Bhagya Achievers Test Series

CA Inter

Paper 1: Advance Accounting

Chapter 4: Presentation & Disclosures Based Accounting Standards (Part-i)

(AS 3, 17, 18, 25)

Total Marks: 20

Time: 40min

Question1. (5 Marks)

Explain the meaning of the terms 'cash' and 'cash equivalent' for the purpose
of Cash Flow Statement the as per AS-3.

Ruby Exports had a bank balance of USD 25,000, stated in books at Rs.
16,76,250 using the rate of exchange Rs. 67.05 per USD prevailing on the date
of receipt of dollars. However, on the balance sheet date, the closing rate of
exchange was Rs. 67.80 and the bank balance had to be restated at Rs.
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.

Question2. (5 Marks)

Company A is engaged in the manufacture of chemicals. The company

manufactures five types of chemicals that have different applications. Can this
company include more than one type of chemical in a single business
segment? Comment.

Question3. (6 Marks)

In respect of a key supplier who is dependent on the company for its existence
and the company enjoys influence over the prices of this supplier (which may

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not be formally demonstrable), can the supplier and the be considered as
related parties?

MCQ’s

1. Crown Ltd. wants to prepare its cash flow statement. It sold equipment
of book value of Rs.60,000 at a gain of Rs.8,000. The amount to be
reported in its cash flow statement under operating activities is
(a) Nil
(b) Rs.8,000
(c) Rs.68,000
(d) Rs.60,000 (1 Mark)

2. The standard defines Interim financial Report as a financial report for an

interim period that contains a set of financial statements.
(a) Complete
(b) Condensed
(c) Financial statement similar to annual
(d) Either complete or condensed (1 Mark)

3. Which of the following statements is correct?

(a) In case of 10% test based on profit/loss, we need to consider that
any segment whose profit or loss is 10% or more than the net
profit or net loss respectively of all segments taken together
becomes reportable segment.
(b) In case of 10% test based on profit/loss, we need to consider that
any segment whose profit or loss is 10% or more than the net profit
(after netting the losses) of all segments taken together becomes
reportable segment.
(c) In case of 10% test based on profit/loss, we need to consider that
any segment whose profit or loss is 10% or more than the net profit
or loss (whichever is higher in absolute figures) of all segments
taken together becomes reportable segment.
(d) In case of 10% test based on profit/loss, we need to consider that
any segment whose profit or loss is 10% or more than the net profit
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 or loss (whichever is lower in absolute figures) of all segments
taken together becomes reportable segment. (2 Marks)

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