Discuss disclosure requirements of change in accounting policy in below cases as per
AS-1.
(i) ABC Ltd. was previously making provision for non-moving stocks based on not
issued for the last 12 months up to 31.03.2020. Now, the company wants to make
provision based on technical evaluation during the year ending 31.03.2021.
Total value of stock ₹133.75 lakhs
Provision required based on technical evaluation ₹4.00 lakhs
Provision required based on 12 months not issued ₹5.00 lakhs
(ii) In the Books of M/s kay Ltd., Closing stock as on 31st March, 2021 amounts to
₹1,24,000 (on the basis of FIFO method). The company decides to change from FIFOmethod
to weighted average method for ascertaining the cost of inventory from the year 2020-
2021. On the basis of weighted average method, closing stock as on 31st March, 2021
amounts to ₹1,54,000.

WWW.NAVINCLASSES.COM
Q5. Following is the Balance Sheet of M/s. S Traders as on 31st March, 2019:
Liabilities ₹ Assets ₹
Capital 1,50,000 Fixed Assets 1,05,000
11% Bank Loan 80,000 Closing Stock 76,000
Trade Payables 52,000 Debtors 68,000
Profit & Loss A/c 56,000 Deferred Expenditure 24,000
Cash & Bank 65,000
3,38,000 3,38,000
Additional Information:
(i) Remaining life of Fixed Assets is 6 years with even use. The net realizable value of
Fixed Assets as on 31st March, 2020 is ₹90,000.
(ii) Firm’s Sales & Purchases for the year ending 31st March, 2020 amounted to
₹7,80,000 and ₹6,25,000 respectively.
(iii) The cost & net realizable value of the stock as on 31st March, 2020 was, ₹60,000 and
₹66,000 respectively.
(iv) General expenses (including interest on Loan) for the year 2019-20 were ₹53,800.
(v) Deferred expenditure is normally amortised equally over 5 years starting from the
Financial year 2018-19 i.e., ₹6,000 per year.
(vi) Debtors on 31st March, 2020 is ₹65,000 of which ₹5,000 is doubtful. Collection of
another ₹10,000 debtors depends on successful re-installation of certain products
supplied to the customer.
(vii) Closing Trade payable ₹48,000, which is likely to be settled at 5% discount.
(viii) There is a prepayment penalty of ₹4,000 for Bank loan outstanding.
(ix) Cash & Bank balances as on 31st March, 2020 is ₹1,65,200.
Prepare Profit & Loss Account for the year ended 31st March, 2020 and Balance Sheet as
on 31st March, 2020 assuming the firm is not a going concern.

AS 2 - VALUATION OF INVENTORIES
Q6. Rohan Pvt. Ltd., a wholesaler in agriculture products, has valued the inventory on Net
Realizable Value on the ground that AS 2 does not apply to inventory of agriculture
products. Comment.
Q7. On 31st March 20X1, a business firm finds that cost of a partly finished unit on that date
is ₹530. The unit can be finished in 20X1-X2 by an additional expenditure of ₹310. The
finished unit can be sold for ₹750 subject to payment of 4% brokerage on selling price.
The firm seeks your advice regarding the amount at which the unfinished unit should be
valued as at 31st March, 20X1 for preparation of final accounts. Assume that the partly
finished unit cannot be sold in semi-finished form and its NRV is zero without
processingit further.
Q8. Z Ltd. ordered 13,000 kgs of chemicals @ ₹90/kg. The purchase price includes GST of
₹5/kg in respect of which full input credit is admissible. Further, state VAT is leviable at
₹2.5/kg on purchase price. Freight incurred amounted to ₹30,000. Normal transit loss is
4%. The company actually received 12,400 kgs and consumed 10,000 kgs. The company
has received trade discount in the form of cash amounting to ₹1/kg. The chemicals were
delivered in containers. The containers were not reusable, hence sold for ₹500. The
administrative expenses incurred to bring the chemicals were ₹10,000. Compute the
value of inventory and allocate the material cost as per AS-2.
Q9. Joy Ltd. purchased 20,000 kilograms of Raw Material @ ₹20 per kilogram during the year
2020-21. They have furnished you with the following further information for the year
ended 31st March, 2021:
Particulars Units Amount (₹)
Opening Inventory:
Finished Goods 2,000 1,00,000
Raw Materials 2,200 44,000
Direct Labour 3,06,000
Fixed Overheads 3,00,000
Sales 20,000 11,20,000
Closing Inventory:
Finished Goods 2,400
Raw Materials 1,800
The plant has a capacity to produce 30,000 units of finished product per annum. However,
the actual production of finished products during the year 2020-21 was 20,400 units. Due
to a fall in the market demand, the price of the finished goods in which the raw material
has been utilized is expected to be sold @ ₹40 per unit. The replacement cost of the raw
material was ₹ 19 per kilogram.
You are required to ascertain the value of closing inventory as at 31st March, 2021 as per
AS 2.

Q10. On the basis of information given below, find the value of inventory (by Periodic inventory
method) as per AS 2, to be considered while preparing the Balance Sheet as on 31st March,
2021 on weighted Average Basis.
Details of Purchases:
Purchase cost per unit
Date of purchase Unit (Nos.)
(₹)
01-03-2021 20 108
08-03-2021 15 107
17-03-2021 30 109
25-03-2021 15 107
Details of issue of Inventory:
Date of Issue Unit (Nos.)
03-03-2021 10
12-03-2021 20
18-03-2021 10
24-03-2021 20
Net realizable value of inventory as on 31st March, 2021 is ₹107.75 per unit.
You are required to compute the Value of Inventory as per AS-2?
Q11. Alpha Ltd. sells flavored milk to customers; some of the customers consume the milk in
the shop run by Alpha Limited. While leaving the shop, the consumers leave the empty
bottles in the shop and the company takes possession of these empty bottles. The
company has laid down a detailed internal record procedure for accounting for these
empty bottles which are sold by the company by calling for tenders.
Keeping this in view:
Decide whether the inventory of empty bottles is an asset of the company;
If so, whether the inventory of empty bottles existing as on the date of Balance Sheet is
to be considered as inventories of the company and valued as per AS 2 or to be treated
as scrap and shown at realizable value with corresponding credit to ‘Other Income’?

AS 10 – PROPERTY, PLANT & EQUIPMENT

Q12. Arush Ltd. is installing a new plant in its factory. It provides you the following information:
Cost of the plant (cost as per supplier’s invoice) ₹31,25,000
Estimated dismantling costs to be incurred after 5 years ₹2,50,000
Initial delivery and handling costs ₹1,85,000
Cost of site preparation ₹4,50,000
Consultants used for advice on the acquisition of the plant ₹6,50,000
You are required to advise Arush Ltd. on the costs that can be capitalised for plant in
accordance with AS 10 ‘Property, Plant and Equipment’. Discount rate - 10%.
Q13. ABC Ltd is setting up a new refinery outside the city limits. In order to facilitate the
construction of the refinery and its operations, ABC Ltd. is required to incur expenditure
on the construction/development of railway siding, road and bridge. Though ABC Ltd.
incurs the expenditure on the construction/development, it will not have ownership
rights on these items and they are also available for use to other entities and public at
large. Can ABC Ltd. capitalize expenditure incurred on these items as property, plant
andequipment (PPE)?
Q14. Entity A carried plant and machinery in its books at ₹2,00,000 which were destroyed in
a fire. These machines were insured ‘New for old’ and were replaced by the insurance
company with new machines of fair value ₹20,00,000. The old destroyed machines were
acquired by the insurance company and the company did not receive any cash
compensation. State, how Entity A should account for the same?
Q15. A Company acquired a machine on 1.4.2014 for ₹5,00,000. The company charged
depreciation up to 2016-17 on SLM with estimated life of 10 years and scrap value of
₹50,000. From 2017-18, the company decided to change depreciation method at 20% on
WDV method. Compute the amount of depreciation to be debited to P/l A/c for 2017-18?
Q16. On 1-4-2016, Indra Ltd. bought a machinery for ₹1,00,000. The company followed
revaluation model for Plant & Machinery class and it revalued the machinery to
₹1,50,000 on 31-3-2018. The company follows SLM to depreciate the asset over its
remaining useful life of 8 years (i.e., original life is 10 years). Out of the depreciation of
₹18,750, the company wants to charge only ₹10,000 to P/l and remaining amount of
₹8,750 to revaluation surplus. Do you agree with this accounting?
Q17. A property costing ₹ 10,00,000 is bought on 1.4.2020. Its estimated total physical life is
50 years. However, the company considers it likely that it will sell the property after 25
years. The estimated residual value in 25 years’ time, based on current year prices, is:
Case (a) ₹ 10,00,000
Case (b) ₹ 9,00,000
You are required to compute the amount of depreciation charged for the year ended
31.3.2021.

Q18. ABC Ltd. has entered into a binding agreement with XYZ Ltd. to buy a custom-made
machine amounting to ₹4,00,000. As on 31st March, 2021 before delivery of the machine,
ABC Ltd. had to change its method of production. The new method will not require the
machine ordered and so it shall be scrapped after delivery. The expected scrap value is
‘NIL’. Show the treatment of machine in the books of ABC Ltd.
Q19. An entity gave the following Note in its Financial Statements:

‘The company chooses not to charge depreciation on Property, Plant and Equipment on
account of:
(a) Annual Maintenance Contracts being expensed thereby ensuring timely repairs of
Plant and Machinery.
(b) Depreciation being a non-cash expense has no impact on cash flows. Accordingly, it
is not necessary to depreciate an asset when repairs and maintenance charges are
expensed in the Statement of Profit and Loss.
(c) The values of certain assets like Property increase with passage of time, and hence
charging depreciation does not make sense.
(d) At the end of the useful life, the asset is ultimately sold, and since the asset is at cost
due to no depreciation, exact profit or loss on sale of the asset is stated.’
You are required to state the appropriateness of the above accounting policy in line with
the relevant Accounting Standards.
Q20. Skanda Ltd. acquired a machinery for ₹2,50,00,000 five years ago. Depreciation was
charged at 10% p.a. on SLM basis, useful life being 10 years. At the beginning of Year 3,
the machinery was revalued to ₹3,00,00,000 with the surplus on revaluation being
credited to Revaluation Reserve. Depreciation was provided on the revalued amount
over the balance useful life of 8 years. The machinery was sold in the current year for
₹1,12,50,000. Give the accounting treatment for the above in the Company’s accounts.
What will be the treatment if the machinery fetched only ₹42,50,000 now?
Q21. Bharat Infrastructure Ltd. acquired a heavy machinery at a cost of ₹1,000 lakhs, the
breakdown of its components is not provided. The estimated useful life of the machinery
is 10 years. At the end of Year 6, the turbine, which is a major component of the
machinery, needed replacement, as further usage and maintenance was uneconomical.
The remainder of the machine is in good condition and is expected to last for the
remaining 4 years. The cost of the new turbine is ₹450 lakhs. Give the accounting
treatment for the new turbine, assuming SLM Depreciation and a discount rate of 8%.

AS 11 – THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

Q22. Explain "monetary item" as per Accounting Standard 11.
How are foreign currency monetary items to be recognized at each Balance Sheet date?
Classify the following as monetary or non-monetary item:
Share Capital.
Trade Receivables.
Investments.
Fixed Assets.
Q23. Kumar Ltd. borrowed US$ 3,00,000 on 31-12-2020 which will repaid as on 30-06-2021.
Kumar Ltd. prepares its financial statements ending on 31-03-2021. Rate of exchange
between reporting currency (Rupee) and foreign currency (US$) on different dates are
as under:
31-12-2020 1 US $ = ₹44.00
31-03-2021 1 US $ = ₹44.50
30-06-2021 1 US $ = ₹44.75
(i) Calculate Borrowings in reporting currency to be recognized in the books on above
mentioned dates and also show journal entries for the same.
(ii) If borrowings were repaid on 28-2-2021 on which date exchange rate was
1 US $ = ₹44.20 then what entry should be passed?
Q24. Answer the following questions:

(i) PP Ltd. an Indian Company acquired long term finance from WW (p) Ltd, a U.S.
company, amounting to ₹ 40,88,952. The transaction was recorded at US $1= ₹72.00,
taking exchange rate prevailing at the date of transaction. The exchange rate on
balance sheet date (31.03.2021) is US $1= ₹73.60
(ii) Trade receivables of PP Ltd. include amount receivable from Preksha Ltd, ₹20,00,150
recorded at the prevailing exchange rate on the date of sales, transaction recorded
at US $1= ₹73.40. The exchange rate on balance sheet date (31.03.2021) is
US $1= ₹ 73.60.
You are required to calculate the amount of exchange difference and also explain the
accounting treatment needed in the above two cases as per AS 11 in the books of PP Ltd.
Q25. Mona Ltd. purchased a plant for US$ 1,00,000 on 1st December 2020, payable after three
months. Company entered into a forward contract for three months @ ₹49.15 per dollar.
Exchange rate per dollar on 1st December was ₹48.85. How will you recognize the profit
or loss on forward contract in the books of Mona Ltd for the year ended 31st December,
2020 if exchange rate on that was ₹48.70?

Q26. A Ltd. has borrowed USD 10,000 in foreign currency on April 1, 20X1 at 5% p.a. annual
interest and acquired a depreciable asset. The exchange rates are as under:
01/04/20X1 1 US$ = ₹48.00
31/03/20X2 1 US$ = ₹51.00
You are required to pass the journal entries in the following cases:
(i) Option under Para 46A is not availed.
(ii) Option under Para 46A is availed.
(iii) The loan was taken to finance the operations of the entity (and not to procure a
depreciable asset).
In all cases, assume interest accrued on 31 March 20X2 is paid on the same date.
Q27. Om Ltd. purchased an item of property, plant and equipment for US $ 50 lakh on 01.04.2020
and the same was fully financed by the foreign currency loan [US $] repayable in five
equal instalments annually. (Exchange rate at the time of purchase was 1 US $ = ₹60).
As on 31.03.2021 the first instalment was paid when 1 US $ fetched ₹62.00. The entire
loss on exchange was included in cost of goods sold by the accountant. Om Ltd. provides
depreciation on an item of property, plant and equipment at 20% on WDV basis and wants
to exercise the option to adjust the cost of asset for exchange difference arising out of loan
restatement and payment.
You are required to calculate the amount of exchange loss, its treatment and depreciation
on this item of property, plant and equipment.

AS 12 – ACCOUNTING FOR GOVERNMENT GRANTS

Q28. Alps Limited has received the following Grants from the Government during the year
ended 31st March, 2021:
(i) ₹120 Lacs received as Subsidy from the Central Government for setting up an
Industrial undertaking in Medak, a notified backward area.
(ii) ₹15 Lacs Grant received from the Central Government on installation of Effluent
Treatment Plant.
(iii) ₹25 Lacs received from State Government for providing Medical facilities to its
workmen during the pandemic.
Advise Alps Limited on the treatment of the above Grants in its books of Account in
accordance with AS-12 “Government Grants”
Q29. Darshan Ltd. purchased a Machinery on 1st April, 2016 for ₹ 130 lakhs (Useful life is 4
years).
Government grant received is ₹ 40 lakhs for the purchase of above Machinery.
Salvage value at the end of useful life is estimated at ₹ 60 lakhs.
Darshan Ltd. decides to treat the grant as deferred income.
You are required to calculate the amount of depreciation and grant to be recognized in
profit & loss account for the year ending 31st March, 2017, 31st March, 2018, 31st March,
2019 & 31st March, 2020.
Darshan Ltd. follows straight line method for charging depreciation.
Q30. PQ Hygiene Ltd. had received a grant of ₹50 lakh in 2012 from a State Government
towards installation of pollution control machinery on fulfilment of certain conditions.
The company, however, failed to comply with the said conditions and consequently was
required to refund the said amount in 2020. The company debited the said amount to its
machinery account in 2020 on payment of the same. It also reworked the depreciation for
the said machinery from the date of its purchase and passed necessary adjusting entries
in the year 2020 to incorporate the retrospective impact of the same. State whether the
treatment done by the company is correct or not.
Q31. On 1.4.20X1, ABC Ltd. received Government grant of ₹300 lakhs for acquisition of
machinery costing ₹1,500 lakhs. The grant was credited to the cost of the asset. The life
of the machinery is 5 years. The machinery is depreciated at 20% on WDV basis. The
Company had to refund the grant in May 20X4 due to non-fulfillment of certain
conditions.
How you would deal with the refund of grant in the books of ABC Ltd. assuming that the
company did not charge any depreciation for year 20X4?

Q32. Co X runs a charitable hospital. It incurs salary of doctors, staff etc. to the extent of ₹30
lakhs per annum. As a support, the local govt grants a lumpsum payment of ₹90 lakhs to
meet the salary expense for a period of next 5 years.
At the start of Year 4, Co X is unable = to meet the conditions attached to the grant and is
required to refund the entire grant of 90 lakhs.
You are required to pass the necessary journal entries in the books of the company for
refund of the grant if the grant was shown separately as Other Income.

AS 16 – BORROWING COST
Q33. A company incorporated in June 2020, has setup a factory within a period of 8 months
with borrowed funds. The construction period of the assets had reduced drastically due
to usage of technical innovations by the company and the company is able to justify the
reasons for the same. Whether interest on borrowings for the period prior to the date of
setting up the factory should be capitalized although it has taken less than 12 months for
the assets to get ready for use. You are required to comment on the necessary treatment
with reference to AS 16.
Q34. XYZ Ltd. has taken a loan of $10,000 on April 1, 2017 for a specific project at an interest
rate of 5% p.a. paid annually. On 1st April, 2017, the exchange rate between the currencies
was ₹45 per $. The exchange rate is ₹48 per $ as at March 31, 2018. The corresponding
amount could have been borrowed by the company in India @11% p.a. as on 1st April,
2017. Calculate Borrowing cost for 2017-18?
Q35. (a) An enterprise has constructed a complex piece of equipment (qualifying asset) that is
to be installed on the production line of a manufacturing plant. The equipment has been
constructed over a period of 15 months. However, on installation, certain calibrations are
required to achieve the desired level of production before it is finally commissioned. This
process is expected to take approximately 2 months during which test runs will be made.
Should the borrowing costs attributable to borrowings pertaining to the 2 months test
run period be capitalized?
(b) Should capitalization of borrowing costs be continued when the qualifying asset has
been constructed but marketing activities to sell the asset are still in progress?
Q36. Gayatri Ltd. is constructing a building at Hyderabad from 1-4-2017. The estimated
expenditure is ₹20 crore. It took a loan on 1-10-2017 for ₹15 crore @ 10% p.a. from SBI
specifically for the construction and the balance amount is funded from retained
earnings. It invested the excess funds temporarily in fixed deposits and earned an
amount of ₹5 lakh. Building is under construction till 31-3-2018. What is the amount to
be capitalised as per AS-16?
Q37. ABC Limited has started construction of an asset on 1st December, 2020, which continues
till 31st March, 2021 (and is expected to go beyond a year). The entity has not taken
any specific borrowings to finance the construction of the asset but has incurred finance
costs on its general borrowings during the construction period. The directly attributable
expenditure at the beginning of the month on this asset was ₹10 lakh in December 2020
and ₹4 lakh in each of the months of January to March 2021. At the beginning of the year,
the entity had taken Inter Corporate Deposits of ₹20 lakh at 9% rate of interest and had
an overdraft of ₹4 lakh, which increased to ₹8 lakh on 1st March, 2021. Interest was paid
on the overdraft at 10% until 1st January, 2021 and then the rate was increased to 12%.
You are required to calculate the annual capitalization rate for computation of borrowing
cost in accordance with AS-16 ‘Borrowing Costs’.

Q38. On 1st April, 20X1, Amazing Construction Ltd. obtained a loan of ₹32 crores to be utilised
as under:
(i) Construction of sea link across two cities:(work was held up totally for a
monthduring the year due to high water levels): ₹25 crores
(ii) Purchase of equipment’s and machineries: ₹3 crores
(iii) Working capital: ₹2 crores
(iv) Purchase of vehicles: ₹50,00,000
(v) Advance for tools/cranes etc.: ₹50,00,000
(vi) Purchase of technical know-how: ₹1 crores
(vii) Total interest charged by the bank for the year ending 31st March, 20X2: ₹80,00,000.
Show the treatment of interest by Amazing Construction Ltd.?
Q39. Harish Construction Company is constructing a huge building project consisting of four
phases. It is expected that the full building will be constructed over several years but
Phase I and Phase II of the building will be started as soon as they are completed.
Following is the detail of the work done on different phases of the building during the
current year:
(₹ in lakhs)
Particulars Phase I Phase II Phase III Phase IV
₹ ₹ ₹ ₹
Cash expenditure 10 30 25 30
Building purchased 24 34 30 38
Total expenditure 34 64 55 68
Total expenditure of all phases 221
Loan taken @15% at the beginning 200
of the year
During mid of the current year, Phase I and Phase II have become operational.
Find out the total amount to be capitalized and to be expensed during the year.
Q40. Expert Limited issued 12% secured debentures of ₹100 lakhs on 01.06.2021. Money
raised from debentures to be utilized as under:
Intended Purpose Amount ₹ in lakhs
Construction of factory building 40
Working Capital 30
Purchase of Machinery 15
Purchase of Furniture 2
Purchase of truck 13

Additional Information:
(i) Interest on debentures for the Financial Year 2021-2022 was paid by the
Company.
(ii) During the year, the company invested idle fund of ₹5 lakhs (out of the money
raised from debentures) in Bank's fixed deposit and earned interest of ₹50,000.
(iii) In March, 2022 construction of factory building was not completed (it is expected
that it will take another 6 months).
(iv) In March 2022, Machinery was installed and ready for its intended use.
(v) Furniture was put to use at the end of March 2022.
(vi) Truck is going to be received in April, 2022.
You are required to show the treatment of interest as per AS 16 in respect of borrowing
cost for the year ended 31st March, 2022 in the Books of Expert Limited.

CA INTER ACCOUNTING
PRACTICE QUESTIONS FOR CHAPTERS

Preparation of Financial Statements & Managerial Remuneration
Q1. In each of the following companies, operating/cycle and expected settlement of trade
payables is given. State giving reasons whether the Trade Payables of each company are
Current Liabilities or Non-Current Liabilities as per Schedule III of the Companies Act,
2013:
Company Operating Cycle Period Expected Payment Period

1 10 months 12 Months
Q2. On 31st March, 2021, Morya Ltd. provides the following ledger balances:
Particulars Amount (₹)

Debit Credit
Equity Share Capital, fully paid shares of ₹50 each 80,00,000
Calls in arrear 15,000
Land 25,00,000
Buildings 30,00,000
Plant & Machinery 24,00,000
Furniture & Fixture 13,00,000
Securities Premium 15,00,000
General Reserve 9,41,000
Profit & Loss Account 5,80,000
Loan from Public Finance Corporation (Secured by 26,30,000
Hypothecation of Land)
Other Long-Term Loans 22,50,000
Short Term Borrowings 4,60,000
Inventories: Finished goods 45,00,000
Raw materials 13,00,000
Trade Receivables 17,50,000
Advances: Short Term 3,75,000
Trade Payables 8,13,000
Provision for Taxation 3,80,000
Cash in Hand 70,000
Balances with Banks 3,44,000
Total 1,75,54,000 1,75,54,000

The following additional information was also provided in respect of the above balances:
(1) 50,000 fully paid equity shares were allotted as consideration for land.
(2) The cost of assets were:
Building ₹32,00,000
Plant and Machinery ₹30,00,000
Furniture and Fixture ₹16,50,000
(3) Trade Receivables for ₹4,86,000 are due for more than 6 months.
(4) Balances with banks include ₹56,000, the Naya bank, which is not a scheduled bank.
(5) Loan from Public Finance Corporation repayable after 3 years.
(6) The balance of ₹26,30,000 in the loan account with Public Finance Corporation
is inclusive of ₹1,34,000 for interest accrued but not due. The loan is secured by
hypothecation of land.
(7) Other long-term loans (unsecured) include:
Loan taken from Nixes Bank ₹13,80,000
(Amount repayable within one year ₹4,80,000)
Loan taken from Directors ₹8,50,000
(8) Bills Receivable for ₹1,60,000 maturing on 15th June, 2021 has been discounted.
(9) Short term borrowings include:
Loan from Naya bank ₹1,16,000 (Secured)
Loan from directors ₹48,000
(10) Transfer of ₹35,000 to general reserve has been proposed by the Board of directors
out of the profits for the year.
(11) Inventory of finished goods includes loose tools costing ₹5 lakhs (which do not meet
definition of property, plant & equipment as per AS 10)
You are required to prepare the Balance Sheet of the Company as at March 31st 2021 as
required under Schedule III of the Companies Act, 2013. Ignore previous year figures.
Q3. Om Ltd. has the Authorised Capital of ₹15,00,000 consisting of 6,000, 6% Redeemable
Preference shares of ₹100 each and 90,000 Equity Shares of ₹10 each. The following was
the Trial Balance of the Company as on 31st March, 2021:
Particulars Dr. Cr.

Investment in shares at cost (non-current investment) 1,50,000
Purchases 14,71,500
Selling expenses 2,37,300
Inventory as at the beginning of the year 4,35,600
Salaries and wages (included ₹30,000 being Director’s 1,56,000
Remuneration)
Cash in hand 84,000

CA INTER ACCOUNTING
Bills receivable 1,24,500

Interest on Bank overdraft 29,400
Interest on debentures up to 30th Sep (1st half year) 11,250
Sundry Debtors and Sundry Creditors 1,50,300 2,63,550
Freehold property at cost 10,50,000
Furniture at cost less depreciation of ₹45,000 1,05,000
6% Redeemable Preference share capital 6,00,000
Equity share capital fully paid up 6,00,000
5% mortgage debentures secured on freehold properties 4,50,000
Dividends received 12,750
Profit and Loss A/c (opening balance) 85,500
Sales (Net) 20,11,050
Bank overdraft (secured by hypothecation of stocks and 4,50,000
receivables)
Technical knowhow fees (cost paid during the year) 4,50,000
Audit fees 18,000
Total 44,72,850 44,72,850
Other Information:
1. Closing Stock was valued at ₹4,27,500.
2. Purchases include ₹15,000 worth of goods and articles distributed among valued
customers.
3. Salaries and Wages include ₹6,000 being Wages incurred for installation of
Electrical Fittings which were recorded under “Furniture”.
4. Bills Receivable include ₹4,500 being dishonored bills. 50% of which had been
considered irrecoverable.
5. Bills Receivable of ₹6,000 maturing after 31st March were discounted.
6. Depreciation on Furniture to be charged at 10% on Written Down Value.
7. Interest on Debentures for the half year ending on 31st March was due on that date.
8. Technical Knowhow Fees is to be written off over a period of 10 years.
9. Trade receivables include ₹18,000 due for more than six months.
You are required to prepare the Balance Sheet as at 31st March, 2021 and Statement of
Profit and Loss for the year ended 31s March, 2021 as per Schedule III to the Companies
Act, 2013 after taking into account the above information. Ignore taxation.

Q4. Star Ltd. gives the following information the year ended 31st March, 2021:
Particulars ₹
Gross profit 60,38,048
Subsidies received from Govt. 4,10,888
Administrative, Selling and distribution expenses 12,33,813
Directors’ fees 2,02,170
Interest on debentures 46,860
Managerial remuneration 4,28,025
Depreciation on Property, plant and equipment (PPE) 7,83,815
Provision for Taxation 18,63,750
Transfer to General Reserve 6,00,000
Transfer to Investment Revaluation Reserve 18,750
Depreciation on PPE as per Schedule II of the Companies Act, 2013 was ₹8,63,018.
You are required to calculate the maximum amount of the managerial remuneration as
allowed as per Companies Act, 2013.
Q5. The following information is provided by Exe Limited for 31st March, 2022:
Particulars ₹
Net Profit before Income Tax and Managerial Remuneration, but after 9,40,000
Depreciation and Provision for Repairs
Depreciation provided in the Books 4,05,000
Provision for repairs for Machinery during the year 35,000
Depreciation Allowable under Schedule II 3,40,000
Actual Expenditure incurred on Repairs during the year 25,000
Provision for Income Tax 1,50,000
You are required to calculate the Managerial Remuneration for Exe Limited as on
31st March, 2022 in the following situations:
(i) There is only one Whole Time Director.
(ii) There are two Whole Time Directors.
(iii) There are two Whole Time Directors, a part time Director and a Manager.

CA INTER ACCOUNTING
Q6. X Ltd. (a non-investment company) provides the following information as on 31st March,
2020:
Particulars ₹
Issued and subscribed capital:
15,000, 14% Preference shares of Rs. 100 each fully paid 15,00,000
1,20,000 Equity shares of Rs. 100 each, Rs. 80 paid-up 96,00,000
Capital reserves (Rs. 1,50,000 is revaluation reserve) 1,95,000
Securities premium 50,000
15% Debentures 65,00,000
Investment in shares, debentures, etc. 75,00,000
Profit and Loss account (debit balance) 15,25,000
You are required to compute Effective Capital as per the provisions of Schedule V to the
Companies Act, 2013.
Q7. XYZ Ltd. proposes to declare 10% dividend out of General Reserves due to inadequacy of
profits in the year ending 31-03-2020.
From the following particulars ascertain the amount that can be utilized from general
reserves, according to the Companies Rules, 2014: (Rs.)
8,00,000 Equity Shares of Rs. 10 each fully paid up 80,00,000
General Reserves 25,00,000
Revaluation Reserves 6,50,000
Net profit for the year 1,42,500
Average rate of dividend during the last five years has been 12%.

BONUS & RIGHT ISSUE

Q8. Pass Journal Entries in the following circumstances:
(i) A Limited company with subscribed capital of ₹5,00,000 consisting of 50,000 Equity
shares of ₹10 each; called up capital ₹7.50 per share. A bonus of ₹1,25,000 declared
out of General Reserve to be applied in making the existing shares fully paid up.
(ii) A Limited company having fully paid-up capital of ₹50,00,000 consisting of Equity
shares of ₹10 each, had General Reserve of ₹9,00,000. It was resolved to capitalize
₹5,00,000 out of General Reserve by issuing 50,000 fully paid bonus shares of ₹10
each, each shareholder to get one such share for every ten shares held by him in the
company.
Q9. Following is the extract of the Balance Sheet of Sindhu Limited as at 31st March, 2020:
50,000 Equity shares of ₹10 each, ₹8 paid up ₹4,00,000
General Reserve ₹80,000
Revaluation Reserve ₹20,000
Securities Premium ₹10,000
Surplus i.e., credit in Profit & Loss Account ₹1,60,000
On 1st April, 2020 the company made a final call of ₹2 each on 50,000 Equity shares. The
call money was received on 15th April, 2020. Thereafter, the company decided to
capitalize its reserves by way of bonus at the rate of one share for every five shares held.
Additionally, the Company passed the board resolution to use securities premium, general
reserve and balance, if any from the surplus in the profit and loss account. Show necessary
entries in the books of Sindhu Limited and show relevant extract of Balance Sheet.
Q10. Beta Ltd. has decided to increase its existing share capital by making rights issue to its
existing shareholders. Beta Ltd. is offering one new share for every two shares held by the
shareholder. The market value of the share is ₹180 and the company is offering one share
of ₹90 each. Calculate the value of a right. What should be the ex-right market price of a
share?

CA INTER ACCOUNTING
REDEMPTION OF PREFERENCE SHARES

Q11. The Books of Arpit Ltd. shows the following Balances as on 31st December, 2019:

6,00,000 Equity shares of ₹10 each fully paid up 60,00,000
30,000, 10% Preference shares of ₹100 each, ₹80 paid up 24,00,000
Capital Redemption Reserve 18,00,000
Under the terms of issue, the Preference Shares are redeemable on 31st March, 2020 at
a premium of 10%. In order to finance the redemption, the Board of Directors decided
to make a fresh issue of 1,50,000 Equity shares of ₹10 each at a premium of 20%, ₹2 being
payable on application, ₹7 (including premium) on allotment and the balance on 1st
January, 2021. The issue was fully subscribed and allotment made on 1st March, 2020.
The money due on allotment was received by 20th March, 2020.
The preference shares were redeemed after fulfilling necessary conditions of Section 55
of the Companies Act, 2013.
You are required to pass the necessary Journal Entries and also show how the relevant
items will appear in the Balance Sheet of the company after the redemption carried out
on 31st March, 2020.
Q12. The Summarized Balance Sheet of Clean Ltd. as on 31st March, 2019 is as follows:
Particulars (₹)
EQUITY AND LIABILITIES
1. Shareholder’s funds:
(a) Share Capital 5,80,000
(b) Reserves and Surplus 96,000
2. Current Liabilities:
Total 7,89,000
ASSETS:
1. Non-Current Assets:
(a) Property, Plant and Equipment - Tangible Assets 6,90,000
(b) Non-current investments 37,000
2. Current Assets:
Cash and cash equivalents (Bank) 62,000
Total 7,89,000
The Share Capital of the company consists of ₹50 each Equity shares of ₹4,50,000 and 100
each 8% Redeemable Preference Shares of ₹1,30,000 (issued on 1.4.2014).

Reserves and Surplus comprises statement of profit and loss only.

In order to facilitate the redemption of preference shares at a premium of 10%, the
Company decided:
(a) to sell all the investments for ₹30,000.
(b) to finance part of redemption from company funds, subject to, leaving a Bank
balance of ₹24,000.
(c) to issue minimum equity share of ₹50 each at a premium of ₹10 per share to
raisethe balance of funds required.
You are required to
(1) Pass Journal Entries to record the above transactions.
(2) Prepare Balance Sheet after completion of the above transactions.
Q13. The following is the summarised Balance Sheet of Bumbum Limited as at 31st March,
2019.
Particulars ₹
Sources of funds
Authorized capital:
50,000 Equity shares of ₹10 each 5,00,000
10,000 Preference shares of ₹100 each (8% redeemable) 40,00,000
15,00,000
Issued, subscribed and paid up:
30,000 Equity shares of ₹10 each 3,00,000
5,000, 8%Redeemable Preference shares of ₹100 each 5,00,000
Reserves & Surplus
Profit & Loss A/c 40,000
Trade payables 4,20,000
25,10,000
Application of funds
PPE (net) 7,80,000
Investments (market value ₹5,80,000) 4,90,000
Deferred Tax Assets 3,40,000
Trade receivables 6,20,000
Cash & Bank balance 2,80,000
25,10,000

CA INTER ACCOUNTING
In Annual General Meeting held on 20th June, 2019 the company passed the following
resolutions:
(i) To redeem 8% preference shares at a premium of 5%.
(ii) To issue fully paid bonus shares in the ratio of one equity share for every 3 shares
held on record date.
On 10th July, 2019 investments were sold for ₹5,55,000 and preference shares were
redeemed. The bonus issue was concluded by 12th September, 2019
You are required to journalize the above transactions including cash transactions and
prepare Balance Sheet as at 30th September, 2019. All working notes should form part of
your answer.

CASHFLOW STATEMENT
Q14. From the following information of XYZ Ltd. calculate Cash and Cash equivalent as on
31-03-2021 as per AS-3:

Balance as per Bank Statement 25,000
Cheque issued but not presented in the Bank 15,000
Short term investment in liquid equity shares of ABC Ltd. 50,000
Fixed deposit created on 1-11-2020and maturing on 15-4-2021 75,000
Short term investment in highly liquid sovereign Debt mutual funds 1,00,000
on 1-3-2021 (having maturity period ofless than 3 months)
Bank balance in a Foreign currency account in India (Conversion $1,000
rates: On date of deposit ₹69/$, as on 31-3-2021 ₹70/$)
Q15. Classify the following activities as per AS-3:

a) Interest paid by financial enterprises.
b) Tax deducted at source on interest received from subsidiary company.
c) Deposit with bank for a term of 2 years.
d) Insurance claim received towards loss of machinery by fire.
e) Bad debts written off.
Q16. The following information was provided by PQR Ltd. for the year ended 31st March, 2019:
(1) Gross Profit Ratio was 25% for the year, which amounts to ₹3,75,000.
(2) Company sold goods for cash only.
(3) Opening inventory was lesser than closing inventory by ₹25,000.
(4) Wages paid during the year ₹5,55,000.
(5) Office expenses paid during the year ₹35,000.
(6) Selling expenses paid during the year ₹15,000.
(7) Dividend paid during the year ₹40,000 (including dividend distribution tax).
(8) Bank Loan repaid during the year ₹2,05,000 (included interest ₹5,000)
(9) Trade Payables on 31st March, 2018 were ₹50,000 and on 31st March, 2019 were
₹35,000.
(10) Amount paid to Trade payables during the year ₹6,00,000
(11) Income Tax paid during the year amounts to ₹55,000 (Provision for taxation as on
31st March, 2019 ₹30,000)
(12) Investments of ₹8,20,000 sold during the year at a profit of ₹20,000.
(13) Depreciation on furniture amounts to ₹40,000.
(14) Depreciation on other tangible assets amounts to ₹20,000.

CA INTER ACCOUNTING
(15) Plant and Machinery purchased on 15% November, 2018 for ₹3,50,000.
(16) On 31st March, 2019 ₹2,00,000, 7% Debentures were issued at face value in an
exchange for a plant.
(17) Cash and Cash equivalents on 31st March, 2018 ₹2,25,000.
You are required to:
(A) Prepare cash flow statement for the year ended 31st March, 2019, using direct
method.
(B) Calculate cash flow from operating activities, using indirect method.
Q17. Following information was extracted from the books of S Ltd. for the year ended 31st
March, 2020:
(1) Net profit before taking into account income tax and after taking into account the
following items was ₹30 lakhs;
(i) Depreciation on Property, Plant & Equipment ₹7,00,000
(ii) Discount on issue of debentures written off ₹45,000.
(iii) Interest on debentures paid ₹4,35,000
(iv) Investment of Book value ₹3,50,000 sold for ₹3,75,000.
(v) Interest received on Investments ₹70,000
(2) Income tax paid during the year ₹12,80,000
(3) Company issued 60,000 Equity Shares of ₹10 each at a premium of 20% on 10th
April,2019.
(4) 20,000, 9% Preference Shares of ₹100 each were redeemed on 31st March, 2020 at a
premium of 5%
(5) Dividend paid during the year amounted to ₹11 Lakhs (including dividend
distribution tax)
(6) A new Plant costing ₹7 Lakhs was purchased in part exchange of an old plant on 1st
January,2020. The book value of the old plant was ₹8 Lakhs but the vendor took over
the old plant at a value of ₹6 Lakhs only. The balance amount was paid to vendor
through cheque on 30th March,2020.
(7) Company decided to value inventory at cost, whereas previously the practice was to
value inventory at cost less 10%. The inventory according to books on 31.03.2020
was ₹14,76,000.
The inventory on 31.03.2019 was correctly valued at ₹13,50,000.
(8) Current Assets and Current Liabilities in the beginning and at the end of year
2019-2020 were as:
Particulars As on 15 April,2019 (₹) As on 31st March,2020 (₹)
Inventory 13,50,000 14,76,000
Trade Receivables 3,27,000 3,13,200
Cash &Bank Balances 2,40,700 3,70,500
Trade Payables 2,84,700 2,87,300
Outstanding Expenses 97,000 1,01,400
You are required to prepare a Cash Flow Statement for the year ended 31% March, 2020
as per AS 3 (revised) using the indirect method.

Q18. Explain the meaning of the terms ‘cash’ and ‘cash equivalent’ for the purpose of Cash Flow
Statement as per AS-3.
Ruby Exports had a bank balance of USD 25,000, stated in books at ₹16,76,250 using the
rate of exchange ₹67.05 per USD prevailing on the date of receipt of dollars. However, on
the balance sheet date, the closing rate of exchange was ₹67.80 and the bank balance had
to be restated at ₹16,95,000.
Comment on the effect of change in bank balance due to exchange rate fluctuation and also
discuss how it will be disclosed in Cash Flow Statement of Ruby Exports with reference to
AS-3.
Q19. The Balance Sheet of New Light Ltd. for the years ended 31st March, 2014 and 2015 are as
follows:
Liabilities 31.3.14 31.3.15 Assets 31.3.14 31.3.15
(₹) (₹) (₹) (₹)
Equity share capital 12,00,000 16,00,000 Fixed Assets 32,00,000 38,00,000
10% Preference Less: 9,20,000 11,60,000
Depreciation
share capital 4,00,000 2,80,000 22,80,000 26,40,000
Capital Reserve Nil 40,000 4,00,000 3,20,000
General Reserve 6,00,000 7,60,000 Investment 10,000 10,000
Profit and Loss A/c 2,40,000 3,00,000 Cash
9% Debentures 4,00,000 2,80,000 Other current 11,10,000 13,10,000
Current liabilities assets
4,80,000 5,20,000
Dividend payable 1,20,000 1,44,000
Provision for Tax 3,60,000 3,40,000
Unpaid dividend Nil 16,000
38,00,000 38,00,000 42,80,000
Additional information:
1. The company sold one fixed asset for ₹1,00,000, the cost of which was ₹2,00,000
and thedepreciation provided on it was ₹80,000.
2. The company also decided to write off another fixed asset costing ₹56,000 on which
depreciation amounting to ₹40,000 has been provided.
3. Depreciation on fixed assets provided ₹3,60,000.
4. Company sold some investment at a profit of ₹40,000, which was credited to capital
reserve.
5. Debentures and preference share capital redeemed at 5% premium.
6. Company decided to value inventory at cost, whereas previously the practice was to
valueinventory at cost less 10%. The inventory according to books on 31.3.2014 was
₹2,16,000.The inventory on 31.3.2015 was correctly valued at ₹3,00,000.
Prepare Cash Flow Statement as per revised Accounting Standard 3 by indirect method.

CA INTER ACCOUNTING
PROFIT OR LOSS PRE AND POST INCORPORATION

Q20. S. Ltd. was incorporated on 30th November 2020 to take over the running Business of
proprietorship firm of Mr. S. The various expenses debited to the profit and loss Account
for the year 2020-21 included:
(i) Directors fees
(ii) Preliminary expenses written off
(iii) Salaries and general expenses
(iv) Statutory Audit fees
(v) Tax Audit fees u/s 44 AB of the Income Tax Act, 1961
(vi) Commission to travelling agents
(vii) Sale promotion expenses
(viii) Advertisement expenses
(ix) Rent expenses
(x) Bad debts
You are required to determine the basis of apportionment of above expenses between pre
incorporation and post incorporation periods.
Q21. New Limited was incorporated on 01.08.2020 to take-over the business of a partnership
firm w.e.f. 01.04.2020. It provides you the following information for the year ended
31.03.2021:
Particulars ₹
Gross profit 9,00,000
Expenses:
Salaries 1,80,000
Rent, Rates & Taxes 1,20,000
Depreciation 37,500
Commission on Sales 31,500
Interest on Debentures 48,000
Director’s Fees 18,000
Advertisement 54,000
Net Profit for the Year 4,11,000
(i) New Limited initiated an advertising campaign which resulted increase in monthly
average sales by 25% post incorporation.
(ii) The Gross profit ratio post incorporation increased to 30% from 25%.
You are required to apportion the profit for the year between pre-incorporation and post
incorporation periods.

Q22. Cool Limited was formed to take over a running business of Fire Enterprises with effect
from 1st April, 2021. The company was incorporated in 1st August, 2021 and the
certificate of commencement of business was received on 1st October 2021. No entries
relating tothe transfer of the business were entered in the books which were continued
until 31st March, 2022. The following Trial Balance was extracted from the books as on
31st March,2022.
Particulars Dr.(₹) Cr.(₹)

Sales 19,20,000
Cost of Goods Sold 15,54,000
Rent 80,000
Salaries 42,000
Travelling Expenses 16,800
Depreciation 9,600
Carriage Outward 800
Printing & Stationary 4,800
Advertisement 16,000
Miscellaneous Expenses 25,200
Director’s Fees 1,200
Managing Director’s Remuneration 8,200
Bad Debts 3,200
Commission and Brokerage to selling agents 16,000
Audit Fees 6,000
Interest on Debentures 3,000
Interest to Vendors 4,200
Selling & Distribution Expenses 24,000
Preliminary Expenses 3,000
Underwriting Commission 1,800
Fixed Assets 7,30,000
Curent Assets 87,600
Cool Limited’s Capital as on 1st April ,2021 5,56,000
Current Liabilities 61,400
Debentures 1,00,000
Total 26,37,400 26,37,400
Additional Information :
(a) Total Sales for year arose evenly up to the date of the certificate of commencement
where-after they spurted to record an increase of two third during the rest of the
year.
(b) The Company deals in one type of product. The unit cost of goods sold was reduced
by10% since 1 August, 2021 as compared to the pre incorporation period.
(c) Rent of old office building was increased by 20% since 1st November, 2021. It had to
also occupy additional space from 1st July, 2021 for which rent was 6,000 p.m.

CA INTER ACCOUNTING
(d) The Salaries were tripled from 1st July, 2021.
(e) Travelling Expenses include 4,800 towards sales promotion.
(f) Depreciation includes 600 for new assets acquired in August 2021.
(g) Purchase consideration was discharged by the company on 30th September,
2021 byissuing 60,000 Equity shares of 10 each.
You are required to prepare the Profit & Loss Statement in a columnar form for the year
ended 31st March, 2022 showing the allocation of profits pre-incorporation and post-in-
corporation periods indicating the basis of apportionment.

REDEMPTION OF DEBENTURES
Q23. XYZ Ltd. has issued 1,000, 12% convertible debentures of ₹100 each redeemable after a
period of five years. According to the terms & conditions of the issue, these debentures
were redeemable at a premium of 5%. The debenture holders also had the option at the
time of redemption to convert 20% of their holdings into equity shares of ₹10 each at a
price of ₹20 per share and balance in cash. Debenture holders amounting ₹20,000 opted
to get their debentures converted into equity shares as per terms of the issue. You are
required to calculate the number of shares issued and cash paid for redemption of ₹20,000
debenture holders.
Q24. AB Ltd. (a listed company) recently made a public issue in respect of which the following
information is available:
(i) No. of partly convertible 8% debentures issued 3,00,000; face value and issue price
of ₹100 per debenture.
(ii) Convertible portion per debenture- 60%, date of conversion- on expiry of 7 months
from the date of closing of issue.
(iii) Date of closure of subscription lists 1-5-2020, date of allotment 1-6-2020, rate of
interest on debenture 8% payable from the date of allotment, market value of equity
shares as on date of conversion ₹60 (Face Value ₹10).
(iv) Underwriting Commission 1%.
(v) No. of debentures applied for 2,50,000.
(vi) Interest payable on debentures half-yearly on 30th September and 31st March.
Write relevant journal entries for all transactions arising out of the above during the year
ended 31st March, 2021 (including cash and bank entries).
Q25. The following balances appeared in the books of Omega Ltd. as on 1-4-2020:
(i) 10% Debentures ₹75,00,000
(ii) Balance of DRR ₹2,50,000
(iii) DRR Investment ₹11,25,000 represented by 10%, 11,250 Secured Bonds of the
Government of India of ₹100 each.
Annual contribution to the DRR was made as per the requirement. On 31-3-2021, balance
at bank was ₹80,00,000 before receipt of interest. Interest on Debentures had already been
paid. The investments were realized at par for redemption of debentures at a premium of
10% on the above date.
Omega Ltd. is an unlisted company (other than AIFI, Banking company, NBFC and HFC).
You are required to prepare Debenture Redemption Reserve Account, Debenture
Redemption Reserve Investment Account and Bank Account in the books of Omega Ltd.
for the year ended 31st March, 2021.

CA INTER ACCOUNTING
Q26. Sumit Ltd. is an unlisted company (other than AIFI, Banking company, NBFC and HFC) had
8,000, 9% Debentures of ₹100 each outstanding on 1st April, 2019, redeemable on 31st
March 2020.
On 1st April 2019, the following balances appeared in the books of accounts:
a) Investment in 1,000; 7% Secured Govt. Bonds of ₹100 each, ₹1,00,000.
b) Debenture redemption reserve is ₹50,000.
Interest on investments is received yearly at the end of financial year.
1,000 own debentures were purchased on 30th March, 2020 at an average price of ₹96.50
and cancelled on the same date.
On 31st March, 2020, the investments were realised at par and the debentures were
redeemed.
You are required to prepare 9% Debentures Account, Debenture Redemption Reserve
Account, Debenture Redemption Reserve Investment Account and Own debentures
Account in the books of Sumit Ltd. for the year ended 31st March, 2020.
Q27. The following is the summarized Balance Sheet of R Limited as at 31st March, 2021:
Particulars Amount(₹)
Equity & Liabilities
Authorized Capital
1,50,000 Equity shares of 10 each 15,00,000
30,000 10% Redeemable Preference shares of 100 each 30,00,000
45,00,000
Issued, subscribed and paid up
90,000 Equity shares of 10 each 9,00,000
15,000 10% Redeemable Preference shares of 100 each 15,00,000
Reserves & Surplus
Profit & Loss A/c 1,20,000
7500, 9% Debentures of 100 each 7,50,000
Total 69,32,500
Assets
Non-Current Assets
Property Plant & Equipment 31,60,000
Investments (Market Value, 17,40,000) 14,70,000
Trade Receivables 17,60,000
Cash & Bank Balance 5,42,500
Total 69,32,500

In Annual General Meeting held on 15th May, 2021 the company passed the following
resolutions:
(i) To redeem 10% preference shares at a premium of 5%.
(ii) To redeem 9% Debentures by making offer to Debenture holders to convert their
holding into equity shares at Rs.40 per share or accept cash on redemption.
(iii) To issue fully paid bonus shares in the ratio of one equity share for every three shares
held on 31st March, 2021.
(iv) Redemption of preference shares and debentures will be paid through company’s
cash & bank balance subject to leaving a minimum cash & bank balance of
Rs.2,00,000.
(v) To issue sufficient number of equity shares @ Rs.40 per share if required to finance
redemption of Preference Shareholders and debenture holders.
On 5th June, 2021 investments were sold for Rs.16,80,000 and preference shares were
redeemed. 30% of Debenture holders exercised their option to accept cash and their
claims were settled on 1st August, 2021. The bonus issue was concluded by 10th August,
2021.
You are requested to journalize the above transactions including cash transactions and
prepare Balance Sheet as at 30th September, 2021. All working notes should form part of
your answer.
Q28. Sencom Limited (listed company) issued Rs.1,50,000 5% Debentures on 30th September
2020 on which interest is payable half yearly on 31st March and 30th September. The
company has power to purchase debentures in open market for cancellation thereof.
The following purchases were made during the year ended 31st December, 2020 and the
cancellation were made on the same date. On 31st December 2020, investments made for
the purpose of redemption were Rs.22,500.
1st March 2022 – Rs.25,000 nominal value purchased for Rs.24,725 ex-interest.
1st September 2022 – Rs.20,000 nominal value purchased for Rs.20,125 cum-interest.
You are required to draw up the following accounts up to the date of cancellation: (i)
Debentures Account; and (ii) Own Debenture (Investment) Account. Ignore taxation.

CA INTER ACCOUNTING
INSURANCE CLAIM FOR LOSS OF STOCK AND LOSS OF PROFIT

Q29. The premises of Animesh Ltd. caught fire on 22nd January 2023, and the stock was
damaged. The firm makes account up to 31st March each year. On 31st March, 2022 the
stock at cost was ₹13,27,200 as against ₹9,62,200 on 31st March, 2021.
Purchases from 1st April, 2022 to the date of fire were ₹34,82,700 as against ₹45,25,000
for the full year 2021-22 and the corresponding sales figures were ₹49,17,000 and
₹52,00,000 respectively. You are given the following further information:
(i) In July, 2022, goods costing ₹1,00,000 were given away for advertising purposes, no
entries being made in the books.
(ii) During 2022-23, a clerk had misappropriated unrecorded cash sales. It is estimated
that the defalcation averaged ₹2,000 per week from 1st April, 2022 until the clerk
was dismissed on 18th August, 2022.
(iii) The rate of gross profit is constant.
From the above information calculate the stock in hand on the date of fire.
Q30. On 27th July, 2021, a fire occurred in the godown of M/s. Vijay Exports and most of the
stocks were destroyed. However, goods costing ₹5,000 could be salvaged. Their
firefighting expenses were amounting to ₹1,300.
From the salvaged accounting records, the following information is available relating to
the period from 1.4.2021 to 27.7.2021:
1. Stock as per balance sheet as on 31.3.2021 ₹63,000
2. Purchases (including purchase of machinery costing ₹10,000) ₹2,92,000
3. Wages (including wages paid for installation of machinery ₹3,000) ₹53,000
4. Sales (including goods sold on approval basis amounting to ₹40,000. ₹4,12,300
No approval has been received in respect of 1/4th of the goods sold on
approval)
5. Cost of goods distributed as free sample ₹2,000
Other Information:
(i) While valuing the stock on 31.3.2021, ₹1,000 had been written off in respect of
certain slow-moving items costing ₹4,000. A portion of these goods were sold in
June, 2021 at a loss of ₹700 on original cost of ₹3,000. The remainder of these stocks
is now estimated to be worth its original cost.
(ii) Past record shows the normal gross profit rate is 20%.
(iii) The insurance company also admitted firefighting expenses as part of insurance
policy. The Company had taken the fire insurance policy of ₹55,000 with the average
clause.
Compute the amount of claim of stock destroyed by fire, to be lodged to the Insurance
Company. Also prepare Memorandum Trading Account for the period 1.4.2021 to 27.7.2021
for normal and abnormal items.

Q31. ABC Ltd. has insured itself under a loss of profit policy for ₹3,30,000 with indemnity period
of 8 months under average clause. A fire occurred in the factory on 01-01-2019 and
normal business was affected up to 30-04-2019.
From the following information, prepare a Statement of Claim under the policy:
Actual Turnover over the period of dislocation (01-01-2019 to 30-4-2019) 50,000
Turnover for 12 months immediately preceding the date of fire (01-01- 10,00,000
2018 to 31-12-2018)
Turnover for corresponding period in 12 months immediately preceding the 4,50,000
date of fire (01-01-2018 to 30-04-2018)
Turnover for last financial year 12,00,000
Net Profit for last financial year 3,00,000
Uninsured Standing charges 18,000
Insured Standing charges for the last financial year 60,000
Following increases are approved in the policy:
(i) Increase in G.P. rate by 2%
(ii) Increase in turnover by 10%
There was an additional cost of working of ₹20,000 during dislocation period. Due to
this additional cost, there was a saving of ₹5,000 in insured standing charges during
the indemnity period and but for this additional cost the turnover during the period of
dislocation would have been only ₹35,000.
Q32. Shan Limited, which operates a wholesale warehouse, had a fire in the premises on January
31st, 2022 which destroyed most of the building, although stock of the valueof Rs.3.96
lakhs was salvaged. The company has an insurance policy covering the stock for Rs.600
Lakhs, and loss of profits including standing charges for Rs.250 Lakhs with a six-month
period of indemnity. The company’s last annual accounts for the year ended December
31st, 2021 showed the following position:
Particulars ₹ (in Lakhs) Particulars ₹ (in Lakhs)
To Opening Stock 412.50 By Sales 2000.00
To Purchases 1812.50 By Closing Stock 525.00
To Gross Profit c/d 300.00
2525.00 2525.00
To Variable Expenses 80.00 By Gross Profit b/d 300.00
To Standing Charges 167.50
To Net Profit 52.50
300.00 300.00
The company’s record show that the turnover for January 2022 of Rs.100 Lakhs had been
the same as for the corresponding month in the previous year, payments made in January
2022 to trade creditors were Rs.106.68 Lakhs and at the end of that month the balance
owing to trade creditors had increased by Rs.3.32 Lakhs.
The company’s business was disrupted until the end of April 2022, during which period
the turnover fell by Rs.180.00 Lakhs compared with the same period in the previous year.
You are required to compute the claim to be lodged with the Insurance Company for Loss
of Stock and Loss of Profit.
CA INTER ACCOUNTING
INVESTMENT ACCOUNTS
Q33. PQR Investments Ltd., wants to re-classify its investments in accordance with AS 13.
State the values, at which the investments have to be reclassified in the following cases:
(i) Long term investments in Company A, costing ₹10 lakhs are to be re-classified as
current. Company had reduced value of these investments to ₹8 lakhs to recognize
a permanent decline in value. The fair value on date of transfer is ₹8.50 lakhs.
(ii) Long term investments in Company B, costing ₹5 lakhs are to be re-classified as
current. The fair value on date of transfer is ₹6 lakhs and book value is ₹5 lakhs.
(iii) Current investment in Company C costing ₹8 lakhs are to be re-classified as long
term as the company wants to retain them. The market value on date of transfer is
₹9 lakhs.
(iv) Current investment in Company D, costing ₹12 lakhs are to be re-classified as long
term. The market value on date of transfer is ₹11 Lakhs.
You are required to advise PQR Investments Ltd., the correct treatment in light of relevant
accounting standard.
Q34. A Ltd. purchased on 1st April, 2020 8% convertible debenture in C Ltd. of face value of
₹2,00,000 @ Rs. 108. On 1st July, 2020 A Ltd. purchased another ₹1,00,000 debentures
@ ₹112 cum interest. On 1st October, 2020 ₹80,000 debentures were sold @ ₹105. On
1st December, 2020, C Ltd. give option for conversion of 8% convertible debentures into
equity share of ₹10 each. A Ltd. received 5,000 equity shares in C Ltd. in conversion of 25%
debentures held on that date. The market price of debenture and equity share in C Ltd. on
31st December, 2020 is ₹110 and ₹15 respectively. Interest on debenture is payable each
year on 31st March, and 30th September. Prepare investment account in the books of A
Ltd. on average cost basis for the accounting year ended 31st December, 2020.
Q35. Following transactions of Meeta took place during the financial year 2020-21:
Purchased 4,500 8% bonds of ₹100 each at ₹80.50 cum-interest.
1st April, 2020
Interest is payable on 1st November and 1st May.
1st May, 2020 Received half year’s interest on 8% bonds.
Purchased 6,000 equity shares of ₹10 each in Kamal Limited for
10th July, 2020
₹44 each through a broker, who charged brokerage @ 2%.
1st October 2020 Sold 1,125 8% bonds at ₹81 Ex-interest.
1st November, 2020 Received half year’s interest on 8% bonds.
Received 18% interim dividend on equity shares of Kamal
15th January, 2021
Limited.
Kamal Limited made a rights issue of one equity share for every
four Equity shares held at ₹5 per share. Meeta exercised theoption
15th March, 2021
for 40% of her entitlements and sold the balance rights in the
market at ₹2.25 per share.
Prepare separate investment account for 8% bonds and equity shares of Kamal Limited
in the books of Meeta for the year ended on 31st March, 2021. Assume that the average
cost method is followed.

Q36. Mr. Z has made following transactions during the financial year 2020-21:
Investment 1: 8% Corporate Bonds having face value ₹100.
Date Particulars
01-06-2020 Purchased 36,000 Bonds at ₹86 cum-interest. Interest is payable on
30th September and 31st March every year
15-02-2021 Sold 24,000 Bonds at ₹92 ex-interest
Interest on the bonds is received on 30th September and 31st March.
Investment 2: Equity Shares of G Ltd. having face value ₹1
Date Particulars
01-04-2020 Opening balance 8000 equity shares at a book value of ₹190 per share
01-05-2020 Purchased 7,000 equity shares@ ₹230 on cum right basis; Brokerage
of 1% was paid in addition.
15-06-2020 Company announced a bonus issue of 2 shares for every 5 sharesheld
01-08-2020 The company made a rights issue of 1 share for every 7 shares held at
₹230 per share. The entire money was payable by 31.08.2020
25-08-2020 Rights to the extent of 30% of his entitlements was sold @ ₹75 per
share. The remaining rights were subscribed.
15-09-2020 Dividend @ ₹6 per share for the year ended 31.03.2020 was received
on 16.09.2020. No dividend payable on Right issue and Bonus issue.
01-12-2020 Sold 7,000 shares @ ₹260 per share. Brokerage of 1% was incurred
extra.
25-01-2021 Received interim dividend @ ₹3 per share for the year 2020-21.
31-03-2021 The shares were quoted in the stock exchange @ ₹260.
Both investments have been classified as Current investment in the books of Mr. Z. On
15th May 2021, Mr. Z decides to reclassify investment in equity shares of Z Ltd. as Long
term Investment. On 15th May 2021, shares were quoted in the stock exchange @ ₹180.
(i) Prepare Investment Accounts in the books of Mr. Z for the year 2020-21, assuming
that the average cost method is followed.
(ii) Profit and loss Account for the year 2020-21, based on the above information.
(ii) Suggest values at which investment in equity shares should be reclassified in
accordance with AS 13.
Q37. Gowtham Limited invested in shares of another company (with the intention to hold the
shares for short-term period) on 30th November, 2021 at a cost of ₹4,25,000. It also
earlier purchased Gold of ₹8,00,000 and Silver of ₹3,50,000 on 31st March, 2019.
Market values as on 31st March, 2022, of the above investments are as follows:
Shares ₹3,50,000
Gold ₹10,25,000
Silver ₹5,10,000
You are required to explain how will the above investments be shown (individually and
in total) in the books of account of Gowtham Limited for the year ending 31st March, 2022
as per the provisions of AS 13.

CA INTER ACCOUNTING
HIRE PURCHASE AND INSTALMENT SALE TRANSACTIONS

Q38. A acquired on 1st January, 2012 a machine under a Hire-Purchase agreement which
provides for 5 half-yearly instalments of ₹6,000 each, the first instalment being due on 1st
July, 2012. Assuming that the applicable rate of interest is 10 per cent per annum,
calculate the cash value of the machine and interest included in each instalment. All
working should form part of the answer.
Q39. Happy Valley Florists Ltd. acquired delivery van on hire purchase on 01.04.2021 from
Ganesh Enterprises. The terms were as follows:
Particulars ₹
Hire Purchase Price 180,000
Down Payment 30,000
1st instalment payable after 1 year 50,000
2nd instalment after 2 years 50,000
3rd instalment after 3 years 30,000
4th instalment after 4 years 20,000
Cash price of van ₹150,000 You are required to calculate Total Interest and Interest
included in each instalment.
Q40. M/s. Amar bought six Scooters from M/s. Bhanu on 1st April, 2015 on the following terms:
Down payment ₹3,00,000
1st instalment payable at the end of 1st year ₹1,59,000
2nd instalment payable at the end of 2nd year ₹1,47,000
3rd instalment payable at the end of 3rd year ₹1,65,000
Interest is charged at the rate of 10% per annum.
M/s. Amar provides depreciation @ 20% per annum on the diminishing balance method.
On 31st March, 2018 M/s. Amar failed to pay the 3rd instalment upon which M/s. Bhanu
repossessed two Scooters. M/s. Bhanu agreed to leave the other four Scooters with M/s.
Amar and adjusted the value of the repossessed Scooters against the amount due. The
Scooters taken over were valued on the basis of 30% depreciation per annum on written
down value. The balance amount remaining in the vendor’s account after the above
adjustment was paid by M/s. Amar after 5 months with interest@ 15% per annum.
M/s. Bhanu incurred repairing expenses of ₹15,000 on repossessed scooters and sold
scooters for ₹1,05,000 on 25th April, 2018.
(1) Calculate the cash price of the Scooters and the interest paid with each instalment
(2) Prepare Scooters Account and M/s. Bhanu Account in the books of M/s. Amar.
(3) Prepare Goods Repossessed Account in the books of M/s. Bhanu.

SINGLE ENTRY
Q41. The following is the Balance Sheet of Chirag as on 31st March, 2020:
Liabilities ₹ Assets ₹
Capital Account 48,000 Building 32,500
Loan 15,000 Furniture 5,000
Creditor 31,000 Motor car 9,000
Stock 20,000
Debtors 17,000
Cash in hand 2,000
Cash at bank 8,500
94,000 94,000
A riot occurred on the night of 31st March, 2021 in which all books and records were lost.
The cashier had absconded with the available cash. He gives you the following
information:
(a) His sales for the year ended 31st March, 2021 were 20% higher than the previous
year’s sales. He always sells his goods at cost plus 25%; 20% of the total sales for the
year ended 31st March, 2021 were for cash. There were no cash purchases.
(b) On 1st April, 2020 the stock level was raised to Rs. 30,000 and stock was maintained
at this new level all throughout the year.
(c) Collection from debtors amounted to Rs. 1,40,000 of which Rs. 35,000 was received
in cash, Business expenses amounted to Rs. 20,000 of which Rs. 5,000 was
outstanding on 31st March, 2021 and Rs. 6,000 was paid by cheques.
(d) Analysis of the Pass Book revealed the Payment to Creditors Rs. 1,37,500, Personal
Drawing Rs. 7,500, Cash deposited in Bank Rs. 71,500, and Cash withdrawn from
Bank Rs. 12,000.
(e) Gross profit as per last year’s audited accounts was Rs. 30,000.
(f) Provide depreciation on Building and Furniture at 5% and Motor Car at 20%.
(g) The amount defalcated by the cashier may be treated as recoverable from him.
You are required to prepare the Trading and Profit and Loss Account for the year ended
31st March, 2021 and Balance Sheet as on that date.
Q42. A and B are in Partnership having Profit sharing ratio 2:1. The following information is
available about their assets and liabilities:
Particulars 31.3.2011 (₹) 31.3.2012 (₹)
Furniture 1,20,000 ?
Advances 70,000 50,000
Creditors 32,000 30,000
Debtors 40,000 45,000
Inventory 60,000 74,750
Loan 80,000 -
Cash at Bank 50,000 1,40,000

CA INTER ACCOUNTING
The partners are entitled to salary @ ₹2,000 p.m. They contributed proportionate capital.
Interest is paid @ 6% on capital and charged @ 10% on drawings.
Drawings of A and B
Particulars A B
(₹) (₹)
April 30 2,000 -
May 31 - 2,000
June 30 4,000 -
Sept 30 - 6,000
Dec 31 2,000 -
Feb 28 - 8,000
On 30th June, they took C as 1/3rd partner who contributed ₹75,000. C is entitled to share
of 9 months’ profit. The new profit ratio becomes 1:1:1. A withdrew his proportionate
share. Depreciate furniture ₹10% p.a., new purchases ₹10,000 may be depreciated for
1/4th of a year.
Current account as on 31-3-20X1: A ₹5,000 (Cr.), B ₹2,000 (Dr.)
Prepare Statement of Profit, Current Accounts of partners and Statement of Affairs as on
31-3-2012.

CA INTER ACCOUNTING
DEPARTMENT
Q43. Ram, Sham and Mahaan sons of Prabhu Dyal are running Punya Hotel in Chennai. Ram is
heading Room division (A), Sham is heading banquet division (B) and Mahaan is heading
Restaurant division (C). Each of the three brothers would receive 60% of the profits, if
any, of the department of which he was in charge and remaining combined profits would
be shared in 2:2:1 ratio. The following is the Trading and Profit and Loss Account of the
firm for the year ended March 31,2021:
Particulars (₹) (₹) Particulars (₹) (₹)

To Opening Stock: By Sales:
Room (A) 25,650 Room (A) 2,70,000
Banquet (B) 18,000 Banquet (B) 1,65,000
Restaurant (C) 19,500 63,150 Restaurant (C) 86,700 5,21,700
To Purchases: By 1,650
Discount
received
Room (A) 2,35,000
Banquet (B) 1,56,000 By Closing
Stock:
Restaurant (C) 84,200 4,75,200 Room (A) 55,300
To Salaries 34,400 Banquet (B) 31,800
To Royalties 8,000 Restaurant (C) 42,500 1,29,600
To Parking fee & car 9,600
washing charges
To Discount allowed 2,500
To Misc. Exp. 7,000
To Depreciation 1,160 62,660
To Net Profit 51,940
Total 6,52,950 Total 6,52,950
Prepare: (1) Departmental Trading and Profit and Loss Account along with combined
Profit & Loss account and (II) Profit and Loss Appropriation Account after incorporating
the following information:
(i) Closing stock of Dept. B includes goods amounting ₹3,500 being transferred from
Dept. A
(ii) Stock value ₹9,300 and other goods of the value of ₹1,500 were transferred at
sellingprice by Departments A and C respectively to Department B.
(iii) The details of salaries were as follows:
(1) Admin Office 60%, Pantry 40%
(2) Allocate Admin Office in the proportion of 3: 2:1 among the Departments A, B, C
(3) Distribute Pantry expenses equally among the Department A and B.
(iv) The parking fee is ₹500 per month which is to be divided equally between
Departments A, B & C.
(v) All other expenses are to be allocated in ratio of 2:2:1.

(vi) Discounts received are to be credited to the three Departments as follows:
A: ₹650; B: ₹600; C: ₹400.
(vii) The opening stock of Department B does not include any goods transferred from
other departments and closing stock of Department B does not include any stock
transferred from Department C.
Q44. A firm has two departments – P and Q. Department Q makes furniture with the wood
supplied by P department at its usual selling price. From the following figures prepare
Departmental Trading and Profit and Loss Account for the year 2022:
Particulars P Q
(₹) (₹)
Opening Stock on 1st January, 2022 3,00,000 50,000
Sales 24,00,000 4,00,000
Purchases 20,00,000 15,000
Supply to Q 3,00,000 --
Selling expenses 20,000 6,000
Wages 60,000 20,000
Closing Stock on 31st December, 2022 2,00,000 60,000
The value of stocks in the furniture department consist of 75 % wood and 25 % other
expenses. P Department earned Gross Profit at 15 % on sales in 2021. General expenses
of the business as a whole came to ₹1,10,000. The firm adopts FIFO method for assigning
costs to inventories.
Q45. Brahma Limited has three departments and submits the following information for the year
ending on 31st March, 2012:
Particulars A B C Total (₹)
Purchases (units) 5,000 10,000 15,000
Purchases (Amount) - - - 8,40,000
Sales (units) 5,200 9,800 15,300
Selling price (₹per unit) 40 45 50
Closing Stock (Units) 400 600 700
You are required to prepare departmental trading account of Brahma Limited assuming
that the rate of profit on sales is uniform in each case.

CA INTER ACCOUNTING
Q46. X Ltd has three departments A, B and C. From the particulars given below compute: (i) the
values of stock as on 31st Dec. 2020 and (ii) the departmental results showing actual
amount of gross profit.
Particulars A B C
₹ ₹ ₹
Stock (on 1.1.2020) 24,000 36,000 12,000
Purchases 1,46,000 1,24,000 48,000
Actual sales 1,72,500 1,59,400 74,600
Gross Profit on normal selling price 20% 25% 33 1/3%
During the year ended 31st Dec. 2020, certain items were sold at discount and these
discounts were reflected in the value of sales shown above. The items sold at discount
were:
Particulars A B C
₹ ₹ ₹
Sales at normal price 10,000 3,000 1,000
Sales at actual price 7,500 2,400 600
Q47. P Ltd. has two Departments X and Y. From the following particulars you are required to
prepare Departmental Trading Account and General Trading and P & L Account for the
year ending 31 March, 2021.
Particulars Department Department

X (₹) Y (₹)
Opening stock (at Cost) 70,000 54,000
Purchase 2,14,000 1,66,000
Carriage inwards 6,000 6,000
Wages 21,000 24,450
Sales 3,10,000 2,54,000
Purchased goods transferred by Dept. Y toDept. X 30,000 -
Purchased goods transferred by Dept. X toDept. Y - 24,000
Finished goods transferred by Dept. Y toDept. X 80,000 -
Finished goods transferred by Dept. X toDept. Y - 1,00,000
Return of Finished Goods by Dept. Y to Dept.X 25,000 -
Return of Finished Goods by Dept. X to Dept.Y - 17,000
Closing Stock of Purchased Goods 12,000 15,000
Closing Stock of Finished Goods 60,000 35,000
Purchased goods have been transferred mutually at their respective departmental
purchase cost and finished goods at departmental market price and that 20% of the
finished stock (closing) at each department represented finished goods received from the
other department.

Q48. A Departmental Store having 3 departments has reported the following turnover and
profits:
Department Turnover (₹) Net Profit (₹)
Department X 20,00,000 2,00,000
Department Y 30,00,000 2,50,000
Department Z 50,00,000 5,50,000
Net Profit is after allocation of all expenses except Department’s Manager Commission.
The Commission of each Departmental Manager is to be calculated as follows:
- If the percentage departmental profits are either equal or less than the percentage
of overall profits - 5%.
- If the percentage of departmental profits is more than the percentage of overall
profits, the commission will be 5% of departmental profits which is equal to the
percentage of overall profits on department’s turnover, plus 25% of departmental
profit exceeding the percentage of overall profits.
You are required to calculate the Commission of the Manager of each of the Department.
Q49. PQR Limited is a retail organization with several departments. Goods supplied to each
department are debited to a Memorandum Departmental Stock Account at cost, plus a
fixed percentage (mark-up) to give the normal selling price. The mark-up is credited to a
memorandum departmental Mark-up account, any reduction in selling prices (mark-down)
will require adjustment in the stock account and in mark-up account. The markup for
Department A for the last three years has been 20%. Figures relevant to Department A for
the year ended 31st March, 2020 were as follows:
Opening stock as on 1st April, 2019, at cost ₹70,000
Purchases at cost ₹2,16,000
Sales ₹3,24,000
It is further ascertained that:
(1) Goods purchased in the period were marked down by ₹1,680 from a cost of ₹19,200.
Marked down stock costing ₹4,800 remained unsold on 31st March 2020.
(2) Shortage of stock found in year ending 31.03.2020, costing ₹1,440 was written off.
(3) Opening stock on 01.04.19 including goods costing ₹9,840 had been sold during the
year and had been marked down in the selling price by ₹888. The remaining stock
had been sold during the year.
(4) The departmental closing stock is to be valued at cost subject to adjustment for
mark-up and mark-down.
You are required to prepare:
(i) A Departmental Trading Account for Department A for the year ended 31st March,
2020 in the books of Head Office.
(ii) A Memorandum Stock Account for the year.
(iii) A Memorandum Mark-up Account for the year.

CA INTER ACCOUNTING
BRANCH
Q50. Treadmill invoices goods to its branch at cost plus 20%. The branch sells goods for cash
as well as on credit. The branch meets its expenses out of cash collected from its debtors
and cash sales and remits the balance of cash to head office after withholding ₹20,000
necessary for meeting immediate requirements of cash. On 31st March, 2022 the assets
at the branch were as follows:
Cash in Hand 20
Trade Debtors 768
Stock, at Invoice Price 2,160
Furniture and Fittings 1,000
During the accounting year ended 31st March, 2023 the invoice price of goods dispatched
by the head office to the branch amounted to ₹2 crore 64 lakhs. Out of the goods received
by it, the branch sent back to head office goods invoiced at ₹1,44,000. Other transactions
at the branch during the year were as follows:
Cash Sales 19,400
Credit Sales 6,280
Cash collected by Branch from Credit Customers 5,684
Cash Discount allowed to Debtors 116
Returns by Customers direct to Head office (at invoice price) 204
Bad Debts written off 74
Expenses paid by Branch 1,684
On 1st January, 2023 the branch purchased new furniture for ₹2 lakh for which payment
was made by head office through a cheque.
On 31st March, 2023 branch expenses amounting to ₹12,000 were outstanding and cash
in hand was again ₹20,000. Furniture is subject to depreciation @ 16% per annum on
diminishing balance method.
Prepare Branch Account in the books of head office for the year ended 31st March, 2023.
Q51. Lal & Co. of Jaipur has a branch in Patna to which goods are sent @ 20% above cost. The
branch makes both cash & credit sales. Branch expenses are paid direct from Head office
and the branch has to remit all cash received into the bank account of Head office. Branch
doesn’t maintain any books of accounts but sends monthly returns to the head office.
Following further details are given for the year ended 31st March, 2020:
Goods received from Head office at Invoice Price 4,20,000
Goods returned to Head office at Invoice Price 30,000
Cash sales for the year 2019-20 92,500
Credit Sales for the year 2019-20 3,12,500

Stock at Branch as on 01-04-2019 at Invoice price 36,000

Sundry Debtors at Patna branch as on 01-04-2019 48,000
Cash received from Debtors 2,19,000
Discount allowed to Debtors 3,750
Goods returned by customer at Patna Branch 7,000
Bad debts written off 2,750
Amount recovered from Bad debts previously written off as Bad 500
Rent, Rates & taxes at Branch 12,000
Salaries & wages at Branch 36,000
Office Expenses (at Branch) 4,600
Stock at Branch as on 31-03-2020 at cost price 62,500
Prepare necessary ledger accounts in the books of Head office by following Stock and
Debtors method and ascertain Branch profit.
Q52. Alpha Ltd. has a retail shop under the supervision of a manager. The ratio of gross profit
at selling price is constant at 25 per cent throughout the year to 31st March, 2020.
Branch manager is entitled to a commission of 10 per cent of the profit earned by his
branch, calculated before charging his commission but subject to a deduction from such
commission equal to 25 per cent of any ascertained deficiency of branch stock. All goods
were supplied to the branch from head office.
The following details for the year ended 31st March, 2020 are given as follows:
Particulars ₹ Particulars ₹
Opening Stock (at cost) 74,736 Chargeable expenses 49,120
Goods sent to branch (at cost) 2,89,680 Closing Stock (Selling Price) 1,23,328
Sales 3,61,280
Manager’s commission 2,400
paid onaccount
From the above details, you are required to calculate the commission due to manager for
the year ended 31s March, 2020.
Q53. You are required to pass necessary Journal entries in the books of an Independent Branch
of a Company, wherever required, to rectify or adjust the following:
(i) Expenses of ₹5,000 allocated to the Branch by Head Office but not recorded in the
Branch books.
(ii) Provision for doubtful debts, whose accounts are kept by the Head Office, not
provided earlier for ₹3,000.
(iii) Branch paid ₹4,000 as salary to a Head Office Manager, but the amount paid has
been debited by the Branch to Salaries Account.
(iv) Branch incurred travelling expenses of ₹6,000 on behalf of other Branches, but not
recorded in the books of Branch.

CA INTER ACCOUNTING
(v) A remittance of ₹1,00,000 sent by the Branch has not been received by Head Office
on the date of reconciliation of Accounts.
(vi) Head Office allocates ₹80,000 to the Branch as Head Office expenses, which has not
yet been recorded by the Branch,
(vii) Head Office collected ₹50,000 directly from a Branch Customer. The intimation of
the fact has been received by the Branch only now.
(viii) Goods dispatched by the Head office amounting to ₹20,000, but not received by the
Branch till date of reconciliation. The Goods have been received subsequently.
Q54. DM Delhi has a branch in London which is an integral foreign operation of DM. At the
end of the year 31st March, 2021, the branch furnishes the following trial balance in U.K.
Pound:
Particulars £ £
Dr. Cr.
Fixed assets (Acquired on 1st April, 2017) 24,000
Stock as on 1st April, 2020 11,200
Goods from head Office 64,000
Expenses 4,800
Debtors 4,800
Creditors 3,200
Cash at bank 1,200
Head Office Account 22,800
Purchases 12,000
Sales 96,000
1,22,000 1,22,000
In head office books, the branch account stood as shown below:
London Branch A/c
Particulars Amount (₹) Particulars Amount (₹)
To Balance b/d 20,10,000 By Bank A/c 52,16,000
To Goods sent to branch 49,26,000 By Balance c/d 17,20,000
69,36,000 69,36,000
The following further information is given:
(a) Fixed assets are to be depreciated @ 10% p.a. on WDV.
(b) On 31st March, 2021:
Expenses outstanding - £400
Prepaid expenses - £200
Closing stock - £8,000
(c) Rate of Exchange:
1st April, 2017 - Rs. 70 to £1
1st April, 2020 - Rs. 76 to £4

31st March, 2021 - Rs. 77 to £1
Average - Rs. 75 to £1
You are required to prepare: (1) Trial balance, incorporating adjustments of outstanding
and prepaid expenses, converting U.K. pound into Indian rupees; and (2) Trading and
profit and loss account for the year ended 31st March, 2021 of London branch as would
appear in the books of Delhi head office of DM.
Q55. M/s. Royal Trading whose Head Office is in New York has a branch in Hyderabad, India. As
on 31st March, 2020 the following balances appeared in the books of Hyderabad Branch:
Particulars Amount in (₹) Amount in (₹)

Dr. Cr.
Stock on 1st April, 2019 5,02,200 -
Purchases and Sales 33,75,000 49,72,500
Debtors and Creditors 16,47,000 10,98,000
Bills Receivable and Payable 4,39,200 3,84,300
Salaries and wages 1,62,000 -
Rent, Rates and Insurance 2,29,500 -
Commission received - 90,000
Trade expenses 54,000 -
Furniture 1,95,300 -
Bank A/c 12,24,270 -
New York Account - 12,83,670
Total 78,28,470 78,28,470
Other information are as follows:
(a) Hyderabad branch account in New York books is showing a debit balance of US $ 24,120.
(b) Closing Stock as on 31st March, 2020 was ₹11,46,800.
(c) Furniture appeared in the Head Office books at US $ 3,150.
(d) The rate of exchange for 1 US $ on 31st March, 2019 was ₹62 and on 31st March,
2020 was ₹61. The average rate of US $ for the year was ₹60.
(e) Salary outstanding ₹10,980.
You are asked to :

(i) Prepare Trial Balance incorporating adjustments given, converting Indian rupees
into US dollar.
(ii) Prepare in US dollars Trading and Profit and Loss a/c for the year ended 31st
March, 2020 and Balance Sheet of the Hyderabad Branch as would appear in
the books of Head Office (New York office) of M/s Royal Trading.

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Acc-End Game-Questionnaire-Nov&#39;23

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The End Game

(a) AS-11 (a) (a) (a) Basics

NAVIN CLASSES 1 CA CS AVINASH SANCHETI

PRACTICE QUESTIONS FOR ACCOUNTING STANDARDS

AS 1 - DISCLOSURE OF ACCOUNTING POLICIES

NAVIN CLASSES 2 CA CS AVINASH SANCHETI

NAVIN CLASSES 3 CA CS AVINASH SANCHETI

NAVIN CLASSES 4 CA CS AVINASH SANCHETI

NAVIN CLASSES 5 CA CS AVINASH SANCHETI

AS 10 – PROPERTY, PLANT & EQUIPMENT

NAVIN CLASSES 6 CA CS AVINASH SANCHETI

Q19. An entity gave the following Note in its Financial Statements:

NAVIN CLASSES 7 CA CS AVINASH SANCHETI

AS 11 – THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

Q24. Answer the following questions:

NAVIN CLASSES 8 CA CS AVINASH SANCHETI

NAVIN CLASSES 9 CA CS AVINASH SANCHETI

AS 12 – ACCOUNTING FOR GOVERNMENT GRANTS

NAVIN CLASSES 10 CA CS AVINASH SANCHETI

NAVIN CLASSES 11 CA CS AVINASH SANCHETI

NAVIN CLASSES 12 CA CS AVINASH SANCHETI

NAVIN CLASSES 13 CA CS AVINASH SANCHETI

NAVIN CLASSES 14 CA CS AVINASH SANCHETI

PRACTICE QUESTIONS FOR CHAPTERS

Company Operating Cycle Period Expected Payment Period

Particulars Amount (₹)

NAVIN CLASSES 15 CA CS AVINASH SANCHETI

Particulars Dr. Cr.

NAVIN CLASSES 16 CA CS AVINASH SANCHETI

Bills receivable 1,24,500

NAVIN CLASSES 17 CA CS AVINASH SANCHETI

NAVIN CLASSES 18 CA CS AVINASH SANCHETI

NAVIN CLASSES 19 CA CS AVINASH SANCHETI

BONUS & RIGHT ISSUE

NAVIN CLASSES 20 CA CS AVINASH SANCHETI

REDEMPTION OF PREFERENCE SHARES

Particulars Amount (₹)

NAVIN CLASSES 21 CA CS AVINASH SANCHETI

Reserves and Surplus comprises statement of profit and loss only.

NAVIN CLASSES 22 CA CS AVINASH SANCHETI

NAVIN CLASSES 23 CA CS AVINASH SANCHETI

Particulars Amount (₹)

Q15. Classify the following activities as per AS-3:

NAVIN CLASSES 24 CA CS AVINASH SANCHETI

NAVIN CLASSES 25 CA CS AVINASH SANCHETI

NAVIN CLASSES 26 CA CS AVINASH SANCHETI

PROFIT OR LOSS PRE AND POST INCORPORATION

NAVIN CLASSES 27 CA CS AVINASH SANCHETI

Particulars Dr.(₹) Cr.(₹)

NAVIN CLASSES 28 CA CS AVINASH SANCHETI

NAVIN CLASSES 29 CA CS AVINASH SANCHETI

NAVIN CLASSES 30 CA CS AVINASH SANCHETI

NAVIN CLASSES 31 CA CS AVINASH SANCHETI

NAVIN CLASSES 32 CA CS AVINASH SANCHETI

INSURANCE CLAIM FOR LOSS OF STOCK AND LOSS OF PROFIT

NAVIN CLASSES 33 CA CS AVINASH SANCHETI

NAVIN CLASSES 35 CA CS AVINASH SANCHETI

NAVIN CLASSES 36 CA CS AVINASH SANCHETI

HIRE PURCHASE AND INSTALMENT SALE TRANSACTIONS

NAVIN CLASSES 37 CA CS AVINASH SANCHETI

NAVIN CLASSES 38 CA CS AVINASH SANCHETI

NAVIN CLASSES 39 CA CS AVINASH SANCHETI

Particulars (₹) (₹) Particulars (₹) (₹)

(v) All other expenses are to be allocated in ratio of 2:2:1.

Acc-End Game-Questionnaire-Nov'23

Acc-End Game-Questionnaire-Nov'23